Document:

exv10w1

Exhibit 10.1

Execution Version

Basic Energy Services, Inc.

$225,000,000 11.625% Senior Secured Notes due 2014

PURCHASE AGREEMENT

July 23, 2009

Houston, Texas

Goldman, Sachs & Co.

Banc of America Securities LLC

UBS Securities LLC

Jefferies & Company, Inc.

Capital One Southcoast, Inc.

Comerica Securities, Inc.

Natixis Bleichroeder Inc.

c/o Goldman, Sachs & Co.

1000 Louisiana St.

Suite 550

Houston, Texas 77002

Ladies and Gentlemen:

          Basic Energy Services, Inc., a Delaware corporation (the “Company”), and each of the other
Guarantors (as defined herein) agree with you as follows:

          1. Issuance of Notes. The Company proposes to issue and sell to Goldman, Sachs & Co.,
Banc of America Securities LLC, UBS Securities LLC (together with Goldman, Sachs & Co. and Banc of
America Securities LLC, the “Representatives”), Jefferies & Company, Inc., Capital One Southcoast,
Inc., Comerica Securities, Inc. and Natixis Bleichroeder Inc. (together with the Representatives,
the “Initial Purchasers”) $225,000,000 aggregate principal amount of 11.625% Senior Secured Notes
due 2014 (the “Original Notes”). The Company’s obligations under the Original Notes and the
Indenture (as defined below) will be, jointly and severally, unconditionally guaranteed (the
"Guarantees”), on a senior secured basis, by each of the Subsidiaries (as defined below) listed on
the signature pages hereto (collectively, the “Guarantors,” and, together with the Company, the
"Issuers”). The Original Notes and the Guarantees are referred to herein as the “Securities.” The
Securities will be issued pursuant to an indenture (the “Indenture”), to be dated the Closing Date
(as defined herein), by and between the Issuers and The Bank of New York Mellon Trust Company,
National Association, as trustee (the “Trustee”).

          The Securities will be offered and sold to the Initial Purchasers pursuant to an exemption
from the registration requirements under the Securities Act of 1933, as amended (the

 

 

“Act”). The Issuers have prepared a preliminary offering circular, dated as of July 22, 2009, the
“Preliminary Offering Circular”), and a pricing supplement thereto dated the date hereof, which
includes the information contained in Schedule III (the “Pricing Supplement”). The
Preliminary Offering Circular (as amended and supplemented immediately prior to the Applicable Time
(as defined below)) and the Pricing Supplement are herein referred to as the “Pricing Disclosure
Package.” Promptly after the execution of this Purchase Agreement (this “Agreement”), the Issuers
will prepare a final offering circular dated the date hereof (the “Final Offering Circular”). For
the purposes of this Agreement, the “Applicable Time” is 3:00 p.m. (Eastern time) on the date of
this agreement.

          The Initial Purchasers have advised the Issuers that the Initial Purchasers intend, as soon as
they deem practicable after this Agreement has been executed and delivered, to resell (the “Exempt
Resales”) the Securities in private sales exempt from registration under the Act on the terms set
forth in the Pricing Disclosure Package, solely to (i) persons whom the Initial Purchasers
reasonably believe to be “qualified institutional buyers” (“QIBs”), as defined in Rule 144A under
the Act (“Rule 144A”), in accordance with Rule 144A and (ii) other eligible purchasers pursuant to
offers and sales that occur outside the United States within the meaning of Regulation S under the
Act (“Regulation S”) in accordance with Regulations S (the persons specified in clauses (i) and
(ii), the “Eligible Purchasers”).

          Holders (including subsequent transferees) of the Securities will have the registration rights
under the registration rights agreement (the “Registration Rights Agreement”), between the Issuers
and the Initial Purchasers, to be dated the Closing Date, substantially in the form attached hereto
as Exhibit A. Under the Registration Rights Agreement, the Issuers will agree to (a) file
with the Securities and Exchange Commission (the “Commission”) (i) a registration statement under
the Act (the “Exchange Offer Registration Statement”) relating to a new issue of debt securities
(collectively with the Private Exchange Notes (as defined in the Registration Rights Agreement),
the “Exchange Notes” and, together with the Original Notes, the “Notes”), guaranteed by the
guarantors under the Indenture, to be offered in exchange for the Original Notes and the Guarantees
thereof (the “Exchange Offer”) and issued under the Indenture and/or (ii)under certain
circumstances set forth in the Registration Rights Agreement, a shelf registration statement
pursuant to Rule 415 under the Act (the “Shelf Registration Statement”) relating to the resale by
certain holders of the Original Notes and the Guarantees thereof, (b) to use its reasonable best
efforts to cause the Exchange Offer Registration Statement and, if applicable, the Shelf
Registration Statement to be declared effective and (c) to consummate the Exchange Offer, all
within the time periods specified in the Registration Rights Agreement.

          The Issuers have agreed to secure the Notes by granting to the Trustee for the benefit of the
holders of the Notes a perfected first-priority lien (subject to Permitted Collateral Liens, as
such term is defined in the Indenture) in the Collateral (as such term is defined in that certain
Security Agreement, dated as of the Closing Date, by and among the Grantors (as defined therein)
and the Trustee (the “Security Agreement”)) as required pursuant to the Indenture and other
security instruments and documents as are necessary to create and perfect the liens and security
interests contemplated by the Indenture and the Security Agreement (the foregoing documents and,
along with the Security Agreement, collectively referred to herein as the “Security Documents”).

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          This Agreement, the Notes, the Guarantees, the Indenture, the Registration Rights Agreement
and the Security Documents are hereinafter sometimes referred to collectively as the “Note
Documents.”

          2. Agreements to Sell and Purchase. On the basis of the representations, warranties
and covenants contained in this Agreement, the Issuers agree to issue and sell to the Initial
Purchasers, and on the basis of the representations, warranties and covenants contained in this
Agreement, and subject to the terms and conditions contained in this Agreement, each of the Initial
Purchasers, severally and not jointly, agrees to purchase from the Issuers, the aggregate principal
amount of the Securities set forth opposite its name on Schedule I attached hereto. The
purchase price for the Securities shall be 92.851% of their principal amount.

          3. Delivery and Payment. Delivery of, and payment of the purchase price (via wire
transfer) for, the Securities shall be made at 9:00 a.m. Houston time, on July 31, 2009 (such date
and time, the “Closing Date”) at the offices of Vinson & Elkins L.L.P., 1001 Fannin Street, Suite
2500, Houston, Texas 77002. The Closing Date and the location of delivery of and the form of
payment for the Securities may be varied by mutual agreement between the Initial Purchasers and the
Company.

          The Securities shall be delivered by the Issuers to the Initial Purchasers (or as the Initial
Purchasers direct) through the facilities of The Depository Trust Company against payment by the
Initial Purchasers of the purchase price therefor by means of wire transfer of immediately
available funds to such account or accounts specified by the Company in accordance with Section
8(h) on or prior to the Closing Date, or by such means as the parties hereto shall agree prior to
the Closing Date. The Securities shall be evidenced by one or more certificates in global form
registered in such names as the Initial Purchasers may request upon at least one business day’s
notice prior to the Closing Date and having an aggregate principal amount corresponding to the
aggregate principal amount of the Securities.

          4. Agreements of the Issuers. The Issuers jointly and severally, covenant and agree
with the Initial Purchasers as follows:

     (a) To furnish the Initial Purchasers and those persons identified by the Initial
Purchasers, without charge, as many copies of the Preliminary Offering Circular, the Pricing
Supplement and the Final Offering Circular, and any amendments or supplements thereto, as
the Initial Purchasers may reasonably request. The Issuers consent to the use of the
Preliminary Offering Circular, the Pricing Supplement and the Final Offering Circular, and
any amendments or supplements thereto, by the Initial Purchasers in connection with Exempt
Resales.

     (b) As promptly as practicable following the execution and delivery of this Agreement
and in any event not later than the second business day following the date hereof, to
prepare and deliver to the Initial Purchasers the Final Offering Circular, which shall
consist of the Preliminary Offering Circular as modified only by the information contained
in the Pricing Supplement. Not to amend or supplement the Preliminary Offering Circular or
the Pricing Supplement. Not to amend or supplement the Final Offering Circular prior to the
Closing Date unless the Initial Purchasers shall previously

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have been advised of such proposed amendment or supplement at least two business days
prior to the proposed use, and shall not have objected to such amendment or supplement.

     (c) If, prior to the later of (x) the Closing Date and (y) the time that the Initial
Purchasers have completed their distribution of the Securities, any event shall occur that,
in the judgment of the Issuers or in the judgment of counsel to the Initial Purchasers,
makes any statement of a material fact in the Final Offering Circular, as then amended or
supplemented, untrue or that requires the making of any additions to or changes in the Final
Offering Circular in order to make the statements in the Final Offering Circular, as then
amended or supplemented, in the light of the circumstances under which they are made, not
misleading, or if it is necessary to amend or supplement the Final Offering Circular to
comply with all applicable laws, the Issuers shall promptly notify the Initial Purchasers of
such event and (subject to Section 4(b)) prepare an appropriate amendment or supplement to
the Final Offering Circular so that (i) the statements in the Final Offering Circular, as
amended or supplemented, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in the light of
the circumstances at the Closing Date and at the time of sale of Securities, not misleading
and (ii) the Final Offering Circular will comply with applicable law.

     (d) To qualify or register the Securities under the securities laws of such
jurisdictions as the Initial Purchasers may request and to continue such qualification in
effect so long as required for the Exempt Resales. Notwithstanding the foregoing, no Issuer
shall be required to qualify as a foreign corporation in any jurisdiction in which it is not
so qualified or to execute a general consent to service of process in any such jurisdiction
or subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.

     (e) To advise the Initial Purchasers promptly, and if requested by the Initial
Purchasers, to confirm such advice in writing, of the issuance by any securities commission
of any stop order suspending the qualification or exemption from qualification of any of the
Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for
such purpose by any securities commission or other regulatory authority. The Issuers shall
use their reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any of the Securities under any securities
laws, and if at any time any securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption of any of the Securities under any
securities laws, the Issuers shall use their reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.

     (f) Whether or not the transactions contemplated by this Agreement are consummated, to
pay all costs, expenses, fees and disbursements (including fees and disbursements of counsel
and accountants for the Issuers) incurred and stamp, documentary or similar taxes incident
to and in connection with: (i) the preparation, printing and distribution of the Preliminary
Offering Circular, the Pricing Supplement and the Final Offering Circular and any amendments
and supplements thereto, (ii) all expenses (including travel expenses) of the Issuers and
the Initial Purchasers in

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connection with any meetings with prospective investors in the Securities, (iii) the
preparation, notarization (if necessary) and delivery of the Note Documents and all other
agreements, memoranda, correspondence and documents prepared and delivered in connection
with this Agreement and with the Exempt Resales, (iv) the issuance, transfer and delivery of
the Securities by the Issuers to the Initial Purchasers, (v) the qualification or
registration of the Securities for offer and sale under the securities laws of the several
states of the United States or provinces of Canada (including, without limitation, the cost
of printing and mailing preliminary and final Blue Sky or legal investment memoranda and
fees and disbursements of counsel (including local counsel) to the Initial Purchasers
relating thereto), (vi) the application for quotation of the Securities in The Portal
Alliance (“Portal”), (vii) the inclusion of the Securities in the book-entry system of The
Depository Trust Company (“DTC”), (viii) the rating of the Securities by rating agencies,
(ix) the fees and expenses of the Trustee and its counsel and (x) the performance by the
Company of its other obligations under the Note Documents, including all fees and expenses
in connection with the creation and perfection of the Liens under each of the Security
Documents (including, without limitation, filing and recording fees, search fees and taxes);
provided, notwithstanding the foregoing, the Initial Purchasers shall pay for all expenses
incurred in connection with chartered aircraft used in connection with the transactions
contemplated by this Agreement.

     (g) To use the proceeds from the sale of the Original Notes in the manner described in
the Pricing Disclosure Package under the caption “Use of Proceeds.”

     (h) To do and perform all things required to be done and performed under this Agreement
by them prior to or after the Closing Date and to satisfy all conditions precedent on their
part to the delivery of the Securities.

     (i) Not to, and not to permit any Subsidiary to, sell, offer for sale or solicit offers
to buy any security (as defined in the Act) that would be integrated with the sale of the
Securities in a manner that would require the registration under the Act of the sale of the
Securities to the Initial Purchasers or any Eligible Purchasers.

     (j) Not to, and to cause its affiliates (as defined in Rule 144 under the Act) not to,
resell any of the Securities that have been reacquired by any of them.

     (k) Not to engage, not to allow any Subsidiary to engage, and to cause its other
affiliates and any person acting on their behalf (other than, in any case, the Initial
Purchasers and any of their affiliates, as to whom the Company makes no covenant) not to
engage, in any form of general solicitation or general advertising (within the meaning of
Regulation D under the Act) in connection with any offer or sale of the Securities in the
United States.

     (l) Not to engage, not to allow any Subsidiary to engage, and to cause its other
affiliates and any person acting on their behalf (other than, in any case, the Initial
Purchasers and any of their affiliates, as to whom the Company makes no covenant) not to
engage, in any directed selling effort with respect to the Securities, and to comply with

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the offering restrictions requirement of Regulation S. Terms used in this paragraph
have the meanings given to them by Regulation S.

     (m) From and after the Closing Date, for so long as any of the Securities remain
outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the
Act and during any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), to make available upon
request the information required by Rule 144A(d)(4) under the Act to (i) any holder or
beneficial owner of Securities in connection with any sale of such Securities and (ii) any
prospective purchaser of such Securities from any such holder or beneficial owner designated
by the holder or beneficial owner. The Company will pay the expenses of preparing, printing
and distributing such documents.

     (n) To comply with their obligations under the Registration Rights Agreement.

     (o) To cooperate with and assist the Initial Purchasers to obtain approval of the
Securities to be eligible for clearance and settlement through DTC.

     (p) Prior to the Closing Date, to furnish without charge to the Initial Purchasers, (i)
as soon as they have been prepared by the Company, a copy of any regularly prepared internal
financial statements of the Company and the Subsidiaries for any period subsequent to the
period covered by the financial statements appearing in the Pricing Disclosure Package, (ii)
all other reports and other communications (financial or otherwise) that the Company mails
or otherwise makes available to its security holders and (iii) such other information as the
Initial Purchasers shall reasonably request.

     (q) Without the prior consent of the Representatives, not to make, and not to permit
any of its affiliates or anyone acting on its or its affiliates behalf to make, any offer
relating to the Securities that, if the offering of the Securities contemplated by this
Agreement were conducted as a public offering pursuant to a registration statement filed
under the Act with the Commission, would constitute an “issuer free writing prospectus,” as
defined in Rule 433 under the Act (any such offer is hereinafter referred to as a “Company
Supplemental Disclosure Document”).

     (r) During the period of two years after the Closing Date or, if earlier, until such
time as the Securities are no longer restricted securities (as defined in Rule 144 under the
Act), not to be or become a closed-end investment company required to be registered, but not
registered, under the Investment Company Act of 1940.

     (s) In connection with the offering, until the Initial Purchasers shall have notified
the Company of the completion of the distribution of the Securities, not to, and not to
permit any of its affiliates (as such term is defined in Rule 501(b) of Regulation D under
the Act) to, either alone or with one or more other persons, bid for or purchase for any
account in which it or any of its affiliates has a beneficial interest, for the purpose of
creating actual or apparent active trading in, or of raising the price of, the Securities.

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     (t) During the period from the date hereof through and including the date that is 30
days after the date hereof, without the prior written consent of the Representatives, offer,
sell, contract to sell or otherwise dispose of any debt securities issued or guaranteed by
the Company or any Subsidiary and having a tenor of more than one year.

          5. Representations and Warranties.

          (a) The Issuers represent and warrant to the Initial Purchasers that, as of the date hereof
and as of the Closing Date (references in this Section 5 to the “Offering Circular” are to (x) the
Pricing Disclosure Package in the case of representations and warranties made as of the date hereof
and (y) the Final Offering Circular in the case of representations and warranties made as of the
Closing Date):

          (i) Neither the Pricing Disclosure Package, as of the Applicable Time, nor the Final
Offering Circular, as of its date or (as amended or supplemented in accordance with Section
4(b), if applicable) as of the Closing Date, contains or represents any untrue statement of
a material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading and each Company Supplemental Disclosure Document listed on Schedule IV
hereto does not conflict with the information contained in the Pricing Disclosure Package or
the Final Offering Circular and each such Company Supplemental Disclosure Document, as
supplemented by and taken together with the Pricing Disclosure Package as of the Applicable
Time, did not include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Issuers make no
representation or warranty with respect to information relating to the Initial Purchasers
contained in or omitted from the Pricing Disclosure Package, the Final Offering Circular or
any amendment or supplement thereto in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of any Initial Purchaser through the
Representatives expressly for inclusion in the Pricing Disclosure Package, the Final
Offering Circular or amendment or supplement thereto, as the case may be. No order
preventing the use of the Preliminary Offering Circular, the Pricing Supplement or the Final
Offering Circular, or any amendment or supplement thereto, or any order asserting that any
of the transactions contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued or, to the knowledge of the Issuers, has been
threatened.

          (ii) There are no securities of the Issuers that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted in a United
States automated interdealer quotation system of the same class within the meaning of Rule
144A as the Securities.

          (iii) The capitalization of the Company as of the Closing Date will be as set forth in
the “As Adjusted” column under the heading “Capitalization” in the Offering Circular, other
than changes since March 31, 2009 in (A) cash and cash equivalents in the ordinary course of
business, (B) other debt and obligations under capital leases in the ordinary course of
business, and (C) items of stockholders’ equity for

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shares issued upon the exercise of options (including treasury stock) and shares
repurchased by the Company, and for retained earnings. All of the issued and outstanding
equity interests of the Company have been duly authorized and validly issued, are fully paid
and nonassessable and were not issued in violation of any preemptive or similar right.
Attached as Schedule II is a true and complete list of each entity in which the
Company has a direct or indirect majority equity or voting interest (each, a “Subsidiary”
and, together, the “Subsidiaries”), their jurisdictions of organization, name of its
equityholder(s) and percentage of outstanding equity owned of record by each equityholder.
All of the issued and outstanding equity interests of each Subsidiary have been duly and
validly authorized and issued, are fully paid (to the extent required under the applicable
limited liability company agreement or limited partnership agreement of the Subsidiary, as
applicable) and nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware Limited Liability Company Act (the “Delaware LLC Act”), in the case
of limited liability company interests in a Delaware limited liability company, and Section
17-607 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware LP Act”), in
the case of any partnership interests in a Delaware limited partnership, and Section 17-403
of the Delaware LP Act with respect to general partner interests in a Delaware limited
partnership), and, except for directors’ qualifying shares and as set forth in the Offering
Circular, are owned, directly or indirectly through Subsidiaries, by the Company free and
clear of all liens (other than transfer restrictions imposed by the Act, the securities or
Blue Sky laws of certain jurisdictions and security interests granted pursuant to the Fourth
Amended and Restated Credit Agreement, dated as of October 3, 2003, and amended and restated
as of February 6, 2007, as amended by Amendment and Consent No. 1, dated as of May 4, 2009
(the “Credit Agreement”)). Except as set forth in the Offering Circular, there are no
outstanding options, warrants or other rights to acquire or purchase, or instruments
convertible into or exchangeable for, any equity interests of the Company or any of the
Subsidiaries. No holder of any securities of the Company or any of the Subsidiaries is
entitled to have such securities (other than the Securities) registered under any
registration statement contemplated by the Registration Rights Agreement.

          (iv) Each of the Company and each Subsidiary (A) is a corporation, limited liability
company, partnership or other entity duly organized and validly existing under the laws of
the jurisdiction of its organization; (B) has all requisite corporate or other power and
authority necessary to own its property and carry on its business as now being conducted and
(C) is qualified to do business and is in good standing in all jurisdictions in which the
nature of the business conducted by it or its ownership of property makes such qualification
necessary, except where the failure to be so qualified and be in good standing, individually
or in the aggregate, would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. A “Material Adverse Effect” means (x) a material
adverse effect on, or any development involving a prospective material adverse change in,
the business, condition (financial or other), results of operations, performance or
properties of the Company and the Subsidiaries, taken as a whole or (y) an adverse effect on
the ability to consummate the transactions contemplated hereby on a timely basis.

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          (v) Each Issuer has all requisite corporate or other power and authority to execute,
deliver and perform all of its obligations under the Note Documents to which it is a party
and to consummate the transactions contemplated hereby, and, without limitation, the Company
has all requisite corporate power and authority to issue, sell and deliver and perform its
obligations under the Notes.

          (vi) This Agreement has been duly and validly authorized, executed and delivered by
each Issuer.

          (vii) The execution and delivery of, and the performance by each Issuer of their
respective obligations under the Indenture have been duly and validly authorized by each
Issuer and, when duly executed and delivered by the Issuers (assuming the due authorization,
execution and delivery thereof by the Trustee), will be a legally binding and valid
obligation of each such Issuer, enforceable against it in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity (regardless of whether considered at
equity or at law) and the discretion of the court before which any proceeding therefor may
be brought (the “Enforceability Exceptions”). The Indenture, when executed and delivered,
will conform in all material respects to the description thereof in the Offering Circular.

          (viii) The Original Notes have been duly and validly authorized for issuance and sale
to the Initial Purchasers by the Company, and when issued, authenticated by the Trustee in
accordance with the provisions of the Indenture, and delivered by the Company against
payment therefor by the Initial Purchasers in accordance with the terms of this Agreement
and the Indenture, the Original Notes will be legally binding and valid obligations of the
Company, entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by the
Enforceability Exceptions. The Original Notes, when issued, authenticated by the Trustee in
accordance with the provisions of the Indenture and delivered, will conform in all material
respects to the description thereof in the Offering Circular.

          (ix) The Exchange Notes have been, or on or before the Closing Date will be, duly and
validly authorized for issuance by the Company, and when issued, authenticated and delivered
by the Company in accordance with the terms of the Registration Rights Agreement, the
Exchange Offer and the Indenture, the Exchange Notes will be legally binding and valid
obligations of the Company, entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except as the enforcement thereof may be
limited by the Enforceability Exceptions.

          (x) The Guarantees have been duly and validly authorized by each of the Guarantors and
when the Original Notes are issued, authenticated by the Trustee in accordance with the
provisions of the Indenture, and delivered by the Company against payment by the Initial
Purchasers in accordance with the terms of this Agreement and the

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Indenture, will be legally binding and valid obligations of the Guarantors, enforceable
against each of them in accordance with their terms, except that enforceability thereof may
be limited by the Enforceability Exceptions. The guarantees of the Exchange Notes have been
duly and validly authorized by each of the Guarantors and, when the Exchange Notes are
issued, authenticated by the Trustee in accordance with the provisions of the Indenture, and
delivered in accordance with the terms of the Registration Rights Agreement, the Exchange
Offer and the Indenture, will be legally binding and valid obligations of the Guarantors,
enforceable against each of them in accordance with their terms, except that enforceability
thereof may be limited by the Enforceability Exceptions.

          (xi) The Registration Rights Agreement has been duly and validly authorized by each
Issuer and, when duly executed and delivered by the Issuers (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers), will constitute a valid and
legally binding obligation of each such Issuer, enforceable against it in accordance with
its terms, except that (A) the enforcement thereof may be limited by the Enforceability
Exceptions and (B) any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations. The Registration Rights
Agreement, when executed and delivered, will conform in all material respects to the
description thereof in the Offering Circular.

          (xii) The Security Documents have each been duly and validly authorized by each of the
Grantors party thereto and, when executed and delivered by each such Grantor, will be
legally binding and valid obligations of such Grantor, enforceable against such Grantor in
accordance with their respective terms, except as the enforcement thereof may be limited by
the Enforceability Exceptions.

          (xiii) Neither the Company nor any Subsidiary is (A) in violation of its charter,
bylaws or other constitutive documents, (B) in default (or, with notice or lapse of time or
both, would be in default) in the performance or observance of any obligation, agreement,
covenant or condition contained in any bond, debenture, note, indenture, mortgage, deed of
trust, loan or credit agreement, lease, license, franchise agreement, authorization, permit,
certificate or other agreement or instrument to which the Company or any Subsidiary is a
party or by which any of them is bound or to which any of their assets or properties is
subject (collectively, “Agreements and Instruments”), or (C) in violation of any law,
statute (including, without limitation, any rule or regulation) or any judgment, order or
decree of any domestic or foreign court or other governmental or regulatory authority,
agency or other body with jurisdiction over any of them or any of their assets or properties
(“Governmental Authority”), except, in the case of clauses (B) and (C), for such defaults or
violations as could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

          (xiv) The execution, delivery and performance of the Note Documents, the grant and
perfection of the Liens on the Collateral pursuant to the provisions of the Security
Documents and the issuance and sale of the Securities does not and will not (A) violate the
charter, bylaws or other constitutive documents of the Company or any Subsidiary, (B)
conflict with or constitute a breach of or a default under (or an event that with notice or
the lapse of time, or both, would constitute a default), or require consent

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under, or result in a Repayment Event (as defined below), other than a Repayment Event
that will be satisfied at the Closing Date as contemplated by the Offering Circular, or the
creation or imposition of a lien, charge or encumbrance on any property or assets of the
Company or any Subsidiary under any of the Agreements and Instruments or (C) violate any
law, statute, rule or regulation, including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System, or any judgment, order or decree of any
Governmental Authority, except for such conflicts, violations, breaches or defaults in the
cases of clauses (B) and (C) that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Assuming the accuracy of the representations
and warranties of the Initial Purchasers in Section 5(b) of this Agreement, no consent,
approval, authorization or order of, or filing, registration, qualification, license or
permit of or with, any Governmental Authority is required to be obtained or made by the
Company or any Subsidiary for the execution, delivery and performance by the Company or any
Subsidiary of the Note Documents, the grant and perfection of the Liens on the Collateral
pursuant to the provisions of the Security Documents, the issuance and sale of the
Securities and the consummation of the transactions contemplated hereby and by the Note
Documents, except (1) such as have been or will be obtained or made on or prior to the
Closing Date, (2) registration of the Exchange Offer or resale of the Notes under the Act
pursuant to the Registration Rights Agreement, and qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), in connection with the
issuance of the Exchange Notes, (3) the filings required to perfect Liens granted pursuant
to the Security Documents and (4) such filings as may be required to terminate Liens
securing existing indebtedness to be paid off with the proceeds of the Offering. No
consents or waivers from any other person or entity are required for the execution, delivery
and performance of the Note Documents, the grant and perfection of the Liens on the
Collateral pursuant to the provisions of the Security Documents and the issuance and sale of
the Securities, other than such consents and waivers as have been obtained or will be
obtained prior to the Closing Date and will be in full force and effect. As used herein, a
“Repayment Event” means any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder’s behalf) the right
to require the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any Subsidiary.

          (xv) When executed and delivered to the Trustee at the Closing, the Security Documents
will grant and create, in favor of the Trustee for the benefit of the holders of the Notes
as security for all of the Obligations (as such term is defined in the Security Agreement),
a valid and enforceable Lien in the Collateral, and when the filings, the act of taking
possession or the other acts (as the case may be) referred to in the following sentences are
made or taken, such Liens will be perfected first priority Liens (subject only to Permitted
Collateral Liens). The Company will also deliver at the Closing, UCC-1 financing statements
for each of the Grantors, together with all schedules and exhibits to such financing
statements, in appropriate form for filing with the Secretary of State (or other authorized
officer) of the jurisdiction of formation or organization for such Grantor (“UCC Financing
Statements”), covering the Collateral described therein as being covered thereby. The
Company shall file each such UCC

11

 

     Financing Statement in the appropriate governmental office referred to in the preceding
sentence.

               (xvi) The public accountants whose report is included in the Offering Circular are
independent within the meaning of the Act. The historical financial statements (including
the notes thereto) included in the Offering Circular present fairly in all material respects
the consolidated financial position, results of operations, cash flows and changes in
stockholder’s equity of the Company at the respective dates and for the respective periods
indicated. All such financial statements have been prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”) applied on a consistent basis
throughout the periods presented (except as disclosed therein) and in compliance with
Regulation S-X (“Regulation S-X”) under the Exchange Act. The information set forth under
the captions “Offering Circular Summary — Summary Historical Consolidated Financial
Information” and “Selected Historical Financial Data” included in the Offering Circular have
been prepared on a basis consistent with that of the audited financial statements of the
Company. The ratio of earnings to fixed charges has been calculated in compliance with Item
503(d) of Regulation S-K. The other financial information, including but not limited to the
financial information under the heading “Offering Circular Summary — Recent Developments”
and non-GAAP financial measures, if any, included in the Offering Circular have been
prepared in good faith and on a reasonable basis consistent with that of the unaudited
financial statements of the Company. Since the date as of which information is given in the
Offering Circular, except as set forth as contemplated in the Offering Circular, (A) neither
the Company nor any Subsidiary has (1) incurred any liabilities or obligations, direct or
contingent, that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, or (2) entered into any material transaction not in the ordinary
course of business, (B) there has not been any event or development in respect of the
business or condition (financial or other) of the Company or any Subsidiary that, either
individually or in the aggregate, would reasonably be expected to have a Material Adverse
Effect, (C) there has been no dividend or distribution of any kind declared, paid or made by
the Company on any of its equity interests and (D) there has not been any change in the
long-term debt of the Company or any Subsidiary other than changes due to ordinary course of
business capital leases.

               (xvii) The statistical and market-related data and forward-looking statements included
in the Offering Circular are based on or derived from sources that the Issuers believe to be
reliable and accurate in all material respects and represent their good faith estimates that
are made on the basis of data derived from such sources. The Company has obtained the
written consent to the use of such data from such sources to the extent required.

               (xviii) As of the date hereof and as of the Closing Date, immediately prior to and
immediately following the issuance and sale of the Securities, each Issuer is and will be
Solvent. As used herein, “Solvent” shall mean, for any person on a particular date, that on
such date (A) the fair value of the property of such person is greater than the total amount
of liabilities, including, without limitation, contingent liabilities, of such person, (B)
the present fair salable value of the assets of such person is not less than the

12

 

amount that will be required to pay the probable liability of such person on its debts
as they become absolute and matured, (C) such person does not intend to, and does not
believe that it will, incur debts and liabilities beyond such person’s ability to pay as
such debts and liabilities mature, (D) such person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for which such
person’s property would constitute an unreasonably small capital and (E) such person is able
to pay its debts as they become due and payable.

               (xix) Except as set forth in the Offering Circular, there is (A) no action, suit or
proceeding before or by any Governmental Authority or arbitrator, now pending or, to the
knowledge of the Issuers, threatened or contemplated, to which the Company or any Subsidiary
is or may be a party or to which the business, assets or property of the Company or any
Subsidiary is or may be subject and (B) no judgment, decree or order of any Governmental
Authority that, in either of clause (A) or (B), could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.

               (xx) Except as could not reasonably be expected to have a Material Adverse Effect, no
labor disturbance by the employees of the Company or any Subsidiary exists or, to the
knowledge of the Issuers, is imminent.

               (xxi) Except as described in the Offering Circular and except for such matters as would
not individually or in the aggregate have a Material Adverse Effect (A) none of the Company
or any of its Subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum
products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to
the manufacture, processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Company and
its Subsidiaries have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their requirements, (C) there
are no pending or, to the knowledge of the Company, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law against the
Company, or any of its Subsidiaries, and (D) to the knowledge of the Company, there are no
events or circumstances that would reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its Subsidiaries
relating to Hazardous Materials or any Environmental Laws.

               (xxii) The Company and its Subsidiaries possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to

13

 

conduct the business now operated by them and have not received any notice of
proceedings relating to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.

               (xxiii) The Company and the Subsidiaries have good and indefeasible title in fee simple
to all items of owned real property, and good and marketable title to all personal property
owned by each of them in each case free and clear of any pledge, lien, encumbrance, security
interest or other defect or claim of any third party, except (A) such as would not
reasonably be expected a Material Adverse Effect, (B) liens described in the Offering
Circular and (C) liens permitted by the Indenture. Any real property, personal property and
buildings held under lease by the Company or any such Subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

               (xxiv) Each of the Company and the Subsidiaries has insurance covering its properties,
operations, personnel and business, including protection and indemnity insurance, which
insurance is in amounts and insures against such losses and risks as are generally deemed
adequate to protect each of the Company and the Subsidiaries and its business consistent
with industry practice. All policies of insurance insuring the Company and its Subsidiaries
or their businesses, assets, employees, officers and directors are in full force and effect.
Each of the Company and the Subsidiaries is in compliance with the terms of such policies
and instruments in all material respects. Neither the Company nor any Subsidiary has been
refused any insurance coverage sought or applied for, and the Company has no reason to
believe that it or any of its Subsidiaries will not be able to renew existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

               (xxv) All tax returns required to be filed by the Company or any Subsidiary have been
filed (or extensions have been obtained) in all jurisdictions where such returns are
required to be filed; and all taxes, including withholding taxes, value added and franchise
taxes, penalties and interest, assessments, fees and other charges due or claimed to be due
from such entities or that are due and payable have been paid, other than those being
contested in good faith and for which reserves have been provided in accordance with GAAP or
those currently payable without penalty or interest and except where the failure to make
such required filings or payments could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

               (xxvi) Neither the Company nor any Subsidiary is, or after giving effect to the
transactions contemplated hereby will be, required to be registered as an “investment
company” or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

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               (xxvii) The Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (A) transactions are executed in
accordance with management’s general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of their financial statements in conformity with
GAAP and to maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; and (D) the recorded
accountability for their assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.

               (xxviii) The Company has established and maintains disclosure controls and procedures
(as such term is defined in Rule 13a-15(e) under the Exchange Act); such disclosure controls
and procedures are designed to ensure that material information relating to the Company and
the Subsidiaries is made known to the chief executive officer and chief financial officer of
the Company by others within the Company or any Subsidiary and such disclosure controls and
procedures are reasonably effective to perform the functions for which they were established
subject to the limitations of any such control system; the Company’s auditors and the audit
committee of the board of directors of the Company have been advised of: (A) any significant
deficiencies in the design or operation of internal controls which could adversely affect
the Company’s ability to record, process, summarize, and report financial data; and (B) any
fraud, whether or not material, that involves management or other employees who have a role
in the Company’s internal controls; and since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal controls, including
any corrective actions with regard to significant deficiencies and material weaknesses.

               (xxix) Neither the Company nor any of its affiliates (as defined in Rule 501(b) of
Regulation D under the Act) has, directly or through any person acting on its or their
behalf (other than any Initial Purchaser, as to which no representation is made), (A) taken,
directly or indirectly, any action designed to, or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of any security of any Issuer
to facilitate the sale or resale of the Securities, (B) sold, bid for, purchased or paid any
person any compensation for soliciting purchases of the Securities in a manner that would
require registration of the Securities under the Act or paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of any Issuer in a
manner that would require registration of the Securities under the Act, (C) sold, offered
for sale, contracted to sell, pledged, solicited offers to buy or otherwise disposed of or
negotiated in respect of any security (as defined in the Act) that is currently or will be
integrated with the sale of the Securities in a manner that would require the registration
of the Securities under the Act or (D) engaged in any directed selling effort (as defined by
Regulation S) with respect to the Securities, and each of them has complied with the
offering restrictions requirement of Regulations.

               (xxx) No form of general solicitation or general advertising (prohibited by the Act in
connection with offers or sales such as the Exempt Resales) was used by the Company or any
person acting on its behalf (other than any Initial Purchaser as to which no representation
is made) in connection with the offer and sale of any of the Securities

15

 

or in connection with Exempt Resales, including, but not limited to, articles, notices
or other communications published in any newspaper, magazine or similar medium or broadcast
over television or radio or the Internet, or any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising within the meaning of
Regulation D under the Act. The Company has not made, and has not permitted any of its
affiliates or anyone acting on its or its affiliates behalf to make, any Company
Supplemental Disclosure Document other than as set forth on Schedule IV hereto.
Neither the Company nor any of its affiliates has entered into, or will enter into, any
contractual arrangement with respect to the distribution of the Securities except for this
Agreement.

               (xxxi) Except as described in the section entitled “Plan of Distribution” in the
Offering Circular, there are no contracts, agreements or understandings between the Company
or any Subsidiary and any other person other than the Initial Purchasers pursuant to this
Agreement that would give rise to a valid claim against the Company, any Subsidiary or any
of the Initial Purchasers for a brokerage commission, finder’s fee or like payment in
connection with the issuance, purchase and sale of the Securities.

               (xxxii) The principal executive officer and principal financial officer of the Company
have made all certifications required by the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”). The Company is
otherwise in compliance in all material respects with all applicable provisions of the
Sarbanes-Oxley Act that are effective.

               (xxxiii) None of the Issuers nor, to the knowledge of the Issuers, any director,
officer, agent, employee or affiliate of the any of the Issuers is currently the subject of
any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities
of any person or entity that, at the time of such funding, is the subject of any sanctions
administered by OFAC.

               (xxxiv) None of the Issuers, nor, to the knowledge of the Issuers, any director,
officer, agent, employee or other person associated with or acting on behalf of any of the
Issuers, has (i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; or (ii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977.

          Each certificate signed by any officer of any Issuer and delivered to the Initial Purchasers
or counsel for the Initial Purchasers pursuant to, or in connection with, this Agreement shall be
deemed to be a representation and warranty by the Issuers to the Initial Purchasers as to the
matters covered by such certificate.

          The Company acknowledges that the Initial Purchasers and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Section 8 of this Agreement,

16

 

counsel to the Company and counsel to the Initial Purchasers will rely upon the accuracy and
truth of the foregoing representations and the Company hereby consents to such reliance.

          (b) Each Initial Purchaser represents to the Issuers that it is a QIB and acknowledges that it
is purchasing the Securities pursuant to a private sale exemption from registration under the Act,
and that the Securities have not been registered under the Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons except pursuant to
an exemption from the registration requirements of the Act. Each Initial Purchaser, severally and
not jointly, represents, warrants and covenants to the Issuers that:

               (i) Neither it, nor any person acting on its behalf, has or will solicit offers for, or
offer or sell, any Securities by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act, and it has and will solicit offers
for the Securities only from, and will offer and sell the Securities only to, (A) persons
whom such Initial Purchaser reasonably believes to be QIBs or, if any such person is buying
for one or more institutional accounts for which such person is acting as fiduciary or agent
only when such person has represented to such Initial Purchaser that each such account is a
QIB to whom notice has been given that such sale or delivery is being made in reliance on
Rule 144A, and, in each case, in accordance with and reliance on the exemption from the
registration requirements of the Act pursuant to Rule 144A, or (B) persons other than U.S.
persons outside the United States in reliance on, and in compliance with, the exemption from
the registration requirements of the Act provided by Regulation S.

               (ii) With respect to offers and sales outside the United States, such Initial Purchaser
has offered the Securities and will offer and sell the Securities (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later of the commencement
of the offering of the Securities and the Closing Date, only in accordance with Rule 903 of
Regulation S or another exemption from the registration requirements of the Act.
Accordingly, neither such Initial Purchasers nor any person acting on their behalf has
engaged or will engage in any directed selling efforts (within the meaning of Regulation S)
with respect to the Securities, and any such persons have complied and will comply with the
offering restrictions requirements of Regulation S. Terms used in this Section 5(b)(ii)
have the meanings given to them by Regulation S.

Each Initial Purchaser severally agrees that, at or prior to confirmation of a sale of
Securities pursuant to Regulation S it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases Securities from it
or through it during the restricted period a confirmation or notice to substantially the
following effect:

     “The Securities covered hereby have not been registered under
the United States Securities Act of 1933, as amended (the
“Securities Act”), and may not be offered or sold within the United
States or to or for the account or benefit of, U.S. persons (i) as
part of their distribution at any time and (ii) otherwise until

17

 

forty days after the later of the date upon which the offering of the
Securities commenced and the date of closing, except in either case
in accordance with Regulation S or Rule 144A under the Securities
Act. Terms used above have the meaning given to them by Regulation
S.”

          The Initial Purchasers understand that the Issuers and, for purposes of the opinions to be
delivered to them pursuant to Section 8 hereof, counsel to the Issuers and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing representations, and each Initial
Purchaser hereby consents to such reliance.

          6. Indemnification.

          (a) The Issuers, jointly and severally, agree to indemnify and hold harmless the Initial
Purchasers, each person, if any, who controls any Initial Purchaser within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, the agents, employees, officers and directors
of any Initial Purchaser and the agents, employees, officers and directors of any such controlling
person from and against any and all losses, liabilities, claims, damages and expenses whatsoever
(including, but not limited to, reasonable attorneys’ fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all reasonable amounts paid in settlement of any
claim or litigation) (collectively, “Losses”) to which they or any of them may become subject under
the Act, the Exchange Act or otherwise insofar as such Losses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a material fact
contained in the Pricing Disclosure Package or the Final Offering Circular, or in any amendment or
supplement thereto, or any Company Supplemental Disclosure Document, or arise out of or are based
upon the omission or alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that none of the Issuers will be liable in any such case to the extent, but only to the
extent, that any such Loss arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission relating to an Initial Purchaser made therein in
reliance upon and in conformity with written information furnished to the Company by or on behalf
of such Initial Purchaser through the Representatives expressly for use therein. This indemnity
agreement will be in addition to any liability that the Issuers may otherwise have, including, but
not limited to, liability under this Agreement.

          (b) Each Initial Purchaser, severally and not jointly, agrees to indemnify and hold harmless
the Issuers, and each person, if any, who controls any of the Issuers within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, the agents, employees, officers and directors
of any of the Issuers and the agents, employees, officers and directors of any such controlling
person from and against any and all Losses to which they or any of them may become subject under
the Act, the Exchange Act or otherwise insofar as such Losses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a material fact
contained in the Pricing Disclosure Package or the Final Offering Circular, or in any amendment or
supplement thereto, or any Company Supplemental Disclosure Document, or arise out of or are based
upon the omission or alleged omission to state therein a

18

 

material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only to the extent,
that any such Loss arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission relating to such Initial Purchaser made therein in reliance upon
and in conformity with information furnished in writing to the Company by or on behalf of such
Initial Purchaser through the Representatives expressly for use therein.

          (c) Promptly after receipt by an indemnified party under Section 6(a) or 6(b) above of notice
of the commencement of any action, suit or proceeding (collectively, an “action”), such indemnified
party shall, if a claim in respect thereof is to be made against the indemnifying party under such
section, notify each party against whom indemnification is to be sought in writing of the
commencement of such action (but the failure so to notify an indemnifying party shall not relieve
such indemnifying party from any liability that it may have under this Section 6 except to the
extent that it has been prejudiced in any material respect by such failure). In case any such
action is brought against any indemnified party, and it notifies an indemnifying party of the
commencement of such action, the indemnifying party will be entitled to participate in such action,
and to the extent it may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense of such action
with counsel satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own counsel in any such
action, but the reasonable fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall have been authorized
in writing by the indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii) the named parties to
such action (including any impleaded parties) include such indemnified party and the indemnifying
parties (or such indemnifying parties have assumed the defense of such action), and such
indemnified party or parties shall have reasonably concluded that there may be defenses available
to it or them that are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of which events such
reasonable fees and expenses of counsel shall be borne by the indemnifying parties. In no event
shall the indemnifying parties be liable for the fees and expenses of more than one counsel
(together with appropriate local counsel) at any time for all indemnified parties in connection
with any one action or separate but substantially similar or related actions arising in the same
jurisdiction out of the same general allegations or circumstances. An indemnifying party shall not
be liable for any settlement of any claim or action effected without its written consent, which
consent may not be unreasonably withheld. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by paragraph (a) or (b) of this Section 6, then
the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (A) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (B) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the date of such
settlement and (C) such indemnified party shall have given the indemnifying party at least 45 days’
prior notice of its intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party,

19

 

effect any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement (x) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such proceeding and
(y) does not include a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

          7. Contribution. In order to provide for contribution in circumstances in which the
indemnification provided for in Section 6 of this Agreement is for any reason held to be
unavailable from the indemnifying party, or is insufficient to hold harmless a party indemnified
under Section 6 of this Agreement, each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such aggregate Losses (a) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers, on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Securities or (b) if such
allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the Issuers, on the one
hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions
that resulted in such Losses, as well as any other relevant equitable considerations. The relative
benefits received by the Issuers, on the one hand, and the Initial Purchasers, on the other hand,
shall be deemed to be in the same proportion as (x) the total proceeds from the offering of
Securities (net of discounts and commissions but before deducting expenses) received by the Issuers
are to (y) the total discount and commissions received by the Initial Purchasers. The relative
fault of the Issuers, on the one hand, and the Initial Purchasers, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information
supplied by an Issuer or the Initial Purchasers and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission or alleged
statement or omission.

