Exhibit 10.13

 

 

 

Jackson Hewitt Tax Service Inc.

 

and

 

Jackson Hewitt Inc.

 

 

$175,000,000 Floating Rate Senior Notes due June 25, 2009

 

 

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Note Purchase Agreement

 

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Dated as of June 21, 2004

 

 

 

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Table of Contents

 

Section

 

Heading

 

 

 

 

 

Section 1.

 

Authorization of Notes

 

 

 

 

 

Section 1.1.

 

Description of Notes

 

Section 1.2.

 

Note Interest Rate

 

 

 

 

 

Section 2.

 

Sale and Purchase of Notes

 

 

 

 

 

Section 2.1.

 

Notes

 

Section 2.2.

 

Guaranty

 

 

 

 

 

Section 3.

 

Closing

 

 

 

 

 

Section 4.

 

Conditions to Closing

 

 

 

 

 

Section 4.1.

 

Representations and Warranties

 

Section 4.2.

 

Performance; No Default

 

Section 4.3.

 

Compliance Certificates

 

Section 4.4.

 

Opinions of Counsel

 

Section 4.5.

 

Purchase Permitted by Applicable Law, Etc

 

Section 4.6.

 

Related Transactions

 

Section 4.7.

 

Payment of Special Counsel Fees

 

Section 4.8.

 

Private Placement Number

 

Section 4.9.

 

Changes in Corporate Structure

 

Section 4.10.

 

Subsidiary Guaranty

 

Section 4.11.

 

Proceedings and Documents

 

 

 

 

 

Section 5.

 

Representations and Warranties of the Company and the Issuer

 

 

 

 

 

Section 5.1.

 

Organization; Power and Authority

 

Section 5.2.

 

Authorization, Etc

 

Section 5.3.

 

Disclosure

 

Section 5.4.

 

Organization and Ownership of Shares of Subsidiaries

 

Section 5.5.

 

Financial Statements

 

Section 5.6.

 

Compliance with Laws, Other Instruments, Etc

 

Section 5.7.

 

Governmental Authorizations, Etc

 

Section 5.8.

 

Litigation; Observance of Statutes and Orders

 

Section 5.9.

 

Taxes

 

Section 5.10.

 

Title to Property; Leases

 

Section 5.11.

 

Licenses, Permits, Etc

 

Section 5.12.

 

Compliance with ERISA

 

Section 5.13.

 

Private Offering by the Company

 

Section 5.14.

 

Use of Proceeds; Margin Regulations

 

Section 5.15.

 

Existing Debt; Future Liens

 

 

2

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Section 5.16.

 

Foreign Assets Control Regulations, Etc

 

Section 5.17.

 

Status under Certain Statutes

 

Section 5.18.

 

Environmental Matters

 

Section 5.19.

 

Solvency

 

 

 

 

 

Section 6.

 

Representations of the Purchaser

 

 

 

 

 

Section 6.1.

 

Purchase for Investment

 

Section 6.2.

 

Source of Funds

 

 

 

 

 

Section 7.

 

Information as to Company

 

 

 

 

 

Section 7.1.

 

Financial and Business Information

 

Section 7.2.

 

Officer’s Certificate

 

Section 7.3.

 

Inspection

 

 

 

 

 

Section 8.

 

Payment of the Notes

 

 

 

 

 

Section 8.1.

 

Required Payments

 

Section 8.2.

 

Optional Prepayment of the Notes with LIBOR Breakage Amount

 

Section 8.3.

 

Maturity; Surrender, Etc.

 

Section 8.4.

 

Purchase of Notes

 

Section 8.5.

 

Change in Control

 

 

 

 

 

Section 9.

 

Affirmative Covenants

 

 

 

 

 

Section 9.1.

 

Compliance with Law

 

Section 9.2.

 

Insurance

 

Section 9.3.

 

Maintenance of Properties

 

Section 9.4.

 

Payment of Taxes and Claims

 

Section 9.5.

 

Corporate Existence, Etc

 

Section 9.6.

 

Additional Subsidiary Guarantors

 

 

 

 

 

Section 10.

 

Negative Covenants

 

 

 

 

 

Section 10.1.

 

Consolidated Leverage Ration

 

Section 10.2.

 

Consolidated Fixed Charge Coverage Ratio

 

Section 10.3.

 

Limitation on Liens

 

Section 10.4

 

Restricted Payments

 

Section 10.5.

 

Sales of Assets

 

Section 10.6.

 

Merger, Consolidation

 

Section 10.7.

 

Nature of Business

 

Section 10.8.

 

Transactions with Affiliates

 

Section 10.9.

 

Subsidiaries

 

 

 

 

 

Section 11.

 

Guaranty by the Company

 

 

 

 

 

Section 11.1.

 

Guaranty by the Company

 

 

3

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Section 11.2.

 

Guaranty of Payment and Performance

 

Section 11.3.

 

General Provisions Relating to Guaranty by the Company of Issuer’s Obligations
under this Agreement and the Note

 

 

 

 

 

Section 12.

 

Events of Default

 

 

 

 

 

Section 13.

 

Remedies on Default, Etc

 

 

 

 

 

Section 13.1.

 

Acceleration

 

Section 13.2.

 

Other Remedies

 

Section 13.3.

 

Rescission

 

Section 13.4.

 

No Waivers or Election of Remedies, Expenses, Etc.

 

 

 

 

 

Section 14.

 

Registration; Exchange; Substitution of Notes

 

 

 

 

 

Section 14.1.

 

Registration of Notes

 

Section 14.2.

 

Transfer and Exchange of Notes

 

Section 14.3.

 

Replacement of Notes

 

 

 

 

 

Section 15.

 

Payments on Notes

 

 

 

 

 

Section 15.1.

 

Place of Payment

 

Section 15.2.

 

Home Office Payment

 

 

 

 

 

Section 16.

 

Expenses, Etc

 

 

 

 

 

Section 16.1.

 

Transaction Expenses

 

Section 16.2.

 

Survival

 

 

 

 

 

Section 17.

 

Survival of Representations and Warranties; Entire Agreement

 

 

 

 

 

Section 18.

 

Amendment and Waiver

 

 

 

 

 

Section 18.1.

 

Requirements

 

Section 18.2.

 

Solicitation of Holders of Notes

 

Section 18.3.

 

Binding Effect, Etc

 

Section 18.4.

 

Notes Held by Company, Issuer, Etc

 

 

 

 

 

Section 19.

 

Notices

 

 

 

 

 

Section 20.

 

Reproduction of Documents

 

 

 

 

 

Section 21.

 

Confidential Information

 

 

4

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Section 22.

 

Substitution of Purchaser

 

 

 

 

 

Section 23.

 

Miscellaneous

 

 

 

 

 

Section 23.1.

 

Successors and Assigns

 

Section 23.2.

 

Payments Due on Non-Business Days

 

Section 23.3.

 

Severability

 

Section 23.4.

 

Construction

 

Section 23.5.

 

Counterparts

 

Section 23.6.

 

Governing Law

 

 

5

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Schedule A

—

Information Relating To Purchasers

 

 

 

 

 

Schedule B

—

Defined Terms

 

 

 

 

 

Schedule 5.4

—

Subsidiaries of the Company, Ownership of Subsidiary Stock

 

 

 

 

 

Schedule 10.3

—

Existing Liens

 

 

 

 

 

Exhibit 1

—

Form of Floating Rate Senior Note due June 25, 2009

 

 

 

 

 

Exhibit 2.2

—

Subsidiary Guaranty

 

 

 

 

 

Exhibit 4.4(a)

—

Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, Special Counsel to
the Company and the Issuer

 

 

 

 

 

Exhibit 4.4(b)

—

Form of Opinion of Piper Rudnick, LLP, Special Counsel to the Issuer

 

 

 

 

 

Exhibit 4.4(c)

—

Form of Opinion of Chapman and Cutler LLP, Special Counsel for the Purchasers

 

 

6

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Jackson Hewitt Tax Service Inc.

7 Sylvan Way
Parsippany, New Jersey 07054

 

and

 

Jackson Hewitt Inc.

c/o Jackson Hewitt Tax Service Inc.

7 Sylvan Way
Parsippany, New Jersey 07054

 

$175,000,000 Floating Rate Senior Notes due June 25, 2009

 

Dated as of
June 21, 2004

 

To the Purchasers listed in
the attached Schedule A:

 

Ladies and Gentlemen:

 

Jackson Hewitt Tax Service Inc., a Delaware corporation (the “Company”), and
Jackson Hewitt Inc., a Virginia corporation (the “Issuer”), hereby jointly and
severally agree with the Purchasers listed in the attached Schedule A (the
“Purchasers”) to this Note Purchase Agreement (this “Agreement”) as follows:

 

Section 1.                                            Authorization of Notes.

 

Section 1.1.                                          Description of Notes.  The
Issuer will authorize the issue and sale of $175,000,000 aggregate principal
amount of its Floating Rate Senior Notes due June 25, 2009 (the “Notes”).  The
term “Notes” shall also include any such notes issued in substitution therefor
pursuant to Section 14 of this Agreement.  The Notes shall be substantially in
the form set out in Exhibit 1 with such changes therefrom, if any, as may be
approved by the Purchasers and the Issuer.  Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a “Schedule” or an
“Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.

 

Section 1.2.                                          Note Interest Rate.

 

(i)                                     The Notes shall bear interest (computed
on the basis of a 360-day year and actual days elapsed) on the unpaid principal
thereof from the date of issuance at a floating rate equal to the Adjusted LIBOR
Rate from time to time, payable quarterly on the twenty fifth day of March,
June, September and December, commencing on September 25, 2004, until such
principal sum shall have become due and payable (whether at maturity, upon
notice of prepayment or

 

7

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otherwise) (each such date being referred to herein as an “Interest Payment
Date”) and interest (so computed) on any overdue principal and LIBOR Breakage
Amount, if any, and, to the extent permitted by applicable law, on any overdue
interest, from the due date thereof (whether by acceleration or otherwise) at
the Default Rate until paid.

 

(ii)                                  The Adjusted LIBOR Rate shall be
determined by the Issuer, and notice thereof shall be given to the holders of
the Notes, within three Business Days after the beginning of each Interest
Period, together with a copy of the relevant screen used for the determination
of LIBOR, a calculation of Adjusted LIBOR Rate for such Interest Period, the
number of days in such Interest Period, the date on which interest for such
Interest Period will be paid and the amount of interest to be paid to each
holder of Notes on such date.  In the event that the holders of more than 50% in
aggregate principal amount of the outstanding Notes do not concur with such
determination by the Issuer, within ten Business Days after receipt by such
holders of the notice delivered by the Issuer pursuant to the immediately
preceding sentence, such holders of the Notes shall provide notice to the
Issuer, together with a copy of the relevant screen used for the determination
of LIBOR, a calculation of Adjusted LIBOR Rate for such Interest Period, the
number of days in such Interest Period, the date on which interest for such
Interest Period will be paid and the amount of interest to be paid to each
holder of Notes on such date, and any such determination made by the holders of
the Notes in accordance with the provisions of this Agreement, shall be
presumptively correct absent manifest error.

 

Section 2.                                            Sale and Purchase of
Notes.

 

Section 2.1.                                          Notes.  Subject to the
terms and conditions of this Agreement, the Issuer will issue and sell to each
Purchaser and each Purchaser will purchase from the Issuer, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite such
Purchaser’s name in Schedule A at the purchase price of 100% of the principal
amount thereof.  The obligations of each Purchaser hereunder are several and not
joint obligations and each Purchaser shall have no obligation and no liability
to any Person for the performance or nonperformance by any other Purchaser
hereunder.

 

Section 2.2.                                          Guaranty.  The payment by
the Issuer of all amounts due with respect to the Notes and the performance by
the Issuer of its obligations under this Agreement will be absolutely and
unconditionally guaranteed by the Company pursuant to the terms of this
Agreement and the Subsidiary Guarantors pursuant to the Subsidiary Guaranty,
which shall be substantially in the form of Exhibit 2.2 attached hereto, and
otherwise in accordance with Section 9.6 hereof.

 

Section 3.                                            Closing.

 

The sale and purchase of the Notes to be purchased by each Purchaser shall occur
at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square,
New York, New York 10019 at 10:00 a.m. New York time, at a closing (the
“Closing”) on the fourth Business Day following the execution of the
underwriting agreement to be entered into in connection with the initial public
offering (“IPO”) of the Company’s common stock, par value $0.01 per share

 

8

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(the “Common Stock”), or on such other Business Day thereafter on or prior to
July 7, 2004 as may be agreed upon by the Issuer, the Company and the
Purchasers.  At the Closing, the Issuer will deliver to each Purchaser the Notes
to be purchased by such Purchaser in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as such Purchaser may
reasonably request) dated the date of the Closing and registered in such
Purchaser’s name (or in the name of a nominee of such Purchaser), against
delivery by such Purchaser to the Issuer or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Issuer to Account Number 304
192 813, Account Name Jackson Hewitt Inc., at JPMorgan Chase, ABA Number 021 000
021.  If at the Closing the Issuer shall fail to tender such Notes to any
Purchaser as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to any Purchaser’s
satisfaction, such Purchaser shall, at such Purchaser’s election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
such Purchaser may have by reason of such failure or such nonfulfillment.

 

Section 4.                                            Conditions to Closing.

 

The obligation of each Purchaser to purchase and pay for the Notes to be sold to
such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at the Closing, of the following conditions:

 

Section 4.1.                                          Representations and
Warranties of the Company.  (a) The representations and warranties of the
Company and the Issuer in this Agreement shall be correct when made and at the
time of Closing.

 

(b)                                 Representations and Warranties of the
Subsidiary Guarantors. The representations and warranties of the Subsidiary
Guarantors in the Subsidiary Guaranty shall be correct when made and at the time
of Closing.

 

Section 4.2.                                          Performance; No Default.
 The Company and the Issuer shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by the Company and the Issuer prior to or at the Closing, and
after giving effect to the issue and sale of the Notes (and the application of
the proceeds thereof as contemplated by Section 5.14), no Default or Event of
Default shall have occurred and be continuing.  Neither the Company nor any
Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by Section 10, other than
transactions disclosed in the Memorandum.

 

Section 4.3.                                          Compliance Certificates.

 

(a)                                  Officer’s Certificate of the Company.  The
Company shall have delivered to such Purchaser an Officer’s Certificate, dated
the date of the Closing, certifying that the conditions specified in
Sections 4.1(a), 4.2 and 4.9 have been fulfilled.

 

(b)                                 Secretary’s Certificate of the Company.  The
Company shall have delivered to such Purchaser a certificate certifying as to
the resolutions attached thereto and other corporate

 

9

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proceedings relating to the authorization, execution and delivery of this
Agreement.

 

(c)                                  Officer’s Certificate of the Issuer.  The
Issuer shall have delivered to such Purchaser an Officer’s Certificate, dated
the date of Closing, certifying that the conditions specified in Sections
4.1(a), 4.2 and 4.9 have been fulfilled.

 

(d)                                 Secretary’s Certificate of the Issuer.  The
Issuer shall have delivered to such Purchaser a certificate certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this Agreement.

 

(e)                                  Officer’s Certificate of the Subsidiary
Guarantors.  Each Subsidiary Guarantor shall have delivered to such Purchaser an
Officer’s Certificate, dated the date of the Closing, certifying that the
conditions specified in Section 4.1(b) and 4.2 have been fulfilled.

 

(f)                                    Secretary’s Certificate of the Subsidiary
Guarantors.  Each Subsidiary Guarantor shall have delivered to such Purchaser a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Subsidiary Guaranty.

 

Section 4.4.                                          Opinions of Counsel.  Such
Purchaser shall have received opinions addressed to such Purchaser, dated the
date of the Closing from (a) Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to the Company and the Issuer, substantially in the form attached as
Exhibit 4.4(a) (and the Company and the Issuer hereby instruct their counsel to
deliver such opinion to such Purchaser), (b) Piper Rudnick, LLP, special counsel
to the Issuer, substantially in the form attached as Exhibit 4.4(b) (and the
Issuer hereby instructs its counsel to deliver such opinion to such Purchaser),
and (c) Chapman and Cutler LLP, the Purchasers’ special counsel in connection
with such transactions, substantially in the form set forth in Exhibit 4.4(c).

 

Section 4.5.                                          Purchase Permitted by
Applicable Law, Etc.  On the date of Closing, each purchase of Notes shall
(a) be permitted by the laws and regulations of each jurisdiction to which each
Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(b) not violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject any Purchaser to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was not in
effect on the date hereof.  If requested by any Purchaser, such Purchaser shall
have received an Officer’s Certificate certifying as to such matters of fact as
such Purchaser may reasonably specify to enable such Purchaser to determine
whether such purchase is so permitted.

 

Section 4.6.                                          Related Transactions.  The
Company and the Issuer, as the case may be, shall have (a) consummated the sale
of the entire principal amount of the Notes scheduled to be sold on the date of
Closing pursuant to this Agreement, (b) consummated the IPO via the sale by
Cendant Finance Holding Corporation of substantially all of the Common Stock
owned by

 

10

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Cendant Corporation and its affiliates (collectively, excluding the Company and
its Subsidiaries, “Cendant”), and (c) executed and delivered the Bank Credit
Agreement and such Bank Credit Agreement shall provide for a revolving credit
commitment of not less than $100,000,000.

 

Section 4.7.                                          Payment of Special Counsel
Fees.  Without limiting the provisions of Section 15.1, the Company and the
Issuer shall pay on the Closing, the reasonable fees, reasonable charges and
reasonable disbursements of the Purchasers’ special counsel referred to in
Section 4.4 to the extent reflected in a reasonably detailed statement of such
counsel rendered to the Company or the Issuer at least one Business Day prior to
the Closing.

 

Section 4.8.                                          Private Placement Number. 
Special counsel to the Purchasers shall have obtained Private Placement Number
issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) for the Notes.

 

Section 4.9.                                          Changes in Corporate
Structure.  Neither the Company nor the Issuer shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation and
shall have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.

 

Section 4.10.                                   Subsidiary Guaranty.  The
Subsidiary Guaranty shall have been duly authorized, executed and delivered by
each Subsidiary Guarantor, shall constitute the legal, valid and binding
contract and agreement of each Subsidiary Guarantor except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and such Purchaser shall have received a true, correct and complete copy
thereof.

 

Section 4.11.                                   Proceedings and Documents.  All
corporate and other proceedings in connection with the transactions contemplated
by this Agreement and all documents and instruments incident to such
transactions shall be reasonably satisfactory to such Purchaser and such
Purchaser’s special counsel, and such Purchaser and such Purchaser’s special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as such Purchaser or such Purchaser’s special counsel
may reasonably request.

 

The obligation of the Issuer to issue and sell the Notes to the Purchasers at
Closing is subject to the fulfillment to the Issuer’s satisfaction, prior to or
at the Closing, of the condition referred to in clause (b) of Section 4.6
hereof.

 

Section 5.                                            Representations and
Warranties of the Company and the Issuer.

 

The Company and the Issuer jointly and severally represent and warrant to each
Purchaser that:

 

Section 5.1.                                          Organization; Power and
Authority.  Each of the Company and the Issuer is a corporation duly organized,
validly existing and in good standing under the laws of its

 

11

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jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  Each of the Company
and the Issuer has the corporate power and authority to own or hold under lease
the properties it purports to own or hold under lease, to transact the business
it transacts and proposes to transact, to execute and deliver this Agreement and
the Notes, as the case may be, and to perform the provisions hereof and thereof.

 

Section 5.2.                                          Authorization, Etc.  This
Agreement and the Notes have been duly authorized by all necessary corporate
action on the part of the Company and the Issuer, as the case may be, and this
Agreement constitutes, and upon execution and delivery thereof each Note will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company and of the Issuer enforceable against the Issuer, as the
case may be, in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

Section 5.3.                                          Disclosure.  The Company,
has authorized its agent, J.P. Morgan Securities Inc., to deliver to each
Purchaser a copy of (i) a Private Placement Memorandum, dated April 23, 2004,
together with the Appendices thereto, including Amendment No. 2 to the Company’s
Registration Statement on Form S-1 (the “Placement Memorandum”) and (ii) a
supplement to such Placement Memorandum, dated June 18, 2004 including the
Appendix thereto consisting of Amendment No. 5 to the Company’s Registration
Statement on Form S-1 (the Placement Memorandum as so supplemented is herein
referred to as the “Memorandum”) which relate to the transactions contemplated
hereby.  The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Company and its
Subsidiaries.  This Agreement and the Memorandum, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made.  Except as disclosed in the
Memorandum, since April 30, 2004, there has been no change in the financial
condition, operations, business or properties of the Company or any of its
Subsidiaries except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.  There is no fact
known to the Company or the Issuer that could reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in the
Memorandum.  The Company was incorporated on February 27, 2004, it issued and
sold for $1.00 100 shares of Common Stock to Cendant in connection with its
organization and on March 1, 2004, all of the issued and outstanding shares of
capital stock of the Issuer were transferred by Cendant to the Company.  On May
12, 2004, the Company distributed a stock dividend of 37,499,900 shares of
Common Stock to Cendant Finance Holding Corporation, which increased the
aggregate number of shares of Common Stock of the Company outstanding to
37,500,000 shares.  As of the date hereof, the Company does not have any
Material amount of assets or liabilities other than such capital stock of the
Issuer and, except as disclosed in the Memorandum, immediately prior to the date
of the Closing, the Company will not have any Material amount of assets or
liabilities other than such capital stock.

 

12

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Section 5.4.                                          Organization and Ownership
of Shares of Subsidiaries.  (a) Schedule 5.4 contains (except as noted therein)
complete and correct lists of the Company’s Material Subsidiaries, showing, as
to each such Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital stock
outstanding owned by the Company and each other Subsidiary.  The Company’s
directors and executive officers are listed in the Memorandum.

 

(b)                                 All of the outstanding shares of capital
stock of each Subsidiary shown in Schedule 5.4 as being owned by the Company and
its Subsidiaries have been validly issued, are fully paid and nonassessable and
are owned by the Company or another Subsidiary free and clear of any Lien
(except Permitted Liens).

 

(c)                                  Each Subsidiary identified in Schedule 5.4
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

 

(d)                                 No Material Subsidiary is a party to, or
otherwise subject to, any legal restriction or any agreement (other than this
Agreement, and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.

 

Section 5.5.                                          Financial Statements.  The
consolidated financial statements of the Company and its Subsidiaries and for
the three years ended April 30, 2004 are included in the Memorandum.  All of
said financial statements (including in each case the related notes thereto)
fairly present in all material respects the consolidated financial position of
the Company and its Subsidiaries as of the respective dates specified in such
financial statements and the consolidated results of their operations and cash
flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto.

 

Section 5.6.                                          Compliance with Laws,
Other Instruments, Etc.  The execution, delivery and performance by the Company
and the Issuer, as the case may be, of this Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other material
agreement or instrument to which the Company or any Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective properties may be
bound or affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental

 

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Authority applicable to the Company or any Subsidiary, or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.  The offer and sale of
the Notes in the manner provided in this Agreement will not have a Material
Adverse Effect on the licenses and permits required by the Company and its
Subsidiaries to conduct business in the jurisdictions in which they currently
conduct their business.

 

Section 5.7.                                          Governmental
Authorizations, Etc.  Assuming the accuracy of the representations and
warranties of the Purchasers set forth herein and of J.P. Morgan Securities Inc.
regarding the manner in which the Notes were offered and the status of the
offerees of the Notes under the Securities Act, no consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company and the Issuer, as the case may be, of this Agreement or the
Notes.

 

Section 5.8.                                          Litigation; Observance of
Statutes and Orders.  (a) There are no actions, suits or proceedings pending or,
to the knowledge of the Company or the Issuer, threatened against or affecting
the Company or any Subsidiary or any property of the Company or any Subsidiary
in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

 

(b)                                 Neither the Company nor any Subsidiary is in
default under any term of any agreement or instrument to which it is a party or
by which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation Environmental Laws)
of any Governmental Authority, which default or violation, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 5.9.                                          Taxes.  The Company and
its Subsidiaries have filed all tax returns that are required to have been filed
in any jurisdiction, except for tax returns the failure of which to file would
not have a Material Adverse Effect, and have paid all taxes shown to be due and
payable on such returns and all other taxes and assessments levied upon them or
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (a) the amount of which is not individually
or in the aggregate Material or (b) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which the Company or a Subsidiary, as the case may be, has
established reserves in accordance with GAAP.  Neither the Company nor the
Issuer knows of any basis for any other tax or assessment that could reasonably
be expected to have a Material Adverse Effect.  The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of federal,
state or other taxes for all fiscal periods are adequate.  The federal income
tax liabilities of the Company and its Subsidiaries, or of the affiliated group
of which the Company and its Subsidiaries are members, as the case may be, have
been determined by the Internal Revenue Service and paid for all taxable years
ended on or prior to December 31, 1997.

 

14

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Section 5.10.                                   Title to Property; Leases.  The
Company and its Subsidiaries have good and sufficient title to their respective
properties that individually or in the aggregate are Material, including all
such properties reflected in the most recent audited balance sheet referred to
in Section 5.5 or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens, other than
Permitted Liens.  All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.

 

Section 5.11.                                   Licenses, Permits, Etc.  (a) The
Company and its Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others except for those conflicts, that,
individually or in the aggregate, could not have a Material Adverse Effect;

 

(b)                                 To the best knowledge of the Company or the
Issuer, no financial product or service of the Company or any of its
Subsidiaries infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and

 

(c)                                  To the best knowledge of the Company or the
Issuer, there is no Material violation by any Person of any right of the Company
or any of its Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any of its
Subsidiaries.

 

Section 5.12.                                   Compliance with ERISA.  (a) The
Company and each ERISA Affiliate have operated and administered each Plan in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to result in a
Material Adverse Effect.  Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA) that has not been satisfied in full, and no event,
transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.

