Exhibit 10.1
 
 
Credit Agreement
dated as of January 24, 2007
among
Alliance Data Systems Corporation,
as Borrower,
The Guarantors Party Hereto,
The Banks Party Hereto,
and
Bank of Montreal,
as Administrative Agent
 
 
BMO Capital Markets,
as Lead Arranger

 

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

 

Table of Contents

              Section   Heading   Page  
Article 1
  Definitions     1  
 
           
Section 1.1
  Definitions     1  
Section 1.2.
  Accounting Terms and Determinations     15  
Section 1.3.
  Types of Borrowings     16  
 
           
Article 2
  The Credits     16  
 
           
Section 2.1.
  Commitments to Lend     16  
Section 2.2.
  Notice of Borrowing     16  
Section 2.3.
  Notice to Banks Funding of Loans     16  
Section 2.4.
  Evidence of Indebtedness     17  
Section 2.5.
  Maturity of Loans     18  
Section 2.6.
  Interest Rates     18  
Section 2.7.
  [Intentionally Omitted]     19  
Section 2.8.
  [Intentionally Omitted]     19  
Section 2.9.
  Method of Electing Interest Rates for Loans     19  
Section 2.10.
  Optional Prepayments     19  
Section 2.11.
  Mandatory Prepayments     20  
Section 2.12.
  General Provisions as to Payments     21  
Section 2.13.
  Funding Losses     21  
Section 2.14.
  Computation of Interest     22  
Section 2.15.
  Regulation D Compensation     22  
Section 2.16.
  Additional Commitments     22  
 
           
Article 3
  Conditions     23  
 
           
Section 3.1.
  Initial Borrowing     23  
Section 3.2.
  Each Borrowing     23  
 
           
Article 4
  Representations and Warranties     24  
 
           
Section 4.1.
  Existence and Power     24  
Section 4.2.
  Corporate and Governmental Authorization; No Contravention     24  
Section 4.3.
  Binding Effect     25  
Section 4.4.
  Financial Information     25  
Section 4.5.
  Litigation     26  
Section 4.6.
  Compliance with ERISA     26  
Section 4.7.
  Environmental Matters     26  
Section 4.8.
  Taxes     27  
Section 4.9.
  Subsidiaries     27  
Section 4.10.
  Investment Company     27  
Section 4.11.
  Full Disclosure     27  

-i-

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

 

              Section   Heading   Page  
Article 5
  Covenants     28  
 
           
Section 5.1.
  Information     28  
Section 5.2.
  Payment of Obligations     30  
Section 5.3.
  Maintenance of Property; Insurance     31  
Section 5.4.
  Conduct of Business and Maintenance of Existence     31  
Section 5.5.
  Compliance with Laws     31  
Section 5.6.
  Inspection of Property, Books and Records     31  
Section 5.7.
  Mergers and Sales of Assets     31  
Section 5.8.
  Use of Proceeds     32  
Section 5.9.
  Negative Pledge     32  
Section 5.10.
  End of Fiscal Years and Fiscal Quarters     33  
Section 5.11.
  Maximum Total Capitalization Ratio     33  
Section 5.12.
  Senior Leverage Ratio     33  
Section 5.13.
  Interest Coverage Ratio     33  
Section 5.14.
  Delinquency Ratio     34  
Section 5.15.
  Debt Limitation     34  
Section 5.16
  Capitalization of Insured Subsidiaries     34  
Section 5.17.
  Restricted Payments; Required Dividends     34  
Section 5.18.
  Equity Ownership, Limitation On Creation Of Subsidiaries     35  
Section 5.19.
  Change Of Business     35  
Section 5.20.
  Limitation On Issuance Of Capital Stock     35  
Section 5.21.
  Investments; Restricted Acquisition     36  
Section 5.22.
  No Restrictions     37  
Section 5.23.
  Guarantors     38  
 
           
Article 6
  Defaults     39  
 
           
Section 6.1.
  Events of Default     39  
Section 6.2.
  Notice of Default     41  
 
           
Article 7
  The Agent     41  
 
           
Section 7.1.
  Appointment and Authorization     41  
Section 7.2.
  Administrative Agent and Affiliates     41  
Section 7.3.
  Action By Administrative Agent     42  
Section 7.4.
  Consultation with Experts     42  
Section 7.5.
  Liability of Administrative Agent     42  
Section 7.6.
  Indemnification     42  
Section 7.7.
  Credit Decision     42  
Section 7.8.
  Successor Administrative Agent     43  
 
           
Article 8
  Change in Circumstances     43  
 
           
Section 8.1.
  Basis for Determining Interest Rate Inaccurate or Unfair     43  
Section 8.2.
  Illegality     44  
Section 8.3.
  Increased Cost and Reduced Return     44  
Section 8.4.
  Taxes     45  

-ii-

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

 

              Section   Heading   Page  
Section 8.5.
  Base Rate Loans Substituted for Affected Fixed Rate Loans     47  
Section 8.6.
  Limitations on Reimbursement     47  
 
           
Article 9
  Performance and Payment Guaranty     48  
 
           
Section 9.1.
  Unconditional and Irrevocable Guaranty     48  
Section 9.2.
  Enforcement     49  
Section 9.3.
  Obligations Absolute     49  
Section 9.4.
  Waiver     50  
Section 9.5.
  Subrogation     50  
Section 9.6.
  Survival     50  
Section 9.7.
  Guarantors’ Consent to Assigns     50  
Section 9.8.
  Continuing Agreement     50  
Section 9.9.
  Entire Agreement     51  
Section 9.10.
  Application     51  
 
           
Article 10
  Miscellaneous     51  
 
           
Section 10.1.
  Notices     51  
Section 10.2.
  No Waivers     51  
Section 10.3.
  Expenses; Indemnification     51  
Section 10.4.
  Sharing of Set-Offs     52  
Section 10.5.
  Amendment or Waiver, etc     52  
Section 10.6.
  Successors and Assigns     53  
Section 10.7.
  Collateral     55  
Section 10.8.
  Governing Law; Submission to Jurisdiction     55  
Section 10.9.
  Counterparts; Integration; Effectiveness     55  
Section 10.10.
  Waiver of Jury Trial     56  
Section 10.11.
  Limitation on Interest     56  
Section 10.12.
  Currency Equivalent Generally     57  
Section 10.13.
  USA Patriot Act     57  
Section 10.14.
  Confidentiality     57  

         
Schedule I
  —   Commitments
Schedule II
  —   Investment Plan
Schedule 5.9
  —   Existing Liens
Schedule 5.21
  —   Intercompany Investment Commitments
Appendix I
  —   Pricing Schedule
 
       
Exhibit A
  —   Form of Assignment and Assumption Agreement
Exhibit B
  —   Form of Note
Exhibit C
  —   Form of Guarantor Supplement
Exhibit D
  —   Form of Commitment Amount Increase Request

-iii-

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

 

     This Credit Agreement, dated as of January 24, 2007, is entered into by and
among Alliance Data Systems Corporation, a Delaware corporation (the
“Borrower”), the Guarantors from time to time party hereto, the Banks from time
to time party hereto, and Bank of Montreal, as Administrative Agent.
     Whereas, the Borrower has requested that the Banks provide a credit
facility to the Borrower on the terms and conditions set forth in this
Agreement;
     Now, Therefore, the parties hereto agree as follows:
Article 1
Definitions
     Section 1.1 Definitions. The following terms, as used herein, have the
following meanings:
     “Act” has the meaning set forth in Section 10.13.
     “Administrative Agent” means Bank of Montreal in its capacity as agent for
the Banks hereunder, and its successors in such capacity.
     “Administrative Questionnaire” means an administrative questionnaire in a
form supplied by the Administrative Agent.
     “ADSI” means ADS Alliance Data Systems, Inc., a Delaware corporation.
     “Affected Loans” has the meaning set forth in Section 2.11(c).
     “Affiliate” means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a “Controlling Person”) or
(ii) any Person (other than the Borrower or a Subsidiary thereof) which is
controlled by or is under common control with a Controlling Person. As used
herein, the term “control” means possession, directly or indirectly, of the
power to vote 10% or more of any class of voting securities of a Person or to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. The
Affiliates of a Person shall include any officer or director of such Person.
     “Agreement” means this Credit Agreement, as modified, supplemented,
amended, restated (including any amendment and restatement hereof), extended,
renewed or refinanced from time to time.
     “Annual Measurement Period” has the meaning set forth in Section 5.17(a).

 

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

 

     “Applicable Lending Office” means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office and (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office.
     “Assignment and Assumption Agreement” means an appropriately completed
Assignment and Assumption Agreement in the form of Exhibit A hereto.
     “Bank” means each bank listed on the signature pages hereof, each Assignee
which becomes a Bank pursuant to Section 10.6(c), and their respective
successors.
     “Bankruptcy Code” has the meaning set forth in Section 9.3.
     “Base Rate” means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
     “Base Rate Loan” means a Loan which bears interest at the Base Rate
pursuant to the provisions of Articles 2 or 8 hereof.
     “Base Rate Margin” means a percentage per annum equal to the applicable
percentage specified in the pricing schedule attached hereto as Appendix 1.
     “Beneficiaries” has the meaning set forth in Section 9.1.
     “Benefit Arrangement” means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.
     “Borrower” has the meaning provided in the first paragraph of this
Agreement.
     “Borrowing” has the meaning set forth in Section 1.3.
     “Business Day” means any day except a Saturday, Sunday or other day on
which commercial banks in Chicago, Illinois are authorized by law to close and,
if the applicable Business Day relates to an advance or continuation of, or
conversion into, or payment of, a Euro-Dollar Loan, on which commercial banks
are open for international business (including dealing in U.S. Dollar deposits)
in London, England.
     “Canadian Dollars” and “Cdn$” each mean the lawful currency of Canada.
     “Canadian Scheme License” means the Amended and Restated License to Use and
Exploit the Air Miles Scheme in Canada, made as of July 24, 1998, between Air
Miles International Trading B.V. and Loyalty Management, as such may be amended
from time to time.

-2-

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

 

     “Canadian Trademark License” means the Amended and Restated License to Use
the Air Miles Trade Marks in Canada, dated July 24, 1998, between Air Miles
International Holdings N.V. and Loyalty Management, as such may be amended from
time to time.
     “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.
     “Capital Stock” means (a) in the case of a corporation, capital stock,
(b) in the case of a partnership, partnership interests (whether general or
limited), (c) in the case of a limited liability company, membership interests
and (d) any other interest or participation in a Person that confers on the
holder the right to receive a share of the profits and losses of, or
distributions of assets of, such Person.
     “Change of Control” means the acquisition by any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) at any time of beneficial ownership of 30% or more of the
outstanding Voting Stock of the Borrower on a fully-diluted basis, other than
acquisitions of such interests by the Welsh, Carson, Anderson & Stowe
Partnerships or The Limited; provided, that common stock owned by employees
(either individually or through employee stock ownership or other stock based
benefit plans) of the Borrower and its Subsidiaries shall not be included in the
calculation of ownership interests for purposes of this definition or any
“change of control.”
     “Code” means the U.S. Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect on the Effective Date and
any subsequent provisions of the Code, amendatory thereof, supplemental thereto
or substituted therefor.
     “Commitment” means, (i) with respect to each Bank listed on the signature
pages hereof, the amount set forth opposite its name on Schedule I hereto under
the heading “Commitment” and (ii) with respect to any Bank that becomes a “Bank”
pursuant to Section 2.16, the amount of such Bank’s Commitment set forth in the
applicable Commitment Amount Increase Request.
     “Commitment Amount Increase” has the meaning set forth in Section 2.16.
     “Commitment Amount Increase Request” means a Commitment Amount Increase
Request in the form of Exhibit D.
     “Consolidated Capital Expenditures” of any Person means, for any period,
the additions to property, plant and equipment and other capital expenditures of
such Person and its Consolidated Subsidiaries for such period, as the same are
or would be set forth in a consolidated statement of cash flows of such Person
and its Consolidated Subsidiaries for such period.
     “Consolidated Debt” of any Person means, at any date, the Debt of such
Person and its Consolidated Subsidiaries, determined on a consolidated basis as
of such date.

-3-

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

 

     “Consolidated EBIT” means, for any period, the sum of Consolidated Net
Income for such period, plus, to the extent deducted in determining such
Consolidated Net Income, (i) Consolidated Interest Expense and (ii) federal,
state, local and foreign income, value added and similar taxes. If, during the
period for which Consolidated EBIT is being calculated, the Borrower or any
Subsidiary has (i) acquired sufficient Capital Stock of a Person to cause such
Person to become a Subsidiary; (ii) acquired all or substantially all of the
assets or operations, division or line of business of a Person; (iii) disposed
of sufficient Capital Stock of a Subsidiary to cause such Subsidiary to cease to
be a Subsidiary; or (iv) disposed of all or substantially all of the assets or
operations of a Subsidiary, Consolidated EBIT shall be calculated after giving
pro forma effect thereto as if such acquisition or disposition had occurred on
the first day of such period.
     “Consolidated Interest Expense” means, for any period, the total interest
expense paid on Debt of the Borrower and its Subsidiaries (including the
interest component of Capital Leases) for such period, determined on a
consolidated basis in accordance with GAAP.
     “Consolidated Net Income” of any Person means, for any fiscal period, the
net income of such Person and its Consolidated Subsidiaries, determined on a
consolidated basis for such period, exclusive of the effect of any extraordinary
or other nonrecurring gain and loss and excluding all non-cash adjustments;
provided that any cash payment made (or received) with respect to any such
non-cash charge, expense or loss shall be subtracted (added) in computing
Consolidated Net Income during the period in which such cash payment is made (or
received).
     “Consolidated Net Worth” of any Person means at any date the consolidated
stockholders’ equity of such Person and its Consolidated Subsidiaries.
     “Consolidated Operating EBITDA” means, for any period, the sum of
Consolidated EBIT for such period, plus, to the extent deducted in determining
Consolidated Net Income, (i) depreciation and amortization expense, including
amortization of goodwill and other intangible assets and (ii) the amount of any
change in the Deferred Revenue Account from the beginning of such period to the
last day of such period, less (iii) the amount of any change in the Restricted
Cash Account from the beginning of such period to the last day of such period.
If, during the period for which Consolidated Operating EBITDA is being
calculated, the Borrower or any Subsidiary has (i) acquired sufficient Capital
Stock of a Person to cause such Person to become a Subsidiary; (ii) acquired all
or substantially all of the assets or operations, division or line of business
of a Person; (iii) disposed of sufficient Capital Stock of a Subsidiary to cause
such Subsidiary to cease to be a Subsidiary; or (iv) disposed or all or
substantially all of the assets or operations of a Subsidiary, Consolidated
Operation EBITDA shall be calculated after giving pro forma effect thereto as if
such acquisition or disposition had occurred on the first day of such period.
     “Consolidated Subsidiary” of any Person means, at any date, any Subsidiary
or other entity the accounts of which would be consolidated with those of such
Person in its consolidated financial statements if such statements were prepared
as of such date.