          The Issuers and the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable considerations referred to
above. Notwithstanding the provisions of this Section 7, (i) in no case shall any Initial
Purchaser be required to contribute any amount in excess of the amount by which the total discount
and commissions applicable to the Securities purchased by such Initial Purchaser pursuant to this
Agreement exceeds the amount of any damages that such Initial Purchaser has otherwise been required
to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as the Initial Purchasers, and each person, if any, who
controls an Issuer within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and each director, officer, employee and agent of an Issuer shall have the same rights to
contribution as the Issuers. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 7,

20

 

notify such party or parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 or otherwise, except to the extent that it
has been prejudiced in any material respect by such failure; provided, however, that no additional
notice shall be required with respect to any action for which notice has been given under Section 6
for purposes of indemnification. Anything in this section to the contrary notwithstanding, no
party shall be liable for contribution with respect to any action or claim settled without its
written consent; provided, however, that such written consent was not unreasonably withheld.

          8. Conditions of Initial Purchasers’ Obligations. The obligations of the Initial
Purchasers to purchase and pay for the Securities, as provided for in this Agreement, shall be
subject to satisfaction of the following conditions prior to or concurrently with such purchase:

     (a) All of the representations and warranties of the Issuers contained in this
Agreement shall be true and correct on the date of this Agreement and on the Closing Date.
The Issuers shall have performed or complied with all of the agreements and covenants
contained in this Agreement and required to be performed or complied with by them at or
prior to the Closing Date. The Initial Purchasers shall have received a certificate, dated
the Closing Date, signed by the chief executive officer and chief financial officer of the
Company, certifying as to the foregoing and to the effect in Section 8(c).

     (b) The Final Offering Circular shall have been printed and copies distributed to the
Initial Purchasers as required by Section 4(a). No stop order suspending the qualification
or exemption from qualification of the Securities in any jurisdiction shall have been issued
and no proceeding for that purpose shall have been commenced or shall be pending or
threatened.

     (c) Since the Applicable Time, there shall not have been any decrease in the rating of
any debt or preferred stock of the Company or any Subsidiary by any “nationally recognized
statistical rating organization” (as defined for purposes of Rule 436(g) under the Act), or
any notice given of any intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the possible change.

     (d) The Initial Purchasers shall have received on the Closing Date opinions dated the
Closing Date, addressed to the Initial Purchasers, of (i) Andrews Kurth LLP, counsel to the
Company, substantially to the effect set forth in Exhibit B attached hereto,
including with respect to Guarantors organized under the laws of the states of Delaware and
Texas; (ii) counsel to the Guarantors organized under the laws of the State of Oklahoma
substantially in the form of Exhibit C, (iii) counsel to the Guarantor organized
under the laws of the State of Kansas substantially in the form of Exhibit D, (iv)
counsel to the Guarantor organized under the laws of the State of New Mexico substantially
in the form of Exhibit E, and (v) special Federal Aviation Administration
counsel in the State of Oklahoma that will render an opinion as to the enforceability of the
Security Agreement in relation to the Aircraft (as defined in the Security Agreement) and
the

21

 

perfection of the Lien on the Security Agreement on such Aircraft, in each case, in
form and substance satisfactory to the Representatives and counsel to the Initial
Purchasers.

     (e) The Initial Purchasers shall have received on the Closing Date an opinion dated the
Closing Date of Vinson & Elkins L.L.P., counsel to the Initial Purchasers, in form and
substance satisfactory to the Representative. Such counsel shall have been furnished with
such certificates and documents as they may reasonably request to enable them to review or
pass upon the matters referred to in this Section 8 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the representations,
warranties or conditions contained in this Agreement.

     (f) On the date hereof, the Initial Purchasers shall have received a “comfort letter”
from KPMG LLP, the independent public accountants for the Company, dated the date of this
Agreement, addressed to the Initial Purchasers and in form and substance satisfactory to the
Representatives and counsel to the Initial Purchasers, covering the financial and accounting
information in the Preliminary Offering Circular and the Pricing Supplement. In addition,
the Initial Purchasers shall have received a “bring-down comfort letter” from the
independent public accountants for the Company, dated as of the Closing Date, addressed to
the Initial Purchasers and in the form of the “comfort letter” delivered on the date hereof,
except that (i) it shall cover the financial and accounting information in the Final
Offering Circular and any amendment or supplement thereto and (ii) procedures shall be
brought down to a date no more than 5 days prior to the Closing Date, and otherwise in form
and substance satisfactory to the Representatives and counsel to the Initial Purchasers.

     (g) The Issuers and the Trustee shall have executed and delivered the Indenture and the
Initial Purchasers shall have received copies thereof. The Issuers shall have executed and
delivered the Registration Rights Agreement and the Initial Purchasers shall have received
executed counterparts thereof. The Grantors and the Trustee shall have executed and
delivered the Security Agreement and any other Security Documents to which they are intended
to be a party, and the Initial Purchasers shall have received copies thereof.

     (h) The Initial Purchasers shall have been furnished with wiring instructions for the
application of the proceeds of the Securities in accordance with this Agreement and such
other information as they may reasonably request.

     (i) The Securities shall be eligible for trading in Portal upon issuance. All
agreements set forth in the blanket representation letter of the Company to DTC relating to
eligibility of the Securities for clearance and settlement through DTC shall have been
complied with.

     (j) The Trustee shall have received (with a copy for the Initial Purchasers):

     (i) appropriately completed copies, which have been duly authorized for filing
by the appropriate entity, of UCC Financing Statements naming the Company and each
other Grantor as a debtor and the Trustee as the secured party,

22

 

or other similar instruments or documents to be filed under the Uniform
Commercial Code in all jurisdictions as may be necessary or, in the reasonable
opinion of any of the Trustee, or the Initial Purchasers and their respective
counsel, desirable to perfect the Liens of the Trustee pursuant to the Security
Documents;

     (ii) termination statements (or copies of authorizations to file termination
statements) with respect to filings under the Uniform Commercial Code necessary to
release all Liens (other than Permitted Collateral Liens) of any person in any
Collateral described in the Security Documents previously granted by any person and
authorization to file terminations of UCC-1 filings evidencing such Liens;

     (iii) certified copies of Uniform Commercial Code Requests for Information or
Copies (Form UCC-11), or a similar search report certified by a party acceptable to
the Trustee, dated a date reasonably near to the Time of Delivery, listing all
effective Financing Statements which name any of the Grantors (under its present
name and any previous names used in the preceding five years) as the debtor,
together with copies of such Financing Statements (none of which shall cover any
collateral described in the Security Documents, other than such Financing Statements
that evidence Permitted Collateral Liens);

     (iv) such releases, reconveyances, satisfactions or other instruments as it may
request to confirm the release, satisfaction and discharge in full of all mortgages,
deeds of trust, security agreements, and other documents creating or evidencing
Liens (other than Permitted Collateral Liens) at any time delivered by any of the
Grantors to secure any of the Grantors’ existing indebtedness that is secured by
assets constituting Collateral, duly executed, delivered and acknowledged in
recordable form by the grantee named therein or its of record successors or assigns;

     (v) documents from each of the lenders under any of the Grantors’ existing
indebtedness that is secured by assets constituting Collateral (other than such
indebtedness secured by Permitted Collateral Liens) indicating the total amount of
indebtedness payable to such lender and providing that such lender shall, upon
payment to such lender of the full amount of the indebtedness payable to it,
immediately release all Liens held by it and provide all related documentation
necessary to evidence such release in form and substance satisfactory to the Trustee
and its counsel;

     (vi) all certificates or instruments (if any) representing or evidencing the
Collateral in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Trustee;

23

 

     (vii) certificates of the Grantors’ insurance brokers in form and substance
reasonably satisfactory to the Initial Purchasers confirming that all insurance
requirements of the Security Documents are satisfied; and

     (viii) such other documents, approvals, affidavits, opinions or certificates as
the Trustee or the Initial Purchasers may reasonably request in form and substance
reasonably satisfactory to the Trustee or the Initial Purchaser, as the case may be.

     (k) All UCC Financing Statements and financing statement terminations, required
pursuant to clauses (i) and (ii) of paragraph (j) above (collectively, the “Financing
Statements”) shall have been delivered to CT Corporation System or another similar filing
service company acceptable to the Trustee (the “Filing Agent”). The Filing Agent shall have
acknowledged in a writing reasonably satisfactory to the Trustee and its counsel (i) the
Filing Agent’s receipt of all Financing Statements, (ii) that the Financing Statements have
either been submitted for filing in the appropriate filing offices or will be submitted for
filing in the appropriate offices within ten days following the Closing and (iii) that the
Filing Agent will notify the Trustee and its counsel of the results of such submissions
within 30 days following the Closing.

          If any of the conditions specified in this Section 8 shall not have been fulfilled when and as
required by this Agreement to be fulfilled (or waived by the Initial Purchasers), this Agreement
may be terminated by the Initial Purchasers on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to any other party.

          The documents required to be delivered by this Section 8 will be delivered at the office of
counsel for the Initial Purchasers on the Closing Date.

          9. Survival of Representations and Agreements. All representations and warranties,
covenants and agreements contained in this Agreement, including the agreements contained in
Sections 4(f) and 10(d), the indemnity agreements contained in Section 6 and the contribution
agreements contained in Section 7, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Initial Purchasers or any controlling person
thereof or by or on behalf of the Company or any controlling person thereof, and shall survive
delivery of and payment for the Original Notes to and by the Initial Purchasers. The agreements
contained in Sections 4(f), 6, 7, and 10(d) shall survive the termination of this Agreement,
including pursuant to Section 10.

          10. Effective Date of Agreement; Termination.

          (a) This Agreement shall become effective upon execution and delivery of a counterpart hereof
by each of the parties hereto.

          (b) The Initial Purchasers shall have the right to terminate this Agreement at any time prior
to the Closing Date by notice to the Company from the Initial Purchasers, without liability (other
than with respect to Sections 6 and 7) on the Initial Purchasers’ part to the Company or any
affiliate thereof if, on or prior to such date, (i) the Company shall have failed,

24

 

refused or been unable to perform any agreement on its part to be performed under this
Agreement when and as required; (ii) any other condition to the obligations of the Initial
Purchasers under this Agreement to be fulfilled by the Issuers pursuant to Section 8 is not
fulfilled when and as required in any material respect; (iii) trading in any securities of the
Company shall be suspended or limited by the Commission or the New York Stock Exchange, or trading
in securities generally on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market shall have been suspended or materially limited, or minimum prices shall have been
established thereon by the Commission, or by such exchange or other regulatory body or governmental
authority having jurisdiction; (iv) a general moratorium shall have been declared by either Federal
or New York or Texas State authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States shall have occurred; (v) there is an outbreak
or escalation of hostilities or national or international calamity in any case involving the United
States, on or after the date of this Agreement, or if there has been a declaration by the United
States of a national emergency or war or other national or international calamity or crisis
(economic, political, financial or otherwise) which affects the U.S. and international markets,
making it, in the Representatives’ judgment, impracticable to proceed with the offering or delivery
of the Securities on the terms and in the manner contemplated in the Pricing Disclosure Package; or
(vi) there shall have been such a material adverse change in general economic, political or
financial conditions or the effect (or potential effect if the financial markets in the United
States have not yet opened) of international conditions on the financial markets in the United
States shall be such as, in the Representatives’ judgment, to make it inadvisable or impracticable
to proceed with the offering or delivery of the Securities on the terms and in the manner
contemplated in the Pricing Disclosure Package.

          (c) Any notice of termination pursuant to this Section 10 shall be given at the address
specified in Section 11 below by telephone or facsimile, confirmed in writing by letter.

          (d) If this Agreement shall be terminated pursuant to Section 10(b), or if the sale of the
Securities provided for in this Agreement is not consummated because of any refusal, inability or
failure on the part of the Issuers to satisfy any condition to the obligations of the Initial
Purchasers set forth in this Agreement to be satisfied or because of any refusal, inability or
failure on the part of the Issuers to perform any agreement in this Agreement or comply with any
provision of this Agreement, the Issuers, jointly and severally, will reimburse the Initial
Purchasers for all of their reasonable out-of-pocket expenses (including, without limitation, the
fees and expenses of the Initial Purchasers’ counsel) incurred in connection with this Agreement
and the transactions contemplated hereby.

          (e) If any one or more Initial Purchasers shall fail to purchase and pay for any of the
Securities agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase
shall constitute a default in the performance of its or their obligations under this Agreement, the
remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective
proportions which the principal amount of Securities set forth opposite their names in Schedule
I hereto bears to the aggregate principal amount of Securities set forth opposite the names of
all the remaining Initial Purchasers) the Securities which the defaulting Initial Purchaser or
Initial Purchasers agreed but failed to purchase; provided, however, that in the event that the
aggregate principal amount of Securities which the defaulting Initial Purchaser

25

 

or Initial Purchasers agreed but failed to purchase shall exceed 10% of the aggregate
principal amount of Securities set forth in Schedule I hereto, the remaining Initial
Purchasers shall have the right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Initial Purchasers do not purchase all the
Securities, this Agreement will terminate without liability to any nondefaulting Initial Purchaser
or the Company. In the event of a default by any Initial Purchaser as set forth in this Section
10(e), the Closing Date shall be postponed for such period, not exceeding seven Business Days, as
the Representatives shall determine in order that the required changes in the Final Offering
Circular or in any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Initial Purchaser of its liability, if any, to the Company
or any nondefaulting Initial Purchaser for damages occasioned by its default hereunder.

          11. Notice. All communications with respect to or under this Agreement, except as may
be otherwise specifically provided in this Agreement, shall be in writing and, if sent to the
Initial Purchasers, shall be mailed, delivered or telecopied and confirmed in writing to c/o
Goldman, Sachs & Co., 85 Broad Street, 20th Floor, New York, NY 10004, Attention: Registration
Department, with a copy for information purposes only to Vinson & Elkins L.L.P., 1001 Fannin
Street, Suite 2500, Houston, TX 77002 (fax: 713-615-5620), Attention: Alan Beck, and if sent to the
Issuers, shall be mailed, delivered or telecopied and confirmed in writing to (A)Basic Energy
Services, Inc., 400 W. Illinois, Midland, TX 79701 (telephone: 432-620-5500, fax: 432-620-5501),
Attention: Kenneth V. Huseman and (B) Andrews Kurth LLP, 600 Travis, Suite 4200, Houston, TX 77002,
Attention: David C. Buck, Esq. (fax: 713-220-4285).

          All such notices and communications shall be deemed to have been duly given: when delivered by
hand, if personally delivered; five business days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged by telecopier machine, if telecopied; and one
business day after being timely delivered to a next-day air courier.

          12. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Initial Purchasers, the Issuers and the other indemnified parties referred to in
Sections 6 and 7, and their respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue
of this Agreement or any provision herein contained. The term “successors and assigns” shall not
include a purchaser, in its capacity as such, of Notes from the Initial Purchasers.

          13. Construction. This Agreement shall be construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed within the State of New
York.

          14. Submission to Jurisdiction; Waiver of Jury Trial. The Issuers hereby waive all
right to trial by jury in any proceeding (whether based upon contract, tort or otherwise) in any
way arising out of or relating to this Agreement. The Issuers agree that a final judgment in any
such proceeding brought in any such court shall be conclusive and binding upon the Issuers and may
be enforced in any other courts in the jurisdiction of which the Issuers are or may be subject, by
suit upon such judgment.

26

 

          15. Captions. The captions included in this Agreement are included solely for
convenience of reference and are not to be considered a part of this Agreement.

          16. Counterparts. This Agreement may be executed in various counterparts that
together shall constitute one and the same instrument.

          17. No Fiduciary Relationship. The Issuers hereby acknowledge that the Initial
Purchasers are acting solely as initial purchasers in connection with the purchase and sale of the
Securities. The Issuers further acknowledge that each of the Initial Purchasers is acting pursuant
to a contractual relationship created solely by this Agreement entered into on an arm’s length
basis and in no event do the parties intend that any Initial Purchaser act or be responsible as a
fiduciary to the Issuers, their management, stockholders, creditors or any other person in
connection with any activity that such Initial Purchaser may undertake or has undertaken in
furtherance of the purchase and sale of the Securities, either before or after the date hereof.
The Initial Purchasers hereby expressly disclaim any fiduciary or similar obligations to the
Issuers, either in connection with the transactions contemplated by this Agreement or any matters
leading up to such transactions, and the Issuers hereby confirm their understanding and agreement
to that effect. The Issuers and each Initial Purchaser agree that they are each responsible for
making their own independent judgments with respect to any such transactions, and that any opinions
or views expressed by any Initial Purchaser to the Issuers regarding such transactions, including
but not limited to any opinions or views with respect to the price or market for the Securities, do
not constitute advice or recommendations to the Issuers. The Issuers hereby waive and release, to
the fullest extent permitted by law, any claims that such Issuers may have against the Initial
Purchasers with respect to any breach or alleged breach of any fiduciary or similar duty to the
Issuers in connection with the transactions contemplated by this Agreement or any matters leading
up to such transactions.

[Signature Pages Follow]

27

 

          If the foregoing Purchase Agreement correctly sets forth the understanding among the Issuers
and the Initial Purchasers, please so indicate in the space provided below for the purpose,
whereupon this letter and your acceptance shall constitute a binding agreement among the Issuers
and the Initial Purchasers.

	 	 	 	 	 
	 	BASIC ENERGY SERVICES, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	BASIC ENERGY SERVICES GP, LLC

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	BASIC ENERGY SERVICES LP, LLC

 	 
	 	By:  	/s/ Jerry Tufly
 	 
	 	 	Name:  	Jerry Tufly 	 
	 	 	Title:  	Sole Manager 	 
	 
	 	BASIC ENERGY SERVICES L.P.

 	 
	 	By:  	BASIC ENERGY SERVICES GP, LLC
 	 
	 	 	its General Partner 	 
	 	 	 	 
	 	By:  	                   /s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	FIRST ENERGY SERVICES COMPANY

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 

Signature Page

 

 

	 	 	 	 	 
	 	BASIC ESA, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	BASIC MARINE SERVICES, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	CHAPARRAL SERVICE, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	HENNESSEY RENTAL TOOLS, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	OILWELL FRACTURING SERVICES, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 

Signature Page

 

 

	 	 	 	 	 
	 	WILDHORSE SERVICES, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	LEBUS OIL FIELD SERVICE CO.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	GLOBE WELL SERVICE, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	SCH DISPOSAL, L.L.C.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	JS ACQUISITION LLC

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	JETSTAR HOLDINGS, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 

Signature Page

 

 

	 	 	 	 	 
	 	ACID SERVICES LLC

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	JETSTAR ENERGY SERVICES, INC.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	SLEDGE DRILLING CORP.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	PERMIAN PLAZA, LLC

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	XTERRA FISHING & RENTAL TOOLS CO.

 	 
	 	By:  	/s/ Kenneth V. Huseman
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 

Signature Page

 

 

Confirmed and accepted as of the date first above written

Goldman, Sachs & Co.

Banc of America Securities LLC

UBS Securities LLC

Jefferies & Company, Inc.

Capital One Southcoast, Inc.

Comerica Securities, Inc.

Natixis Bleichroeder Inc.

	By:	 	 GOLDMAN, SACHS & CO.

BANC OF AMERICA SECURITIES LLC

UBS SECURITIES LLC

as Representatives of the several Initial Purchasers

	 	 	 	 	 
	 	 	 
	By:  	
/s/ Goldman, Sachs & Co.
 	 	 
	 	(Goldman, Sachs & Co.) 	 	 
	 	 	 	 
	 
	BANC OF AMERICA SECURITIES LLC

 	 	 
	By:  	/s/ Lex Maultsby
 	 	 
	 	Name:  	Lex Maultsby 	 	 
	 	Title:  	Managing Director 	 	 
	 
	UBS SECURITIES LLC

 	 	 
	By:  	/s/ Francisco Pinto-Leite
 	 	 
	 	Name:  	Francisco Pinto-Leite 	 	 
	 	Title:  	Executive Director 	 	 
	 
	 	 	 
	By:  	                     /s/ Michele R. Cousins
 	 	 
	 	Name:  	Michele R. Cousins 	 	 
	 	Title:  	Director

Leveraged Capital Markets 	 	 
	 

Signature Page

 

 

Schedule I

	 	 	 	 	 
	 	 	Principal Amount of	 
	Initial Purchaser	 	Notes to Be Purchased	 
	Goldman, Sachs & Co.
	 	$	113,445,000	 
	Banc of America Securities LLC
	 	 	34,312,500	 
	UBS Securities LLC
	 	 	34,312,500	 
	Jefferies & Company, Inc.
	 	 	17,167,500	 
	Capital One Southcoast, Inc.
	 	 	8,572,500	 
	Comerica Securities, Inc.
	 	 	8,572,500	 
	Natixis Bleichroeder Inc.
	 	 	8,572,500	 
	 
	 	 	 
	Total
	 	$	225,000,000	 

I-1

 

Schedule II

	 	 	 	 	 
	 	 	Jurisdiction of	 	 
	Subsidiary	 	Organization	 	Equity Holder and % Held by Each
	 
	 	 	 	 
	Basic Energy Services GP, LLC

	 	Delaware
	 	Basic Energy Services Inc. — 100%
	 
	 	 	 	 
	Basic Energy Services LP, LLC

	 	Delaware
	 	Basic Energy Services Inc. — 100%
	 
	 	 	 	 
	Basic Energy Services L.P.

	 	Delaware
	 	Basic Energy Services GP, LLC. -
0.01%
	 

	 	 	 	Basic Energy Services LP, LLC -
99.99%
	 
	 	 	 	 
	Basic ESA, Inc.

	 	Texas
	 	Basic Energy Services Inc.  — 100%
	 
	 	 	 	 
	Chaparral Service, Inc.

	 	New Mexico
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	Basic Marine Services, Inc.

	 	Delaware
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	First Energy Services Company

	 	Delaware
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	Hennessey Rental Tools, Inc.

	 	Oklahoma
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	Oilwell Fracturing Services, Inc.

	 	Oklahoma
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	Wildhorse Services, Inc.

	 	Oklahoma
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	LeBus Oil Field Service Co.

	 	Texas
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	Globe Well Service, Inc.

	 	Texas
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	SCH Disposal, L.L.C.

	 	Texas
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	JS Acquisition LLC

	 	Delaware
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	JetStar Holdings, Inc.

	 	Delaware
	 	JS Acquisition LLC — 100%
	 
	 	 	 	 
	Acid Services, LLC

	 	Kansas
	 	JS Acquisition LLC — 100%
	 
	 	 	 	 
	JetStar Energy Services, Inc.

	 	Texas
	 	JS Acquisition LLC — 100%
	 
	 	 	 	 
	Sledge Drilling Corp.

	 	Texas
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	Permian Plaza, LLC

	 	Texas
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	Xterra Fishing & Rental Tools Co.

	 	Texas
	 	Basic Energy Services L.P. — 100%

II-1

 

	 	 	 	 	 
	 	 	Jurisdiction of	 	 
	Subsidiary	 	Organization	 	Equity Holder and % Held by Each
	 
	Basic Energy Services 

International, LLC**

	 	Delaware
	 	Basic Energy Services L.P. — 100%
	 
	 	 	 	 
	ESA de Mexico S. de R.L. C.V.**

	 	Mexico
	 	Basic Energy Services
International, LLC — 99%
	 
	 	 	 	 
	 

	 	 	 	Basic ESA, Inc. — 1%

 

			
	*	 	Will not be a Guarantor as of the Closing Date.

II-2

 

Schedule III

Basic Energy Services, Inc.

Pricing Term Sheet

Pricing Term Sheet dated July 23, 2009 to the Preliminary Offering Circular dated July 22, 2009 of
Basic Energy Services, Inc. (the “Preliminary Offering Circular”). This Pricing Term Sheet is
qualified in its entirety by reference to the Preliminary Offering Circular. The information in
this Pricing Term Sheet supplements the Preliminary Offering Circular and supersedes the
information in the Preliminary Offering Circular to the extent it is inconsistent with the
information in the Preliminary Offering Circular. Terms used herein and not defined herein have the
meanings assigned in the Preliminary Offering Circular.

	 	 	 	 	 
	Issuer:

	 	Basic Energy Services, Inc.

	 
	 	 	 	 
	Title of Purchased Securities:

	 	11.625% Senior Secured Notes due 2014

	 
	 	 	 	 
	Issue Format:

	 	Rule 144A/ Regulation S

	 
	 	 	 	 
	Ratings (Moody’s/S&P):

	 	Ba3/BB-

	 
	 	 	 	 
	Trade Date:

	 	July 23, 2009

	 
	 	 	 	 
	Settlement:

	 	July 31, 2009; T+6

	 
	 	 	 	 
	Interest Payment Dates:

	 	Semi-annually in arrears on each
August 1 and February 1, commencing
February 1, 2010

	 
	 	 	 	 
	Principal Amount:

	 	$225,000,000	 
	 
	 	 	 	 
	Maturity:

	 	August 1, 2014

	 
	 	 	 	 
	Coupon:

	 	11.625%	 
	 
	 	 	 	 
	Net Proceeds (After Expenses):

	 	$208.4 million

	 
	 	 	 	 
	Benchmark Treasury:

	 	U.S. Treasury 4.25% due August 2014

	 
	 	 	 	 
	Spread to Benchmark Treasury:

	 	+1054 bps

	 
	 	 	 	 
	Yield to Maturity:

	 	13.125%	 
	 
	 	 	 	 
	Initial Price to Public:

	 	94.621% per Note

	 
	 	 	 	 
	Optional Redemption:

	 	Make-whole call at any time prior to
February 1, 2012 at the Applicable
Premium (as defined in the
Preliminary Offering Circular),
then:

	 	 	 	 	 
	On or after	 	Price	 
	February 1, 2012
	 	 	105.813%	
	February 1, 2013
	 	 	102.906%	
	February 1, 2014
	 	 	100.000%	

III-1

 

	 	 	 
	Optional Redemption (Equity Proceeds):

	 	At any time before February 1,
2012, the Issuer may redeem up
to 35% of the aggregate
principal amount of the notes
issued under the indenture
with the net cash proceeds of
one or more qualified equity
offerings at a redemption
price equal to 111.625% of the
principal amount of the notes
to be redeemed, plus accrued
and unpaid interest to the
date of redemption; provided
that, at least 65% of the
aggregate principal amount of
the notes issued under the
indenture remains outstanding
immediately after the
occurrence of such redemption
and such redemption occurs
within 90 days of the date of
the closing of any such
qualified equity offering.
	 
	 	 
	Change of Control:

	 	101% of the principal amount
of the notes, plus accrued and
unpaid interest, if any, to
the payment date.
	 
	 	 
	CUSIP/ISIN No.:

	 	144A: 06985P AE0 / US06985PAE07

Reg S: U06858 AC5 / USU06858AC58
	 
	 	 
	Joint Book-Running Managers:

	 	Goldman, Sachs & Co.
Banc of America Securities LLC
UBS Securities LLC
	 
	 	 
	Co-Managers:

	 	Jefferies & Company, Inc.
Capital One Southcoast, Inc.
Comerica Securities, Inc.
Natixis Bleichroeder Inc.
	 
	 	 
	Pro Forma Ratio of Earnings
to Fixed Charges:

	 	The Issuer’s pro forma ratio
of earnings to fixed charges,
giving effect to the offering
and the use of proceeds
therefrom, would have been as
follows (as of the beginning
of each pro forma period
presented below):

	 	 	 
	Pro Forma
	Year Ended	 	Three Months Ended
	December 31, 2008	 	March 31, 2009
	3.4x
	 	(a)

	 	 	 
	 

	 	(a) Earnings were inadequate to cover fixed charges
for such period by $215.6 million.
	 
	 	 
	Capitalization:

	 	As of March 31, 2009, on an as adjusted basis to give effect to the offering and
the use of proceeds therefrom in the manner described in the Preliminary Offering Circular,
the Issuer had cash and cash equivalents of $171.3 million, total debt of $518.6 million
(including $212.9 million of indebtedness associated with its new senior notes) and total
capitalization of $925.8 million. The $225.0 million of senior secured notes are recorded at
their discounted amount, with the discount to be amortized over the life of the senior notes.
This information supplements the information contained in the capitalization table under the
column heading “As Adjusted” on page 26 of the Preliminary Offering Circular.

III-2

 

Revised Disclosures

     In addition to the terms described above, this Pricing Term Sheet amends and supplements the
Preliminary Offering Circular as follows:

     On the cover page of the Preliminary Offering Circular, the second, third and fourth sentences
of the third paragraph are hereby amended and restated as follows:

The notes and the guarantees will be secured by a first priority lien, subject to limited
exceptions, on all of the current and future personal property of our company and our
guarantor subsidiaries, except for cash and cash equivalents, accounts receivable,
inventory, maritime assets (including our existing inland barge rigs), titled vehicles and
the stock or other equity interests of our subsidiaries. As of March 31, 2009, the net book
value of the collateral included approximately $525 million of property and equipment, which
represents 71% of our total property and equipment.

     On page 8 of the Preliminary Offering Circular, the paragraph next to the caption “Collateral ...” is hereby amended and restated as follows:

The notes and the guarantees will be secured by a first priority lien, subject to limited
exceptions, on all of the current and future personal property of our company and our
guarantor subsidiaries, except for cash and cash equivalents, accounts receivable,
inventory, maritime assets (including our existing inland barge rigs), titled vehicles and
the stock or other equity interests of our subsidiaries. As of March 31, 2009, the net book
value of the collateral included approximately $525 million of property and equipment, which
represents 71% of our total property and equipment.

     On page 20 of the Preliminary Offering Circular, the third sentence under the Risk Factor
“There May Not Be Sufficient Collateral to Pay All of the Notes” is hereby amended and restated as
follows:

As of March 31, 2009, the net book value of the collateral included approximately $525
million of property and equipment.

     On page 50 of the Preliminary Offering Circular, the sentence under the under the heading
“Other Debt—Credit Rating Agencies” is hereby amended and restated as follows:

Our
Senior Notes due 2016 are currently rated B- and Caa1 by Standard and Poor’s and Moody’s,
respectively.

     On page 80 of the Preliminary Offering Circular, clause (1) under the caption “Security” is
hereby amended and restated as follows:

     (1) subject to limited exceptions, on all of the current and future personal property
of the Issuer and the Guarantors, excluding cash and cash equivalents, accounts receivable,
inventory, maritime assets (including our existing inland barge rigs), titled vehicles and
the stock or other equity interests of our subsidiaries;

     On page 119 of the Preliminary Offering Circular, clause (16) of the definition of “Permitted
Liens” is hereby amended and restated as follows:

     (16) Liens securing Indebtedness Incurred under the Credit Facilities or with respect
to other obligations that do not exceed in the aggregate the greater of (a) $15.0 million or
(b) 3.0% of the Issuer’s Consolidated Tangible Assets at any time outstanding;

     On page 120 of the Preliminary Offering Circular, clause (26) of the definition of “Permitted
Liens” is deleted in its entirety.

     On page 123 of the Preliminary Offering Circular, the following sentence is hereby added to
the end of the definition of “Subordinated Indebtedness”:

III-3

 

For purposes of the covenant described under “—Certain Covenants — Limitations on
Restricted Payments,” our outstanding 7.125% Senior Notes due 2016 and any Refinancing
Indebtedness issued with respect to such outstanding senior notes will be deemed to be
“Subordinated Indebtedness.”

This material is strictly confidential and has been prepared by the Issuer solely for use in
connection with the proposed offering of the securities described in the Preliminary Offering
Circular. This material is personal to each offeree and does not constitute an offer to any other
person or the public generally to subscribe for or otherwise acquire the securities. Please refer
to the Preliminary Offering Circular for a complete description.

The securities have not been registered under the Securities Act of 1933, as amended (the
“Securities Act”) and are being offered only to (1) “qualified institutional buyers” as defined in
Rule 144A under the Securities Act and (2) outside the United States to non-U.S. persons in
compliance with Regulation S under the Securities Act.

This communication is not an offer to sell the securities and it is not a solicitation of an offer
to buy the securities in any jurisdiction where the offering is prohibited.

Each security rating agency has its own methodology for assigning ratings. Security ratings are
not recommendations to buy, sell or hold securities and may be subject to revision or withdrawal at
any time.

III-4

 

Schedule IV

Company Supplemental Disclosure Documents

1. Electronic Roadshow Presentation, dated July 6, 2009, made available by means of graphic
communication through NetRoadshow, including written communication made available only as part of
such roadshow and not separately.

IV-1

 

Exhibit A

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

REGISTRATION RIGHTS AGREEMENT

Dated as of July 31, 2009

By and Among

BASIC ENERGY SERVICES, INC.,

the GUARANTORS named herein

and

GOLDMAN, SACHS & CO.,

BANC OF AMERICA SECURITIES LLC,

UBS SECURITIES LLC,

JEFFERIES & COMPANY, INC.,

CAPITAL ONE SOUTHCOAST, INC.,

COMERICA SECURITIES, INC. and

NATIXIS BLEICHROEDER INC.

as Initial Purchasers

11.625% Senior Secured Notes due 2014

 

 

A-1

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	Section 1.	 	Definitions
	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	Section 2.	 	Exchange Offer
	 	 	4	 
	 	 	 	 	 
	 	 	 	 
	Section 3.	 	Shelf Registration
	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	Section 4.	 	Liquidated Damages
	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	Section 5.	 	Registration Procedures
	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	Section 6.	 	Market Making.
	 	 	16	 
	 	 	 	 	 
	 	 	 	 
	Section 7.	 	Registration Expenses
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	Section 8.	 	Indemnification
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	Section 9.	 	Rules 144 and 144A
	 	 	23	 
	 	 	 	 	 
	 	 	 	 
	Section 10.	 	Underwritten Registrations
	 	 	23	 
	 	 	 	 	 
	 	 	 	 
	Section 11.	 	Miscellaneous
	 	 	24	 
	 	 	 	 	 
	 	 	 	 
	 	(a	)	 	No Inconsistent Agreements
	 	 	24	 
	 	(b	)	 	Adjustments Affecting Registrable Notes
	 	 	24	 
	 	(c	)	 	Amendments and Waivers
	 	 	24	 
	 	(d	)	 	Notices
	 	 	24	 
	 	(e	)	 	Guarantors
	 	 	25	 
	 	(f	)	 	Successors and Assigns
	 	 	25	 
	 	(g	)	 	Counterparts
	 	 	25	 
	 	(h	)	 	Headings
	 	 	26	 
	 	(i	)	 	Governing Law
	 	 	26	 
	 	(j	)	 	Severability
	 	 	26	 
	 	(k	)	 	Securities Held by the Issuers or Their Affiliates
	 	 	26	 
	 	(l	)	 	Third-Party Beneficiaries
	 	 	26	 
	 	(m	)	 	Entire Agreement
	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	SIGNATURES	 	 	S-1	 

-i-

 

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”) is dated as of July 31, 2009, by
and among BASIC ENERGY SERVICES, INC., a Delaware corporation (the “Company”), and each of
the Guarantors (as defined herein) (the Company and the Guarantors are referred to collectively
herein as the “Issuers”), on the one hand, and GOLDMAN, SACHS & CO., BANC OF AMERICA
SECURITIES LLC and UBS SECURITIES LLC (the “Representatives”) and JEFFERIES & COMPANY, INC.,
CAPITAL ONE SOUTHCOAST, INC., COMERICA SECURITIES, INC. and NATIXIS BLEICHROEDER INC. (together
with the Representatives, the “Initial Purchasers”), on the other hand.

          This Agreement is entered into in connection with the Purchase Agreement, dated as of July 23,
2009, by and among the Issuers and the Initial Purchasers (the “Purchase Agreement”),
relating to the offering of $225,000,000 aggregate principal amount of 11.625% Senior Secured Notes
due 2014 of the Company (including the guarantees thereof by the Guarantors, the “Notes”).
The execution and delivery of this Agreement is a condition to the Initial Purchasers’ obligation
to purchase the Notes under the Purchase Agreement.

          The parties hereby agree as follows:

     Section 1. Definitions

          As used in this Agreement, the following terms shall have the following meanings:

          “action” shall have the meaning set forth in Section 8(c) hereof.

          “Advice” shall have the meaning set forth in Section 5 hereof.

          “Affiliate” of any specified Person shall mean any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, control of a Person shall mean the power, direct or
indirect, to direct or cause the direction of the management and policies of such Person whether by
contract or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative
to the foregoing.

          “Agreement” shall have the meaning set forth in the first introductory paragraph
hereto.

          “Applicable Period” shall have the meaning set forth in Section 2(b) hereof.

          “Board of Directors” shall have the meaning set forth in Section 5 hereof.

          “Business Day” shall mean a day that is not a Legal Holiday.

          “Company” shall have the meaning set forth in the introductory paragraph hereto and
shall also include the Company’s permitted successors and assigns.

          “Commission” shall mean the Securities and Exchange Commission.

          “day” shall mean a calendar day.

          “Delay Period” shall have the meaning set forth in Section 5 hereof.

          “Effectiveness Period” shall have the meaning set forth in Section 3(b) hereof.

 

 

          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

          “Exchange Notes” shall have the meaning set forth in Section 2(a) hereof.

          “Exchange Offer” shall have the meaning set forth in Section 2(a) hereof.

          “Exchange Offer Registration Statement” shall have the meaning set forth in Section
2(a) hereof.

          “FINRA” shall have the meaning set forth in Section 5(s) hereof.

          “Guarantors” means each subsidiary of the Company listed on the signature page to this
Agreement and each Person who executes and delivers a counterpart of this Agreement after the date
hereof pursuant to Section 11(e) hereof.

          “Holder” shall mean any holder of a Registrable Note or Registrable Notes.

          “Indenture” shall mean the Indenture, dated as of July 31, 2009, by and among the
Issuers and The Bank of New York Mellon Trust Company, N.A., as trustee, pursuant to which the
Notes are being issued, as amended or supplemented from time to time in accordance with the terms
thereof.

          “Initial Purchasers” shall have the meaning set forth in the first introductory
paragraph hereof.

          “Inspectors” shall have the meaning set forth in Section 5(n) hereof.

          “Issue Date” shall mean July 31, 2009, the date of original issuance of the Notes.

          “Issuers” shall have the meaning set forth in the first introductory paragraph hereto.

          “Legal Holiday” shall mean a Saturday, a Sunday or a day on which banking institutions
in New York, New York are required by law, regulation or executive order to remain closed.

          “Liquidated Damages” shall have the meaning set forth in Section 4(a) hereof.

          “Liquidated Damages Payment Date” shall have the meaning set forth in Section 4(b)
hereof.

          “Losses” shall have the meaning set forth in Section 8(a) hereof.

          “Market Maker” shall have the meaning set forth in Section 6(a) hereof.

          “Market Maker’s Information” shall have the meaning set forth in Section 6(d) hereof.

          “Market Making Registration Statement” shall have the meaning set forth in Section
8(a)(i) hereof.

          “Notes” shall have the meaning set forth in the second introductory paragraph hereto.

          “Participant” shall have the meaning set forth in Section 8(a) hereof.

2

 

          “Participating Broker-Dealer” shall have the meaning set forth in Section 2(b) hereof.

          “Person” shall mean an individual, corporation, partnership, joint venture
association, joint stock company, trust, unincorporated limited liability company, government or
any agency or political subdivision thereof or any other entity.

          “Private Exchange” shall have the meaning set forth in Section 2(b) hereof.

          “Private Exchange Notes” shall have the meaning set forth in Section 2(b) hereof.

          “Prospectus” shall mean the prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a prospectus that includes
any information previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.

          “Purchase Agreement” shall have the meaning set forth in the second introductory
paragraph hereof.

          “Records” shall have the meaning set forth in Section 5(n) hereof.

          “Registrable Notes” shall mean each Note upon its original issuance and at all times
subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof is applicable upon
original issuance and at all times subsequent thereto and each Private Exchange Note upon original
issuance thereof and at all times subsequent thereto, in each case until (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section 2(c)(iv) hereof is
applicable, the Exchange Offer Registration Statement) covering such Note, Exchange Note or Private
Exchange Note has been declared effective by the Commission and such Note, Exchange Note or such
Private Exchange Note, as the case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Note has been exchanged pursuant to the Exchange Offer for an
Exchange Note or Exchange Notes that may be resold without restriction under state and federal
securities laws, (iii) such Note, Exchange Note or Private Exchange Note, as the case may be,
ceases to be outstanding for purposes of the Indenture or (iv) such Note, Exchange Note or Private
Exchange Note has been sold in compliance with Rule 144 or is salable pursuant to Rule 144 by a
person that is not an “affiliate” (as defined in Rule 144) of the Company without regard to any of
the conditions specified therein (other than the holding period requirement in paragraph (d) of
Rule 144 so long as such holding period requirement is satisfied at such time of determination).

          “Registration Default” shall have the meaning set forth in Section 4(a) hereof.

          “Registration Statement” shall mean any appropriate registration statement of the
Issuers covering any of the Registrable Notes filed with the Commission under the Securities Act,
and all amendments and supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

          “Representatives” shall have the meaning set forth in the introductory paragraph
hereto.

          “Requesting Participating Broker-Dealer” shall have the meaning set forth in Section
2(b) hereof.

3

 

          “Rule 144” shall mean Rule 144 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter
adopted by the Commission providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not Affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements of the Securities
Act.

          “Rule 144A” shall mean Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter
adopted by the Commission.

          “Rule 415” shall mean Rule 415 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter adopted by the
Commission.

          “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

          “Shelf Filing Event” shall have the meaning set forth in Section 2(c) hereof.

          “Shelf Registration” shall have the meaning set forth in Section 3(a) hereof.

          “TIA” shall mean the Trust Indenture Act of 1939, as amended.

          “Trustee” shall mean the trustee under the Indenture and the trustee (if any) under
any indenture governing the Exchange Notes and Private Exchange Notes.

          “underwritten registration” or “underwritten offering” shall mean a
registration in which securities of the Issuers are sold to an underwriter for reoffering to the
public.

     Section 2. Exchange Offer

          (a) Unless the Exchange Offer would violate applicable law or interpretation of the staff of
the Commission, the Issuers shall (i) file a Registration Statement (the “Exchange Offer
Registration Statement”) with the Commission on an appropriate registration form with respect
to a registered offer (the “Exchange Offer”) to exchange any and all of the Registrable
Notes for a like aggregate principal amount of notes (including the guarantees with respect
thereto, the “Exchange Notes”) that are identical in all material respects to the Notes
(except that the Exchange Notes shall not contain restrictive legends, terms with respect to
transfer restrictions or Liquidated Damages upon a Registration Default), (ii) use their reasonable
best efforts to cause the Exchange Offer Registration Statement to be declared effective under the
Securities Act and (iii) use their reasonable best efforts to consummate the Exchange Offer within
270 days after the Issue Date. Upon the Exchange Offer Registration Statement being declared
effective by the Commission, the Issuers will offer the Exchange Notes in exchange for surrender of
the Notes. The Issuers shall keep the Exchange Offer open for not less than 20 Business Days (or
longer if required by applicable law) after the date notice of the Exchange Offer is mailed to
Holders.

          Each Holder that participates in the Exchange Offer will be required to represent to the
Issuers in writing that (i) any Exchange Notes to be received by it will be acquired in the
ordinary course of its business, (ii) it has no arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in
violation of the provisions of the Securities Act, (iii) it is not an affiliate of the Company or
any Guarantor as defined by Rule 405 of the Securities Act, or if it is an affiliate, it will
comply with the registration and prospectus delivery requirements of the Securities Act to the
extent applicable, (iv) if such Holder is not a broker-dealer,
it is not en-

4

 

gaged in, and does not intend to engage in, a distribution of Exchange Notes and (v) if such
Holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for
Notes that were acquired as a result of market-making or other trading activities, it will deliver
a prospectus in connection with any resale of such Exchange Notes.

          (b) The Issuers and the Initial Purchasers acknowledge that the staff of the Commission has
taken the position that any broker-dealer that elects to exchange Notes that were acquired by such
broker-dealer for its own account as a result of market-making or other trading activities for
Exchange Notes in the Exchange Offer (a “Participating Broker-Dealer”) may be deemed to be
an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Exchange Notes (other than
a resale of an unsold allotment resulting from the original offering of the Notes).

          The Issuers and the Initial Purchasers also acknowledge that the staff of the Commission has
taken the position that if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and the means by which
Participating Broker-Dealers may resell the Exchange Notes, without naming the Participating
Broker-Dealers or specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligations under
the Securities Act in connection with resales of Exchange Notes for their own accounts, so long as
the Prospectus otherwise meets the requirements of the Securities Act.

          In light of the foregoing, if requested by a Participating Broker-Dealer (a “Requesting
Participating Broker-Dealer”), the Issuers agree to use their reasonable best efforts to keep
the Exchange Offer Registration Statement continuously effective for a period necessary to comply
with applicable law in connection with such resales but in no event more than 180 days after the
date on which the Exchange Registration Statement is declared effective, or such longer period if
extended pursuant to any Delay Period in accordance with the penultimate paragraph of Section 5
hereof (such period, the “Applicable Period”), or such earlier date as each Requesting
Participating Broker-Dealer shall have notified the Company in writing that such Requesting
Participating Broker-Dealer has resold all Exchange Notes acquired by it in the Exchange Offer.
The Issuers shall include a plan of distribution in such Exchange Offer Registration Statement that
meets the requirements set forth in the preceding paragraph.