 

(b)                                 The present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer Plans) sponsored
or maintained by the Company or its Subsidiaries, determined as of the end of
such Plan’s most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan’s most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities.  The term “benefit liabilities”
has the meaning specified in Section 4001 of ERISA and the terms “current value”
and “present value” have the meaning specified in Section 3 of ERISA.

 

15

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(c)                                  The Company and its ERISA Affiliates have
not incurred any withdrawal liabilities (and are not subject to contingent
withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.

 

(d)                                 The expected post-retirement benefit
obligation (determined as of the last day of the Company’s most recently ended
fiscal year in accordance with Financial Accounting Standards Board Statement
No. 106, without regard to liabilities attributable to continuation coverage
mandated by Section 4980B of the Code) of the Company and its Subsidiaries is
not Material.

 

(e)                                  The execution and delivery of this
Agreement and the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
Section 4975(c)(1)(A)-(D) of the Code.  The representation by the Company and
the Issuer, as the case may be, in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of each Purchaser’s
representation in Section 6.2 as to the sources of the funds to be used to pay
the purchase price of the Notes to be purchased by such Purchaser.

 

Section 5.13.                                   Private Offering by the
Company.  Neither the Company, the Issuer nor anyone acting on the their behalf
has offered the Notes or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any Person other than 75 “Qualified Institutional Buyers,”
as defined in Rule 144A under the Securities Act and no more than two or three
other institutional accredited investors, as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act, each of which has been offered the Notes in
connection with a private sale for investment and not through any form of
general solicitation or general advertising.  Neither the Company, the Issuer
nor anyone acting on their behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act.  The representations and warranties contained
in this Section 5.13 are based in part on representations and warranties
received by the Company and the Issuer from J.P. Morgan Securities Inc.
regarding the manner in which the Notes were offered and the status of the
offerees of the Notes under the Securities Act and the representations and
warranties of the Purchasers contained herein.

 

Section 5.14.                                   Use of Proceeds; Margin
Regulations.  The Issuer will apply the proceeds of the sale of the Notes to pay
a special dividend to the Company which will apply such proceeds to pay the cash
portion of the Special Dividend from the Company to Cendant.  No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Issuer in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220).  Margin stock does not
constitute more than 1% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company and the Issuer do not have any present
intention that margin stock will constitute more than 1% of the value of such
assets.  As used in this Section, the terms “margin stock” and “purpose of
buying or carrying” shall have the meanings assigned to them in said
Regulation U.

 

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Section 5.15.                                   Existing Debt; Future Liens. 
(a) Except as disclosed in the Memorandum, the Company and its Subsidiaries, on
a consolidated basis, do not, and as of the date of the Closing will not, have
any outstanding Debt.  Neither the Company nor any Subsidiary is in default and
no waiver of default is currently in effect, in the payment of any principal or
interest on any Debt of the Company or such Subsidiary, and no event or
condition exists with respect to any Debt of the Company or any Subsidiary, that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Debt to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.

 

(b)                                 Neither the Company nor any Subsidiary has
agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.3.

 

Section 5.16.                                   Foreign Assets Control
Regulations, Etc.  Neither the sale of the Notes by the Issuer hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto or is in violation of any
federal statute or Presidential Executive Order, including without limitation
Executive Order 13224 66 Fed. Reg. 49079 (September 25, 2001) (Blocking Property
and Prohibiting Transactions with Persons who Commit, Threaten to Commit or
Support Terrorism), or The USA Patriot Act.

 

Section 5.17.                                   Status under Certain Statutes. 
Neither the Company nor any Subsidiary is an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended,
or is subject to regulation under the Public Utility Holding Company Act of
1935, as amended, the ICC Termination Act of 1995, as amended, or the Federal
Power Act, as amended.

 

Section 5.18.                                   Environmental Matters.  Neither
the Company nor any Subsidiary has knowledge of any claim or has received any
notice of any claim, and no proceeding has been instituted raising any claim
against the Company or any of its Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them, or other
assets, alleging damage to the environment or any violation of any Environmental
Laws, except, in each case, such as could not reasonably be expected to result
in a Material Adverse Effect.  Except as otherwise disclosed to each Purchaser
in writing:

 

(a)                                  neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any claim, public or private,
for violation of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties or to other assets now or
formerly owned, leased or operated by any of them or their use, except, in each
case, such as could not reasonably be expected to result in a Material Adverse
Effect;

 

(b)                                 neither the Company nor any of its
Subsidiaries has stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them or

 

17

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has disposed of any Hazardous Materials in each case in a manner contrary to any
Environmental Laws and in any manner that could reasonably be expected to result
in a Material Adverse Effect; and

 

(c)                                  all buildings on all real properties now
owned, leased or operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse Effect.

 

Section 5.19.                                   Solvency.  After giving effect
to the sale of the Notes and the application of the proceeds thereof, (a) the
fair value of Company’s consolidated assets, or the Issuer’s consolidated
assets, as the case may be, will be in excess of the total amount of the
Company’s liabilities, or the Issuer’s liabilities, as the case may be,
including, without limitation, contingent obligations, (b) each of the Company
and the Issuer will be able to pay its debts as they mature, and (c) each of the
Company and the Issuer will not have unreasonably small capital to carry on its
business.

 

Section 6.                                            Representations of the
Purchaser.

 

Section 6.1.                                          Purchase for Investment. 
Each Purchaser represents that it (i) is a “Qualified Institutional Buyer” as
defined in Rule 144A under the Securities Act, and (ii) is purchasing the Notes
for its own account or for one or more separate accounts maintained by it or for
the account of one or more pension or trust funds that also are Qualified
Institutional Buyers and not with a view to the distribution thereof, provided
that the disposition of such Purchaser’s or such pension or trust funds’
property shall at all times be within such Purchaser’s or such pension or trust
funds’ control.  Each Purchaser understands that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Issuer is
not required to register the Notes.  Each Purchaser further represents and
warrants that it (a) will not sell, transfer or otherwise dispose of the Notes
or any interest therein except in a transaction exempt from or not subject to
the registration requirements of the Securities Act, (b) was given the
opportunity to access such information regarding the Company, the Issuer and the
Subsidiary Guarantors as it has requested and (c) was provided with the
Memorandum.  Each Purchaser acknowledges that the Notes will bear a restrictive
legend substantially in the form set forth in Exhibit 1.

 

Section 6.2.                                          Source of Funds.  Each
Purchaser represents that at least one of the following statements is an
accurate representation as to each source of funds (a “Source”) to be used by it
to pay the purchase price of the Notes to be purchased by it hereunder:

 

(a)                                  the Source is an “insurance company general
account” within the meaning of Department of Labor Prohibited Transaction
Exemption (“PTE”) 95-60 (issued July 12, 1995) and there is no employee benefit
plan, treating as a single plan all plans maintained by the same employer or
employee organization, with respect to which the amount of the general account
reserves and liabilities for all contracts held by or on

 

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behalf of such plan, exceeds ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account liabilities)
plus surplus, as set forth in the NAIC Annual Statement for such Purchaser most
recently filed with such Purchaser’s state of domicile; or

 

(b)                                 the Source is either (i) an insurance
company pooled separate account, within the meaning of PTE 90-1 (issued
January 29, 1990), or (ii) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser prior to
the execution and delivery of this Agreement has disclosed to the Issuer in
writing pursuant to this paragraph (b), no employee benefit plan or group of
plans maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or
collective investment fund; or

 

(c)                                  the Source constitutes assets of an
“investment fund” (within the meaning of Part V of the QPAM Exemption) managed
by a “qualified professional asset manager” or “QPAM” (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan’s assets that are
included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such
employer or by the same employee organization and managed by such QPAM, exceed
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of “control” in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Issuer and
(i) the identity of such QPAM and (ii) the names of all employee benefit plans
whose assets are included in such investment fund have been disclosed to the
Issuer in writing pursuant to this paragraph (c) prior to the execution and
delivery of this Agreement; or

 

(d)                                 the Source is a governmental plan; or

 

(e)                                  the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or more employee
benefit plans, each of which prior to the execution and delivery of this
Agreement has been identified to the Issuer in writing pursuant to this
paragraph (e); or

 

(f)                                    the Source does not include assets of any
employee benefit plan, other than a plan exempt from the coverage of ERISA; or

 

(g)                                 the Source is an insurance company separate
account maintained solely in connection with the fixed contractual obligations
of the insurance company under which the amounts payable, or credited, to any
employee benefit plan (or its related trust) and to any participant or
beneficiary of such plan (including any annuitant) are not affected in any
manner by the investment performance of the separate account.

 

If any Purchaser or any subsequent transferee of the Notes indicates that such
Purchaser or such

 

19

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transferee is relying on any representation contained in paragraph (b), (c) or
(e) above, the Issuer shall deliver on the date of issuance of such Notes and on
the date of any applicable transfer a certificate, which shall either state that
(i) it is neither a party in interest nor a “disqualified person” (as defined in
Section 4975(e)(2) of the Code), with respect to any plan identified pursuant to
paragraphs (b) or (e) above, or (ii) with respect to any plan, identified
pursuant to paragraph (c) above, neither it nor any “affiliate” (as defined in
Section V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of any plan identified in writing pursuant to paragraph (c) above or to
negotiate the terms of said QPAM’s management agreement on behalf of any such
identified plan.  As used in this Section 6.2, the terms “employee benefit
plan”, “governmental plan”, “party in interest” and “separate account” shall
have the respective meanings assigned to such terms in Section 3 of ERISA.

 

Section 7.                                            Information as to Company.

 

Section 7.1.                                          Financial and Business
Information.  The Company shall deliver to each holder of Notes that is an
Institutional Investor:

 

(a)                                  Quarterly Statements — within 45 days after
the end of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,

 

(i)                                     an unaudited consolidated balance sheet
of the Company and its Subsidiaries as at the end of such quarter, and

 

(ii)                                  unaudited consolidated statements of
operations of the Company and its Subsidiaries as of the end of and for such
fiscal quarter and statements of cash flows of the Company and its Subsidiaries
for the then elapsed portion of the fiscal year ending with such quarter,

 

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, prepared in accordance with GAAP applicable
to quarterly financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial condition
of the companies being reported on and their results of operations and cash
flows, subject to changes resulting from normal, recurring year-end adjustments,
provided that delivery within the time period specified above of copies of the
Company’s Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this Section 7.1(a);

 

(b)                                 Annual Statements — within 90 days after the
end of each fiscal year of the Company, duplicate copies of,

 

(i)                                     a consolidated balance sheet of the
Company and its Subsidiaries, as at the end of such year, and

 

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(ii)                                  consolidated statements of operations,
stockholders’ equity and cash flows of the Company and its Subsidiaries as of
the end of and for such year,

 

setting forth in each case in comparative form the figures for the previous
fiscal year, prepared in accordance with GAAP, and accompanied by an opinion
thereon of Deloitte & Touche LLP or other independent certified public
accountants of recognized national standing, which opinion shall state that such
consolidated financial statements present fairly, in all material respects, the
financial condition of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with GAAP
consistently applied, and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a reasonable basis for
such opinion in the circumstances, provided that the delivery within the time
period specified above of the Company’s Annual Report on Form 10-K for such
fiscal year (together with the Company’s annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(b);

 

(c)                                  SEC and Other Reports — promptly upon their
becoming available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public securities
holders generally, (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder), and
each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission containing information of
a financial nature, and (iii) all press releases and other statements made
available generally by the Company or any Subsidiary to the public concerning
developments that are reasonably likely to have a Material Adverse Effect on the
Company; provided that if any holder has indicated in writing to the Company
that notices under this Section 7.1(c) may be delivered electronically, then
such notices may be so delivered; provided, further, that written copies of such
electronic copies shall be delivered concurrently with the financial statements
referred to in Section 7.1(a) and (b);

 

(d)                                 Notice of Default or Event of Default —
promptly, and in any event within five Business Days after a Responsible Officer
becomes aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in Section 12(f), a
written notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto and, in
addition, so long as any such Default or Event of Default shall exist, the
Company shall provide prior written notice at least three Business Days before
the Company declares or makes any Restricted Payment;

 

(e)                                  ERISA Matters — promptly, and in any event
within five days after a

 

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Responsible Officer becomes aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company, the
Issuer or an ERISA Affiliate proposes to take with respect thereto:

 

(i)                                     with respect to any Plan, any reportable
event, as defined in Section 4043(b) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such regulations as in
effect on the date thereof; or

 

(ii)                                  the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the institution of, proceedings
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company, the Issuer or
any ERISA Affiliate of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan; or

 

(iii)                               Any event, transaction or condition that
could result in the incurrence of any liability by the Company, the Issuer or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the imposition of a
penalty or excise tax under the provisions of the Code relating to employee
benefit plans, or the imposition of any Lien on any of the rights, properties or
assets of the Company, the Issuer or any ERISA Affiliate pursuant to Title I or
IV of ERISA or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect;

 

(f)                                    Notices from Governmental Authority —
promptly, and in any event within 30 days of receipt thereof, copies of any
notice to the Company or any Subsidiary from any federal or state Governmental
Authority relating to any order, ruling, statute or other law or regulation that
could reasonably be expected to have a Material Adverse Effect;

 

(g)                                 Auditor’s Letter –– concurrently with any
delivery of financial statements under Section 7.1(b), or promptly thereafter, a
letter addressed to the board of directors of the Company from the accounting
firm that reported on such financial statements stating that, in connection with
the accounting firm’s audits, nothing came to the attention of such firm that
caused it to believe that the Company failed to comply with Sections 10.1 or
10.2 insofar as such Sections relate to financial and accounting matters, and
that such accounting firm’s audit was not directed primarily toward obtaining
knowledge of noncompliance with such Sections;

 

(h)                                 Projections –– following the request of any
Institutional Investor which is a holder of the Notes made prior to the
commencement of any fiscal year, the Company shall provide such holder with
financial projections of the Company and its consolidated Subsidiaries for such
fiscal year concurrently with the delivery of the financial statements referred
to in Section 7.1(b) (it being understood that the Company may obtain assurance

 

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from such holder that such information is subject to the confidentiality
provisions set forth in Section 21 of this Agreement); and

 

(i)                                     Requested Information — with reasonable
promptness, such other data and information relating to the business,
operations, affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested in writing by any such holder of Notes.

 

Section 7.2.                                          Officer’s Certificate. 
Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of
a Senior Financial Officer setting forth:

 

(a)                                  Covenant Compliance — the information
(including reasonably detailed calculations) required in order to establish
whether the Company was in compliance with the requirements of Section 10.1,
Section 10.2, Section 10.3(m), Section 10.5 and Section 10.9 hereof, inclusive,
during the quarterly or annual period covered by the statements then being
furnished (including with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of such Sections, and the calculation of the
amount, ratio or percentage then in existence); and

 

(b)                                 Event of Default — a statement that such
officer has reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions and conditions
of the Company and its Subsidiaries from the beginning of the quarterly or
annual period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Company or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.

 

Section 7.3.                                          Inspection.  The Company
shall permit the representatives of each holder of Notes that is an
Institutional Investor:

 

(a)                                  No Default — if no Default or Event of
Default then exists, at the expense of such holder and upon reasonable prior
notice to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company’s officers, and (with the consent of the Company,
which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times during normal business hours
and as often as may be reasonably requested in writing; and

 

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(b)                                 Default — if a Default or Event of Default
then exists, at the expense of the Company, to visit and inspect any of the
offices or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to discuss the
affairs, finances and accounts of the Company and its Subsidiaries), all at such
times and as often as may be requested.

 

Section 8.                                            Payment of the Notes.

 

Section 8.1.                                          Required Payments.  The
entire principal amount of the Notes shall become due and payable on June 25,
2009.

 

Section 8.2.                                          Optional Prepayment of the
Notes with LIBOR Breakage Amount.  (a) Subject to the last sentence of this
paragraph, the Issuer may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than $1,000,000 in the case of a partial prepayment, at 100% of the
principal amount so prepaid, plus the LIBOR Breakage Amount (unless the date
specified for prepayment is a regularly scheduled Interest Payment Date).  The
Issuer will give each holder of Notes written notice of each optional prepayment
under this Section 8.2 not less than 20 Business Days and not more than 60 days
prior to the date fixed for such prepayment.  Each such notice shall specify
such date, the aggregate principal amount of the Notes to be prepaid on such
date, the principal amount of each such Note held by such holder to be prepaid
(determined in accordance with Section 8.2(b)), and the interest to be paid on
the prepayment date with respect to such principal amount being prepaid and
shall state that the LIBOR Breakage Amount will be payable if such prepayment is
not on a regularly scheduled Interest Payment Date and that such holder is
required to calculate such amount and submit such calculation in reasonable
detail to the Issuer not less than two Business Days prior to the date of
prepayment.  Notwithstanding the foregoing, the Issuer may not prepay the Notes
prior to June 25, 2005.

 

(b)                                 In the case of each partial prepayment of
the Notes, the principal amount of the Notes to be prepaid shall be allocated
among all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof.

 

(c)                                  The term “LIBOR Breakage Amount” shall mean
any loss reasonably incurred by any holder of a Note in the reemployment of the
funds released by any prepayment of any Note.  Each holder shall determine the
LIBOR Breakage Amount with respect to the principal amount of its Notes then
being paid or prepaid by written notice to the Issuer setting forth such
determination in reasonable detail not less than two Business Days prior to the
date of prepayment in the case of any prepayment pursuant to Section 8.2(a) and
not less than one Business Day in the case of any payment required by
Section 13.1.  Each such determination shall be presumptively correct absent
manifest error.

 

Section 8.3.                                          Maturity; Surrender, Etc. 
In the case of each prepayment of Notes pursuant

 

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to this Section 8, the principal amount of each Note to be prepaid shall mature
and become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable LIBOR
Breakage Amount, if any.  From and after such date, unless the Issuer shall fail
to pay such principal amount when so due and payable, together with the interest
and LIBOR Breakage Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue.  Any Note paid or prepaid in full shall be
surrendered to the Issuer and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.

 

Section 8.4.                                          Purchase of Notes.  The
Company and the Issuer will not and will not permit any Subsidiary of the
Company to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes.  The
Issuer will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.

 

Section 8.5.                                          Change in Control.

 

(a)                                  Notice of Change in Control or Control
Event.  The Company will, within ten days after any Responsible Officer has
actual knowledge of the occurrence of any Change in Control or Control Event,
give written notice of such Change in Control or Control Event to each holder of
Notes unless notice in respect of such Change in Control (or the Change in
Control contemplated by such Control Event) shall have been given pursuant to
subparagraph (b) of this Section 8.5.  If a Change in Control has occurred, such
notice shall contain and constitute an offer to prepay Notes as described in
subparagraph (c) of this Section 8.5 and shall be accompanied by the certificate
described in subparagraph (g) of this Section 8.5.

 

(b)                                 Condition to Company Action.  The Company
will not take any action that consummates or finalizes a Change in Control
unless (i) at least 20 days prior to such action it shall have given to each
holder of Notes written notice containing and constituting an offer to prepay
Notes as described in subparagraph (c) of this Section 8.5, accompanied by the
certificate described in subparagraph (g) of this Section 8.5, and
(ii) contemporaneously with such action, it prepays all Notes required to be
prepaid in accordance with this Section 8.5.

 

(c)                                  Offer to Prepay Notes.  The offer to prepay
Notes contemplated by subparagraphs (a) and (b) of this Section 8.5 shall be an
offer to prepay, in accordance with and subject to this Section 8.5, all, but
not less than all, the Notes held by each holder (in this case only, “holder” in
respect of any Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on a date specified in such
offer (the “Proposed Prepayment Date”).  If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of this Section 8.5,
such date shall be not less than 20 days and not more than 60 days after the
date of such offer (if the Proposed Prepayment Date shall not be specified in
such offer, the Proposed Prepayment Date shall be the 30th day after the date of
such offer).

 

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(d)                                 Acceptance/Rejection.  A holder of Notes may
accept the offer to prepay made pursuant to this Section 8.5 by causing a notice
of such acceptance to be delivered to the Company at least 5 days prior to the
Proposed Prepayment Date.  A failure by a holder of Notes to respond to an offer
to prepay made pursuant to this Section 8.5 shall be deemed to constitute a
rejection of such offer by such holder.

 

(e)                                  Prepayment.  Prepayment of the Notes to be
prepaid pursuant to this Section 8.5 shall be at 100% of the principal amount of
such Notes together with interest on such Notes accrued to the date of
prepayment.  On the Business Day preceding the date of prepayment, the Company
shall deliver to each holder of Notes being prepaid a statement showing the
amount due in connection with such prepayment and setting forth the details of
the computation of such amount.  The prepayment shall be made on the Proposed
Prepayment Date except as provided in subparagraph (f) of this Section 8.5.

 

(f)                                    Deferral Pending Change in Control.  The
obligation of the Company to prepay Notes pursuant to the offers required by
subparagraph (c) and accepted in accordance with subparagraph (d) of this
Section 8.5 is subject to the occurrence of the Change in Control in respect of
which such offers and acceptances shall have been made.  In the event that such
Change in Control does not occur on the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until and shall be made on the date on
which such Change in Control occurs.  The Company shall keep each holder of
Notes reasonably and timely informed of (i) any such deferral of the date of
prepayment, (ii) the date on which such Change in Control and the prepayment are
expected to occur, and (iii) any determination by the Company that efforts to
effect such Change in Control have ceased or been abandoned (in which case the
offers and acceptances made pursuant to this Section 8.5 in respect of such
Change in Control shall be deemed rescinded).

 

(g)                                 Officer’s Certificate.  Each offer to prepay
the Notes pursuant to this Section 8.5 shall be accompanied by a certificate,
executed by a Senior Financial Officer of the Company and dated the date of such
offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is
made pursuant to this Section 8.5; (iii) the principal amount of each Note
offered to be prepaid; (iv) the interest that would be due on each Note offered
to be prepaid, accrued to the Proposed Prepayment Date; (v) that the conditions
of this Section 8.5 have been fulfilled; (vi) in reasonable detail, the nature
and date of the Change in Control; and (vii) that the failure to respond to such
offer of prepayment shall constitute a rejection of such offer.

 

(h)                                 “Change in Control” Defined.  “Change in
Control” means each and every issue, sale or other disposition of shares of
voting stock of the Company which results in any person (as such term is used in
Section 13(d) and Section 14(d)(2) of the Exchange Act) or related persons
constituting a group (as such term is used in Rule 13d-5 under the Exchange
Act), becoming the “beneficial owners” (as such term is used in Rule 13d-3 under
the Exchange Act as in effect on the date of the Closing), directly or
indirectly, of more than 50% of the total voting power of all classes then
outstanding of the Company’s voting stock, or if such person acquires the right
to elect a majority of the board of directors of the Company.

 

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(i)                                     “Control Event” Defined.  “Control
Event” means:

 

(a)                                  the execution by the Company or any of its
Subsidiaries or Affiliates of any agreement or binding letter of intent with
respect to any proposed transaction or event or series of transactions or events
which, individually or in the aggregate, could reasonably be expected to result
in a Change in Control;

 

(b)                                 the execution of any written agreement
which, when fully performed by the parties thereto, would result in a Change in
Control; or

 

(c)                                  the making of any written offer by any
person (as such term is used in Section 13(d) and Section 14(d)(2) of the
Exchange Act as in effect on the date of the Closing) or related persons
constituting a group (as such term is used in Rule 13d-5 under the Exchange Act
as in effect on the date of the Closing) to the holders of the common stock of
the Company, which offer, if accepted by the requisite number of holders, would
result in a Change in Control unless such offer is rejected or expires pursuant
to its terms prior to the date on which notice of such Change in Control is
required to be delivered pursuant to Section 8.5(a).

 

Section 9.                                            Affirmative Covenants.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 9.1.                                          Compliance with Law.  The
Company will, and will cause each of its Subsidiaries to, comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, have a Material
Adverse Effect.

 

Section 9.2.                                          Insurance.  The Company
will, and will cause each of its Subsidiaries to, maintain, with financially
sound and reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles, co-insurance
and self-insurance, if adequate reserves are maintained with respect thereto) as
is customary in the case of entities of established reputations engaged in the
same or a similar business and similarly situated.

 

Section 9.3.                                          Maintenance of
Properties.  The Company will, and will cause each of its Subsidiaries to,
maintain and keep, or cause to be maintained and kept, their respective
properties Material to the conduct of their respective businesses in good
repair, working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Company or

 

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any Subsidiary from discontinuing the operation and the maintenance of any of
its properties if such discontinuance is desirable in the conduct of its
business and the Company has concluded that such discontinuance could not,
individually or in the aggregate, have a Material Adverse Effect.

 

Section 9.4.                                          Payment of Taxes and
Claims.  The Company will, and will cause each of its Subsidiaries to, file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or such Subsidiary has established
reserves therefor in accordance with GAAP on the books of the Company or such
Subsidiary or (ii) the non-filing or nonpayment, as the case may be, of all such
taxes and assessments in the aggregate could not have a Material Adverse Effect.

 

Section 9.5.                                          Corporate Existence, Etc. 
Subject to Sections 10.5 and 10.6, the Company will at all times preserve and
keep in full force and effect its corporate existence, and will at all times
preserve and keep in full force and effect the corporate existence of each of
its Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary)
and all rights and franchises Material to the conduct of the business of the
Company and its Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.

 

Section 9.6.                                          Additional Subsidiary
Guarantors.  The Company will cause each Domestic Subsidiary which is required
by the terms of the Bank Credit Agreement to become a party to, or otherwise
guarantee, Debt outstanding under such Bank Credit Agreement, to enter into the
Subsidiary Guaranty and deliver to each of the holders of the Notes
(concurrently with the incurrence of any such obligation pursuant to such Bank
Credit Agreement) the following items:

 

(a)                                  a joinder agreement in respect of the
Subsidiary Guaranty;

 

(b)                                 a certificate signed by the President, a
Vice President or another authorized Responsible Officer of the Company making
representations and warranties to the effect of those contained in Sections 5.4,
5.6 and 5.7, with respect to such Subsidiary and the Subsidiary Guaranty, as
applicable; and

 

(c)                                  an opinion of counsel (who may be in-house
counsel for the Company) addressed to each of the holders of the Notes
reasonably satisfactory to the Required Holders, to the effect that the
Subsidiary Guaranty has been duly authorized, executed and delivered by such
Subsidiary Guarantor and that the Subsidiary Guaranty constitutes the legal,
valid and binding contract and agreement of such Subsidiary Guarantor
enforceable

 

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in accordance with its terms, except as an enforcement of such terms may be
limited by bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles.