-4-

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

 

     “Consolidated Total Assets” of any Person means total assets of such Person
and its Subsidiaries, determined on a consolidated basis in accordance with
generally accepted accounting principles less any amount of assets reflected
therein to the extent that they have been sold or pledged pursuant to a
Qualified Securitization Transaction that are or may be reflected as Debt on a
balance sheet of such Person.
     “Credit Document” means this Agreement, the Notes and each other document
(including any additional guarantees) executed or delivered in connection
herewith or therewith.
     “Credit Party” shall mean the Borrower and each Guarantor.
     “Debt” of any Person means at any date, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v) all
non-contingent obligations (and, for purposes of Section 5.9, Section 5.15 and
the definitions of “Material Debt” and “Material Financial Obligations,” all
contingent obligations) of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument, (vi) all
Debt secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, (vii) all Debt of others Guaranteed by
such Person, but excluding any Qualifying Deposits and (viii) Redeemable Stock
of the Borrower or any of its Subsidiaries, valued at the amount of all
obligations with respect to the redemption or repurchase thereof or the
applicable liquidation preference. Notwithstanding the foregoing, there shall be
excluded from Debt of any Person any obligations of such Person under a
Qualified Securitization Transaction that are or may be reflected as Debt on a
balance sheet of such Person.
     “Default” means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
     “Deferred Revenue Account” means the account on the consolidating balance
sheet of the Borrower associated solely with the change in revenue recognition
by Loyalty Management as required by the Securities and Exchange Commission of
the United States of America.
     “Delinquency Ratio” means, for any calendar month, the percentage
equivalent of a fraction (a) the numerator of which is the aggregate amount of
all Managed Receivables the minimum payments on which are more than 90 days
contractually overdue and (b) the denominator of which is all Managed
Receivables, in each case determined as of the last day of such calendar month.
     “Derivatives Obligations” of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,

-5-

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

 

currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions), any transaction whose value is derived from another
asset or security, or any combination of the foregoing transactions.
     “Dollars” and “$” means freely transferable lawful money of the United
States of America.
     “Domestic Lending Office” means, as to each Bank, its office identified as
such on its Administrative Questionnaire or such other office as such Bank may
hereafter designate as its Domestic Lending Office by notice to the Borrower and
the Administrative Agent, which office shall be located in the United States.
     “Domestic Subsidiary” means any Subsidiary of the Borrower incorporated or
organized in the United States or any state or territory thereof.
     “Effective Date” means January 24, 2007.
     “Eligible Transferee” means and includes a commercial bank, insurance
company, financial institution, fund or other Person (other than a natural
person) which regularly purchases interests in loans or extensions of credit of
the types made pursuant to this Agreement, any other Person (other than a
natural person) which would constitute a “qualified institutional buyer” within
the meaning of Rule 144A under the Securities Act as in effect on the Effective
Date or other “accredited investor” (other than a natural person) (as defined in
Regulation D of the Securities Act).
     “Environmental Laws” means any and all federal, state, provincial, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
cleanup or other remediation thereof.
     “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
     “ERISA Group” of any Person means such Person, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Code.
     “Euro-Dollar Lending Office” means, as to each Bank, its office, branch or
affiliate identified as such on the signature pages hereto or such other office,
branch or affiliate of such

-6-

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

 

Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Administrative Agent.
     “Euro-Dollar Loan” means (i) a Loan which bears interest at a Euro-Dollar
Rate or (ii) an overdue amount which was a Euro-Dollar Loan immediately before
it became overdue.
     “Euro-Dollar Margin” means a percentage per annum equal to the applicable
percentage specified in the pricing schedule attached hereto as Appendix 1.
     “Euro-Dollar Rate” means a rate of interest determined pursuant to
Section 2.6(b) on the basis of the London Interbank Offered Rate.
     “Event of Default” has the meaning set forth in Section 6.1.
     “Federal Funds Rate” means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided, that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to the
Administrative Agent on such day on such transactions as determined by the
Administrative Agent.
     “Foreign Pension Plan” means any plan, fund (including, without limitation,
any superannuation fund) or other similar program established or maintained
outside the United States of America by the Borrower or any one or more of its
Subsidiaries primarily for the benefit of employees of the Borrower or such
Subsidiaries residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
     “Foreign Subsidiary” means each Subsidiary of the Borrower other than a
Domestic Subsidiary.
     “GAAP” has the meaning set forth in Section 1.2.
     “Granting Bank” has the meaning set forth in Section 10.6(e).
     “Guaranteed Obligations” has the meaning set forth in Section 9.1.
     “Guarantor” means each direct and indirect Material Domestic Subsidiary of
the Borrower that becomes a Guarantor from time to time after the Effective Date
pursuant to Section 5.23.

-7-

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

 

     “Guarantor Supplement” means an appropriately completed Guarantor
Supplement substantially in the form of Exhibit C hereto.
     “Guaranty” by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the holder of such Debt of the payment
thereof to protect such holder against loss in respect thereof (in whole or in
part), provided, that the term Guaranty shall not include endorsements for
collection or deposit in the ordinary course of business. The term “Guaranty”
used as a verb has a corresponding meaning.
     “Hazardous Substances” means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics.
     “Hostile Acquisition” means the acquisition of the capital stock or other
equity interests of a Person through a tender offer or similar solicitation of
the owners of such capital stock or other equity interests which has not been
approved (prior to such acquisition) by resolutions of the board of directors of
such Person or by similar action if such Person is not a corporation, and as to
which such approval has not been withdrawn.
     “Indemnitee” has the meaning set forth in Section 10.3(b).
     “Insured Subsidiary” means a Subsidiary of the Borrower which is an
“insured depository institution” under and as defined in the U.S. Federal
Deposit Insurance Act (12 U.S.C. 1813(c)(2)) or any successor statute.
     “Intercompany Note” means a promissory note made by the Borrower or any
Subsidiary payable to the order of the Borrower or any of its Subsidiaries.
     “Interest Coverage Ratio” of any Person means, for any period, the ratio of
Consolidated Operating EBITDA of such Person for such period to Consolidated
Interest Expense of such Person for such period.
     “Interest Period” means with respect to each Euro-Dollar Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable Notice of Interest Period
Election and ending one, two or three months thereafter, as the Borrower may
elect in the applicable notice; provided that:
     (i) any Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such

-8-

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

 

Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;
     (ii) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (iii) below, end on the last Business Day of a calendar month; and
     (iii) any Interest Period which would otherwise end after the Maturity Date
shall end on the Maturity Date (unless such date is not a Business Day, in which
case such Interest Period shall end on the latest Business Day to occur prior to
the Maturity Date).
     “Investment” means any investment in any Person, whether by means of share
purchase, capital contribution, loan, Guaranty, time deposit or otherwise (but
not including any demand deposit).
     “License Agreements” means the Canadian Trademark License, the US Trademark
License, the Canadian Scheme License, and the US Scheme License.
     “Lien” means, with respect to any asset, any mortgage, lien, pledge,
charge, hypothec, security interest or encumbrance of any kind, or any other
type of preferential arrangement that has the practical effect of creating a
security interest, in respect of such asset. For the purposes of this Agreement,
the Borrower or any Subsidiary shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
     “Loan” has the meaning set forth in Section 2.1(a); provided, that if any
such Loan or Loans (or portions thereof) are combined or subdivided pursuant to
a Notice of Interest Period Election, the term “Loan” shall refer to the
combined principal amount resulting from such combination or to each of the
separate principal amounts resulting from such subdivision, as the case may be.
     “London Interbank Offered Rate” means, for any Interest Period, with
respect to any Euro-Dollar Loan, either (i) the rate per annum (rounded upward,
if necessary, to the next higher 1/100th of 1%) for deposits in Dollars for a
period equal to such Interest Period, which appears on Telerate Page 3750 (or
any successor page) as of 11:00 a.m. (London, England time) on the day two
Business Days before the commencement of such Interest Period or (ii) if the
rate in clause (i) of this definition is not shown for any particular day, the
rate per annum (rounded upward, if necessary, to the next higher 1/100th of 1%)
at which deposits in U.S. Dollars are offered to the Administrative Agent in the
London interbank market at approximately 11:00 a.m. (London, England time) two
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Euro-Dollar Loans of the
Administrative Agent to which such Interest Period is to apply and for a period
of time comparable to such Interest Period for which such rate will apply as of
approximately 11:00 a.m. (London, England time) two Business Days prior to the
first day of such Interest Period.

-9-

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

 

     “Loyalty Management” means Loyalty Management Group Canada Inc., an Ontario
corporation.
     “Managed Receivables” of any Person means for any date all credit card
receivables originated by such Person as of such date regardless of whether such
credit card receivables are determined, with respect to such Person’s financial
statements, to be “on-balance sheet” or “off-balance sheet.”
     “Material Adverse Effect” means (a) a material adverse change in, or
material adverse effect upon, the business, financial condition or operations of
the Borrower and its Consolidated Subsidiaries taken as a whole, (b) a material
impairment of the ability of the Borrower and the Guarantors to perform their
material obligations under the Credit Documents or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against the Credit
Parties of the Credit Documents or the material rights and remedies of the
Administrative Agent and the Banks thereunder.
     “Material Asset” means an asset or assets having a fair market value in
excess of $25,000,000.
     “Material Debt” means Debt (other than the Loans hereunder) (i) of a Person
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal or face amount exceeding U.S.
$25,000,000, (ii) under the Revolving Credit Agreement and (iii) under the Note
Purchase Agreement.
     “Material Domestic Subsidiary” means each Domestic Subsidiary that is a
Material Subsidiary.
     “Material Financial Obligations” of any Person means a principal or face
amount of Debt and/or payment or collateralization obligations in respect of
Derivatives Obligations of such Person and/or one or more of its Subsidiaries,
arising in one or more related or unrelated transactions, exceeding in the
aggregate U.S. $25,000,000.
     “Material Plan” means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of U.S. $25,000,000.
     “Material Subsidiary” means each direct or indirect Subsidiary which
(i) owned as of the end of the most recently completed fiscal quarter (or, in
the case of an acquired Subsidiary, on a pro forma basis would have owned)
assets that represent in excess of 10% of the Consolidated Total Assets of the
Borrower as of the end of such fiscal quarter or (ii) generated (or, in the case
of an acquired Subsidiary, on a pro forma basis would have generated) annual
revenues in excess of 10% of the consolidated total revenues for the Borrower
and its Consolidated Subsidiaries for the most recently completed fiscal year.
     “Maturity Date” means July 24, 2007.
     “Maximum Annual Amount” is defined in Section 5.17(a).

-10-

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

 

     “Multiemployer Plan” means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
     “Net Cash Proceeds” means with respect to any offering of equity securities
of a Person or the issuance of any Debt by a Person, as applicable, cash and
cash equivalent proceeds received by or for such Person’s account, net of legal,
underwriting, and other fees and expenses incurred as a direct result thereof.
     “Note” has the meaning set forth in Section 2.4(d).
     “Note Purchase Agreement” means the Note Purchase Agreement dated as of
May 1, 2006 among the Borrower and the Purchasers from time to time party
thereto relating to the sale by the Borrower of its $250,000,000 6.00% Senior
Notes, Series A, due May 16, 2009 and its $250,000,000 6.14% Senior Notes,
Series B, due May 16, 2011, as the same may be amended, modified, supplemented,
replaced or refinanced from time to time.
     “Notice of Borrowing” has the meaning set forth in Section 2.2.
     “Notice of Interest Period Election” has the meaning set forth in
Section 2.9.
     “Obligations” means (i) all amounts owing to the Administrative Agent or
any Bank pursuant to the terms of this Agreement or any other Credit Document
and (ii) so long as there are amounts owing under clause (i), Derivatives
Obligations from time to time owed to a Person that, at the time of incurrence
thereof, was a Bank or an Affiliate of a Bank.
     “Other Taxes” has the meaning set forth in Section 8.4(a).
     “Parent” means, with respect to any Bank, any Person controlling such Bank.
     “Participant” has the meaning set forth in Section 10.6(b).
     “Payment Office” means the office of the Administrative Agent located at
115 South LaSalle Street, Chicago, Illinois 60603, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
     “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
     “Percentage” means at any time for each Bank with a Commitment, the
percentage obtained by dividing such Bank’s Commitment by the Total Commitment,
provided that if the Total Commitment has been terminated, the Percentage of
each Bank shall be determined by dividing the percentage held by such Bank, of
the aggregate principal amount of all Loans.