          If, prior to consummation of the Exchange Offer, any Initial Purchaser or any other Holder
holds any Notes acquired by it that have, or that are reasonably likely to be determined to have,
the status of an unsold allotment in an initial distribution, or if any Holder is not entitled to
participate in the Exchange Offer, the Issuers upon the request of the Initial Purchasers or any
such Holder, as the case may be, shall simultaneously with the delivery of the Exchange Notes in
the Exchange Offer, issue and deliver to the Initial Purchasers or any such Holder, as the case may
be, in exchange (the “Private Exchange”) for such Notes held by such Initial Purchaser or
any such Holder a like principal amount of notes (the “Private Exchange Notes”) of the
Issuers that are identical in all material respects to the Exchange Notes except that the Private
Exchange Notes may be subject to restrictions on transfer and bear a legend to such effect. The
Private Exchange Notes shall be issued pursuant to the same indenture as the Exchange Notes and
bear the same CUSIP number as the Exchange Notes (if permitted by the CUSIP Service Bureau).

          Upon consummation of the Exchange Offer in accordance with this Section 2, the Issuers shall
have no further registration obligations other than the Issuers’ continuing registration
obligations with respect to (i) Private Exchange Notes, (ii) Exchange Notes held by Participating
Broker-Dealers and (iii) Notes or Exchange Notes as to which clause (c)(iv) of this Section 2
applies.

5

 

          In connection with the Exchange Offer, the Issuers shall:

     (1) mail or cause to be mailed to each Holder entitled to participate in the Exchange
Offer a copy of the Prospectus forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related documents;

     (2) utilize the services of a depositary for the Exchange Offer with an address in
the Borough of Manhattan, The City of New York;

     (3) permit Holders to withdraw tendered Notes at any time prior to the close of
business, New York time, on the last Business Day on which the Exchange Offer shall remain
open; and

     (4) otherwise comply in all material respects with all applicable laws, rules and
regulations.

          As soon as practicable after the close of the Exchange Offer and the Private Exchange, if any,
the Issuers shall:

     (1) accept for exchange all Notes validly tendered and not validly withdrawn by the
Holders pursuant to the Exchange Offer and the Private Exchange, if any;

     (2) deliver or cause to be delivered to the Trustee for cancellation all Registrable
Notes so accepted for exchange; and

     (3) cause the Trustee to authenticate and deliver promptly to each such Holder of
Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal
amount to the Registrable Notes of such Holder so accepted for exchange.

          The Exchange Offer and the Private Exchange shall not be subject to any conditions, other than
that (i) the Exchange Offer or Private Exchange, as the case may be, does not violate applicable
law or any applicable interpretation of the staff of the Commission, (ii) no action or proceeding
shall have been instituted or threatened in any court or by any governmental agency which might
materially impair the ability of the Issuers to proceed with the Exchange Offer or the Private
Exchange, and no material adverse development shall have occurred in any existing action or
proceeding with respect to the Issuers and (iii) all governmental approvals shall have been
obtained, which approvals the Company deems necessary for the consummation of the Exchange Offer or
Private Exchange.

          The Exchange Notes and the Private Exchange Notes shall be issued under (i) the Indenture or
(ii) an indenture identical in all material respects to the Indenture (in either case, with such
changes as are necessary to comply with any requirements of the Commission to effect or maintain
the qualification thereof under the TIA) and which, in either case, has been qualified under the
TIA and shall provide that (a) the Exchange Notes shall not be subject to the transfer restrictions
set forth in the Indenture and (b) the Private Exchange Notes shall be subject to the transfer
restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange Notes or the Notes
will have the right to vote or consent as a separate class on any matter.

          (c) In the event that (i) the applicable law or interpretations of the staff of the Commission
do not permit the Issuers to effect the Exchange Offer, (ii) for any reason the Exchange Offer is

6

 

not consummated within 270 days of the Issue Date, (iii) any Holder notifies the Company prior
to the 20th Business Day following consummation of the Exchange Offer that it is prohibited by law
or the applicable interpretations of the staff of the Commission from participating in the Exchange
Offer, (iv) in the case of any Holder who participates in the Exchange Offer, such Holder does not
receive Exchange Notes on the date of the exchange that may be sold without restriction under state
and federal securities laws (other than due solely to the status of such Holder as an affiliate of
any Issuer within the meaning of the Securities Act) or (v) any Initial Purchaser so requests with
respect to Notes or Private Exchange Notes that have, or that are reasonably likely to be
determined to have, the status of unsold allotments in an initial distribution (each such event
referred to in clauses (i) through (v) of this sentence, a “Shelf Filing Event”), then the
Issuers shall file a Shelf Registration pursuant to Section 3 hereof.

     Section 3. Shelf Registration

          If at any time a Shelf Filing Event shall occur, then:

          (a) Shelf Registration. The Issuers shall file with the Commission a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Notes not exchanged in the Exchange Offer, Private Exchange Notes and Exchange Notes as
to which Section 2(c)(iv) is applicable (the “Shelf Registration”). The Shelf Registration
shall be on Form S-1 or another appropriate form permitting registration of such Registrable Notes
for resale by Holders in the manner or manners designated by them (including, without limitation,
one or more underwritten offerings). The Issuers shall not permit any securities other than the
Registrable Notes to be included in the Shelf Registration.

          (b) The Issuers shall use all their reasonable best efforts (x) to cause the Shelf
Registration to be declared effective under the Securities Act on or prior to the later of (A) the
150th day after the Issue Date and (B) the 120th day after the occurrence of the applicable Shelf
Filing Event and (y) to keep the Shelf Registration continuously effective under the Securities Act
until the expiration of the one-year period for non-affiliates referred to in Rule 144(b)(1) under
the Securities Act, subject to extension pursuant to the penultimate paragraph of Section 5 hereof
(the “Effectiveness Period”), or such shorter period ending when all Registrable Notes
covered by the Shelf Registration have been sold in the manner set forth and as contemplated in the
Shelf Registration; provided, however, that (i) the Effectiveness Period in respect of the Shelf
Registration shall be extended to the extent required to permit dealers to comply with the
applicable prospectus delivery requirements of Rule 174 under the Securities Act and as otherwise
provided herein and (ii) the Company may suspend the effectiveness of the Shelf Registration by
written notice to the Holders solely (A) as a result of the filing of a post-effective amendment to
the Shelf Registration to incorporate annual audited financial information with respect to the
Company where such post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related Prospectus or (B) to the extent and for so long as permitted
by the penultimate paragraph of Section 5.

          (c) Supplements and Amendments. The Issuers agree to supplement or make amendments to
the Shelf Registration as and when required by the rules, regulations or instructions applicable to
the registration form used for such Shelf Registration or by the Securities Act or rules and
regulations thereunder for shelf registration, or if reasonably requested by the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such Registration
Statement or by any underwriter of such Registrable Notes.

7

 

     Section 4. Liquidated Damages

          (a) The Issuers and the Initial Purchasers agree that the Holders will suffer damages if the
Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision. Accordingly, the Issuers agree
that if:

     (i) the Exchange Offer is not consummated on or prior to the 270th day following the
Issue Date, or, if that day is not a Business Day, the next day that is a Business Day; or

     (ii) the Shelf Registration is required to be filed but is not declared effective
within the time period specified in Section 3(b)(x), or is declared effective by such date
but thereafter ceases to be effective or usable (unless the Shelf Registration ceases to be
effective or usable as specifically permitted by the penultimate paragraph of Section 5
hereof),

(each such event referred to in clauses (i) and (ii) a “Registration Default”), additional
interest in the form of additional cash interest (“Liquidated Damages”) will accrue on the
affected Registrable Notes. The rate of Liquidated Damages will be 0.25% per annum for the first
90-day period immediately following the occurrence of a Registration Default, increasing by an
additional 0.25% per annum with respect to each subsequent 90-day period up to a maximum amount of
Liquidated Damages of 1.00% per annum, from and including the date on which any such Registration
Default shall occur to, but excluding, the earlier of (1) the date on which all Registration
Defaults have been cured or (2) the date on which such Registrable Note ceases to be a Registrable
Note or otherwise become freely transferable by Holders other than Affiliates of the Issuers
without further registration under the Securities Act. If, after the cure of all Registration
Defaults then in effect, there is a subsequent Registration Default, the rate of Liquidated Damages
for such subsequent Registration Default shall initially be 0.25% regardless of the rate in effect
with respect to any prior Registration Default at the time of cure of such Registration Default and
shall increase in the manner and be subject to the maximum Liquidated Damages rate contained in the
preceding sentence.

          Notwithstanding the foregoing, (1) the amount of Liquidated Damages payable shall not increase
because more than one Registration Default has occurred and is pending and (2) a Holder of
Registrable Notes that is not entitled to the benefits of the Shelf Registration (e.g.,
such Holder has not elected to include information) shall not be entitled to Liquidated Damages
with respect to a Registration Default that pertains to the Shelf Registration.

          (b) So long as Notes remain outstanding, the Company shall notify the Trustee within five
Business Days after each and every date on which an event occurs in respect of which Liquidated
Damages is required to be paid. Any amounts of Liquidated Damages due pursuant to clauses (a)(i)
or (a)(ii) of this Section 4 will be payable in cash semi-annually on each January 1 and July 1
(each a “Liquidated Damages Payment Date”), commencing with the first such date occurring
after any such Liquidated Damages commences to accrue, to Holders to whom regular interest is
payable on such Liquidated Damages Payment Date with respect to Notes that are Registrable Notes.
The amount of Liquidated Damages for each Registrable Note will be determined by multiplying the
applicable rate of Liquidated Damages by the aggregate principal amount of such Registrable Note
outstanding on the Liquidated Damages Payment Date following such Registration Default in the case
of the first such payment of Liquidated Damages with respect to a Registration Default (and
thereafter at the next succeeding Liquidated Damages Payment Date until the cure of such
Registration Default), and multiplying the product of the foregoing by a fraction, the numerator of
which is the number of days such Liquidated Damages rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of which is 360.

8

 

     Section 5. Registration Procedures

          In connection with the filing of any Registration Statement pursuant to Section 2 or 3 hereof,
the Issuers shall effect such registrations to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuers hereunder, the Issuers shall:

     (a) Prepare and file with the Commission the Registration Statement or Registration
Statements prescribed by Section 2 or 3 hereof, and use their reasonable best efforts to
cause each such Registration Statement to become effective and remain effective as provided
herein; provided, however, that, if (1) such filing is pursuant to Section 3 hereof, or (2)
a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating
thereto, before filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Issuers shall furnish to and afford the Holders of the Registrable
Notes covered by such Registration Statement or each such Participating Broker-Dealer, as
the case may be, their counsel (if requested by any such person) and the managing
underwriters, if any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at least five Business Days prior to such
filing). The Issuers shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto if the Holders of a majority in aggregate principal amount
of the Registrable Notes covered by such Registration Statement, or any such Participating
Broker-Dealer, as the case may be, their counsel, or the managing underwriters, if any,
shall reasonably object.

     (b) Prepare and file with the Commission such amendments and post-effective amendments
to each Shelf Registration or Exchange Offer Registration Statement, as the case may be, as
may be necessary to keep such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by applicable law, and
as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
force) promulgated under the Securities Act; and comply with the applicable provisions of
the Securities Act and the Exchange Act with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus, in each case, in accordance with
the intended methods of distribution set forth in such Registration Statement or Prospectus,
as so amended or supplemented.

     (c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto
from whom the Company has received written notice that such Broker-Dealer will be a
Participating Broker-Dealer in the applicable Exchange Offer, notify the selling Holders of
Registrable Notes, or each such Participating Broker-Dealer, as the case may be, their
counsel (if such counsel is known to the Issuers) and the managing underwriters, if any, as
promptly as possible, and, if requested by any such Person, confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective amendment, when
the same has become effective under the Securities Act (including in such notice a written
statement that any Holder may, upon request, obtain, at the sole expense of the Issuers, one
conformed copy of such Registration Statement or post-effective amendment in-

9

 

cluding
financial statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of a Registration Statement or of any order preventing or suspending
the use of any preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes or resales of Exchange Notes by Participating
Broker-Dealers the representations and warranties of the Issuers contained in any agreement
(including any underwriting agreement) contemplated by Section 5(m) hereof cease to be true
and correct in all material respects, (iv) of the receipt by any of the Issuers of any
notification with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes or the Exchange
Notes for offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known to any Issuer that makes any statement made in
such Registration Statement or related Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that requires the
making of any changes in or amendments or supplements to such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, and (vi) of the Company’s determination that a post-effective amendment to a
Registration Statement would be appropriate.

     (d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use their
reasonable best efforts to prevent the issuance of any order suspending the effectiveness of
a Registration Statement or of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any of the Registrable
Notes or the Exchange Notes, as the case may be, for sale in any jurisdiction, and, if any
such order is issued, to use their reasonable best efforts to obtain the withdrawal of any
such order at the earliest practicable moment.

     (e) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period and if requested
by the managing underwriter or underwriters (if any), the Holders of a majority in aggregate
principal amount of the Registrable Notes covered by such Registration Statement or any
Participating Broker-Dealer, as the case may be, (i) promptly incorporate in such
Registration Statement or Prospectus a prospectus supplement or post-effective amendment
such information as the managing underwriter or underwriters (if any), such Holders or any
Participating Broker-Dealer, as the case may be (based upon advice of counsel), determine is
reasonably required to be included therein and (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment; provided, however, that the Issuers shall not be
required to take any action hereunder that would, in the written opinion of counsel to the
Issuers, violate applicable laws.

10

 

     (f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, furnish to each selling Holder of
Registrable Notes or each such Participating Broker-Dealer, as the case may be, who so
requests, their counsel (if requested by any such person) and each managing underwriter, if
any, at the sole expense of the Issuers, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits.

     (g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, deliver to each
selling Holder of Registrable Notes or each such Participating Broker-Dealer, as the case
may be, their respective counsel (if requested) and the underwriters, if any, at the sole
expense of the Issuers, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request; and, subject to
the last paragraph of this Section 5, the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with the offering and
sale of the Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement thereto.

     (h) Prior to any public offering of Registrable Notes or Exchange Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use their
reasonable best efforts to register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or qualification) of such
Registrable Notes or Exchange Notes, as the case may be, for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or underwriters reasonably
request; provided, however, that where Exchange Notes or Registrable Notes are offered other
than through an underwritten offering, the Issuers agree to cause the Issuers’ counsel to
perform Blue Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably necessary or advisable
to enable the disposition in such jurisdictions of such Exchange Notes or Registrable Notes
covered by the applicable Registration Statement; provided, however, that no Issuer shall be
required to (A) qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself to taxation in
excess of a nominal dollar amount in any such jurisdiction where it is not then so subject.

     (i) If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the
selling Holders of Registrable Notes and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be

11

 

sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable such Registrable
Notes to be in such denominations and registered in such names as the managing underwriter
or underwriters, if any, or
selling Holders may request at least two Business Days prior to any sale of such
Registrable Notes.

     (j) Use their reasonable best efforts to cause the Registrable Notes or Exchange Notes
covered by any Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be reasonably necessary to enable the seller or
sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of
such Registrable Notes or Exchange Notes, except as may be required solely as a consequence
of the nature of such selling Holder’s business, in which case the Issuers will cooperate in
all reasonable respects with the filing of such Registration Statement and the granting of
such approvals.

     (k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by Section 5(c)(v) or 5(c)(vi) hereof, as promptly as
practicable prepare and (subject to Section 5(a) and the penultimate paragraph of this
Section 5) file with the Commission, at the sole expense of the Issuers, a supplement or
post-effective amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by reference,
or file any other required document so that, as thereafter delivered to the purchasers of
the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to
whom such Prospectus will be delivered by a Participating Broker-Dealer, any such Prospectus
will not contain 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, in the light of
the circumstances under which they were made, not misleading.

     (l) Prior to the effective date of the first Registration Statement relating to the
Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes in a
form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes.

     (m) In connection with any underwritten offering of Registrable Notes pursuant to a
Shelf Registration, enter into an underwriting agreement as is customary in underwritten
offerings of debt securities similar to the Notes and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to expedite or
facilitate the registration or the disposition of such Registrable Notes and, whether or not
such offering is an underwritten offering, (i) make such representations and warranties to
the underwriter or underwriters (and to any Holder that has advised the Company that such
Holder may have a “due diligence” defense under Section 11 of the Securities Act), and
covenants with, the underwriters with respect to the business of the Issuers and their
subsidiaries (including any acquired business, properties or entity, if applicable), and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the Notes, and confirm
the same in writing if and when requested; (ii) use their reasonable best efforts to obtain
the written opinions of counsel to the Issuers and written updates thereof in form, scope
and substance reasonably satisfactory to the managing underwriter or underwriters, addressed
to the underwriters (and to any Holder that has advised the Company that such Holder may
have a “due diligence” defense under Section 11 of the Securities Act) covering the matters
customarily cov-

12

 

ered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by the managing underwriter or underwriters; (iii) use their
reasonable best efforts to obtain “cold comfort” letters and updates thereof in form, scope
and substance reasonably satis
factory to the managing underwriter or underwriters from the independent certified
public accountants of the Issuers (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to each of the
underwriters (and to any Holder that has advised the Company that such Holder may have a
“due diligence” defense under Section 11 of the Securities Act), such letters to be in
customary form and covering matters of the type customarily covered in “cold comfort”
letters in connection with underwritten offerings; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 8 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of Registrable Notes
covered by such Registration Statement and the managing underwriter or underwriters or
agents) with respect to all parties to be indemnified pursuant to said Section; provided
that the Issuers shall not be required to provide indemnification to any underwriter
selected in accordance with the provisions of Section 10 hereof with respect to information
relating to such underwriter furnished in writing to the Company by or on behalf of such
underwriter expressly for inclusion in such Registration Statement. The above shall be done
at each closing under such underwriting agreement, or as and to the extent required
thereunder.

     (n) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available
for inspection by any selling Holder of such Registrable Notes being sold or each such
Participating Broker-Dealer, as the case may be, any underwriter participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the “Inspectors”), at the offices where
normally kept, during reasonable business hours, all financial and other records, pertinent
corporate documents and instruments of the Company and its subsidiaries (collectively, the
“Records”) as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and employees
of the Company and its subsidiaries to supply all information reasonably requested by any
such Inspector in connection with such Registration Statement and Prospectus. Each
Inspector shall agree in writing that it will keep the Records confidential and that it will
not disclose, or use in connection with any market transactions in violation of any
applicable securities laws, any Records that the Company determines, in good faith, to be
confidential and that it notifies the Inspectors in writing are confidential unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement or omission in
such Registration Statement or Prospectus, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction, (iii)
disclosure of such information is necessary or advisable in the opinion of counsel for an
Inspector in connection with any action, claim, suit or proceeding, directly or indirectly,
involving or potentially involving such Inspector and arising out of, based upon, relating
to, or involving this Agreement or the Purchase Agreement, or any transactions contemplated
hereby or thereby or arising hereunder or thereunder, or (iv) the information in such
Records has been made generally available to the public; provided, however, that (i) each
Inspector shall agree to use reasonable best efforts to provide notice to the Company of the
potential disclosure of any information by such Inspector pursuant to clause (i), (ii) or
(iii) of this sentence to permit the Issuers to obtain a protective order (or waive the
provisions of this paragraph (n)) and (ii) each such Inspector shall take such actions as

13

 

are reasonably necessary to protect the confidentiality of such information (if practicable)
to the extent such action is otherwise not inconsistent with, an impairment of or in
derogation of the rights and interests of the Holder or any Inspector.

     (o) Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as
the case may be, and cause the Indenture or the trust indenture provided for in Section 2(b)
hereof to be qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the Holders of the
Registrable Notes or Exchange Notes, as applicable, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use their reasonable best efforts to cause such trustee to execute,
all documents as may be required to effect such changes, and all other forms and documents
required to be filed with the Commission to enable such indenture to be so qualified in a
timely manner.

     (p) Comply with all applicable rules and regulations of the Commission and make
generally available to the Company’s securityholders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable Notes or Exchange
Notes are sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a Registration Statement,
which statements shall cover said 12-month periods consistent with the requirements of Rule
158.

     (q) Upon the request of a Holder, upon consummation of the Exchange Offer or a Private
Exchange, use their reasonable best efforts to obtain an opinion of counsel to the Issuers,
in a form customary for underwritten transactions, addressed to the Trustee for the benefit
of all Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes, as the case
may be, and the related indenture constitute legal, valid and binding obligations of the
Issuers, enforceable against the Issuers in accordance with its respective terms, subject to
customary exceptions and qualifications.

     (r) If the Exchange Offer or a Private Exchange is to be consummated, upon delivery of
the Registrable Notes by Holders to the Company (or to such other Person as directed by the
Company) in exchange for the Exchange Notes or the Private Exchange Notes, as the case may
be, mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are
being cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; provided that in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.

     (s) Cooperate with each seller of Registrable Notes covered by any Registration
Statement and each underwriter, if any, participating in the disposition of such Registrable
Notes and their respective counsel in connection with any filings required to be made with
the Financial Industry Regulatory Authority, Inc. (“FINRA”).

     (t) Use their reasonable best efforts to take all other steps reasonably necessary or
advisable to effect the registration of the Exchange Notes and/or Registrable Notes covered
by a Registration Statement contemplated hereby.

14

 

          The Company may require each seller of Registrable Notes or Exchange Notes as to which any
registration is being effected to furnish to the Company such information regarding such seller and
the distribution of such Registrable Notes or Exchange Notes as the Company may, from time to
time, reasonably request. The Company may exclude from such registration the Registrable
Notes of any seller so long as such seller fails to furnish such information within a reasonable
time after receiving such request and in the event of such an exclusion, the Issuers shall have no
further obligation under this Agreement (including, without limitation, the obligations under
Section 4) with respect to such seller or any subsequent Holder of such Registrable Notes. Each
seller as to which any Shelf Registration is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make any information previously
furnished to the Company by such seller not materially misleading.

          If any such Registration Statement refers to any Holder by name or otherwise as the holder of
any securities of the Company or the Guarantors, then such Holder shall have the right to require
(i) the insertion therein of language, in form and substance reasonably satisfactory to such
Holder, to the effect that the holding by such Holder of such securities is not to be construed as
a recommendation by such Holder of the investment quality of the securities covered thereby and
that such holding does not imply that such Holder will assist in meeting any future financial
requirements of the Company or the Guarantors, or (ii) in the event that such reference to such
Holder by name or otherwise is not required by the Securities Act or any similar federal statute
then in force, the deletion of the reference to such Holder in any amendment or supplement to the
applicable Registration Statement filed or prepared subsequent to the time that such reference
ceases to be required.

          Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by acquisition of
such Registrable Notes or Exchange Notes that, upon the Company providing notice to such Holder or
Participating Broker-Dealer, as the case may be, (x) of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv), or 5(c)(v) hereof, or (y) that the Board of
Directors of the Company (the “Board of Directors”) has resolved that the Company has a
bona fide business purpose for doing so, then, upon providing such notice (which shall refer to the
penultimate paragraph of this Section 5), the Issuers may delay the filing or the effectiveness of
the Exchange Offer Registration Statement or the Shelf Registration (if not then filed or
effective, as applicable) and shall not be required to maintain the effectiveness thereof or amend
or supplement the Exchange Offer Registration Statement or the Shelf Registration, in all cases,
for a period (a “Delay Period”) expiring upon the earlier to occur of (i) in the case of
the immediately preceding clause (x), such Holder’s or Participating Broker-Dealer’s receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) hereof or until it is
advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements thereto or (ii) in the
case of the immediately preceding clause (y), the date which is the earlier of (A) the date on
which such business purpose ceases to interfere with the Issuers’ obligations to file or maintain
the effectiveness of any such Registration Statement pursuant to this Agreement or (B) 60 days
after the Company notifies the Holders of such good faith determination. There shall not be more
than 90 days of Delay Periods during any 12-month period. The maximum length of the Applicable
Period set forth in Section 2(b) shall be extended by a number of days equal to the number of days
during any Delay Period. Any Delay Period will not alter the obligations of the Issuers to pay
Liquidated Damages under the circumstances set forth in Section 4 hereof.

          Each Holder or Participating Broker-Dealer, by its acceptance of any Registrable Note, agrees
that during any Delay Period, each Holder or Participating Broker-Dealer will discontinue
disposition of such Notes or Exchange Notes covered by such Registration Statement or Prospectus or
Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the case may be.

15

 

     Section 6. Market Making.

          (a) At such time and for so long as any of the Notes or Exchange Notes are outstanding and any
of the Initial Purchasers (each in such capacity, the “Market Maker”) or any of their Af
filiates is an Affiliate of the Company, the Guarantors or any of their Affiliates and
proposes to make a market in the Notes or the Exchange Notes as applicable, as part of its business
in the ordinary course, the following provisions shall apply for the sole benefit of the Market
Maker:

     (i) The Company and the Guarantors shall (A) on the date that the Exchange Offer
Registration Statement or, if required hereby, the Shelf Registration is filed with the
Commission, file one or more registration statements (the “Market Making Registration
Statements”) (which may be the Exchange Offer Registration Statement or the Shelf
Registration if permitted by the rules and regulations of the Commission) and use their
commercially reasonable best efforts to cause such Market Making Registration Statements to
be declared effective by the Commission on or prior to the consummation of the Exchange
Offer or the effective date of the Shelf Registration, as applicable; (B) periodically amend
such Market Making Registration Statements so that the information contained therein
complies with the requirements of Section 10(a) under the Securities Act; (C) amend the
Market Making Registration Statements or amend or supplement the related Prospectuses when
necessary to reflect any material changes in the information provided therein; and (D) amend
the Market Making Registration Statements when required to do so in order to comply with
Section 10(a)(3) of the Securities Act; provided, however, that (1) prior to filing the
Market Making Registration Statements, any amendment thereto or any supplement to the
related Prospectuses, the Company shall furnish to the Market Maker copies of all such
documents proposed to be filed, which documents will be subject to the review of the Market
Maker and its counsel and (2) the Company and the Guarantors will not file any Market Making
Registration Statement, any amendment thereto or any amendment or supplement to the related
Prospectus to which the Market Maker and its counsel shall reasonably object unless the
Company is advised by counsel that such Market Making Registration Statement, amendment or
supplement is required to be filed under applicable securities laws and the Company will
provide the Market Maker and its counsel with copies of such Market Making Registration
Statement and each amendment and supplement filed. The Company, in its sole discretion, may
determine to include Prospectuses relating to each of the Notes or the Exchange Notes in the
same or different Market Making Registration Statements so long as each such registration
statement complies with this Section 6. The term “Prospectus” in this Section 6 includes
any Prospectus contained in a Market Making Registration Statement relating to any or all of
the Notes or the Exchange Notes, as applicable.

     (ii) The Company shall notify the Market Maker and, if requested by the Market Maker,
confirm such advice in writing, (A) when any Market Making Registration Statement, any
post-effective amendment to any Market Making Registration Statement or any amendment or
supplement to the related Prospectus has been filed, and, with respect to any Market Making
Registration Statement or any post-effective amendment, when the same has become effective;
(B) of any request by the Commission for any post-effective amendment to any Market Making
Registration Statement, any supplement or amendment to the related Prospectus or for
additional information; (C) the issuance by the Commission of any stop order suspending the
effectiveness of any Market Making Registration Statement or the initiation of any
proceedings for that purpose; (D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes or the Exchange Notes, as
applicable, for sale in any jurisdiction or the initiation or threatening of any proceedings
for that purpose; and (E) of the happening of any event that makes any statement made in any
Market Making Registration Statement, the related Prospectus or any amendment or supplement
thereto untrue or that requires that making of any

16

 

changes in any Market Making Registration
Statement, such Prospectus or any amendment or supplement thereto, in order to make the
statements therein not misleading.

     (iii) If any event contemplated by Section 6(a)(ii)(B) through (E) occurs during the
period for which the Company and the Guarantors are required to maintain an effective Market
Making Registration Statement, the Company and the Guarantors shall promptly prepare and
file with the Commission a post-effective amendment to each Market Making Registration
Statement or an amendment or supplement to the related Prospectus or file any other required
document so that the Prospectus will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

     (iv) In the event of the issuance of any stop order suspending the effectiveness of any
Market Making Registration Statement or of any order suspending the qualification of the
Notes or Exchange Notes for sale in any jurisdiction, the Company and the Guarantors shall
promptly use their reasonable best efforts to obtain its withdrawal.

     (v) The Company shall furnish to the Market Maker, without charge, (A) at least one
conformed copy of any Market Making Registration Statement and any post-effective amendment
thereto and (B) as many copies of the related Prospectus and any amendment or supplement
thereto as the Market Maker may reasonably request.

     (vi) The Company and the Guarantors shall consent to the use of any Prospectus
contained in any Market Making Registration Statement or any amendment or supplement thereto
by the Market Maker in connection with its market-making activities.

     (vii) Notwithstanding the foregoing provisions of this Section 6, the Company and the
Guarantors may for valid business reasons, including without limitation, a potential
material acquisition, divestiture of assets or other material corporate transaction, notify
the Market Maker in writing that a Market Making Registration Statement is no longer
effective or the Prospectus included therein is no longer usable for offers and sales of
Notes or Exchange Notes; provided that the use of a Market Making Registration Statement or
the Prospectus contained therein shall not be suspended for more than 75 days (whether or
not consecutive) in the aggregate in any 12-month period. The Market Maker agrees that upon
receipt of any notice from the Company pursuant to this Section 6(a)(vii), it will
discontinue use of the Prospectus contained in such Market Making Registration Statement
until receipt of copies of the supplemented or amended Prospectus relating thereto or until
advised in writing by the Company that the use of the Prospectus contained in such Market
Making Registration Statement may be resumed.

          (b) In connection with any Market Making Registration Statement, the Company and the
Guarantors shall (i) make reasonably available for inspection by a representative of, and counsel
acting for, the Market Maker all relevant financial and other records, pertinent corporate
documents and properties of the Company, the Guarantors and their respective subsidiaries and (ii)
use their respective reasonable best efforts to have their respective officers, directors,
employees, accountants and counsel supply all relevant information reasonably requested by such
representative or counsel or the Market Maker; provided, however, that any information that is
designated in writing by the Company or the Guarantors, in good faith, as confidential at the time
of delivery of such information shall be kept confidential by the Market Maker or any
representative or counsel, unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality;

17

 

          (c) Prior to the effective date of any Market Making Registration Statement, the Company and
the Guarantors shall arrange, if necessary, for the qualification of the Notes or Exchange Notes,
as applicable, for sale under the laws of such jurisdictions as the Market Maker reasonably re
quests in writing and will maintain such qualification in effect so long as required to enable
the offer and sale in such jurisdictions of the Notes or Exchange Notes, as applicable, covered by
such Market Making Registration Statement; provided that in no event shall the Company and the
Guarantors be obligated to (i) qualify as a foreign corporation or other entity or as a dealer in
securities in any jurisdiction where it would not otherwise be required to so qualify, (ii) file
any general consent to subject itself to service of process in any such jurisdictions or (iii)
subject itself to taxation in any such jurisdiction if it not so subject.

          (d) The Company and the Guarantors represent and agree that any Market Making Registration
Statement, any post-effective amendments thereto, any amendments or supplements to the related
Prospectus and any documents filed by them under the Exchange Act will, when they become effective
or are filed with the Commission, as the case may be, conform in all respects to the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the Commission
thereunder and will not, as of the effective date of such Market Making Registration Statement or
post-effective amendments and as of the filing date of amendments or supplements to such Prospectus
or filings under the Exchange Act, contain 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, in the
light of the circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted from any Market Making
Registration Statement or the related Prospectus in reliance upon and in conformity with written
information furnished to the Company by the Market Maker specifically for inclusion therein, which
information the parties hereto agree will be limited to the statements concerning the market-making
activities of the Market Maker to be set forth on the cover page and in the “Plan of Distribution”
section of the related Prospectus (the “Market Maker’s Information”).

          (e) At the time of effectiveness of any Market Making Registration Statement and concurrently
with each time such Market Making Registration Statement or the related Prospectus shall be amended
or such Prospectus shall be supplemented, the Company shall (if requested by the Market Maker)
furnish the Market Maker and its counsel with a certificate of its Chief Executive Officer and its
Chief Financial Officer to the effect that:

     (i) such Market Making Registration Statement has been declared effective;

     (ii) in the case of an amendment to such Market Making Registration Statement, such
amendment has become effective under the Act as of the date and time specified in such
certificate, if applicable; and in the case of an amendment or supplement to the Prospectus,
such amendment or supplement to the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) under the Act specified in such certificate on the date
specified therein;

     (iii) to the knowledge of such officers, no stop order suspending the effectiveness of
such Market Making Registration Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission; and

     (iv) such officers have carefully examined such Market Making Registration Statement
and the Prospectus (and, in the case of an amendment or supplement, such amendment or
supplement) and as of the date of such Market Making Registration Statement, amendment or
supplement, as applicable, the Market Making Registration Statement and the Prospectus, as
amended or supplemented, if applicable, did not include any untrue statement of a material fact

18

 

and did not omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.

          (f) At the time of effectiveness of any Market Making Registration Statement and concurrently
with each time any Market Making Registration Statement or the related Prospectus shall be amended
or such Prospectus shall be supplemented, the Company shall (if requested by the Market Maker)
furnish the Market Maker and its counsel with the written opinion of counsel for the Company
satisfactory to the Market Maker to the effect that:

     (i) such Market Making Registration Statement has been declared effective;

     (ii) in the case of an amendment to such Market Making Registration Statement, such
amendment has become effective under the Securities Act as of the date and time specified in
such opinion, if applicable; and in the case of an amendment or supplement to the
Prospectus, such amendment or supplement to the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) under the Act specified in such opinion on the
date specified therein;

     (iii) to the knowledge of such counsel, no stop order suspending the effectiveness of
such Market Making Registration Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission; and

     (iv) such counsel has reviewed such Market Making Registration Statement and the
Prospectus (and, in the case of an amendment or supplement, such amendment or supplement)
and participated with officers of the Company and independent public accountants for the
Company in the preparation of such Market Making Registration Statement and Prospectus (and,
in the case of an amendment or supplement, such amendment or supplement) and has no reason
to believe that (except for the financial statements and other financial and statistical
data contained therein as to which such counsel need express no belief) as of the date of
such Market Making Registration Statement, amendment or supplement, as applicable, the
Market Making Registration Statement and the Prospectus, as amended or supplemented, if
applicable, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein not
misleading.

          (g) At the time of effectiveness of any Market Making Registration Statement and concurrently
with each time such Market Making Registration Statement or the related Prospectus shall be amended
or such Prospectus shall be supplemented to include audited annual financial information, the
Company shall (if requested by the Market Maker) furnish the Market Maker and its counsel with a
letter of KPMG LLP (or other independent public accountants for the Company or the Guarantors of
nationally recognized standing) in form satisfactory to the Market Maker, addressed to the Market
Maker and dated the date of delivery of such letter, (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation
S-X of the Commission and (ii) in all other respects, substantially in the form of the letter
delivered to the Initial Purchasers pursuant to the Purchase Agreement, with, in the case of an
amendment or supplement that includes audited financial information, such changes as may be
necessary to reflect the amended or supplemented financial information.

          (h) The Company and the Guarantors, on the one hand, and the Market Maker, on the other hand,
hereby agree to indemnify each other, and, if applicable, contribute to the other, in accordance
with Section 8 of this Agreement.

19

 

          (i) The Company and the Guarantors will comply with the provisions of this Section 6 at their
own expense and will reimburse the Market Maker for its expenses associated with this Section 6
(including reasonable fees of counsel for the Market Maker).

          (j) The agreements contained in this Section 6 and the representations, warranties and
agreements contained in this Agreement shall survive all offers and sales of the Notes and Exchange
Notes and shall remain in full force and effect, regardless of any termination or cancellation of
this Agreement or any investigation made by or on behalf of any indemnified party.

          (k) For purposes of this Section 6, (i) any reference to the terms “amend”, “amendment” or
“supplement” with respect to any Market Making Registration Statement or the Prospectus contained
therein shall be deemed to refer to and include the filing under the Exchange Act of any document
deemed to be incorporated therein by reference and (ii) any reference to the terms “Notes” or
“Exchange Notes” shall be deemed to refer to and include any securities issued in exchange for or
with respect to such Notes or Exchange Notes.

     Section 7. Registration Expenses

          All fees and expenses incident to the performance of or compliance with this Agreement by the
Issuers (other than any underwriting discounts or commissions) shall be borne by the Issuers,
whether or not the Exchange Offer Registration Statement or the Shelf Registration is filed or
becomes effective or the Exchange Offer is consummated, including, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses of compliance with
state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel
in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for investment under
the laws of such jurisdictions (x) where the holders of Registrable Notes are located, in the case
of an Exchange Offer, or (y) as provided in Section 5(h) hereof, in the case of a Shelf
Registration or in the case of Exchange Notes to be sold by a Participating Broker-Dealer during
the Applicable Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible for deposit with
The Depository Trust Company and of printing prospectuses if the printing of prospectuses is
requested by the managing underwriter or underwriters, if any, or by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration Statement or in
respect of Exchange Notes to be sold by any Participating Broker-Dealer during the Applicable
Period, as the case may be, (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Issuers and the reasonable fees and disbursements of one special
counsel for all of the sellers of Registrable Notes (exclusive of any counsel retained pursuant to
Section 8 hereof) selected by the Holders of a majority in aggregate principal amount of Notes,
Exchange Notes and Private Exchange Notes being registered and reasonably satisfactory to the
Issuers, (v) fees and disbursements of all independent certified public accountants referred to in
Section 5(m)(iii) hereof (including, without limitation, the expenses of any special audit and
“cold comfort” letters required by or incident to such performance), (vi) Securities Act liability
insurance, if the Issuers desire such insurance, (vii) fees and expenses of all other Persons
retained by any of the Issuers, (viii) internal expenses of the Issuers (including, without
limitation, all salaries and expenses of officers and employees of the Company performing legal or
accounting duties), (ix) the expense of any annual audit, (x) the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities exchange, and the
obtaining of a rating of the securities, in each case, if applicable, (xi) any required fees and
expenses incurred in connection with any filing required to be made with the FINRA and (xii) the
expenses relating to printing, word processing and distributing all Registration Statements,
underwriting agreements, indentures and any other documents necessary in order to comply with this
Agreement. Notwithstanding the foregoing or anything to the contrary, each Holder

20

 

shall pay all
underwriting discounts and commissions of any underwriters with respect to any Registrable Notes
sold by or on behalf of it.

     Section 8. Indemnification

          (a) The Issuers, jointly and severally, agree to indemnify and hold harmless each Holder of
Registrable Notes and each Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, each Person, if any, who controls any such Person within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, the agents, employees, officers and directors
of each Holder and each such Participating Broker-Dealer and the agents, partners, members,
employees, officers, managers and directors of any such controlling Person (each, a
“Participant”) from and against any and all losses, liabilities, claims, damages and
expenses whatsoever (including, but not limited to, reasonable attorneys’ fees and any and all
reasonable expenses whatsoever actually incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and all reasonable
amounts paid in settlement of any claim or litigation) (collectively, “Losses”) to which
they or any of them may become subject under the Securities Act, the Exchange Act or otherwise
insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any Registration Statement
(or any amendment thereto) or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in the case of the
Prospectus, in the light of the circumstances under which they were made, not misleading, provided
that the foregoing indemnity shall not be available to any Participant insofar as such Losses are
caused by any untrue statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to such Participant furnished to the Company in
writing by or on behalf of such Participant expressly for use therein. This indemnity agreement
will be in addition to any liability that the Issuers may otherwise have, including, but not
limited to, liability under this Agreement.

          (b) Each Participant agrees, severally and not jointly, to indemnify and hold harmless each
Issuer, each Person, if any, who controls any Issuer within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, and each of their respective agents, partners,
members, employees, officers and members of the board of directors from and against any Losses to
which they or any of them may become subject under the Securities Act, the Exchange Act or
otherwise insofar as such Losses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in the case of the
Prospectus, in the light of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that any such Loss arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information relating to such Participant furnished in writing to the Company
by or on behalf of such Participant expressly for use therein.

          (c) Promptly after receipt by an indemnified party under Section 8(a) or 8(b) above of notice
of the commencement of any action, suit or proceeding (collectively, an “action”), such
indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party
under such subsection, notify each party against whom indemnification is to be sought in writing of
the commencement of such action (but the failure so to notify an indemnifying party shall not
relieve such indemnifying party from any liability that it may have under this Section 8 except to
the extent that it has been preju-

21

 

diced in any material respect by such failure). In case any such
action is brought against any indemnified party, and it notifies an indemnifying party of the
commencement of such action, the indemnifying party will be entitled to participate in such action,
and to the extent it may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense of such action with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such action, but the reasonable fees and expenses
of such counsel shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties shall not have employed
counsel to take charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) the named parties to such action (including any impleaded
parties) include such indemnified party and the indemnifying party or parties (or such indemnifying
parties have assumed the defense of such action), and such indemnified party or parties shall have
reasonably concluded, after consultation with counsel, that there may be defenses available to it
or them that are different from or additional to those available to one or all of the indemnifying
parties (in which case the indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which events such reasonable
fees and expenses of counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying party be liable for the reasonable fees and expenses of more than one counsel
(together with appropriate local counsel) at any time for all indemnified parties in connection
with any one action or separate but substantially similar or related actions arising in the same
jurisdiction out of the same general allegations or circumstances. Any such separate firm for the
Participants shall be designated in writing by Participants who sold a majority in interest of
Registrable Notes sold by all such Participants and shall be reasonably acceptable to the Company
and any such separate firm for the Issuers, their Affiliates, officers, directors, representatives,
employees and agents and such control Person of such Issuers shall be designated in writing by such
Issuers and shall be reasonably acceptable to the Holders. An indemnifying party shall not be
liable for any settlement of any claim or action effected without its written consent, which
consent may not be unreasonably withheld. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by paragraph (a) or (b) of this Section 8, then
the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying party at least 45
days’ prior notice of its intention to settle. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party,
unless such settlement (x) includes an
unconditional release of such indemnified party from all liability on claims that are the subject
matter of such proceeding and (y) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

          (d) In order to provide for contribution in circumstances in which the indemnification
provided for in this Section 8 is for any reason held to be unavailable from the indemnifying party
for any Losses referred to therein, or is insufficient to hold harmless a party indemnified under
this Section 8 for any Losses referred to therein, each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such aggregate Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by each indemnifying party,
on the one hand, and each indemnified party, on the other hand, from the sale of the Notes to the
Initial Purchasers or the resale of the Registrable Notes by such Holder, as applicable, or (ii) if
such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but

22

 

also the relative fault of each
indemnified party, on the one hand, and each indemnifying party, on the other hand, in connection
with the statements or omissions that resulted in such Losses, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers, on the one hand,
and each Participant, on the other hand, shall be deemed to be in the same proportion as (x)
the total proceeds from the sale of the Notes to the Initial Purchasers (net of discounts and
commissions but before deducting expenses) received by the Issuers are to (y) the total net profit
received by such Participant in connection with the sale of the Registrable Notes. The relative
fault of the parties shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Issuers or such Participant and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission or alleged statement or omission.

          (e) The parties agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to above. Notwithstanding the provisions
of this Section 8, (i) in no case shall any Participant be required to contribute any amount in
excess of the amount by which the net profit received by such Participant in connection with the
sale of the Registrable Notes exceeds the amount of any damages that such Participant has otherwise
been required to pay by reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8, notify such party
or parties from whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 8 or otherwise, except to the extent that it has
been prejudiced in any material respect by such failure; provided, however, that no additional
notice shall be required with respect to any action for which notice has been given under this
Section 8 for purposes of indemnification. Anything in this section to the contrary
notwithstanding, no party shall be liable for contribution with respect to any action or claim
settled without its written consent, provided, however, that such written consent was not
unreasonably withheld.

     Section 9. Rules 144 and 144A

          The Issuers covenant that they will file the reports required, if any, to be filed by them
under the Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder in a timely manner in accordance with the requirements of the Securities Act
and the Exchange Act and, if at any time the Issuers are not required to file such reports, they
will, upon the request of any Holder or beneficial owner of Registrable Notes, make available such
information necessary to permit sales pursuant to Rule 144A under the Securities Act. The Issuers
further covenant that for so long as any Registrable Notes remain outstanding they will take such
further action as any Holder of Registrable Notes may reasonably request from time to time to
enable such Holder to sell Registrable Notes without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 and Rule 144A under the Securities Act,
as such Rules may be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission.

     Section 10. Underwritten Registrations

          If any of the Registrable Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager or managers that
will man-

23

 

age the offering will be selected by the Holders of a majority in aggregate principal
amount of such Registrable Notes included in such offering and shall be reasonably acceptable to
the Company.