 

Section 10.                                      Negative Covenants.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 10.1.                                   Consolidated Leverage Ratio. 
The Company will not permit:

 

(a)                                  the Consolidated Leverage Ratio to exceed
(i) 3.25 to 1.00 on or prior to April 30, 2005, (ii) 3.00 to 1.00 on or after
May 1, 2005 to and including April 30, 2006, and (iii) 2.50 to 1.00 on or after
May 1, 2006; and

 

(b)                                 Priority Debt to exceed 15% of Consolidated
Net Tangible Assets as of any Calculation Date.

 

Section 10.2.                                   Consolidated Fixed Charge
Coverage Ratio.  The Company will not permit the Consolidated Fixed Charge
Coverage Ratio to be less than (i) 3.00 to 1.00 on or prior to April 30, 2006,
and (iii) 3.50 to 1.00 on or after May 1, 2006.

 

Section 10.3.                                   Limitation on Liens.    The
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly create, incur, assume or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any property or asset
(including, without limitation, any document or instrument in respect of goods
or accounts receivable) of the Company or any such Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits, except:

 

(a)                                  Liens for taxes, assessments or other
governmental charges that are not yet due and payable or the payment of which is
not at the time required by Section 9.4;

 

(b)                                 judgment liens in respect of judgments that
do not constitute an Event of Default under clause (i) of Section 12;

 

(c)                                  Liens incidental to the conduct of business
or the ownership of properties and assets (including landlords’, carriers’,
warehousemen’s, mechanics’, materialmen’s and other similar Liens for sums not
yet due and payable) and Liens to secure the performance of bids, tenders,
leases, or trade contracts, or to secure statutory obligations (including
obligations under workers compensation, unemployment insurance and other social
security legislation), surety or appeal bonds or other Liens incurred in the
ordinary course of business and not in connection with the borrowing of money;

 

(d)                                 leases or subleases granted to others,
easements, rights-of-way, minor survey exceptions, restrictions and other
similar charges or encumbrances, in each case incidental to the ownership of
property or assets or the ordinary conduct of the business

 

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of the Company or any of its Subsidiaries, provided that such Liens do not, in
the aggregate, materially detract from the value of such property;

 

(e)                                  Liens securing Debt of a Subsidiary owed to
the Company or to a Wholly-Owned Subsidiary;

 

(f)                                    Liens existing as of the date of Closing
and reflected in Schedule 10.3;

 

(g)                                 Liens incurred after the date of Closing
given to secure the payment of the purchase price incurred in connection with
the acquisition, construction or improvement of property (other than accounts
receivable or inventory) useful and intended to be used in carrying on the
business of the Company or a Subsidiary, including Liens existing on such
property at the time of acquisition or construction thereof, or Liens incurred
within 180 days of such acquisition or the completion of such construction or
improvement, provided that (i) the Lien shall attach solely to the property
acquired, purchased, constructed or improved; (ii) at the time of acquisition,
construction or improvement of such property, the aggregate amount remaining
unpaid on all Debt secured by Liens on such property, whether or not assumed by
the Company or a Subsidiary, shall not exceed the greater of (y) the cost of
such acquisition, construction or improvement or (z) the Fair Market Value of
such property (as determined in good faith by one or more officers of the
Company to whom authority to enter into the transaction has been delegated by
the board of directors of the Company); and (iii) at the time of such incurrence
and after giving effect thereto, no Event of Default would exist;

 

(h)                                 any Lien existing on property of a Person
immediately prior to its being consolidated with or merged into the Company or a
Subsidiary or its becoming a Subsidiary, or any Lien existing on any property
acquired by the Company or any Subsidiary at the time such property is so
acquired (whether or not the Debt secured thereby shall have been assumed),
provided that (i) no such Lien shall have been created or assumed in
contemplation of such consolidation or merger or such Person’s becoming a
Subsidiary or such acquisition of property, (ii) each such Lien shall extend
solely to the item or items of property so acquired and, if required by the
terms of the instrument originally creating such Lien, other property which is
an improvement to or is acquired for specific use in connection with such
acquired property, and (iii) at the time of such incurrence and after giving
effect thereto, no Event of Default would exist;

 

(i)                                     any extensions, renewals or replacements
of any Lien permitted by the preceding subparagraphs (f), (g), and (h) of this
Section 10.3, provided that (i) no additional property shall be encumbered by
such Liens, (ii) the unpaid principal amount of the Debt or other obligations
secured thereby shall not be increased on or after the date of any extension,
renewal or replacement (except to the extent of any premiums and other
refinancing costs incurred in connection with such transaction);

 

(j)                                     customary rights of set off upon deposit
accounts and securities accounts of cash in favor of banks or other depository
institutions and other securities intermediaries;

 

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(k)                                  Liens in the nature of licenses that arise
in the ordinary course of business of the Company or any of its Subsidiaries;

 

(l)                                     any call or similar right in the nature
of a right of first offer or a first refusal right of a third party that is an
investor in a joint venture or a Subsidiary of the Company in the case of equity
interests issued by such joint venture or qualifying shares or similar
arrangements designed to satisfy requirements of applicable laws in the case of
equity interests issued by a joint venture or Subsidiary so long as such call or
similar right does not secure Debt of the Company or any Subsidiary; and

 

(m)                               in addition to the Liens permitted by the
preceding subparagraphs (a) through (1), inclusive, of this Section 10.3, Liens
securing obligations of the Company or any Subsidiary, provided that the
aggregate principal amount of obligations secured by Liens pursuant to this
Section 10.3(m) shall not exceed the limitations set forth in Section 10.1(b).

 

Section 10.4                                      Restricted Payments. The
Company will not, and will not permit any of its Subsidiaries to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
except (a) the Company may declare and pay dividends with respect to its Capital
Stock payable solely in additional shares of its Common Stock or warrants,
options or other rights entitling the holder thereof to purchase or acquire
shares of its Common Stock, (b) Subsidiaries may declare and pay dividends
ratably with respect to their Capital Stock, (c) the Company may make Restricted
Payments pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Company, the Issuer and their
respective Subsidiaries, (d) any Subsidiary may make Restricted Payments to the
Company and the Issuer or any of their Subsidiaries, (e) the Company may make
Restricted Payments not otherwise permitted hereunder in an aggregate amount
since the date of the Closing not to exceed 30% of Consolidated Net Income for
the period commencing on May 1, 2003 and ending on April 30 of the fiscal year
preceding the year in which such Restricted Payment is made, on a cumulative
basis, (f) the Company may use proceeds from the underwriters’ over-allotment
option in the IPO for repurchases of Common Stock, and (g) the Company may
declare and pay the Special Dividend.

 

Section 10.5.                                   Sales of Assets.  The Company
will not, and will not permit any Subsidiary to, sell, lease or otherwise
dispose of any assets of the Company and its Subsidiaries (including any such
disposition of the equity interest of the Company or any Subsidiary in another
Subsidiary which arises through a merger or consolidation between such
Subsidiary and any other Person) in excess of the Threshold Amount (as defined
below); provided, however, that the Company or any Subsidiary may sell, lease or
otherwise dispose of assets in excess of the Threshold Amount if such assets are
sold in an arms length transaction and, at such time and after giving effect
thereto, no Event of Default shall have occurred and be continuing and an amount
equal to the Net Proceeds received from such sale, lease or other disposition
shall be used within 365 days of such sale, lease or disposition, in any
combination:

 

(1)                                  to acquire productive assets (other than
cash or cash equivalents) used or

 

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useful in carrying on the business of the Company and its Subsidiaries
(including equity interests in entities which will become Subsidiaries); or

 

(2)                                  to prepay or retire Senior Debt of the
Company and/or its Subsidiaries.

As used in this Section 10.5, a sale, lease or other disposition of assets shall
be deemed to be in excess of the “Threshold Amount” of the assets of the Company
and its Subsidiaries if the book value of such assets, when added to the book
value of all other assets sold, leased or otherwise disposed of by the Company
and its Subsidiaries during the period of 12 consecutive months ending on the
date of such sale, lease or other disposition, exceeds 10% of the book value of
Consolidated Total Assets, determined as of the end of the fiscal quarter
immediately preceding such sale, lease or other disposition; provided that there
shall be excluded from any determination of Threshold Amount (i) any sale, lease
or disposition of assets in the ordinary course of business of the Company and
its Subsidiaries, (ii) any sale, lease or disposition of assets from the Company
to any Subsidiary or from any Subsidiary to the Company or a Subsidiary, and
(iii) the Special Dividend.

 

Section 10.6.                                   Merger, Consolidation.  Neither
the Company nor the Issuer will consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person; provided that the
foregoing restriction does not apply to the consolidation or merger of the
Company or the Issuer, as the case may be, with, or the conveyance, transfer or
lease of substantially all of the assets of the Company or the Issuer, as the
case may be, in a single transaction or series of transactions to, any Person so
long as:

 

(a)                                  the successor formed by such consolidation
or the survivor of such merger or the Person that acquires by conveyance,
transfer or lease substantially all of the assets of the Company or the Issuer
as an entirety, as the case may be (the “Successor Corporation”), shall be a
solvent corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia;

 

(b)                                 if the Company or the Issuer, as the case
may be, is not the Successor Corporation, such corporation shall have executed
and delivered to each holder of Notes its assumption of the due and punctual
performance and observance of each covenant and condition of this Agreement and,
in the case of any successor to the Issuer, the Notes (pursuant to such
agreements and instruments as shall be reasonably satisfactory to the Required
Holders), and the Company shall have caused to be delivered to each holder of
Notes an opinion of nationally recognized outside counsel, to the effect that
all agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof;

 

(c)                                  the Company or any such Successor
Corporation would be in compliance with Sections 10.1 and 10.2 on a pro forma
basis for the Four Quarter Period ending immediately prior to such merger or
consolidation and after giving effect thereto; and

 

(d)                                 immediately after giving effect to such
transaction no Default or Event of Default would exist.

 

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Section 10.7.                                   Nature of Business.  The Company
will not, and will not permit any Subsidiary to, engage in any business, if, as
a result, the general nature of the business of the Company and its
Subsidiaries, when taken as a whole, would be substantially changed from the
general nature of the business of the Company and its Subsidiaries, when taken
as a whole, on the date of this Agreement.

 

Section 10.8.                                   Transactions with Affiliates. 
The Company will not and will not permit any Subsidiary to enter into directly
or indirectly any Material transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except upon fair and reasonable
terms not Materially less favorable to the Company or such Subsidiary than would
be obtainable in a comparable arm’s-length transaction with a Person not an
Affiliate.  Notwithstanding the foregoing, the provisions set forth in the
immediately preceding sentence will not apply to: (i) the Special Dividend,
(ii) transactions with Affiliates solely in their capacity as holders of Debt or
Capital Stock of the Company or any of its Subsidiaries, where such Affiliates
are treated no more favorably than holders of such Debt or such Capital Stock
generally; and (iii) any agreement disclosed in the Memorandum as in effect as
of the date of the Closing or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the holders of the Notes in any
material respect than the original agreement as in effect on the date of the
Closing.

 

Section 10.9.                                   Subsidiaries.  The Company will
not at any time permit more than (i) 5% of Consolidated Total Assets, (ii) 5% of
Consolidated Net Worth, or (iii) 5% of consolidated revenues of the Company and
its Subsidiaries to be held by, or attributable to, Subsidiaries which are not
the Issuer and the Subsidiary Guarantors.  The Company will not at any time,
directly or indirectly, own less than 95% of the voting stock or other voting
equity interest in the Issuer and each Material Subsidiary.  The Company will
not permit any Subsidiary, other than a Domestic Subsidiary, to become a
co-obligor or to guarantee Debt under the Bank Credit Agreement.

 

Section 11.                                      Guaranty by the Company.

 

Section 11.1.                                   Guaranty by the Company.  The
Company does hereby irrevocably, absolutely and unconditionally guarantee unto
the holders:  (1) the full and prompt payment of the principal of, LIBOR
Breakage Amount, if any, and interest on the Notes from time to time
outstanding, as and when such payments shall become due and payable, whether by
lapse of time, upon redemption or prepayment, by extension or by acceleration or
declaration or otherwise (including (to the extent legally enforceable) interest
due on overdue payments of principal, LIBOR Breakage Amount, if any, and
interest) in Federal or other immediately available funds of the United States
of America which at the time of payment or demand therefor shall be legal tender
for the payment of public and private debts, (2) the full and prompt performance
and observance by the Issuer of each and all of the obligations, covenants and
agreements required to be performed or owed by the Issuer under the terms of the
Notes and this Agreement and (3) the full and prompt payment, upon demand by any
holder, of all reasonable and documented costs and expenses, legal or otherwise
(including reasonable and documented attorneys’ fees), if any,

 

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as shall have been expended or incurred in the protection or enforcement of any
rights, privileges or liabilities in favor of the holders under or in respect of
the Notes, this Agreement or in any action in connection therewith and in each
and every case irrespective of the validity, regularity, or enforcement of any
of the Notes or this Agreement or any of the terms thereof or any other like
circumstance or circumstances.

 

Section 11.2.                                   Guaranty of Payment and
Performance.  This is a guarantee of payment and performance and the Company
hereby waives, to the fullest extent permitted by law, any right to require that
any action on or in respect of any Note or this Agreement be brought against the
Issuer or any other Person or that resort be had to any direct or indirect
security for the Notes or for this Agreement or any other remedy.  Any holder
may, at its option, proceed hereunder against the Company in the first instance
to collect monies when due, the payment of which is guaranteed hereby, without
first proceeding against the Issuer or any other Person and without first
resorting to any direct or indirect security for the Notes or for this Agreement
or any other remedy.  The liability of the Company hereunder shall in no way be
affected or impaired by any acceptance by any holder of any direct or indirect
security for, or other guaranties of, any Debt, liability or obligation of the
Issuer or any other Person to any holder or by any failure, delay, neglect or
omission by any holder to realize upon or protect any such guarantees, Debt,
liability or obligation or any notes or other instruments evidencing the same or
any direct or indirect security therefor or by any approval, consent, waiver, or
other action taken, or omitted to be taken by any such holder.

 

Section 11.3.                                   General Provisions Relating to
Guaranty by the Company of Issuer’s Obligations under this Agreement and the
Notes.  (a) The Company hereby consents and agrees that any holder or holders
from time to time may, without in any manner affecting the liability of the
Company under this Agreement, and upon such terms and conditions as any such
holder or holders may deem advisable:

 

(1)                                  extend in whole or in part (by renewal or
otherwise), modify, increase, change, compromise, release or extend the duration
of the time for the performance or payment of any Debt, liability or obligation
of the Issuer or of any other Person secondarily or otherwise liable for any
Debt, liability or obligations of the Issuer on the Notes, or waive any Default
with respect thereto, or waive, modify, amend or change any provision of any
other agreement or this Agreement (to the extent permitted by Section 18.1); or

 

(2)                                  sell, release, surrender, modify, impair,
exchange or substitute any and all property, of any nature and from whomsoever
received, held by, or for the benefit of, any such holder as direct or indirect
security for the payment or performance of any Debt, liability or obligation of
the Issuer or of any other Person secondarily or otherwise liable for any Debt,
liability or obligation of the Issuer on the Notes; or

 

(3)                                  settle, adjust or compromise any claim of
the Issuer against any other Person secondarily or otherwise liable for any
Debt, liability or obligation of the Issuer on the Notes.

 

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The Company hereby ratifies and confirms any such extension, renewal, change,
sale, release, waiver, surrender, exchange, modification, amendment, impairment,
substitution, settlement, adjustment or compromise and that the same shall be
binding upon it, and hereby waives, to the fullest extent permitted by law, any
and all defenses, counterclaims or offsets which it might or could have by
reason thereof, it being understood that the Company shall at all times be bound
by this Agreement and remain liable hereunder.

 

(b)                                 The Company hereby waives, to the fullest
extent permitted by law:

 

(1)                                  notice of acceptance of this guarantee by
the holders or of the creation, renewal or accrual of any liability of the
Issuer, present or future, or of the reliance of such holders upon this
guarantee (it being understood that all Debt, liabilities and obligations
described in Section 11.1 hereof shall conclusively be presumed to have been
created, contracted or incurred in reliance upon the execution of this Agreement
by the Company); and

 

(2)                                  demand of payment by any holder from the
Issuer or any other Person indebted in any manner on or for any of the Debt,
liabilities or obligations hereby guaranteed; and

 

(3)                                  presentment for the payment by any holder
or any other Person of the Notes or any other instrument, protest thereof and
notice of its dishonor to any party thereto and to the Company.

 

The obligations of the Company under this guarantee and the rights of any holder
to enforce such obligations by any proceedings, whether by action at law, suit
in equity or otherwise, shall not be subject to any reduction, limitation,
impairment or termination, whether by reason of any claim of any character
whatsoever or otherwise and shall not be subject to any defense, set-off,
counterclaim (other than any compulsory counterclaim), recoupment or termination
whatsoever.

 

(c)                                  The obligations of the Company hereunder
shall be binding upon the Company and its successors and assigns, and shall
remain in full force and effect irrespective of:

 

(1)                                  the genuineness, validity, regularity or
enforceability of the Notes, this Agreement or any other agreement or any of the
terms of any thereof, the continuance of any obligation on the part of the
Issuer, or any other Person on or in respect of the Notes or under the Agreement
or any other agreement or the power or authority or the lack of power or
authority of the Issuer to issue the Notes or the Issuer to execute and deliver
this Agreement or any other agreement or to perform any of its obligations
hereunder or the existence or continuance of the Issuer or any other Person as a
legal entity; or

 

(2)                                  any default, failure or delay, willful or
otherwise, in the performance by the Issuer or any other Person of any
obligations of any kind or character whatsoever under the Notes, this Agreement
or any other agreement; or

 

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(3)                                  any creditors’ rights, bankruptcy,
receivership or other insolvency proceeding of the Issuer or any other Person or
in respect of the property of the Issuer or any other Person or any merger,
consolidation, reorganization, dissolution, liquidation, the sale of all or
substantially all of the assets of or winding up of the Issuer or any other
Person; or

 

(4)                                  impossibility or illegality of performance
on the part of the Issuer or any other Person of its obligations under the
Notes, this Agreement or any other agreements; or

 

(5)                                  in respect of the Issuer, or any other
Person, any change of circumstances, whether or not foreseen or foreseeable,
whether or not imputable to the Issuer, or any other Person, or other
impossibility of performance through fire, explosion, accident, labor
disturbance, floods, droughts, embargoes, wars (whether or not declared), civil
commotion, acts of God or the public enemy, delays or failure of suppliers or
carriers, inability to obtain materials, action of any federal or state
regulatory body or agency, change of law or any other causes affecting
performance, or any other force majeure, whether or not beyond the control of
the Issuer or any other Person and whether or not of the kind hereinbefore
specified; or

 

(6)                                  any attachment, claim, demand, charge,
Lien, order, process, encumbrance or any other happening or event or reason,
similar or dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, Debt, obligations or
liabilities of any character, foreseen or unforeseen, and whether or not valid,
incurred by or against the Issuer or any other Person or any claims, demands,
charges or Liens of any nature, foreseen or unforeseen, incurred by any Person,
or against any sums payable in respect of the Notes or under this Agreement, so
that such sums would be rendered inadequate or would be unavailable to make the
payments herein provided; or

 

(7)                                  any order, judgment, decree, ruling or
regulation (whether or not valid) of any court of any nation or of any political
subdivision thereof or any body, agency, department, official or administrative
or regulatory agency of any thereof or any other action, happening, event or
reason whatsoever which shall delay, interfere with, hinder or prevent, or in
any way adversely affect, the performance by the Issuer or any other Person of
its respective obligations under or in respect of the Notes, this Agreement or
any other agreement; or

 

(8)                                  the failure of the Company to receive any
benefit from or as a result of its execution, delivery and performance of this
Agreement; or

 

(9)                                  any failure or lack of diligence in
collection or protection, failure in presentment or demand for payment, protest,
notice of protest, notice of default and of nonpayment, any failure to give
notice to the Company of failure of the Issuer, or any other Person to keep and
perform any obligation, covenant or agreement under the terms

 

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of the Notes, this Agreement or any other agreement or failure to resort for
payment to the Issuer or to any other Person or to any other guaranty or to any
property, security, Liens or other rights or remedies; or

 

(10)                            the acceptance of any additional security or
other guaranty, the advance of additional money to the Issuer or any other
Person, the renewal or extension of the Notes or amendments, modifications,
consents or waivers with respect to the Notes, this Agreement or any other
agreement, or the sale, release, substitution or exchange of any security for
the Notes; or

 

(11)                            any change in the ownership of any shares of the
Issuer, the Company or any other Person; or

 

(12)                            any defense whatsoever that:  (i) the Issuer or
any other Person might have to the payment of the Notes (principal, LIBOR
Breakage Amount, if any, or interest), other than payment thereof in Federal or
other immediately available funds, or (ii) the Issuer or any other Person might
have to the performance or observance of any of the provisions of the Notes,
this Agreement or any other agreement, whether through the satisfaction or
purported satisfaction by the Issuer, the Company or any other Person of its
debts due to any cause such as bankruptcy, insolvency, receivership, merger,
consolidation, reorganization, dissolution, liquidation, winding-up or
otherwise; or

 

(13)                            any act or failure to act with regard to the
Notes, this Agreement or any other agreement or anything which might vary the
risk of the Company or any other Person; or

 

(14)                            any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Company or any other
Person in respect of the obligations of the Company or other Person under this
Agreement or any other agreement other than the final and indefeasible payment
in full of cash of the Notes;

 

provided that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Agreement that the obligations of the Company shall be absolute, irrevocable and
unconditional and shall not be discharged, impaired or varied except by the
payment of the principal of, premium, if any, and interest on the Notes in
accordance with their respective terms whenever the same shall become due and
payable as in the Notes provided and all other sums due and payable under this
Agreement, at the place specified in and all in the manner and with the effect
provided in the Notes and this Agreement, as each may be amended or modified
from time to time.  Without limiting the foregoing, it is understood that
repeated and successive demands may be made and recoveries may be had hereunder
as and when, from time to time, the Issuer shall default under or in respect of
the terms of the Notes or this Agreement and that notwithstanding recovery
hereunder for or in respect of any given default or defaults by the Issuer under
the Notes or this Agreement, the Guaranty hereunder shall remain in full force
and effect and shall apply to each and every subsequent default.

 

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(d)                                 All rights of any holder hereunder may be
transferred or assigned at any time and shall be considered to be transferred or
assigned at any time or from time to time upon the transfer of any Note whether
with or without the consent of or notice to the Company under this Agreement or
to the Issuer (except as provided in Section 19 of this Agreement).

 

(e)                                  To the extent of any payments made under
this Agreement, the Company shall be subrogated to the rights of the holder upon
whose Notes such payment was made, but the Company covenants and agrees that
such right of subrogation shall be subordinate in right of payment to the prior
indefeasible final payment in cash in full of all amounts due and owing by the
Issuer and the Company with respect to the Notes and this Agreement, and the
Company shall not take any action to enforce such right of subrogation, and the
Company shall not accept any payment in respect of such right of subrogation,
until all amounts due and owing by the Issuer under or in respect of the Notes
and this Agreement and all amounts due and owing by the Company hereunder have
indefeasibly been finally paid in cash in full.  If any amount shall be paid to
the Company in violation of the preceding sentence at any time prior to the
later of the indefeasible payment in cash in full of the Notes and all other
amounts payable under the Notes and this Agreement, such amount shall be held in
trust for the benefit of the holders and shall forthwith be paid to the holders
to be credited and applied to the amounts due or to become due with respect to
the Notes and all other amounts payable under this Agreement, whether matured or
unmatured.  The Company acknowledges that it has received direct and indirect
benefits from the financing arrangements contemplated by this Agreement and that
the waiver set forth in this paragraph (e) is knowingly made as a result of the
receipt of such benefits.

 

(f)                                    The Company agrees that to the extent the
Issuer, or any other Person makes any payment on any Note, which payment or any
part thereof is subsequently invalidated, voided, declared to be fraudulent or
preferential, set aside, recovered, rescinded or is required to be retained by
or repaid to a trustee, receiver, or any other Person under any bankruptcy code,
common law, or equitable cause, then and to the extent of such payment, the
obligation or the part thereof intended to be satisfied shall be revived and
continued in full force and effect with respect to the Company’s obligations
hereunder, as if said payment had not been made.  The liability of the Company
hereunder shall not be reduced or discharged, in whole or in part, by any
payment to any holder from any source that is thereafter paid, returned or
refunded in whole or in part by reason of the assertion of a claim of any kind
relating thereto, including, but not limited to, any claim for breach of
contract, breach of warranty, preference, illegality, invalidity, or fraud
asserted by any account debtor or by any other Person.

 

(g)                                 No holder shall be under any obligation: 
(1) to marshall any assets in favor of the Company or in payment of any or all
of the liabilities of the Issuer under or in respect of the Notes or the
obligations of the Company hereunder or (2) to pursue any other remedy that the
Company may or may not be able to pursue and that may lighten the Company’s
burden, any right to which the Company hereby expressly waives.

 

(h)                                 The obligations of the Company under this
Agreement rank pari passu in right of payment with all other Debt of the Company
which is not secured or which is not expressly subordinated in right of payment
to any other Debt of the Company.

 

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Section 12.                                      Events of Default.