-11-

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

 

     “Person” means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
     “Plan” means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
     “Prime Rate” means the rate of interest announced or otherwise established
by the Administrative Agent from time to time as its Prime Rate.
     “Qualified Securitization Subsidiary” means a Subsidiary that is a special
purpose entity used in connection with a Qualified Securitization Transaction.
     “Qualified Securitization Transaction” means a securitization or other sale
or financing of credit card receivables.
     “Qualifying Deposits” means deposits that are (i) insured by the U.S.
Federal Deposit Insurance Corporation and (ii) do not exceed the difference
between (A) the amount of seller’s interest and credit card receivables minus
(B) the allowance for doubtful accounts related to seller’s interest and credit
card receivables, in each case as shown on the consolidated balance sheet of the
Borrower and its Subsidiaries.
     “Quarterly Dates” has the meaning set forth in Section 2.6(a).
     “Redeemable Stock” means Capital Stock of the Borrower or any of its
Subsidiaries that is redeemable at the option of the holder thereof or that
constitutes preferred stock.
     “Regulation U” means Regulation U of the Board of Governors of the U.S.
Federal Reserve System, as in effect from time to time.
     “Required Banks” means Banks the sum of whose outstanding Commitments (or
after the termination thereof, outstanding Loans) represent an amount greater
than 50% of the sum of the Total Commitment (or after the termination thereof,
the sum of the total outstanding Loans at such time).
     “Reserve Percentage” means for any day that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect of “Eurocurrency
Liabilities” (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-Dollar Loans is
determined or any

-12-

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

 

category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents).
     “Restricted Acquisition” means any acquisition, whether in a single
transaction or series of related transactions, by the Borrower or any one or
more of its Subsidiaries, or any combination thereof, of (i) all or a
substantial part of the assets, or all or any substantial part of a going
business or division, of any Person, whether through purchase of assets or
securities, by merger or otherwise, (ii) control of securities of an existing
corporation or other Person having ordinary voting power (apart from rights
accruing under special circumstances) to elect a majority of the board of
directors of such corporation or other Person or (iii) control of a greater than
50% ownership interest in any existing partnership, joint venture or other
Person).
     “Restricted Cash” means cash required by the Borrower and its Subsidiaries
to fund securitization spread accounts, cash collateral accounts relating to
securitization of credit card receivables, excess funding accounts relating to
securitization of credit card receivables and cash restricted to fund future Air
Miles redemptions.
     “Restricted Cash Account” means the account on the consolidating balance
sheet of the Borrower related solely to redemption settlement assets of Loyalty
Management’s “Air Miles Program.”
     “Restricted Payment” means (i) any dividend or other distribution on any
shares of a Person’s (including any Credit Party’s) capital stock (except
dividends or distributions payable solely in shares of its capital stock and
except dividends and distributions payable to the Borrower or any of its
Subsidiaries) or (ii) any payment on account of the purchase, redemption,
retirement or acquisition of (a) any shares of a Person’s (including any Credit
Party’s) capital stock or (b) any option, warrant or other right to acquire
shares of a Person’s capital stock (but not including (1) payments of principal,
premium (if any) or interest made pursuant to the terms of convertible debt
securities prior to conversion, (2) payments made to the Borrower or any of its
Subsidiaries, and (3) payments made solely in shares of (or solely out of the
net proceeds of a substantially concurrent issuance of) such Person’s (including
any Credit Party’s) capital stock or options, warrants or other rights to
acquire shares of such Persons’ (including any Credit Party’s) capital stock).
     “Revolving Credit Agreement” means that certain Credit Agreement dated as
of September 29, 2006, by and among the Borrower, the guarantors from time to
time party thereto, the financial institutions from time to time party thereto,
Bank of Montreal as Letter of Credit Issuer, and Bank of Montreal as
Administrative Agent, as amended, supplemented or otherwise modified from time
to time.
     “Senior Leverage Ratio” means, at any time, the ratio of (x) all principal
amounts owing by the Borrower and its Subsidiaries pursuant to the terms of
(i) this Agreement, any other Credit Document, the Revolving Credit Agreement
and the Note Purchase Agreement and all extensions, renewals, refinancings,
refundings and replacements of any of the foregoing, in whole or in part (in
each case other than Subordinated Debt), and (ii) any credit agreement, note
purchase agreement, indenture or other credit facility relating to Debt (in each
case other than

-13-

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

 

Subordinated Debt) permitted by Section 5.15(viii) to (y) Consolidated Operating
EBITDA of the Borrower and its Subsidiaries for the twelve months then most
recently ended.
     “SPC” has the meaning set forth in Section 10.6(e).
     “Subordinated Debt” means subordinated Debt of the Borrower or any
Guarantor, provided that (i) such Debt shall be expressly subordinated in right
of payment to the Obligations in a manner reasonably acceptable to the
Administrative Agent and (ii) such Debt shall be unsecured and unguaranteed
other than guarantees issued by Guarantors which are subordinated in right of
payment to the obligations of such Guarantors hereunder pursuant to
subordination terms reasonably acceptable to the Administrative Agent.
     “Subsidiary” means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, “Subsidiary” means a Subsidiary of the Borrower.
     “Taxes” is defined in Section 8.4(a).
     “The Community Reinvestment Act” means The Community Reinvestment Act of
1977 (12 U.S.C. 2901 et seq.) as amended.
     “The Limited” means Limited Commerce Corp., a Delaware corporation and its
successors and assigns.
     “Total Capitalization Ratio” means, for any Person, the ratio of
(x) Consolidated Debt of such Person at such time to (y) the sum of
(i) Consolidated Debt of such Person at such time plus (ii) Consolidated Net
Worth of such Person at such time.
     “Total Commitment” means the aggregate amount of the Commitments of each of
the Banks.
     “Type” means the type of Loan determined according to the interest option
applicable thereto; i.e., whether a Base Rate Loan or a Euro-Dollar Loan.
     “Unfunded Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

-14-

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

 

     “United States” means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
     “U.S. Dollars” and “U.S. $” shall mean freely transferable lawful money of
the United States of America.
     “US Scheme License” means the Amended and Restated License to Use and
Exploit the Air Miles Scheme in the United States, dated July 24, 1998, between
Air Miles International Trading B.V. and the Borrower, as such agreement may be
amended from time to time.
     “US Trademark License” means the Amended and Restated License to Use the
Air Miles Trade Marks in the United States, dated July 24, 1998, between Air
Miles International Holdings B.V. and the Borrower, as such agreement may be
amended from time to time.
     “Voting Stock” of any Person means the equity interests of such Person that
are, under ordinary circumstances, entitled to vote in the election of the board
of directors or other persons performing similar functions of such Person.
     “Welsh, Carson, Anderson & Stowe Partnerships” means each Welsh, Carson,
Anderson & Stowe limited partnership, as constituted on the Effective Date, as
may be constituted in the future and any partner, partnership or Affiliate of
any of them and their respective successors and assigns.
     “WFNNB” means World Financial Network National Bank, a limited purpose
national banking association wholly owned by the Borrower.
     “Wholly-Owned Subsidiary” means, as to any Person, any corporation or other
entity 100% of whose Voting Stock (other than director’s qualifying shares) is
at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of
such Person.
     Section 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles in the United States as in effect from
time to time, applied on a basis consistent (except for changes concurred in by
the Borrower’s independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks (“GAAP”); provided that, (i) all
calculations of financial covenants and corresponding accounting terms shall
include for all periods covered thereby pro forma adjustments for the (x) actual
historical financial performance of and (y) identifiable cost savings associated
with providing data processing services to any entities acquired as permitted
under Section 5.21(b) and (ii) if the Borrower notifies the Administrative Agent
that the Borrower wishes to amend any covenant in Article 5 to eliminate the
effect of any change in generally accepted accounting principles on the
operation of such covenant (or if the Administrative Agent notifies the Borrower
that the Required Banks wish to amend Article 5 for such purpose), then the
Borrower’s compliance with such covenant shall be determined on the basis of
generally accepted accounting principles in

-15-

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

 

effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower and the Required
Banks.
     Section 1.3. Types of Borrowings. The term “Borrowing” denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on the same date, all of which Loans are of the same Type (subject to
Article 8) and, except in the case of Base Rate Loans, have the same initial
Interest Period.
Article 2
The Credits
     Section 2.1. Commitments to Lend. Each Bank with a Commitment severally
agrees, on the terms and conditions set forth in this Agreement, to make loans
(each a “Loan” and, collectively, the “Loans") to the Borrower pursuant to this
Section in U.S. Dollars in an amount equal to its Commitment. The Borrowing
under this Section shall be made in a single Borrowing on the Effective Date
from the several Banks ratably in proportion to their respective Commitments, at
which time the Commitments shall expire. Loans shall either be Base Rate Loans
or Euro-Dollar Loans. No amount repaid or prepaid on any Loan may be borrowed
again.
     Section 2.2. Notice of Borrowing. The Borrower shall give the
Administrative Agent notice (a “Notice of Borrowing") in respect of the
Borrowing of Loans not later than 11:00 a.m. (Chicago, Illinois, time) on
(x) the Business Day of the Borrowing if such Borrowing is to be a Base Rate
Borrowing and (y) the third Business Day immediately preceding the date of the
Borrowing if such Borrowing is to be a Euro-Dollar Borrowing, specifying:
     (i) the date of such Borrowing, which shall be a Business Day;
     (ii) what Type of Loans are to be borrowed;
     (iii) in the case of a Euro-Dollar Borrowing, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period and in the case of a Base Rate Borrowing, the date, if any,
on which such Loan will be converted to a Euro-Dollar Loan; and
     (iv) the aggregate amount of such Borrowing.
     Section 2.3. Notice to Banks Funding of Loans. (a) Upon receipt of a Notice
of Borrowing, the Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank’s share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
     (b) Not later than 1:30 p.m. (Chicago, Illinois time) on the date of each
Borrowing, each Bank shall make available its share of such Borrowing, in
Federal or other funds immediately available in Chicago, Illinois, to the
Administrative Agent at its address referred to

-16-

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

 

in Section 10.1. Unless the Administrative Agent determines that any applicable
condition specified in Article 3 has not been satisfied, the Administrative
Agent will make the funds so received from the Banks available to the Borrower
at the Administrative Agent’s aforesaid address.
     (c) Unless the Administrative Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available to the
Administrative Agent such Bank’s share of such Borrowing, the Administrative
Agent may assume that such Bank has made such share available to the
Administrative Agent on the date of such Borrowing in accordance with subsection
(b) of this Section and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Bank shall not have so made such share available
to the Administrative Agent, such Bank and the Borrower severally agree to repay
to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, a rate per annum equal
to the higher of the Federal Funds Rate and the interest rate applicable thereto
pursuant to Section 2.6 and (ii) in the case of such Bank, the Federal Funds
Rate. If such Bank shall repay to the Administrative Agent such corresponding
amount, such amount so repaid shall constitute such Bank’s Loan included in such
Borrowing for purposes of this Agreement.
     Section 2.4. Evidence of Indebtedness. (a) Each Bank shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Bank resulting from each Loan made by such
Bank from time to time, including the amounts of principal and interest payable
and paid to such Bank from time to time hereunder.
     (b) The Administrative Agent shall also maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the type thereof and the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Bank hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Bank’s share thereof.
     (c) The entries maintained in the accounts maintained pursuant to
paragraphs (a) and (b) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the failure
of the Administrative Agent or any Bank to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Obligations in accordance with their terms.
     (d) Any Bank may request that its Loans be evidenced by a promissory note
or notes in the forms of Exhibit B (collectively, the “Notes” and individually,
as a “Note"). In such event, the Borrower shall prepare, execute and deliver to
such Bank a Note payable to the order of such Bank. Thereafter, the Loans
evidenced by such Note or Notes and interest thereon shall at all times
(including after any assignment pursuant to Section 10.6) be represented by one
or more Notes payable to the order of the payee named therein or any assignee
pursuant to Section 10.6, except to the extent that any such Bank or assignee
subsequently returns any such Note for

-17-

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

 

cancellation and requests that such Loans once again be evidenced as described
in subsections (a) and (b) above.
     Section 2.5. Maturity of Loans. The principal amount of all then
outstanding Loans, together with accrued interest thereon, shall be due and
payable in full on the Maturity Date.
     Section 2.6. Interest Rates. (a) Each Base Rate Loan shall bear interest on
the outstanding principal amount thereof, for each day from the date such Loan
is made (or converted pursuant to Article 8) until it becomes due, at a rate per
annum equal to the Base Rate plus the Base Rate Margin for such day. Such
interest shall be payable quarterly in arrears on the last day of each March,
June, September, and December in each year (each, a “Quarterly Date") and, with
respect to the principal amount of any Base Rate Loan converted to a Euro-Dollar
Loan, on each date a Base Rate Loan is so converted. Any overdue principal of or
interest on any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
     (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus
the London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof.
     (c) Any overdue principal of, or interest on, any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus the quotient obtained (rounded upward, if necessary, to the next higher
1/100 of it) by dividing (x) the average rate per annum (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Business
Days, then for such other period of time not longer than three months as the
Administrative Agent may select) deposits in Dollars in an amount approximately
equal to such overdue payment due to the Administrative Agent is offered to the
Administrative Agent in the London interbank market for the applicable period
determined as provided above by (y) one minus the Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.1 shall exist, at a
rate per annum equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day) and (ii) the sum of 2% plus the Euro-Dollar Margin for such
day plus the London Interbank Offered Rate applicable to such Loan at the date
such payment was due.
     (d) The Administrative Agent shall determine each interest rate applicable
to the Loans hereunder. The Administrative Agent shall give prompt notice to the
Borrower and the participating Banks of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of manifest error.
     (e) The Administrative Agent agrees to use its best efforts to furnish
quotations as contemplated by this Section. If the Administrative Agent is
unable to provide a quotation, the provisions of Section 8.1 shall apply.