          No Holder of Registrable Notes may participate in any underwritten registration hereunder if
such Holder does not (a) agree to sell such Holder’s Registrable Notes on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements
and (b) complete and execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting arrangements.

     Section 11. Miscellaneous

          (a) No Inconsistent Agreements. The Issuers have not, as of the date hereof, and shall
not, after the date of this Agreement, enter into any agreement with respect to any of their
securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not conflict with and are not inconsistent with, in any material respect, the rights
granted to the holders of any of the Issuers’ other issued and outstanding securities under any
such agreements. The Issuers have not entered and will not enter into any agreement with respect
to any of their securities which will grant to any Person piggy-back registration rights with
respect to any Registration Statement.

          (b) Adjustments Affecting Registrable Notes. The Issuers shall not, directly or
indirectly, take any action with respect to the Registrable Notes as a class that would adversely
affect the ability of the Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.

          (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions hereof may not be given
except pursuant to a written agreement duly signed and delivered by (I) the Company (on behalf of
all Issuers) and (II)(A) the Holders of not less than a majority in aggregate principal amount of
the then outstanding Registrable Notes and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less than a majority in
aggregate principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 8 and this Section 11(c) may not be amended, modified or
supplemented except pursuant to a written agreement duly signed and delivered by the Issuers and
each Holder and each Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be, disposed of
pursuant to any Registration Statement) affected by any such amendment, modification, waiver or
supplement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other Holders of
Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of
the Registrable Notes being sold pursuant to such Registration Statement.

          (d) Notices. All notices and other communications (including, without limitation, any
notices or other communications to the Trustee) provided for or permitted hereunder shall be made
in writing by hand-delivery, registered first-class mail, next-day air courier or telecopier:

     (i) if to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the
most current address of such Holder or Participating Broker-Dealer, as the case may be, set
forth on the records of the registrar under the Indenture.

24

 

     (ii) if to any Issuer, to it

c/o Basic Energy Services, Inc.

400 W. Illinois, Suite 800

Midland, TX 79701

Fax: (432) 620-5501

Attention: Alan Krenek, Senior Vice President, Chief Financial Officer,

Treasurer, and Secretary

with a copy to:

Andrews Kurth LLP

600 Travis, Suite 4200

Houston, TX 77002

Fax: (713) 220-4285

Attention: David C. Buck, Esq.

     (iii) if to the Initial Purchasers, at the address as follows:

Goldman, Sachs & Co.

85 Broad Street

New York, New York 10004

Attention: Registration Department

          All such notices and communications shall be deemed to have been duly given: when delivered
by hand, if personally delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt is acknowledged by the recipient’s telecopier machine, if
telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.

          Copies of all such notices, demands or other communications shall be concurrently delivered by
the Person giving the same to the Trustee at the address and in the manner specified in such
Indenture.

          (e) Guarantors. So long as any Registrable Notes remain outstanding, the Issuers shall
cause each Person that becomes a guarantor of the Notes under the Indenture to execute and deliver
a counterpart to this Agreement which subjects such Person to the provisions of this Agreement as a
Guarantor. Each of the Guarantors agrees to join the Issuers in all of their undertakings
hereunder to effect the Exchange Offer for the Exchange Notes and the filing of any Shelf
Registration required hereunder.

          (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto, the Holders and the Participating
Broker-Dealers; provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such successor or assign
holds Registrable Notes.

          (g) Counterparts. This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement.

25

 

          (h) Headings. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

          (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

          (j) Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.

          (k) Securities Held by the Issuers or Their Affiliates. Whenever the consent or approval
of Holders of a specified percentage of Registrable Notes is required hereunder, Registrable Notes
held by the Issuers or any of their affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or approval was given by
the Holders of such required percentage.

          (l) Third-Party Beneficiaries. Holders and beneficial owners of Registrable Notes and
Participating Broker-Dealers are intended third-party beneficiaries of this Agreement, and this
Agreement may be enforced by such Persons. No other Person is intended to be, or shall be
construed as, a third-party beneficiary of this Agreement.

          (m) Entire Agreement. This Agreement, together with the Purchase Agreement and the
Indenture, is intended by the parties as a final and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein and therein
and any and all prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Holders on the one hand and
the Issuers on the other, or between or among any agents, representatives, parents, subsidiaries,
Affiliates, predecessors in interest or successors in interest with respect to the subject matter
hereof and thereof are merged herein and replaced hereby.

26

 

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

	 	 	 	 	 
	 	BASIC ENERGY SERVICES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	BASIC ENERGY SERVICES, GP, LLC, as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	BASIC ENERGY SERVICES, LP, LLC, as a

Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Jerry Tufly 	 
	 	 	Title:  	Sole Manager 	 
	 
	 	BASIC ENERGY SERVICES, L.P., as a Guarantor

 	 
	 	By:  	BASIC ENERGY SERVICES GP, LLC
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	FIRST ENERGY SERVICES COMPANY, as a

Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 

S-1

 

	 	 	 	 	 

	 	 	 	 	 
	 	BASIC ESA, INC., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	BASIC MARINE SERVICES, INC., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	CHAPARRAL SERVICE, INC., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	HENNESSEY RENTAL TOOLS, INC.,

as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	OILWELL FRACTURING SERVICES, INC.,

as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	WILDHORSE SERVICES, INC., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 

S-2

 

	 	 	 	 	 

	 	 	 	 	 
	 	LEBUS OIL FIELD SERVICE CO., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	GLOBE WELL SERVICE, INC., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	SCH DISPOSAL, L.L.C., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	JS ACQUISITION LLC, as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	JETSTAR HOLDINGS, INC., as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	ACID SERVICES LLC, as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 

S-3

 

	 	 	 	 	 

	 	 	 	 	 
	 	JETSTAR ENERGY SERVICES, INC.,

as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	SLEDGE DRILLING CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	PERMIAN PLAZA, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 
	 
	 	XTERRA FISHING & RENTAL TOOLS CO.

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth V. Huseman 	 
	 	 	Title:  	President 	 

S-4

 

	 	 	 	 	 

	 	 	 	 	 
	 	GOLDMAN, SACHS & CO.

BANC OF AMERICA SECURITIES LLC,

UBS SECURITIES LLC,

JEFFERIES & COMPANY, INC.,

CAPITAL ONE SOUTHCOAST, INC.,

COMERICA SECURITIES, INC. and

NATIXIS BLEICHROEDER INC.

 	 
	 	By:  	GOLDMAN, SACHS & CO.,
 	 
	 	 	BANC OF AMERICA SECURITIES LLC and 	 
	 	 	UBS SECURITIES LLC

as Representative of the Initial Purchasers 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	(Goldman, Sachs & Co.) 	 
	 	 	 	 
	 
	 	BANC OF AMERICA SECURITIES LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	UBS SECURITIES LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

S-5

 

Exhibit B

FORM OF OPINION OF COMPANY COUNSEL

          (i) The Company is validly existing as a corporation and in good standing under the laws of
the State of Delaware. Each of the Applicable Guarantors listed on the exhibit to the opinion is
validly existing as a corporation, limited liability company or limited partnership as indicated in
such exhibit and in good standing under the laws of its jurisdiction of Delaware or Texas as
indicated in such exhibit.

          (ii) The Company has the corporate power and corporate authority under the laws of the State
of Delaware to (i) execute and deliver, and incur and perform all of its obligations under, the
Note Documents and (ii) carry on its business and own its properties as described in the Offering
Circular. Each of the Applicable Guarantors has the corporate, limited liability company or
limited partnership power and authority under the laws of its jurisdiction of organization or
formation as indicated in the exhibit to the opinion to (i) execute and deliver, and to incur and
perform all of its obligations under, the Note Documents to which it is a party and (ii) carry on
its business and own its properties as described in the Offering Circular.

          (iii) Each of the Purchase Agreement, the Registration Rights Agreement, the Original Notes
and the Indenture has been duly authorized, executed and delivered by the Company. The Exchange
Notes have been duly authorized by the Company. Each of the Purchase Agreement, the Registration
Rights Agreement, the Indenture and the notations of guarantee appearing on the Original Notes has
been duly authorized, executed and delivered by each of the Applicable Guarantors. Each of the
Security Documents has been duly authorized, executed and delivered by each of the Grantors party
thereto.

          (iv) None of (i) the execution and delivery of, or the incurrence or performance by the
Issuers of their respective obligations under, each of the Note Documents to which it is a party,
each in accordance with its terms, (ii) the grant and perfection of the Liens on the Collateral
pursuant to the provisions of the Security Documents, (iii) the offering, issuance, sale and
delivery of the Original Notes pursuant to the Purchase Agreement, (iv) the offering, issuance,
exchange and delivery of the Exchange Notes pursuant to the Exchange Offer contemplated by the
Registration Rights Agreement in the manner therein contemplated, (v) the issuance of the
guaranties of the Original Notes by the Guarantors, as set forth in the Indenture, or (vi) the
issuance of the guaranties of the Exchange Notes by the Guarantors, as set forth in the Indenture,
at such time as the Exchange Notes are issued pursuant to the Exchange Offer contemplated by the
Registration Rights Agreement in the manner therein contemplated, (A) constituted, constitutes or
will constitute a violation of the Applicable Issuer Organizational Documents, (B) constituted,
constitutes or will constitute a breach or violation of, or a default (or an event which, with
notice or lapse of time or both, would constitute such a default), or result in a Repayment Event
(as defined in the Purchase Agreement), other than a Repayment Event that is contemplated by the
Pricing Disclosure Package and the Final Offering Circular to be satisfied at the Closing Date,
under any Applicable Agreement, (C) resulted, results or will result in the creation of any
security interest in, or lien upon, any of the property or assets of any Issuer

B-1

 

pursuant to any Applicable Agreement (other than Liens created and perfected pursuant to the
Security Documents), (D) resulted, results or will result in any violation of (i) applicable laws
of the State of New York, (ii) applicable laws of the State of Texas, (iii) the General Corporation
Law of the State of Delaware, (iv) the Delaware Limited Liability Company Act, (v) the Delaware
Revised Uniform Limited Partnership Act, (vi) applicable laws of the United States of America or
(vii) Regulation T, U or X of the Board of Governors of the Federal Reserve System, or (E)
resulted, results or will result in the contravention of any Applicable Order.

          (v) No Governmental Approval, which has not been obtained or taken and is not in full force
and effect, is required to authorize, or is required for (i) the execution and delivery by each of
the Issuers of, the Note Documents to which it is a party or the incurrence or performance of its
obligations thereunder, or the enforceability of any of such Note Documents against any of the
Issuers that is a party thereto, (ii) the grant and perfection of the Liens on the Collateral
pursuant to the provisions of the Security Documents (other than any filing required to perfect the
Liens on the Collateral pursuant to the Security Documents) or (iii) the offering, issuance, sale
and delivery of the Original Notes pursuant to the Purchase Agreement. As used in this paragraph,
“Governmental Approval” means any consent, approval, license, authorization or validation of, or
filing, recording or registration with, any executive, legislative, judicial, administrative or
regulatory body of the State of New York, the State of Texas, the State of Delaware or the United
States of America, pursuant to (i) applicable laws of the State of New York, (ii) applicable laws
of the State of Texas, (iii) the General Corporation Law of the State of Delaware, (iv) the
Delaware Limited Liability Company Act, (v) the Delaware Revised Uniform Limited Partnership Act
and (vi) applicable laws of the United States of America.

          (vi) The statements under the captions “Description of the Notes,” “Exchange Offer;
Registration Rights” and “Description of Other Indebtedness” in the Pricing Disclosure Package and
the Offering Circular, insofar as such statements purport to summarize certain provisions of
documents referred to therein and reviewed by us as described above, fairly summarize such
provisions in all material respects, subject to the qualifications and assumptions stated therein.

          (vii) The statements in the Preliminary Offering Circular and the Offering Circular under the
caption “Material United States Federal Income Tax Consequences,” insofar as they refer to
statements of law or legal conclusions, fairly summarize the matters referred to therein in all
material respects, subject to the qualifications and assumptions stated therein.

          (viii) The Indenture constitutes a valid and binding obligation of each of the Issuers,
enforceable against each of them in accordance with its terms, under applicable laws of the State
of New York.

          (ix) When authenticated by the Trustee in the manner provided in the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the Purchase Agreement, the Original
Notes will constitute valid and binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms, under applicable laws
of the State of New York.

B-2

 

          (x) When the Original Notes have been authenticated by the Trustee in the manner provided in
the Indenture and delivered to and paid for by the Initial Purchasers in accordance with the
Purchase Agreement, the guarantee of the Original Notes included in the Indenture will constitute a
valid and binding obligation of the Guarantors, enforceable against the Guarantors in accordance
with the terms of the Indenture, under applicable laws of the State of New York.

          (xi) When validly executed by the Issuer and authenticated by the Trustee in the manner
provided in the Indenture and delivered in exchange for Original Notes pursuant to the Exchange
Offer contemplated by the Registration Rights Agreement, the Exchange Notes will constitute valid
and binding obligations of the Issuer, entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, trader applicable laws of the State of New
York.

          (xii) When the Exchange Notes have been validly executed by the Company and authenticated by
the Trustee in accordance with the provisions of the Indenture and delivered in exchange for
Original Notes pursuant to the Exchange Offer contemplated by the Registration Rights Agreement,
the guarantee included in the Indenture of the Exchange Notes will constitute a valid and binding
obligation of the Guarantors, enforceable against the Guarantors in accordance with applicable laws
of the State of New York.

          (xiii) The Registration Rights Agreement constitutes a valid and binding obligation of each of
the Issuers, enforceable against each of them in accordance with its terms, under applicable laws
of the State of New York.

          (xiv) Each Security Document constitutes a valid and binding obligation of each Grantor party
thereto, enforceable against such Grantor in accordance with its terms under the applicable laws of
the State of New York..

          (xv) Each Security Document is effective to create, in favor of the Trustee for the benefit of
the Secured Parties (as defined in such Security Document), a valid security interest under the
Uniform Commercial Code of the State of New York (the “NY UCC”) in all of the right, title
and interest of each Grantor party thereto in, to and under the Collateral (as defined in such
Security Document) to which Article 9 of the NY UCC is applicable (the “Article 9
Collateral”) as collateral security for the payment when due of the Secured Obligations (as
defined in such Security Document).

          (xvi) Upon the creation of the security interest referred to in paragraph (xv) above
consisting of that portion of the Article 9 Collateral in which a security interest may be
perfected by the filing of a financing statement under (a) Article 9 of the Uniform Commercial of
the State of Delaware, such security interest will be perfected by the filing of the Delaware
Financing Statements1 in the office of the Secretary of State of the State of Delaware,
and (b) Chapter 9 of the Uniform Commercial of the State of Texas, such security interest will be

 

			
	1	 	To be defined as those Uniform Commercial Code
Financing Statements naming the Grantors organized in the State of Delaware as
debtors and the Trustee as secured party.

B-3

 

perfected by the filing of the Texas Financing Statements2 in the office of the
Secretary of State of the State of Texas.

          (xvii) Assuming (i) the accuracy of the representations and warranties of the Issuers set
forth in Section 5(a) of the Purchase Agreement, (ii) the due performance by the Issuers and the
Initial Purchasers of the covenants and agreements set forth in the Purchase Agreement, (iii) the
compliance by the Initial Purchasers with the offering and transfer procedures and the restrictions
described in the Offering Circular, (iv) the accuracy of the representations and warranties of the
Initial Purchasers set forth in Section 5(b) of the Purchase Agreement, (v) the accuracy of the
representations and warranties made or deemed to be made in accordance with the Purchase Agreement
and the Offering Circular by purchasers to whom the Initial Purchasers initially resell the
Original Notes, and (vi) that purchasers to whom the Initial Purchasers initially resell the
Original Notes have been made aware of the information set forth in the Offering Circular under the
caption “Notice to Investors,” (A) the offer, issue, sale and delivery of the Original Notes (and
the guaranties thereof by the Guarantors) to the Initial Purchasers and the initial resale of the
Original Notes (and the guaranties thereof by the Guarantors) by the Initial Purchasers, each in
the manner contemplated by the Purchase Agreement and the Offering Circular, do not require
registration under the Securities Act, and (B) prior to the consummation of the Exchange Offer or
the effectiveness of the Shelf Registration (as defined in the Registration Rights Agreement), such
offer, issue, sale and delivery of the Original Notes (and the guaranties thereof by the
Guarantors) and such initial resale of the Original Notes (and the guaranties thereof by the
Guarantors) do not require qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, provided, however, that we express no opinion as to any subsequent resale of any Original
Note (and the guaranties thereof by the Guarantors) or any Exchange Note (and the guaranties
thereof by the Guarantors).

          (xviii) Each of the Issuers is not, and immediately after giving effect to the issuance and
sale of the Original Notes occurring today and the application of proceeds therefrom as described
in the Offering Circular, will not be, an “investment company” within the meaning of said term as
used in the Investment Company Act of 1940, as amended.

          In addition, we have participated in conferences with officers and other representatives of
the Issuers, the independent registered public accounting firm for the Issuers, your counsel and
your representatives at which the contents of the Pricing Disclosure Package and the Offering
Circular and related matters were discussed and, although we have not independently verified and
are not passing upon, and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Pricing Disclosure Package and the Offering Circular
(except as and to the extent set forth in paragraphs 6 and 7 above), on the basis of the foregoing
(relying with respect to factual matters to the extent we deem appropriate upon statements by
officers and other representatives of the Issuers), no facts have come to our attention that have
led us to believe that (i) the Pricing Disclosure Package, as of 3:00 p.m. (New York City Time) on
July 23, 2009 (which you have informed us is a time prior to the time of the first sale of the
Securities by any Initial Purchaser), contained an untrue statement

 

			
	2	 	To be defined as those Uniform Commercial Code
Financing Statements naming the Grantors organized in the State of Texas as
debtors and the Trustee as secured party.

B-4

 

of a material fact or omitted to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, (ii) each
Company Supplemental Disclosure Document listed on Schedule IV to the Purchase Agreement,
as supplemented by and taken together with the Pricing Disclosure Package as of 3:00 p.m. (New York
City Time) on July 23, 2009, contained an untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (iii) the Offering Circular, as of its
date and as of the date hereof, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, it being understood that we express
no statement or belief in this letter with respect to (i) the financial statements and related
schedules, including the notes and schedules thereto and the auditor’s report thereon and (ii) any
other financial or accounting data, included in, or excluded from, the Offering Circular or the
Pricing Disclosure Package.

B-5

 

Exhibit C

FORM OF LOCAL COUNSEL OPINION

          (i) Each of Oilwell Fracturing Services, Inc., Wildhorse Services, Inc. and Hennessey Rental
Tools, Inc. (collectively, the “Oklahoma Guarantors”) has been duly incorporated and is validly
existing and in good standing under the laws of the State of Oklahoma.

          (ii) Each of the Oklahoma Guarantors has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Purchase Agreement, the Registration Rights
Agreement, the Indenture and the Security Documents to which such Oklahoma Guarantor is a party,
and to own and hold its respective properties and conduct its business as described in the Offering
Circular.

          (iii) Each of the Purchase Agreement, the Registration Rights Agreement, the Indenture, the
notation of guarantee appearing on the Original Notes and the Security Documents to which such
Oklahoma Guarantor is a party has been duly authorized, executed and delivered by each of the
Oklahoma Guarantors.

          (iv) Each of the Oklahoma Guarantors has duly authorized its notation of guarantee on the
Exchange Notes.

          (v) (i) The issuance of the guarantee of the Original Notes by each of the Oklahoma
Guarantors, as set forth in the Indenture, (ii) the issuance of the guarantee of the Exchange Notes
by each of the Oklahoma Guarantors, as set forth in the Indenture, at such time as the Exchange
Notes are issued pursuant to the Exchange Offer contemplated by the Registration Rights Agreement
in the manner therein contemplated, (iii) the execution, delivery and compliance by each of the
Oklahoma Guarantors with all of the provisions of the Note Documents and the performance of its
obligations thereunder and (iv) the grant and perfection of the Liens on the Collateral pursuant to
the provisions of the Security Documents will not result in a violation of each of the Oklahoma
Guarantor’s certificate of incorporation, as amended, or by-laws, as amended, as certified by each
of the Oklahoma Guarantors to be in effect on the date of the opinion or any Applicable
Law.3

          (vi) To the extent that the filing of a financing statement can be effective to perfect a
security interest in the Article 9 Collateral (as such term is hereinafter defined) under the
Oklahoma Uniform Commercial Code (the “Oklahoma UCC”), the security interest in favor of the
Trustee in that portion of the Article 9 Collateral described in the financing statements will be
duly perfected upon the filing of the financing statements in the Office of the Secretary of State
of the State of Oklahoma. As used herein, the term “Article 9 Collateral” means, collectively,
that portion of the Collateral (as such term is defined in the Security Agreement) to the extent
that such Collateral is property in which a security interest may be created under Article 9 of the
Oklahoma UCC.

 

			
	3	 	Applicable Law will be defined as the laws of the State
of Oklahoma.

C-1

 

Exhibit D

FORM OF LOCAL COUNSEL OPINION

          (i) Acid Services, LLC (the “Company”) has been duly formed and is validly existing and in
good standing under the laws of the State of Kansas.

          (ii) The Company has all necessary limited liability company power and authority to execute,
deliver and perform its obligations under the Purchase Agreement, the Registration Rights
Agreement, the Indenture and the Security Documents to which it is a party and to own and hold its
respective properties and conduct its business as described in the Offering Circular.

          (iii) Each of the Purchase Agreement, the Registration Rights Agreement, the Indenture, the
notation of guarantee appearing on the Original Notes and the Security Documents to which it is a
party has been duly authorized, executed and delivered by the Company.

          (iv) The Company has duly authorized its notation of guarantee on the Exchange Notes.

          (v) (i) The issuance of the guarantee of the Original Notes by the Company, as set forth in
the Indenture, (ii) the issuance of the guarantee of the Exchange Notes by the Company, as set
forth in the Indenture, at such time as the Exchange Notes are issued pursuant to the Exchange
Offer contemplated by the Registration Rights Agreement in the manner therein contemplated, (iii)
the execution, delivery and compliance by the Company with all of the provisions of the Note
Documents and the performance of its obligations thereunder and (iv) the grant and perfection of
the Liens on the Collateral pursuant to the provisions of the Security Documents will not result in
a violation of the articles of organization, as amended, or limited liability company agreement, as
amended, of the Company certified by the Company as in effect on the date of the opinion or any
Applicable Law.4

          (vi) To the extent that the filing of a financing statement can be effective to perfect a security
interest in the Article 9 Collateral (as such term is hereinafter defined) under the Kansas Uniform
Commercial Code (the “Kansas UCC”), the security interest in favor of the Trustee in that portion
of the Article 9 Collateral described in the financing statements will be duly perfected upon the
filing of the financing statements in the Office of the Secretary of State of the State of Kansas.
As used herein, the term “Article 9 Collateral” means, collectively, that portion of the Collateral
(as such term is defined in the Security Agreement) to the extent that such Collateral is property
in which a security interest may be created under Article 9 of the Kansas UCC.

 

			
	4	 	Applicable Law will be defined as the laws of the State
of Kansas.

D-1

 

Exhibit E

FORM OF LOCAL COUNSEL OPINION

          (i) Chaparral Service, Inc. (the “Company”) has been duly incorporated and is validly existing
and in good standing under the laws of the State of New Mexico.

          (ii) The Company has all necessary corporate power and authority to execute, deliver and
perform its obligations under the Purchase Agreement, the Registration Rights Agreement, the
Indenture and the Security Documents to which it is a party and to own and hold its respective
properties and conduct its business as described in the Offering Circular.

          (iii) Each of the Purchase Agreement, the Registration Rights Agreement, the Indenture, the
notation of guarantee appearing on the Original Notes and the Security Documents to which it is a
party has been duly authorized, executed and delivered by the Company.

          (iv) The Company has duly authorized its notation of guarantee on the Exchange Notes.

          (v) (i) The issuance of the guarantee of the Original Notes by the Company, as set forth in
the Indenture, (ii) the issuance of the guarantee of the Exchange Notes by the Company, as set
forth in the Indenture, at such time as the Exchange Notes are issued pursuant to the Exchange
Offer contemplated by the Registration Rights Agreement in the manner therein contemplated, (iii)
the execution, delivery and compliance by the Company with all of the provisions of the Note
Documents and the performance of its obligations thereunder and (iv) the grant and perfection of
the Liens on the Collateral pursuant to the provisions of the Security Documents will not result in
a violation of the certificate of incorporation, as amended, or by-laws, as amended, of the Company
certified by the Company as in effect on the date of the opinion or any Applicable Law.5

          (vi) To the extent that the filing of a financing statement can be effective to perfect a
security interest in the Article 9 Collateral (as such term is hereinafter defined) under the New
Mexico Uniform Commercial Code (the “New Mexico UCC”), the security interest in favor of the
Trustee in that portion of the Article 9 Collateral described in the financing statements will be
duly perfected upon the filing of the financing statements in the Office of the Secretary of State
of the State of New Mexico. As used herein, the term “Article 9 Collateral” means, collectively,
that portion of the Collateral (as such term is defined in the Security Agreement) to the extent
that such Collateral is property in which a security interest may be created under Article 9 of the
New Mexico UCC.

 

			
	5	 	Applicable Law will be defined as the laws of the State
of New Mexico.

E-1exv10w1

REVOLVING CREDIT AND SECURITY AGREEMENT

between

AMERICA SERVICE GROUP INC.

PRISON HEALTH SERVICES, INC.

PRISON HEALTH SERVICES OF INDIANA, L.L.C.

SECURE PHARMACY PLUS, LLC

CORRECTIONAL HEALTH SERVICES, LLC

and

CAPITALSOURCE BANK

Dated as of

July 28, 2009

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 
	 	 	 	 
	I.
	 	DEFINITIONS
	 	 	1	 
	1.1
	 	General Terms
	 	 	1	 
	II.
	 	ADVANCES, PAYMENT AND INTEREST
	 	 	2	 
	2.1
	 	The Revolving Facility
	 	 	2	 
	2.2
	 	The Revolving Loans; Maturity
	 	 	2	 
	2.3
	 	Interest
on the Revolving Facility
	 	 	2	 
	2.4
	 	Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate
	 	 	3	 
	2.5
	 	Collections; Repayment; Borrowing Availability and Lockbox
	 	 	3	 
	2.6
	 	Manner of Payment; Promise to Pay
	 	 	4	 
	2.7
	 	Repayment of Excess Advances
	 	 	4	 
	2.8
	 	Payments by Agent
	 	 	5	 
	2.9
	 	Grant of Security Interest; Collateral
	 	 	5	 
	2.10
	 	Collateral Administration
	 	 	6	 
	2.11
	 	Power of Attorney
	 	 	7	 
	2.12
	 	Letters of Credit
	 	 	8	 
	2.13
	 	Evidence of Loans
	 	 	11	 
	III.
	 	FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE
	 	 	12	 
	3.1
	 	Unused Line Fee
	 	 	12	 
	3.2
	 	Collateral Management Fee
	 	 	12	 
	3.3
	 	Early Termination Fee
	 	 	12	 
	3.4
	 	Computation of Fees; Lawful Limits
	 	 	13	 
	3.5
	 	Default Rate of Interest
	 	 	13	 
	3.6
	 	Acknowledgement of Joint and Several Liability
	 	 	13	 
	IV.
	 	CONDITIONS PRECEDENT
	 	 	14	 
	4.1
	 	Conditions to Effectiveness of Agreement and Closing
	 	 	14	 
	4.2
	 	Conditions to Each Advance and Issuance of Each Letter of Credit
	 	 	16	 
	V.
	 	REPRESENTATIONS AND WARRANTIES
	 	 	16	 
	5.1
	 	Organization and Authority
	 	 	17	 
	5.2
	 	Loan Documents
	 	 	17	 
	5.3
	 	Subsidiaries, Capitalization and Ownership Interests
	 	 	17	 
	5.4
	 	Properties
	 	 	18	 
	5.5
	 	Other Agreements
	 	 	18	 
	5.6
	 	Litigation
	 	 	18	 
	5.7
	 	Hazardous Materials
	 	 	18	 
	5.8
	 	Tax Returns; Governmental Reports
	 	 	19	 
	5.9
	 	Financial Statements and Reports
	 	 	19	 
	5.10
	 	Compliance with Law
	 	 	19	 
	5.11
	 	Intellectual Property
	 	 	20	 
	5.12
	 	Licenses and Permits; Labor
	 	 	20	 
	5.13
	 	No Default
	 	 	20	 
	5.14
	 	Disclosure
	 	 	20	 
	5.15
	 	Existing Indebtedness; Investments, Guarantees and Certain Contracts
	 	 	20	 
	5.16
	 	Other Agreements
	 	 	21	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 
	 	 	 	 
	5.17
	 	Insurance
	 	 	21	 
	5.18
	 	Names; Location of Offices, Records and Collateral
	 	 	21	 
	5.19
	 	Non-Subordination
	 	 	21	 
	5.20
	 	Accounts
	 	 	21	 
	5.21
	 	Survival
	 	 	22	 
	5.22
	 	Performance and Payment Bonds for Government Contracts
	 	 	22	 
	5.23
	 	OFAC and Anti-Terrorism Regulations
	 	 	22	 
	VI.
	 	AFFIRMATIVE COVENANTS
	 	 	22	 
	6.1
	 	Financial Statements, Reports and Other Information
	 	 	22	 
	6.2
	 	Payment of Obligations
	 	 	24	 
	6.3
	 	Conduct of Business and Maintenance of Existence and Assets
	 	 	24	 
	6.4
	 	Compliance with Legal and Other Obligations
	 	 	24	 
	6.5
	 	Insurance
	 	 	25	 
	6.6
	 	True Books
	 	 	25	 
	6.7
	 	Inspection; Periodic Audits
	 	 	25	 
	6.8
	 	Further Assurances; Post Closing
	 	 	26	 
	6.9
	 	Payment of Indebtedness
	 	 	26	 
	6.10
	 	Lien Terminations
	 	 	26	 
	6.11
	 	Use of Proceeds
	 	 	26	 
	6.12
	 	Collateral Documents; Security Interest in Collateral
	 	 	26	 
	6.13
	 	Taxes and Other Charges
	 	 	27	 
	6.14
	 	New Subsidiaries
	 	 	27	 
	6.15
	 	Schedules to the Loan Agreement
	 	 	28	 
	6.16
	 	New Government Contracts
	 	 	28	 
	VII.
	 	NEGATIVE COVENANTS
	 	 	28	 
	7.1
	 	Financial Covenants
	 	 	28	 
	7.2
	 	Permitted Indebtedness
	 	 	28	 
	7.3
	 	Permitted Liens
	 	 	29	 
	7.4
	 	Investments; New Facilities or Collateral; Subsidiaries
	 	 	30	 
	7.5
	 	Dividends; Redemptions; Equity
	 	 	30	 
	7.6
	 	Transactions with Affiliates
	 	 	31	 
	7.7
	 	Charter Documents; Fiscal Year; Dissolution; Collateral Assignment
	 	 	31	 
	7.8
	 	Transfer of Assets
	 	 	32	 
	7.9
	 	Contingent Obligations
	 	 	32	 
	7.10
	 	Truth of Statements
	 	 	32	 
	7.11
	 	Payment on Subordinated Debt
	 	 	32	 
	7.12
	 	IRS Form 8821
	 	 	32	 
	VIII.
	 	EVENTS OF DEFAULT
	 	 	32	 
	IX.
	 	RIGHTS AND REMEDIES AFTER DEFAULT
	 	 	35	 
	9.1
	 	Rights and Remedies
	 	 	35	 
	9.2
	 	Application of Proceeds
	 	 	35	 
	9.3
	 	Rights of Agent to Appoint Receiver
	 	 	36	 
	9.4
	 	Rights and Remedies not Exclusive
	 	 	36	 
	X.
	 	WAIVERS AND JUDICIAL PROCEEDINGS
	 	 	36	 
	10.1
	 	Waivers
	 	 	36	 
	10.2
	 	Delay; No Waiver of Defaults
	 	 	37	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 
	 	 	 	 
	10.3
	 	Jury Waiver
	 	 	37	 
	10.4
	 	Cooperation in Discovery and Litigation
	 	 	38	 
	10.5
	 	Amendment and Waivers
	 	 	38	 
	XI.
	 	EFFECTIVE DATE AND TERMINATION
	 	 	38	 
	11.1
	 	Effectiveness and Termination
	 	 	39	 
	11.2
	 	Survival
	 	 	39	 
	XI-A.
	 	AGENCY PROVISIONS
	 	 	39	 
	11-A.1
	 	Agent
	 	 	39	 
	11-A.2
	 	Consents
	 	 	43	 
	11-A.3
	 	Set Off and Sharing of Payments
	 	 	43	 
	11-A.4
	 	Disbursement of Funds
	 	 	44	 
	11-A.5
	 	Settlements; Payments and Information
	 	 	44	 
	11-A.6
	 	Dissemination of Information
	 	 	46	 
	XI-B.
	 	BORROWING AGENCY
	 	 	46	 
	11-B.1
	 	Borrowing Agency Provisions
	 	 	46	 
	11-B.2
	 	Waiver of Subrogation
	 	 	47	 
	XII.
	 	MISCELLANEOUS
	 	 	47	 
	12.1
	 	Governing Law; Jurisdiction; Service of Process; Venue
	 	 	47	 
	12.2
	 	Successors and Assigns; Assignments and Participation; New Lenders
	 	 	47	 
	12.3
	 	Application of Payments
	 	 	49	 
	12.4
	 	Indemnity
	 	 	50	 
	12.5
	 	Notice
	 	 	50	 
	12.6
	 	Severability; Captions; Counterparts; Facsimile Signatures
	 	 	51	 
	12.7
	 	Expenses
	 	 	51	 
	12.8
	 	Entire Agreement
	 	 	51	 
	12.9
	 	Agent Approvals
	 	 	52	 
	12.10
	 	Confidentiality and Publicity
	 	 	52	 
	12.11
	 	Release of Agent and Lenders
	 	 	52	 
	12.12
	 	Agreement Controls
	 	 	53	 
	12.13
	 	Patriot Act
	 	 	53	 

iii

 

REVOLVING CREDIT AND SECURITY AGREEMENT

     THIS REVOLVING CREDIT AND SECURITY AGREEMENT (the “Agreement”) dated as of July 28, 2009, is
entered into between AMERICA SERVICE GROUP INC., a Delaware corporation (“ASG”), PRISON HEALTH
SERVICES, INC., a Delaware corporation (“PHS”), PRISON HEALTH SERVICES OF INDIANA, L.L.C., an
Indiana limited liability company (“PHS Indiana”), SECURE PHARMACY PLUS, LLC, a Tennessee limited
liability company (“SPP”), and CORRECTIONAL HEALTH SERVICES, LLC, a New Jersey limited liability
company (“CHS” and together with ASG, PHS, PHS Indiana, and SPP, individually and collectively as
the “Borrower”), CAPITALSOURCE BANK, a California industrial bank (“CapitalSource”), as
administrative agent and collateral agent for Lenders (in such capacities, the “Agent”), and the
Lenders party hereto.

     WHEREAS, Borrower has requested that Lenders make available to Borrower a revolving credit
facility (the “Revolving Facility”) in a maximum principal amount at any time outstanding of up to
Forty Million Dollars ($40,000,000) (the “Facility Cap”) and within the Facility Cap, a sublimit of
Fifteen Million Dollars ($15,000,000) (the “L/C Sublimit”), the proceeds of such Revolving Facility
shall be used by Borrower for general corporate matters and purposes, and working capital needs in
connection with its provision of medical and related services to correctional facilities;

     WHEREAS, the parties agree that the Existing Letters of Credit (as defined below) shall be
governed by and deemed to be outstanding under the terms and conditions of this Agreement; and

     WHEREAS, Lenders are willing to make the Revolving Facility available to Borrower upon the
terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged, Borrower, Agent and
Lenders hereby agree as follows:

I. DEFINITIONS

     1.1 General Terms

          For purposes of this Agreement, in addition to the definitions above and elsewhere in this
Agreement, the terms listed in Appendix A and Annex I hereto shall have the
meanings given such terms in Appendix A and Annex I, which are incorporated herein
and made a part hereof. All capitalized terms used which are not specifically defined shall have
meanings provided in Article 9 of the UCC in effect on the date hereof to the extent the same are
used or defined therein. Unless otherwise specified herein or in Appendix A, any agreement
or contract referred to herein or in Appendix A shall mean such agreement as modified,
amended, restated or supplemented from time to time. Unless otherwise specified, as used in the
Loan Documents or in any certificate, report, instrument or other document made or delivered
pursuant to any of the Loan Documents, all accounting terms not defined in Appendix A or
elsewhere in this Agreement shall have the meanings given to such terms in and shall be interpreted
in accordance with GAAP. References herein to “Eastern Time” shall mean eastern standard time or
eastern daylight savings time as in effect on any date of determination in the eastern United
States of America.

 

 

II. ADVANCES, PAYMENT AND INTEREST

     2.1 The Revolving Facility

          (a) Subject to the provisions of this Agreement, each Lender agrees to make available its Pro
Rata Share of Advances, including Advances in connection with the issuance or collateralization of
Letters of Credit, to Borrower under the Revolving Facility from time to time during the Term;
provided, that (i) the Pro Rata Share of the Advances of any Lender shall not at any time exceed
its separate Commitment, and (ii) the aggregate amount of all Advances at any time outstanding
under the Revolving Facility, together with the then aggregate amount of L/C Exposure, shall not
exceed the lesser of (A) the Facility Cap and (B) the Availability. The obligations of Lenders
hereunder shall be several and not joint up to the amount of the Commitments. The Revolving
Facility is a revolving credit facility, which may be drawn, repaid and redrawn, from time to time
as permitted under this Agreement. Any determination as to whether there is availability within
the Borrowing Base for Advances shall be made by Agent in its Permitted Discretion and is final and
binding upon Borrower. Unless otherwise permitted by Agent, each Advance shall be in an amount of
at least $100,000. Subject to the provisions of this Agreement, Borrower may request Advances
under the Revolving Facility up to and including the value, in Dollars, of 85% of the Borrowing
Base (such calculated amount being referred to herein as the “Availability”). Advances under the
Revolving Facility automatically shall be made for the payment of interest on the Loans and other
Obligations on the date when due to the extent available and as provided for herein.

          (b) Agent has established the above-referenced advance rate for Availability and, following an
audit and review of Borrower’s financial statements and with not less than three (3) Business Days
prior notice to Borrower (except that upon the occurrence, and during the continuance, of a Default
or Event of Default, such notice shall not be required), may further adjust the Availability and
such advance rate by applying percentages (known as “liquidity factors”) to Eligible Receivables
based upon Borrower’s actual recent collection history all in a manner consistent with Agent’s
underwriting practices and procedures, including, without limitation, Agent’s review and analysis
of, among other things, Borrower’s historical returns, rebates, discounts, credits and allowances
(collectively, the “Dilution Items”). Such liquidity factors and the advance rate for Availability
may be adjusted by Agent, throughout the Term, subject to prior notice to Borrower, as warranted by
Agent’s underwriting practices and procedures in its Permitted Discretion. Also, Agent shall have
the right to establish and readjust from time to time, in its Permitted Discretion, reserves
against the Borrowing Base, which reserves shall have the effect of reducing the amounts otherwise
eligible to be disbursed to Borrower under the Revolving Facility pursuant to this Agreement.

     2.2 The Revolving Loans; Maturity

          All amounts outstanding under the Revolving Loans and other Obligations under the Revolving
Facility shall be due and payable in full, if not earlier in accordance with this Agreement, upon
the earliest of (i) any automatic acceleration upon an Event of Default as provided for herein;
(ii) Agent’s acceleration and demand for payment following an Event of Default, and (iii) the last
day of the Term (such earlier date being the “Maturity Date”).

     2.3 Interest on the Revolving Facility

          Interest on outstanding Advances under the Revolving Loans shall be payable monthly in arrears
on the first day of each calendar month at an annual rate of LIBOR plus 2.0%, calculated on the
basis of a 360-day year and for the actual number of calendar days elapsed in each interest
calculation period. Notwithstanding the foregoing (and without affecting Agent’s rights under
Section 3.5 hereof),

2

 

during the continuance of an Event of Default and at any other time when Agent has determined
that LIBOR cannot be readily determined or is otherwise unavailable, interest on outstanding
Advances under the Revolving Facility shall be payable monthly in arrears on the first day of each
calendar month at an annual rate of the Prime Rate; provided, however, that,
notwithstanding any provision of any Loan Document, for the purpose of calculating interest at any
time hereunder, LIBOR shall be not less than 3.14%, in each case calculated on the basis of a
360-day year and for the actual number of calendar days elapsed in each interest calculation
period. Interest accrued on each Advance under the Revolving Loans shall be payable in accordance
with the procedures provided for in Section 2.5 and Section 2.6, commencing August
1, 2009 and continuing until the later of the expiration of the Term and the full performance and
irrevocable payment in full in cash of the Obligations and termination of this Agreement. Interest
on outstanding Advances under the Revolving Loans shall accrue from the respective funding dates of
the Advances.

     2.4 Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate

          So long as no Default or Event of Default shall have occurred and be continuing, Borrower may
give Agent irrevocable written notice requesting an Advance under the Revolving Facility by
notifying Agent not later than 12:00 p.m. (New York City time) at least one (1) but not more than
four (4) Business Days before the proposed borrowing date of such requested Advance (the “Borrowing
Date”), and delivering to Agent by noon (New York City time) on the date of the proposed borrowing,
a completed Borrowing Certificate and relevant supporting documentation satisfactory to Agent in
its Permitted Discretion (which shall only include an Accounts re-aging once each month, as
specified below), which shall (a) specify the proposed Borrowing Date of such Advance which shall
be a Business Day, (b) specify the principal amount of such requested Advance, (c) certify the
matters contained in Section 4.2, and (d) specify the amount of any known recoupments or
setoffs by any third party payor being sought, requested or claimed, or, to Borrower’s knowledge,
threatened against Borrower to the extent not otherwise reflected in the calculation of
Availability. Each time a request for an Advance is made, and, in any event and regardless of
whether an Advance is being requested, each month during the Term until the Obligations are
indefeasibly paid in cash in full and this Agreement is terminated, Borrower shall deliver to Agent
a Borrowing Certificate accompanied by a separate detailed aging and categorization of Borrower’s
accounts receivable, and such other supporting documentation with respect to the figures and
information in the Borrowing Certificate as Agent shall request in its Permitted Discretion from a
credit or security perspective or otherwise. On each Borrowing Date, Borrower irrevocably
authorizes Agent to disburse the proceeds of the requested Advance to the Borrower’s account(s) as
set forth on Schedule 2.4, in all cases for credit to the Borrower (or to such other
account as to which the Borrower shall instruct Agent) via Federal funds wire transfer no later
than 4:00 p.m. Eastern Time. If Borrower’s Borrowing Certificate does not request the same dollar
amount as that which Borrower estimated in its notification to Agent, Borrower agrees to pay any
interest cost incurred by Agent in connection with such estimated funds.

     2.5 Collections; Repayment; Borrowing Availability and Lockbox

          Borrower shall maintain a lockbox together with a blocked account (individually and
collectively, the “Blocked Account”) with one or more banks acceptable to Agent (each, a “Lockbox
Bank”), and shall execute with each Lockbox Bank one or more agreements acceptable to Agent in its
Permitted Discretion (individually and collectively, the “Lockbox Agreement”), and such other
agreements related thereto as Agent may require in its Permitted Discretion. Borrower shall ensure
that all collections of its Accounts and all other cash payments received by Borrower are paid and
delivered directly from Account Debtors and other Persons into the Blocked Account. The Lockbox
Agreements shall provide that the Lockbox Banks on each Business Day will promptly transfer all
funds paid into the Blocked Accounts into a depository account or accounts maintained by Agent or
an Affiliate of Agent at

3

 

such bank as Agent may communicate to Borrower from time to time (the “Concentration
Account”). Notwithstanding and without limiting any other provision of any Loan Document, Agent
shall apply to the Obligations, on a daily basis, all funds transferred into the Concentration
Account pursuant to the Lockbox Agreement and this Section 2.5 in such order and manner as
determined by Agent. To the extent that any Accounts collections of Borrower or any other cash
payments received by Borrower are not sent directly to the Blocked Account but are received by
Borrower or any of its Affiliates, such collections and proceeds shall be held in trust for the
benefit of Agent and Lenders and promptly remitted (and in any event within two (2) Business Days),
to the Blocked Account for transfer to the Concentration Account. Borrower acknowledges and agrees
that compliance with the terms of this Section 2.5 is an essential term of this Agreement,
and that, in addition to and notwithstanding any other rights Agent may have hereunder, under any
other Loan Document, under applicable law or at equity, upon each material failure by Borrower to
comply with any such terms which is not promptly remedied, Agent shall be entitled to assess a
non-compliance fee which shall operate to increase the Applicable Rate by two percent (2.0%) per
annum during any period of non-compliance, whether or not a Default or an Event of Default occurs
or is declared; provided, that nothing shall prevent Agent from considering any failure to
comply with the terms of this Section 2.5 to be a Default or an Event of Default. All
funds transferred to the Concentration Account for application to the Obligations under the
Revolving Facility shall be applied to reduce the Obligations under the Revolving Facility, but,
only for purposes of calculating interest hereunder, shall be subject to a two (2) Business Day
clearance period unless the net Advance balance is zero or a credit at the end of the day in which
case collection swept to the Concentration Account for such day will not be subject to the two (2)
Business Day clearance period. If as the result of collections of Accounts and/or any other cash
payments received by Borrower pursuant to this Section 2.5 a credit balance exists with
respect to the Concentration Account, such credit balance shall not accrue interest in favor of a
Borrower, but shall be available to Borrower upon Borrower’s demand therefor. If applicable, at
any time prior to the execution of all or any of the Lockbox Agreements and operation of the
Blocked Account, Borrower and its Subsidiaries shall direct all collections or proceeds it receives
on Accounts or from other Collateral to the accounts(s) and in the manner specified by Agent in its
sole discretion.