 

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

 

(a)                                  the Issuer defaults in the payment of any
principal or LIBOR Breakage Amount, if any, on any Note when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or

 

(b)                                 the Issuer defaults in the payment of any
interest on any Note for more than five Business Days after the same becomes due
and payable; or

 

(c)                                  (i) the Company defaults in the performance
of or compliance with any term contained in Sections 10.1, 10.2, 10.3(m) or
10.4, or (ii) the Company defaults in the performance of or compliance with any
other term contained in Section 10 and such default is not remedied within 20
days after the earlier of (x) a Responsible Officer obtaining actual knowledge
of such default and (y) the Company receiving written notice of such default
from any holder of a Note (any such written notice to be identified as a “notice
of default” and to refer specifically to this paragraph (c) of Section 12); or

 

(d)                                 the Company or the Issuer defaults in the
performance of or compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this Section 12) and such default
is not remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note (any such written
notice to be identified as a “notice of default” and to refer specifically to
this paragraph (d) of Section 12); or

 

(e)                                  any representation or warranty made in
writing by or on behalf of the Company or the Issuer or by any officer of the
Company or the Issuer in this Agreement or in any certificate of the Company or
any Subsidiary delivered on the Closing Date or in any certificate of the
Company delivered pursuant to Section 7 proves to have been false or incorrect
in any material respect on the date as of which made; or

 

(f)                                    (i) the Company, the Issuer or any
Material Subsidiary is in default (as principal or as guarantor or other surety)
in the payment of any principal of or premium or make-whole amount or interest
on any Debt other than the Notes that is outstanding in an aggregate principal
amount of at least $3,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company, the Issuer or any Material Subsidiary is in
default in the performance of or compliance with any term of any instrument,
mortgage, indenture or other agreement relating to any Debt other than the Notes
in an aggregate principal amount of at least $3,000,000 or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared (or one or more Persons are entitled to declare such Debt
to be), due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a

 

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consequence of the occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of Debt to convert such Debt
into equity interests or any purchase or repayment of Debt on account of the
voluntary sale or transfer of the property or asset which secures such Debt and
which is permitted by the terms of the agreement pursuant to which such Debt is
outstanding), (x) the Company, the Issuer or any Material Subsidiary has become
obligated to purchase or repay Debt other than the Notes before its regular
maturity or before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $3,000,000, or (y) one or more Persons
have the right to require the Company or any Subsidiary so to purchase or repay
such Debt; or

 

(g)                                 the Company, the Issuer or any Material
Subsidiary (i) is generally not paying, or admits in writing its inability to
pay, its debts as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for the benefit of
its creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, (v) is adjudicated as insolvent or to
be liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or

 

(h)                                 a court or governmental authority of
competent jurisdiction enters an order appointing, without consent by the
Company, the Issuer or any of its Material Subsidiaries, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company, the Issuer or any of its Material Subsidiaries, or
any such petition shall be filed against the Company, the Issuer or any of its
Material Subsidiaries and such petition shall not be dismissed within 90 days;
or

 

(i)                                     a final judgment or judgments at any one
time outstanding for the payment of money aggregating in excess $5,000,000 (not
paid or fully covered by insurance) are rendered against one or more of the
Company and its Subsidiaries and which judgments are not, within 90 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 90 days after the expiration of such stay; or

 

(j)                                     if (i) any Plan shall fail to satisfy
the minimum funding standards of ERISA or the Code for any plan year or part
thereof or a waiver of such standards or extension of any amortization period is
sought or granted under Section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed with
the PBGC or the PBGC shall have instituted proceedings under Section 4042 of
ERISA to terminate or appoint a trustee to administer any Plan or the PBGC shall
have notified the Company, the Issuer or any ERISA Affiliate that a Plan may
become a

 

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subject of any such proceedings, (iii) the aggregate “amount of unfunded benefit
liabilities” (within the meaning of Section 4001(a)(18) of ERISA) under all
Plans, determined in accordance with Title IV of ERISA, shall exceed
$10,000,000, (iv) the Company, the Issuer or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company, the Issuer or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company, the Issuer or any
Subsidiary establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that could increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a
Material Adverse Effect; or

 

(k)                                  for any reason any provision of the
Subsidiary Guaranty of any Material Subsidiary or Section 11 of this Agreement
ceases to be in full force and effect, including, without limitation, a
determination by any Governmental Authority that any such Subsidiary Guaranty or
such Guaranty by the Company in this Agreement is invalid, void or
unenforceable, or any Material Subsidiary shall contest or deny in writing the
enforceability of any its obligations under the Subsidiary Guaranty, or the
Company shall contest or deny in writing the enforceability of its guaranty
obligations set forth in Section 11 of this Agreement.

 

As used in Section 12(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

 

Section 13.                                      Remedies on Default, Etc.

 

Section 13.1.                                   Acceleration.  (a) If an Event
of Default with respect to the Company described in paragraph (g) or (h) of
Section 12 (other than an Event of Default described in clause (i) of
paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact
that such clause encompasses clause (i) of paragraph (g)) has occurred, all the
Notes then outstanding shall automatically become immediately due and payable.

 

(b)                                 If any other Event of Default has occurred
and is continuing, any holder or holders of more than 50% in aggregate principal
amount of the Notes at the time outstanding may at any time at its or their
option, by notice or notices to the Company and the Issuer, declare all the
Notes then outstanding to be immediately due and payable.

 

(c)                                  If any Event of Default described in
paragraph (a) or (b) of Section 12 has occurred and is continuing, any holder of
Notes at the time outstanding affected by such Event of Default may at any time,
at its option, by notice or notices to the Company and the Issuer, declare all
the Notes held by it to be immediately due and payable.

 

Upon any Note becoming due and payable under this Section 13.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (i) all accrued and unpaid interest
thereon, and (ii) the LIBOR Breakage Amount if

 

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any, in respect of such principal amount (to the full extent permitted by
applicable law) shall all be immediately due and payable, in each and every case
without presentment, demand, protest or further notice, all of which are hereby
waived.  The Company and the Issuer acknowledge, and the parties hereto agree,
that each holder of a Note has the right to maintain its investment in the Notes
free from repayment by the Issuer (except as herein specifically provided for),
and that the provision for payment of a LIBOR Breakage Amount, if any, by the
Issuer in the event that the Notes are prepaid or are accelerated as a result of
an Event of Default, is intended to provide compensation for the deprivation of
such right under such circumstances.

 

Section 13.2.                                   Other Remedies.  If any Default
or Event of Default has occurred and is continuing, and irrespective of whether
any Notes have become or have been declared immediately due and payable under
Section 13.1, the holder of any Note at the time outstanding may proceed to
protect and enforce the rights of such holder by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise.

 

Section 13.3.                                   Rescission.  At any time after
any Notes have been declared due and payable pursuant to clause (b) (other than
pursuant to an Event of Default described in paragraphs (g) or (h) of
Section 12) or (c) of Section 13.1, the holders of more than 50% in aggregate
principal amount of the Notes then outstanding, by written notice to the Company
and the Issuer, may rescind and annul any such declaration and its consequences
if (a) the Issuer has paid all overdue interest on the Notes, all principal of,
or LIBOR Breakage Amount, if any, on any Notes that are due and payable and are
unpaid other than by reason of such declaration, and all interest on such
overdue principal, or LIBOR Breakage Amount, if any, and (to the extent
permitted by applicable law) any overdue interest in respect of the Notes, at
the Default Rate, (b) all Events of Default and Defaults, other than non-payment
of amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 18, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to any
Notes.  No rescission and annulment under this Section 13.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.

 

Section 13.4.                                   No Waivers or Election of
Remedies, Expenses, Etc.  No course of dealing and no delay on the part of any
holder of any Note in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. 
No right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise.  Without limiting the obligations of the Company under Section 16,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 13, including, without
limitation, the reasonable attorneys’ fees, expenses and disbursements for the
holders as set forth in Section 16.

 

Section 14.                                                                         
Registration; Exchange; Substitution of Notes.

 

Section 14.1.                                   Registration of Notes.  The
Issuer shall keep at its principal executive office

 

42

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a register for the registration and registration of transfers of Notes.  The
name and address of each holder of one or more Notes, each transfer thereof and
the name and address of each transferee of one or more Notes shall be registered
in such register.  Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the Issuer shall not
be affected by any notice or knowledge to the contrary.  The Issuer shall give
to any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

 

Section 14.2.                                   Transfer and Exchange of Notes. 
Upon surrender of any Note at the principal executive office of the Issuer for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or its attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Issuer shall execute and deliver
not more than 10 Business Days following surrender of such Note, at the Issuer’s
expense (except as provided below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note.  Each such new Note shall
be payable to such Person as such holder may request and shall be substantially
in the form of the Note originally issued hereunder.  Each such new Note shall
be dated and bear interest from the date to which interest shall have been paid
on the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon.  The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes.  Notes shall not be transferred in denominations of
less than $100,000, provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000.  Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.1 (other than clause (b) of the
second to the last sentence of Section 6.1) and Section 6.2, provided that such
holder may (in reliance upon information provided by the Issuer, which shall not
be unreasonably withheld) make a representation to the effect that the purchase
by such holder of any Note will not constitute a non-exempt prohibited
transaction under Section 406(a) of ERISA.  Prior to the registration of the
transfer of any Note, the Issuer may require a proposed transferee to confirm
that the representations and warranties set forth in Section 6.1 (other than
clause (b) of the second to the last sentence of Section 6.1) are applicable to
such transferree, and in the case of any transfer in which the registered owner
will be registered in the name of a nominee, the name of the beneficial owner of
the Note and confirmation that such nominee is not permitted to transfer such
Note without the consent of the beneficial owner.

 

The Notes have not been registered under the Securities Act or under the
securities laws of any state and may not be transferred or resold unless
registered under the Securities Act and all applicable state securities laws or
unless an exemption from the requirement for such registration is available.

 

Section 14.3.                                   Replacement of Notes.  Upon
receipt by the Issuer of evidence reasonably satisfactory to it of the ownership
of and the loss, theft, destruction or mutilation of any Note

 

43

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(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and

 

(a)                                  in the case of loss, theft or destruction,
of indemnity reasonably satisfactory to it (provided that if the holder of such
Note is, or is a nominee for, an original Purchaser or another holder of a Note
with a minimum net worth of at least $50,000,000, such Person’s own unsecured
agreement of indemnity shall be deemed to be satisfactory), or

 

(b)                                 in the case of mutilation, upon surrender
and cancellation thereof,

 

the Issuer at its own expense shall execute and deliver not more than five
Business Days following satisfaction of such conditions, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

 

Section 15.                                      Payments on Notes.

 

Section 15.1.                                   Place of Payment.  Subject to
Section 15.2, payments of principal, LIBOR Breakage Amount, if any, and interest
becoming due and payable on the Notes shall be made in New York, New York at the
principal office of JPMorgan Chase Bank in such jurisdiction.  The Issuer may at
any time, by notice to each holder of a Note, change the place of payment of the
Notes so long as such place of payment shall be either the principal office of
the Issuer in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.

 

Section 15.2.                                   Home Office Payment.  So long as
any Purchaser or such Purchaser’s nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Issuer will pay all sums becoming due on such Note for principal,
LIBOR Breakage Amount, if any, and interest by the method and at the address
specified for such purpose for such Purchaser on Schedule A hereto, or by such
other method or at such other address as such Purchaser shall have from time to
time specified to the Issuer in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Issuer made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Issuer at its principal executive office or at the
place of payment most recently designated by the Issuer pursuant to
Section 15.1.  Prior to any sale or other disposition of any Note held by any
Purchaser or such Person’s nominee, such Person will, at its election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Issuer in exchange
for a new Note or Notes pursuant to Section 14.2.  The Issuer will afford the
benefits of this Section 15.2 to any Institutional Investor that is the direct
or indirect transferee of any Note.

 

44

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Section 16.                                      Expenses, Etc.

 

Section 16.1.                                   Transaction Expenses.  Whether
or not the transactions contemplated hereby are consummated, the Company and the
Issuer jointly and severally agree to pay all reasonable and documented costs
and expenses (including reasonable attorneys’ fees of one special counsel for
the Purchasers, which such counsel shall be Chapman and Cutler LLP, in
connection with the initial sale of the Notes and, if reasonably required, local
or other counsel) incurred by the Purchasers and the holders of Notes in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the reasonable and documented costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any
rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand by any Governmental
Authority issued in connection with this Agreement or the Notes, or by reason of
being a holder of any Note, and (b) to the extent reasonably documented, the
reasonable costs and expenses, including financial advisors’ fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes.  The Company and the Issuer jointly and
severally agree that they will pay, and will save each Purchaser and each other
holder of a Note harmless from, all claims in respect of any reasonable fees,
costs or expenses if any, of brokers and finders (other than those retained by
the Purchasers).

 

Section 16.2.                                   Survival.  The obligations of
the Company and the Issuer under this Section 16 will survive the payment or
transfer of any Note, the enforcement, amendment or waiver of any provision of
this Agreement or the Notes, and the termination of this Agreement.

 

Section 17.                                      Survival of Representations and
Warranties; Entire Agreement.

 

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the related Notes, the purchase or transfer
by any Purchaser of any such Note or portion thereof or interest therein and the
payment of any Note may be relied upon by any subsequent holder of any such
Note, regardless of any investigation made at any time by or on behalf of any
Purchaser or any other holder of any such Note.  All statements contained in any
certificate or other instrument delivered by or on behalf of the Company or the
Issuer pursuant to this Agreement shall be deemed representations and warranties
of the Company or the Issuer under this Agreement.  Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers, the Company and the Issuer and supersede
all prior agreements and understandings relating to the subject matter hereof.

 

Section 18.                                      Amendment and Waiver.

 

Section 18.1.                                   Requirements.  This Agreement
and the Notes may be amended, and the observance of any term hereof or of the
Notes may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company, the Issuer and the Required Holders,
except that (a) no amendment or waiver of any of the provisions of Section 1,

 

45

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2, 3, 4, 5, 6 or 22 hereof, or any defined term (as it is used in any such
Section), will be effective as to any holder of Notes unless consented to by
such holder of Notes in writing, and (b) no such amendment or waiver may,
without the written consent of all of the holders of Notes at the time
outstanding affected thereby, (i) subject to the provisions of Section 13
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the LIBOR Breakage Amount on,
the Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver,
(iii) amend any of Sections 8, 12(a), 12(b), 13, 18 or 21, or (iv) reduce or
alter the scope of the guarantee by the Company of the obligations of the Issuer
in respect of this Agreement and the Notes.

 

Section 18.2.                                   Solicitation of Holders of
Notes.

 

(a)                                  Solicitation.  The Company and the Issuer
will provide each holder of the Notes (irrespective of the amount of Notes then
owned by it) with sufficient information, sufficiently far in advance of the
date a decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes.  The Company and the
Issuer will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this Section 18 to each
holder of outstanding Notes promptly following the date on which it is executed
and delivered by, or receives the consent or approval of, the requisite holders
of Notes.

 

(b)                                 Payment.  Neither the Company nor the Issuer
will directly or indirectly pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, or grant any
security, to any holder of Notes as consideration for or as an inducement to the
entering into by such holder of Notes of any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder of
Notes then outstanding even if such holder did not consent to such waiver or
amendment.

 

Section 18.3.                                   Binding Effect, Etc.  Any
amendment or waiver consented to as provided in this Section 18 applies equally
to all holders of Notes and is binding upon them and upon each future holder of
any Note and upon the Company and the Issuer without regard to whether such Note
has been marked to indicate such amendment or waiver.  No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon.  No course of dealing between the Company, the Issuer and the holder of
any Note nor any delay in exercising any rights hereunder or under any Note
shall operate as a waiver of any rights of any holder of such Note.  As used
herein, the term “this Agreement” and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

 

Section 18.4.                                   Notes Held by Company, Issuer,
Etc.  Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal

 

46

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amount of Notes then outstanding, Notes directly or indirectly owned by the
Company, the Issuer or any of their respective Affiliates shall be deemed not to
be outstanding.

 

Section 19.                                      Notices.

 

All notices and communications provided for hereunder shall be in writing and
sent (a) by telefacsimile if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by a recognized overnight delivery service (with charges prepaid).  Any such
notice must be sent:

 

(i)                                     if to a Purchaser or such Purchaser’s
nominee, to such Purchaser or such Purchaser’s nominee at the address specified
for such communications in Schedule A to this Agreement, or at such other
address as such Purchaser or such Purchaser’s nominee shall have specified to
the Company or the Issuer in writing pursuant to this Section 19;

 

(ii)                                  if to any other holder of any Note, to
such holder at such address as such other holder shall have specified to the
Company or the Issuer in writing pursuant to this Section 19; or

 

(iii)                               if to the Company or the Issuer, to the
Company or the Issuer at its address set forth at the beginning hereof to the
attention of Chief Financial Officer, or at such other address as the Issuer
shall have specified to the holder of each Note in writing.

 

Notices under this Section 19 will be deemed given only when actually received.

 

Section 20.                                      Reproduction of Documents.

 

This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to each Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced.  The Company and the Issuer
agree and stipulate that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. 
This Section 20 shall not prohibit the Company, the Issuer or any other holder
of Notes from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the inaccuracy
of any such reproduction.

 

Section 21.                                      Confidential Information.

 

For the purposes of this Section 21, “Confidential Information” means
information

 

47

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delivered to any Purchaser by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement, provided that such term does not include information that (a) was
publicly known or otherwise known to such Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise
becomes known to such Purchaser other than through disclosure by the Company or
any Subsidiary or (d) constitutes financial statements delivered to such
Purchaser under Section 7.1 that are otherwise publicly available.  Each
Purchaser will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by such Purchaser in good faith to protect
confidential information of third parties delivered to such Purchaser, provided
that such Purchaser may deliver or disclose Confidential Information to (i) such
Purchaser’s directors, trustees, officers, employees, agents, attorneys and
Affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by such Purchaser’s Notes),
(ii) such Purchaser’s financial advisors and other professional advisors who
agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 21, (iii) any other holder of any
Note, (iv) any Institutional Investor to which such Purchaser sells or offers to
sell such Note or any part thereof or any participation therein (if such Person
has agreed in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this Section 21), (v) any Person from which such
Purchaser offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 21), (vi) any federal or state
regulatory authority having jurisdiction over such Purchaser, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
such Purchaser’s investment portfolio, or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser’s Notes and this Agreement.  Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 21 as though it were a party to this Agreement.  On
reasonable request by the Company or the Issuer in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company and the Issuer embodying the provisions of this
Section 21.

 

Section 22.                                      Substitution of Purchaser.

 

Each Purchaser shall have the right to substitute any one of such Purchaser’s
Affiliates as the purchaser of the Notes that such Purchaser has agreed to
purchase hereunder, by written notice to the Company and the Issuer, which
notice shall be signed by both such Purchaser and such Purchaser’s Affiliate,
shall contain such Affiliate’s agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6, provided, however, that no such
substitution shall

 

48

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relieve the original Purchaser from its obligation to purchase Notes hereunder. 
Upon receipt of such notice, wherever the word “Purchaser” is used in this
Agreement (other than in this Section 22), such word shall be deemed to refer to
such Affiliate in lieu of such Purchaser.  In the event that such Affiliate is
so substituted as a purchaser hereunder and such Affiliate thereafter transfers
to such Purchaser all of the Notes then held by such Affiliate, upon receipt by
the Company and the Issuer of notice of such transfer, wherever the word
“Purchaser” is used in this Agreement (other than in this Section 22), such word
shall no longer be deemed to refer to such Affiliate, but shall refer to such
Purchaser, and such Purchaser shall have all the rights of an original holder of
the Notes under this Agreement.

 

Section 23.                                      Miscellaneous.

 

Section 23.1.                                   Successors and Assigns.  All
covenants and other agreements contained in this Agreement by or on behalf of
any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent holder of
a Note) whether so expressed or not.

 

Section 23.2.                                   Payments Due on Non-Business
Days.  Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of LIBOR Breakage Amount or interest on any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.

 

Section 23.3.                                   Severability.  Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.

 

Section 23.4.                                   Construction.  Each covenant
contained herein shall be construed (absent express provision to the contrary)
as being independent of each other covenant contained herein, so that compliance
with any one covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance with any other covenant.  Where any provision herein
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.

 

Section 23.5.                                   Counterparts.  This Agreement
may be executed in any number of counterparts, each of which shall be an
original but all of which together shall constitute one instrument.  Each
counterpart may consist of a number of copies hereof, each signed by less than
all, but together signed by all, of the parties hereto.

 

Section 23.6.                                   Governing Law.  This Agreement
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.

 

49

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*   *   *   *   *

 

50

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The execution hereof by the Purchasers shall constitute a contract among the
Company, the Issuer and the Purchasers for the uses and purposes hereinabove set
forth.  This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
agreement.

 

 

Very truly yours,

 

 

 

Jackson Hewitt Tax Service Inc.

 

 

 

 

 

 

 

By:

/s/ Michael D. Lister

 

 

Name: 

Michael D. Lister

 

 

Title:

President and Chief Executive
Officer

 

 

 

 

 

 

 

Jackson Hewitt Inc.

 

 

 

 

 

 

 

By:

/s/ Michael D. Lister

 

 

Name: 

Michael D. Lister

 

 

Title:

President and Chief Executive

 

 

Officer

 

51

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Accepted as of the first date written above.

 

 

SunAmerica Life Insurance Company

 

 

 

 

By:

AIG Global Investment Corp.,
Investment Adviser

 

 

 

 

 

By:

/s/ Lori J. White

 

 

Name: 

Lori J. White

 

 

Title:

Vice President

 

 

Jackson Hewitt Tax Service Inc.

Note Purchase Agreement

 

52

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Accepted as of the first date written above.

 

 

Monumental Life Insurance Company

 

 

 

 

 

 

 

By:

/s/ Mary T. Pech

 

 

Name: 

Mary T. Pech

 

 

Title:

Vice President

 

53

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Accepted as of the first date written above.

 

 

 

ING USA Annuity and Life Insurance Company

 

ING Life Insurance and Annuity Company

 

 

 

 

By:

ING Investment Management LLC, as Agent

 

 

 

 

 

 

 

 

By:

/s/ Christopher P. Lyons

 

 

 

Name:

Christopher P. Lyons

 

 

Title:

Senior Vice President

 

54

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Accepted as of the first date written above.

 

 

Connecticut General Life Insurance Company

 

 

 

 

By:

CIGNA Investments, Inc. (authorized agent)

 

 

 

 

 

 

 

 

By:

/s/ Deborah B. Wiacek

 

 

Name: 

Deborah B. Wiacek

 

 

Title:

Managing Director

 

55

--------------------------------------------------------------------------------

 

Accepted as of the first date written above.

 

 

 

Principal Life Insurance Company

 

 

 

 

By:

Principal Global Investors, LLC
a Delaware limited liability company, its
authorized signatory

 

 

 

 

 

 

 

 

By:

/s/ Christopher J. Henderson

 

 

Name: 

Christopher J. Henderson

 

 

Title:

Counsel

 

 

 

 

 

By:

/s/ Elizabeth D. Swanson

 

 

Name: 

Elizabeth D. Swanson

 

 

Title:

Counsel

 

56

--------------------------------------------------------------------------------

 

Accepted as of the first date written above.

 

 

 

The Travelers Insurance Company

 

 

 

 

 

 

 

 

By:

/s/ John A. Wills

 

 

Name: 

John A. Wills

 

 

Title:

Investment Officer

 

57

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Information Relating to Purchasers

 

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

SunAmerica Life Insurance Company
c/o AIG Global Investment Group
2929 Allen Parkway, A36-01
Houston, Texas  77019-2155
Attention:  Legal Department – Investment Management
Fax:  (713) 831-2328

 

$

65,000,000

 

 

Payments

 

All payments on or in respect of the Notes to be made by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
“Jackson Hewitt Inc., Floating Rate Senior Notes due June 25, 2009, PPN 468201
A* 9, principal, premium or interest”) to:

 

The Bank of New York

ABA #021-000-018

BNF Account #:  IOC 566

Credit to:  SunAmerica Life Insurance Company / GIC

OBI=PPN# and Prin: $            Int: $

 

Notices

 

All notices of payment on or in respect of the Notes and written confirmation of
each such payment, to be addressed to:

 

AIG Global Investment Group

c/o The Bank of New York

Attention:  P&I Department

P.O. Box 19266

Newark, NJ  07195

Phone:  (212) 437-6557

Fax:  (212) 437-6467

 

Duplicate payment notices and compliance information to:

 

SunAmerica Life Insurance Company / GIC

c/o AIG Global Investment Group

2929 Allen Parkway, Suite A36-04

 

SCHEDULE A

(to Note Purchase Agreement)

 

A-58

--------------------------------------------------------------------------------

 

Houston, Texas  77019-2155

Attn:  Private Placement Department

Fax Number:  (713) 831-1072

 

All other correspondence to:

 

AIG Global Investment Group

2929 Allen Parkway, A36-01

Houston, Texas  77019-2155

Attention:  Legal Department – Investment Management

Fax:  (713) 831-2328

 

Name of Nominee in which Notes are to be issued:  HARE & Co.

 

Taxpayer I.D. Number for HARE & Co.:  13-6062916

 

Taxpayer I.D. Number for SunAmerica Life Insurance Company:  52-0502540

 

A-59

--------------------------------------------------------------------------------

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

Monumental Life Insurance Company
c/o AEGON USA Investment Management, LLC
Attention:  Director of Private Placements
4333 Edgewood Road N.E.
Cedar Rapids, Iowa  52499-5335
Phone:  (319) 369-2432
Fax:  (319) 369-2666

 

$

35,000,000

 

 

Payments

 

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
“Jackson Hewitt Inc., Floating Rate Senior Notes due June 25, 2009, PPN 468201
A* 9, principal, premium or interest”) to:

 

Citibank, N.A.