-18-

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

 

     Section 2.7. [Intentionally Omitted.]
     Section 2.8. [Intentionally Omitted.]
     Section 2.9. Method of Electing Interest Rates for Loans. (a) The Loans
initially shall be the Type of Loan specified by the Borrower in the Notice of
Borrowing given pursuant to Section 2.2. Thereafter, the Borrower shall deliver
a notice (a “Notice of Interest Period Election") to the Administrative Agent
not later than 11:00 a.m. (Chicago, Illinois, time) on the third Business Day
prior to (i) if such Borrowing was initially a Base Rate Borrowing, the
commencement of the first Interest Period with respect to the conversion of such
Base Rate Loan into a Euro-Dollar Loan specifying the duration of such Interest
Period, or (ii) at any other time, the last day of the current Interest Period
specifying the duration of the additional Interest Period which is to commence.
Each Interest Period specified in a Notice of Interest Period Election shall
comply with the provisions of the definition of “Interest Period.”
Notwithstanding the foregoing, the Borrower may not elect to convert any Loan
into, or continue any Loan as, a Euro-Dollar Loan pursuant to any Notice of
Interest Period Election if at the time such notice is delivered an Event of
Default shall have occurred and be continuing.
     (b) Each Notice of Interest Period Election shall specify:
     (i) the Borrowing of Loans (or portion thereof) to which such notice
applies;
     (ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
     (iii) if the Loans comprising such Borrowing are to be converted, the new
Type of Loans and, if the Loans being converted are to be Euro-Dollar Loans, the
duration of the next succeeding Interest Period applicable thereto; and
     (iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest Period.
     (c) Upon receipt of a Notice of Interest Period Election from the Borrower
pursuant to subsection (a) above, the Administrative Agent shall promptly notify
each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower. If no Notice of Interest Period Election is timely
received prior to the end of an Interest Period, the Borrower shall be deemed to
have elected that such Loan be continued as a Base Rate Loan.
     (d) An election by the Borrower to change or continue the rate of interest
applicable to any Borrowing of Loans pursuant to this Section shall not
constitute a “Borrowing” subject to the provisions of Section 3.2.
     Section 2.10. Optional Prepayments. (a) Subject, in the case of Euro-Dollar
Loans, to Section 2.13, the Borrower may, upon at least one Business Day’s
notice to the Administrative Agent, prepay any Base Rate Loans or, upon at least
three Business Days’ notice to the Administrative Agent, prepay any Euro-Dollar
Loans, in each case in whole at any time, or from

-19-

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

 

time to time in part, without premium or penalty, in amounts aggregating
$5,000,000 or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of prepayment.
Each such optional prepayment shall be applied to prepay ratably the Loans of
the several Banks.
     (b) Upon receipt of a notice of prepayment pursuant to this Section, the
Administrative Agent shall promptly notify each Bank with Loans outstanding of
the contents thereof and of such Bank’s ratable share (if any) of such
prepayment and such notice shall not thereafter be revocable by the Borrower.
     (c) The Borrower may elect to utilize the option set forth in
Section 2.11(c) in connection with any optional prepayment.
     Section 2.11. Mandatory Prepayments. (a) Requirements. If after the
Effective Date the Borrower or any Subsidiary shall issue any (i) Debt (other
than Debt permitted under clauses (i)-(vii) of Section 5.15 and Debt incurred
under the Revolving Credit Agreement) or (ii) new equity securities (whether
common or preferred stock or otherwise), other than equity securities issued
pursuant to or in connection with an employee stock or stock option plan and
capital stock issued to the seller of an acquired business in connection with an
acquisition permitted hereby, the Borrower shall promptly notify the
Administrative Agent of the estimated Net Cash Proceeds of such issuance to be
received by or for the account of the Borrower or such Subsidiary in respect
thereof. Promptly upon receipt by the Borrower or such Subsidiary of Net Cash
Proceeds of such issuance, the Borrower shall prepay the Loans in an aggregate
amount equal to 100% of the amount of such Net Cash Proceeds.
     (b) Application. With respect to each prepayment of Loans required by
Section 2.11(a), the Borrower may designate the Types of Loans which are to be
prepaid and the specific Borrowing or Borrowings pursuant to which made,
provided that (i) Euro-Dollar Loans may be so designated for prepayment pursuant
to this Section 2.11 only on the last day of an Interest Period applicable
thereto unless all Euro-Dollar Loans with Interest Periods ending on such date
of required prepayment and all Base Rate Loans have been paid in full; (ii) if
any prepayment of Euro-Dollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Loans made pursuant to such Borrowing to an amount less
than $5,000,000, such Borrowing shall be immediately converted into Base Rate
Loans; and (iii) each prepayment of Loans pursuant to a Borrowing shall be
applied pro rata among such Loans. In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative Agent shall,
subject to the above, make such designation in its sole discretion with a view,
but no obligation, to minimize breakage costs.
     (c) Cash Collateral to Avoid Breakage. Notwithstanding the provisions of
Section 2.11(b), if at any time a mandatory or voluntary prepayment of Loans
pursuant to Sections 2.10 or 2.11(a) above would result, after giving effect to
the procedures set forth above, in the Borrower incurring breakage costs as a
result of Euro-Dollar Loans being prepaid other than on the last day of an
Interest Period applicable thereto (the “Affected Loans"), then the Borrower may
in its sole discretion initially deposit a portion (up to 100%) of the amounts
that otherwise would have been paid in respect of the Affected Loans with the
Administrative Agent

-20-

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

 

(which deposit must be equal in amount to the amount of the Affected Loans not
immediately prepaid) to be held as security for the obligations of the Borrower
hereunder pursuant to a cash collateral arrangement reasonably satisfactory to
the Administrative Agent and shall provide for investments reasonably
satisfactory to the Administrative Agent, with such cash collateral to be
directly applied upon the first occurrence (or occurrences) thereafter of the
last day of an Interest Period applicable to the relevant Loans (or such earlier
date or dates as shall be requested by the Borrower), to repay an aggregate
principal amount of such Loans equal to the Affected Loans not initially prepaid
pursuant to this sentence. Notwithstanding anything to the contrary contained in
the immediately preceding sentence, all amounts deposited as cash collateral
pursuant to the immediately preceding sentence shall be held for the sole
benefit of the Banks whose Loans would otherwise have been immediately prepaid
with the amounts deposited and upon the taking of any action by the
Administrative Agent or the Banks pursuant to the remedial provisions of
Article 6, any amounts held as cash collateral pursuant to this Section 2.11(c)
shall, subject to the requirements of applicable law, be immediately applied to
repay such Loans.
     Section 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans (i) not later than
12:00 Noon (Chicago, Illinois time) on the date when due, in Federal or other
funds immediately available in Chicago, Illinois, to the Administrative Agent at
its address referred to in Section 10.1, and (ii) without any right to set-off,
deduction or counterclaim by the Borrower. All payments made hereunder shall be
made in U.S. Dollars in immediately available funds at the place of payment. The
Administrative Agent will promptly distribute to each Bank its ratable share of
each such payment received by the Administrative Agent for the account of the
Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans
or of fees shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day. Whenever
any payment of principal of, or interest on, the Euro-Dollar Loans shall be due
on a day which is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case the date for payment thereof shall be the
next preceding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
     (b) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent that the Borrower
shall not have so made such payment, each Bank shall repay to the Administrative
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Administrative Agent, at
the Federal Funds Rate.
     Section 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
prepaid, converted or becomes due (pursuant to Article 2, 6, or 8 or otherwise)
on any day other than the last day of an Interest

-21-

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

 

Period applicable thereto, or if the Borrower fails to borrow, prepay or
continue any Euro-Dollar Loans after notice has been given to any Bank in
accordance with Section 2.2, 2.9, or 2.10, the Borrower shall reimburse each
Bank within 15 days after demand for any resulting loss or expense incurred by
it (or by an existing or prospective Participant in the related Loan),
including, without limitation, any loss incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of margin for the
period after any such payment or conversion or failure to borrow, prepay,
convert or continue, provided that such Bank shall have delivered to the
Borrower a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
     Section 2.14. Computation of Interest. Interest based on the Prime Rate
hereunder shall be computed on the basis of a year of 365 days (or 366 days in a
leap year) and paid for the actual number of days elapsed (including the first
day but excluding the last day). All other interest shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day if and only if such payment
is made in accordance with the provisions of the first sentence of
Section 2.12(a)).
     Section 2.15. Regulation D Compensation. Without duplication of amounts
payable under Section 2.6(c)(i), each Bank may require the Borrower to pay,
contemporaneously with each payment of interest on the Euro-Dollar Loans,
additional interest on the related Euro-Dollar Loan of such Bank at a rate per
annum determined by such Bank up to but not exceeding the excess of (i) (A) the
London Interbank Offered Rate then in effect for such Loan divided by (B) one
minus the Reserve Percentage over (ii) such London Interbank Offered Rate. Any
Bank wishing to require payment of such additional interest (x) shall so notify
the Borrower and the Administrative Agent, in which case such additional
interest on the Euro-Dollar Loan of such Bank shall be payable to such Bank at
the place indicated in such notice with respect to each Interest Period
commencing at least three Business Days after the giving of such notice and
(y) shall notify the Borrower at least five Business Days prior to each date on
which interest is payable on the Euro-Dollar Loans of the amount then due it
under this Section. The Borrower’s obligations under this Section 2.15 are
limited as set forth in Section 8.6.
     Section 2.16. Additional Commitments. Provided there exists no Default, the
Borrower on behalf of the Borrower and Guarantors may, on any Business Day after
the date hereof, without the consent of any Bank but with the written consent of
the Administrative Agent (which consent shall not be unreasonably withheld or
delayed), obtain additional Commitments by delivering a Commitment Amount
Increase Request at least five (5) Business Days prior to the desired effective
date of such increase (the “Commitment Amount Increase") identifying an
additional Bank (or additional Commitment agreed to be made by any existing
Bank) and the amount of its Commitment (or additional Commitment); provided,
however, that any increase in the aggregate amount of the Commitments to an
amount in excess of U.S. $400,000,000 will require the approval of the Required
Banks; provided further that prior to approaching an additional Bank, the
Borrower shall have offered to the existing Banks the opportunity to provide an
additional Commitment. The effective date of the Commitment Amount Increase
shall be agreed upon by the Borrower and the Administrative Agent. Upon the
effectiveness thereof, each new Bank (or, if applicable, each existing Bank
which consented to an additional Commitment) shall advance Loans in an amount
equal to its Commitment, at which time the

-22-

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

 

Commitments shall expire. It shall be a condition to such effectiveness that no
Euro-Dollar Loans be outstanding on the date of such effectiveness. The Borrower
agrees to pay any out-of-pocket expenses of the Administrative Agent relating to
any Commitment Amount Increase. Notwithstanding anything herein to the contrary,
no Bank shall have any obligation to agree to provide an additional Commitment
and no Bank’s Commitment shall be increased without its consent thereto, and
each Bank may at its option, unconditionally and without cause, decline to
provide any such additional Commitment.
Article 3
Conditions
     Section 3.1. Initial Borrowing. The obligations of the Banks to make the
Loans hereunder are subject to receipt by the Administrative Agent of the
following documents and satisfaction of the following conditions:
     (a) an opinion of counsel for the Credit Parties in a form reasonably
acceptable to the Administrative Agent and covering such matters relating to the
transactions contemplated hereby as the Administrative Agent or the Required
Banks may reasonably request;
     (b) all documents the Administrative Agent may reasonably request relating
to the corporate authority of each Credit Party which is a party hereto or any
other Credit Document and the validity of this Agreement and each other Credit
Document, all in form and substance reasonably satisfactory to the
Administrative Agent;
     (c) copies of this Agreement executed by the Borrower, each Guarantor and
each of the Banks; and
     (d) the Administrative Agent shall have received fully executed copies of
the License Agreements.
     The Administrative Agent shall promptly notify the Borrower and the Banks
of the satisfaction of the conditions set forth in this Section 3.1, and such
notice shall be conclusive and binding on all parties hereto.
     Section 3.2. Each Borrowing. The obligation of the Banks to make each Loan
hereunder is subject at the time of such Loan to the satisfaction of the
following additional conditions:
     (a) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.2;
     (b) the fact that, immediately before and after such Borrowing, no Default
shall have occurred and be continuing;

-23-

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

 

     (c) the fact that the representations and warranties of the Credit Parties
contained in this Agreement shall be true and correct in all material respects
on and as of the date of such Borrowing (other than representations and
warranties that relate to a specific date, which shall be true and correct in
all material respects as of such date); and
     (d) with respect to the transactions contemplated by this Agreement, each
Credit Party shall have obtained any necessary consents, waivers, approvals,
authorizations, registrations, filings, licenses and notifications (including,
if necessary, qualifying to do business in, and qualifying under the applicable
consumer laws of, each jurisdiction where the applicable party is then doing
business, or is in the process of obtaining such qualification in each
jurisdiction where the applicable party is expected to be doing business
utilizing the proceeds of such Loan) and the same shall be in full force and
effect, except where the failure to obtain such consent, qualification or other
item could not reasonably be expected to have a material adverse effect on the
Borrower and its Subsidiaries, taken as a whole.
     Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (b), (c), and (d) of this Section.
     No Bank shall have any obligation to make a Loan hereunder at any time
unless all conditions precedent have been satisfied before or at such time. The
conditions precedent are included for the exclusive benefit of the
Administrative Agent and the Banks. In the event that any one more Banks makes
available its Loan at the request of the Borrower notwithstanding that any one
or more of the conditions precedent thereto have not been satisfied in whole or
in part, such waiver shall not operate as to waive the right of the
Administrative Agent and the Banks to require strict compliance thereafter.
Article 4
Representations and Warranties
     The Borrower represents and warrants that:
     Section 4.1. Existence and Power. Each Credit Party is a corporation,
limited liability company, partnership or other organization, duly organized and
validly existing and, where applicable, in good standing under the laws of the
jurisdiction of its organization, and has all corporate or other powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect.
     Section 4.2. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each Credit Party of the Credit
Documents to which it is a party (i) are within the corporate or other powers of
such Credit Party, (ii) have been duly authorized by all necessary corporate or
other action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or officials except where the failure to do so could