     2.6 Manner of Payment; Promise to Pay

          (a) Any payments made by Borrower (other than payments automatically paid through Advances
under the Revolving Facility as provided herein), shall be made only by ACH or wire transfer on the
date when due, without offset or counterclaim, in Dollars, in immediately available funds to such
account as may be indicated in writing by Agent to Borrower from time to time. Any such payment
received after 4:00 p.m. Eastern Time on any date shall be deemed received on the following
Business Day. Whenever any payment hereunder shall be stated to be due or shall become due and
payable on a day other than a Business Day, the due date thereof shall be extended to, and such
payment shall be made on, the next succeeding Business Day, and such extension of time in such case
shall be included in the computation of payment of any interest (at the interest rate then in
effect during such extension) and/or fees, as the case may be. Agent will provide detailed monthly
invoices of such charges and payments.

          (b) Borrower absolutely and unconditionally promises to pay the Obligations hereunder in
accordance with the manner and terms hereof, without any deduction whatsoever, without setoff,
recoupment or counterclaim, each of which claim or defense hereby is waived.

     2.7 Repayment of Excess Advances

          If at any time the sum of outstanding Advances under the Revolving Facility plus any Unfunded
L/C Exposure exceeds the lesser of the Facility Cap or the Availability, such excess amount shall
be immediately due and payable by Borrower without the necessity of any demand, at the Payment

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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 2.6.

     2.8 Payments by Agent

          Should any amount required to be paid under any Loan Document remain unpaid for ten (10)
Business Days from the date due, such amount may be paid by Agent, for the account of Lenders,
which payment shall be deemed a request for an Advance under the Revolving Facility as of the date
such payment is due, and Borrower irrevocably authorizes disbursement of any such funds to Agent,
for the benefit of Lenders, by way of direct payment of the relevant amount, interest or
Obligations. No payment or prepayment of any amount by Agent, Lenders or any other Person shall
entitle any Person to be subrogated to the rights of Agent and/or Lenders under any Loan Document
unless and until the Obligations have been fully performed and paid irrevocably in cash and this
Agreement has been terminated. Any sums expended by Agent and/or Lenders as a result of Borrower’s
or any Guarantor’s failure to pay, perform or comply with any Loan Document or any of the
Obligations may be charged to Borrower’s account as an Advance under the Revolving Facility and
added to the Obligations.

     2.9 Grant of Security Interest; Collateral

          (a) To secure the payment and performance of the Obligations, each Borrower hereby grants to
Agent, for the benefit of itself and the Lenders, a continuing first priority security interest in
and Lien upon, and pledges to Agent, for the benefit of itself and the Lenders, all of its right,
title and interest in and to the following, together with property of a similar nature which each
such Borrower owns or in which each such Borrower hereafter acquires any right, title or interest
(collectively and each individually, the “Collateral”):

               (i) all of such Borrower’s tangible personal property, including without limitation all
present and future Goods, Inventory and Equipment (including items of Equipment which are or become
Fixtures), now owned or hereafter acquired, but excluding any leased or financed Equipment;

               (ii) all of such Borrower’s intangible personal property, including without limitation all
present and future Accounts, securities, contract rights, Permits, General Intangibles, Chattel
Paper, Investment Property, Intellectual Property including goodwill, Documents, Instruments and
Deposit Accounts, Letter of Credit Rights and supporting obligations rights to the payment of money
or other forms of consideration of any kind, tax refunds, insurance proceeds (including, without
limitation, proceeds of any life insurance policy), now owned or hereafter acquired, and all
intangible and tangible personal property relating to or arising out of any of the foregoing;

               (iii) all of such Borrower’s present and future Government Contracts and rights thereunder and
the related Government Accounts and proceeds thereof, now or hereafter owned or acquired by such
Borrower; provided, however, that Agent shall not have a Lien in any rights under
any Government Contract of such Borrower or in the related Government Account where the taking of
such security interest would be prohibited by applicable law (for purposes of this limitation, the
fact that a Government Contract is subject to, or otherwise refers to, Title 31, § 203 or Title 41,
§ 15 of the United States Code shall not be deemed an express prohibition against assignment
thereof); and

               (iv) any and all additions and accessions to any of the foregoing, and any and all
replacements, products and proceeds (including insurance proceeds) of any of the foregoing.

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          (b) Notwithstanding the foregoing provisions of this Section 2.9, such grant of a
security interest shall not extend to, and the term “Collateral” shall not include, any General
Intangibles of Borrower to the extent that (but only to the extent that) (i) such General
Intangibles are not assignable or capable of being encumbered as a matter of law or under the terms
of any license or other agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law) without the consent of the licensor thereof
or other applicable party thereto, and (ii) such consent has not been obtained; provided,
however, that the foregoing grant of a security interest shall extend to, and the term
“Collateral” shall include, each of the following: (a) any General Intangible which is in the
nature of an Account or a right to the payment of money or a proceed of, or otherwise related to
the enforcement or collection of, any Account or right to the payment of money, or goods which are
the subject of any Account or right to the payment of money, (b) any and all proceeds of any
General Intangible that is otherwise excluded to the extent that the assignment, pledge or
encumbrance of such proceeds is not so restricted, and (c) upon obtaining the consent of any such
licensor or other applicable party with respect to any such otherwise excluded General Intangible,
such General Intangible as well as any and all proceeds thereof that might theretofor have been
excluded from such grant of a security interest and from the term “Collateral.”

          (c) In addition to the foregoing, to secure the payment and performance of the Obligations,
ASG has pledged to Agent, for the benefit of the Lenders, all of the securities of its Subsidiaries
pursuant to the Stock Pledge Agreement.

          (d) Each Borrower has full right and power to grant to Agent a perfected, first priority
security interest and Lien in the Collateral pursuant to this Agreement. Upon the execution and
delivery of this Agreement, and upon the filing of the necessary financing statements, which
Borrower hereby authorizes Agent to file, and delivery of any necessary stock certificates, without
any further action, Agent will have a good, valid and perfected first priority Lien and security
interest in the Collateral, subject to no transfer or other restrictions or Liens of any kind in
favor of any other Person except for Permitted Liens. No financing statement relating to any of
the Collateral will be, on the Closing Date, on file in any public office except those (a) on
behalf of Agent, and (b) in connection with Permitted Liens. Borrower is not a party to any
agreement, document or instrument that conflicts with this Section 2.9 or that otherwise
relates to a security interest in, assignment of, or Lien upon the Collateral.

     2.10 Collateral Administration

          (a) Except as permitted pursuant to Sections 7.8(a) and 7.8(b), all Collateral
(except Deposit Accounts and Collateral having an aggregate value of $50,000 or less at any one
location) will at all times be kept by Borrower at the locations set forth on Schedule 5.4
hereto, which may be amended from time to time, and shall not, without thirty (30) calendar days
prior written notice to Agent, be moved therefrom, and in any case shall not be moved outside the
continental United States. Whether or not an Event of Default has occurred, any of the Agent’s
officers, employees, representatives or agents shall have the right, at any time during normal
business hours, in the name of Agent, any designee of Agent, or Borrower, to verify the validity,
amount or any other matter relating to the Collateral. Borrower shall cooperate fully with Agent
in an effort to facilitate and promptly conclude such verification process. Notwithstanding
anything in this subsection to the contrary, Agent shall have the right at all times after the
occurrence and during the continuation of an Event of Default to notify Persons owing Accounts to
Borrower that their Accounts have been assigned to Agent and to collect such Accounts directly in
its own name and to charge collection costs and expenses, including reasonable attorney’s fees, to
Borrower.

          (b) As and when determined by Agent in its Permitted Discretion, Agent will perform the
searches described in clauses (i) and (ii) below against Borrower or any Guarantor (the results

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of which are to be consistent with Borrower’s representations and warranties under this
Agreement), on a quarterly basis at Borrower’s expense, unless an Event of Default has occurred and
is continuing in which case such searches shall be conducted as often as Agent deems reasonably
appropriate at Borrower’s expense: (i) UCC searches with the Secretary of State and local filing
offices of each jurisdiction where Borrower and/or any Guarantors are organized; and (ii) judgment,
federal tax lien and corporate and partnership tax lien searches, in each jurisdiction searched
under clause (i) above, and in any jurisdiction where Borrower or Guarantors maintain their
respective offices or place of business or material assets to the extent that the UCC would permit
a filing in such jurisdiction to attach a security interest in or Lien upon any Collateral. Agent
will (i) upon Borrower’s request and at Borrower’s expense, provide copies of any such searches to
Borrower and (ii) will use a search service with which Agent has a discount arrangement in an
effort to minimize the expense of such searches.

          (c) Upon Agent’s request, Borrower shall immediately deliver to Agent all items for which
Lender must receive possession to obtain a perfected Lien and all notes, certificates, and
documents of title, Chattel Paper, warehouse receipts, Instruments, and any other similar
instruments constituting Collateral.

          (d) Borrower shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit such records to Agent on such periodic bases as Agent may
request in its Permitted Discretion. In addition, if Accounts of Borrower in an aggregate face
amount in excess of $500,000 become ineligible because they fall within one of the specified
categories of ineligibility set forth in the definition of Eligible Billed Receivables or Eligible
Unbilled Receivables, Borrower shall notify Agent of such occurrence within two (2) Business Days
following its discovery of such occurrence and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence. After the occurrence and during the continuation of an Event of Default,
and upon Agent’s request, Borrower shall execute and deliver to Agent formal written assignments of
all of its Accounts weekly or daily as Agent may request, including all Accounts created since the
date of the last assignment, together with copies of claims, invoices and/or other information
related thereto.

          (e) Borrower (i) shall provide prompt written notice to its current bank to transfer all
items, collections and remittances to the Concentration Account, and to any Account Debtor not
remitting to the Blocked Account, to do so promptly, (ii) after the occurrence and during the
continuation of an Event of Default, and upon Agent’s request, shall provide prompt written notice
to each Account Debtor that Agent has been granted a lien and security interest in, upon and to all
Accounts applicable to such Account Debtor, and shall direct each Account Debtor to make payments
directly to Lender’s Concentration Account; and (iii) shall do anything further that may be
lawfully required by Agent to secure Agent, for the benefit of itself and Lenders, and to
effectuate the intentions of the Loan Documents. Borrower hereby authorizes Agent, for purposes of
clause (i) hereof, upon any failure to send such notices and directions within twenty (20) calendar
days after the date of this Agreement (or twenty (20) calendar days after the Person becomes an
Account Debtor), and for purposes of clause (ii) hereof, promptly following the occurrence and
continuation of such Event of Default, to send any and all similar notices and directions to such
Account Debtors.

     2.11 Power of Attorney

          Agent hereby is irrevocably made, constituted and appointed the true and lawful attorney for
Borrower (without requiring Borrower to act as such) with full power of substitution, coupled with
an interest, to do the following: (i) upon the occurrence and during the continuance of an Event of
Default, endorse the name of any such Person upon any and all checks, drafts, money orders and
other instruments for the payment of money that are payable to such Person and constitute
collections on such Person’s Accounts; (ii) upon the occurrence and during the continuance of an
Event of Default, execute in the

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name of Borrower any financing statements, schedules, assignments, instruments, documents, and
statements that it is obligated to give Agent under any of the Loan Documents; and (iii) do such
other and further acts and deeds in the name of Borrower that Agent may deem necessary or desirable
to enforce or to perfect Agent’s security interest or lien or rights in any Collateral. In
addition, if the Borrower breaches its obligation hereunder to direct payments of Accounts within
the time periods specified herein to the Blocked Account, Agent, as the irrevocably made,
constituted and appointed true and lawful attorney for the Borrower pursuant to this paragraph,
may, by the signature or other act of any of Agent’s officers or authorized signatories (without
requiring any of them to do so), direct any federal, state or private payor or fiscal intermediary
to pay proceeds of Accounts or any other Collateral to the Blocked Account.

     2.12 Letters of Credit

          (a) Subject to the terms and conditions of this Agreement, Agent agrees to cause an L/C Issuer
at any time and from time to time after the date hereof and prior to the Termination Date to issue
standby letters of credit which comply with the provisions of this Section 2.12 for the
account of Borrower (each such standby letter of credit, and each Existing Letter of Credit, a
“Letter of Credit”) or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an “L/C Undertaking”) with respect to Letters of Credit
issued by an Underlying Issuer for the account of Borrower (in which case, Agent agrees to cause
such Underlying Issuer to issue Letters of Credit which comply with the provisions of this
Section 2.12 for the account of Borrower; provided, however, that an L/C
Issuer will not be required to issue, purchase or execute a requested Letter of Credit, and Agent
will not be required to cause same, if any of the following would result after giving effect
thereto: the L/C Exposure would (i) exceed the L/C Sublimit or (ii) when taken together with the
outstanding Advances, would exceed the lesser of the Facility Cap or the Availability, without
duplication. As of the Closing Date, the Existing Letters of Credit will be deemed to be
outstanding under this Agreement and subject to the provisions herein.

          (b) Borrower may from time to time request L/C Issuer to assist Borrower in establishing or
opening a Letter of Credit by delivering to L/C Issuer, with a copy to Agent, the L/C Issuer’s
standard form of standby letter of credit application (the “Letter of Credit Application”)
completed to the satisfaction of the L/C Issuer (in the exercise of its sole discretion), and such
other certificates, documents and other papers and information as Agent or L/C Issuer may
reasonably request. If requested by Agent or L/C Issuer, Borrower 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
Undertaking. Borrower acknowledges that the issuance of any Letter of Credit shall occur no sooner
than five (5) Business Days following the submission of a Letter of Credit Application to, and to
the satisfaction of, the L/C Issuer (in its sole discretion); provided, however, that Agent shall
use good faith efforts to cause the L/C Issuer to issue an Letter of Credit within ten (10)
Business Days following the submission of a Letter of Credit Application to, and to the
satisfaction of, the L/C Issuer (in its sole discretion).

          (c) Each Letter of Credit (and each corresponding Underlying Letter of Credit) shall, among
other things, (i) be for a standby letter of credit, (ii) be in form and substance acceptable to
the L/C Issuer (in the exercise of its Permitted Discretion), including the requirement that the
amounts payable thereunder must be payable in Dollars, (iii) subject to Section 2.12(e),
have an expiry date not later than twelve (12) months after such Letter of Credit’s date of
issuance and in no event later than 30 days prior to the Termination Date and (iv) be issued for
the purpose for which the Borrower has historically obtained letters of credit, or for such other
purpose as is reasonably acceptable to Agent, and, in all cases, for a purpose permitted for use of
proceeds hereunder. Each Letter of Credit Application and each Letter of Credit shall be subject
to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber
of Commerce Publication No. 600, and any amendments or revisions thereof (“UCP”).

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          (d) Borrower shall authorize and direct the L/C Issuer and each Underlying Issuer to name
Borrower as the “Account Party” therein and to accept and rely upon the Agent’s instructions and
agreements with respect to all matters arising in connection with the issuance of the Letters of
Credit and the applications therefor.

          (e) 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 which is after the Maturity Date, then Borrower shall, at
least 15 days prior to the Maturity Date, provide a “back-to-back” letter of credit to Agent in
form, and substance satisfactory to Agent in its sole discretion. Such back-to-back letter of
credit shall be issued by a bank satisfactory to Agent in its sole discretion, in an amount equal
to the Relevant Percentage of the then undrawn stated amount of all outstanding Letters of Credit.
In the alternative, Borrower may deposit cash in the Agent Collateral Account in an amount equal to
the Relevant Percentage of the then undrawn stated amount of each such outstanding Letter of Credit
with respect to which a “back-to-back” letter of credit has not been issued to Agent.
Notwithstanding the provision of such “back-to-back letter(s) of credit and/or the funding of such
Agent Collateral Account, Borrower shall remain liable pursuant to the terms of this Agreement for
all L/C Exposure until such time as (i) each such Letter of Credit (x) expires by its terms without
any draws being made in respect thereof or (y) has been returned to Agent undrawn and marked
“cancelled” and, (ii) all Funded L/C Exposure continued as Advances pursuant to Section
2.12(f) has been repaid in full in cash by Borrower. For this purpose “Relevant Percentage”
means, as of the Maturity Date and each date prior to the one-year anniversary thereof, 105%, and
from and after each one-year anniversary of the Maturity Date, two percent (2%) more than the
Relevant Percentage as of the preceding annual anniversary.

          (f) Any payment by Agent in respect of any Letter of Credit or L/C Undertaking shall
constitute for all purposes of this Agreement the making by Agent of an Advance in the amount of
such payment. All Funded L/C Exposure shall bear interest at a per annum rate equal to the
interest rate charged to other Advances. With respect to each Advance made pursuant to this
Section 2.12, the Borrower shall be deemed to have certified the statements contained in
Section V as of the date the payment constituting such Advance was made by Agent; provided,
however, that in the event any such statement was not true and correct as of such date,
such Advance shall be repayable on demand; provided, further, that upon any such
repayment on demand, the failure of any such statement to be true and correct as of such date shall
not constitute an Event of Default hereunder, unless the failure of any such statement to be true
and correct as of such date would have constituted an Event of Default hereunder even if such
repaid Advance had never been made.

          (g) The obligations of Borrower for Advances that arise as a result of payments in respect of
or draws under Letters of Credit or L/C Undertakings 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 or L/C Undertaking, (ii) the existence of any claim, setoff,
defense or other right which Borrower may have at any time against a beneficiary of any Letter of
Credit or L/C Undertaking or against Agent, any Lender, any L/C Issuer or Underlying Issuer; (iii)
the fact that, or any allegation that, any draft, demand, certificate or other document presented
under such Letter of Credit or L/C Undertaking 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, any Lender,
any L/C Issuer or any other Person; (v) payment by the Agent, any Lender or L/C Issuer under any
Letter of Credit or L/C Undertaking against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit or L/C Undertaking; (vi) any
other circumstance or happening whatsoever, which is similar to any of the foregoing; or (vii) the
fact that any Default or Event of Default shall have occurred and be continuing (it

9

 

being understood that any such payment by the Borrower of its Obligations in respect of any
such Advance shall be without prejudice to, and shall not constitute a waiver of any rights any
party hereto may have or might acquire against the beneficiary of any Letter of Credit or L/C
Undertaking or against any L/C Issuer).

          (h) On the first day of each month, commencing on the first such day following the Closing
Date and continuing thereafter until the date the Unfunded L/C Exposure has been reduced to zero,
including on the Termination Date, the Borrower shall pay to Agent, in arrears, for the account of
Agent and each other Lender in accordance with their respective participations in each Letter of
Credit, the Letter of Credit Fee.

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

          (j) On demand by Agent at any time following the occurrence and during the continuance of an
Event of Default, Borrower will cause to be deposited and maintained in an account as directed by
Agent, cash collateral in an amount equal to one hundred five percent (105%) of the Unfunded L/C
Exposure, and Borrower hereby irrevocably authorizes Agent, in its discretion, on Borrower’s behalf
and in Borrower’s name, to open such an account and to make and maintain deposits therein, or in an
account opened by Borrower, in the amounts required to be maintained by Borrower, out of the
proceeds of Accounts or other Collateral or out of any funds of Borrower coming into Agent’s
possession at any time. Borrower may not withdraw amounts credited to any such account except upon
the earlier of (i) payment and performance in full of all Obligations (other than indemnity
obligations under the Loan Documents that are not then due and payable or for which any events or
claims that would give rise thereto are not then pending), termination of this Agreement and
termination, replacement or cash collateralization of all then outstanding Letters of Credit in
accordance with the terms of this Agreement, and (ii) at such time as such Event of Default no
longer exists.

          (k) In connection with the issuance of any Letter of Credit, Borrower shall indemnify, save
and hold Agent, each Lender and each L/C Issuer harmless from any loss, cost, expense or liability,
including, without limitation, payments made by Agent, any Lender or any L/C Issuer, and reasonable
out-of-pocket expenses and reasonable attorneys’ fees incurred by Agent, any Lender or any L/C
Issuer arising out of, or in connection with, any Letter of Credit to be issued for the account of
Borrower, except for any such losses, costs, expenses or liabilities arising out of Agent’s, such
Lender’s or such L/C Issuer’s gross negligence or willful misconduct. Borrower shall be bound by
the L/C Issuer’s regulations and reasonable good faith interpretations of any Letter of Credit
issued or created for Borrower’s account, although this interpretation may be different from
Borrower’s own; and neither Agent, any Lender nor any L/C Issuer, nor any of their respective
correspondents shall be liable for any error, negligence, or mistakes, whether of omission or
commission, in following Borrower’s instructions or those contained in any Letter of Credit or any
modifications, amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for, and solely to the extent of, Agent’s, such Lender’s, such L/C Issuer’s or such
correspondents’ gross negligence or willful misconduct.

          (l) Any other lender hereafter participating in the Revolving Facility (a “Participant”) may
also participate in the issuance of Letters of Credit and L/C Undertakings contemplated by this
Section 2.12 pursuant to the terms hereof, at such percentage interest as is acceptable to
Agent and such Participant without any consent of any other party or any further amendment hereto.

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          (m) 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 any L/C Issuer, Underlying Issuer, Agent or any Lender 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):

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

     (2) there shall be imposed on Lender, L/C Issuer or any Underlying Issuer any
other condition regarding any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost to Agent, such
Lender, L/C Issuer or any Underlying Issuer of issuing, making, guaranteeing, or maintaining any
Letter of Credit or to reduce the amount receivable in respect thereof by Agent, such Lender, L/C
Issuer or any Underlying Issuer, 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 Borrower shall pay within two Business Days such amounts as Agent may specify to be
necessary to compensate Agent, such Lender L/C Issuer or Underlying Issuer, as the case may be, for
such additional cost or reduced receipt, together with interest on such amount from the date of
such demand until payment in full thereof at the Applicable Rate for Advances. The determination
by Agent of any amount due pursuant to this Section 2.12, as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties hereto.

     2.13 Evidence of Loans

          (a) Agent shall maintain, in accordance with its usual practice, electronic or written records
evidencing the indebtedness and obligations to each Lender resulting from each Loan made by such
Lender from time to time, including without limitation, the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.

          (b) The entries made in the electronic or written records maintained pursuant to this
Section 2.13 (the “Register”) shall be prima facie evidence of the existence and amounts of
the obligations and indebtedness therein recorded; provided, however, that the
failure of the Agent to maintain such records or any error therein shall not in any manner affect
the obligations of the Borrower to repay the Loans or Obligations in accordance with their terms.

          (c) Agent will account to Borrower monthly with a statement of Advances under the Revolving
Facility, and any 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 fifteen (15) calendar days
of Receipt of each accounting, which notice shall be deemed an objection only to items specifically
objected to therein.

          (d) The Borrower agrees that:

               (i) upon written notice by any Lender to the Borrower that a promissory note or other evidence
of indebtedness is requested by such Lender to evidence the Loans and other Obligations owing or
payable to, or to be made by, such Lender, the Borrower shall promptly (and in any event within
three (3) Business Days of any such request) execute and deliver to such Lender an

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appropriate promissory note or notes in form and substance reasonably acceptable to such
Lender and Borrower, payable to the order of such Lender or in a principal amount equal to the
amount of the Loans owing or payable to such Lender;

               (ii) all references to Notes in the Loan Documents shall mean Notes, if any, to the extent
issued (and not returned to the Borrower for cancellation) hereunder, as the same may be amended,
modified, divided, supplemented and/or restated from time to time; and

               (iii) upon any Lender’s written request, and in any event within three (3) Business Days of
any such request, Borrower shall execute and deliver to such Lender new Notes and/or divide the
Notes in exchange for then existing Notes in such smaller amounts or denominations as such Lender
shall specify in its sole and absolute discretion; provided, that the aggregate principal
amount of such new Notes shall not exceed the aggregate principal amount of the Notes outstanding
at the time such request is made; and provided, further, that such Notes that are to be replaced
shall then be deemed no longer outstanding hereunder and replaced by such new Notes and returned to
the Borrower within a reasonable period of time after such Lender’s receipt of the replacement
Notes.

III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE

     3.1 Unused Line Fee

          Borrower shall pay to Agent, for the ratable benefit of Lenders, an unused line fee (the
“Unused Line Fee”) in an amount equal to 0.0375% per month of the difference derived by subtracting
(a) the daily average amount of the balances under the Revolving Facility (including any Unfunded
L/C Exposure under the L/C Sublimit) outstanding during the preceding month, from (b) the amount of
the Facility Cap on the last day of such month. The Unused Line Fee shall be payable monthly in
arrears on the first day of each successive calendar month (starting with August 1, 2009).

     3.2 Collateral Management Fee

          Borrower shall pay Agent a monthly collateral management fee (the “Collateral Management Fee”)
equal to 0.042% per month of the daily average amount of the balances under the Revolving Facility
outstanding during the preceding month. The Collateral Management Fee shall be payable monthly in
arrears on the first day of each successive calendar month (starting with August 1, 2009).

     3.3 Early Termination Fee

          If (i) Borrower terminates the Revolving Facility under Section 11.1 hereof, (ii)
Agent or any Lender accelerates any Revolving Loan or Borrower is otherwise required to make
payment in full of the Obligations relating to the Revolving Facility or Lender’s obligation to
make Advances pursuant to the Revolving Facility shall terminate in each case upon the occurrence
of an Event of Default, or (iii) a Change of Control or final payment of the Revolving Facility
pursuant to Section 11.1 occurs, any voluntary or involuntary termination of the Revolving
Facility and final prepayment of the Obligations relating to the Revolving Facility by Borrower or
any other Person occurs (other than reductions to zero of the outstanding balance of the Revolving
Facility resulting from the ordinary course operation of the provisions of Section 2.5),
whether by virtue of Agent’s exercising its right of set off or otherwise; or (iv) any payment in
full of the principal amount of any Revolving Loan or other satisfaction of the outstanding balance
of any Revolving Loan and/or the Revolving Facility is made during a bankruptcy, reorganization or
other proceeding or is made pursuant to any plan of reorganization or liquidation or any Debtor
Relief Law (each, a “Revolver Termination”), then, at the effective date of any such Revolver

12

 

Termination, Borrower shall pay Agent, for the account of Lenders (in addition to the then
outstanding principal, accrued interest and other Obligations pursuant to the terms of this
Agreement and any other Loan Document), as yield maintenance for the loss of bargain and not as a
penalty, an amount equal to the Termination Fee. Notwithstanding any other provision hereof, no
Termination Fee shall be due if Borrower merges or enters into a business combination with another
person and the surviving person becomes the Borrower hereunder, or enters into economically
similar, financing arrangements with Agent in which Agent remains, at least, a co-lead lender and
collateral agent.

     3.4 Computation of Fees; Lawful Limits

          All fees hereunder shall be computed on the basis of a year of 360 days and for the actual
number of days elapsed in each calculation period, as applicable. In no contingency or event
whatsoever, whether by reason of acceleration or otherwise, shall the interest and other charges
paid or agreed to be paid to Agent, for the benefit of Lenders, for the use, forbearance or
detention of money hereunder exceed the maximum rate permissible under applicable law which a court
of competent jurisdiction shall, in a final determination, deem applicable hereto. If, due to any
circumstance whatsoever, fulfillment of any provision hereof, at the time performance of such
provision shall be due, shall exceed any such limit, then, the obligation to be so fulfilled shall
be reduced to such lawful limit, and, if Agent or the Lenders shall have received interest or any
other charges of any kind which might be deemed to be interest under applicable law in excess of
the maximum lawful rate, then such excess shall be applied first to any unpaid fees and charges
hereunder, then to unpaid principal balance owed by Borrower hereunder, and if the then remaining
excess interest is greater than the previously unpaid principal balance, Agent and the Lenders
shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed
amended to provide for such permissible rate. The terms and provisions of this Section 3.4
shall control to the extent any other provision of any Loan Document is inconsistent herewith.

     3.5 Default Rate of Interest

          Upon the occurrence and during the continuation of an Event of Default, the Applicable Rate of
interest in effect at such time with respect to the Obligations shall be increased by 3.0% per
annum (the “Default Rate”).

     3.6 Acknowledgement of Joint and Several Liability

          Each Borrower acknowledges that it is jointly and severally liable for all of the Obligations
under the Loan Documents. Each Borrower expressly understands, agrees and acknowledges that (i) it
is an Affiliated entity by common ownership of each other Borrower, (ii) it desires to have the
availability of one common credit facility instead of separate credit facilities, (iii) it has
requested that Agent and Lenders extend such a common credit facility on the terms herein provided,
(iv) Agent and Lenders will be lending against, and relying on a lien upon, all of Borrowers’
assets even though the proceeds of any particular loan made hereunder may not be advanced directly
to a particular Borrower, (v) it will nonetheless benefit by the making of all such loans by Agent
and Lenders and the availability of a single credit facility of a size greater than each could
independently warrant, and (vi) all of the representations, warranties, covenants, obligations,
conditions, agreements and other terms contained in the Loan Documents shall be applicable to and
shall be binding upon Borrower. Each Borrower, in the event it shall be held or deemed to be a
guarantor of the Obligations of any other Borrower hereby expressly waives any rights and defenses
that are or may become available to such Borrower by reason of Sections 2787 to 2855, inclusive,
and Sections 2899 and 3433 of the California Civil Code. As provided by Section 15.1, this
Agreement shall be governed by, and construed in accordance with, the laws of the State of New
York. The foregoing waivers and the provisions which pertain to California law are

13

 

included solely out of an abundance of caution, and shall not be construed to mean that any of
the above-referenced provisions of California law are in any way applicable to this Agreement or
the Obligations.

IV. CONDITIONS PRECEDENT

     4.1 Conditions to Effectiveness of Agreement and Closing

          This Agreement shall become effective upon the satisfaction, in the judgment of Agent in its
Permitted Discretion, of the following conditions:

          (a) Borrower shall have delivered to Agent the Loan Documents to which it is a party, each
duly executed by an authorized officer of Borrower and the other parties thereto;

          (b) all in form and substance satisfactory to Agent in its Permitted Discretion, Agent shall
have received (i) a report of Uniform Commercial Code financing statement, tax and judgment lien
searches performed with respect to Borrower and Guarantor in each jurisdiction determined by Agent
in its Permitted Discretion, and such report shall show no Liens on the Collateral (other than
Permitted Liens), (ii) each document (including, without limitation, any Uniform Commercial Code
financing statement) required by any Loan Document or under law or requested by Agent to be filed,
registered or recorded to create, in favor of Agent, for the benefit of Lenders, a perfected first
priority security interest upon the Collateral;

          (c) Agent shall have received (i) the Charter and Good Standing Documents, all in form and
substance reasonably acceptable to Agent, (ii) a certificate of the corporate secretary or
assistant secretary of Borrower dated the Closing Date, as to the incumbency and signature of the
Persons executing the Loan Documents, in form and substance acceptable to Agent, (iii) the written
legal opinion of counsel for Borrower, in form and substance satisfactory to Agent in its Permitted
Discretion, and (iv) a certificate executed by an authorized officer of Borrower, which shall
constitute a representation and warranty by Borrower as of the Closing Date that the conditions
contained in this Section 4.1 have been satisfied;

          (d) Agent shall have received a certificate of the chief financial officer (or, in the absence
of a chief financial officer, the chief executive officer) of Borrower, in form and substance
satisfactory to Agent (each, a “Solvency Certificate”), certifying (i) the solvency of Borrower
after giving effect to the transactions and the Indebtedness contemplated by the Loan Documents,
and (ii) as to Borrower’s financial resources and ability to meet its obligations and liabilities
as they become due, to the effect that as of the Closing Date and after giving effect to such
transactions and Indebtedness: (A) the assets of such Person, at a Fair Valuation, exceed the total
liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such
Person, and (B) no unreasonably small capital base with which to engage in its anticipated business
exists with respect to Borrower;

          (e) Agent shall have completed or waived examinations, the results of which shall be
satisfactory in form and substance to Agent, of the Collateral, the financial statements and the
books, records, business, obligations, financial condition and operational state of Borrower, and
Borrower shall have demonstrated to Agent’s satisfaction that (i) its operations comply, in all
respects reasonably deemed material by Agent, in its reasonable judgment, with all applicable
federal, state, foreign and local laws, statutes and regulations, (ii) its operations are not the
subject of any governmental investigation, evaluation or any remedial action which could reasonably
result in any Material Adverse Effect, and (iii) it has no liability (whether contingent or
otherwise) that could reasonably give rise to a Material Adverse Effect;

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          (f) Agent shall have received all fees, charges and expenses payable to Agent and Lenders on
or prior to the Closing Date pursuant to the Loan Documents;

          (g) all in form and substance satisfactory to Agent in its Permitted Discretion, Agent shall
have received such consents, approvals and agreements, including, without limitation, Landlord
Waivers and Consents with respect to the leases for those locations specifically identified on
Schedule 5.18B where a complete set of books and records relating to Accounts or the
Borrower’s Inventory is kept, from such third parties as Agent and its counsel shall determine are
reasonably necessary or desirable with respect to (i) the Loan Documents and/or the transactions
contemplated thereby, and/or (ii) claims against Borrower or the Collateral;

          (h) Borrower shall be in compliance with Section 5.17 and Section 6.5, and
Agent shall have received (i) copies of all such insurance policies, and (ii) original certificates
of such insurance policies as Agent shall request in its Permitted Discretion confirming that they
are in effect and that the premiums due and owing with respect thereto have been paid in full and
naming Agent, for the benefit of itself and Lenders, as loss payee on Borrower’s property
insurance;

          (i) all corporate and other proceedings, documents, instruments and other legal matters in
connection with the transactions contemplated by the Loan Documents (including, but not limited to,
those relating to corporate and capital structures of Borrower) shall be reasonably satisfactory to
Agent;

          (j) No default shall exist pursuant to any of Borrower’s obligations under any material
contract (including this Agreement, after giving effect to the terms hereof); Borrower shall be in
compliance with all applicable laws in all material respects;

          (k) Borrower shall have established a Lockbox and Blocked Account pursuant to Section
2.5;

          (l) Agent shall have received copies of all (i) material licenses and permits required for
Borrower to conduct the business in which it is currently engaged or is contemplated pursuant to
the Loan Documents, and (ii) all intercompany agreements, management agreements, documents related
to borrowed money, capital leases and other material contracts;

          (m) Agent shall have completed or waived its legal due diligence examinations of Borrower, the
results of which shall be satisfactory in form and substance to Agent, as evidenced by Agent’s
execution of the Loan Documents;

          (n) Agent shall have received evidence, in form and substance satisfactory to Agent, of the
release and termination of any and all Liens, security interest and/or Uniform Commercial Code
financing statements in, on, against or with respect to any of the Collateral (other than Permitted
Liens);

          (o) there shall not have occurred any Material Adverse Change or Material Adverse Effect from
that which was reflected on the financial statements dated May 31, 2009, and provided to Agent;

          (p) Borrower shall have executed and filed IRS Form 8821 with the appropriate office of the
Internal Revenue Service; and

15

 

          (q) Agent shall have received such other documents, certificates, information or legal
opinions as Agent may reasonably request, all in form and substance reasonably satisfactory to
Agent in its Permitted Discretion.

     4.2 Conditions to Each Advance and Issuance of Each Letter of Credit

          The obligations of Lenders to make any Advance and to issue each Letter of Credit 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 to 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 hereof, 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 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 Unfunded L/C Exposure shall not exceed the
L/C Sublimit;

          (d) except as disclosed in the financial information delivered to Agent hereunder, there shall
be no liabilities or obligations with respect to Borrower of any nature whatsoever which, either
individually or in the aggregate, reasonably would be likely to have a Material Adverse Effect;

          (e) Agent shall have received all fees, charges and expenses due and payable to Agent on or
prior to such date pursuant to the Loan Documents;

          (f) there shall not have occurred any Material Adverse Change or Material Adverse Effect; and

          (g) no default or Event of Default shall have occurred or be continuing or would exist after
giving effect to the Advance under the Revolving Facility or the issuance of a Letter of Credit on
such date.

V. REPRESENTATIONS AND WARRANTIES

     Each Borrower, jointly and severally, represents and warrants as of the date hereof and,
except for such representations and warranties that are as a specified date, each Borrowing Date
and each date of issuance of a Letter of Credit as follows:

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     5.1 Organization and Authority

          Borrower is a corporation, limited partnership or limited liability company duly organized,
validly existing and in good standing under the laws of its state of formation. Borrower (a) has
all requisite power and authority to own its properties and assets and to carry on its business as
now being conducted and as contemplated in the Loan Documents, (b) is duly qualified to do business
in every jurisdiction in which it is a party to a Government Contract, and, except as set forth on
Schedule 5.1, every other jurisdiction in which failure so to qualify could reasonably be
expected to have a Material Adverse Effect, and (c) has all requisite power and authority (i) to
execute, deliver and perform the Loan Documents to which it is a party, (ii) to borrow hereunder,
(iii) to consummate the transactions contemplated under the Loan Documents, and (iv) to grant the
Liens with regard to the Collateral pursuant to the Security Documents to which it is a party.
Borrower is not an “investment company” registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled by such an “investment company.”

     5.2 Loan Documents

          The execution, delivery and performance by Borrower of the Loan Documents to which it is a
party, and the consummation of the transactions contemplated thereby, (a) have been duly authorized
by all requisite action of Borrower and have been duly executed and delivered by or on behalf of
Borrower; (b) do not violate any provisions of (i) applicable law, statute, rule, regulation,
ordinance or tariff, (ii) any order of any Governmental Authority binding on Borrower or any of its
properties, or (iii) the certificate of incorporation or bylaws (or any other equivalent governing
agreement or document) of Borrower, or any agreement between Borrower and its shareholders,
members, partners or equity owners or among any such shareholders, members, partners or equity
owners; (c) are not in conflict with, and do not result in a breach or default of or constitute an
event of default, or an event, fact, condition or circumstance which, with notice or passage of
time, or both, would constitute or result in a conflict, breach, default or event of default under,
any indenture, agreement or other instrument to which Borrower is a party, or by which the
properties or assets of Borrower are bound, the effect of which could reasonably be expected to
have a Material Adverse Effect; and (d) except as set forth therein, will not result in the
creation or imposition of any Lien of any nature upon any of the properties or assets of Borrower,
and (e) except as set forth on Schedule 5.2, do not require the consent, approval or
authorization of, or filing, registration or qualification with, any Governmental Authority or any
other Person. When executed and delivered, each of the Loan Documents to which Borrower is a party
will constitute the legal, valid and binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of creditors’ rights
generally and to the effect of general principles of equity which may limit the availability of
equitable remedies (whether in a proceeding at law or in equity).

     5.3 Subsidiaries, Capitalization and Ownership Interests

          As of the date of this Agreement, Borrower has no Subsidiaries (other than EMSA Limited
Partnership) other than those Persons listed as Subsidiaries on Schedule 5.3, each of which
(other than EMSA Limited Partnership) either are other Borrowers or Guarantors of the Obligations
of Borrower herein. Schedule 5.3 also states the authorized and issued capitalization of
Borrower and each such Subsidiary, and the number and class of equity securities and/or ownership,
voting or partnership interests (except for ASG) issued and outstanding (including options,
warrants and other rights to acquire any of the foregoing). The ownership or partnership interests
of each Borrower that is a limited partnership or a limited liability company are not certificated,
the documents relating to such interests do not expressly state that the interests are governed by
Article 8 of the Uniform Commercial Code, and the interests are

17

 

not held in a securities account. Schedule 5.3 also lists the directors, members,
managers and/or partners of Borrower, as well as any beneficial or record holders of more than
twenty-five percent (25%) of the equity of ASG, and ASG owns, directly or indirectly, all of the
issued and outstanding equity securities and/or ownership or voting or partnership interests of
each other Borrower. The outstanding equity securities and/or ownership, voting or partnership
interests of each Borrower have been duly authorized and validly issued and are fully paid and
nonassessable. Except as listed on Schedule 5.3, Borrower does not own an interest or
participate or engage in any joint venture, partnership or similar arrangements with any Person.

     5.4 Properties

          Borrower (a) is the sole owner and has good, valid and marketable title to all of its
properties and assets, including the Collateral, whether personal or real, subject to no transfer
restrictions or Liens of any kind except for Permitted Liens, and (b) is in compliance in all
material respects with each lease to which it is a party or otherwise bound, except for such
noncompliance as would not reasonably be expected to have a Material Adverse Effect. Schedule
5.4 lists all real properties (and their locations) owned or leased or utilized in client owned
facilities by or to Borrower, and all assets or property that are leased pursuant to capital leases
or licensed by Borrower, and any other material leases. Borrower enjoys peaceful and undisturbed
possession under all such leases and such leases are all the leases necessary for the operation of
such properties and are valid and subsisting and are in full force and effect.

     5.5 Other Agreements

          Except as set forth on Schedule 5.5, Borrower is not (a) a party to any judgment,
order or decree or any agreement, document or instrument, or subject to any restriction, which
would materially adversely affect its ability to execute and deliver, or perform under, any Loan
Document or to pay the Obligations, or (b) in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in any agreement, document or
instrument to which it is a party or to which any of its properties or assets are subject, which
default, if not remedied within any applicable grace or cure period, could reasonably be expected
to have a Material Adverse Effect, nor is there any event, fact, condition or circumstance which,
with notice or passage of time or both, would constitute or result in a conflict, breach, default
or event of default under, any of the foregoing which, if not remedied within any applicable grace
or cure period could reasonably be expected to have a Material Adverse Effect.

     5.6 Litigation

          Except as set forth on Schedule 5.6, there is no action, suit, proceeding or
investigation pending or, to its knowledge, threatened against Borrower that (a) questions or could
prevent the validity of any of the Loan Documents or the right of Borrower to enter into any Loan
Document or to consummate the transactions contemplated thereby, (b) would reasonably be expected
to result in an outcome that would, either individually or in the aggregate, (i) have any material
adverse effect upon or change in the validity or enforceability of any Loan Document, (ii) be
material and adverse to the value of the Collateral taken as a whole or to the business,
operations, prospects, properties, assets, liabilities or condition of Borrower or any Guarantors,
taken as a whole, or (iii) materially impair or be reasonably expected to materially impair the
ability of Borrower or any Guarantor, taken as a whole, to perform the Obligations or to consummate
the transactions under the Loan Documents executed by such Person, or (c) would reasonably be
likely to result in any Change of Control or other change in the current ownership, control or
management of Borrower. Except as set forth on Schedule 5.6, as of the date hereof
Borrower is not a party or subject to any order, writ, injunction, judgment or decree of any
Governmental Authority. Except as set forth on Schedule 5.6, as of the date hereof there
is no action, suit or proceeding initiated by

18

 

Borrower currently pending, and Borrower has no existing accrued and/or unpaid Indebtedness to
any Governmental Authority or any other governmental payor, except for Permitted Indebtedness.

     5.7 Hazardous Materials

          Borrower is in compliance in all material respects with all applicable Environmental Laws.
Borrower has not been notified of any action, suit, proceeding or investigation (a) relating in any
way to compliance by or liability of Borrower under any Environmental Laws, (b) which otherwise
deals with any Hazardous Substance or any Environmental Law, or (c) which seeks to suspend, revoke
or terminate any license, permit or approval necessary for the generation, handling, storage,
treatment or disposal of any Hazardous Substance which, in any case, could have a Material Adverse
Effect.

     5.8 Tax Returns; Governmental Reports

          Borrower (a) has filed all material federal, state, foreign (if applicable) and local tax
returns and other reports which are required by law to be filed by Borrower, and (b) has paid all
material taxes, assessments, fees and other governmental charges, including, without limitation,
payroll and other employment related taxes, in each case that are due and payable, except only for
items that Borrower is currently contesting in good faith and that are identified on Schedule
5.8.