111 Wall Street

New York, New York  10043

ABA #021000089

DDA #36218394

FBO MONLIFE 847785

 

Notices

 

All notices and confirmation of Payment information with respect to the Notes
should be sent to:

 

AEGON USA Investment Management, LLC

Attention:  Custody Operations-Privates

4333 Edgewood Road N.E.

Cedar Rapids, Iowa  52499-7013

 

All other notices and communications (including financial statement and
reporting), to be addressed as first provided above, with copies to:

 

AEGON USA Investment Management, LLC

Attention:  Lizz Taylor – Private Placements

400 West Market Street, 10th Floor

Louisville, Kentucky  40202

Phone:  (502) 560-2639

Fax:  (502) 560-2030

 

A-60

--------------------------------------------------------------------------------

 

Name of Nominee in which Notes are to be issued:  None

 

Taxpayer I.D. Number:  52-0419790

 

A-61

--------------------------------------------------------------------------------

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

ING USA Annuity and Life Insurance Company
c/o ING Investment Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, Georgia  30327-4349
Attention:  Private Placements
Fax Number:  (770) 690-5057

 

$

20,000,000

 

 

Payments

 

All payments on or in respect of the Notes to be made by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
“Jackson Hewitt Inc., Floating Rate Senior Notes due June 25, 2009, PPN 468201
A* 9, principal, premium or interest”) to:

 

The Bank of New York

ABA #021000018

BFN:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments) or

BFN:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)

Reference:          ING USA IMKT, Account No. 108473 and PPN 468201 A* 9

 

Notices

 

All notices and communications with respect to payments and written confirmation
of each such payment, to be addressed:

 

ING Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia  30327-4349

Attention:  Operations/Settlements

Fax Number:  (770) 690-4886

 

All other notices and communications to be addressed as follows with a copy to
address first provided above:

 

ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, MN  55401-2121

Attention:  Martin Rosacker

Phone:  (612) 342-7138

Fax Number:  (612) 372-5368

 

Name of Nominee in which Notes are to be issued:  None

 

Taxpayer I.D. Number:  41-0991508

 

A-62

--------------------------------------------------------------------------------

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

ING USA Annuity and Life Insurance Company
c/o ING Investment Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, Georgia  30327-4349
Attention:  Private Placements
Fax Number:  (770) 690-5057

 

$

3,000,000

 

 

Payments

 

All payments on or in respect of the Notes to be made by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
“Jackson Hewitt Inc., Floating Rate Senior Notes due June 25, 2009, PPN 468201
A* 9, principal, premium or interest”) to:

 

The Bank of New York

ABA #021000018

BFN:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments) or

BFN:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)

Reference:   ING USA Annuity and Life Insurance Co., Account No. 136373 and PPN
468201 A* 9

 

Notices

 

All notices and communications with respect to payments and written confirmation
of each such payment, to be addressed:

 

ING Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia  30327-4349

Attention:  Operations/Settlements

Fax Number:  (770) 690-4886

 

All other notices and communications to be addressed as follows with a copy to
address first provided above:

 

ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, MN  55401-2121

Attention:  Martin Rosacker

Phone:  (612) 342-7138

Fax Number:  (612) 372-5368

 

Name of Nominee in which Notes are to be issued:  None

 

Taxpayer I.D. Number:  41-0991508

 

A-63

--------------------------------------------------------------------------------

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

ING Life Insurance and Annuity Company
c/o ING Investment Management LLC
5780 Powers Ferry Road NW, Suite 300
Atlanta, Georgia  30327-4349
Attention:  Private Placements
Fax Number:  (770) 690-5057

 

$

2,000,000

 

 

Payments

 

All payments on or in respect of the Notes to be made by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
“Jackson Hewitt Inc., Floating Rate Senior Notes due June 25, 2009, PPN 468201
A* 9, principal, premium or interest”) to:

 

The Bank of New York

ABA #021000018

BFN:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments) or

BFN:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)

Attention:  P&I Department

Reference:  ING Life Insurance and Annuity Company, Account No. 216101 and PPN
468201 A* 9

 

Notices

 

All notices and communications with respect to payments and written confirmation
of each such payment, to be addressed:

 

ING Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia  30327-4349

Attention:  Operations/Settlements

Fax Number:  (770) 690-4886

 

All other notices and communications to be addressed as follows with a copy to
address first provided above:

 

ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, MN  55401-2121

Attention:  Martin Rosacker

Phone:  (612) 342-7138

Fax Number:  (612) 372-5368

 

Name of Nominee in which Notes are to be issued:  None

 

Taxpayer I.D. Number:  71-0294708

 

A-64

--------------------------------------------------------------------------------

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

Connecticut General Life Insurance Company

 

$

10,000,000

 

c/o Cigna Retirement & Investment Services

 

$

3,000,000

 

280 Trumbull Street

 

$

3,000,000

 

Hartford, Connecticut  06103

 

$

2,000,000

 

Attention:   Private and Alternative Investments, H16B

 

$

2,000,000

 

Fax:   860-534-7203

 

 

 

 

Payments

 

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
“Jackson Hewitt Inc., Floating Rate Senior Notes due June 25, 2009, PPN 468201
A* 9, principal, premium or interest”) to:

 

J. P. Morgan Chase Bank

BNF=CIGNA Private Placements/AC=9009001802

ABA #021000021

OBI=[name of company; description of security; interest rate; maturity date;
PPN; due date] and application (as among principal, premium and interest of the
payment being made); contact name and phone.

 

Address for Notices Related to Payments:

 

CIG & Co.

c/o Cigna Investments, Inc.

Attention:  Private and Alternative Investments, H16B

280 Trumbull Street

Hartford, Connecticut  06103

Fax:  860-534-7203

 

with a copy to:

 

J. P. Morgan Chase Bank

14201 Dallas Parkway, 13th Floor

Dallas, Texas  75254

Attention: Heather Frisina, Mail Code 300-116

Fax:  469-477-1904

 

Address for All Other Notices:

 

CIG & Co.

 

A-65

--------------------------------------------------------------------------------

 

c/o Cigna Retirement & Investment Services

Attention:  Private and Alternative Investments, H16B

280 Trumbull Street

Hartford, Connecticut  06103

Fax:  860-534-7203

 

Name of Nominee in which Notes are to be issued:  CIG & Co.

 

Taxpayer I.D. Number for CIG & Co.:  13-3574027

 

A-66

--------------------------------------------------------------------------------

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

Principal Life Insurance Company
c/o Principal Global Investors, LLC
Attn:  Fixed Income Private Placements
711 High Street, G-26
Des Moines, Iowa  50392-0800

 

$

20,000,000

 

 

Payments

 

All payments on or in respect of the Notes to be made by 12:00 noon (New York
City time) by bank wire transfer of Federal or other immediately available funds
(identifying each payment as “Jackson Hewitt Inc., Floating Rate Senior Notes
due June 25, 2009, PPN 468201 A* 9, principal, premium or interest”) to:

 

ABA #121000248

Wells Fargo Bank, N.A.

San Francisco, CA

For credit to Principal Life Insurance Company

Account No. 0000014752

OBI PFGSE (S) B00()67053 Jackson Hewitt Tax Service

Attn:  (cusip number – Issuer’s name)

 

With sufficient information (including Cusip number, interest rate, maturity
date, interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds.

 

All Notices to:

 

Principal Global Investors, LLC

ATTN:  Fixed Income Private Placements

711 High Street, G26

Des Moines, IA  50392-0800

 

and via Email: Privateplacements2@exchange.principal.com

 

With a copy of any notices related to scheduled payments, prepayments, rate
reset notices to:

 

Principal Global Investors, LLC

Attention:  Investment Accounting  Fixed Income Securities

711 High Street

 

A-67

--------------------------------------------------------------------------------

 

Des Moines, Iowa  50392-0960

 

Name of Nominee in which Notes are to be issued:  None

 

Taxpayer I.D. Number:  42-0127290

 

A-68

--------------------------------------------------------------------------------

 

Name and Address of Purchaser

 

Principal Amount
of Notes to be Purchased

 

 

 

 

 

The Travelers Insurance Company
242 Trumbull Street
P. O. Box 150449
Hartford, Connecticut  06115-0449
Attention:  Private Placements, 7th Floor
Facsimile:  860-308-8545

 

$

10,000,000

 

 

Payments

 

All payments on or in respect of the Notes to be made by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
“Jackson Hewitt Inc., Floating Rate Senior Notes due June 25, 2009, PPN 468201
A* 9, principal, premium or interest”) to:

 

The Travelers Insurance Company

Consolidated Private Placement Account No. 910-2-587434

JP Morgan Chase Bank

One Chase Manhattan Plaza

New York, New York  10081

ABA No. #021000021

 

Notices

 

All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:

 

The Travelers Insurance Company

242 Trumbull Street

P. O. Box 150449

Hartford, Connecticut  06115-0449

Attention: Cashier, 5th Floor

Facsimile:  869-308-8556

 

Name of Nominee in which Notes are to be issued:  TRAL & CO

 

Taxpayer I.D. Number:  06-0566090 (a Connecticut corporation)

 

A-69

--------------------------------------------------------------------------------

 

Defined Terms

 

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

 

“Acquisition” means (a) an Investment (through the acquisition of Capital Stock
or otherwise) by the Company or any Subsidiary in any other Person pursuant to
which such Person shall become a Subsidiary of the Company or shall be merged
with or into the Company or any Subsidiary of the Company, or (b) the
acquisition (by purchase, merger, consolidation or otherwise) by the Company or
any Subsidiary of the assets of any Person which constitute all or substantially
all of the assets of such Person, any division or line of business of such
Person or any other properties or assets of such Person other than in the
ordinary course of business.

 

“Adjusted LIBOR Rate” for each Interest Period shall be a rate per annum equal
to LIBOR for such Interest Period plus 1.5%.

 

“Affiliate” means, at any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any Person of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests.  As used in this
definition, “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise and
shall exclude any officer or director of the Company or any Subsidiary in such
capacity.  Unless the context otherwise clearly requires, any reference to an
“Affiliate” is a reference to an Affiliate of the Company.

 

“Bank Credit Agreement” means the Credit Agreement dated as of June 25, 2004
among Jackson Hewitt Tax Service Inc., as Parent, Jackson Hewitt, Inc., as
Borrower, the lenders party thereto and, JPMorgan Chase Bank, as administrative
agent, as amended from time to time, and any renewals, extensions or
replacements thereof.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York are required or authorized to be closed;
provided that when used in connection with any determination of LIBOR “Business
Day” shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market.

 

“Calculation Date” means the last day of each fiscal quarter of the Company.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

 

SCHEDULE B

(to Note Purchase Agreement)

 

B-70

--------------------------------------------------------------------------------

 

“Capital Lease Obligation” means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.

 

“Capital Stock” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a Person and any warrants, options and other
rights entitling the holder thereof to purchase or acquire any such equity
interest.

 

“Cendant” is defined in Section 4.6.

 

“Change in Control” is defined in Section 8.5(h).

 

“Closing” is defined in Section 3.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

 

“Common Stock” is defined in Section 3.

 

“Company” means Jackson Hewitt Tax Service Inc., a Delaware corporation.

 

“Confidential Information” is defined in Section 21.

 

“Consolidated Debt” means the total amount of all Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

“Consolidated EBITDA” means, for any period, Consolidated Net Income (excluding
any Consolidated Net Income resulting from any Office Acquisition or Franchisee
Expansion occurring during such period) after eliminating extraordinary gains
and losses, and unusual items, plus, without duplication, (a) taxes, (b)
depreciation and amortization, (c) Consolidated Interest Expense, (d) other
non-cash charges, (e) any amount attributable to any non-recurring item
including the Litigation Settlement, but excluding any cash payments made in
such period with respect to any non-recurring item, in the case of clauses (a)
through (e) to the extent deducted for the computation of Consolidated Net
Income for such period, and (f) (1) if any Office Acquisition occurred during
such period, the product of (A) the amount of the total revenues of such Office
for the most recently completed period of four consecutive calendar quarters
prior to the date of such Office Acquisition, and (B) the average EBITDA Margin
attributable to all Office Acquisitions made by the Company during the fiscal
year preceding the year in which such Office Acquisition occurred; and  (2) if
any Franchisee Expansion occurred during such period, the product of (A) the
royalty rate currently in effect for such Franchisee under the applicable
franchise agreement and (B) the amount of the total revenues of such Office for
the most recently completed period of four consecutive calendar quarters prior
to the date of such Franchisee Expansion; provided that the aggregate amount
included in Consolidated EBITDA pursuant to clause (f) shall not exceed 5% of
Consolidated EBITDA calculated without giving

 

B-71

--------------------------------------------------------------------------------

 

effect to clause (f).

 

In addition to, and, without limitation of the foregoing, for purposes of this
definition, “Consolidated EBITDA” shall be calculated after giving effect on a
pro forma basis for the period of such calculation to any EBITDA attributable to
the assets which are the subject of an Acquisition during the Four Quarter
Period, as if such Acquisition occurred on the first day of such Four Quarter
Period.

 

“Consolidated Fixed Charges” means, for any period, the sum of (a) Consolidated
Interest Expense for such period and (b) regular quarterly dividends paid during
such period in respect of the Company’s common stock.  On any Calculation Date,
the Consolidated Fixed Charge Coverage Ratio will be calculated after giving
effect on a pro forma basis for the applicable Four Quarter Period to the
incurrence of any Debt in connection with an Office Acquisition, Franchisee
Expansion or other Acquisition.  For purposes of determining “Consolidated Fixed
Charges”, (1) interest on outstanding Debt determined on a fluctuating basis as
of the Calculation Date and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Debt in effect on the Calculation Date; (2) if interest on Debt
outstanding on the Calculation Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
Calculation Date shall be deemed to have been in effect during the Four Quarter
Period; and (3) notwithstanding clause (1) above, interest on Debt determined on
a fluctuating basis, to the extent such interest is covered by interest rate
protection agreements, shall be deemed to accrue at the rate per annum resulting
after giving effect to the operation of such agreements.

 

“Consolidated Fixed Charge Coverage Ratio” means as of any Calculation Date, the
ratio of Consolidated EBITDA for the Four Quarter Period ending on such
Calculation Date to (b) Consolidated Fixed Charges for the Four Quarter Period
ending on such Calculation Date.

 

“Consolidated Interest Expense” means, for any period, the sum, for the Company
and its Subsidiaries (determined in accordance with GAAP), of all interest in
respect of Debt (including, without limitation, the interest component of any
payments in respect of Capital Lease obligations but excluding any capitalized
financing costs) accrued  during such period (whether or not actually paid
during such period).

 

“Consolidated Leverage Ratio” means, at any Calculation Date, the ratio of (a)
Consolidated Debt at such date to (b) Consolidated EBITDA for the Four Quarter
Period ended as of such Calculation Date.

 

“Consolidated Net Income” means, for any period, the net income (or loss) of the
Company and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP consistently applied.

 

“Consolidated Net Tangible Assets” means as of the date of any determination
thereof Consolidated Total Assets after deducting “Goodwill” and “Other
Intangibles-Net” (or equivalent line item or items) as shown on the consolidated
balance sheet of the Company and its

 

B-72

--------------------------------------------------------------------------------

 

Subsidiaries for the most recently ended fiscal quarter.

 

“Consolidated Net Worth” means as of any date of determination the consolidated
stockholders’ equity of the Company and its Subsidiaries, as determined in
accordance with GAAP.

 

“Consolidated Total Assets” means, as of any date of determination, the total
amount of all assets of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.

 

“Debt” means, with respect to any Person, without duplication,

 

(a)           its liabilities for borrowed money;

 

(b)           its liabilities for the deferred purchase price of property
acquired by such Person (excluding (a) accounts payable and other accrued
liabilities arising in the ordinary course of business and (b) to the extent the
payment thereof is contingent, the deferred purchase price of property acquired
by such Person) but including, without limitation, all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property);

 

(c)           its Capital Lease Obligations;

 

(d)           all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);

 

(e)           its redemption obligations in respect of Disqualified Capital
Stock to the extent payable with cash or other consideration (except common
stock or other equity securities); and

 

(f)            Guarantees of such Person with respect to liabilities of a type
described in any of clauses (a) through (e) hereof, excluding Franchisee Advance
Payments made in connection with programs created by the Company or any
Subsidiary for the general benefit of the franchisee system.

 

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (f) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.  Debt of any Person shall exclude all liabilities of
such Person for the Litigation Settlement and the development advance notes (or
other similar arrangements).

 

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

 

“Default Rate” means with respect to the Notes that rate of interest that is the
greater of

 

B-73

--------------------------------------------------------------------------------

 

(i) 2% per annum above the rate of interest referred to in clause (a) of the
first paragraph of the Notes or (ii) 2% over the rate of interest publicly
announced by JPMorgan Chase Bank in New York, New York as its “base” or “prime”
rate.

 

“Disqualified Capital Stock” means mandatorily redeemable preferred stock with
mandatory sinking fund or redemptions payments prior to the maturity date of the
Notes.

 

“Domestic Subsidiary” means any Subsidiary which is which is organized under the
laws of the United States of America or any State thereof or the District of
Columbia.

 

“EBITDA Margin” means, with respect to any Office, for any period, the quotient
of the Office Acquisition EBITDA with respect to such Office for such period
divided by the total revenues (as determined in accordance with GAAP) of such
Office for such period.

 

“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company or the Issuer, as the
case may be, under Section 414 of the Code.

 

“Event of Default” is defined in Section 12.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm’s-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell), as reasonably
determined in the good faith opinion of the Company’s board of directors or one
or more officers to whom authority to determine such value has been delegated by
the board of directors.

 

“Four Quarter Period” means as of any Calculation Date, the period of four
complete, consecutive fiscal quarters ended on such Calculation Date.

 

“Franchisee” means a Person (other than the Company or a Subsidiary) that owns
and operates a Company-licensed Office.

 

B-74

--------------------------------------------------------------------------------

 

“Franchisee Advance Payments” means advances made from time to time by the
Company or any Subsidiary to third parties on behalf of or for the benefit of
Franchisees

 

“Franchisee Expansion” means the issuance of a development advance note or other
similar financings to Franchisees by the Company or any Subsidiary.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America; provided that if the Company notifies the
holders of the Notes or the Required Holders notify the Company that such party
wishes to amend any negative covenant to eliminate the effect of any change in
GAAP on the operation of such covenant, then the Company’s compliance with such
negative covenant shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company
and the Required Holders.

 

“Governmental Authority” means

 

(a)           the government of

 

(i)            the United States of America or any state or other political
subdivision thereof, or

 

(ii)           any jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which has jurisdiction over any properties
of the Company or any Subsidiary, or

 

(b)           any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.

 

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:

 

(a)           to purchase such Debt or obligation or any property constituting
security therefor primarily for the purpose of assuring the owner of such Debt
or obligation of the ability of any other Person to make payment of the Debt or
obligation;

 

(b)           to advance or supply funds (i) for the purchase or payment of such
Debt or obligation, or (ii) to maintain any working capital or other balance
sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
Debt or obligation;

 

(c)           to lease properties or to purchase properties or services
primarily for the

 

B-75

--------------------------------------------------------------------------------

 

purpose of assuring the owner of such Debt or obligation of the ability of any
other Person to make payment of the Debt or obligation; or

 

(d)           otherwise to assure the owner of such Debt or obligation against
loss in respect thereof.

 

In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor, provided that the
amount of such Debt outstanding for purposes of this Agreement shall not exceed
the maximum amount of Debt that is the subject of such Guaranty.

 

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
any other substances that might pose a hazard to health or safety, the removal
of which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law (including,
without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

 

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Issuer pursuant to Section 14.1.

 

“Institutional Investor” means (a) any original purchaser of a Note, (b) any
holder of more than $5,000,000 of the aggregate principal amount of the Notes
then outstanding, and (c) any bank, trust company, savings and loan association
or other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.

 

“Interest Payment Date” shall have the meaning assigned thereto in Section 1.2
of this Agreement.

 

“Interest Period” shall mean the period commencing on the Closing Date up to,
but not including, the first Interest Payment Date and, thereafter, the period
commencing on the next succeeding Interest Payment Date and continuing up to,
but not including, the next Interest Payment Date.

 

“Interest Rate Protection Agreement” means any interest rate swap agreement,
interest rate cap agreement or other similar financial agreement or arrangement.

 

“Investments” shall mean all investments, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares of
Capital Stock, Debt or other obligations or securities or by loan, advance,
capital contribution or otherwise.

 

“IPO” is defined in Section 3.

 

“Issuer” means Jackson Hewitt Inc., a Virginia corporation.

 

B-76

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“knowledge” when used with respect to the Company or any Responsible Officer to
qualify a representation or warranty of the Company or such Responsible Officer,
shall be deemed to be, the actual knowledge of such Responsible Officer.

 

“LIBOR” shall mean, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the next higher one hundred-thousandth of a percentage
point) for deposits in U.S. Dollars for a 90-day period which appears on the
Bloomberg Financial Markets Service Page BBAM-1 (or if such page is not
available, the Reuters Screen LIBO Page) as of 11:00 a.m. (London, England time)
on the date 2 Business Days before the commencement of such Interest Period (or
three (3) Business Days prior to the beginning of the first Interest Period). 
“Reuters Screen LIBO Page” means the display designated as the “LIBO” page on
the Reuters Monitory Money Rates Service (or such other page as may replace the
LIBO page on that service or such other service as may be nominated by the
British Bankers’ Association as the information vendor for the purpose of
displaying British Banker’s Association Interest Settlement Rates for U.S.
Dollar deposits).

 

“LIBOR Breakage Amount” is defined in Section 8.2.

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement (other than an operating lease) or
Capital Lease, upon or with respect to any property or asset of such Person
(including, in the case of stock, shareholder agreements, voting trust
agreements and all similar arrangements).

 

“Litigation Settlement” means the settlement with franchisees in July 2003
arising out of the lawsuit filed against the Company by 154 of its franchisees
on August 27, 2002.

 

“Material” means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company, the
Issuer and their Subsidiaries, taken as a whole, to perform their obligations
under this Agreement and the Notes, or (c) the validity or enforceability of
this Agreement, the Notes or the Subsidiary Guaranty.

 

“Material Subsidiary” means each Subsidiary of the Company other than
Subsidiaries that, in the aggregate, account for no more than 5% of Consolidated
Total Assets, 5% of Consolidated Net Worth or 5% of the consolidated revenues of
the Company.

 

“Memorandum” is defined in Section 5.3.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in Section 4001(a)(3) of ERISA).

 

B-77

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“Net Proceeds” means with respect to any sale of property by any Person an
amount equal to (a) the aggregate amount of the consideration received by such
Person in respect of such sale (valued at the Fair Market Value of such
consideration at the time of such sale), minus (b) the sum of (i) all
out-of-pocket costs and expenses actually incurred by such Person in connection
with such sale, and (ii) all state, federal and foreign taxes incurred, or to be
incurred, by such Person in connection with such sale.

 

“Notes” is defined in Section 1.

 

“Office” means a business that provides tax return preparation and other related
services.

 

“Office Acquisition” means the purchase (whether through the purchase of an
Office or an Acquisition) by the Company or a Subsidiary of an operating Office
from a third party.

 

“Office Acquisition EBITDA” means, for any Office Acquisition for any period,
consolidated net income (determined in accordance with GAAP) of such Office for
such period after eliminating extraordinary gains and losses, and unusual items,
plus, without duplication, (a) taxes, (b) depreciation and amortization, (c)
interest expense, (d) other non-cash charges and (e) any amount attributable to
any non-recurring item, but excluding any cash payments made in such period with
respect to any non-recurring item, in the case of clauses (a) through (e) to the
extent deducted for the computation of consolidated net income for such period.

 

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company, the Issuer or any Subsidiary Guarantor, as the
context may require, whose responsibilities extend to the subject matter of such
certificate.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

 

“Permitted Liens” means any Liens of the type described in clauses (a) through
(m) of Section 10.3.

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.

 

“Plan” means an “employee benefit plan” (as defined in Section 3(3) of ERISA)
that is or, within the preceding five years, has been established or maintained,
or to which contributions are or, within the preceding five years, have been
made or required to be made, by the Company, the Issuer or any ERISA Affiliate
or with respect to which the Company, the Issuer or any ERISA Affiliate may have
any liability.

 

“Priority Debt” means (without duplication), as of the date of any determination
thereof, (i) all unsecured Debt of Subsidiaries of the Company (but excluding
(x) Debt of the Issuer, (y) Debt owing to the Company, the Issuer or a
Wholly-Owned Subsidiary and (z) Debt of

 

B-78

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Subsidiary Guarantors under the Subsidiary Guaranty and the guaranty of
obligations under the Bank Credit Agreement), and (ii) all Debt of the Company
or its Subsidiaries secured by Liens other than Debt secured by Liens permitted
by subparagraphs (a) through (l), inclusive, of Section 10.3.

 

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

 

“Purchasers” means the purchasers of the Notes named in Schedule A hereto.

 

“QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.

 

“Required Holders” means, at any time, the holders of more than 50% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company, the Issuer or any of their Affiliates).

 

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Capital Stock in the Company
or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Capital Stock in the Company or any Subsidiary or any option, warrant
or other right to acquire any such Capital Stock in the Company or any
Subsidiary.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time.

 

“Senior Debt” means, as of the date of any determination thereof, all
Consolidated Debt, other than Subordinated Debt.

 

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

 

“Special Dividend” means the special dividend to be paid to Cendant described in
the Memorandum as supplemented by Amendment No. 6 to the Company’s Registration
Statement on Form S-1 as it relates to such special dividend.

 

“Subordinated Debt” means all unsecured Debt of the Issuer which shall contain
or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Issuer (including, without
limitation, the obligations of the Issuer under this Agreement and the Notes).

 

“Subsidiary” means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of

 

B-79

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its Subsidiaries owns sufficient equity or voting interests to enable it or them
(as a group) ordinarily, in the absence of contingencies, to elect a majority of
the directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries).  Unless the context otherwise
clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary
of the Company or the Issuer.

 

“Subsidiary Guarantor” means each Material Subsidiary which is a Domestic
Subsidiary and any other Subsidiary which has become a party to the Subsidiary
Guaranty.

 

“Subsidiary Guaranty” shall mean the Subsidiary Guaranty delivered pursuant to
Section 2.2 and each other Subsidiary Guaranty hereafter executed and delivered
by a Subsidiary of the Company for the benefit of the holders of the Notes in
accordance with Section 9.6.