-24-

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

 

not reasonably be expected to have a Material Adverse Effect, (iv) do not
contravene, or constitute a default under, (a) any provision of applicable law
or regulation or of the articles of association, the organizational certificate,
bylaws or other constitutional documents, as applicable, of such Credit Party or
(b) any agreement, judgment, injunction, order, decree or other instrument
binding upon the Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect and (v) will not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries. Neither the Borrower (or any of its directors or officers) nor any
Insured Subsidiary (or any of its directors or officers) is a party to, or
subject to, any agreement with, or specific directive or order issued by, any
federal or state bank or thrift regulatory authority which restricts the payment
of dividends by any Insured Subsidiary to the Borrower; and no action or
administrative proceeding is pending or, to the Borrower’s knowledge, threatened
against the Borrower or any Insured Subsidiary or any of their directors or
officers which seeks to impose any such restriction, in each case that could
reasonably be expected to have a Material Adverse Effect.
     Section 4.3. Binding Effect. This Agreement and the other Credit Documents
constitute valid and binding agreements of the Borrower and each other Credit
Party which is a party thereto, and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Borrower, in each case enforceable in accordance with its terms.
     Section 4.4. Financial Information. (a) The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of December 31, 2005, and the
related consolidated statements of income, retained earnings and cash flows for
the fiscal year then ended, reported on by Deloitte & Touche LLP, and the
unaudited interim consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of September 30, 2006 and the related consolidated
statements of income, retained earnings and cash flows for the nine months then
ended, copies of which have been delivered to each of the Banks, fairly present
in all material respects the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such dates and their consolidated results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited financial statements, to the absence of footnotes and to year end
adjustments.
     (b) Since December 31, 2005 there has been no material adverse change in
the business, financial position or operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
     (c) Except as disclosed in the financial statements delivered pursuant to
Section 4.4(a) there were as of the Effective Date no liabilities or obligations
with respect to the Borrower or any of its Subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
which, either individually or in aggregate, could reasonably be expected to have
a material and adverse effect on the Borrower or the Borrower and its
Subsidiaries taken as a whole. As of the Effective Date, the Borrower knows of
no basis for the assertion against it or any of its Subsidiaries of any
liability or obligation of any nature whatsoever that is not disclosed in the
financial statements delivered pursuant to Section 4.4(a)

-25-

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

 

which, either individually or in the aggregate, could reasonably be expected to
be material to the Borrower or the Borrower and its Subsidiaries taken as a
whole.
     Section 4.5. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or affecting,
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could materially adversely affect the business,
consolidated financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole, or which in
any manner draws into question the validity or enforceability of any Credit
Document.
     Section 4.6. Compliance with ERISA. To the best of the Borrower’s knowledge
after reasonable investigation: (a) Each member of the ERISA Group has fulfilled
its obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code with respect to each Plan.
No member of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Code or
(iii) incurred any liability under Title IV of ERISA other than a liability to
the PBGC for premiums under Section 4007 of ERISA.
     (b) Each Foreign Pension Plan has been maintained in substantial compliance
with its terms and with the requirements of any and all applicable laws,
statutes, rules, regulations and orders and has been maintained, where required,
in good standing with applicable regulatory authorities. All material
contributions required to be made with respect to a Foreign Pension Plan have
been timely made. Neither the Borrower nor any of its Subsidiaries has incurred
any material obligation in connection with the termination of or withdrawal from
any Foreign Pension Plan. The Borrower and its Subsidiaries do not maintain or
contribute to any Foreign Pension Plan the obligations with respect to which
could reasonably be expected to have a material adverse effect on the ability of
the Borrower or the Borrower and its Subsidiaries taken as a whole to perform
their obligations under the Credit Documents.
     Section 4.7. Environmental Matters. To the best of the Borrower’s knowledge
after reasonable investigation: Each of the Borrower and its Subsidiaries has
obtained all material environmental, health and safety permits, licenses and
other authorizations required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted except for such permits,
licenses and other authorizations the failure to obtain, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Each of such permits, licenses and authorizations is in full force and
effect and the Borrower and its Subsidiaries is in material compliance with the
terms and conditions thereof, and is also in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder
except for such failure to comply,

-26-

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

 

individually or in the aggregate, as could not reasonably be expected to result
in a Material Adverse Effect. In addition, no notice, notification, demand,
request for information, citations, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or threatened by any governmental or other entity with respect
to any alleged failure by the Borrower or any of its Subsidiaries to have any
environmental, health or safety permit, license or other authorization required
under any Environmental Law in connection with the conduct of the business of
the Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, discharge or disposal, or any
release of any Hazardous Substance generated or handled by the Borrower or any
of its Subsidiaries except for such matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. There have been no environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or that are in the possession of the
Borrower or any of its Subsidiaries in relation to any site or facility now or
previously owned, operated or leased by the Borrower or any of its Subsidiaries
which have not been made available to the Administrative Agent and the Banks
except for such matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
     Section 4.8. Taxes. The Borrower and its Subsidiaries have filed all United
States Federal and Canadian income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary, except such taxes, if any, as are being contested in good
faith and by appropriate proceedings. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
     Section 4.9. Subsidiaries. Each of the Borrower’s corporate Subsidiaries,
if any, is a corporation duly incorporated, validly existing and, where
applicable, in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted except where the failure to do so could not reasonably
be expected to result in a Material Adverse Effect.
     Section 4.10. Investment Company. The Borrower is not an “investment
company” within the meaning of the U.S. Investment Company Act of 1940, as
amended.
     Section 4.11. Full Disclosure. All information heretofore furnished by the
Borrower to the Administrative Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Borrower to the Administrative
Agent or any Bank will be, true and accurate in all material respects on the
date as of which such information is stated or certified. The Borrower has
disclosed to the Banks in writing any and all facts which materially and
adversely affect or may affect (to the extent the Borrower can now reasonably
foresee), the business, operations or financial condition of the Borrower and
its Consolidated Subsidiaries, taken as a whole, or the ability of the Borrower
to perform its obligations under this Agreement or the other Credit Documents.

-27-

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

 

Article 5
Covenants
     The Borrower and each Guarantor, as the case may be, agree that, so long as
any Bank has any Commitment hereunder or any amount payable hereunder or under
any Note remains unpaid:
     Section 5.1. Information. The Borrower will deliver to each of the Banks:
     (a) as soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, cash flows, and changes in common
stockholders’ equity, each for such fiscal year, setting forth in comparative
form the figures for the previous fiscal year and certified by Deloitte & Touche
LLP or another independent public accounting firm of nationally recognized
standing;
     (b) as soon as available and in any event within 45 days after the end of
each of the first three fiscal quarters of the Borrower, the consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such quarter and the related consolidated statements of income and cash flows
for such quarter and for the portion of the Borrower’s fiscal year ended at the
end of such quarter, setting forth in comparative form the figures for the
corresponding quarter and the corresponding portion of the Borrower’s previous
fiscal year, all certified (subject to normal year-end adjustments and the
absence of footnotes) to fairly present in all material respects, such financial
condition, and as to generally accepted accounting principles and consistency by
the treasurer or chief financial officer of the Borrower;
     (c) simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate of the treasurer or
chief financial officer of the Borrower, (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower was in compliance
with the requirements of Sections 5.11, 5.12, 5.13 and 5.14 and the current
outstanding balances of all Intercompany Notes as of the date of such financial
statements, and (ii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details thereof
and the action which the Borrower is taking or proposes to take with respect
thereto;
     (d) so long as not contrary to the then recommendations of the Financial
Accounting Standards Board, simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a statement of the
accounting firm which reported on such statements as to whether anything has
come to their attention to cause them to believe that any Default existed on the
date of such statements;

-28-

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

 

     (e) within 45 days after the beginning of each fiscal year of the Borrower,
a budget in form reasonably satisfactory to the Administrative Agent (including
budgeted statements of consolidated income, consolidated cash flows, and
consolidated balance sheets) prepared by the Borrower for each of the four
quarters of such fiscal year, accompanied by a statement of the treasurer or
chief financial officer of the Borrower to the effect that, to the best of such
officer’s knowledge, the budget is a reasonable estimate for the period covered
thereby;
     (f) within five days after any officer of any Credit Party obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the treasurer or chief financial officer of the Borrower setting forth the
details thereof and the action which the Borrower or such Credit Party is taking
or proposes to take with respect thereto;
     (g) promptly after the mailing thereof to the public shareholders of the
Borrower, copies of all financial statements, reports and proxy statements so
mailed;
     (h) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which the Borrower or any other Credit Party shall have filed with the
Securities and Exchange Commission;
     (i) promptly upon discovery of the fact that any member of the ERISA Group
(i) gives or is required to give notice to the PBGC of any “reportable event”
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or contribution
to any Plan, Foreign Pension Plan or Multiemployer Plan or in respect of any
Benefit Arrangement or makes any amendment to any Plan, Foreign Pension Plan or
Benefit Arrangement which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a certificate of the treasurer
of the Borrower setting forth details as to such occurrence and action, if any,
which the Borrower, the applicable Credit Party or the applicable member of the
ERISA Group is required or proposes to take;

-29-

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

 

     (j) to the extent permitted by applicable law, promptly upon the receipt or
execution thereof, (i) notice by the Borrower or any Insured Subsidiary that
(1) it has received a request or directive from any federal or state regulatory
agency which requires it to submit a capital maintenance or restoration plan
that restricts the payment of dividends by any Insured Subsidiary to the
Borrower or (2) it has submitted a capital maintenance or restoration plan to
any federal or state regulatory agency or has entered into a memorandum or
agreement with any such agency, in each case which plan, memorandum or agreement
restricts the payment of dividends by any Insured Subsidiary to the Borrower,
and (ii) copies of any such plan, memorandum, or agreement, unless disclosure is
prohibited by the terms thereof and, after the Borrower or such Insured
Subsidiary has in good faith attempted to obtain the consent of such regulatory
agency, such agency will not consent to the disclosure of such plan, memorandum,
or agreement to the Bank;
     (k) prompt notice if the Borrower, any Subsidiary or any other Credit Party
shall receive any notification from any governmental authority alleging a
violation of any applicable law or any inquiry which could reasonably be
expected to have a material adverse effect on the Borrower and the other Credit
Parties, taken as a whole;
     (l) prompt notice of any Person becoming a Material Subsidiary;
     (m) prompt notice of the sale, transfer or other disposition of any
Material Asset of the Borrower, any Subsidiary or any other Credit Party to any
Person other than the Borrower, any Subsidiary or any other Credit Party other
than a sale, transfer or other disposition made in the ordinary course of
business;
     (n) prompt notice of any change in the senior management of the Borrower
and any change in the business assets, liabilities, financial condition or
operations of the Borrower, any Subsidiary or any other Credit Party which has
had or could reasonably be expected to have a material adverse effect on the
Borrower and the other Credit Parties, taken as a whole; and
     (o) from time to time such additional information regarding the financial
position or business of the Credit Parties and their Subsidiaries (including
non-financial information and examination reports and supervisory letters to the
extent permitted by applicable regulatory authorities) as the Administrative
Agent, at the request of any Bank, may reasonably request.
     Section 5.2. Payment of Obligations. Each Credit Party will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities (including,
without limitation, tax liabilities and claims of materialmen, warehousemen and
the like which if unpaid might by law give rise to a Lien), except where the
same (i) may be contested in good faith by appropriate proceedings, and will
maintain, and will cause each Subsidiary to maintain, in accordance with
generally accepted accounting principles, appropriate reserves for the accrual
of any of the same or (ii) could not reasonably be expected to result in a
Material Adverse Effect.

-30-

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

 

     Section 5.3. Maintenance of Property; Insurance. (a) Each Credit Party will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
          (b) Each Credit Party will, and will cause each Subsidiary to,
maintain (either in the name of the Borrower or in its own name) with
financially sound and responsible insurance companies, insurance on all their
respective properties in at least such amounts, against at least such risks and
with such risk retention as are usually maintained, insured against or retained,
as the case may be, in the same general area by companies of established repute
engaged in the same or a similar business and will furnish to the Banks, upon
request from the Administrative Agent, information presented in reasonable
detail as to the insurance so carried.
     Section 5.4. Conduct of Business and Maintenance of Existence. Each Credit
Party will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by such Credit Party, and
will preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect their respective
existence and their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided, that nothing in this
Section 5.4 shall prohibit (i) a merger or consolidation which is otherwise
permitted by Section 5.7 or (ii) the termination of the corporate existence of
any Subsidiary if the Borrower in good faith determines that such termination is
in the best interest of the Borrower and is not materially disadvantageous to
the Banks.
     Section 5.5. Compliance with Laws. Each Credit Party will comply, and cause
each Subsidiary to comply, in all respects with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws and ERISA and the rules and regulations
thereunder) except (i) where the necessity of compliance therewith is contested
in good faith by appropriate proceedings or (ii) to the extent that failure to
comply therewith could not reasonably be expected to result in a Material
Adverse Effect.
     Section 5.6. Inspection of Property, Books and Records. The Credit Parties
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank, at such
Bank’s expense, to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants, all at such reasonable times and as
often as may reasonably be desired.
     Section 5.7. Mergers and Sales of Assets. The Credit Parties will not
(x) consolidate or merge with or into any other Person or (y) sell, lease or
otherwise transfer, directly or indirectly, any substantial part of the assets
of any Credit Party and its Subsidiaries, taken as a whole, to any other Person;
except that the following shall be permitted, but in the case of clauses (a),
(c) and (d) below, only so long as no Default shall have occurred and be
continuing both before and after giving effect thereto: (a) (i) any Credit Party
may merge with or sell or otherwise transfer assets