     5.9 Financial Statements and Reports

          All financial statements relating to Borrower that have been or may hereafter be delivered to
Agent by Borrower are accurate and complete in all material respects and have been prepared in
accordance with GAAP consistently applied with prior periods. ASG has no material obligations or
liabilities of any kind not disclosed in such financial statements that would be required to be
disclosed therein in accordance with GAAP, and since the date of the most recent financial
statements submitted to Agent, there has not occurred any Material Adverse Change or Material
Adverse Effect or, to Borrower’s knowledge, any other event or condition that could reasonably be
expected to have a Material Adverse Effect.

     5.10 Compliance with Law

          (a) Borrower (a) is in compliance with all laws, statutes, rules, regulations, ordinances and
tariffs of any Governmental Authority applicable to Borrower and/or Borrower’s business, assets or
operations, including, without limitation, ERISA and HIPPA, as applicable, and (b) is not in
violation of any order of any Governmental Authority or other board or tribunal, except where such
noncompliance or violation would not reasonably be likely to have a Material Adverse Effect. There
is no event, fact, condition or circumstance known to Borrower which, with notice or passage of
time, or both, would constitute or result in any noncompliance with, or any violation of, any of
the foregoing, in each case except where noncompliance or violation could not reasonably be
expected to have a Material Adverse Effect. Borrower has not received any notice that Borrower is
not in compliance in any respect with any of the requirements of any of the foregoing. Borrower
has (i) not engaged in any Prohibited Transactions as defined in Section 406 of ERISA and Section
4975 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder, (ii) not failed to meet any applicable minimum funding requirements under Section 302
of ERISA in respect of its plans and no funding requirements have been postponed or delayed, (iii)
no knowledge of any event or occurrence which would cause the Pension Benefit Guaranty Corporation
to institute proceedings under Title IV of ERISA to terminate any of the employee benefit plans,
(iv) no fiduciary responsibility under ERISA for investments with respect to any plan existing for
the benefit of Persons other than its employees or former employees, or (v) not withdrawn,
completely or partially, from any multi-employer pension plans so as to incur

19

 

liability under the MultiEmployer Pension Plan Amendments of 1980. With respect to Borrower,
there exists no event described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12 C.F.R. § 2615.3 has
not been waived.

          (b) Borrower is in compliance, in all material respects, with the
Patriot Act.

     5.11 Intellectual Property

          Except as set forth on Schedule 5.11, as of the date hereof Borrower does not own, and
is not a party to, any patents, patent applications, trademarks, trademark applications, service
marks, registered copyrights, copyright applications, copyrights, trade names, trade secrets,
proprietary software or licenses (collectively, the “Intellectual Property”).

     5.12 Licenses and Permits; Labor

          Borrower is in compliance with and has all Permits necessary or required by applicable law or
Governmental Authority for the operation of its businesses except where the failure to be in
compliance would not reasonably be likely to have a Material Adverse Effect. All of the foregoing
are in full force and effect and not in known conflict with the rights of others, except as would
not reasonably be likely to have a Material Adverse Effect. Borrower (a) is not in breach of or
default under the provisions of any of the foregoing, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would constitute or result in a
conflict, breach, default or event of default under, any of the foregoing which, if not remedied
within any applicable grace or cure period would reasonably be likely to have a Material Adverse
Effect, and (b) has not been involved in any labor dispute, strike, walkout or union organization
activity which would reasonably be likely to have a Material Adverse Effect

     5.13 No Default

          There does not exist any Default or Event of Default or any event, fact, condition or
circumstance which, with the giving of notice or passage of time or both, would constitute or
result in a Default or Event of Default.

     5.14 Disclosure

          No Loan Document nor any other agreement, document, certificate, or statement furnished to
Agent by or on behalf of Borrower in connection with the transactions contemplated by the Loan
Documents, nor any representation or warranty made by Borrower in any Loan Document, contains any
untrue statement of material fact or omits to state any fact necessary to make the statements
therein not materially misleading. There is no fact known to Borrower which has not been disclosed
to Agent in writing which reasonably would be likely to have a Material Adverse Effect.

     5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts

          Except as permitted by the Loan Documents, Borrower (a) has no outstanding Indebtedness (b) is
not subject or party to any mortgage, note, indenture, indemnity or guarantee of, with respect to
or evidencing any Indebtedness of any other Person, or (c) does not own or hold any equity or
long-term debt investments in, and does not have any outstanding advances to or any outstanding
guarantees for, the obligations of, or any outstanding borrowings from, any Person other than with
respect to a Guarantor or another Borrower as set forth on Schedule 5.15. Borrower has
performed all material obligations required to be performed by Borrower under any document
evidencing such Indebtedness and

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there has occurred no breach, default or event of default under any document evidencing any
such items or any fact, circumstance, condition or event which, with the giving of notice or
passage of time or both, would constitute or result in a breach, default or event of default
thereunder.

     5.16 Other Agreements

          Except as described in the filings of ASG with the Securities and Exchange Commission, as of
the date hereof there are no existing or proposed material agreements, arrangements, understandings
or transactions between Borrower and any of Borrower’s officers, members, managers, directors,
stockholders, partners, other interest holders, employees or any members of their respective
immediate families.

     5.17 Insurance

          Borrower has in full force and effect such insurance policies as are customary in its industry
and as may be required pursuant to Section 6.5 hereof. All such insurance policies as in
force on the date of this Agreement are listed and described on Schedule 5.17.

     5.18 Names; Location of Offices, Records and Collateral

          During the preceding five years, Borrower has not conducted business under or used any name
(whether corporate, partnership or assumed) other than as shown on Schedule 5.18A.
Borrower is the sole owner of all of its names listed on Schedule 5.18A, and any and all
business done and invoices issued having a value in excess of $50,000, in such names are Borrower’s
sales, business and invoices. Borrower maintains its places of business and chief executive
offices only at the locations set forth on Schedule 5.18B or with respect to which notice
is provided to the Agent pursuant to Section 7.4(a), and all Accounts of Borrower arise,
originate and are located, and all of the Collateral and all books and records in connection
therewith or in any way relating thereto or evidence the Collateral are located and shall be only,
in and at such locations. All of the Collateral is located only in the United States.

     5.19 Non-Subordination

          The Obligations are not subordinated in any way to any other obligations of Borrower or to the
rights of any other Person.

     5.20 Accounts

          In determining which Accounts are Eligible Receivables, Agent may rely on all statements and
representations made by Borrower with respect to any Account. Unless otherwise indicated in
writing to Agent, each Account of Borrower (a) is genuine and in all respects what it purports to
be and is not evidenced by a judgment, (b) arises out of a completed, bona fide sale and delivery
of goods or rendering of services by Borrower in the ordinary course of business and in accordance
with the terms and conditions of all purchase orders, contracts, certifications, participations and
other documents relating thereto or forming a part of the contract between Borrower and the Account
Debtor, (c) is for a liquidated amount maturing as stated in a claim or invoice covering such sale
of goods or rendering of services, a copy of which has been furnished or is available to Agent, (d)
if included on a Borrowing Base Certificate, is not, subject to any known offset, lien, deduction,
defense, dispute, counterclaim or other adverse condition, is absolutely owing to Borrower and is
not contingent in any respect or for any reason, (e) there are no known facts, events or
occurrences which in any way impair the validity or enforceability thereof or if included on a
Borrowing Base Certificate, reduce the amount payable thereunder from the face amount of the claim
or invoice and statements delivered to Agent with respect thereto, (f) to the best

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of Borrower’s knowledge, there are no proceedings or actions which are threatened or pending
against any Account Debtor thereunder which in Borrower’s opinion is likely to result in any
Material Adverse Change in the collectability of any such Account, and (g) Borrower has obtained
and currently has all Permits necessary in the generation thereof except for any failure to obtain
a Permit which would not be reasonably likely to have a Material Adverse Effect. Unless otherwise
indicated in writing to Agent, to the best of Borrower’s knowledge, (i) the Account Debtor under
each Account of Borrower had the capacity to contract at the time any contract or other document
giving rise thereto was executed, and (ii) such Account Debtor is solvent.

     5.21 Survival

          Borrowers, jointly and severally, make the representations and warranties contained herein
with the knowledge and intention that Agent and Lenders are relying and will rely thereon. All
such representations and warranties will survive the execution and delivery of this Agreement, and
the making of the Advances.

     5.22 Performance and Payment Bonds for Government Contracts

          Borrower has posted all bonds required by each Government Contract to which it is a party,
except as set forth on Schedule 5.22.

     5.23 OFAC and Anti-Terrorism Regulations

          (a) Neither Borrower nor any of its Subsidiaries (i) is a Person whose property or interest in
property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
transactions prohibited by Section 2 of such executive order, or is otherwise associated with any
such Person in any manner violative of Section 2 of such executive order, or (iii) is a Person on
the list of Specially Designated Nationals and Blocked Persons or is in violation of the
limitations or prohibitions under any other OFAC regulation or executive order.

          (b) No part of the proceeds of the Loans will be used, directly or indirectly, for any
payments to any governmental official or employee, political party, official of a political party,
candidate for political office, or anyone else acting in an official capacity, in order to obtain,
retain or direct business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.

          (c) Borrower acknowledges by executing this Agreement that Agent has notified Borrower that,
pursuant to the requirements of the Patriot Act, Agent is required to obtain, verify and record
such information as may be necessary to identify Borrower (including, without limitation) the name
and address of each Borrower) in accordance with the Patriot Act.

VI. AFFIRMATIVE COVENANTS

     Borrower covenants and agrees that, until full performance and satisfaction, and indefeasible
payment in full in cash, of all the Obligations and termination of this Agreement:

     6.1 Financial Statements, Reports and Other Information

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          (a) Financial Reports. ASG shall furnish to Agent and each Lender (i) as soon as they
are prepared and in any event within ninety (90) calendar days after the end of each fiscal year of
ASG, audited annual consolidated financial statements of ASG including the notes thereto,
consisting of a consolidated balance sheet at the end of such completed fiscal year and the related
consolidated statements of income, stockholders’ equity and cash flows for such completed fiscal
year, which financial statements shall be prepared by ASG and certified without qualification by an
independent certified public accounting firm reasonably satisfactory to Agent (which shall include
Deloitte) and accompanied by related management letters, if available, (ii) as soon as available
and in any event within forty-five (45) days after the end of the first three fiscal quarters of
the fiscal year of ASG, unaudited consolidated financial statements of ASG consisting of a balance
sheet and statements of income, stockholders’ equity and cash flows as of the end of the
immediately preceding fiscal quarter, and (iii) as soon as available and in any event within thirty
(30) calendar days after the end of each calendar month, unaudited consolidated financial
statements of ASG consisting of a balance sheet and a statement of income, and cash flows as of the
end of the immediately preceding calendar month. All such financial statements shall be prepared
in accordance with GAAP consistently applied with prior periods (except that certain of the
financial statements do not have footnotes, are subject to year end adjustments in the case of
monthly and quarterly financial statements, including, without limitation, reserves for incurred
but not reported items and claims payable consistent with past practices). With each quarterly and
annual financial statement, ASG shall also deliver a certificate of its chief financial officer
stating that (A) such person has reviewed the relevant terms of the Loan Documents and the
condition of Borrower, (B) no Default or Event of Default has occurred or is continuing, or, if any
of the foregoing has occurred or is continuing, specifying the nature and status and period of
existence thereof and the steps taken or proposed to be taken with respect thereto, and (C) ASG (on
a consolidated basis) is in compliance with all financial covenants attached as Annex I
hereto. Such certificate shall be accompanied by the calculations necessary to show compliance
with the financial covenants in a form reasonably satisfactory to the Agent.

          (b) Other Materials. ASG shall furnish to Agent and each Lender as soon as available,
and in any event within ten (10) calendar days after the preparation or issuance thereof or at such
other time as set forth below: (i) copies of any pro forma financial statements and any other
notes, reports and other materials related thereto, (ii) any reports, returns, information, notices
and other materials that ASG shall send to its stockholders at any time, (iii) within thirty (30)
calendar days after the end of each calendar month for such month, an accounts payable detailed
aging and reconciliation of the accounts receivable and accounts payable to the general ledger and
financial statements, (iv) promptly upon receipt thereof, copies of any reports submitted to ASG by
its independent accountants in connection with any interim audit of the books of ASG or any future
Guarantor and copies of each management control letter provided by such independent accountants,
(v) within forty-five (45) days after the end each calendar month, a report detailing any
outstanding surety bonds and any letters of credit collateralizing such surety bonds, and (vi) such
additional information, documents, statements, reports and other materials as Agent may reasonably
request from a credit or security perspective from time to time.

          (c) Notices. Borrower shall promptly, and in any event within five (5) Business Days
after Borrower or any authorized officer of Borrower obtains knowledge thereof, notify Agent in
writing of (i) any pending or threatened litigation, suit, investigation, arbitration, dispute
resolution proceeding or administrative proceeding brought or initiated by Borrower or otherwise
affecting or involving or relating to Borrower or any of its property or assets to the extent (A)
the amount in controversy exceeds $2,000,000 (other than in lawsuits brought by or on behalf of
inmates or employees of Borrower that Borrower reasonably believes will not go to trial), (B) any
of the foregoing seeks injunctive relief (excluding such relief sought in law suits brought by or
on behalf of inmates), or (C) if against Borrower and not covered by insurance, (ii) any Default or
Event of Default, which notice shall specify the nature and status thereof, the period of existence
thereof and what action is proposed to be

23

 

taken with respect thereto, (iii) any other development, event, fact, circumstance or
condition that could reasonably be expected to have a Material Adverse Effect, in each case
describing the nature and status thereof and the action proposed to be taken with respect thereto,
(iv) any notice received by Borrower from any payor of a claim, suit or other action such payor
has, claims or has filed against Borrower in an amount of $100,000 or more, (v) any matter(s)
affecting the value, enforceability or collectability of any of the Collateral, including, without
limitation, claims or disputes in the amount of $100,000 or more in existence at any one time, (vi)
any notice given by Borrower to any other lender of Borrower and shall furnish to Agent a copy of
such notice, (vii) receipt of any notice or request from any Governmental Authority regarding any
liability or claim of liability in an amount of $100,000 or more, (viii) receipt of any notice by
Borrower regarding termination of any real estate lease, and/or (ix) if any Account over $100,000
becomes evidenced or secured by an instrument or chattel paper.

          (d) Consents. Borrower shall obtain and deliver from time to time all consents,
approvals and agreements from such third parties as Agent shall determine are necessary or
desirable in its Permitted Discretion for the protection of its Collateral and that are reasonably
satisfactory to Agent with respect to the Loan Documents and the transactions contemplated thereby,
or the Collateral, including, without limitation, Landlord Waivers and Consents for each location
set forth on Schedule 5.18B, as amended from time to time.

          (e) Operating Budget. ASG shall furnish to Agent and each Lender on or prior to the
Closing Date and for each fiscal year of ASG thereafter on the date on which such operating budgets
are approved by ASG’s Board of Directors, and in any case no later than January 1 of each fiscal
year, consolidated month by month projected operating budgets, which shall include projected profit
and loss statements, balance sheets and cash flow reports of and for Borrower for such upcoming
fiscal year in each case prepared in accordance with GAAP consistently applied with prior periods
(except that such projections will not have footnotes and will be subject to year-end adjustments
in the case of monthly and quarterly projections, including, without limitation, reserves for
incurred but not reported items and claims payable consistent with past practices).

     6.2 Payment of Obligations

          Borrower shall make full and timely indefeasible payment in cash of the principal of and
interest on the Loans, Advances and all other Obligations.

     6.3 Conduct of Business and Maintenance of Existence and Assets

          Borrower shall (a) conduct its business in accordance with good business practices customary
to the industry, (b) engage principally in the same or similar lines of business substantially as
heretofore conducted, (c) collect its Accounts in the ordinary course of business, (d) maintain all
of its material properties, assets and equipment used or useful in its business in good repair,
working order and condition (normal wear and tear excepted and except as may be disposed of in the
ordinary course of business and in accordance with the terms of the Loan Documents), (e) from time
to time to make all necessary repairs, renewals and replacements of its material properties, assets
and equipment, and (f) maintain and keep in full force and effect its existence and all material
Permits and qualifications to do business and good standing in each jurisdiction in which the
ownership or lease of property or the nature of its business makes such Permits or qualification
necessary and in which failure to maintain such Permits or qualification could reasonably be likely
to have a Material Adverse Effect; and (g) remain in good standing and maintain operations in all
jurisdictions reasonably necessary to conduct its business.

     6.4 Compliance with Legal and Other Obligations

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          Borrower shall (a) comply with all laws, statutes, rules, regulations, ordinances and tariffs
of all Governmental Authorities applicable to it or its business, assets or operations, (b) pay all
taxes, assessments, fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, except liabilities being contested in good faith and
against which adequate reserves have been established, (c) perform in accordance with its terms
each contract, agreement or other arrangement to which it is a party or by which it or any of the
Collateral is bound, including, but not limited to, any accreditation and survey requirements, and
(d) maintain and comply with all Permits necessary to conduct its business and comply with any new
or additional requirements that may be imposed on it or its business, except where failure to
comply, pay, maintain or perform would not reasonably be likely to have a Material Adverse Effect.
Borrower shall give Agent prompt notice and a copy of (a) any new material Government Contract, and
(b) any communication from a Governmental Authority concerning nonperformance (including
nonperformance in connection with Hazardous Substances), default, set-off or bonding issues under
any Governmental Contract.

     6.5 Insurance

          Borrower shall (a) keep all of its insurable properties and assets adequately insured in all
material respects against losses, damages and hazards as are customarily insured against by
businesses engaging in similar activities or owning similar assets or properties in at least the
minimum amount required by applicable law and any agreement to which Borrower is a party,
including, without limitation, property insurance, automobile insurance and professional liability
insurance, as applicable, (b) maintain (i) general public liability insurance at all times against
liability on account of damage to persons and property having such limits, deductibles, exclusions
and co-insurance and other provisions as are customary for a business engaged in activities similar
to those of Borrower, and (ii) stop loss insurance with coverage in reasonable amounts as are
customary for a business engaged in activities similar to those of Borrower or as required by any
agreement to which Borrower is a party (i.e., at Closing, Borrower has coverage of 100% of exposure
for amounts in excess of $300,000 per patient with a per patient cap of $1,000,000); (c) maintain
insurance under all applicable workers’ compensation laws, and (d) require all of its healthcare
professional employees and independent contractors to maintain on behalf of or acquire professional
liability insurance; all of the foregoing insurance policies to be satisfactory in form and
substance to Agent in its Permitted Discretion.

     6.6 True Books

          Borrower shall (a) keep true, complete and accurate books of record and account in accordance
with commercially reasonable business practices in which true and correct entries are made of all
of its and their dealings and transactions in all material respects; and (b) set up and maintain on
its books such reserves as may be required by GAAP with respect to doubtful accounts and all taxes,
assessments, charges, levies and claims and with respect to its business, and include such reserves
in its quarterly as well as year end financial statements.

     6.7 Inspection; Periodic Audits

          Borrower shall permit the representatives of Agent and Lenders from time to time during normal
business hours, upon reasonable notice and at the expense of Borrower, to (a) (once each quarter at
Borrower’s expense if no Default or Event of Default shall have occurred and be continuing, and
more often, at Agent’s Permitted Discretion, after the occurrence and during the continuance of any
Default or Event of Default) visit and inspect any of its offices or properties or any other place
where Collateral is located to inspect the Collateral and/or to examine or audit all of its books
of account, records, reports and other papers, and make copies and extracts therefrom, and (b)
discuss its business, operations, prospects, properties, assets, liabilities, condition and/or
Accounts with its officers and independent public

25

 

accountants (and by this provision such officers and accountants are authorized to discuss the
foregoing). Notwithstanding the foregoing, Borrower shall not be required to provide information
to Agent if doing so would require Borrower to waive any applicable attorney/client privilege or
accountant/client privilege existent in connection with any pending or threatened litigation.
Agent shall endeavor to minimize the expenses of any quarterly audits.

     6.8 Further Assurances; Post Closing

          At Borrower’s cost and expense, Borrower shall (a) within five (5) Business Days after Agent’s
demand, take such further actions, obtain such consents and approvals and duly execute and deliver
such further agreements, assignments, instructions or documents as Agent reasonably may request
with respect to the purposes, terms and conditions of the Loan Documents and the consummation of
the transactions contemplated thereby, whether before, at or after the performance and/or
consummation of the transactions contemplated hereby or the occurrence of a Default or Event of
Default, (b) without limiting and notwithstanding any other provision of any Loan Document, execute
and deliver, or cause to be executed and delivered, such agreements and documents, and take or
cause to be taken such actions, and otherwise perform, observe and comply with such obligations, as
are set forth on Schedule 6.8, and (c) upon the exercise by Agent, any Lender or any of
their Affiliates of any power, right, privilege or remedy pursuant to any Loan Document or under
applicable law or at equity which requires any consent, approval, registration, qualification or
authorization of any Governmental Authority, execute and deliver, or cause the execution and
delivery of, within a reasonable time, all applications, certificates, instruments and other
documents that may be so required for such consent, approval, registration, qualification or
authorization. Without limiting the foregoing, upon the exercise by Agent, any Lender or any of
their Affiliates of any right or remedy under any Loan Document which requires any consent,
approval or registration with, consent, qualification or authorization by, any Person, Borrower
shall execute and deliver, or cause the execution and delivery of, all applications, certificates,
instruments and other documents that Agent, any Lender or such Affiliate may be required to obtain
for such consent, approval, registration, qualification or authorization.

     6.9 Payment of Indebtedness

          Except as otherwise prescribed in the Loan Documents, Borrower shall pay, discharge or
otherwise satisfy at or before maturity (subject to applicable grace periods and, in the case of
trade payables, to ordinary course payment practices) all of its material obligations and
liabilities, except when the amount or validity thereof is being contested in good faith by
appropriate proceedings and such reserves as Agent may deem proper and necessary in its sole
discretion shall have been made therefor.

     6.10 Lien Terminations

          If Liens other than Permitted Liens exist, Borrower immediately shall take, execute and
deliver all actions, documents and instruments necessary to release and terminate such Liens.

     6.11 Use of Proceeds

          Borrower shall use the proceeds from the Revolving Facility only for the purposes set forth in
the recitals to this Agreement.

     6.12 Collateral Documents; Security Interest in Collateral

          On reasonable request of Agent, Borrower shall make available to Agent copies of any and all
documents, instruments, materials and other items that relate to, secure, evidence, give rise to or

26

 

generate or otherwise involve Collateral, including, without limitation, Accounts of Borrower.
Borrower shall (i) execute, obtain, deliver, file, register and/or record any and all financing
statements, continuation statements, stock powers, instruments and other documents, or cause the
execution, filing, registration, recording or delivery of any and all of the foregoing, that are
necessary or required under law or otherwise or reasonably requested by Agent to be executed,
filed, registered, obtained, delivered or recorded to create, maintain, perfect, preserve, validate
or otherwise protect the pledge of the Collateral to Agent and Agent’s perfected first priority
Lien on the Collateral (and Borrower irrevocably grants Agent the right, at Agent’s option, to file
any or all of the foregoing), (ii) maintain, or cause to be maintained, at all times, the pledge of
the Collateral to Agent and Agent’s perfected first priority Lien on the Collateral, (iii) promptly
upon learning thereof, report to Agent any reclamation, return or repossession of goods in excess
of $500,000 (individually or in the aggregate), and (iv) defend the Collateral and Agent’s
perfected first priority Lien thereon against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to Agent, and pay all costs and expenses
(including, without limitation, reasonable in-house documentation, diligence fees and legal
expenses and other reasonable attorneys’ fees and expenses) in connection with such defense, which
shall be added to the Obligations.

     6.13 Taxes and Other Charges

          All payments and reimbursements to Agent, for the benefit of Lenders, made under any Loan
Document shall be free and clear of and without deduction for all taxes, levies, imposts,
deductions, assessments, charges or withholdings, and all liabilities with respect thereto of any
nature whatsoever, excluding taxes to the extent imposed on each Lender’s net income. If Borrower
shall be required by law to deduct any such amounts from or in respect of any sum payable under any
Loan Document to Agent, for the benefit of Lenders, then the sum payable to Agent, for the benefit
of Lenders, shall be increased as may be necessary so that, after making all required deductions,
each Lender receives an amount equal to the sum it would have received had no such deductions been
made. Notwithstanding any other provision of any Loan Document, if at any time after the Closing
(a) any change in any existing law, regulation, treaty or directive or in the interpretation or
application thereof, (b) any new law, regulation, treaty or directive enacted or any interpretation
or application thereof, or (c) compliance by any Lender with any request or directive (whether or
not having the force of law) from any Governmental Authority: (i) subjects such Lender to any tax,
levy, impost, deduction, assessment, charge or withholding of any kind whatsoever with respect to
any Loan Document, or changes the basis of taxation of payments to Agent, for the benefit of
Lenders, of any amount payable thereunder (except for net income taxes, or franchise taxes imposed
in lieu of net income taxes, imposed generally by federal, state or local taxing authorities with
respect to interest or commitment fees or other fees payable hereunder or changes in the rate of
tax on the overall net income of each Lender), or (ii) imposes on Lenders any other condition or
increased cost in connection with the transactions contemplated thereby or participations therein;
and the result of any of the foregoing is to increase the cost to Lenders of making or continuing
any Loan hereunder or to reduce any amount receivable hereunder, then, in any such case, Borrower
shall promptly pay to Agent, for the benefit of Lenders, any additional amounts necessary to
compensate each Lender, on an after-tax basis, for such additional cost or reduced amount as
determined by such Lender. If any Lender becomes entitled to claim any additional amounts pursuant
to this Section 6.13 it shall promptly notify Borrower of the event by reason of which such
Lender has become so entitled, and each such notice of additional amounts payable pursuant to this
Section 6.13 submitted by such Lender to Borrower shall, absent manifest error, be final,
conclusive and binding for all purposes. Without limiting or being limited by any other provision
of any Loan Document, Borrower at all times shall retain and use a commercially known and
professional payroll company to process, manage and pay its payroll taxes.

     6.14 New Subsidiaries

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          Within thirty (30) calendar days of any Person becoming a Subsidiary after the Closing Date,
Borrower shall (a) deliver to Agent a joinder to this Agreement and to each other Loan Document to
which the Borrower is a party duly executed by such Person, which joinder shall be in form and
substance satisfactory to the Agent in its Permitted Discretion, (b) provide Agent with copies of
such Person’s organizational documents, material contracts, financial information, and any other
information requested by Agent, on behalf of the Lenders, in order to perform legal and financial
diligence and Uniform Commercial Code, tax and judgment lien searches, and (c) cause such Person to
duly execute and deliver such further agreements, assignments, instructions or documents as Agent
may request in its Permitted Discretion with respect to the purposes, terms and conditions of the
Loan Documents.

     6.15 Schedules to the Loan Agreement

          Notwithstanding any other provision in any Loan Document, or any date limitation set forth in
any representation or warranty referencing such schedules, Borrower shall keep all schedules
current in all material respects and shall provide amended schedules to ensure to Agent as
necessary to comply herewith. Article VI and Article VII schedules may not be amended without
Agent’s prior consent. Notwithstanding the foregoing, the following schedules shall be updated
only to the extent specified hereby:

          (a) the disclosure of directors, members, managers and/or partners of Borrower, as well as any
beneficial or record holders of more than twenty-five percent (25%) of the equity of ASG in
Schedule 5.3 shall be updated as reasonably requested by Agent;

          (b) the disclosure of any order, writ, injunction, judgment or decree of any Governmental
Authority to which Borrower is a party or otherwise subject to in Schedule 5.6, and the
disclosure of any action, suit, proceeding or investigation initiated by Borrower in Schedule
5.6 shall be updated only if any such information would be reasonably likely to result in a
Material Adverse Effect;

          (c) all disclosures in Schedule 5.8 shall be updated only if any such information
would reasonably be likely to result in a Material Adverse Effect; and

          (d) all disclosures of property and business interruption insurance policies in Schedule
5.17 shall be updated for any material change to the policy or the addition of any business
interruption policy, all other disclosures of insurance in Schedule 5.17 shall be updated
only if any such information would reasonably be likely to result in a Material Adverse Effect.

     6.16 New Government Contracts

          Within thirty (30) calendar days of any Borrower entering into a Government Contract with a
Governmental Authority, Borrower shall deliver to Agent a full copy of such Government Contract so
that Agent can determine whether such contract contains Eligible Receivables and whether it shall
be included on the Borrowing Base.

VII. NEGATIVE COVENANTS

     Borrower covenants and agrees that, until full performance and satisfaction, and indefeasible
payment in full in cash, of all the Obligations and termination of this Agreement:

     7.1 Financial Covenants

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          Borrower shall not violate the financial covenants set forth on Annex I to this
Agreement, which annex is incorporated herein and made a part hereof.

     7.2 Permitted Indebtedness

          Borrower shall not create, incur, assume or suffer to exist any Indebtedness, except the
following (collectively, “Permitted Indebtedness”): (a) Indebtedness under the Loan Documents, (b)
any Indebtedness set forth on Schedule 7.2 or arising after the date hereof pursuant to
commitments set forth in Schedule 7.2 and any refunding or renewals thereof which do not
increase the principal amount of such Indebtedness; (c) Capitalized Lease Obligations incurred
after the Closing Date and Indebtedness incurred pursuant to purchase money Liens permitted by
Section 7.3(e); provided, that the aggregate amount thereof outstanding at any time
shall not exceed $1,000,000, (d) current liabilities (other than for borrowed money) to the extent
(i) incurred in the ordinary course of business consistent with past practices and (ii) discharged
or satisfied at or before the due date for payment (subject to ordinary course payment practices),
unless the same are being contested in good faith and by appropriate and lawful proceedings and
such reserves, if any, with respect thereto as are required by GAAP and deemed adequate by
Borrower’s independent accountants shall have been reserved, (e) borrowings incurred in the
ordinary course of business, (f) other indebtedness in an amount not exceeding $1,000,000
individually or in the aggregate outstanding at any one time; (g) indemnities under Government
Contracts, (h) Subordinated Debt in an amount not to exceed $10,000,000 at any one time
outstanding, (i) Indebtedness with respect to financed insurance premiums to the extent not past
due, (j) Contingent Obligations undertaken by any Borrower with respect to the Indebtedness of any
other Borrower, to the extent such Indebtedness is permitted hereunder as set forth on Schedule
7.2, (k) intercompany debt between or among Borrowers hereto and (l) reimbursement obligations
with respect to letters of credit that are secured by cash collateral accounts, provided,
however, that in each case under this Section 7.2, all such Indebtedness shall be
on an unsecured basis, except for Permitted Liens relating to money borrowed which shall be
subordinated in right of repayment and remedies to all of the Obligations and to all of the
Lenders’ rights in form and substance satisfactory to Agent. Borrower shall not make prepayments
on any existing or future Indebtedness to any Person other than to Agent, for the benefit of
Lenders, or to the extent specifically permitted by this Agreement or any subsequent agreement
between Borrower, Agent and Lenders.

     7.3 Permitted Liens

          Borrower shall not create, incur, assume or suffer to exist any Lien upon, in or against, or
pledge of, any of the Collateral or any of its properties or assets or any of its shares,
securities or other equity or ownership or partnership interests, whether now owned or hereafter
acquired, except the following (collectively, “Permitted Liens”): (a) Liens under the Loan
Documents or otherwise arising in favor of Agent, for the benefit of itself and Lenders, (b) Liens
imposed by law for taxes, assessments or charges of any Governmental Authority for claims not yet
due or which are being contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained by such Person in accordance
with GAAP, (c) (i) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen,
and (ii) other Liens imposed by law or that arise by operation of law in the ordinary course of
business, in each case only for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other appropriate provisions
are being maintained by such Person in accordance with GAAP to the satisfaction of Agent in its
Permitted Discretion, (d) Liens incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in connection with workers’
compensation, unemployment insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations, (e) purchase money Liens (i) securing
Indebtedness

29

 

permitted under Section 7.2(c), or (ii) in connection with the purchase by
such Person of equipment in the normal course of business; provided, that such secured Indebtedness shall not exceed
any limits on Indebtedness provided for herein and shall otherwise be Permitted Indebtedness
hereunder, (f) Liens necessary and desirable for the operation of such Person’s business;
provided, that Agent has consented to such Liens in writing before their creation and
existence and the priority of such Liens and the debt secured thereby are both subject and
subordinate in all respects to the Liens securing the Collateral and to the Obligations and all of
the rights and remedies of Agent and each Lender, all in form and substance satisfactory to Agent
in its Permitted Discretion, (g) Liens disclosed on Schedule 7.3, (h) easements,
reservations, exceptions, rights-of-way, covenants, conditions, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate, are not
substantial in amount and that do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of business by the Borrower, (i) liens in
respect of any writ of execution, attachment, garnishment, judgment or award in an amount less than
$100,000, if (x) the time for appeal or petition for rehearing has not expired, an appeal or
appropriate proceeding for review is being prosecuted in good faith and a stay of execution pending
such appeal or proceeding for review has been secured, or (y) the underlying claim is fully covered
by insurance, the insurer has acknowledged in writing its responsibility to pay such claim and no
action has been taken to enforce such execution, attachment, garnishment, judgment or award, (j)
liens of lessors (except liens on Accounts are not permitted under any circumstances) under or in
connection with operating leases, and (k) liens on cash collateral accounts established to secure
Borrower’s reimbursement obligations with respect to letters of credit.

     7.4 Investments; New Facilities or Collateral; Subsidiaries

          (a) Except as set forth on Schedule 7.4 and except for any Borrower’s ownership on the
date of this Agreement of the equity interests of another Borrower, Borrower, directly or
indirectly, shall not (i) merge with, purchase, own, hold, invest in or otherwise acquire
obligations or stock or securities of, or any other interest in all or substantially all of the
assets of, any Person or any joint venture unless such Person is or becomes a Borrower in the
manner provided in Section 6.14, or (ii) make or permit to exist any loans, advances or
guarantees to or for the benefit of any Person other than to or for the benefit of a person who is
or becomes a Borrower under the Loan Documents in the manner provided in Section 6.14,
except for ordinary course of business investments of the type historically made by Borrower, or
assume, guarantee, endorse, contingently agree to purchase or otherwise become liable for or upon
or incur any obligation of any Person (other than those created by the Loan Documents, Permitted
Indebtedness, and other than (x) trade credit extended in the ordinary course of business, (y)
advances for business travel and similar temporary advances made in the ordinary course of business
to officers, directors and employees, and (z) the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business). Borrower, directly or
indirectly, shall not purchase, own, operate, hold, invest in or otherwise acquire any property or
assets or any Collateral having a value of $50,000 or more that is not located at the locations set
forth on Schedule 5.18B, unless Borrower shall provide to Agent contemporaneous written
notice. Furthermore, Borrower shall update Schedule 5.18B any time books and records
related to Account Collateral and any Inventory are located at any place other than the places
specifically identified on Schedule 5.18B.

          (b) Borrower shall not redirect any Accounts or the proceeds thereof to or through any
subsidiary that is inactive or that is not a party to the Loan Documents. If any inactive
Subsidiary commences business activity Borrower shall cause it to become a party to the Loan
Documents.

     7.5 Dividends; Redemptions; Equity

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          Borrower shall not (a) declare, pay or make any cash dividend or distribution on any shares of
capital stock or other securities or interests, or apply any of its funds, property or assets to
the acquisition, redemption or other retirement of any capital stock or other securities or
interests or of any options to purchase or acquire any of the foregoing (collectively, the
“Distributions”), or (b) other than ASG, issue or create any capital stock or other equity
securities; except, that (i) ASG may declare, pay or make cash dividends on any shares of its
capital stock, provided, that, no Default or Event of Default shall have occurred
and be continuing as of the effective date of any such transaction or would result from any such
transaction, (ii) Borrower may make Distributions or issue capital stock or other equity securities
to or for the benefit of another Borrower; (iii) ASG may pay cash in lieu of issuing fractional
shares upon the exercise of options or warrants to purchase shares of its common stock; and (iv)
ASG may repurchase shares of its common stock in any single transaction or series of transactions
pursuant to a Stock Repurchase Authorization (defined below), provided, that, (x)
the aggregate dollar amount of cash paid by ASG in connection therewith does not exceed
$15,000,000, (y) no Default or Event of Default shall have occurred and be continuing as of the
effective date of any such transaction or would result from any such transaction, and (z) not less
than three (3) Business Days prior to giving effect to the initial stock repurchase contemplated by
this clause (iv), ASG shall have provided Agent with a copy of the resolutions duly authorized by
the board of directors of ASG to give effect to the stock repurchase contemplated by this clause
(iv) (the “Stock Repurchase Authorization”), together with an officer’s compliance certificate
demonstrating compliance with the terms of the preceding subclauses (x) and (y).

     7.6 Transactions with Affiliates

          Borrower shall not enter into or consummate any transaction of any kind with any of its
Affiliates (except any Guarantor or another Borrower) other than: (a) salary, bonus, employee stock
option and other compensation and employment arrangements with directors or officers in the
ordinary course of business; provided, that no payments of any bonus or otherwise (except
normal salaries, consistent with past practices) shall be permitted if a Default or Event of
Default has occurred and remains in effect or would be caused by or result from such payment, (b)
Distributions and dividends permitted pursuant to Section 7.5, (c) transactions on overall
terms at least as favorable to Borrower as would be the case in an arm’s length transaction between
unrelated parties of equal bargaining power, (d) payments permitted under and pursuant to written
agreements entered into by and between Borrower and one or more of its Affiliates that both (i)
reflect and constitute transactions on overall terms at least as favorable to Borrower as would be
the case in an arm’s-length transaction between unrelated parties of equal bargaining power, and
(ii) are subject to such terms and conditions as determined by Agent in its sole discretion,
provided, that notwithstanding the foregoing Borrower shall not (Y) enter into or
consummate any transaction or agreement pursuant to which it becomes a party to any mortgage, note,
indenture or guarantee evidencing any Indebtedness of any of its Affiliates or otherwise to become
responsible or liable as a guarantor, surety or otherwise, pursuant to an agreement for any
Indebtedness of any such Affiliate in the ordinary course of business, except that Borrower may
enter into such transaction with another Borrower or Guarantor so long as any and all material
transactions are set forth on Schedule 7.6, or (Z) make any payment to an Affiliate (except
another Borrower or Guarantor in the ordinary course of business) if a Default or Event of Default
has occurred and remains in effect or would be caused by or result from such payment, and (e)
payments by Borrower to EMSA Limited Partnership, provided that (i) such payments do not
exceed $50,000 individually or in the aggregate and (ii) no such payments shall be permitted if a
Default or Event of Default has occurred and is continuing or would be caused by or result from
such payment.

     7.7 Charter Documents; Fiscal Year; Dissolution; Collateral Assignment

          Borrower shall not (a) change its state of organization, or amend, modify, restate or change
its certificate of incorporation or bylaws or similar charter documents in a manner that would be

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adverse to Agent or any Lender, (b) change its fiscal year, (c) amend, alter or suspend or
terminate or make provisional, any material Permit, (d) wind up, liquidate or dissolve (except for
mergers into another party hereto) (voluntarily or involuntarily) or commence or suffer any proceedings seeking or
that would result in any of the foregoing, except that Borrower shall be permitted to dissolve SPP
and PHS Indiana, provided that (i) the dissolution of SPP and PHS Indiana is in accordance
with all applicable laws, (ii) Borrower promptly delivers to Agent written evidence of such
dissolution (including, but not limited to, a certified copy of the articles or certificate of
dissolution and resolutions by the members and managers of SPP and PHS Indiana (as applicable)
authorizing the dissolution), (iii) the Eligible Receivables of SPP shall have been removed from
the Borrowing Base, and (iv) to the extent that either SPP or PHS Indiana has assets, such assets
shall have been contributed to PHS prior to the dissolution, or (e) use any proceeds of any Loans
for “purchasing” or “carrying” “margin stock” as defined in Regulations U, T or X of the Board of
Governors of the Federal Reserve System.

     7.8 Transfer of Assets

          Borrower shall not sell, lease, transfer, assign or otherwise dispose of any interest in any
properties or assets, or agree to do any of the foregoing, except that:

          (a) Borrower may lease (other than by a sale-leaseback transaction) as lessee real or personal
property or surrender all or a portion of a lease of the same, in each case in the ordinary course
of business (so long as such lease does not create or result in and is not otherwise a Capitalized
Lease Obligation prohibited under this Agreement) provided that, if books and
records regarding Collateral or Inventory if included on any Borrowing Base Certificate, are to be
kept at any new leased location, a Landlord Waiver is executed, satisfactory in form and substance
to Agent;

          (b) Borrower may sell obsolete or replaced equipment or excess equipment no longer needed in
the ordinary course of business; and

          (c) Borrower may sell Inventory in the ordinary course of business.

     7.9 Contingent Obligations

          Borrower shall not enter into any Contingent Obligations or assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable for or upon or incur any obligation of
any Person, except for (i) indemnification obligations in the ordinary course of Borrower’s
business, (ii) Contingent Obligations permitted pursuant to Section 7.2, and (iii) such
other obligations as are set forth on Schedule 7.9 hereto.

     7.10 Truth of Statements

          Borrower shall not furnish to Agent or any Lender any certificate or other document that
contains any untrue statement of a material fact or that omits to state a material fact necessary
to make it not misleading in light of the circumstances under which it was furnished.

     7.11 Payment on Subordinated Debt

          Borrower shall not (a) make any prepayment of any part or all of any Subordinated Debt, (b)
repurchase, redeem or retire any instrument evidencing any such Subordinated Debt prior to
maturity, or (c) enter into any agreement (oral or written) which could in any way be construed to
amend, modify, alter or terminate any one or more instruments or agreements evidencing or relating
to any Subordinated Debt.

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     7.12 IRS Form 8821

          Borrower shall not alter, amend, restate or otherwise modify, or withdraw, terminate or refile
the IRS Form 8821 required to be filed pursuant to Section 4.1 hereof.