 

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent
(100%) of all of the equity interests (except directors’ qualifying shares) and
voting interests of which are owned by any one or more of the Company and the
Company’s other Wholly-Owned Subsidiaries at such time.

 

B-80

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Subsidiaries of the Company, Ownership of Subsidiary Stock

 

Subsidiary

 

State of
Incorporation

 

Stockholder

Jackson Hewitt Inc.

 

Virginia

 

100% owned by the Company

Tax Services of America, Inc.

 

Delaware

 

100% owned by the Issuer

Hewfant, Inc.

 

Virginia

 

100% owned by the Issuer

 

 

SCHEDULE 5.4

(to Note Purchase Agreement)

 

E-1-81

--------------------------------------------------------------------------------

 

Existing Liens

 

None

 

SCHEDULE 10.3

(to Note Purchase Agreement)

 

E-1-82

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[Form of Note]

 

This Note has been acquired for investment and has not been registered under the
Securities Act of 1933, as amended (the “Act”), or under state securities laws. 
No transfer, sale, assignment, pledge, hypothecation or other disposition of
this Note may be made unless registered or exempt from registration under the
Act and applicable state securities laws and unless the transfer restrictions
imposed by the Note Purchase Agreement referred to below are complied with.

 

Jackson Hewitt Inc.

 

Floating Rate Senior Note due June 25, 2009

 

No.  [              ]

 

[Date]

$[                    ]

 

PPN 468201 A* 9

 

For Value Received, the undersigned, Jackson Hewitt Inc. (herein called the
“Issuer”), a Virginia corporation, hereby promises to pay to
[                                     ], or registered assigns, the principal
sum of [                           ] Dollars on June 25, 2009, with interest
(computed on the basis of a 360 day year and actual days elapsed) (a) on the
principal amount from time to time remaining unpaid hereon at a floating rate
equal to the Adjusted LIBOR Rate (as defined in the Note Purchase Agreement
referred to below) from the date thereof until maturity, payable quarterly on
the twenty-fifth day of each March, June, September and December in each year
commencing on September 25, 2004 until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any LIBOR Breakage Amount (as defined in the Note
Purchase Agreement referred to below), payable quarterly as aforesaid (or, at
the option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the Default Rate (as defined in the Note Purchase
Agreement).

 

Payments of principal of, interest on and any LIBOR Breakage Amount with respect
to this Note are to be made in lawful money of the United States of America at
the principal office of JP Morgan Chase Bank in New York, New York or at such
other place as the Issuer shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

 

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated as of June 21, 2004 (as from time
to time amended, supplemented or modified, the “Note Purchase Agreement”), among
Jackson Hewitt Tax Service Inc., a Delaware corporation (the “Company”), the
Issuer and the respective Purchasers named therein and is entitled to the
benefits thereof.  Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 21 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.

 

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon

 

EXHIBIT 1

(to Note Purchase Agreement)

 

E-1-83

--------------------------------------------------------------------------------

 

surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee.  Prior to due presentment for registration of transfer, the
Issuer may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Issuer will not be affected by any notice to the contrary.

 

This Note is also subject to optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

 

Pursuant to the Note Purchase Agreement and the Subsidiary Guaranty dated as of
June 21, 2004, respectively, the Company and certain Subsidiaries of the Company
have absolutely and unconditionally guaranteed payment in full of the principal
of, LIBOR Breakage Amount, if any, and interest on this Note and the performance
by the Issuer of all of its obligations contained in the Note Purchase Agreement
all as more fully set forth in said Note Purchase Agreement and said Subsidiary
Guaranty.

 

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner, at the price (including any applicable LIBOR Breakage
Amount) and with the effect provided in the Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the issuer and holder hereof shall be governed by, the law of the State of New
York excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.

 

 

Jackson Hewitt Inc.

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

E-1-84

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Subsidiary Guaranty

 

 

dated as of June 21, 2004

 

 

Re:    $175,000,000 Floating Rate Senior Notes
due June 25, 2009

of

Jackson Hewitt Inc.

 

 

Exhibit 2.2

(to Note Purchase Agreement)

 

85

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TABLE OF CONTENTS

 

(Not a part of the Agreement)

 

Section

 

Heading

 

 

 

 

 

Parties

 

 

 

 

 

 

 

Recitals

 

 

 

 

 

 

 

Section 1.

 

Definitions

 

 

 

 

 

Section 2.

 

Guaranty of Notes and Note Purchase Agreement

 

 

 

 

 

Section 3.

 

Guaranty of Payment and Performance.

 

 

 

 

 

Section 4.

 

General Provisions Relating to the Guaranty

 

 

 

 

 

Section 5.

 

Representations and Warranties of the Guarantors.

 

 

 

 

 

Section 6.

 

Amendments, Waivers, Consents and Termination

 

 

 

 

 

Section 7.

 

Notices

 

 

 

 

 

Section 8.

 

Miscellaneous

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

 

 

Attachments to Subsidiary Guaranty:

 

 

 

 

 

 

Exhibit A      —     Guaranty Joinder

 

 

 

--------------------------------------------------------------------------------

 

Subsidiary Guaranty

 

Re:          $175,000,000 Floating Rate Senior Notes

due June 25, 2009

of

Jackson Hewitt Inc.

 

This Subsidiary Guaranty dated as of June 21, 2004 (the “Guaranty”) is entered
into on a joint and several basis by each of the undersigned (which parties are
hereinafter referred to individually as a “Guarantor” and collectively as the
“Guarantors”).

 

Recitals

 

A.            Each Guarantor and Jackson Hewitt Inc., a Virginia corporation,
(the “Issuer”) is presently a direct or indirect Subsidiary of Jackson Hewitt
Tax Service Inc., a Delaware corporation (the “Company”).

 

B.            In order to raise funds to pay a special dividend to Cendant and
for general corporate purposes, the Company and the Issuer have entered into the
Note Purchase Agreement dated as of June 21, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the “Note Purchase
Agreement”) among the Company, the Issuer and each of the institutional
investors named in Schedule A attached thereto (the “Note Purchasers”) providing
for, among other things, the issue and sale by the Issuer to the Note Purchasers
of the Issuer’s Floating Rate Senior Notes due June 25, 2009 in the aggregate
principal amount of $175,000,000 (the “Notes”).  The Note Purchasers, together
with their successors and assigns and any subsequent transferees of the Notes in
accordance with the terms of the Note Purchase Agreement, are hereinafter
collectively referred to as the “Holders”.

 

C.            The Note Purchasers have required as a condition to their purchase
of the Notes that the Company cause each of the undersigned to enter into this
Guaranty and to cause each Domestic Subsidiary which is required by the terms of
any Bank Credit Agreement to become a party to, or otherwise guarantee, Debt
outstanding under any such Bank Credit Agreement, to enter into this Guaranty by
executing and delivering a Guaranty Joinder in substantially the form set forth
as Exhibit A hereto (a “Guaranty Joinder”), in each case as security for the
Notes, and the Company has agreed to cause each of the undersigned to execute
this Guaranty and to cause each other Domestic Subsidiary to execute a Guaranty
Joinder, in each case in order to induce the Note Purchasers to purchase the
Notes and thereby benefit the Company and its Subsidiaries by providing funds to
enable the Company to raise funds to pay a special dividend to Cendant and to
enable the Company and its Subsidiaries to have funds available for general
corporate purposes.

 

Now, Therefore, as required by the Note Purchase Agreement and in consideration
of the premises and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, each Guarantor does hereby covenant
and agree, jointly and severally, as

 

87

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follows:

 

Section 1.               Definitions.

 

Capitalized terms used herein shall have the meanings set forth in the Note
Purchase Agreement unless herein defined or the context shall otherwise require.

 

Section 2.               Guaranty of Notes and Note Purchase Agreement.

 

(a)   Each Guarantor jointly and severally does hereby irrevocably, absolutely
and unconditionally guarantee unto the Holders:  (1) the full and prompt payment
of the principal of, LIBOR Breakage Amount, if any, and interest on the Notes
from time to time outstanding, as and when such payments shall become due and
payable, whether by lapse of time, upon redemption or prepayment, by extension
or by acceleration or declaration or otherwise (including (to the extent legally
enforceable) interest due on overdue payments of principal, LIBOR Breakage
Amount, if any, and interest) in Federal or other immediately available funds of
the United States of America which at the time of payment or demand therefor
shall be legal tender for the payment of public and private debts, (2) the full
and prompt performance and observance by the Company and the Issuer of each and
all of the respective obligations, covenants and agreements required to be
performed or owed by each the Company and the Issuer under the terms of the
Notes and the Note Purchase Agreement and (3) the full and prompt payment, upon
demand by any Holder, of all reasonable and documented costs and expenses, legal
or otherwise (including reasonable and documented attorneys’ fees), if any, as
shall have been expended or incurred in the protection or enforcement of any
rights, privileges or liabilities in favor of the Holders under or in respect of
the Notes, the Note Purchase Agreement or under this Guaranty or in any action
in connection therewith or herewith and in each and every case irrespective of
the validity, regularity, or enforcement of any of the Notes or Note Purchase
Agreement or any of the terms thereof or any other like circumstance or
circumstances.

 

(b)   The liability of each Guarantor under this Guaranty shall not exceed an
amount equal to a maximum amount as will, after giving effect to such maximum
amount and all other liabilities of such Guarantor, contingent or otherwise,
result in the performance of the obligations of such Guarantor hereunder not
constituting a fraudulent transfer, obligation or conveyance and will in no
event exceed an amount which can be guaranteed by such Guarantor under
applicable Federal and state law relating to insolvency of debtors.

 

Section 3.               Guaranty of Payment and Performance.

 

This is a guarantee of payment and performance and each Guarantor hereby waives,
to the fullest extent permitted by law, any right to require that any action on
or in respect of any Note or the Note Purchase Agreement be brought against the
Company, the Issuer or any other Person or that resort be had to any direct or
indirect security for the Notes or for this Guaranty or any other remedy.  Any
Holder may, at its option, proceed hereunder against any Guarantor in the first
instance to collect monies when due, the payment of which is guaranteed hereby,
without first proceeding against the Company, the Issuer or any other Person and
without first

 

88

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resorting to any direct or indirect security for the Notes or for this Guaranty
or any other remedy.  The liability of each Guarantor hereunder shall in no way
be affected or impaired by any acceptance by any Holder of any direct or
indirect security for, or other guaranties of, any Debt, liability or obligation
of the Company, the Issuer or any other Person to any Holder or by any failure,
delay, neglect or omission by any Holder to realize upon or protect any such
guarantees, Debt, liability or obligation or any notes or other instruments
evidencing the same or any direct or indirect security therefor or by any
approval, consent, waiver, or other action taken, or omitted to be taken by any
such Holder.

 

The covenants and agreements on the part of the Guarantors herein contained
shall be joint and several covenants and agreements, and references to the
Guarantors shall be deemed references to each of them and none of them shall be
released from liability hereunder by reason of the Guaranty ceasing to be
binding as a continuing security on any other of them.

 

Section 4.               General Provisions Relating to the Guaranty.

 

(a)   Each Guarantor hereby consents and agrees that any Holder or Holders from
time to time, with or without any further notice to or assent from any other
Guarantor may, without in any manner affecting the liability of any Guarantor
under this Guaranty, and upon such terms and conditions as any such Holder or
Holders may deem advisable:

 

(1)           extend in whole or in part (by renewal or otherwise), modify,
increase, change, compromise, release or extend the duration of the time for the
performance or payment of any Debt, liability or obligation of the Company, the
Issuer or of any other Person secondarily or otherwise liable for any Debt,
liability or obligations of the Issuer or the Company on the Notes, or waive any
Default with respect thereto, or waive, modify, amend or change any provision of
any other agreement or this Guaranty (to the extent permitted by Section 6); or

 

(2)           sell, release, surrender, modify, impair, exchange or substitute
any and all property, of any nature and from whomsoever received, held by, or
for the benefit of, any such Holder as direct or indirect security for the
payment or performance of any Debt, liability or obligation of the Company, the
Issuer or of any other Person secondarily or otherwise liable for any Debt,
liability or obligation of the Issuer on the Notes; or

 

(3)           settle, adjust or compromise any claim of the Issuer against any
other Person secondarily or otherwise liable for any Debt, liability or
obligation of the Issuer on the Notes.

 

Each Guarantor hereby ratifies and confirms any such extension, renewal, change,
sale, release, waiver, surrender, exchange, modification, amendment, impairment,
substitution, settlement, adjustment or compromise and that the same shall be
binding upon it, and hereby waives, to the fullest extent permitted by law, any
and all defenses, counterclaims or offsets which it might or could have by
reason thereof, it being understood that such Guarantor shall at all times be
bound by this Guaranty and remain liable hereunder until the payment in full in
each of the principal, LIBOR Breakage Amount, if any, or interest on the Notes.

 

89

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(b)   Each Guarantor hereby waives, to the fullest extent permitted by law:

 

(1)           notice of acceptance of this Guaranty by the Holders or of the
creation, renewal or accrual of any liability of the Company or the Issuer,
present or future, or of the reliance of such Holders upon this Guaranty (it
being understood that all Debt, liabilities and obligations described in
Section 2 hereof shall conclusively be presumed to have been created, contracted
or incurred in reliance upon the execution of this Guaranty); and

 

(2)           demand of payment by any Holder from the Company, the Issuer or
any other Person indebted in any manner on or for any of the Debt, liabilities
or obligations hereby guaranteed; and

 

(3)           presentment for the payment by any Holder or any other Person of
the Notes or any other instrument, protest thereof and notice of its dishonor to
any party thereto and to such Guarantor.

 

The obligations of each Guarantor under this Guaranty and the rights of any
Holder to enforce such obligations by any proceedings, whether by action at law,
suit in equity or otherwise, shall not be subject to any reduction, limitation,
impairment or termination, whether by reason of any claim of any character
whatsoever or otherwise and shall not be subject to any defense, set-off,
counterclaim (other than any compulsory counterclaim), recoupment or termination
whatsoever.

 

(c)   The obligations of each Guarantor hereunder shall be binding upon such
Guarantor and its successors and assigns, and shall remain in full force and
effect irrespective of:

 

(1)           the genuineness, validity, regularity or enforceability of the
Notes, the Note Purchase Agreement or any other agreement or any of the terms of
any thereof, the continuance of any obligation on the part of the Issuer, any
other Guarantor or any other Person on or in respect of the Notes or under the
Note Purchase Agreement or any other agreement or the power or authority or the
lack of power or authority of the Issuer to issue the Notes or the Company or
the Issuer to execute and deliver the Note Purchase Agreement or any other
agreement or of any other Guarantor to execute and deliver this Guaranty or to
perform any of its obligations hereunder or the existence or continuance of the
Company, the Issuer, any other Guarantor or any other Person as a legal entity;
or

 

(2)           any default, failure or delay, willful or otherwise, in the
performance by the Company, the Issuer, any other Guarantor or any other Person
of any obligations of any kind or character whatsoever under the Notes, the Note
Purchase Agreement, this Guaranty or any other agreement; or

 

(3)           any creditors’ rights, bankruptcy, receivership or other
insolvency proceeding of the Company, the Issuer, any other Guarantor or any
other Person or in respect of the property of the Company, the Issuer, any other
Guarantor or any other

 

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Person or any merger, consolidation, reorganization, dissolution, liquidation,
the sale of all or substantially all of the assets of or winding up of the
Company, the Issuer, any other Guarantor or any other Person; or

 

(4)           impossibility or illegality of performance on the part of the
Company, the Issuer, any other Guarantor or any other Person of its obligations
under the Notes, the Note Purchase Agreement, this Guaranty or any other
agreements; or

 

(5)           in respect of the Company, the Issuer, any other Guarantor or any
other Person, any change of circumstances, whether or not foreseen or
foreseeable, whether or not imputable to the Company, the Issuer, any other
Guarantor or any other Person, or other impossibility of performance through
fire, explosion, accident, labor disturbance, floods, droughts, embargoes, wars
(whether or not declared), civil commotion, acts of God or the public enemy,
delays or failure of suppliers or carriers, inability to obtain materials,
action of any federal or state regulatory body or agency, change of law or any
other causes affecting performance, or any other force majeure, whether or not
beyond the control of the Company, the Issuer, any other Guarantor or any other
Person and whether or not of the kind hereinbefore specified; or

 

(6)           any attachment, claim, demand, charge, Lien, order, process,
encumbrance or any other happening or event or reason, similar or dissimilar to
the foregoing, or any withholding or diminution at the source, by reason of any
taxes, assessments, expenses, Debt, obligations or liabilities of any character,
foreseen or unforeseen, and whether or not valid, incurred by or against the
Company, the Issuer, any Guarantor or any other Person or any claims, demands,
charges or Liens of any nature, foreseen or unforeseen, incurred by any Person,
or against any sums payable in respect of the Notes or under the Note Purchase
Agreement or this Guaranty, so that such sums would be rendered inadequate or
would be unavailable to make the payments herein provided; or

 

(7)           any order, judgment, decree, ruling or regulation (whether or not
valid) of any court of any nation or of any political subdivision thereof or any
body, agency, department, official or administrative or regulatory agency of any
thereof or any other action, happening, event or reason whatsoever which shall
delay, interfere with, hinder or prevent, or in any way adversely affect, the
performance by the Company, the Issuer, any Guarantor or any other Person of its
respective obligations under or in respect of the Notes, the Note Purchase
Agreement, this Guaranty or any other agreement; or

 

(8)           the failure of any Guarantor to receive any benefit from or as a
result of its execution, delivery and performance of this Guaranty; or

 

(9)           any failure or lack of diligence in collection or protection,
failure in presentment or demand for payment, protest, notice of protest, notice
of default and of nonpayment, any failure to give notice to any Guarantor of
failure of the Company, the Issuer, any other Guarantor or any other Person to
keep and perform any obligation, covenant or agreement under the terms of the
Notes, the Note Purchase Agreement, this Guaranty or any other agreement or
failure to resort for payment to the Company, the

 

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Issuer, any other Guarantor or to any other Person or to any other guaranty or
to any property, security, Liens or other rights or remedies; or

 

(10)         the acceptance of any additional security or other guaranty, the
advance of additional money to the Company, the Issuer or any other Person, the
renewal or extension of the Notes or amendments, modifications, consents or
waivers with respect to the Notes, the Note Purchase Agreement or any other
agreement, or the sale, release, substitution or exchange of any security for
the Notes; or

 

(11)         any change in the ownership of any shares of the Company, the
Issuer, any Guarantor or any other Person; or

 

(12)         any defense whatsoever that:  (i) the Company, the Issuer or any
other Person might have to the payment of the Notes (principal, LIBOR Breakage
Amount, if any, or interest), other than payment thereof in Federal or other
immediately available funds, or (ii) the Company, the Issuer or any other Person
might have to the performance or observance of any of the provisions of the
Notes, the Note Purchase Agreement or any other agreement, whether through the
satisfaction or purported satisfaction by the Company, the Issuer, any other
Guarantor or any other Person of its debts due to any cause such as bankruptcy,
insolvency, receivership, merger, consolidation, reorganization, dissolution,
liquidation, winding-up or otherwise; or

 

(13)         any act or failure to act with regard to the Notes, the Note
Purchase Agreement, this Guaranty or any other agreement or anything which might
vary the risk of any Guarantor or any other Person; or

 

(14)         any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Guarantor or any other Person in respect of
the obligations of any Guarantor or other Person under this Guaranty or any
other agreement other than the final and indefeasible payment in full in cash of
the Notes;

 

provided that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Guaranty that the obligations of each Guarantor shall be absolute, irrevocable
and unconditional and shall not be discharged, impaired or varied except by the
payment of the principal of, LIBOR Breakage Amount, if any, and interest on the
Notes in accordance with their respective terms whenever the same shall become
due and payable as in the Notes provided and all other sums due and payable
under the Note Purchase Agreement, at the place specified in and all in the
manner and with the effect provided in the Notes and the Note Purchase
Agreement, as each may be amended or modified from time to time.  Without
limiting the foregoing, it is understood that repeated and successive demands
may be made and recoveries may be had hereunder as and when, from time to time,
the Company or the Issuer shall default under or in respect of the terms of the
Notes or the Note Purchase Agreement and that notwithstanding recovery hereunder
for or in respect of any given default or defaults by the Company or the Issuer
under the Notes or the Note Purchase Agreement, this Guaranty shall remain in
full force and effect and shall apply to each and every subsequent

 

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default.

 

(d)   All rights of any Holder hereunder may be transferred or assigned at any
time and shall be considered to be transferred or assigned at any time or from
time to time upon the transfer of any Note whether with or without the consent
of or notice to the Guarantors under this Guaranty or to the Company or the
Issuer (except as provided in Section 14 of the Note Purchase Agreement).

 

(e)   To the extent of any payments made under this Guaranty, each Guarantor
shall be subrogated to the rights of the Holder upon whose Notes such payment
was made, but such Guarantor covenants and agrees that such right of subrogation
shall be subordinate in right of payment to the prior indefeasible final payment
in cash in full of all amounts due and owing by the Company and the Issuer with
respect to the Notes and the Note Purchase Agreement and by the Guarantors under
this Guaranty, and the Guarantors shall not take any action to enforce such
right of subrogation, and the Guarantors shall not accept any payment in respect
of such right of subrogation, until all amounts due and owing by the Company and
the Issuer under or in respect of the Notes and the Note Purchase Agreement and
all amounts due and owing by the Guarantors hereunder have indefeasibly been
finally paid in cash in full.  If any amount shall be paid to any Guarantor in
violation of the preceding sentence at any time prior to the later of the
indefeasible payment in cash in full of the Notes and all other amounts payable
under the Notes, the Note Purchase Agreement and this Guaranty, such amount
shall be held in trust for the benefit of the Holders and shall forthwith be
paid to the Holders to be credited and applied to the amounts due or to become
due with respect to the Notes and all other amounts payable under the Note
Purchase Agreement and this Guaranty, whether matured or unmatured.  Each
Guarantor acknowledges that it has received direct and indirect benefits from
the financing arrangements contemplated by the Note Purchase Agreement and that
the waiver set forth in this paragraph (e) is knowingly made as a result of the
receipt of such benefits.

 

(f)    Each Guarantor agrees that to the extent the Company, the Issuer, any
other Guarantor or any other Person makes any payment on any Note, which payment
or any part thereof is subsequently invalidated, voided, declared to be
fraudulent or preferential, set aside, recovered, rescinded or is required to be
retained by or repaid to a trustee, receiver, or any other Person under any
bankruptcy code, common law, or equitable cause, then and to the extent of such
payment, the obligation or the part thereof intended to be satisfied shall be
revived and continued in full force and effect with respect to the Guarantors’
obligations hereunder, as if said payment had not been made.  The liability of
the Guarantors hereunder shall not be reduced or discharged, in whole or in
part, by any payment to any Holder from any source that is thereafter paid,
returned or refunded in whole or in part by reason of the assertion of a claim
of any kind relating thereto, including, but not limited to, any claim for
breach of contract, breach of warranty, preference, illegality, invalidity, or
fraud asserted by any account debtor or by any other Person.

 

(g)   No Holder shall be under any obligation:  (1) to marshall any assets in
favor of the Guarantors or in payment of any or all of the liabilities of the
Issuer or the Company under or in respect of the Notes or the obligations of the
Guarantors hereunder or (2) to pursue any other remedy that the Guarantors may
or may not be able to pursue themselves and that may lighten the

 

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Guarantors’ burden, any right to which each Guarantor hereby expressly waives.

 

(h)   The obligations of each Guarantor under this Guaranty rank pari passu in
right of payment with all other Debt of such Guarantor which is not secured or
which is not expressly subordinated in right of payment to any other Debt of
such Guarantor.

 

Section 5.               Representations and Warranties of the Guarantors.

 

Each Guarantor represents and warrants to each Holder that:

 

(a)   Such Guarantor is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on (1) the ability of
such Guarantor to perform its obligations under this Guaranty, or (2) the
validity or enforceability of this Guaranty (herein in this Section 5, a
“Material Adverse Effect”).  Such Guarantor has the power and authority to own
or hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts, to execute and deliver this Guaranty and to
perform the provisions hereof.

 

(b)   This Guaranty has been duly authorized by all necessary corporate action
on the part of such Guarantor, and this Guaranty constitutes a legal, valid and
binding obligation of such Guarantor enforceable against such Guarantor in
accordance with its terms, except as such enforceability may be limited by
(1) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or other similar laws affecting the enforcement of
creditors’ rights generally and (2) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

(c)   The execution, delivery and performance by such Guarantor of this Guaranty
will not (1) contravene, result in any breach of, or constitute a default under,
or result in the creation of any Lien in respect of any property of such
Guarantor under its corporate charter or by-laws, or other equivalent formation
or governing document, or except for contraventions, breaches or defaults which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, under any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, or any other agreement or instrument to
which such Guarantor or any of its subsidiaries is bound or by which such
Guarantor or any of its subsidiaries or any of their respective properties may
be bound or affected, (2) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to such Guarantor or
(3) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to such Guarantor.

 

(d)   No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or

 

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performance by such Guarantor of this Guaranty.

 

(e)   Subject to the limitation set forth in Section 2(f) of this Guaranty, such
Guarantor is solvent, has capital not unreasonably small in relation to its
business or any contemplated or undertaken transaction and has assets having a
value both at fair valuation and at present fair salable value greater than the
amount required to pay its liabilities (including contingent and unliquidated
liabilities) as they become due and greater than the amount that will be
required to pay its probable liability on its existing liabilities as they
become absolute and matured.  Such Guarantor does not intend to incur, or
believe that it will incur, debts beyond its ability to pay such debts as they
become due.  Subject to the limitation set forth in Section 2(b) of this
Guaranty, such Guarantor will not be rendered insolvent by the execution and
delivery of, and performance of its obligations under, this Guaranty.  Such
Guarantor does not intend to hinder, delay or defraud its creditors by or
through the execution and delivery of, or performance of its obligations under,
this Guaranty.