-31-

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

 

to the Borrower or any Guarantor, (ii) any Person may be merged with or into any
Credit Party pursuant to an acquisition permitted by Section 5.21(b), provided
that such Credit Party is the surviving corporation of such merger and (iii) any
Credit Party (other than the Borrower) may be merged with or into any Person
pursuant to an acquisition permitted by Section 5.21(b), provided that if
required by Section 5.23 the surviving entity becomes a Guarantor at the time of
such merger pursuant to documentation reasonably acceptable to the
Administrative Agent, (b) the sale or other transfer of credit card receivables
and related assets pursuant to Qualified Securitization Transactions, (c) assets
sold and leased back in the normal course of the Borrower’s business and
(d) sales, leases and other transfers of assets in an aggregate amount which
when combined with all such other transactions under this clause (d) during the
then current fiscal year, represents the disposition of assets with an aggregate
book value not greater than 15% of Consolidated Total Assets of the Borrower
calculated as of the end of the immediately preceding fiscal year.
     Section 5.8. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Borrower to finance the general corporate and
working capital needs of the Borrower and its Subsidiaries. None of the proceeds
of any Loan made hereunder will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying any
“margin stock” within the meaning of Regulation U.
     Section 5.9. Negative Pledge. Neither a Credit Party nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
     (a) Liens existing on the Effective Date and listed on Schedule 5.9 hereto;
     (b) any Lien existing on any asset of any Person at the time such Person
merges with or becomes a Subsidiary and not created in contemplation of such
event;
     (c) any Lien on any asset securing Debt incurred or assumed for the purpose
of financing all or any part of the cost of acquiring such asset, provided that
such Lien attaches only to such asset acquired and attaches concurrently with or
within 90 days after the acquisition thereof;
     (d) any Lien on any asset of any Person existing at the time such Person is
merged or consolidated with or into a Credit Party or its Subsidiary and not
created in contemplation of such event, so long as such Lien does not attach to
any other asset of such Credit Party or its Subsidiaries;
     (e) any Lien existing on any asset prior to the acquisition thereof by a
Credit Party or a Subsidiary and not created in contemplation of such
acquisition;
     (f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that the amount of such Debt is not increased
and is not secured by any additional assets;

-32-

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

 

     (g) Liens arising in the ordinary course of its business which (i) do not
secure Debt or Derivatives Obligations, (ii) do not secure any obligation in an
amount exceeding U.S. $5,000,000 and (iii) do not in the aggregate materially
detract from the value of the assets secured or materially impair the use
thereof in the operation of such Credit Party or Subsidiary’s business;
     (h) Liens arising in connection with Qualified Securitization Transactions;
     (i) Liens securing Debt permitted under Section 5.15(iv) hereof;
     (j) Liens incurred or deposits or pledges made in the ordinary course of
business (i) in connection with workers’ compensation, unemployment insurance
and other types of social security, (ii) to secure the payment or performance of
tenders, statutory or regulatory obligations, bids, leases, contracts (including
contracts to provide customer care services, billing services, transaction
processing services and other services), performance and return of money bonds
and other similar obligations, including letters of credit and bank guarantees
required or requested by the United States, any State thereof or any foreign
government or any subdivision, department, agency, organization or
instrumentality of any of the foregoing in connection with any contract or
statute (exclusive of obligations for the payment of borrowed money), or
(iii) to cover anticipated costs of future redemptions of awards under loyalty
marketing programs; and
     (k) Liens not otherwise permitted by the foregoing clauses of this
Section 5.9 securing Debt in an aggregate principal or face amount at any date
not to exceed 20% of Consolidated Net Worth of the Borrower.
          In each case set forth above, notwithstanding any stated limitation on
the assets that may be subject to such Lien, a Lien on a specified asset or
group or type of assets may include Liens on all improvements, additions and
accessions thereto and all products and proceeds thereof.
     Section 5.10. End of Fiscal Years and Fiscal Quarters. The Borrower shall
cause its fiscal year, and shall cause each of its Subsidiaries’ fiscal years,
to end on December 31 and shall cause its and each of its Subsidiaries’ fiscal
quarters to coincide with calendar quarters.
     Section 5.11. Maximum Total Capitalization Ratio. The Borrower will not
permit its Total Capitalization Ratio at any time to be more than 60%.
     Section 5.12. Senior Leverage Ratio. The Borrower shall not permit its
Senior Leverage Ratio at any time to exceed 2.75 to 1.00.
     Section 5.13. Interest Coverage Ratio. The Borrower will not permit its
Interest Coverage Ratio for any period of four consecutive fiscal quarters, as
determined for such four quarter period ending on the last day of any fiscal
quarter, to be less than 3.50 to 1.00.

-33-

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

 

     Section 5.14. Delinquency Ratio. The Borrower shall not permit the average
of the Delinquency Ratios for WFNNB for the most recently ended three
consecutive calendar months to exceed 4.5%.
     Section 5.15. Debt Limitation. The Borrower shall not, and shall not permit
any of its Subsidiaries, whether now existing or created in the future, to
create or retain any Debt other than (i) any Debt created or retained by the
Borrower or such Subsidiary on or before the Effective Date and extensions,
renewals, refinancings, refundings and replacements thereof, (ii) any Debt owed
to the Borrower or a Subsidiary by the Borrower or a Subsidiary, provided that
(A) all such loans shall be made in compliance with Section 5.21(a), and (B) all
such loans from the Borrower to a Subsidiary shall be made pursuant to and
evidenced by an Intercompany Note, (iii) issuances by Insured Subsidiaries of
certificates of deposit and other items to the extent no Default results
therefrom pursuant to the other covenants contained in this Article 5,
(iv) obligations of the Borrower or its Subsidiaries as lessee in respect of
leases of property which are capitalized in accordance with generally accepted
accounting principles and shown on the balance sheet of the Borrower and its
Subsidiaries, (v) loans from time to time under this Agreement, (vi) Debt
incurred by the Borrower and its Subsidiaries in the nature of a purchase price
adjustment in connection with a permitted Restricted Acquisition, (vii) Debt
(other than Debt of the types described in clauses (iii) or (iv) of this
Section 5.15) of any Person that is acquired by the Borrower or any Subsidiary
and becomes a Subsidiary or is merged with or into the Borrower or any
Subsidiary after the Effective Date and Debt secured by an asset acquired by the
Borrower or any Subsidiary after the Effective Date, and, in each case,
refinancings, renewals, extensions, refundings and replacements thereof, if
(A) such original Debt was in existence on the date such Person became a
Subsidiary or merged with or into the Borrower or any Subsidiary or on the date
that such asset was acquired, as the case may be, (B) such original Debt was not
created in contemplation of such Person becoming a Subsidiary or merging with or
into the Borrower or any Subsidiary or such asset being acquired, as the case
may be, and (C) immediately after giving effect to the acquisition of such
Person or asset by the Borrower or any Subsidiary, as the case may be, no
Default or Event of Default shall have occurred and be continuing, including,
without limitation, under Section 5.21(b) of this Agreement, and (viii) Debt of
the Borrower and its Subsidiaries in an amount such that, after giving pro forma
effect thereto and to the use of proceeds thereof as contemplated by
Section 5.21(b)(i), Borrower shall be in compliance with the covenants set forth
in Sections 5.11, 5.12 and 5.13 of this Agreement.
     Section 5.16. Capitalization of Insured Subsidiaries. The Borrower shall,
at all times, cause all Insured Subsidiaries to be “well capitalized” within the
meaning of U.S. 12 C.F.R. 208.43(b)(1) or any successor regulation and such
Insured Subsidiaries at no time be reclassified by any relevant agency as
anything other than “well capitalized.”
     Section 5.17. Restricted Payments; Required Dividends. (a) Other than
payments made in accordance with the terms of subsection (b) below, neither the
Borrower nor any of its Subsidiaries will declare or make any Restricted Payment
unless, after giving effect thereto, (i) the Senior Leverage Ratio calculated on
a pro forma basis would not exceed 2.50 to 1.00 and (ii) the aggregate of all
Restricted Payments made during such fiscal year does not exceed the Maximum
Annual Amount. For purposes of this section, the term “Maximum Annual Amount”
shall mean (i) $200,000,000 for the period from and including January 1, 2006
through and

-34-

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

 

including December 31, 2006 and (ii) during each Annual Measurement Period (as
defined below) thereafter, an amount equal to the sum of (x) the Maximum Annual
Amount for the immediately preceding Annual Measurement Period plus (y) if the
Consolidated Operating EBITDA for the immediately preceding Annual Measurement
Period was greater than 110% of the Consolidated Operating EBITDA for the second
preceding Annual Measurement Period $50,000,000, and, if not, zero.
Notwithstanding the foregoing, the unused portion of the Maximum Annual Amount
not expended in the applicable fiscal year may be carried over for use in the
immediately succeeding fiscal year only. As used herein the term “Annual
Measurement Period” shall mean each period commencing on January 1 of a calendar
year and ending on December 31 of such calendar year.
          (b) The Borrower shall cause each Domestic Subsidiary (to the extent
permitted under any applicable law, rule or regulation, judgment, injunction,
order or decree of any governmental authority) to take all such necessary
corporate actions to declare cash dividends, payable to the shareholder of such
Subsidiary, in an aggregate amount, if any, equal to all amounts that are then
due and owing and remain outstanding after the date of payment therefor pursuant
to the terms of this Agreement.
Notwithstanding the foregoing, if a Default or Event of Default exists, neither
the Borrower nor any of its Subsidiaries shall make any Restricted Payments to
any Person other than to the Borrower or any other Credit Party.
     Section 5.18. Equity Ownership, Limitation on Creation of Subsidiaries.
Notwithstanding anything to the contrary contained in this Agreement, the
Borrower will not, and will not permit any of its Subsidiaries to, establish,
create or acquire after the Effective Date any Subsidiary; provided that (A) the
Borrower and its Wholly-Owned Subsidiaries shall be permitted to establish or
create Wholly-Owned Subsidiaries so long as, in each case, (i) if such new
Subsidiary is a Material Subsidiary, written notice of the establishment or
creation thereof is given to the Administrative Agent promptly after such
establishment or creation as required pursuant to Section 5.1(l), and (ii) if
required by Section 5.23, such new Subsidiary promptly executes a Guarantor
Supplement to become a Guarantor pursuant to Article 9 (or similar document
satisfactory to the Administrative Agent) and (B) Subsidiaries may be acquired
to the extent such acquisition does not give rise to a Default hereunder so long
as the actions specified in preceding clause (A) shall be taken, and, to the
extent applicable, the Borrower complies with Section 5.21(b). In addition, each
new Subsidiary that is required to execute any Credit Document shall execute and
deliver, or cause to be executed and delivered, all other relevant documentation
of the type described in Section 3.1 as such new Subsidiary would have had to
deliver if such new Subsidiary were a Credit Party on the Effective Date.
     Section 5.19. Change of Business. The Borrower will not, and will not
permit any of its Subsidiaries to, materially alter the character of the
business of the Borrower and its Subsidiaries from that conducted on the
Effective Date.
     Section 5.20. Limitation on Issuance of Capital Stock. The Borrower will
not permit any of its Subsidiaries to issue any capital stock (including by way
of sales of treasury stock) or any options or warrants to purchase, or
securities convertible into, capital stock, except (i) for

-35-

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

 

transfers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and issuances which do not decrease the percentage
ownership of the Borrower or any of its Subsidiaries in any class of the capital
stock of such Subsidiary, (iii) to qualify directors to the extent required by
applicable law, (iv) for issuances by newly created or acquired Subsidiaries in
accordance with the terms of this Agreement, and (v) to the Borrower or a
Subsidiary of the Borrower.
     Section 5.21. Investments; Restricted Acquisition. (a) The Borrower shall
not, and shall not permit any Subsidiary to hold, make or acquire any Investment
in any Person other than:
     (i) Investments by the Borrower or its Subsidiaries in Persons which are
Guarantors;
     (ii) Investments by the Borrower or its Subsidiaries in Persons which are
Domestic Subsidiaries but not Guarantors; provided that, immediately after each
such Investment is made, the aggregate amount of such Investments then
outstanding (the amount of each such Investment being measured at the time such
Investment was made) (and without duplication of amounts subsequently invested
by the recipient thereof in another Domestic Subsidiary that is not a Guarantor)
shall not exceed 5% of the Borrower’s Consolidated Net Worth (measured at the
time each such Investment is made) plus the amount invested or committed to be
invested on the Effective Date as shown on Schedule 5.21, and in each case all
amendments, restatements, modifications, extensions, renewals, refinancings,
refundings and replacements of such Investments;
     (iii) Investments by the Borrower or its Subsidiaries in Foreign
Subsidiaries provided that, immediately after each such Investment is made, the
aggregate amount of such Investments then outstanding (the amount of each such
Investment being measured at the time such Investment was made) (and without
duplication of amounts subsequently invested by the recipient thereof in another
Foreign Subsidiary) shall not exceed 5% of the Borrower’s Consolidated Net Worth
(measured at the time each such Investment is made) plus the amount invested or
committed to be invested on the Effective Date as shown on Schedule 5.21, and in
each case all amendments, restatements, modifications, extensions, renewals,
refinancings, refundings and replacements of such Investments;
     (iv) Investments consistent with the investment policy attached hereto as
Schedule II;
     (v) Investments by Insured Subsidiaries as are necessary to comply with the
provisions of The Community Reinvestment Act;
     (vi) Investments consisting of credit card loans made by Insured
Subsidiaries pursuant to the terms of any applicable credit card accounts owned
by Insured Subsidiaries;
     (vii) Restricted Acquisitions permitted under Section 5.21(b);

-36-

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

 