VIII. EVENTS OF DEFAULT

     The occurrence of any one or more of the following shall constitute an “Event of Default:”

          (a) Borrower shall fail to pay any amount on the Obligations, including any Funded L/C
Exposure, or otherwise provided for in any Loan Document when due (whether on any payment date, at
maturity, by reason of acceleration, by required prepayment or otherwise);

          (b) any representation, statement or warranty made or deemed made by Borrower or any Guarantor
in any Loan Document or in any other certificate, document, report or opinion delivered in
conjunction with any Loan Document to which it is a party, shall not be true and correct in all
material respects or shall have been false or misleading in any material respect on the date when
made or deemed to have been made (except to the extent already qualified by materiality, in which
case it shall be true and correct in all respects and shall not be false or misleading in any
respect);

          (c) Borrower or any Guarantor or other party thereto, other than Agent or any Lender, shall be
in violation, breach or default of, or shall fail to perform, observe or comply with any covenant,
obligation or agreement set forth in, any Loan Document and such violation, breach, default or
failure shall not be cured within the applicable period set forth in the applicable Loan Document;
provided that, with respect to the affirmative covenants set forth in Article VI
(other than Sections 6.1(a), 6.2, 6.3, 6.8, and 6.11 for
which there shall be no cure period), there shall be a thirty (30) calendar day cure period
commencing from the earlier of (i) Receipt by such Person of written notice of such breach,
default, violation or failure, and (ii) the time at which such Person or any authorized officer of
such Person knew or became aware, of such failure, violation, breach or default;

          (d) (i) any of the Loan Documents ceases to be in full force and effect, or (ii) any Lien
created thereunder ceases to constitute a valid perfected first priority Lien on the Collateral in
accordance with the terms thereof, or Agent, for the benefit of itself and Lenders, ceases to have
a valid perfected first priority security interest in any of the Collateral or any securities
pledged to Agent, for the benefit of itself and Lenders, pursuant to the Security Documents;

          (e) one or more judgments or decrees is rendered against Borrower or Guarantor in an amount in
excess of $500,000, which is/are not satisfied, stayed, vacated or discharged of record within
thirty (30) calendar days of being rendered;

          (f) (i) any default occurs, which is not cured or waived, (x) in the payment of any amount
with respect to any Indebtedness (other than the Obligations) for borrowed money of Borrower or
Guarantor in excess of $500,000, or (y) in the performance or observance of any provision in any
agreement, document or instrument pursuant to which Borrower or any Guarantor issued, assumed or
guaranteed any Indebtedness in an amount in excess of $500,000 to which any Borrower or Guarantor
is a party, or any of their assets are subject and such default continues for more than any
applicable grace period or permits the holder of any Indebtedness to accelerate the maturity
thereof, or (ii) any Indebtedness of Borrower or Guarantor for borrowed money in an amount greater
than $500,000 individually or in the aggregate at any one time, is declared to be due and payable
or is required to be prepaid (other than by a regularly scheduled payment) prior to the stated
maturity thereof, or any obligation of such Person for the payment of Indebtedness in an amount
greater than $500,000

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individually or in the aggregate at any one time (other than the Obligations)
is not paid when due or within any applicable grace period, or any such obligation becomes or is declared to be due
and payable before the expressed maturity thereof;

          (g) Borrower or Guarantor shall (i) be unable to pay its debts generally as they become due,
(ii) file a petition under any Debtor Relief Law, (iii) make a general assignment for the benefit
of its creditors, (iv) commence a proceeding for the appointment of a receiver, trustee, liquidator
or conservator of itself or of the whole or any substantial part of its property, or (v) file a
petition seeking reorganization or liquidation or similar relief under any Debtor Relief Law;

          (h) (i) a court of competent jurisdiction shall (A) enter an order, judgment or decree
appointing a custodian, receiver, trustee, liquidator or conservator of Borrower or Guarantor or
the whole or any substantial part of any such Person’s properties, which shall continue unstayed
and in effect for a period of sixty (60) calendar days, (B) shall approve a petition filed against
Borrower or Guarantor seeking reorganization, liquidation or similar relief under the any Debtor
Relief Law or any other applicable law or statute, which is not dismissed within sixty (60)
calendar days or, (C) under the provisions of any Debtor Relief Law or other applicable law or
statute, assume custody or control of Borrower or Guarantor or of the whole or any substantial part
of any such Person’s properties, which is not irrevocably relinquished within sixty (60) calendar
days, or (ii) there is commenced against Borrower or Guarantor any proceeding or petition seeking
reorganization, liquidation or similar relief under any Debtor Relief Law or any other applicable
law or statute, which (A) is not unconditionally dismissed within sixty (60) calendar days after
the date of commencement, or (B) is with respect to which Borrower or Guarantor takes any action to
indicate its approval of or consent to;

          (i) (i) any Change of Control occurs or any agreement or commitment to cause or that may
result in any such Change of Control is entered into, (ii) any Material Adverse Effect or Material
Adverse Change occurs, or is reasonably expected to occur, or (iii) Borrower or Guarantor ceases
any material portion of its business operations as currently conducted;

          (j) an Event of Default occurs under any other Loan Document beyond applicable cure periods;

          (k) uninsured damage to, or loss, theft or destruction of, any portion of the Collateral
occurs that exceeds $500,000 in the aggregate (excluding deductibles);

          (l) Borrower or Guarantor or any of their respective directors or senior officers is convicted
under any law that could lead to a forfeiture of any material portion of the Collateral;

          (m) the issuance of any process for levy, attachment or garnishment or execution upon or prior
to any judgment seeking in any one instance or in the aggregate a recovery of $500,000 or more
against Borrower or Guarantor or any of their property or assets; or

          (n) Borrower or Guarantor does, or enters into or becomes a party to any agreement or
commitment to do, or cause to be done, any of the things described in this Article VIII or
otherwise prohibited by any Loan Document (subject to any cure periods set forth therein);

then, and during the continuance of any such event, notwithstanding any other provision of any Loan
Document, (I) Agent may (and at the request of Requisite Lenders, shall), by notice to Borrower (i)
terminate Lenders’ obligations to make Loans hereunder, whereupon the same shall immediately
terminate, and (ii) declare all or any of the Notes, all interest thereon and all other Obligations
to be due and payable immediately (except in the case of an Event of Default under Section
8(d), (g) or (h), in

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which event all of the foregoing shall automatically and
without further act by Agent or any Lender be due and payable; provided, that, with respect to non-material breaches or violations that
constitute Events of Default under clause (ii) of Section 8(d), there shall be a ten (10)
Business Day cure period commencing from the earlier of (A) Receipt by the applicable Person of
written notice of such breach or violation or of any event, fact or circumstance constituting or
resulting in any of the foregoing, and (B) the time at which such Person or any authorized officer
thereof knew or became aware, of any event, fact or circumstance constituting or resulting in any
of the foregoing), in each case without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower, and (II) effective immediately, without any
action of Agent or Lenders, no action permitted to be taken under Article VII hereof may be
taken.

IX. RIGHTS AND REMEDIES AFTER DEFAULT

     9.1 Rights and Remedies

          (a) In addition to the acceleration provisions set forth in Article VIII above, upon
the occurrence and continuation of an Event of Default, Agent shall have the right to (and at the
request of Requisite Lenders, shall) exercise any and all rights, options and remedies provided for
in any Loan Document, under the UCC or at law or in equity, including, without limitation, the
right to (i) apply any property of Borrower held by Agent, for the benefit of Lenders, or Lenders
to reduce the Obligations, (ii) foreclose the Liens created under the Security Documents, (iii)
realize upon, take possession of and/or sell any Collateral or securities pledged with or without
judicial process, (iv) exercise all rights and powers with respect to the Collateral as Borrower
might exercise, (v) collect and send notices regarding the Collateral, with or without judicial
process, (vi) by its own means or with judicial assistance, enter any premises at which Collateral
and/or pledged securities are located, or render any of the foregoing unusable or dispose of the
Collateral and/or pledged securities on such premises without any liability for rent, storage,
utilities, or other sums, and no Borrower shall resist or interfere with such action, (vii) at
Borrower’s expense, require that all or any part of the Collateral be assembled and made available
to Agent at any place designated by Agent, (viii) reduce or otherwise change the Facility Cap
and/or the Maximum Loan Amount, and/or (ix) relinquish or abandon any Collateral or securities
pledged or any Lien thereon. Notwithstanding any provision of any Loan Document, Agent, in its
sole discretion, shall have the right, at any time that Borrower fails to do so, and from time to
time, without prior notice, to: (i) obtain insurance covering any of the Collateral to the extent
required hereunder; (ii) pay for the performance of any of Obligations; (iii) discharge taxes or
Liens on any of the Collateral that are in violation of any Loan document unless Borrower is in
good faith with due diligence by appropriate proceedings contesting those items; and (iv) pay for
the maintenance and preservation of the Collateral. Such expenses and advances shall be added to
the Obligations until reimbursed to Agent and shall be secured by the Collateral, and such payments
by Agent shall not be construed as a waiver by Agent or Lenders of any Event of Default or any
other rights or remedies of Agent and Lenders.

          (b) Borrower agrees that notice received by it at least ten (10) calendar days before the time
of any intended public sale, or the time after which any private sale or other disposition of
Collateral is to be made, shall be deemed to be reasonable notice of such sale or other
disposition. If permitted by applicable law, any perishable Collateral which threatens to speedily
decline in value or which is sold on a recognized market may be sold immediately by Agent without
prior notice to Borrower. At any sale or disposition of Collateral or securities pledged, Agent
may (to the extent permitted by applicable law) purchase all or any part thereof free from any
right of redemption by Borrower which right is hereby waived and released. Borrower covenants and
agrees not to, and not to permit or cause any of its Subsidiaries to, interfere with or impose any
obstacle to Agent’s exercise of its rights and remedies with respect to the Collateral. Agent, in
dealing with or disposing of the Collateral or

35

 

any part thereof, shall not be required to give
priority or preference to any item of Collateral or otherwise to marshal assets or to take
possession or sell any Collateral with judicial process.

     9.2 Application of Proceeds

          In addition to any other rights, options and remedies Agent and Lenders have under the Loan
Documents, the UCC, at law or in equity, all dividends, interest, rents, issues, profits, fees,
revenues, income and other proceeds collected or received from collecting, holding, managing,
renting, selling, or otherwise disposing of all or any part of the Collateral or any proceeds
thereof upon exercise of its remedies hereunder shall be applied in the following order of
priority: (i) first, to the payment of all costs and expenses of such collection, storage,
lease, holding, operation, management, sale, disposition or delivery and of conducting Borrower’s
business and of maintenance, repairs, replacements, alterations, additions and improvements of or
to the Collateral, and to the payment of all sums which Agent or Lenders may be required or may
elect to pay, if any, for taxes, assessments, insurance and other charges upon the Collateral or
any part thereof, and all other payments that Agent or Lenders may be required or authorized to
make under any provision of this Agreement (including, without limitation, in each such case, in
house documentation and diligence fees and legal expenses, search, audit, recording, professional
and filing fees and expenses and reasonable attorneys’ fees and all expenses, liabilities and
advances made or incurred in connection therewith); (ii) second, to the payment of all
Obligations as provided herein and as determined by Requisite Lenders; (iii) third, to the
satisfaction of Indebtedness secured by any subordinate security interest of record in the
Collateral if written notification of demand therefor is received before distribution of the
proceeds is completed, provided, that, if requested by Agent, the holder of a subordinate
security interest shall furnish reasonable proof of its interest, and unless it does so, Agent and
Lenders need not address their claims; and (iv) fourth, to the payment of any surplus then
remaining to Borrower, unless otherwise provided by law or directed by a court of competent
jurisdiction, provided that Borrower shall be liable for any deficiency if such proceeds
are insufficient to satisfy the Obligations or any of the other items referred to in this section.

     9.3 Rights of Agent to Appoint Receiver

          Without limiting and in addition to any other rights, options and remedies Agent has under the
Loan Documents, the UCC, at law or in equity, upon the occurrence and continuation of an Event of
Default, Agent shall have the right to apply for and have a receiver appointed by a court of
competent jurisdiction in any action taken by Agent to enforce its and Lenders’ rights and remedies
in order to manage, protect and preserve the Collateral and continue the operation of the business
of Borrower and to collect all revenues and profits thereof and apply the same to the payment of
all expenses and other charges of such receivership including the compensation of the receiver and
to the payments as aforesaid until a sale or other disposition of such Collateral shall be finally
made and consummated.

     9.4 Rights and Remedies not Exclusive

          Agent shall have the right in its sole discretion to determine which rights, Liens and/or
remedies Agent or Lenders may at any time pursue, relinquish, subordinate or modify, and such
determination will not in any way modify or affect any of Agent’s or Lenders’ rights, Liens or
remedies under any Loan Document, applicable law or equity. The enumeration of any rights and
remedies in any Loan Document is not intended to be exhaustive, and all rights and remedies of
Agent and Lenders described in any Loan Document are cumulative and are not alternative to or
exclusive of any other rights or remedies which Agent or Lenders otherwise may have. The partial
or complete exercise of any right or remedy shall not preclude any other further exercise of such
or any other right or remedy.

X. WAIVERS AND JUDICIAL PROCEEDINGS

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     10.1 Waivers

          (a) Except as expressly provided for herein, Borrower hereby waives demand, presentment,
protest, all defenses with respect to any and all instruments and all notices and demands of any
description, and the pleading of any statute of limitations as a defense to any demand under any
Loan Document. Borrower hereby waives any and all defenses and counterclaims it may have or could
interpose in any action or procedure brought by Agent or any Lender to obtain an order of court
recognizing the assignment of, or Lien of Agent, for the benefit of itself and Lenders, in and to,
any Collateral.

          (b) If it is at any time determined that any Borrower is liable as a guarantor of any portion
of the Obligations (and not as a co-obligor or co-borrower), the liability of each Borrower
hereunder shall be absolute and unconditional irrespective of (a) the insolvency of, or the
voluntary or involuntary bankruptcy, assignment for the benefit of creditors, reorganization or
other similar proceedings affecting any Borrower or any of its assets, or (b) any other
circumstance or claim which might otherwise constitute a defense available to, or a discharge of,
any Person that is a Borrower in respect of the Obligations. No payment made by any Borrower, or
received or collected by the Agent or any Lender from any Borrower by virtue of any action,
proceeding or set-off in reduction or in payment of the Obligations shall be deemed to modify,
release or otherwise affect the liability of any Borrower under the Loan Documents, and each
Borrower shall remain liable for the Obligations until all Obligations are paid in full.

     10.2 Delay; No Waiver of Defaults

          No course of action or dealing, renewal, release or extension of any provision of any Loan
Document, or single or partial exercise of any such provision, or delay, failure or omission on
Agent’s or Lenders’ part in enforcing any such provision shall affect the liability of Borrower or
Guarantor or operate as a waiver of such provision or affect the liability of Borrower or Guarantor
or preclude any other or further exercise of such provision. No waiver by any party to any Loan
Document of any one or more defaults by any other party in the performance of any of the provisions
of any Loan Document shall operate or be construed as a waiver of any future default, whether of a
like or different nature, and each such waiver shall be limited solely to the express terms and
provisions of such waiver. Notwithstanding any other provision of any Loan Document, by completing
the Closing under this Agreement and/or by making Advances, neither Agent nor any Lender waives any
breach of any representation or warranty under any Loan Document, and all of Agent’s and Lenders’
claims and rights resulting from any such breach or misrepresentation are specifically reserved.

     10.3 Jury Waiver

          (a) EACH PARTY HEREBY (i) EXPRESSLY, KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE, AND (ii) AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE
WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.

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          (b) In the event any such Claim or cause of action is brought or filed in any United States
federal court sitting in the State of California or in any state court of the State of California,
and the waiver of jury trial set forth in Section 10.3(a) hereof is determined or held to be
ineffective or unenforceable, the parties agree that all Claims and causes of action shall be
resolved by reference to a private judge sitting without a jury, pursuant to California Code of
Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree,
a referee selected by the Presiding Judge of the Los Angeles County, California. Such proceeding
shall be conducted in Los Angeles County, California, with California rules of evidence and
discovery applicable to such proceeding. In the event Claims or causes of action are to be
resolved by judicial reference, any party may seek from any court having jurisdiction thereover any
prejudgment order, writ or other relief and have such prejudgment order, writ or other relief
enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise
subject to resolution by judicial reference.

     10.4 Cooperation in Discovery and Litigation

          In any litigation, arbitration or other dispute resolution proceeding relating to any Loan
Document, Borrower waives any and all defenses, objections and counterclaims it may have or could
interpose with respect to (a) any of its directors, officers, employees or agents being deemed to
be employees or managing agents of Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a deposition, at trial or
otherwise), (b) any discovery deposition of any of them as if it were an evidence deposition,
and/or (c) using all commercially reasonable efforts to produce in any such dispute resolution
proceeding, at the time and in the manner requested by Agent, all Persons, documents (whether in
tangible, electronic or other form) and/or other things under its control and relating to the
dispute.

     10.5 Amendment and Waivers

          (a) Except as otherwise provided herein, no amendment, modification, termination, or waiver of
any provision of this Agreement or any Loan Document, or consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing and signed by the
Requisite Lenders; provided, that no amendment, modification, termination, or waiver shall,
unless in writing and signed by each Lender directly affected thereby, do any of the following: (i)
increase the Commitment of any Lender (which action shall be deemed to directly affect all
Lenders); (ii) reduce the principal of, rate of interest on or fees payable with respect to any
Loan; (iii) extend the scheduled due date or reduce the amount due on any scheduled due date, of
any installment of principal, interest, or fees payable with respect to any Loan, or waive,
forgive, extend, defer or postpone the payment thereof; (iv) change the percentage of the
Commitments, of the aggregate unpaid principal amount of the Loans, or of Lenders which shall be
required for Lenders or any of them to take any action hereunder (which action shall be deemed to
directly affect all Lenders); (v) except as otherwise permitted herein or in the other Loan
Documents, release any Guaranty or release any material portion of the Collateral (which action
shall be deemed to directly affect all Lenders) (provided, that consent to such release shall not
be required if such release is made after and during the continuance of an Event of Default in
connection with the sale or disposition of the Collateral by Agent); (vi) amend, modify or waive
this Section 10.5 or the definitions of the terms used in this Section 10.5 insofar
as the definitions affect the substance of this Section 10.5 (which action shall be deemed
to directly affect all Lenders); (vii) consent to the assignment or other transfer by Borrower or
any other party (other than any Lender) to any Loan Documents of any of their rights and
obligations under any Loan Document; or (viii) increase the Advance Rate or change the definition
of Eligible Billed Receivables, Eligible Unbilled Receivables or Borrowing Base; and,
provided, further, that no amendment, modification, termination or waiver affecting
the rights or duties of Agent under any Loan Document shall in any event be effective, unless in
writing and signed by Agent, in addition to Lenders required herein above to take such action.

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          (b) Each amendment, modification, termination or waiver shall be effective only in the
specific instance and for the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral pursuant to any
Loan Document.

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

XI. EFFECTIVE DATE AND TERMINATION

     11.1 Effectiveness and Termination

          Subject to each Lender’s right to terminate and cease making Loans as set forth in this
Agreement, this Agreement shall continue in full force and effect until the full performance and
indefeasible payment in cash of all Obligations, unless terminated sooner as provided in this
Section 11.1. Borrower may terminate the Revolving Facility or this Agreement at any time
prior to the last day of the Term, subject to Section 3.3, upon not less than thirty (30)
calendar days’ prior notice to Agent and upon full performance and indefeasible payment in full in
cash of all Obligations under the Loan Documents. Upon any termination of the Revolving Facility
or this Agreement by Borrower, the obligation of Lenders to make Advances under the Revolving
Facility shall terminate. All of the Obligations shall be immediately due and payable upon any
such termination on the termination date stated in any notice of termination (the “Termination
Date”); provided that, notwithstanding any other provision of any Loan Document,
the Termination Date shall be effective no earlier than the first Business Day of the month
following the expiration of the thirty (30) calendar days’ prior written notice period.
Notwithstanding any other provision of any Loan Document, no notice to terminate this Agreement
shall affect any Lender’s or Agent’s rights or any of the Obligations existing as of the effective
date of such termination, and the provisions of the Loan Documents shall continue to be fully
operative until the Obligations have been fully and indefeasibly paid in cash in full. The Liens
granted to Agent, for the benefit of itself and Lenders, under the Security Documents and the
financing statements filed pursuant thereto and the rights and powers of Agent and Lenders shall
continue in full force and effect notwithstanding the fact that Borrower’s borrowings hereunder may
from time to time be in a zero or credit position until all of the Obligations have been
indefeasibly paid in full in cash.

     11.2 Survival

          All obligations, covenants, agreements, representations, warranties, waivers and indemnities
made by Borrower in any Loan Document shall survive the execution and delivery of the Loan
Documents, the Closing, the making of the Loans and any termination of this Agreement until all
Obligations are fully performed and indefeasibly paid in full in cash. The obligations and
provisions of Sections 3.4, 10.1, 10.3, 11.1, 11.2, 12.4 and 12.7 and Article
XI-A shall survive termination of the Loan Documents and any payment, in full of the
Obligations.

XI-A. AGENCY PROVISIONS

     11-A.1 Agent

          (a) Appointment. Each Lender hereby designates and appoints CapitalSource as the
administrative agent and the collateral agent, under this Agreement and the other Loan Documents,
and each Lender hereby irrevocably authorizes CapitalSource, as the administrative agent and the
collateral agent for such Lender, to take such action or to refrain from taking such action on its
behalf under the provisions of this Agreement and the other Loan Documents and to exercise such
powers and perform

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such duties as are delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto. Agent agrees to
act as such on the conditions contained in this Article. The provisions of this Article are solely
for the benefit of Agent and Lenders, and Borrower shall have no rights as a third-party
beneficiary of any of the provisions hereof. Agent may perform any of its duties hereunder, or
under the Loan Documents, by or through its agents or employees.

          (b) Nature of Duties. In performing its functions and duties under this Agreement, Agent is
acting solely on behalf of Lenders and its duties are administrative in nature and it does not
assume and shall not be deemed to have assumed any obligation toward or relationship of agency or
trust with or for Lenders, other than as expressly set forth herein and in the other Loan
Documents, or Borrower. Agent shall have no duties, obligations or responsibilities except those
expressly set forth in this Agreement or in the other Loan Documents. Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender. Except for
information, notices, reports, and other documents expressly required to be furnished to Lenders by
the Agent hereunder or given to the Agent for the account of or with copies for Lenders, each
Lender shall make its own independent investigation of the financial condition and affairs of
Borrower in connection with the extension of credit hereunder and shall make its own appraisal of
the creditworthiness of Borrower, and Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the Closing Date or at any time or times
thereafter. If Agent seeks the consent or approval of any Lenders to the taking or refraining from
taking any action hereunder, then Agent shall send prior written notice thereof to each Lender.
Agent shall promptly notify (in writing) each Lender any time that the applicable percentage of
Lenders have instructed Agent to act or refrain from acting pursuant hereto.

          (c) Rights, Exculpation, Etc. Neither Agent nor any of its officers, directors, managers,
members, equity owners, employees or agents shall be liable to any Lender for any action lawfully
taken or omitted by them hereunder or under any of the other Loan Documents, or in connection
herewith or therewith. Notwithstanding the foregoing, Agent shall be obligated on the terms set
forth herein for performance of its express duties and obligations hereunder, and Agent shall be
liable with respect to its own gross negligence or willful misconduct. Agent shall not be liable
for any apportionment or distribution of payments made by it in good faith, and if any such
apportionment or distribution is subsequently determined to have been made in error, the sole
recourse of any Lender to whom payment was due but not made shall be to recover from other Lenders
any payment in excess of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same care which it would in
dealing with loans for its own account. Agent shall not be responsible to any Lender for any
recitals, statements, representations or warranties made by Borrower herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectability, or sufficiency of this
Agreement or any of the other Loan Documents or the transactions contemplated thereby, or for the
financial condition of Borrower. Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions, or conditions of this Agreement or
any of the Loan Documents or the financial condition of Borrower, or the existence or possible
existence of any Default or Event of Default. Agent may at any time request instructions from
Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of
the other Loan Documents Agent is permitted or required to take or to grant, and Agent shall be
absolutely entitled to refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from taking any action or withholding
any approval under any of the Loan Documents until it shall have received such instructions from
the applicable percentage of Lenders. Without limiting the foregoing, no Lender shall have any
right of action whatsoever against Agent as a result of Agent acting or refraining from acting
under this Agreement or

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any of the other Loan Documents in accordance with the instructions of the applicable
percentage of Lenders and notwithstanding the instructions of Lenders, Agent shall have no
obligation to take any action if it, in good faith believes that such action exposes Agent or any
of its officers, directors, managers, members, equity owners, employees or agents to any personal
liability unless Agent receives an indemnification reasonably satisfactory to it from Lenders with
respect to such action.

          (d) Reliance. Agent shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone message or other communication (including
any writing, telex, telecopy or telegram) believed by it in good faith to be genuine and correct
and to have been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or
thereunder, upon advice of legal counsel, independent accountants, and other experts selected by
Agent in its sole discretion.

          (e) Indemnification. Each Lender, severally and not jointly, agrees to reimburse and
indemnify Agent and its officers, directors, managers, members, equity owners, employees and agents
(to the extent not reimbursed by Borrower or the Guarantors), ratably according to their respective
Pro Rata Share in effect on the date on which indemnification is sought under this subsection of
the total outstanding obligations (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance
with their Pro Rata Share immediately prior to such date of the total outstanding obligations),
from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, advances, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Agent or any of its officers, directors,
managers, members, equity owners, employees or agents in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted by Agent under this
Agreement or any of the other Loan Documents; provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, advances or disbursements resulting from Agent’s gross
negligence or willful misconduct. The obligations of Lenders under this Article XI-A shall survive
the payment in full of the Obligations and the termination of this Agreement.

          (f) CapitalSource Individually. With respect to the Loans made by it, and the Notes issued to
it, CapitalSource shall have and may exercise the same rights and powers hereunder and under the
other Loan Documents and is subject to the same obligations and liabilities as and to the extent
set forth herein and the other Loan Documents as any other Lender. The terms “Lenders” or
“Requisite Lenders” or any similar terms shall, unless the context clearly otherwise indicates,
include CapitalSource in its individual capacity as a Lender or one of the Requisite Lenders.
CapitalSource may lend money to, and generally engage in any kind of banking, trust or other
business with Borrower or any subsidiary of Borrower as if it were not acting as Agent pursuant
hereto.

          (g) Successor Agent.

               (i) Resignation. Agent may resign from the performance of all its functions and
duties hereunder at any time by giving at least thirty (30) days’ prior written notice to Borrower
and Lenders. Such resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (ii) below or as otherwise provided below.

               (ii) Appointment of Successor. Upon any such notice of resignation pursuant to
clause (g)(i) above, Requisite Lenders shall appoint a successor Agent. If a successor
Agent shall not have been so appointed within said thirty (30) day period, the retiring Agent, upon
notice to Borrower, may, on behalf of Lenders, then appoint a successor Agent who shall serve as
Agent until such time, as Requisite Lenders, appoint a successor Agent as provided above. If no
successor Agent has been

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appointed pursuant to the foregoing within said thirty (30) day period, the resignation shall
become effective and Requisite Lenders shall thereafter perform all the duties of Agent hereunder,
until such time, if any, as Requisite Lenders appoint a successor Agent as provided above.

               (iii) Successor Agent. Upon the acceptance of any appointment as Agent under the Loan
Documents by a successor Agent, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and, upon the earlier of
such acceptance or the effective date of the retiring Agent’s resignation, the retiring Agent shall
be discharged from its duties and obligations under the Loan Documents, except that any indemnity
rights or other rights in favor of such retiring Agent shall continue. After any retiring Agent’s
resignation as Agent under the Loan Documents, the provisions of this Article XI-A shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under
the Loan Documents.

          (h) Collateral Matters.

               (i) Collateral. Each Lender agrees that any action taken by the Agent or the
Requisite Lenders (or, where required by the express terms of this Agreement, a greater proportion
of Lenders) in accordance with the provisions of this Agreement or of the other Loan Documents
relating to the Collateral, and the exercise by the Agent or the Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and binding upon all of
Lenders and the Agent. Without limiting the generality of the foregoing, the Agent shall have the
sole and exclusive right and authority to (i) act as the disbursing and collecting agent for
Lenders with respect to all payments and collections arising in connection herewith and with the
Loan Documents in connection with the Collateral; (ii) execute and deliver each Loan Document
relating to the Collateral and accept delivery of each such agreement delivered by Borrower or any
of its Subsidiaries; (iii) act as collateral agent for Lenders for purposes of the perfection of
all security interests and Liens created by such agreements and all other purposes stated therein;
(iv) manage, supervise and otherwise deal with the Collateral; (v) take such action as is necessary
or desirable to maintain the perfection and priority of the security interests and Liens created or
purported to be created by the Loan Documents relating to the Collateral, and (vi) except as may be
otherwise specifically restricted by the terms hereof or of any other Loan Document, exercise all
remedies given to such Agent and Lenders with respect to the Collateral under the Loan Documents
relating thereto, applicable law or otherwise.

               (ii) Release of Collateral. Lenders hereby irrevocably authorize Agent, at its option
and in its discretion, to release any Lien granted to or held by Agent for the benefit of Lenders
upon any property covered by this Agreement or the Loan Documents (A) upon termination of this
Agreement and payment and satisfaction in full of all Obligations; or (B) constituting property
being sold or disposed of outside of Borrowers’ ordinary course of business if Borrower certifies
to Agent that the sale or disposition is made in compliance with the provisions of this Agreement
(and Agent may rely in good faith conclusively on any such certificate, without further inquiry).

               (iii) Confirmation of Authority; Execution of Releases. Without in any manner
limiting Agent’s authority to act without any specific or further authorization or consent by
Lenders (as set forth in Section 11-A.1(h)(i) and (ii)), each Lender agrees to confirm in
writing, upon request by Borrower, the authority to release any property covered by this Agreement
or the Loan Documents conferred upon Agent under Section 11-A.1(h)(ii). So long as no
Event of Default is then continuing, upon receipt by Agent of confirmation from the Requisite
Lenders, of its authority to release any particular item or types of property covered by this
Agreement or the Loan Documents, and upon at least five (5) Business Days prior written request by
Borrower, Agent shall (and is hereby irrevocably authorized by Lenders to) execute such documents
as may be necessary to evidence the release of the

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Liens granted to Agent for the benefit of Lenders herein or pursuant hereto upon such
Collateral; provided, however, that (A) Agent shall not be required to execute any
such document on terms which, in Agent’s opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens without recourse or
warranty, and (B) such release shall not in any manner discharge, affect or impair the Obligations
or any Liens upon (or obligations of Borrower or any subsidiary of Borrower, in respect of), all
interests retained by Borrower or any subsidiary of Borrower, including, without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the property covered by
this Agreement or the Loan Documents.

               (iv) Absence of Duty. Agent shall have no obligation whatsoever to any Lender or any
other Person to assure that the property covered by this Agreement or the Loan Documents exists or
is owned by Borrower or is cared for, protected or insured or has been encumbered or that the Liens
granted to Agent on behalf of Lenders herein or pursuant hereto have been properly or sufficiently
or lawfully created, perfected, protected or enforced or are entitled to any particular priority,
or to exercise at all or in any particular manner or under any duty of care, disclosure, or
fidelity, or to continue exercising, any of the rights, authorities and powers granted or available
to Agent in this Section 11-A.1(h) or in any of the Loan Documents, it being understood and
agreed that in respect of the property covered by this Agreement or the Loan Documents or any act,
omission, or event related thereto, Agent may act in any manner it may deem appropriate, in its
discretion, given Agent’s own interest in property covered by this Agreement or the Loan Documents
as one of Lenders and that Agent shall have no duty or liability whatsoever to any of the other
Lenders; provided, that Agent shall exercise the same care which it would in dealing with
loans for its own account. Notwithstanding the foregoing, Agent shall be liable with respect to
its own gross negligence or willful misconduct.

          (i) Agency for Perfection. Each Lender hereby appoints Agent as agent for the purpose
of perfecting Lenders’ security interest in Collateral which, in accordance with Article 9 of the
UCC in any applicable jurisdiction, can be perfected only by possession. Should any Lender (other
than Agent) obtain possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent’s request therefor, shall deliver such Collateral to Agent or in accordance
with Agent’s instructions.

          (j) Exercise of Remedies. Except as set forth in Section 11-A.3, each Lender
agrees that it will not have any right individually to enforce or seek to enforce this Agreement or
any Loan Document or to realize upon any collateral security for the Loans, it being understood and
agreed that such rights and remedies may be exercised only by Agent.

     11-A.2 Consents

          In the event Agent requests the consent of a Lender in a situation where such Lender’s consent
would be required and such consent is denied, then Agent may, at its option, require such Lender to
assign its interest in the Loans to Agent for a price equal to the then outstanding principal
amount thereof plus accrued and unpaid interest and fees due such Lender, which interest
and fees will be paid when collected from Borrower. In the event that Agent elects to require any
Lender to assign its interest to Agent pursuant to this Section 11-A.2, Agent will so
notify such Lender in writing within forty-five (45) days following such Lender’s denial, and such
Lender will assign its interest to Agent no later than five (5) days following receipt of such
notice.

     11-A.3 Set Off and Sharing of Payments

          In addition to any rights and remedies now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence and during the continuance of any
Event

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of Default, each Lender is hereby authorized by Borrower at any time or from time to time, to
the fullest extent permitted by law, with reasonably prompt subsequent notice to Borrower or to any
other Person (any prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances (general or special, time or demand, provisional
or final) held by such Lender or such holder at any of its offices for the account of Borrower or
any of its Subsidiaries (regardless of whether such balances are then due to Borrower or its
Subsidiaries), and (b) other property at any time held or owing by such Lender or such holder to
or for the credit or for the account of Borrower or any of its Subsidiaries, against and on account
of any of the Obligations which are not paid when due; except that no Lender or any such holder
shall exercise any such right without the prior written notice to Agent; provided,
however, that the failure to give notice to Borrower or to any other Person shall not
affect the validity of such set-off and application. Any Lender which has exercised its right to
set off or otherwise has received any payment on account of the Obligations shall, to the extent
the amount of any such set off or payment exceeds its Pro Rata Share of payments obtained by all of
the Lenders on account of such Obligations, purchase for cash participations in each such other
Lender’s or holder’s Pro Rata Share of Obligations as would be necessary to cause such Lender to
share such excess with each other Lender or holder in accordance with their respective Pro Rata
Shares; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such purchasing Lender, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery. Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender or holder may exercise its right to set off
with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such excess to other Lenders and holders, and (b) any Lender or holder so
purchasing a participation in the Loans made or other Obligations held by other Lenders or holders
may exercise all rights of set-off, bankers’ lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender or holder were a direct holder of Loans and other
Obligations in the amount of such participation.

     11-A.4 Disbursement of Funds

          Agent may, on behalf of Lenders, disburse funds to Borrower for Advances requested. Each
Lender shall reimburse Agent on demand for its Pro Rata Share of all funds disbursed on its behalf
by Agent, or if Agent so requests, each Lender will remit to Agent its Pro Rata Share of any
Advance before Agent disburses same to Borrower. If Agent elects to require that funds be made
available prior to disbursement to Borrower, Agent shall advise each Lender by telephone, telex or
telecopy of the amount of such Lender’s Pro Rata Share of such requested Advance no later than one
(1) Business Day prior to the funding date applicable thereto, and each such Lender shall pay Agent
such Lender’s Pro Rata Share of such requested Loan, in same day funds, by wire transfer to Agent’s
account not later than 3:00 p.m. (Eastern Time) on the day prior to the funding date. If any
Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall
promptly notify Borrower, and Borrower shall immediately repay such amount to Agent. Any repayment
required pursuant to this Section 11-A.4 shall be without premium or penalty. Nothing in
this Section 11-A.4 or elsewhere in this Agreement or the other Loan Documents, including
without limitation the provisions of Section 11-A.5, shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights that Agent or Borrower may have against any Lender
as a result of any default by such Lender hereunder.

     11-A.5 Settlements; Payments and Information

          (a) Advances and Payments; Interest and Fee Payments.

               (i) The amount outstanding pursuant to Advances may fluctuate from day to day through Agent’s
disbursement of funds to, and receipt of funds from, Borrower. In order to minimize

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the frequency of transfers of funds between Agent and each Lender notwithstanding terms to the
contrary set forth in Section 11-A.4, Advances and repayments may be settled according to
the procedures described in Sections 11-A.5(a)(ii) and 11-A.5(a)(iii) of this
Agreement. Payments of principal, interest and fees in respect of the Loans will be settled, in
accordance with each Lender’s Pro Rata Share on the first Business Day after such payments are
received. Notwithstanding these procedures, each Lender’s obligation to fund its Pro Rata Share of
any advances made by Agent to Borrower will commence on the date such advances are made by Agent.
Such payments will be made by such Lender without set-off, counterclaim or reduction of any kind.

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

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

          (b) Availability of Lenders’ Pro Rata Share.

               (i) Unless Agent has been notified by a Lender prior to any proposed funding date of such
Lender’s intention not to fund its Pro Rata Share of the Advance amount requested by Borrower,
Agent may assume that such Lender will make such amount available to Agent on the proposed funding
date or the Business Day following the next Settlement Date, as applicable. If such amount is not,
in fact, made available to Agent by such Lender when due, Agent will be entitled to recover such
amount on demand from such Lender without set-off, counterclaim, or deduction of any kind.

               (ii) Nothing contained in this Section 11-A.5(b) will be deemed to relieve a Lender of
its obligation to fulfill its commitments or to prejudice any rights Agent or Borrower may have
against such Lender as a result of any default by such Lender under this Agreement.

          (c) Return of Payments.

               (i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that
a related payment has been or will be received by Agent from Borrower and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from such Lender without
set-off, counterclaim or deduction of any kind.

               (ii) If Agent determines at any time that any amount received by Agent under this Agreement
must be returned to Borrower or paid to any other person pursuant to any solvency law or otherwise,
then, notwithstanding any other term or condition of this Agreement, Agent will not be

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required to distribute any portion thereof to any Lender. In addition, each Lender will repay
to Agent on demand any portion of such amount that Agent has distributed to such Lender, together
with interest at such rate, if any, as Agent is required to pay to Borrower or such other Person,
without set-off, counterclaim or deduction of any kind.

     11-A.6 Dissemination of Information

          The Agent will distribute promptly to each Lender copies of all notices, schedules, reports,
projections, financial statements, agreements and other material and other information, including,
but not limited to, Borrower’s requests for Advances and financial and reporting information
received from Borrower or its Subsidiaries or generated by a third party (and excluding only
internal information generated by CapitalSource for its own use as a Lender or as Agent), as
provided for in this Agreement and the other Loan Documents as received by the Agent. The Agent
shall promptly give notice to Lenders of the receipt or sending of any notice, schedule, report,
projection, financial statement or other document or information pursuant to this Agreement or any
of the other Loan Documents and shall promptly forward a copy thereof to each Lender. Agent shall
request information from Borrower or its Subsidiaries as Lenders may request from time to time.
Agent shall not be liable to Lenders for any failure to comply with its obligations under this
Section 11-A.6, except to the extent that such failure is attributable to Agent’s gross
negligence or willful misconduct.

XI-B. BORROWING AGENCY

     11-B.1 Borrowing Agency Provisions

          (a) Each Borrower hereby irrevocably designates ASG to be its attorney and agent and in such
capacity to borrow, sign and endorse notes, and execute and deliver all instruments, documents,
writings and further assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of ASG.

          (b) The handling of this credit facility as a co-borrowing facility and the designation by
each Borrower of ASG as its borrowing agent in the manner set forth in this Agreement is solely as
an accommodation to Borrowers and at their request. None of Agent, any L/C Bank or any Lender
shall incur liability to Borrowers as a result thereof. To induce Agent and Lenders to do so and
in consideration thereof, each Borrower hereby indemnifies Agent, each L/C Bank and each Lender and
holds Agent, each L/C Bank and each Lender harmless from and against any and all liabilities,
expenses, losses, damages and claims of damage or injury asserted against Agent, any L/C Bank or
any Lender by any Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or
instruction from ASG or any other action taken by Agent or any Lender with respect to this
Section 11-B except due to willful misconduct or gross negligence by the indemnified party.

          (c) All Obligations shall be joint and several, and each Borrower shall make payment upon the
maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the
part of each Borrower shall in no way be affected by any extensions, renewals and forbearance
granted by Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve
its rights against any Borrower, the release by Agent or any Lender of any Collateral now or
thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to
the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof.

46

 

     11-B.2 Waiver of Subrogation

          Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution of any other claim which such Borrower may now or hereafter have against
the other Borrowers or other Person directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers’ property (including, without limitation, any
property which is Collateral for the Obligations), arising from the existence or performance of
this Agreement, until termination of this Agreement and repayment in full of the Obligations.

XII. MISCELLANEOUS

     12.1 Governing Law; Jurisdiction; Service of Process; Venue

          (a) The Loan Documents, pursuant to New York General Obligations Law Section 5-1401, shall be
governed by and construed in accordance with the laws of the State of New York without giving
effect to its choice of law provisions that would result in the application of the laws of a
different jurisdiction.

          (b) By execution and delivery of each Loan Document to which it is a party, each of the
parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County
and of the United States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating to this Agreement,
or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect any right that the
Agent or the Lenders may otherwise have to bring any action or proceeding relating to this
Agreement against Borrower or its properties in the courts of any jurisdiction.

          (c) Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (a) of this Section 12.1. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.

          (d) Each of the parties hereto waives personal service of process and irrevocably consents to
service of process in the manner provided for notices in Section 12.5 hereof. Nothing in
this Agreement will affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

     12.2 Successors and Assigns; Assignments and Participation; New Lenders

          (a) Each Lender may at any time assign all or a portion of its rights and delegate all or a
portion of its obligations under this Agreement and the other Loan Documents (including all its
rights and obligations with respect to the Loans) to one or more Persons (a “Transferee”);
provided, that if CapitalSource, in its capacity as Agent or Lender is the assignor of such
rights and obligations, then such Transferee shall not be known to CapitalSource to be principally
engaged in the provision of medical services to inmates at correctional facilities (and
provided, further, that such restriction is binding upon

47

 

CapitalSource only and is not binding on any successor Agent or Lender), and such assigning
Lender shall execute and deliver to Agent for acceptance and recording in the Register, a Lender
Addition Agreement, satisfactory to Agent. Agent shall give Borrower notice if Agent sells or
assigns its rights and obligations hereunder. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such Lender Addition Agreement,
(i) the Transferee thereunder shall be a party hereto and, to the extent provided in such Lender
Addition Agreement, shall have the same rights, benefits and obligations as it would if it were a
Lender hereunder, and (ii) the assigning Lender shall be relieved of its obligations hereunder with
respect to its Commitment or assigned portion thereof, as the case may be, to the extent that such
obligations shall have been expressly assumed by the Transferee pursuant to such Lender Addition
Agreement. Borrower hereby acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the Transferee and that the Transferee shall be considered to be a
“Lender” hereunder. Borrower may not sell, assign or transfer any interest in this Agreement, any
of the other Loan Documents, or any of the Obligations, or any portion thereof, including
Borrower’s rights, title, interests, remedies, powers, and duties hereunder or thereunder.

          (b) Each Lender may at any time sell participations in all or any part of its rights and
obligations under this Agreement and the other Loan Documents (including all its rights and
obligations with respect to the Loans) to one or more Persons (a “Participant”), provided that if
Agent is the seller of any such participation, then such Participant shall not be known to Agent to
be principally engaged in the provision of medical services to inmates at correctional facilities
(and provided, further, that such restriction is binding upon CapitalSource Bank as
Agent only and is not binding on any successor Agent). In the event of any such sale by a Lender of
a participation to a Participant, such Lender’s obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for
the performance thereof, such Lender shall remain the holder of any such Loan (and any Note
evidencing such Loan) for all purposes under this Agreement and the other Loan Documents and the
Borrower and the Agent shall continue to deal solely and directly with such Lender in connection
with such Lender’s rights and obligations under this Agreement and the other Loan Documents. Any
agreement pursuant to which any Lender shall sell any such participation shall provide that such
Lender shall retain the sole right and responsibility to exercise such Lender’s rights and enforce
each of the Borrower’s obligations hereunder, including the right to consent to any amendment,
supplement, modification or waiver of any provision of this Agreement or any of the other Loan
Documents; provided, that such participation agreement may provide that such Lender will
not agree, without the consent of the Participant, to any amendment, supplement, modification or
waiver of: (i) any reduction in the principal amount, interest rate or fees payable with respect to
any Loan in which such holder participates; (ii) any extension of the termination date of this
Agreement or the date fixed for any payment of principal, interest or fees payable with respect to
any Loan in which such holder participates; and (iii) any release of all or substantially all of
the Collateral (other than in accordance with the terms of this Agreement or the Loan Documents).
Borrower hereby acknowledges and agrees that the Participant under each participation shall, solely
for the purposes of Sections 11-A.5 and 12.4 of this Agreement be considered to be
a “Lender” hereunder.

          (c) The Agent, on behalf of the Borrower, shall maintain at its address referred to in
Section 12.5 a copy of each Lender Addition Agreement delivered to it and a register (the
“Register”) for the recordation of the names and addresses of the Lenders and the Commitment of,
and the principal amount of the Loans owing to, and the Notes evidencing such Loans owned by, each
Lender from time to time. Notwithstanding anything in this Agreement to the contrary, each of the
Borrower, the Agent and the Lenders shall treat each Person whose name is recorded in the Register
as the owner of the Loan, the Notes and the Commitment recorded therein for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

48

 

          (d) Notwithstanding anything in this Agreement to the contrary, no assignment under
Subsection 12.2(a) of any rights or obligations under or in respect of the Loans or any
Notes evidencing such Loans shall be effective unless and until the Agent shall have recorded the
assignment pursuant to Subsection 12.2(c). Upon its receipt of a Lender Addition Agreement
executed by an assigning Lender and a Transferee, the Agent shall (i) promptly accept such Lender
Addition Agreement and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give prompt notice of such acceptance and
recordation to the Lenders and the Borrower. On or prior to such effective date, the assigning
Lender shall surrender any outstanding Notes held by it all or a portion of which are being
assigned, and the Borrower, at its own expense, shall, upon the request of the Agent by the
assigning Lender or the Transferee, as applicable, execute and deliver to the Agent new Notes to
reflect the interest held by the assigning Lender and its Transferee.

          (e) Except as otherwise provided in this Section 12.2 no Lender shall, as between
Borrower and that Lender, be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or any part of the
Loans or other Obligations owed to such Lender. Each Lender may furnish any information concerning
Borrower and its Subsidiaries in the possession of that Lender from time to time to assignees and
participants (including prospective assignees and participants); provided, however, that prior to
the disclosure by a Lender of information known to the Lender to be confidential and proprietary
information of Borrower, Lender shall inform Borrower of such pending disclosure and shall afford
Borrower, to the extent possible under the circumstances, the opportunity to obtain a
confidentiality agreement from the Person to whom such disclosure is proposed to be made.

          (f) Notwithstanding any other provision set forth in this Agreement, any Lender may at any
time create a security interest in all or any portion of its rights under this Agreement,
including, without limitation, the Loans owing to it and any Notes held by it.

          (g) Borrower agrees to use its commercially reasonable best efforts to assist any Lender (at
Lender’s expense) in assigning or selling participations in all or any part of any Loans made by
such Lender to another Person identified by such Lender.

          (h) Borrower acknowledges and agrees that each Lender at any time and from time to time may
divide and restate any Note.

          (i) Notwithstanding anything in this Agreement to the contrary, (i) CapitalSource and its
Affiliates shall not be required to execute and deliver a Lender Addition Agreement in connection
with any transaction involving its Affiliates or lenders, (ii) no lender to or funding source of
CapitalSource or its Affiliates shall be considered a Transferee and (iii) there shall be no
limitation or restriction on CapitalSource’s ability to assign or otherwise transfer any Loan
Document to any such Affiliate or lender; provided, however, CapitalSource shall
continue to be liable as a “Lender” under the Loan Documents unless such Affiliate or lender
executes a Lender Addition Agreement and thereby becomes a “Lender.”