 

Section 6.               Amendments, Waivers, Consents and Termination.

 

(a)   This Guaranty may be amended, and the observance of any term hereof may be
waived (either retroactively or prospectively), with (and only with) the written
consent of each Guarantor and the Required Holders, except that (1) no amendment
or waiver of any of the provisions of Section 2, 3 or 4, or any defined term (as
it is used therein), will be effective as to any Holder unless consented to by
such Holder in writing, (2) no such amendment or waiver may, without the written
consent of each Holder, (i) change the percentage of the principal amount of the
Notes the Holders of which are required to consent to any such amendment or
waiver, or (ii) amend this Section 6, and (3) this Guaranty may be amended by
the addition of additional Guarantors pursuant to a Guaranty Joinder.

 

(b)   The Guarantors will provide each Holder (irrespective of the amount of
Notes then owned by it) with sufficient information, sufficiently far in advance
of the date a decision is required, to enable such Holder to make an informed
decision with respect to any proposed amendment, waiver or consent in respect of
any of the provisions hereof.  The Guarantors will deliver executed or true and
correct copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 6 to each Holder promptly following the date on which
it is executed and delivered by, or receives the consent or approval of, the
requisite Holders.

 

(c)   Each Guarantor agrees it will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of fee or otherwise, or grant any
security, to any Holder as consideration for or as an inducement to the entering
into by any Holder of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each Holder even if such
Holder did not consent to such waiver or amendment.

 

(d)   Any amendment or waiver consented to as provided in this Section 6 applies
equally to all Holders and is binding upon them and upon each future holder and
upon the Guarantors.  No such amendment or waiver will extend to or affect any
obligation, covenant or agreement not expressly amended or waived or impair any
right consequent thereon.  No course

 

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of dealing between the Guarantors and any Holder nor any delay in exercising any
rights hereunder shall operate as a waiver of any rights of any Holder.  As used
herein, the term “this Guaranty” and references thereto shall mean this Guaranty
as it may from time to time be amended or supplemented.

 

(e)   Subject to Section 4(f), this Guaranty shall automatically terminate and
the Guarantors shall cease to have any obligations hereunder when all amounts
due by the Issuer in respect of the Notes have been paid in full in cash.

 

Section 7.               Notices.

 

All notices and communications provided for hereunder shall be in writing and
sent (a) by telefacsimile if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by a recognized overnight delivery service (with charges prepaid).  Any such
notice must be sent:

 

(1)           if to a Note Purchaser, to such Note Purchaser at the address
specified for such communications on Schedule A to the Note Purchase Agreement,
or at such other address as such Note Purchaser shall have specified to any
Guarantor or the Company in writing,

 

(2)           if to any other Holder, to such Holder at such address as such
Holder shall have specified to any Guarantor or the Company in writing, or

 

(3)           if to a Guarantor, to such Guarantor c/o Jackson Hewitt Tax
Service Inc., 7 Sylvan Way, Parsippany, New Jersey 07054 to the attention of the
Chief Financial Officer, or at such other address as such Guarantor shall have
specified to the Holders in writing.

 

Notices under this Section 7 will be deemed given only when actually received
(whether or not accepted).

 

Section 8.               Miscellaneous.

 

(a)   No remedy herein conferred upon or reserved to any Holder is intended to
be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Guaranty now or hereafter existing at law or in equity.  No delay or
omission to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof but any such right or power may be exercised
from time to time and as often as may be deemed expedient.  In order to entitle
any Holder to exercise any remedy reserved to it under the Guaranty, it shall
not be necessary for such Holder to physically produce its Note in any
proceedings instituted by it or to give any notice, other than such notice as
may be herein expressly required.

 

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(b)   The Guarantors will pay all sums becoming due under this Guaranty by the
method and at the address specified for such purpose in the Note Purchase
Agreement, or by such other reasonable method or at such other address as any
Holder shall have from time to time specified to the Guarantors in writing for
such purpose, without the presentation or surrender of this Guaranty or any
Note.

 

(c)   Any provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

 

(d)   If the whole or any part of this Guaranty shall be now or hereafter become
unenforceable against any one or more of the Guarantors for any reason
whatsoever or if it is not executed by any one or more of the Guarantors, this
Guaranty shall nevertheless be and remain fully binding upon and enforceable
against each other Guarantor as if it had been made and delivered only by such
other Guarantors.

 

(e)   This Guaranty shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of each Holder and its successors and
assigns (including, without limitation, any subsequent holder of a Note) whether
so expressed or not, so long as its Notes remain outstanding and unpaid.

 

(f)    This Guaranty may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument.  Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

 

(g)   This Guaranty shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by the law of the State of New York.

 

In Witness Whereof, each of the undersigned has caused this Guaranty to be duly
executed by an authorized representative as of date first written above.

 

 

 

Tax Services of America, Inc.

 

 

 

 

 

By:

 

 

Name

 

 

Title

 

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Hewfant, Inc.

 

 

 

By:

 

 

Name:

 

 

Title:

 

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Guaranty Joinder

 

Re:    $175,000,000 Floating Rate Senior Notes
due June 25, 2009

of

Jackson Hewitt Inc.

 

This Guaranty Joinder dated as of                         ,             (the or
this “Guaranty Joinder”) is entered into [on a joint and several basis by each
of the undersigned                         , a             corporation [and
                        , a                          corporation] ([which
parties are hereinafter referred to individually as] an “Additional Guarantor”
[and collectively as the “Additional Guarantors”]).  Terms not otherwise defined
herein shall have the meaning set forth in the Note Purchase Agreement
hereinafter referred to.

 

Recitals

 

A.            [Each] Additional Guarantor, is presently a direct or indirect
Subsidiary of Jackson Hewitt Tax Service Inc., a Delaware corporation (the
“Company”).

 

B.            The Company and Jackson Hewitt Inc., a Virginia corporation (the
“Issuer”) entered into the Note Purchase Agreement dated as of June 21, 2004 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Note Purchase Agreement”) among the Company, the Issuer and each of the
institutional investors named in Schedule A attached thereto (the “Note
Purchasers”) providing for, among other things, the issue and sale by the Issuer
to the Note Purchasers of the Issuer’s Floating Rate Senior Notes due June 25,
2009 in the aggregate principal amount of $175,000,000 (the “Notes”).  The Note
Purchasers, together with their successors and assigns, are hereinafter
collectively referred to as the “Holders”.  Capitalized terms not defined herein
shall have the meaning ascribed to them in the Note Purchase Agreement.

 

C.            As a condition precedent to their purchase of the Notes, the Note
Purchasers required that certain Subsidiaries of the Company enter into the
Subsidiary Guaranty dated as of June 21, 2004 (the “Guaranty”) as security for
the Notes.

 

Now, Therefore, as required by the Note Purchase Agreement and in consideration
of the premises and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, [each/the] Additional Guarantor
does hereby covenant and agree, [jointly and severally], as follows:

 

In accordance with the requirements of the Guaranty, the Additional Guarantor[s]
desire to amend the definition of Guarantor (as the same may have been
heretofore amended) set forth in the Guaranty attached hereto so that at all
times from and after the date hereof, the Additional Guarantor[s] shall be
[jointly and severally] liable as set forth in the Guaranty for the obligations
of the Company and the Issuer under the Note Purchase Agreement and Notes to the
extent and

 

Exhibit A

(to Subsidiary Guarnaty)

 

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in the manner set forth in the Guaranty.

 

The undersigned is the duly elected                          of the Additional
Guarantor[s] and is duly authorized to execute and deliver this Guaranty Joinder
for the benefit of all Holders of the Notes.  The execution by the undersigned
of this Guaranty Joinder shall evidence its consent to, and acknowledgment and
approval of, the terms set forth herein and in the Guaranty and by such
execution the Additional Guarantor[s] shall be deemed to have made the
representations and warranties set forth in Section 5 of the Guaranty in favor
of the Holders as of the date of this Guaranty Joinder].

 

Upon execution of this Guaranty Joinder, the Guaranty shall be deemed to be
amended as set forth above.  Except as amended herein, the terms and provisions
of the Guaranty are hereby ratified, confirmed and approved in all respects.

 

Any and all notices, requests, certificates and other instruments (including the
Notes) may refer to the Guaranty without making specific reference to this
Guaranty Joinder, but nevertheless all such references shall be deemed to
include this Guaranty Joinder unless the context shall otherwise require.

 

 

[Name of Additional Guarantor]

 

 

 

 

 

By

 

 

Its

 

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The Purchasers Listed on Schedule A

to the Note Purchase Agreement

June    , 2004

 

Form of Opinion of Special Counsel

to the Company and the Issuer

 

DRAFT SUBJECT TO REVISION BY OPINION COMMITTEE

 

Exhibit 4.4(a)

 

June 25, 2004

 

The Purchasers Listed on

Schedule A to the

Note Purchase Agreement referred to below

 

Re:    Jackson Hewitt Inc. Floating Rate Senior Notes

 

Ladies and Gentlemen:

 

We have acted as special counsel to Jackson Hewitt Tax Service Inc., a Delaware
corporation (the “Company”), in connection with the Note Purchase Agreement,
dated June   , 2004 (the “Purchase Agreement”), by and among the Company,
Jackson Hewitt Inc., a Virginia corporation (the “Issuer”), and each of the
Purchasers named in Schedule A thereto (the “Purchasers”), relating to the
issuance and sale by the Issuer of $175 million aggregate principal amount of
its Floating Rate Senior Notes due 2009 (the “Securities”).

 

This opinion is being furnished pursuant to Section 4.4(a) of the Purchase
Agreement.

 

In rendering the opinions set forth herein, we have examined and relied on
originals or copies of the following:

 

(a)                                  an executed copy of the Purchase Agreement;

 

Exhibit 4.4(a)

(to  Note Purchase Agreement)

 

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(b)                                 Amendment No. 6 to registration statement on
Form S-1 (File No. 333-133593) of the Company, as filed with the Securities and
Exchange Commission on June 21, 2004 (the “Registration Statement”), a copy of
which is included as an appendix to the supplement, dated June   , 2004, to the
Private Placement Memorandum (the “Private Placement Memorandum”) relating to
the Securities;

 

(c)                                  executed copies of the guarantee
agreements, dated June  , 2004, (collectively, the “Subsidiary Guaranties”)
entered into by each of Tax Services of America, Inc., a Delaware corporation
(“TSA”), and Hewfant, Inc. (“Hewfant”), a Virginia corporation (each, a
“Subsidiary Guarantor”);

 

(d)                                 the executed certificates evidencing
Securities registered in the names of the Purchasers;

 

(e)                                  the Amended and Restated Certificate of
Incorporation of the Company, as certified by the Secretary of State of the
State of Delaware (the “Company Certificate of Incorporation”);

 

(f)                                    the By-Laws of the Company, as certified
by Steven L. Barnett, Secretary of the Company (the “Company By-Laws”);

 

(g)                                 resolutions of the Board of Directors of the
Company, adopted June  , 2004, as certified by Steven L. Barnett, Secretary of
the Company;

 

(h)                                 the certificate of Michael D. Lister,
Chairman, Chief Executive Officer and President of the Company, and Mark L.
Heimbouch, Chief Financial Officer, dated the date hereof, a copy of which is
attached as Exhibit A hereto (the “Company’s Certificate”);

 

(i)                                     the certificate of Steven L. Barnett,
Secretary of the Company, dated the date hereof , pursuant to Section 4.3(b) of
the Purchase Agreement;

 

(j)                                     copies of each of the Applicable
Contracts (as defined below);

 

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(k)                                  a certificate, dated June 8, 2004, and a
facsimile bringdown thereof, dated June   , 2004, from the Secretary of State of
the State of Delaware as to the Company’s existence and good standing in such
jurisdiction (collectively, the “Delaware Certificates”);

 

(l)                                     certificates from the public officials
in the States listed on Schedule I hereto as to the status of the Company in
each such jurisdiction (the “State Certificates”);

 

(m)                               the Restated Certificate of Incorporation of
TSA, as certified by the Secretary of State of the State of Delaware (the “TSA
Certificate of Incorporation”);

 

(n)                                 the By-Laws of TSA, as certified by Steven
L. Barnett, Secretary of TSA (“TSA By-Laws”);

 

(o)                                 a certificate, dated  June 14, 2004, and a
facsimile bringdown thereof, dated June   , 2004, from the Secretary of State of
the State of Delaware as to TSA’s existence and good standing in such
jurisdiction (collectively, the “TSA Delaware Certificates”); and

 

(p)                                 a certificate of Steven L. Barnett,
Secretary of TSA, dated the date hereof.

 

We have also examined originals or copies, certified or otherwise identified to
our satisfaction, of such records of the Company and such agreements,
certificates and receipts of public officials, certificates of officers or other
representatives of the Company and others, and such other documents as we have
deemed necessary or appropriate as a basis for the opinions set forth below.

 

In our examination, we have assumed the legal capacity of all natural persons,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as facsimile, electronic, certified or photostatic copies, and
the authenticity of the originals of such copies.  In making our examination of
executed documents, we have assumed that the parties thereto, other than the
Company and TSA, had the power, corporate or other, to enter into and perform
all obligations

 

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thereunder and have also assumed the due authorization by all requisite action,
corporate or other, and the execution and delivery by such parties of such
documents and the validity and binding effect thereof on such parties.  We have
also assumed that the Issuer and Hewfant have been duly organized and are
validly existing in good standing under the laws of the Commonwealth of Virginia
and that the Issuer and Hewfant have complied with all aspects of the laws of
the Commonwealth of Virginia in connection with the transactions contemplated by
the Purchase Agreement.  As to any facts material to the opinions expressed
herein that we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of the
Company and others and of public officials, including the facts set forth in the
Company’s Certificate.

 

As used herein, (i) “Applicable Contracts” means those agreements and
instruments identified in Schedule II hereto; (ii) “Applicable Laws” means the
General Corporation Law of the State of Delaware (the “DGCL”) and those laws,
rules and regulations of the State of New York and the federal laws, rules and
regulations of the United States of America, in each case that, in our
experience, are normally applicable to transactions of the type contemplated by
the Purchase Agreement (other than the United States federal securities laws,
state securities or blue sky laws, antifraud laws and the rules and regulations
of the National Association of Securities Dealers, Inc.), but without our having
made any special investigation as to the applicability of any specific law, rule
or regulation; (iii) “Governmental Authorities” means any court, regulatory
body, administrative agency or governmental body of the State of Delaware, the
State of New York or the United States of America having jurisdiction over the
Company, the Issuer and the Subsidiary Guarantors under Applicable Laws; (iv)
“Governmental Approval” means any consent, approval, license, authorization or
validation of, or filing, qualification or registration with, any Governmental
Authority required to be made or obtained by the Company, the Issuer and the
Subsidiary Guarantors pursuant to Applicable Laws, other than any consent,
approval, license, authorization, validation, filing, qualification or
registration that may have become applicable as a result of the involvement of
any party (other than the Company, the Issuer and the Subsidiary Guarantors) in
the transactions contemplated by the Purchase Agreement or because of such
parties’ legal or regulatory status or because of any other facts specifically
pertaining to such parties; and (v) “Applicable Orders” means those judgments,

 

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orders or decrees of Governmental Authorities identified on Schedule III hereto
(no such judgments, orders or decrees have been so identified).  The Purchase
Agreement, the Securities and the Subsidiary Guaranties are referred to herein
collectively as the “Transaction Documents.”

 

The opinions set forth below are subject to the following further
qualifications, assumptions and limitations:

 

(a)           the opinion set forth in paragraph 1 below with respect to the
valid existence and good standing of the Company is based solely upon the
Delaware Certificates;

 

(b)           the opinion set forth in paragraph 2 below with respect to the
status of the Company in the jurisdictions listed in Schedule I hereto is based
solely upon the State Certificates;

 

(c)           we do not express any opinion as to the effect on the opinions
expressed herein of (i) the compliance or noncompliance of any party to each of
the Transaction Documents (other than with respect to the Company, the Issuer
and the Subsidiary Guarantors to the extent necessary to render the opinions set
forth herein) with any state, federal or other laws or regulations applicable to
it or them or (ii) the legal or regulatory status or the nature of the business
of any party (other than with respect to the Company, the Issuer and the
Subsidiary Guarantors to the extent necessary to render the opinions set forth
herein);

 

(d)           the opinion set forth in paragraph 9 below is based solely on our
discussions with the officers or other representatives of the Company
responsible for the matters discussed therein, our review of documents furnished
to us by the Company and our reliance on the representations and warranties of
the Company contained in the Purchase Agreement and the Company’s Certificate;
we have not made any other inquiries or investigations or any search of the
public docket records of any court, governmental agency or body or
administrative agency;

 

(e)           the opinion set forth in paragraph 3 below is based solely upon
the TSA Delaware Certificates;

 

(f)            in rendering the opinion set forth in paragraph 4 below, we have
relied solely

 

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on the stock record books of TSA in determining the number of issued and
outstanding shares of common stock of TSA and have assumed that the
consideration recited in the resolutions of the Board of Directors of TSA
approving the issuance of all such shares has been received in full by TSA;

 

(g)           we note that certain of the Applicable Contracts are governed by
laws other than the Applicable Laws; our opinions expressed herein are based
solely upon our understanding of the plain language of such agreement or
instrument, and we do not express any such opinion with respect to the validity,
binding nature or enforceability of any such agreement or instrument, and we do
not assume any responsibility with respect to the effect on the opinions or
statement set forth herein of any interpretation thereof inconsistent with such
understanding;

 

(h)           we have assumed that the execution and delivery by the Company,
the Issuer and the Subsidiary Guarantors of each of the Transaction Documents to
which they are a party and the performance by the Company, the Issuer and the
Subsidiary Guarantors of their respective obligations thereunder do not and will
not violate, conflict with or constitute a default under (i) any agreement or
instrument to which the Company, the Issuer, the Subsidiary Guarantors or any of
their properties is subject (except that we do not make the assumption set forth
in this clause (i) with respect to the Company Certificate of Incorporation, the
Company By-Laws, the TSA Certificate of Incorporation, the TSA By-Laws or the
Applicable Contracts), (ii) any law, rule, or regulation to which the Company,
the Issuer, the Subsidiary Guarantors or any of their properties is subject
(except that we do not make the assumption set forth in this clause (ii) with
respect to the DGCL and those laws, rules and regulations of the State of New
York and the federal laws, rules and regulations of the United States of
America, in each case, that, in our experience, are normally applicable to the
transactions of the type contemplated by the Purchase Agreement, but without our
having made any special investigation as to the applicability of any specific
law, rule or regulation), (iii) any judicial or regulatory order or decree of
any Governmental Authority (except that we do not make the assumption set forth
in this clause (iii) with respect to Applicable Orders) or (iv) any consent,
approval, license, authorization or validation of, or filing, recording or
registration with any Governmental Authority (except that we do not make the
assumption set forth in this clause (iv) to the extent set forth in our opinion
in paragraph 12 below);

 

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(i)            the validity or enforcement of any agreements or instruments may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforceability is considered in a
proceeding of equity or at law);

 

(j)            we do not express any opinion as to the applicability or effect
of any fraudulent transfer, preference or similar law on the Transaction
Documents or any transaction contemplated thereby;

 

(k)           to the extent any opinion relates to the enforceability of the
choice of New York law provision of the Transaction Documents, our opinion is
rendered in reliance on N.Y. Gen. Oblig. Law §§ 5-1401, 5-1402 (McKinney 2001)
and N.Y. C.P.L.R. 327(b) (McKinney 2001) and is subject to the qualification
that such enforceability may be limited by public policy considerations of any
jurisdiction, other than the courts of the State of New York, in which
enforcement of such provisions, or of a judgment upon an agreement containing
such provisions, is sought;

 

(l)            we do not express any opinion with respect to the enforceability
of the Transaction Documents to the extent they provide for interest on
interest;

 

(m)          in the case of the Subsidiary Guaranties, certain of the
provisions, including waivers, with respect to the Subsidiary Guaranties, are or
may be unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Subsidiary Guaranties, taken as a whole;

 

(n)           we express no opinion as to the enforceability of Section 11 of
the Purchase Agreement to the extent that the same provides that the obligations
of the Company under Section 11 are absolute and unconditional irrespective of
the value, genuineness, regularity or enforceability of the Securities; and

 

(o)           we have assumed that none of the Purchasers of the Securities are
a “creditor” as defined in Regulation T of the Board of Governors of the Federal
Reserve System.

 

We do not express any opinion as to any laws other than Applicable

 

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Laws and the federal laws of the United States of America to the extent referred
to specifically herein.  Insofar as the opinions expressed herein relate to
matters governed by laws other than those set forth in the preceding sentence,
we have assumed, without having made any independent investigation, that such
laws do not affect any of the opinions set forth herein.  The opinions expressed
herein are based on laws in effect on the date hereof, which laws are subject to
change with possible retroactive effect.

 

Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:

 

1.                                       The Company has been duly incorporated
and is validly existing in good standing under the laws of the State of Delaware
and has the corporate power and corporate authority to execute and deliver the
Purchase Agreement and to consummate the transactions contemplated thereby and
to own, lease and operate its properties and conduct its business, in each case
as described in the Registration Statement.

 

2.                                       The Company has the status set forth in
Schedule I hereto set forth opposite the jurisdictions listed in Schedule I
hereto.

 

3.                                       TSA has been duly incorporated and is
validly existing in good standing under the laws of the State of Delaware.

 

4.                                       The 3,301 shares of TSA’s common stock
shown by TSA’s stock record books as being issued and outstanding and held of
record by the Issuer immediately prior to the date hereof have been duly
authorized and have been validly issued and are fully paid and nonassessable.

 

5.                                       The Purchase Agreement has been duly
authorized, executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.

 

6.                                       The Purchase Agreement is a valid and
binding agreement of the Issuer, enforceable against the Issuer in accordance
with its terms.

 

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7.                                       When issued and delivered by the Issuer
against payment therefor in accordance with the terms of the Purchase Agreement,
the Securities will constitute valid and binding obligations of the Issuer,
enforceable against the Issuer in accordance with their terms.

 

8.                                       The Subsidiary Guaranty of TSA has been
duly authorized, executed and delivered by TSA and, when the Securities are
issued and delivered against payment therefor in accordance with the terms of
the Purchase Agreement, each Subsidiary Guaranty will be a valid and binding
agreement of each Subsidiary Guarantor, enforceable against each Subsidiary
Guarantor in accordance with its terms.

 

9.                                       To our knowledge, there are no legal or
governmental proceedings pending to which the Company is a party or to which any
property of the Company is subject that would have been required to be disclosed
pursuant to Item 103 of Regulation S-K of the General Rules and Regulations
under the Securities Act of 1933 (the “Securities Act”) that are not so
disclosed in the Registration Statement as of its date, except that we do not
express any opinion in this paragraph 9 with respect to legal or governmental
proceedings relating to regulatory matters of the type referred to in the
Registration Statement under the captions entitled “Risk Factors—States have
increasingly taken an active role in regulating refund anticipation loans and
the continuation of such trend could impede our ability to facilitate the sale
of these loans and reduce our profitability,” “Risk Factors—Our failure to
comply with legal and regulatory requirements, particularly those applicable to
the facilitation of tax refund related financial products, could result in
substantial sanctions against us which would harm our profitability and
reputation” and “Business—Business Description—Regulation.”

 

10.                                 The execution and delivery by the Company of
the Purchase Agreement and the consummation by the Company of the transactions
contemplated thereby will not (i) conflict with or result in any breach of any
provisions of or constitute a default under or result in the creation or
imposition of any Lien (as defined in the Purchase Agreement) upon any of the
property of the Company pursuant to the Company Certificate of Incorporation,
the Company By-Laws or any

 

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Applicable Contract or (ii) violate or conflict with, or result in any
contravention of, any Applicable Law or any Applicable Order.  We do not express
any opinion, however, as to whether the execution, delivery or performance by
the Company of the Purchase Agreement and the consummation of any of the
transactions contemplated thereby will constitute a violation of, or a default
under, any covenant, restriction or provision with respect to financial ratios
or tests or any aspect of the financial condition or results of operations of
the Company or any of its subsidiaries.

 

11.                                 The execution and delivery by the Issuer of
the Purchase Agreement and the Securities and the consummation by the Issuer of
the transactions contemplated thereby will not constitute a violation of, or a
breach or default under, the terms of any Applicable Contract.  We do not
express any opinion, however, as to whether the execution, delivery or
performance by the Issuer of the Purchase Agreement and the consummation of any
of the transactions contemplated thereby will constitute a violation of, or a
default under, any covenant, restriction or provision with respect to financial
ratios or tests or any aspect of the financial condition or results of
operations of the Issuer or any of its subsidiaries.

 

12.                                 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 as a condition to, the execution or delivery of each of the
Transaction Documents by the Company, the Issuer and the Subsidiary Guarantors
or the consummation by the Company, the Issuer or the Subsidiary Guarantors of
the transactions contemplated thereby, including the sale and issuance of the
Securities by the Issuer.

 

13.                                 The execution and delivery by the Company
and the Issuer of the Purchase Agreement and the execution and delivery by the
Issuer of the Securities and the consummation by the Company and the Issuer of
the transactions contemplated thereby, will not contravene Regulations T, U or X
of the Board of Governors of the Federal Reserve System.

 

14.                                 The Company and the Issuer are not and,
solely after giving effect to the offering and

 

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sale of the Securities and the application of the proceeds thereof as described
in the Private Placement Memorandum and Registration Statement, will not be an
“investment company,” as such term is defined in the Investment Company Act of
1940.