     (viii) Investments in Insured Subsidiaries to the extent necessary in order
to maintain compliance with Section 5.16;
     (ix) Investments made in connection with Qualified Securitization
Transactions; and
     (x) any Investment not otherwise permitted by the foregoing clauses of this
Section if, immediately after such Investment is made or acquired, the aggregate
net book value of all Investments permitted by this clause (x) (measured at the
time each such Investment is made) does not exceed 5% of Consolidated Net Worth
of the Borrower.
          (b) The Borrower and its Subsidiaries may make Restricted Acquisitions
so long as:
     (i) the Borrower and its Subsidiaries shall be in compliance with all
provisions of this Agreement, including all financial covenants, both before and
after giving effect thereto, with such financial covenants to be calculated on a
pro forma basis as if such Restricted Acquisition had been consummated on the
first day of the then most recently ended period of twelve consecutive fiscal
months and giving effect to (x) the actual historical financial performance
(including Consolidated Operating EBITDA) of such acquired entity and
(y) identifiable cost savings associated with providing data processing services
to such acquired entities as reasonably approved by the Administrative Agent;
     (ii) the total consideration paid (including equity issued and Debt
assumed) in connection with any Restricted Acquisition of a Person which as a
result thereof does not become a Wholly-Owned Subsidiary of the Borrower shall
not exceed 10% of the Borrower’s Consolidated Net Worth calculated at the end of
the immediately preceding fiscal year;
     (iii) such Restricted Acquisition is not a Hostile Acquisition; and
     (iv) the Borrower complies with Section 5.18.
     Section 5.22. No Restrictions. Except as provided herein, the Borrower will
not, and will not permit any Subsidiary to, directly or indirectly create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Insured Subsidiary
to: (a) pay dividends or make any other distribution on any Subsidiary’s capital
stock or other equity interests owned by the Borrower or any other Subsidiary,
(b) pay any indebtedness owed to the Borrower or any other Subsidiary, (c) make
loans or advances to the Borrower or any other Subsidiary or (d) transfer any of
its property to the Borrower or any other Subsidiary, except encumbrances and
restrictions of the types described below:
     (1) encumbrances and restrictions contained in this Agreement and the other
Credit Documents;

-37-

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

 

     (2) customary supermajority voting provisions and other customary
provisions with respect to the disposition or distribution of assets, each
contained in corporate charters, bylaws, stockholders’ agreements, limited
liability company agreements, partnership agreements, joint venture agreements
and other similar agreements;
     (3) encumbrances and restrictions required by law or by any regulatory
authority having jurisdiction over such Insured Subsidiary or any of their
businesses;
     (4) customary restrictions in agreements governing Liens permitted under
Section 5.9 provided that such restrictions relate solely to the property
subject to such Lien;
     (5) encumbrances and restrictions contained in any merger agreement or any
agreement for the sale or other disposition of an asset, including, without
limitation, the capital stock or other equity interest of a Subsidiary,
provided, that such restriction is limited to the asset that is the subject of
such agreement for sale or disposition and such disposition is made in
compliance with Section 5.7;
     (6) encumbrances and restrictions contained in contracts (other than
relating to Debt) entered into in the ordinary course of business that do not,
in the aggregate, detract from the value of the property or assets of the
Borrower or any Subsidiary in any material manner (including, without
limitation, non-assignment provisions in leases and licenses);
     (7) encumbrances and restrictions contained in agreements governing Debt
permitted under Section 5.15; and
     (8) encumbrances and restrictions contained in any agreement or instrument,
capital stock or other equity interest that amends, modifies, restates, renews,
increases, supplements, refunds, replaces, extends or refinances any agreement,
instrument or capital stock or equity interest described in clauses (1)-(8) of
this Section, from time to time, in whole or in part, provided that the
encumbrances or restrictions set forth therein are not more restrictive than
those contained in the predecessor agreement, instrument or capital stock or
other equity interest.
     Section 5.23. Guarantors. The Borrower will (a) cause each Material
Domestic Subsidiary to execute this Agreement as a Guarantor (and from and after
the Effective Date cause each Material Domestic Subsidiary to execute and
deliver to the Administrative Agent, as promptly as possible, but in any event
within thirty (30) days after becoming a Material Domestic Subsidiary of the
Borrower, an executed Guarantor Supplement to become a Guarantor hereunder
(whereupon such Subsidiary shall become a “Guarantor” under this Agreement)),
and (b) deliver and cause each such Subsidiary to deliver corporate resolutions,
opinions of counsel, and such other corporate documentation as the
Administrative Agent may reasonably request, all in form and substance
reasonably satisfactory to the Administrative Agent; provided, however, that
upon the Borrower’s written request of and certification to the Administrative
Agent that a

-38-

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

 

Subsidiary is no longer a Material Domestic Subsidiary, the Administrative Agent
shall release such Subsidiary from its duties and obligations hereunder and
under its Guarantor Supplement; provided, further, that if such Subsidiary
subsequently qualifies as a Material Domestic Subsidiary, it shall be required
to re-execute the Guarantor Supplement. Notwithstanding the foregoing, the
provisions of this Section 5.23 shall not be applicable with respect to Insured
Subsidiaries, Qualified Securitization Subsidiaries and Subsidiaries of Foreign
Subsidiaries, Insured Subsidiaries and Qualified Securitization Subsidiaries.
Article 6
Defaults
     Section 6.1. Events of Default. If one or more of the following events
(“Events of Default”) shall have occurred and be continuing:
     (a) the Borrower shall fail to pay when due any principal of any Loan or
shall fail to pay within 5 Business Days from the date due any interest, any
fees or any other amount payable hereunder;
     (b) any Credit Party shall fail to observe or perform any covenant
contained in Article 5 (other than those contained in Sections 5.1 through 5.3
inclusive, Section 5.5, Section 5.6, Section 5.17(b) and Section 5.18);
     (c) any Credit Party shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for 30 days after notice thereof has been given to the applicable
Credit Party by the Administrative Agent at the request of the Required Banks;
     (d) any representation, warranty, certification or statement made by any
Credit Party in any Credit Document or in any certificate, financial statement
or other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
     (e) any Credit Party or any Subsidiary of any of them shall fail to make
any payment in respect of any Material Financial Obligations when due or within
any applicable grace period;
     (f) any event or condition shall occur which results in the acceleration of
the maturity of any Material Debt of any Credit Party or any Subsidiary of a
Credit Party or enables (or, with the giving of notice or lapse of time or both,
would enable) the holder of such Debt or any Person acting on such holder’s
behalf to accelerate the maturity thereof;
     (g) any Credit Party, any Domestic Subsidiary or any Material Subsidiary of
any of them shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a

-39-

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

 

trustee, receiver (which for the purposes hereof include a receiver and manager
or an interim receiver), liquidator, custodian, examiner or other similar
official of it or any substantial part of its property, or shall consent to any
such relief or to the appointment of, or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize
any of the foregoing or any Insured Subsidiary that is a Material Subsidiary
shall cease to be a federally insured depositary institution, or a cease and
desist order which is material and adverse to the conduct of such Insured
Subsidiary’s business or assets shall be issued against the Borrower or any such
Insured Subsidiary pursuant to applicable federal or state law applicable to
banks or thrifts;
     (h) an involuntary case or other proceeding shall be commenced against any
Credit Party, any Domestic Subsidiary or any Material Subsidiary of any of them
seeking liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian,
examiner or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of 60 days; or an order for relief shall be entered
against any Credit Party, any Domestic Subsidiary or any Material Subsidiary of
any of them under the federal bankruptcy laws as now or hereafter in effect;
     (i) any member of the ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of U.S. $25,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of U.S. $25,000,000;
     (j) judgments or orders for the payment of money aggregating in excess of
U.S. $25,000,000 shall be rendered against the Borrower or any of its
Subsidiaries and such judgments or orders shall continue unsatisfied and
unstayed for a period of 30 days;
     (k) a Change of Control shall occur;
     (l) any Guarantor shall revoke its guaranty provided for in Article 9 of
this Agreement or assert that its guaranty provided for in Article 9 of this
Agreement is unenforceable or otherwise invalid except as permitted hereunder;
or

-40-

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

 

     (m) any License Agreement shall terminate or any arbitration or litigation
shall be commenced seeking termination thereof (except that any litigation or
arbitration commenced by a Person who is not a party to such License Agreement
shall not result in an Event of Default hereunder unless such action is not
stayed or dismissed within 60 days of the commencement thereof), or any party
shall assert any termination thereof, or any party to any License Agreement
shall default in any of its material obligations thereunder beyond the period of
grace (if any) therein provided, except for such terminations, arbitrations,
litigations, assertions or defaults which, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 50% in aggregate amount of the Commitments, by notice
to the Borrower terminate the Commitments and they shall thereupon terminate and
(ii) if requested by Banks holding more than 50% of the aggregate principal
amount of the Loans, by notice to the Borrower declare the Loans (together with
accrued interest thereon) to be, and the Loans shall thereupon become,
immediately due and payable without presentment, demand, notice of acceleration,
notice of intent to accelerate, protest or other notice of any kind, all of
which are hereby waived by the Borrower; provided, that in the case of any of
the Events of Default specified in clause 6.1(g) or 6.1(h) above with respect to
the Borrower, without any notice to the Borrower or any other act by the
Administrative Agent or the Banks, the Commitments shall thereupon terminate and
the Loans (together with accrued interest thereon) shall become immediately due
and payable without presentment, demand, notice of acceleration, notice of
intent to accelerate, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
     Section 6.2. Notice of Default. (a) The Borrower shall comply with
Section 5.1(f).
          (b) The Administrative Agent shall give notice to the Borrower as
provided in Section 6.1(c) promptly upon being requested to do so by the
Required Banks and shall thereupon notify all the Banks thereof.
Article 7
The Agent
     Section 7.1. Appointment and Authorization. (a) Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with all such powers as are reasonably incidental thereto.
     Section 7.2. Administrative Agent and Affiliates. The Administrative Agent
shall have the same rights and powers under this Agreement as any other Bank and
may exercise or refrain from exercising the same as though it were not the
Administrative Agent, and the Administrative Agent and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower as if it were not
the Administrative Agent.

-41-

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

 

     Section 7.3. Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default, except as
expressly provided in Article 6.
     Section 7.4. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower and/or any
Guarantor), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
     Section 7.5. Liability of Administrative Agent. Neither the Administrative
Agent nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required Banks
(or, when expressly required hereby, such different number of Banks required to
consent to or request such action or inaction) or (ii) in the absence of its own
gross negligence or willful misconduct. Neither the Administrative Agent nor any
of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any Borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower or any Guarantor; (iii) the
satisfaction of any condition specified in Article 3, except receipt of items
required to be delivered to the Administrative Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. The Administrative Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, facsimile
transmission or similar writing) believed by it to be genuine or to be signed by
the proper party or parties. Without limiting the generality of the foregoing,
the use of the term “agent” in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
     Section 7.6. Indemnification. Each Bank shall, ratably in accordance with
its Percentage, indemnify the Administrative Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnities, gross negligence or willful misconduct) that such
indemnities may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnities hereunder.
     Section 7.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Bank also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Bank, and based on such documents and

-42-

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

 

information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement.
     Section 7.8. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving notice thereof to the Banks and the Borrower. Upon
any such resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent, subject to the consent of the Borrower if no
Event of Default exists (such consent not to be unreasonably withheld). If no
successor Administrative Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, subject to the consent of the Borrower if no Event of
Default exists (such consent not to be unreasonably withheld), which shall be a
commercial bank organized under the laws of Canada or the United States of
America or of any State thereof and having a combined capital and surplus of at
least the U.S. Dollar Equivalent of U.S. $100,000,000. Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent.
Article 8
Change in Circumstances
     Section 8.1. Basis for Determining Interest Rate Inaccurate or Unfair. If
on, or prior to, the first day of any Interest Period for a Euro-Dollar Loan:
     (a) the Administrative Agent determines that deposits in U.S. Dollars (in
the applicable amounts) are not being offered to the Administrative Agent in the
Euro-Dollar market for such Interest Period, or
     (b) Banks having 50% or more of the aggregate principal amount of the
affected Loans advise the Administrative Agent that the London Interbank Offered
Rate, as determined by the Administrative Agent, will not adequately and fairly
reflect the cost to such Banks of funding their Euro-Dollar Loans for such
Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans or to continue or convert
outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each
outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the
last day of the then current Interest Period applicable thereto. Should either
of the events set forth in subclause (a) or (b) above occur, unless the Borrower
notifies the Administrative Agent at least two Business Days before the date of
any Borrowing of Euro-Dollar Loans for

-43-

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

 

which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
     Section 8.2. Illegality. If, on or after the Effective Date, the adoption
of any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central Bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank
shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and the Borrower whereupon
until such Bank notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans or to convert outstanding Loans into
Euro-Dollar Loans shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan of
such Bank then outstanding shall be converted to a Base Rate Loan either (a) on
the last day of the then current Interest Period applicable to such Loan if such
Bank may lawfully continue to maintain and fund such Loan to such day or
(b) immediately if such Bank shall determine that it may not lawfully continue
to maintain and fund such Loan to such day.
     Section 8.3. Increased Cost and Reduced Return. (a) If on or after the
Effective Date, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
with respect to any Euro-Dollar Loan any such requirement with respect to which
such Bank is entitled to compensation during the relevant Interest Period under
Section 2.15), special deposit, insurance assessment or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or the London interbank market any other condition
affecting its Loans, its Note or its obligation to make Loans and the result of
any of the foregoing is to increase the cost to such Bank (or its Applicable
Lending Office) of making or maintaining any Loan, or to reduce the amount of
any sum received or receivable by such Bank (or its Applicable Lending Office)
under this Agreement or under its Note with respect thereto, by an amount deemed
by such Bank to be material, then, within 15 days after demand by such Bank
(with a copy to the Administrative Agent), the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
increased cost or reduction.