     12.3 Application of Payments

          To the extent that any payment made or received with respect to the Obligations is
subsequently invalidated, determined to be fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver, custodian or any other Person under any Debtor
Relief Law, common law or equitable cause or any other law, then the Obligations intended to be
satisfied by such payment shall be revived and shall continue as if such payment had not been
received by Agent or any

49

 

Lender. Any payments with respect to the Obligations received shall be credited and applied
in such manner and order as Agent shall decide in its sole discretion.

     12.4 Indemnity

          Borrowers jointly and severally shall indemnify Agent and each Lender, their Affiliates and
their respective managers, members, officers, employees, Affiliates, agents, representatives,
successors, assigns, accountants and attorneys (collectively, the “Indemnified Persons”) from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel and reasonable in-house documentation and
diligence fees and reasonable legal expenses) which may be imposed on, incurred by or asserted
against any Indemnified Person with respect to or arising out of, or in any litigation, proceeding
or investigation instituted or conducted by any Person with respect to any aspect of, or any
transaction contemplated by or referred to in, or any matter related to, any Loan Document or any
agreement, document or transaction contemplated thereby, whether or not such Indemnified Person is
a party thereto, except to the extent that any of the foregoing arises out of the gross negligence
or willful misconduct of such Indemnified Person. If any Indemnified Person uses in-house counsel
for any purpose for which Borrower is responsible to pay or indemnify, Borrower expressly agrees
that its indemnification obligations include reasonable charges for such work commensurate with the
fees that would otherwise be charged by outside legal counsel selected by such Indemnified Person
in its sole discretion for the work performed; provided, however, that Borrower shall be
provided with a copy of such records of the hours spent in connection with such work as Lender
maintains in its ordinary course of business. Agent agrees to give Borrower reasonable notice of
any event of which Agent becomes aware for which indemnification may be required under this
Section 12.4, and Agent may elect (but is not obligated) to direct the defense thereof;
provided, that the selection of counsel shall be subject to Borrower’s consent, which
consent shall not be unreasonably withheld or delayed. Any Indemnified Person may, in its
reasonable discretion, take such actions as it deems necessary and appropriate to investigate,
defend or settle any event or take other remedial or corrective actions with respect thereto as may
be necessary for the protection of such Indemnified Person or the Collateral. Notwithstanding the
foregoing, if any insurer agrees to undertake the defense of an event (an “Insured Event”), Agent
agrees not to exercise its right to select counsel to defend the event if that would cause
Borrower’s insurer to deny coverage; provided, however, that Agent reserves the
right to retain counsel to represent any Indemnified Person with respect to an Insured Event at its
sole cost and expense. To the extent that Agent or any Lender obtains recovery from a third party
other than an Indemnified Person of any of the amounts that Borrower has paid to Agent or any
Lender pursuant to the indemnity set forth in this Section 12.4, then Agent and/or Lender
shall promptly pay to Borrower the amount of such recovery. Without limiting any of the foregoing,
Borrowers jointly and severally indemnify the Indemnified Parties for all claims for brokerage fees
or commissions (other than claims of a broker with whom such Indemnified Party has directly
contracted in writing) which may be made in connection with respect to any aspect of, or any
transaction contemplated by or referred to in, or any matter related to, any Loan Document or any
agreement, document or transaction contemplated thereby.

     12.5 Notice

          Any notice or request under any Loan Document shall be given to any party to this Agreement at
such party’s address set forth beneath its signature on the signature page to this Agreement, or at
such other address as such party may hereafter specify in a notice given in the manner required
under this Section 12.5. Any notice or request hereunder shall be given only by, and shall
be deemed to have been received upon (each, a “Receipt”): (i) registered or certified mail, return
receipt requested, on the date on which such notice was received as indicated in such return
receipt, (ii) delivery by a nationally recognized overnight courier, one (1) Business Day after
deposit with such courier (costs prepaid), or (iii)

50

 

facsimile or electronic transmission, in each case upon telephone or further electronic
communication from the recipient acknowledging receipt (whether automatic or manual from
recipient), as applicable.

     12.6 Severability; Captions; Counterparts; Facsimile Signatures

          If any provision of any Loan Document is adjudicated to be invalid under applicable laws or
regulations, such provision shall be inapplicable to the extent of such invalidity without
affecting the validity or enforceability of the remainder of the Loan Documents which shall be
given effect so far as possible. The captions in the Loan Documents are intended for convenience
and reference only and shall not affect the meaning or interpretation of the Loan Documents. The
Loan Documents may be executed in one or more counterparts (which taken together, as applicable,
shall constitute one and the same instrument) and by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts. Each party to this Agreement agrees
that it will be bound by its own facsimile signature and that it accepts the facsimile signature of
each other party.

     12.7 Expenses

          Borrower shall pay, whether or not the Closing occurs, all costs and expenses incurred by
Lenders and/or their Affiliates, including, without limitation, documentation and diligence fees
and expenses, all search, audit, appraisal, recording, reasonable professional and filing fees and
expenses and all other actual out-of-pocket charges and expenses (including, without limitation,
UCC and judgment and tax lien searches and UCC filings and fees for post-Closing UCC and judgment
and tax lien searches and wire transfer fees and audit expenses), and reasonable attorneys’ fees
and expenses, (i) in any effort to enforce, protect or collect payment of any Obligation or to
enforce any Loan Document or any related agreement, document or instrument, (ii) in connection with
entering into, negotiating, preparing, reviewing and executing the Loan Documents and/or any
related agreements, documents or instruments, (iii) arising in any way out of administration of the
Obligations or the taking or refraining from taking by Agent of any action requested by Borrower,
(iv) in connection with instituting, maintaining, preserving, enforcing and/or foreclosing on
Agent’s or the benefit of itself and Lenders, Liens in any of the Collateral or securities pledged
under the Loan Documents, whether through judicial proceedings or otherwise, (v) in defending or
prosecuting any actions, claims or proceedings arising out of or relating to Agent’s and Lenders’
transactions with Borrower, (vi) in seeking, obtaining or receiving any advice with respect to
enforcing its rights and obligations under any Loan Document and any related agreement, document or
instrument, (vii) arising out of or relating to any Default or Event of Default, (viii) in
connection with all actions, visits, audits and inspections undertaken by Agent or its Affiliates
pursuant to the Loan Documents, and/or (ix) in connection with any modification, restatement,
supplement, amendment, waiver or extension of any Loan Document and/or any related agreement,
document or instrument. All of the foregoing shall be charged to Borrower’s account and shall be
part of the Obligations. If Agent or any Lender uses in-house counsel for any purpose under any
Loan Document which Borrower is responsible to pay or indemnify, Borrower expressly agrees that its
Obligations include reasonable charges for such work commensurate with the allocable costs of such
in-house counsel. Without limiting the foregoing, Borrower shall pay all taxes (other than taxes
based upon or measured by each Lender’s income or revenues or any personal property tax), if any,
in connection with the issuance of any Note and the filing and/or recording of any documents and/or
financing statements.

     12.8 Entire Agreement

          This Agreement and the other Loan Documents to which Borrower is a party constitute the entire
agreement between Borrower, Agent and Lenders with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings, if any, relating to the subject
matter hereof or thereof. Any promises, representations, warranties or guarantees not herein
contained and

51

 

hereinafter made shall have no force and effect unless in writing signed by Borrower, Agent
and such Lenders. No provision of this Agreement may be changed, modified, amended, restated,
waived, supplemented, discharged, canceled or terminated orally or by any course of dealing or in
any other manner other than by an agreement in writing signed by Borrower, Agent and Lenders (or
Requisite Lenders, as appropriate). Each party hereto acknowledges that it has been advised by
counsel in connection with the negotiation and execution of this Agreement and is not relying upon
oral representations or statements inconsistent with the terms and provisions hereof.

     12.9 Agent Approvals

          Unless expressly provided herein to the contrary, any approval, consent, waiver or
satisfaction of Agent or Lenders with respect to any matter that is subject of any Loan Document
may be granted or withheld by Agent or Lenders, as applicable, in their Permitted Discretion.

     12.10 Confidentiality and Publicity

          (a) Borrower agrees, and agrees to cause each of its Affiliates, (i) not to transmit or
disclose provisions of any Loan Document to any Person (other than to Borrower’s advisors and
officers on a need-to-know basis or as otherwise may be required by law) without Lender’s prior
written consent, (ii) to inform all Persons of the confidential nature of the Loan Documents and to
direct them not to disclose the same to any other Person and to require each of them to be bound by
these provisions. Borrower agrees to submit to Agent and Lenders, and Agent and Lenders reserve
the right to review and approve all press releases and other written materials for similar
publication purposes that Borrower or any of its Affiliates prepares that contain Agent’s or
Lenders’ names or describe or refer to any Loan Document, any of the terms thereof or any of the
transactions contemplated thereby. Borrower shall not, and shall not permit any of its Affiliates
to, use Agent or Lenders’ names (or the name of any of Agent or Lenders’ Affiliates) in connection
with any of its business operations, including without limitation, advertising, marketing or press
releases or such other similar purposes, without Agent or Lenders’ (as applicable) prior written
consent. Nothing contained in any Loan Document is intended to permit or authorize Borrower or any
of its Affiliates to contract on behalf of Agent or Lenders.

          (b) Borrower hereby agrees that Agent and Lenders or any Affiliate of Agent and Lenders may
(i) disclose a general description of transactions arising under the Loan Documents for
advertising, marketing or other similar purposes and (ii) use Borrower’s or Guarantor’s name, logo
or other indicia germane to such party in connection with such advertising, marketing or other
similar purposes.

     12.11 Release of Agent and Lenders

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

52

 

Borrower the financial accommodations hereunder and has been relied upon by Agent and each
Lender in agreeing to make the Loans.

          (b) Borrower hereby further specifically waives any rights that it may have under Section 1542
of the California Civil Code (to the extent applicable), which provides as follows: “A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR,” and further waives any similar rights under applicable laws.

     12.12 Agreement Controls

          In the event of any inconsistency between this Agreement and any of the other Loan Documents,
the terms of this Agreement shall control.

     12.13 Patriot Act

          Agent hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it may be
required to obtain, verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow Agent to identify
Borrower in accordance with the Patriot Act.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, each of the parties has duly executed this Revolving Credit and Security
Agreement as of the date first written above.

	 	 	 	 	 
	 	BORROWER:

AMERICA SERVICE GROUP INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Chief Financial Officer and Executive 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, INC.

 	 
	 	By:  	/s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Executive 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:  	PRISON HEALTH SERVICES, INC., its General 
Manager
 	 
	 	 	 
	 	By:  	      /s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Executive Vice President

105 Westpark Drive, Suite 200

Brentwood, TN  37027

Phone:  615-376-1376

Fax:   615-376-1309

E-mail:  Taylor@asgr.com 	 

54

 

	 	 	 	 	 

	 	 	 	 	 
	 	CORRECTIONAL HEALTH SERVICES, LLC

 	 
	 	By:  	PRISON HEALTH SERVICES, INC., its General
Manager
 	 
	 	 	 
	 	By:  	     /s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor 	 
	 	 	Title:  	Executive 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, LLC

 	 
	 	By:  	PRISON HEALTH SERVICES, INC., its General
Manager
 	 
	 	 	 
	 	By:  	     /s/ Michael W. Taylor
 	 
	 	 	Name:  	Mr. Michael Taylor
 	 
	 	 	Title:  	Executive Vice President

105 Westpark Drive, Suite 200

Brentwood, TN  37027

Phone:  615-376-1376

Fax:   615-376-1309

E-mail:  Taylor@asgr.com 	 

55

 

	 	 	 	 	 

	 	 	 	 	 
	 	AGENT AND LENDER:

CAPITALSOURCE BANK

 	 
	 	By:  	/s/ Humberto Espada
 	 
	 	 	Name:  	Humberto Espada 	 
	 	 	Title:  	Bank Officer

CapitalSource Bank

4445 Willard Avenue, 12th Floor

Chevy Chase, MD  20815

Attention:  Credit Administration

Telephone:  (301) 841-2700

FAX:  (301) 841-2340

E-MAIL: 	 

56

 

	 	 	 	 	 

EXHIBITS

	 	 	 
	A

	 	Borrowing Certificate

SCHEDULES

	 	 	 
	1

	 	Lenders/Commitments
	2.4

	 	Borrower’s Accounts for Revolving Facility
	2.12

	 	Existing Letters of Credit
	5.2

	 	Required Consents
	5.3

	 	Subsidiaries; Authorized and Issued Capital Stock; Capitalization; Directors, Members,
Managers and/or Partners; Joint Venture and Partnership Arrangements
	5.4

	 	Owned or Leased Real Properties; Other Leased or Licensed Assets
	5.5

	 	Other Agreements
	5.6

	 	Litigation
	5.8

	 	Taxes Contested in Good Faith
	5.11

	 	Intellectual Property
	5.15

	 	Existing Indebtedness
	5.17

	 	Insurance Policies
	5.18A

	 	Corporate Names
	5.18B

	 	Place of Business/Chief Executive Office
	5.22

	 	Performance and Payment Bonds
	6.8

	 	Post Closing Obligations
	7.2

	 	Permitted Indebtedness
	7.3

	 	Permitted Liens
	7.4

	 	Investments; New Facilities or Collateral; Subsidiaries
	7.6

	 	Transactions with Affiliates
	7.9

	 	Contingent Obligations

 

 

ANNEX I

FINANCIAL COVENANTS

1) Minimum EBITDA

     As of the end of each calendar quarter, ASG (on a consolidated basis) shall not permit its
EBITDA for the Test Period ending on the date of such determination to be less than $8,000,000.

2) Pre-Distribution Fixed Charge Coverage Ratio (EBITDA/Adjusted Fixed Charges)

     As of the end of each calendar quarter, the Adjusted Fixed Charge Ratio as measured for the
Test Period shall not be less than 1.75 to 1.0.

3) Post-Distribution Fixed Charge Coverage Ratio (EBITDA/Fixed Charges)

     (a) If, as of the end of each calendar quarter, the average unused Availability for such
calendar quarter plus the average Net Cash for such calendar quarter is greater than or
equal to $20,000,000, then the Fixed Charge Coverage Ratio as measured for the Test Period shall
not be less than 1.25 to 1.0.

     (b) If, as of the end of each calendar quarter, the average unused Availability for such
calendar quarter plus the average Net Cash for such calendar quarter is less than
$20,000,000, then the Fixed Charge Coverage Ratio as measured for the Test Period shall not be less
than 1.50 to 1.0.

     For purposes of the covenants set forth in this Annex I, the terms listed below shall
have the following meanings:

     “Adjusted Fixed Charge Coverage Ratio” shall mean, for Borrower on a consolidated
basis, the ratio of (a) EBITDA for the Test Period, to (b) Adjusted Fixed Charges for the Test
Period.

     “Adjusted Fixed Charges” shall mean the sum of the following: (a) Total Debt Service,
(b) Capital Expenditures, and (c) cash income taxes paid or accrued. For the avoidance of doubt,
the definition of “Adjusted Fixed Charges” shall not include cash dividends paid or accrued or
declared.

     “Capital Expenditures” shall mean, for any Test Period, the sum (without duplication)
of all expenditures (whether paid in cash or accrued as liabilities) during the Test Period that
are or should be treated as capital expenditures under GAAP.

     “EBITDA” shall mean, for any Test Period, the sum, without duplication, of the
following for Borrower, on a consolidated basis: Net Income determined in accordance with GAAP,
plus, (a) Interest Expense, (b) any provision for taxes based on income or profit that was
deducted in computing Net Income, (c) depreciation expense, (d) amortization expense, (e) all other
non-cash, non-recurring charges and expenses, excluding accruals for cash expenses made in the
ordinary course of business, and (f) loss from any sale of assets, other than sales in the ordinary
course of business, all of the foregoing determined in accordance with GAAP, minus (a)
gains from any sale of assets, other than sales in the ordinary course of business and (b) other
extraordinary or non-recurring gains.

     “Fixed Charge Coverage Ratio” shall mean, for Borrower on a consolidated basis, the
ratio of (a) EBITDA for the Test Period, to (b) Fixed Charges for the Test Period.

Annex I-1

 

     “Fixed Charges” shall mean, the sum of the following: (a) Total Debt Service, (b)
Capital Expenditures, (c) cash income taxes paid or accrued, and (d) cash dividends paid or accrued
or declared.

     “Interest Expense” shall mean, for any Test Period, total interest expense (including
expense attributable to Capital Leases in accordance with GAAP) with respect to all outstanding
Indebtedness including capitalized interest net of interest income.

     “Net Cash” shall mean unrestricted cash on hand minus the outstanding balance
under the Revolving Facility.

     “Net Income” shall mean, the net income (or loss) determined in conformity with GAAP,
provided that there shall be excluded (i) the income (or loss) of any Person in which any other
Person (other than any Borrower) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to a Borrower by such Person, (ii) the income (or
loss) of any Person accrued prior to the date it becomes a Borrower or is merged into or
consolidated with a Borrower or that Person’s assets are acquired by a Borrower, (iii) the income
of any Subsidiary of Borrower to the extent that the declaration or payment of dividends or similar
distributions of that income by that Subsidiary is not at the time permitted by operation of the
terms of the charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) compensation expense resulting from the
issuance of capital stock, stock options or stock appreciation rights issued to former or current
employees, including officers, of a Borrower, or the exercise of such options or rights, in each
case to the extent the obligation (if any) associated therewith is not expected to be settled by
the payment of cash by a Borrower or any affiliate thereof, and (v) compensation expense resulting
from the repurchase of capital stock, options and rights described in clause (iv) of this
definition of Net Income.

     “Test Period” shall mean the twelve most recent calendar months then ended (taken as
one accounting period), or such other period as specified in the Agreement or any Annex thereto.

     “Total Debt Service” shall mean the sum of (i) scheduled or other required payments of
principal on Indebtedness, and (ii) Interest Expense (less amortization of loan arrangement fees
and all other non-cash charges to the extent included in Interest Expense for GAAP purposes), in
each case for such period.

Annex I-2

 

APPENDIX A

DEFINITIONS

     “Account Debtor” shall mean any Person who is obligated under an Account.

     “Accounts” shall mean all “accounts” (as defined in the UCC) of Borrower (or, if
referring to another Person, of such other Person), including without limitation, accounts,
accounts receivables, monies due or to become due and obligations in any form (whether arising in
connection with contracts, contract rights, instruments, general intangibles or chattel paper), in
each case whether arising out of goods sold or services rendered or from any other transaction and
whether or not earned by performance, now or hereafter in existence, and all documents of title or
other documents representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

     “Advances” shall mean a borrowing under the Revolving Facility, including without
limitation all Funded L/C Exposure, any other borrowings under the Revolving Facility (including,
but not limited to, Automatic Advances), or any amounts paid by Agent or any Lender on behalf of
Borrower or any Guarantor under any Loan Document.

     “Affiliate” shall mean, as to any Person, any other Person (a) that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with such Person, (b) who is a director or an executive officer (i) of such Person, (ii) of
any Subsidiary of such Person, or (iii) of any Person described in clause (a) above with respect to
such Person, or (c) which directly or indirectly through one or more intermediaries, is the
beneficial or record holder of twenty-five percent (25%) or more of any class of the outstanding
voting stock, securities or other equity or ownership interests of such Person. For purposes of
this definition, the term “control” (and the correlative term, “controlled by”) shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies, whether through ownership of securities or other interests, by contract or otherwise.

     “Agent Collateral Account” means a general interest bearing deposit account
established at and maintained by Agent in the name of and for the benefit of the Agent on behalf of
the Lenders and under the exclusive dominion and control of the Agent, into which Collateral in the
form of cash shall be deposited for purposes of collateralizing Letter of Credit obligations as set
forth herein, and as to which the Administrative Agent has “control” pursuant to Section 9-104 of
the UCC.

     “Applicable Rate” shall mean the interest rates applicable from time to time to Loans
under the Agreement.

     “Availability” shall have the meaning assigned to it in Section 2.1(a) hereof.

     “Borrowing Base” shall mean, as of any date of determination, the value of Eligible
Receivables, after applying liquidity factors, reserves permitted under this Agreement, and the
advance rate, as determined with reference to the most recent Borrowing Certificate and otherwise
in accordance with the Agreement; provided, however, that if as of such date the
most recent Borrowing Certificate is of a date more than four (4) Business Days before or after
such date, the Borrowing Base shall be determined by Agent consistent with this Agreement.

     “Borrowing Certificate” shall mean a Borrowing Certificate substantially in the form
of Exhibit A hereto.

Appendix A-1

 

     “Business Day” shall mean any day other than a Saturday, Sunday or other day on which
the Federal Reserve or Agent is closed.

     “Capital Lease” shall mean, as to any Person, a lease of any interest in any kind of
property or asset by that Person as lessee that is, should be or should have been recorded as a
“capital lease” in accordance with GAAP.

     “Capitalized Lease Obligations” shall mean all obligations of any Person under Capital
Leases, in each case, taken at the amount thereof accounted for as a liability in accordance with
GAAP.

     “Change of Control” shall mean, with respect to any Person, the occurrence of any of
the following: (i) a merger, consolidation, reorganization, recapitalization or share or interest
exchange, sale or transfer or any other transaction or series of transactions (other than with
another Borrower or Guarantor) in which its stockholders, managers, partners or interest holders
immediately prior to such transaction or series of transactions receive, in exchange for the stock
or interests owned by them, cash, property or securities of the resulting or surviving entity or
any Affiliate thereof, and, as a result thereof, Persons who, individually or in the aggregate,
were holders of 50% or more of its voting stock, securities or equity, partnership or ownership
interests immediately prior to such transaction or series of transactions hold less than 50% of the
voting stock, securities or other equity, partnership or ownership interests of the resulting or
surviving entity or such Affiliate thereof, calculated on a fully diluted basis, or (ii) a direct
or indirect sale, transfer or other conveyance or disposition, in any single transaction or series
of transactions, of all or substantially all of its assets to any Person other than a Borrower or
Guarantor.

     “Charter and Good Standing Documents” shall mean, for each Borrower (i) a copy of the
certificate of incorporation or formation (or other charter document) certified as of a date not
more than thirty (30) Calendar Days before the Closing Date by the applicable Governmental
Authority of the jurisdiction of incorporation or organization of Borrower, (ii) a copy of the
bylaws or similar organizational documents of Borrower certified as of a date not more than three
(3) Business Days before the Closing Date by the corporate secretary or assistant secretary of
Borrower, (iii) an original certificate of good standing as of a date not more than 30 Calendar
Days prior to the Closing Date issued by the applicable Governmental Authority of the jurisdiction
of incorporation or organization of Borrower and of every other jurisdiction in which Borrower is
otherwise required to be in good standing, and (iv) copies of the resolutions of the Board of
Directors or managers (or other applicable governing body) and, if required, stockholders, members
or other equity owners authorizing the execution, delivery and performance of the Loan Documents to
which Borrower is a party, certified by an authorized officer of such Person as of the Closing
Date.

     “Claims” shall mean any and all liabilities, obligations, losses, damages, penalties,
claims, actions, litigation, proceedings, investigations, judgments, suits, fees, costs, expenses,
charges, advances and disbursements of any kind (including, without limitation, fees, costs,
expenses and charges of counsel (including in-house counsel)).

     “Closing” shall mean the satisfaction, or written waiver by Agent and Lenders, of all
of the conditions precedent set forth in the Agreement required to be satisfied prior to the
consummation of the transactions contemplated hereby.

     “Closing Date” shall mean the date hereof.

     “Collateral” shall mean, collectively and each individually, all collateral and/or
security granted to Agent, for the benefit of itself and Lenders, by Borrower and/or Guarantors
pursuant to the Loan Documents.

Appendix A-2

 

     “Commitment” or “Commitments” shall mean (a) as to any Lender, the aggregate
commitment of such Lender to make Advances and draws, as set forth on Schedule 1 or in the
most recent Lender Addition Agreement executed by such Lender, and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Advances and draws.

     “Contingent Obligations” shall mean, as to any Person, any obligation of such Person
guaranteeing or intending to guaranty any Indebtedness, leases, dividends or other obligations
(“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly
or indirectly, including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or to hold harmless the owner of such primary obligation
against loss in respect thereof, provided, however, that the term “Contingent
Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary
course of business.

     “Debtor Relief Law” shall mean, collectively, the Bankruptcy Code of the United States
of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization or similar debtor relief laws from time to
time in effect affecting the rights of creditors generally, as amended from time to time.

     “Default” shall mean any event, fact, circumstance or condition that, with the giving
of applicable notice or passage of time or both, would constitute or be or result in an Event of
Default.

     “Deposit Account” shall mean, collectively, any Lockbox Account, Blocked Account and
all bank or other depository accounts of Borrower.

     “Eligible Billed Receivables” shall mean each Account (other than Eligible Unbilled
Receivables) arising in the ordinary course of Borrower’s business from the sale of goods or
rendering of services which Agent, in its Permitted Discretion, deems an Eligible Billed Receivable
unless:

          (a) it is not subject to a valid perfected first priority security interest in favor of Agent,
for the benefit of itself and Lenders, subject to no other Lien of equal or higher priority;

          (b) it is not evidenced by an invoice, statement or other documentary evidence satisfactory to
Agent; provided, that Agent in its Permitted Discretion may from time to time include as
Accounts that are not evidenced by an invoice, statement or other documentary evidence satisfactory
to Agent as Eligible Billed Receivables and determine the advance rate, liquidity factors and
reserves applicable to Advances made on any such Accounts;

          (c) it arises out of services rendered or a sale made to, or out of any other transaction
between with, one or more Affiliates of Borrower;

          (d) it remains unpaid for longer than the earlier of (i) 120 calendar days after the original
invoice date, and (ii) 150 calendar days after the applicable services were rendered;

          (e) with respect to all Accounts owed by any particular Account Debtor or its Affiliates, if
more than 50% of the aggregate balance of all such Accounts owing from such Account

Appendix A-3

 

Debtor or its Affiliates remains unpaid for longer than the earlier of (i) 120 calendar days
after the original invoice date, and (ii) 150 calendar days after the applicable services were
rendered;

          (f) with respect to all Accounts owed by any particular Account Debtor and/or its Affiliates,
50% or more of all such Accounts are not deemed Eligible Receivables for any reason hereunder;

          (g) with respect to all Accounts owed by any particular Account Debtor and/or its Affiliates,
if such Accounts exceed 50%, (such percentage or any other percentage hereafter established by
Lender for any particular Account Debtor, a “Concentration Limit”) of all Accounts at any
one time;

          (h) any covenant, agreement, representation or warranty contained in any Loan Document with
respect to such Account has been breached and remains uncured;

          (i) the Account Debtor for such Account has commenced a voluntary case under any Debtor Relief
Law or has made an assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in respect of such Account Debtor in an involuntary
case under any Debtor Relief Law, or any other petition or application for relief under any Debtor
Relief Law has been filed against such Account Debtor, or such Account Debtor has failed, suspended
business, ceased to be solvent, called a meeting of its creditors, or has consented to or suffered
a receiver, trustee, liquidator or custodian to be appointed for it or for all or a significant
portion of its assets or affairs;

          (j) it arises from the sale of property or services rendered to one or more Account Debtors
outside the continental United States or Canada or that have their principal place of business or
chief executive offices outside the continental United States or Canada;

          (k) it represents the sale of goods to an Account Debtor on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return basis or is
evidenced by chattel paper or an instrument of any kind or has been reduced to judgment;

          (l) (A) the applicable Account Debtor for such Account is any Governmental Authority, and the
rights to payment of such Account may not be assigned to Agent by operation of law, (B) any
required consent from or notice to the relevant Governmental Authority has not been obtained, or in
the case of notice, delivered, and (C) Agent has not otherwise agreed to its inclusion in the
Borrowing Base;

          (m) it is subject to any known offset, credit (including any resource or other income credit
or offset), deduction, defense, discount, chargeback, freight claim, allowance, adjustment, dispute
or counterclaim, or is contingent in any respect or for any reason, but only to such extent;

          (n) there is any agreement with an Account Debtor for any deduction from such Account, except
for discounts or allowances made in the ordinary course of business for prompt payment, all of
which discounts or allowances are reflected in the calculation of the face value of each invoice
related thereto, such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Billed Receivable;

          (o) any return, rejection or repossession of goods or services related to it has occurred, but
only to such extent;

          (p) it is not payable to Borrower;

Appendix A-4

 

          (q) Borrower has agreed to accept or has accepted any non-cash payment for such Account;

          (r) it constitutes a re-billing of an amount previously billed, if the amount previously
billed was treated as an Eligible Billed Receivable;

          (s) the Account is subject to any known reduction, offset or recoupment on account of staffing
deficiencies under any Government Contract (“Accrued Paybacks”) but only to such extent;

          (t) the Account is subject to known reduction, offset or recoupment on account of lower than
expected costs (“Risk Sharing Adjustment”) but only to such extent;

          (u) the Account is subject to known reduction, offset or recoupment on account of adjustments
due to failure to earn any amounts prepaid (“Deferred Revenue”) but only to such extent; and

          (v) it fails to meet such other specifications and requirements which may from time to time be
established by Agent or is not otherwise satisfactory to Agent, as determined in Agent’s sole
discretion, and with respect to Accounts arising under contracts with Governmental Authorities that
have enacted anti-assignment laws, including the State of New York and the U.S. Government, and
until Borrower complies with the applicable laws of such Governmental Authority regarding the
assignment of such Government Contracts, such determination shall be in Agent’s sole discretion.

     “Eligible Receivables” shall mean Eligible Billed Receivables plus Eligible Unbilled
Receivables plus the Rikers Receivables.

     “Eligible Unbilled Receivables” shall mean each Account meeting the criteria of
Eligible Billed Receivables, except:

	 	(i)	 	clause (b) shall not apply;
	 
	 	(ii)	 	clause (d) shall be restated as follows: “if more than 75% of the aggregate
balance of any unbilled Account remains unbilled for longer than the thirtieth
(30th) day following the latest date services were rendered in any thirty
(30) day billing cycle;”
	 
	 	(iii)	 	clause (e) shall be restated as follows: “with respect to all Accounts owed
by any particular Account Debtor and/or its Affiliates if more than 50% of the
aggregate balance of all such Accounts owing from such Account Debtor or its Affiliates
remains unbilled for longer than the thirtieth (30th) day following the
latest date services were rendered in any thirty (30) day billing cycle;” and

the eligible unbilled portion of any such Account shall include, with respect to each Government
Contract, revenue earned on each day prior to issuance of an invoice in an amount equal to the
amount of revenue under such Government Contract in the month most recently closed on Borrower’s
accounting system or, in the case of a Government Contract that is in the first month of its term,
the estimated amount of revenue for such month, in each case divided by 30, provided
that, Agent in its sole discretion may from time to time determine the liquidity factors
and reserves applicable to Advances made on any such Accounts.

     “Environmental Laws” shall mean, collectively and each individually, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendment and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Toxic Substances
Control

Appendix A-5

 

Act, the Clean Air Act, the Clean Water Act, any other “Superfund” or “Superlien” law and all
other federal, state and local and foreign environmental, land use, zoning, health, chemical use,
safety and sanitation laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances, in each case, as amended, and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and directives of
Governmental Authorities with respect thereto.

     “Equipment” has the meaning given such term in the UCC.

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.

     “Event of Default” shall mean the occurrence of any event set forth in Article
VIII.

     “Existing Letters of Credit” shall mean the existing letters of credit having an
aggregate face value of Six Million Eight Hundred Fifty Thousand One Hundred Forty-Five Dollars
($6,850,145.00) which were issued under the Revolving Credit and Security Agreement dated October
31, 2005 between CapitalSource Finance LLC and Borrower, as amended, and which are described in
more detail on Schedule 2.12.

     “Fair Valuation” shall mean the determination of the value of the consolidated assets
of a Person on the basis of the amount which may be realized by a willing seller within a
reasonable time through collection or sale of such assets at market value on a going concern basis
to an interested buyer who is willing to purchase under ordinary selling conditions in an arm’s
length transaction.

     “Fixtures” has the meaning given such term in the UCC.

     “Funded L/C Exposure” means the aggregate principal amount, as of any date of
determination, of all payments that were made by an L/C Issuer under any Letter of Credit or L/C
Undertaking, but which have not been reimbursed to such L/C Issuer by the Borrower.

     “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time as applied by nationally recognized accounting firms.

     “General Intangibles” has the meaning given such term in the UCC.

     “Governmental Authority” shall mean any federal, state, municipal, national, local or
other governmental department, court, commission, board, bureau, agency or instrumentality or
political subdivision thereof, or any entity or officer exercising executive, legislative or
judicial, regulatory or administrative functions of or pertaining to any government or any court,
in each case, whether of the United States or a state, territory or possession thereof, a foreign
sovereign entity or country or jurisdiction or the District of Columbia.

     “Government Account” shall be defined to mean all Accounts arising out of or with
respect to any Government Contract.

     “Government Contracts” shall mean all contracts with the United States or any state
government or any other Governmental Authority or any agency of any of the foregoing, and all
amendments, modifications and supplements thereto.

Appendix A-6

 

     “Guarantor” shall mean, collectively and each individually, all guarantors of the
Obligations or any part thereof.

     “Guaranty” shall mean, collectively and each individually, all guarantees executed by
any Guarantors.

     “Hazardous Substances” shall mean, without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes,
hazardous or toxic substances or related materials as defined in or subject to any applicable
Environmental Law.

     “Indebtedness” of any Person shall mean, without duplication, (a) all items which, in
accordance with GAAP, would be included in determining total liabilities as shown on the liability
side of the balance sheet of such Person as of the date as of which Indebtedness is to be
determined, including any Capital Leases, (b) all indebtedness secured by any mortgage, pledge,
security, Lien or conditional sale or other title retention agreement to which any property or
asset owned or held by such Person is subject, whether or not the indebtedness secured thereby
shall have been assumed by such Person, and (c) all indebtedness of others which such Person has
directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), discounted or sold with recourse or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, or in respect of which such Person has
agreed to supply or advance funds (whether by way of loan, stock, equity or other ownership
interest purchase, capital contribution or otherwise) or otherwise to become directly or indirectly
liable.

     “Landlord Waiver and Consent” shall mean a waiver/consent in form and substance
reasonably satisfactory to Agent from the owner/lessor of any premises not owned by Borrower at
which any of the Collateral is now or hereafter located for the purpose of providing Agent access
to such Collateral, in each case as such may be modified, amended or supplemented from time to
time.

     “L/C Disbursement” shall mean a payment by an L/C Issuer pursuant to a Letter of
Credit.

     “L/C Exposure” means the sum, as of any date of determination, of the Unfunded L/C
Exposure and the Funded L/C Exposure.

     “L/C Fee Rate” shall mean 2.0% per annum.

     “L/C Issuer” means Agent, or any financial institution that, at the request of Agent
agrees, in such financial institution’s sole discretion, to become an L/C Issuer for the purpose of
issuing Letters of Credit or L/C Undertakings pursuant to Section 2.12.

     “L/C Undertaking” shall have the meaning assigned to it in Section 2.12
hereof.

     “Lender Addition Agreement” shall mean an agreement among Agent, a Lender and such
Lender’s assignee regarding their respective rights and obligations with respect to assignments of
the Loans and other interests under this Agreement.

     “Lenders” shall mean the financial institutions, from time to time named on
Schedule 1 under the heading “Lenders”, their respective successors and permitted assigns
(but not, except as expressly set forth herein, any participant that is not otherwise a party to
this Agreement).

     “Letter of Credit” shall mean (i) a letter of credit issued under Section 2.12
hereof or (ii) an Existing Letter of Credit.

Appendix A-7

 

     “Letter of Credit Fee” shall mean a fee equal to the sum of (a) the then applicable
L/C Fee Rate multiplied by the Unfunded L/C Exposure, plus (b) any administrative charges, fees or
expenses actually incurred by Agent to provide Letters of Credit.

     “LIBOR” shall mean a variable per annum percentage rate, as of any date of
determination (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to (a) the rate of
interest which is identified and normally published by Bloomberg Professional Service Page BBAM 1
as the offered rate for loans in United States dollars for the period of one (1) month under the
caption British Bankers Association LIBOR Rates as of 11:00 a.m. (London time) as adjusted on a
daily basis and effective on the second full Business Day after each such day (unless such date is
not a Business Day, in which event, the next succeeding Business Day will be used); divided by (b)
the sum of one minus the daily average during the preceding month of the aggregate maximum reserve
requirement (expressed as a decimal) then imposed under Regulation D of the Board of Governors of
the Federal Reserve System (or any successor thereto) for “Eurocurrency Liabilities” (as defined
therein). If Bloomberg Professional Service (or another nationally-recognized rate reporting
source acceptable to Lender) no longer reports the LIBOR or Lender determines in good faith that
the rate so reported no longer accurately reflects the rate available to Lender in the London
Interbank Market or if such index no longer exists or if Page BBAM 1 no longer exists or accurately
reflects the rate available to Lender in the London Interbank Market, Lender may select a
replacement index or replacement page, as the case may be.

     “Lien” shall mean any mortgage, pledge, security interest, encumbrance, restriction,
lien or charge of any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement or any lease in the nature thereof), or any other
arrangement pursuant to which title to the property is retained by or vested in some other Person
for security purposes.

     “Loan” or “Loans” shall mean, individually and collectively, all Advances.

     “Loan Documents” shall mean, collectively and each individually, the Agreement, the
Notes, the Security Documents, the Stock Pledge Agreement, the Guarantees, the Uniform Commercial
Code Financing Statements, the Landlord Waiver and Consents, the Borrowing Certificates, and all
other agreements, documents, instruments and certificates heretofore or hereafter executed or
delivered to Agent or Lenders in connection with any of the foregoing or the Loans, as the same may
be amended, modified or supplemented from time to time.

     “Material Adverse Effect” or “Material Adverse Change” shall mean any event,
condition or circumstance or set of events, conditions or circumstances or any change(s) which (i)
has or could reasonably be expected to have any material adverse effect upon or change in the
validity or enforceability of any Loan Document, (ii) has been or could reasonably be expected to
be material and adverse to the value of the Collateral taken as a whole or to the business,
operations, prospects, properties, assets, liabilities or condition of Borrower or any Guarantors,
either individually or taken as a whole, or (iii) has materially impaired or could reasonably be
expected to materially impair the ability of Borrower or Guarantor to perform the Obligations or to
consummate the transactions under the Loan Documents executed by such Person.

     “Note or Notes” shall mean Notes issued pursuant to Section 2.13.

     “Obligations” shall mean all present and future obligations, Indebtedness and
liabilities of Borrower and/or Guarantors to Agent or Lenders at any time and from time to time of
every kind, nature and description, direct or indirect, secured or unsecured, joint and several,
absolute or contingent, due or to become due, matured or unmatured, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, under any of the Loan Documents or
otherwise relating to Notes and/or Loans, including,

Appendix A-8

 

without limitation, all applicable fees, charges and expenses and/or all amounts paid or
advanced by Agent or Lenders on behalf of or for the benefit of Borrower and/or Guarantor for any
reason at any time, including in each case obligations of performance as well as obligations of
payment and interest that accrue after the commencement of any proceeding under any Debtor Relief
Law by or against any such Person.

     “OFAC” shall mean the U.S. Department of Treasury’s Office of Foreign Assets Control.

     “Payment Office” shall mean initially the address set forth beneath the Agent’s name
on the signature page of the Agreement, and thereafter, such other office of Agent, if any, which
it may designate by notice to Borrower to be the Payment Office.

     “Permit” shall mean collectively all licenses, leases, powers, permits, franchises,
certificates, authorizations, approvals, certificates of need, provider numbers and other rights
necessary to the conduct of Borrowers’ business.

     “Permitted Discretion” shall mean a determination or judgment made in good faith in
the exercise of reasonable (from the perspective of a secured lender) credit or business judgment.

     “Person” shall mean an individual, a partnership, a corporation, a limited liability
company, a business trust, a joint stock company, a trust, an unincorporated association, a joint
venture, a Governmental Authority or any other entity of whatever nature.

     “Prime Rate” shall mean a variable per annum percentage rate, as of any date of
determination, equal to the rate of interest which is identified and normally published by
Bloomberg Professional Service as the Bloomberg Prime Rate, PRIMBB Index, as the “Prime Rate” (or,
if more than one rate is published as the Prime Rate, then the highest of such rates). The Prime
Rate is rounded upwards to the nearest 1/1000th of 1% (5 decimal places). Any change in Prime Rate
will become effective as of the date the rate of interest which is so identified as the “Prime
Rate” is different from that published on the preceding Business Day. If Bloomberg Professional
Service no longer reports the Prime Rate, or if such Page Prime no longer exists, or Lender
determines in good faith that the rate so reported no longer accurately reflects an accurate
determination of the prevailing Prime Rate, Lender may select a reasonably comparable index or
source to use as the basis for the Prime Rate.

     “Pro Rata Share” shall mean with respect to matters relating to a particular
Commitment of a Lender, the percentage obtained by dividing (i) such Commitment of that Lender by
(ii) all such Commitments of all Lenders; provided, however, that if any Commitment
is terminated pursuant to the terms hereof, then “Pro Rata Share” means the percentage obtained by
dividing (x) the aggregate amount of such Lender’s outstanding Loans related to such Commitment by
(y) the aggregate amount of all outstanding Loans related to such Commitment; in any case as such
percentage may be adjusted by assignments permitted pursuant to Section 12.2.

     “Requisite Lenders” shall mean Lenders holding or being responsible for (i) 100%, if
there are only two Lenders, and (ii) at least 66-2/3% if there are more than two Lenders, in each
case, of the sum of (a) all outstanding Loans and (b) all unutilized Commitments, including
Unfunded L/C Exposure.

     “Rikers Receivables” shall mean each Account meeting the criteria of Eligible Billed
Receivables, provided that the following terms and conditions are satisfied:

          (a) such Account was acquired by PHS pursuant to a receivables purchase agreement among PHS,
PHS Medical Services, PC and PHS Dental Services, PC (the “Rikers Acquisition”) which

Appendix A-9

 

Rikers Acquisition shall be on terms and conditions and otherwise in form and substance
satisfactory to Agent in its Permitted Discretion; and

          (b) Borrower shall have (i) collaterally assigned (or caused to be assigned) to Agent the
agreement evidencing the Rikers Acquisition and any other agreements, instruments or documents in
connection therewith and (ii) executed such agreements, instruments or documents and granted such
liens and security interests as may be reasonably required by Agent and its legal counsel.

     “Security Documents” shall mean the Notes, this Agreement, Stock Pledge Agreement,
Guarantees, Lockbox Agreements, Uniform Commercial Code Financing Statements and all other
documents or instruments necessary to create or perfect the Liens in the Collateral, as such may be
modified, amended or supplemented from time to time.

     “Stock Pledge Agreement” shall mean, collectively and each individually, (i) that
certain Stock Pledge Agreement, by and between Agent and ASG executed in connection herewith, and
(ii) if applicable, all stock pledge agreements executed by and between Agent and any Guarantors in
each case as such may be modified, amended or supplemented from time to time.

     “Subordinated Debt” shall mean any Indebtedness of Borrower, which Indebtedness is
unsecured, subordinated in right of repayment and remedies to all of the Obligations and to all of
Agent’s and Lenders’ rights, Liens and remedies and in form and substance satisfactory to the
Requisite Lenders in their Permitted Discretion.

     “Subsidiary” shall mean, (i) as to Borrower, any Person in which more than 50% of all
equity, membership, partnership or other ownership interests is owned directly or indirectly by
Borrower or one or more of its Subsidiaries, and (ii) as to any other Person, any Person in which
more than 50% of all equity, membership, partnership or other ownership interests is owned directly
or indirectly by such Person or by one or more of such Person’s Subsidiaries.

     “Term” shall mean the period, commencing on the Closing Date and ending on October 31,
2011.

     “Termination Fee” shall mean (for the time period indicated) the amount equal to (i)
3% of the Facility Cap, if the date of such Revolver Termination is after the Closing Date but
before October 31, 2009, (ii) 2% of the Facility Cap, if the date of such Revolver Termination is
on or after October 31, 2009 but prior to October 31, 2010 and (iii) 1% of the Facility Cap, if the
date of such Revolver Termination is on or after October 31, 2010 but prior to July 31, 2011.

     “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York;
provided that, if perfection or the effect of perfection or non-perfection or the priority
of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of New York , then “UCC” means the Uniform Commercial Code
as in effect from time to time in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or non-perfection or priority.

     “Underlying Issuer” shall mean a Person that is the beneficiary of a L/C Undertaking
and that has issued a letter of credit at the request of the L/C Issuer for the benefit of
Borrower.

     “Underlying Letter of Credit” shall mean a letter of credit that has been issued by an
Underlying Issuer.

Appendix A-10

 

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

Appendix A-11

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