 

This letter is furnished only to each of the Purchasers and is solely for the
Purchasers’ benefit in connection with the closing under the Purchase Agreement
occurring today pursuant to the Purchase Agreement.  Without our prior written
consent, this letter may not be used, circulated, quoted or otherwise referred
to for any other purpose or relied upon by, or assigned to, any other person for
any purpose, including any other person that acquires Securities or that seeks
to assert the Purchasers’ rights in respect of this letter (other than the
Purchasers’ successor in interest by means of merger, consolidation, transfer of
a business or other similar transaction); provided, however, that any Qualified
Institutional Buyer, as that term is defined in Rule 144A under the Securities
Act (“QIB”), that purchases Securities from any of the Purchasers (or any such
QIB) from time to time may rely on this opinion subject to all assumptions,
qualifications, limitations and exceptions stated herein, as if addressed to
such person and dated as of the date hereof, it being understood that we do not
express any opinion as to any such sales to a QIB and that we do not assume any
obligation to update or otherwise confirm this opinion following the sale of the
Securities to the Purchasers on the date hereof for any reason or to opine on
the effect of any such sales, and provided further that this opinion may be
furnished to any governmental authority having jurisdiction over the Purchasers
to the extent required by applicable law or regulation, to the National
Association of Insurance Commissioners of the United States and rating agencies.

 

 

 

Very truly yours,

 

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Schedule I

Foreign Qualification

 

 

Jurisdiction

 

Certificate

 

Status

New York

 

Certificate, dated June    , 2004, of the Secretary of State of the State of New
York

 

 

New Jersey

 

Certificate, dated June    , 2004, of the Secretary of State of the State of New
Jersey

 

 

 

Exhibit 4.4(a)

(to Note Purchase Agreement)

 

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Schedule II

Applicable Contracts

 

1.               Transitional Agreement by and among Jackson Hewitt Tax Service
Inc., Cendant Corporation and Cendant Operations, Inc., dated     , 2004.

 

2.               Employment Agreement between Jackson Hewitt Tax Service Inc.
and Michael D. Lister, dated       , 2004.

 

3.               Employment Agreement between Jackson Hewitt Tax Service Inc.
and Mark L. Heimbouch, dated       , 2004.

 

4.               Credit Agreement by and among Jackson Hewitt Tax Service Inc.,
as Parent, Jackson Hewitt Inc., as Borrower, the Lenders named therein and
JPMorgan Chase Bank, as Administrative Agent, dated       , 2004.

 

5.               Underwriting Agreement by and among Jackson Hewitt Tax Service
Inc., Cendant Finance Holding Corporation and Goldman, Sachs & Co. and J.P.
Morgan Securities Inc. as representatives of the underwriters, dated       ,
2004.

 

6.               Jackson Hewitt Tax Service Inc. 2004 Equity and Incentive Plan.

 

7.               Jackson Hewitt Tax Service Inc. Employee Stock Purchase Plan.

 

8.               Letter Agreement for Steven L. Barnett.

 

9.               Letter Agreement for Richard P. Enchura.

 

10.         Letter Agreement for Perb B. Fortner.

 

11.         Letter Agreement for William A. Scavone.

 

12.         Letter Agreement for Jeanmarie Cooney.

 

13.         Jackson Hewitt Tax Service Inc. Non-Employee Directors Deferred
Compensation Plan.

 

14.         Refund Anticipation Loan Program Agreement between Jackson Hewitt
Inc. and Santa Barbara Bank & Trust, dated May 5, 2004.

 

15.         Amended and Restated Program Agreement between Jackson Hewitt Inc.,
Household Tax Masters Inc. and Beneficial Franchise Company Inc., dated as of
January 1, 2003.

 

--------------------------------------------------------------------------------

 

16.         Leasing Operations Supplier Agreement (Products and/or Services)
between Jackson Hewitt Inc. and Wal-Mart Stores, Inc., dated April 8, 2004.

 

17.         Form of Franchise Agreement.

 

18.         Form of Settlement Agreement between Jackson Hewitt Inc. and the
Settling Plaintiff.

 

19.         Form of Settlement Agreement between Jackson Hewitt Inc. and the
Settling Franchisee.

 

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Schedule III

Applicable Orders

 

None.

 

--------------------------------------------------------------------------------

 

The Purchasers Listed on Schedule A

to the Note Purchase Agreement

June    , 2004

 

Form of Opinion of Special Counsel

to the Issuer

 

Exhibit 4.4(b)

 

June   , 2004

 

The Purchasers Listed on

Schedule A to the

Note Purchase Agreement referred to below

 

Re:    Jackson Hewitt, Inc. Floating Rate Senior Notes

 

Ladies and Gentlemen:

 

We have acted as special Virginia counsel to Jackson Hewitt, Inc., a Virginia
corporation (“JHI”), and Hewfant, Inc., a Virginia corporation (“HFI”) and a
wholly owned subsidiary of Jackson Hewitt Tax Services, Inc. (“JHTS”), in
connection with the Note Purchase Agreement, dated June   , 2004 (the “Purchase
Agreement”), by and among JHI, JHTS and each of the Purchasers named in Schedule
A thereto (the “Purchasers”), relating to the sale by JHI of $175 million
aggregate principal amount of its Floating Rate Senior Notes due 2009 (the
“Securities”).

 

This opinion is being furnished pursuant to Section 4.4(b) of the Purchase
Agreement.

 

In rendering the opinions set forth herein, we have examined and relied on
originals or copies of the following:

 

(a)                                  an executed copy of the Purchase Agreement;

 

(b)                                 Amendment No. 5 to registration statement on
Form S-1 (File No. 333-133593) of JHTS, as filed with the Securities and
Exchange

 

Exhibit 4.4(b)

(to Note Purchase Agreement)

 

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Commission on June   , 2004 (the “Registration Statement”), a copy of which is
included as an appendix to the supplement, dated June   , 2004, to the Private
Placement Memorandum relating to the Securities;

 

(c)                                  an executed copy of the guarantee
agreement, dated June  , 2004, (the “HFI Subsidiary Guaranty”) entered into by
HFI;

 

(d)                                 the executed certificates evidencing
Securities registered in the names of the Purchasers;

 

(e)                                  resolutions of the Board of Directors of
JHI, adopted June  , 2004 and resolutions of the Board of Directors of HFI,
adopted June  , 2004, in each case as certified by the respective Secretary of
JHI or HFI;

 

(f)                                    the certificate of
                                   , President of JHI, and
                                   , Chief Financial Officer of JHI, dated the
date hereof, a copy of which is attached as Exhibit A hereto (the “JHI
Certificate”);

 

(g)                                 the certificate of
                                   , President of HFI, and
                                   , Chief Financial Officer of HFI, dated the
date hereof, a copy of which is attached as Exhibit B hereto (the “HFI
Certificate”);

 

(h)           certificates from the public officials in the States listed on
Schedule I hereto as to the status of JHI in each such jurisdiction (the “JHI
State Certificates”);

 

(i)            certificates from the public officials in the States listed on
Schedule II hereto as to the status of HFI in each such jurisdiction (the “HFI
State Certificates,” and together with the JHI State Certificates, the “State
Certificates”);

 

(j)            the Amended and Restated Certificate of Incorporation of JHI, as
certified by the Secretary of State of the Commonwealth of Virginia (the “JHI
Certificate of Incorporation”);

 

(k)           the Amended and Restated Certificate of Incorporation of HFI, as
certified by the Secretary of State of the Commonwealth of Virginia (the “HFI
Certificate of Incorporation”);

 

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(l)            the By-Laws of JHI, as certified by [                     ],
Secretary of JHI (“JHI By-Laws”);

 

(m)          the By-Laws of HFI, as certified by [                     ],
Secretary of HFI (“HFI By-Laws”);

 

(n)           a certificate, dated                       2004 from the Secretary
of State of the Commonwealth of Virginia as to JHI’s existence and good standing
in such jurisdiction (the “JHI Virginia Certificate”) and a certificate, dated 
                      2004 from the Secretary of State of the Commonwealth of
Virginia as to HFI’s existence and good standing in such jurisdiction (the “HFI
Virginia Certificate,” and together with the JHI Virginia Certificate, the
“Virginia Certificates”);

 

(o)           a certificate of                      , Secretary of JHI, dated
the date hereof; and a certificate of                      , Secretary of HFI,
dated the date hereof; and

 

(p)           the unaudited financial statements of JHI as of
                       , 2004, as certified in the JHI Certificate by
                             , President of JHI, and
                             , Chief Financial Officer of JHI (the “JHI
Financial Statements”).

 

We have also examined originals or copies, certified or otherwise identified to
our satisfaction, of such records of JHI and HFI and such agreements,
certificates and receipts of public officials, certificates of officers or other
representatives of JHI and HFI and others, and such other documents as we have
deemed necessary or appropriate as a basis for the opinions set forth below.

 

In our examination, we have assumed the legal capacity of all natural persons,
the genuineness of all signatures (other than  signatures of officers of JHI and
HFI to the Transaction Documents), the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as facsimile, electronic, certified or photostatic copies, and
the authenticity of the originals of such copies.  In making our examination of
executed documents, we have assumed that the parties thereto, other than JHI and
HFI, had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and the

 

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execution and delivery by such parties of such documents and the validity and
binding effect thereof on such parties.  We have also assumed that the other
guarantors of the Securities, JHTS and Tax Services of America, Inc., a Delaware
corporation (“TSA”), (i) have been duly organized and are validly existing in
good standing under the laws of the State of Delaware, (ii) have complied with
all aspects of the laws of the State of Delaware, and (iii) have the corporate
power and authority to execute their respective guaranties of the Securities and
any other documents in connection with the transactions contemplated by the
Purchase Agreement.  As to any facts material to the opinions expressed herein
that we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of JHI,
HFI, JHTS and others and of public officials, including the facts set forth in
the JHI Certificate and the HFI Certificate.

 

As used herein, (i) “Applicable Laws” means the laws of the Commonwealth of
Virginia that, in our experience, are normally applicable to transactions of the
type contemplated by the Purchase Agreement (other than state securities or blue
sky laws and antifraud laws), but without our having made any special
investigation as to the applicability of any specific law, rule or regulation;
(ii) “Governmental Authorities” means any court, regulatory body, administrative
agency or governmental body of the Commonwealth of Virginia having jurisdiction
over JHI and HFI under the Applicable Laws; (iii) “Governmental Approval” means
any consent, approval, license, authorization or validation of, or filing,
qualification or registration with, any Governmental Authority required to be
made or obtained by JHI and HFI pursuant to the Applicable Laws, other than any
consent, approval, license, authorization, validation, filing, qualification or
registration that may have become applicable as a result of the involvement of
any party (other than JHI and HFI) in the transactions contemplated by the
Purchase Agreement or because of such parties’ legal or regulatory status or
because of any other facts specifically pertaining to such parties; and (iv)
“Applicable Orders” means those judgments, orders or decrees of Governmental
Authorities identified on Schedule II hereto (no such judgments, orders or
decrees have been so identified).  The Purchase Agreement, the Securities, and
the HFI Subsidiary Guaranty are referred to herein collectively as the
“Transaction Documents.”

 

The opinions set forth below are subject to the following further
qualifications, assumptions and limitations:

 

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(a)                                  the opinion set forth in paragraph 1 below
with respect to the valid existence and good standing of JHI and HFI is based
solely upon the Virginia Certificates;

 

(b)                                 the opinion set forth in paragraph 2 below
with respect to the status of JHI and HFI in the jurisdictions listed in
Schedules I and II, respectively, is based solely upon the State Certificates;

 

(c)                                  we do not express any opinion as to the
effect on the opinions expressed herein of (i) the compliance or noncompliance
of any party to each of the Transaction Documents (other than with respect to
JHI and HFI to the extent necessary to render the opinions set forth herein)
with any state, federal or other laws or regulations applicable to it or them or
(ii) the legal or regulatory status or the nature of the business of any party
(other than with respect to JHI and HFI to the extent necessary to render the
opinions set forth herein);

 

(d)                                 in rendering the opinion set forth in
paragraph 3 below, we have relied solely on an officer’s certificate from
officers of JHI and HFI, respectively with respect to the number of issued and
outstanding shares of common stock of JHI and HFI, respectively, and have
assumed that the consideration recited in such certificates, has been received
in full by JHI and HFI, respectively;

 

(e)                                  we have assumed that the execution and
delivery by JHI of the Purchase Agreement and HFI of the Subsidiary Guaranty and
the performance by them of their respective obligations thereunder do not and
will not violate, conflict with or constitute a default under (i) any agreement
or instrument to which JHI and HFI or any of their properties is subject (except
that we do not make the assumption set forth in this clause (i) with respect to
the JHI and HFI Certificates of Incorporation or the JHI and HFI  By-Laws), (ii)
any law, rule, or regulation to which JHI and HFI or any of their properties is
subject (except that we do not make the assumption set forth in this clause (ii)
with respect to Applicable Laws, but (except as set forth in our opinion in
Paragraph 7) without our having made any special investigation as to the
applicability of any specific law, rule or regulation), (iii) any judicial or
regulatory order or decree of any Governmental Authority (except that we do not
make the assumption set forth in this clause (iii) with respect to Applicable
Orders) or (iv) any consent, approval, license, authorization or validation of,
or filing, recording or registration with any Governmental Authority (except
that we do not make the assumption set forth in this clause (iv) to the extent
set forth in our opinion in

 

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paragraph 5 below);

 

(f)            in rendering the opinion in Paragraph 7 below, we have relied,
without any independent investigation, on the JHI Financial Statements and,
based solely upon the officer’s certificate signed by the CFO of JHI
accompanying the JHI Financial Statements, we have assumed and relied upon the
accuracy of all matters reflected therein;  our opinion in Paragraph 7 below
also assumes that the dividend referenced therein is either the only dividend
being paid by JHI to JHTS, or in the situation of multiple dividends being paid,
the dividend referenced in Paragraph 7 is paid first to JHTS and prior to the
authorization of any other dividend paid by JHI to JHTS, and we express no
opinion with respect to such additional and subsequent dividends;

 

(g)           our opinion in Paragraph 8 is limited to state regulatory matters
or state governmental proceedings of the type referred to in the Registration
Statement under the captions entitled “Risk Factors — States have increasingly
taken an active role in regulating refund anticipation loans and the
continuation of such trend could impede our ability to facilitate the sale of
these loans and reduce our profitability,”  “Risk Factors - Our failure to
comply with legal and regulatory requirements, particularly those applicable to
the facilitation of tax refund related financial products, could result in
substantial sanctions against us which would harm our profitability and
reputation,” and “Business - Business Description - Regulation”; and

 

Insofar as the opinions expressed herein relate to matters governed by laws
other than those set forth in the preceding sentence, we have assumed, without
having made any independent investigation, that such laws do not affect any of
the opinions set forth herein.  The opinions expressed herein are based on laws
in effect on the date hereof, which laws are subject to change with possible
retroactive effect.

 

Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:

 

1.                                       Each of JHI and HFI has been duly
incorporated and is validly existing in good standing under the laws of the
Commonwealth of Virginia and has the corporate power and corporate authority to
execute and deliver the Purchase Agreement, in the case of JHI, and the HFI
Subsidiary Guaranty, in the case

 

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of HFI, and to consummate the transactions contemplated thereby and to own,
lease and operate its respective properties and conduct their respective
businesses, in each case as described in the Registration Statement.

 

2.                                       JHI has the status set forth in
Schedule I hereto set forth opposite the jurisdictions listed in Schedule I
hereto.

 

3.                                       The [       ] shares of JHI’s common
stock shown by JHI’s stock record books as being issued and outstanding and held
of record by JHTS immediately prior to the date hereof have been duly authorized
and have been validly issued and are fully paid and nonassessable. The [       ]
shares of HFI’s common stock shown by HFI’s stock record books as being issued
and outstanding and held of record by JHTS immediately prior to the date hereof
have been duly authorized and have been validly issued and are fully paid and
nonassessable.

 

4.                                       The Purchase Agreement has been duly
authorized, executed and delivered by JHI.  The HFI Subsidiary Guaranty has been
duly authorized, executed and delivered by HFI.

 

5.                                       The execution and delivery by JHI of
the Purchase Agreement and HFI of the HFI Subsidiary Guaranty will not (i)
conflict with or result in any breach of any provisions of or constitute a
default under JHI or HFI pursuant to the JHI and HFI Certificates of
Incorporation or the JHI and HFI By-Laws, or (ii) violate or conflict with, or
result in any contravention of, any Applicable Law or any Applicable Order.  We
do not express any opinion, however, as to whether the execution, delivery or
performance by JHI of the Purchase Agreement and HFI of the HFI Subsidiary
Guaranty will constitute a violation of, or a default under, any covenant,
restriction or provision with respect to financial ratios or tests or any aspect
of the financial condition or results of operations of JHI or HFI.

 

6.                                       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 as a condition to, the execution or delivery by JHI of
the Purchase Agreement or HFI of the HFI Subsidiary Guaranty.

 

7.                                       The payment by JHI of a dividend to
JHTS in the amount of $175,000,000 in cash has been duly authorized by the Board
of Directors of JHI and will not

 

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violate any provision of Applicable Law.

 

8.                                       To our knowledge, there are no
regulatory matters or governmental proceedings pending to which JHI is a party
or to which any property of the JHI is subject that would have been required to
be disclosed pursuant to Item 103 of Regulation S-K of the General Rules and
Regulations under the Securities Act of 1933 that are not so disclosed in the
Registration Statement as of its date.

 

This letter is furnished only to each of the Purchasers and is solely for the
Purchasers’ benefit in connection with the closing under the Purchase Agreement
occurring today pursuant to the Purchase Agreement.  Without our prior written
consent, this letter may not be used, circulated, quoted or otherwise referred
to for any other purpose or relied upon by, or assigned to, any other person for
any purpose, including any other person that acquires Securities or that seeks
to assert the Purchasers’ rights in respect of this letter (other than the
Purchasers’ successor in interest by means of merger, consolidation, transfer of
a business or other similar transaction); provided, however, that any Qualified
Institutional Buyer, as that term is defined in Rule 144A under the Securities
Act (“QIB”), that purchases Securities from any of the Purchasers (or any such
QIB) from time to time may rely on this opinion subject to all assumptions,
qualifications, limitations and exceptions stated herein, as if addressed to
such person and dated as of the date hereof, it being understood that we do not
express any opinion as to any such sales to a QIB and that we do not assume any
obligation to update or otherwise confirm this opinion following the sale of the
Securities to the Purchasers on the date hereof for any reason or to opine on
the effect of any such sales, and provided further that this opinion may be
furnished to any governmental authority having jurisdiction over the Purchasers
to the extent required by applicable law or regulation, to the National
Association of Insurance Commissioners of the United States and rating agencies.

 

 

Very truly yours,

 

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Schedule I

Foreign Qualification of JHI

 

Jurisdiction

 

Certificate

 

Status

Texas

 

 

 

 

Illinois

 

 

 

 

Florida

 

 

 

 

New York

 

 

 

 

Maryland

 

 

 

 

 

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Schedule II

Applicable Orders

 

None.

 

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Form of Opinion of Special Counsel

to the Purchasers

 

June 25, 2004

 

To the Purchasers named on

  Schedule I attached hereto

 

Re:

$175,000,000 Floating Rate Senior Notes due June 25, 2009

 

 

of

 

 

Jackson Hewitt Inc.

 

 

Ladies and Gentlemen:

 

We have acted as your special counsel in connection with your separate purchases
on the date hereof of $175,000,000 aggregate principal amount of the Floating
Rate Senior Notes due June 25, 2009, (the “Notes”) of Jackson Hewitt Inc., a
Virginia corporation (the “Issuer”), issued under and pursuant to the Note
Purchase Agreement dated as of June 21, 2004 (the “Note Purchase Agreement”),
among Jackson Hewitt Tax Service Inc., a Delaware corporation, (the “Company”),
the Issuer and each of you.  Terms used and not otherwise defined herein shall
have the respective meanings set forth in the Note Purchase Agreement.

 

In that connection, we have examined the following:

 

(a)           The Note Purchase Agreement;

 

(b)           The Subsidiary Guaranty;

 

(c)           A copy of the Amended and Restated Certificate of Incorporation of
the Issuer and all amendments thereto certified by the State Corporate
Commission of the Commonwealth of Virginia and the Certificate of the State
Corporate Commission of the Commonwealth of Virginia evidencing that the Issuer
is in good standing in such Commonwealth (the “Good Standing Certificate”);

 

(d)           A copy of the By-laws of the Issuer, as amended to the date
hereof, and a copy of the resolutions adopted by the Board of Directors of the
Issuer with respect to the authorization of the Note Purchase Agreement, the
issuance, sale and delivery of the

 

Exhibit 4.4(c)

(to Note Purchase Agreement)

 

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Notes and related matters, each as certified by the Secretary of the Issuer;

 

(e)           A copy of the Certificate of Incorporation of the Company and all
amendments thereto certified by the Secretary of the State of Delaware and the
Certificate of the Secretary of State of the State of Delaware evidencing that
the Company is in good standing in such state (the “Company Good Standing
Certificate”);

 

(f)            A copy of the By-laws of the Company, as amended to the date
hereof, and a copy of the resolutions adopted by the Board of Directors of the
Company with respect to the authorization of the Note Purchase Agreement and
related matters, each as certified by the Secretary of the Company;

 

(g)           A copy of the Certificate of Incorporation of Tax Services of
America, Inc., a Delaware corporation, and a copy of the Amended and Restated
Certificate of Incorporation of Hewfant, Inc., a Virginia corporation, each a
party to the Subsidiary Guaranty, (the “Subsidiary Guarantors”) and all
amendments thereto certified by the Secretary of State, or the equivalent
thereof, for the respective Subsidiary Guarantor and the Certificates of the
Secretary of State of the State, or the equivalent thereof, evidencing that the
Subsidiary Guarantors are in good standing in their respective jurisdictions
(the “Subsidiary Guarantors Good Standing Certificates”);

 

(h)           A copy of the By-laws of each Subsidiary Guarantor as amended to
the date hereof, and a copy of the resolutions adopted by the Board of Directors
of each Subsidiary Guarantor with respect to the authorization of the Subsidiary
Guaranty and related matters, each as certified by the Secretary of the
Subsidiary Guarantors;

 

(i)            The opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel for the Company and the Issuer, dated the date hereof and delivered
responsive to Section 4.4(a) of the Note Purchase Agreement;

 

(j)            The opinion of Piper Rudnick, LLP, special counsel to the Company
and the Issuer, dated the date hereof and delivered responsive to Section 4.4(b)
of the Note Purchase Agreement;

 

(k)           The Notes delivered on the date hereof;

 

(l)            Such certificates of officers of the Company, the Issuer and of
public officials as we have deemed necessary to give the opinions hereinafter
expressed; and

 

(m)          Such other documents and matters of law as we have deemed necessary
to give the opinions hereinafter expressed.

 

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We believe that the opinions referred to in clauses (i) and (j) above are
satisfactory in scope and form and that you are justified in relying thereon. 
Our opinion as to matters referred to in paragraph 1 below is based solely upon
an examination of the Articles of Incorporation of the Issuer, the Good Standing
Certificate and the general business corporation law of the Commonwealth of
Virginia.  Our opinion as to matters referred to in paragraph 2 below is based
solely upon an examination of the Certificate of Incorporation of the Company,
the Company Good Standing Certificate and the general business corporation law
of the State of Delaware.  Our opinion as to matters referred to in paragraph 3
below is based solely upon an examination of the Certificate of Incorporation,
or the equivalent thereof, of each Subsidiary Guarantor, each Subsidiary
Guarantor Good Standing Certificate and the general business corporation law of
the State of Delaware and the Commonwealth of Virginia.  We have also relied, as
to certain factual matters, upon appropriate certificates of public officials
and officers of the Issuer, the Company and the Subsidiary Guarantors and upon
representations of the Company, the Issuer and you delivered in connection with
the issuance and sale of the Notes.

 

Based upon the foregoing, we are of the opinion that:

 

1.             The Issuer is a corporation, validly existing and in good
standing under the laws of the Commonwealth of Virginia and has the corporate
power and the corporate authority to execute and deliver the Note Purchase
Agreement and to issue the Notes.

 

2.             The Company is a corporation, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
the corporate authority to execute and deliver the Note Purchase Agreement.

 

3.             Tax Services of America, Inc., is a corporation, validly existing
and in good standing under the laws of the State of Delaware and Hewfant, Inc.,
is a corporation validly existing and in good standing under the laws of the
Commonwealth of Virginia, and each, as Subsidiary Guarantor, has the corporate
power and the corporate authority to execute and deliver the Subsidiary Guaranty
Agreement.

 

4.             The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Issuer and the Company, has been
duly executed and delivered by the Issuer and the Company and constitutes the
legal, valid and binding contract of both the Issuer and the Company enforceable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors’ rights generally, and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law).

 

5.             The Subsidiary Guaranty has been duly authorized by all necessary

 

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corporate action on the part of each Subsidiary Guarantor, has been duly
executed and delivered by each Subsidiary Guarantor and constitutes the legal,
valid and binding contract of each Subsidiary Guarantor enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors’ rights generally, and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law).

 

6.             The Notes have been duly authorized by all necessary corporate
action on the part of the Issuer, and the Notes being delivered on the date
hereof have been duly executed and delivered by the Issuer and constitute the
legal, valid and binding obligations of the Issuer enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors’ rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).

 

Our opinion is limited to the laws of the State of New York, the general
business corporation law of the State of Delaware and the Commonwealth of
Virginia and the Federal laws of the United States and we express no opinion on
the laws of any other jurisdiction.  This opinion may be relied upon by the
successors and assigns of the Purchasers, including subsequent transferees of
the Notes.

 

 

Respectfully submitted,

 

 

JRFisher:SLeist

 

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Schedule I

 

SunAmerica Life Insurance Company

c/o AIG Global Investment Group

Houston, Texas

 

Monumental Life Insurance Company

c/o AEGON USA Investment Management, LLC

Cedar Rapids, Iowa

 

ING USA Annuity and Life Insurance Company

c/o ING Investment Management LLC

Atlanta, Georgia

 

ING Life Insurance and Annuity Company

c/o ING Investment Management LLC

Atlanta, Georgia

 

Connecticut General Life Insurance Company

c/o CIGNA Retirement & Investment Services

Hartford, Connecticut

 

Principal Life Insurance Company

c/o Principal Global Investors, LLC

Des Moines, Iowa

 

The Travelers Insurance Company

Hartford, Connecticut

 

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