-44-

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

 

          (b) If any Bank shall have determined that after the Effective Date,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank’s
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Administrative Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction.
          (c) Each Bank will promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the Effective
Date, which will entitle such Bank to compensation pursuant to this Section and
will designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
     Section 8.4. Taxes. (a) For the purposes of this Section 8.4, the following
terms have the following meanings:
     “Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings with respect to any payment by the Borrower
or the applicable Guarantor, as the case may be, pursuant to this Agreement or
under any Note, and all liabilities with respect thereto, excluding (i) in the
case of each Bank and the Administrative Agent, taxes imposed on its income,
receipts, capital and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which such Bank or the Administrative Agent (as
the case may be) is organized or in which its principal executive office is
located or, in the case of each Bank, in which its Applicable Lending Office is
located and (ii) in the case of each Bank, any United States withholding tax
imposed on such payments but only to the extent that such Bank is subject to
United States withholding tax at the time such Bank first becomes a party to
this Agreement.
     “Other Taxes” means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from the
execution or delivery of, or otherwise with respect to, this Agreement or any
Note.
     (b) Any and all payments by the Borrower or the applicable Guarantor, as
the case may be, to or for the account of any Bank or the Administrative Agent
hereunder or under any Note

-45-

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

 

shall be made without deduction for any Taxes or Other Taxes; provided, that, if
the Borrower or the applicable Guarantor, as the case may be, shall be required
by law to deduct any Taxes or Other Taxes from any such payments (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) such Bank or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or the applicable Guarantor, as the case
may be, shall make such deductions, (iii) the Borrower or the applicable
Guarantor, as the case may be, shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law
and (iv) the Borrower or the applicable Guarantor, as the case may be, shall
furnish to the Administrative Agent, at its address referred to in Section 10.1,
the original or a certified copy of a receipt evidencing payment thereof.
          (c) The Borrower agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by such Bank or the Administrative
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be paid within 15 days after such Bank or the Administrative Agent (as the case
may be) makes demand therefor.
          (d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower and the Administrative Agent with Internal Revenue Service form W-8 BEN
or W-8ECI, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank is entitled to benefits under an
income tax treaty to which the United States is a party which exempts the Bank
from United States withholding tax or reduces the rate of withholding tax on
payments of interest for the account of such Bank or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States.
          (e) For any period with respect to which a Bank has failed to provide
the Borrower or the Administrative Agent with the appropriate form pursuant to
Section 8.4(d) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 8.4(b) or (c) with respect to Taxes imposed by the United States;
provided that if a Bank, which is otherwise exempt from or subject to a reduced
rate of withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Taxes.
          (f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section, then such Bank will change the
jurisdiction of its Applicable

-46-

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

 

Lending office if, in the judgment of such Bank, such change (i) will eliminate
or reduce any such additional payment which may thereafter accrue and (ii) is
not otherwise disadvantageous to such Bank.
     Section 8.5. Base Rate Loans Substituted for Affected Fixed Rate Loans. If
(i) the obligation of any Bank to make, or convert outstanding Loans to,
Euro-Dollar Loans has been suspended pursuant to Section 8.2 or (ii) any Bank
has demanded compensation under Section 8.3 or 8.4 with respect to its
Euro-Dollar Loans and the Borrower shall, by at least five Business Days’ prior
notice to such Bank through the Administrative Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer exist:
          (a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) Euro-Dollar Loans shall instead be Base Rate
Loans (on which interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Banks); and
          (b) after each of its Euro-Dollar Loans has been repaid (or converted
to a Base Rate Loan), all payments of principal which would otherwise be applied
to repay such Euro-Dollar Loans shall be applied to repay its Base Rate Loans
instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into Euro-Dollar Loans on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other Banks.
     Section 8.6. Limitations on Reimbursement. (a) The Borrower shall not be
required to pay to any Bank reimbursement with regard to any costs or expenses
under Section 2.15 or Article 8 incurred more than 90 days prior to the date of
the relevant Bank’s demand therefor.
          (b) None of the Banks shall be permitted to pass through to the
Borrower charges and costs under Section 2.15 or Article 8 on a discriminatory
basis (i.e., which are not also passed through by such Bank to other customers
of such Bank similarly situated where such customer is subject to documents
providing for such pass through).
          (c) If the obligation of any Bank to make a Euro-Dollar Loan has been
suspended under Section 8.2 or 8.5 for more than three consecutive months, or
any Bank has requested compensation under Section 2.15 or 8.3, then the
Borrower, provided no Default exists, shall have the right, subject to the
Administrative Agent’s prior written consent (such consent not to be
unreasonably withheld) and in accordance with Section 10.6(c), to substitute a
financial institution for such Bank. Such substitution shall result in such
financial institution acquiring such Bank’s rights, duties and obligations
hereunder and assuming such Bank’s Commitment hereunder. Upon such acquisition
and assumption, the obligations of the Bank subject thereto shall be discharged,
such Bank’s Commitment shall be reduced to zero, and such Bank shall cease to be
obligated to make further Loans.

-47-

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

 

Article 9
Performance and Payment Guaranty
     Section 9.1. Unconditional and Irrevocable Guaranty. (a) The Guarantors
hereby jointly and severally, unconditionally and irrevocably undertake and
agree with and for the benefit of the Administrative Agent and the Banks and
each of their respective permitted assignees (collectively, the “Beneficiaries”)
to cause the due payment, performance and observance by the Borrower and its
assigns of all of the Obligations, terms, covenants, conditions, agreements and
undertakings on the part of the Borrower, to be paid, performed or observed
under any Credit Document in accordance with the terms thereof including,
without limitation, any agreement of the Borrower to pay any amounts due with
respect to the Loans, under this Agreement or any other amounts due and owing
under any Credit Document together with all costs and expenses (including
without limitation reasonable legal fees and disbursements) incurred by the
Administrative Agent or any Bank in enforcing its or their rights under this
Article 9 (all such Obligations, terms, covenants, conditions, agreements and
undertakings on the part of the Borrower to be paid, performed or observed by
the Borrower being collectively called the “Guaranteed Obligations”). In the
event that the Borrower shall fail in any manner whatsoever to pay, perform or
observe any of the Guaranteed Obligations when the same shall be required to be
paid, performed or observed under such Credit Document (after giving effect to
any cure period), then each of the Guarantors will itself jointly and severally
duly pay, perform or observe, or cause to be duly paid, performed or observed,
such Guaranteed Obligation, and it shall not be a condition to the accrual of
the obligation of any Guarantor hereunder to pay, perform or observe any
Guaranteed Obligation (or to cause the same to be paid, performed or observed)
that the Administrative Agent, the Banks or any of their permitted assignees
shall have first made any request of or demand upon or given any notice to any
Guarantor or to the Borrower or its successors or assigns, or have instituted
any action or proceeding against any Guarantor or the Borrower or its successors
or assigns in respect thereof. Notwithstanding anything to the contrary
contained in this Section 9.1 the obligations of the respective Guarantors
hereunder in respect of the Borrower are expressly limited to the Guaranteed
Obligations.
          (b) Irrevocability. The Guarantors each agree that its obligations
under this Agreement shall be joint and several and irrevocable. In the event
that under applicable law (notwithstanding the Guarantors’ agreement regarding
the joint and several and irrevocable nature of its obligations hereunder) any
Guarantor shall have the right to revoke its guaranty under this Agreement, this
Agreement shall continue in full force and effect as to such Guarantor until a
written revocation hereof specifically referring hereto, signed by such
Guarantor, is actually received by the Administrative Agent, delivered as
provided in Section 10.1 hereof. Any such revocation shall not affect the right
of the Administrative Agent or any other Beneficiary to enforce their respective
rights under this Agreement with respect to (i) any Guaranteed Obligation
(including any Guaranteed Obligation that is contingent or unmatured) which
arose on or prior to the date the aforementioned revocation was received by the
Administrative Agent or (ii) any other Guarantor. If the Administrative Agent,
or its permitted assignees takes any action in reliance on this Agreement after
any such revocation by a Guarantor but prior to the receipt by the
Administrative Agent of said written notice, the rights

-48-

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

 

of the Administrative Agent, any other Beneficiary or such permitted assignee
with respect thereto shall be the same as if such revocation had not occurred.
     Section 9.2. Enforcement. The Administrative Agent and its permitted
assignees may proceed to enforce the obligations of the Guarantors under this
Agreement without first pursuing or exhausting any right or remedy which the
Administrative Agent or its permitted assignees may have against the Borrower,
any other Person or any collateral under the Credit Documents.
     Section 9.3. Obligations Absolute. To the extent permitted by law, the
applicable Guarantor will perform its obligations under this Agreement
regardless of any law now or hereafter in effect in any jurisdiction affecting
any of the terms of this Agreement or any document delivered in connection with
this Agreement or the rights of the Administrative Agent or its permitted
assignees with respect thereto. The obligations of each Guarantor under this
Agreement shall be absolute and unconditional irrespective of:
          (a) any lack of validity or enforceability or the discharge or
disaffirmance (by any Person, including a trustee in bankruptcy) of the
Guaranteed Obligations, the Loans, any Credit Document or any collateral or any
document, or any other agreement or instrument relating thereto;
          (b) any exchange, release, discharge or non-perfection of any
collateral or any release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;
          (c) any failure to obtain any authorization or approval from or other
action by, or to notify or file with, any governmental authority or regulatory
body required in connection with the performance of such obligations by the
Borrower or any Guarantor; or
          (d) any impossibility or impracticality of performance, illegality,
force majeure, any act of any government or any other circumstance which might
constitute a legal or equitable defense available to, or a discharge of, the
Borrower or any Guarantor, or any other circumstance, event or happening
whatsoever, whether foreseen or unforeseen and whether similar or dissimilar to
anything referred to above in this Section 9.3.
Each Guarantor further agrees that its obligations under this Agreement shall
not be limited by any valuation or estimation made in connection with any
proceedings involving the Borrower or any Guarantor filed under the U.S.
Bankruptcy Code of 1978, as amended (the “Bankruptcy Code”), whether pursuant to
Section 502 of the Bankruptcy Code or any other Section thereof. Each Guarantor
further agrees that the Administrative Agent shall be under no obligation to
marshal any assets in favor of or against or in payment of any or all of the
Guaranteed Obligations. Each Guarantor further agrees that, to the extent that a
payment or payments are made by or on behalf of the Borrower to the
Administrative Agent, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to the Borrower, the estate, trustee, receiver or
any other party

-49-

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

 

relating to the Borrower, including, without limitation, any Guarantor, under
any bankruptcy law, state, or federal law, common law or equitable cause then,
to the extent of such payment or repayment, the Guaranteed Obligations or part
thereof which had been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred. The obligations of any Guarantor
under this Agreement shall not be discharged except by performance as provided
herein.
     Section 9.4. Waiver. Each Guarantor hereby waives promptness, diligence,
notice of acceleration, notice of intent to accelerate, notice of acceptance and
any other notice with respect to any of the Guaranteed Obligations and any
Credit Document and any requirement that the Administrative Agent or its
permitted assignees exhaust any right or take any action against the Borrower,
any other Person or any collateral under the Credit Documents.
     Section 9.5. Subrogation. No Guarantor will exercise or assert any rights
which it may acquire by way of subrogation under this Agreement unless and until
all of the Guaranteed Obligations shall have been paid and performed in full. If
any payment shall be made to any Guarantor on account of any subrogation rights
at any time when all of the Guaranteed Obligations shall not have been paid and
performed in full each and every amount so paid will be held in trust for the
benefit of the Beneficiaries and forthwith be paid to the appropriate
Beneficiary in accordance with this Agreement and the appropriate Credit
Document, to be credited and applied to the Guaranteed Obligations to the extent
then unsatisfied, in accordance with the terms of this Agreement or any document
delivered in connection with this Agreement, as the case may be. In the event
(i) the Guarantors shall have satisfied any of the Guaranteed Obligations and
(ii) all of the Guaranteed Obligations shall have been paid and performed in
full, the Administrative Agent will, at the Guarantors’ request and expense,
execute and deliver to the Guarantors appropriate documents, without recourse
and without representation or warranty of any kind, necessary to evidence or
confirm the transfer by way of subrogation to the Guarantors of the rights of
the Beneficiaries or any permitted assignee, as the case may be, with respect to
the Guaranteed Obligations to which the Guarantors shall have become entitled by
way of subrogation, and thereafter the Beneficiaries and their respective
permitted assignees shall have no responsibility to the Guarantors or any other
person with respect thereof.
     Section 9.6. Survival. All covenants made by the Guarantors herein shall be
considered to have been relied upon by the Administrative Agent and the Banks
and shall survive regardless of any investigation made by the Administrative
Agent or any Bank or on the Administrative Agent’s behalf.
     Section 9.7. Guarantors’ Consent to Assigns. Each Bank may assign or
participate out all or any portion of its Commitment or the Loans in accordance
with Section 10.6 of this Agreement, and each Guarantor agrees to recognize any
such Assignee or participant as a successor and assignee of such Bank hereunder,
with all rights of such Bank hereunder.
     Section 9.8. Continuing Agreement. Article 9 under this Agreement is a
continuing agreement and shall remain in full force and effect until all of the
Borrower’s Obligations have been satisfied in full.

-50-

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

 

     Section 9.9. Entire Agreement. Each Guarantor acknowledges and agrees that
the guarantee delivered by it hereunder is delivered free of any conditions and
no representations have been made to any Guarantor affecting the liability of
such Guarantor under its guarantee hereunder. Each Guarantor confirms and agrees
that the guarantee contained herein is in addition to and not in substitution
for any other guarantee held or which may hereafter be held by the
Administrative Agent or any Bank. The rights, remedies and benefits in this
Article 9 are cumulative and not in substitution for or exclusive of any other
rights or remedies or benefits which the Administrative Agent or the Banks may
otherwise have.
     Section 9.10. Application. All monies received by the Administrative Agent
or the Banks under the guarantee contained in this Article 9 may be applied
against such part or parts of the Guaranteed Obligations as the Administrative
Agent and the Banks may see fit and they shall at all times and from time to
time have the right to change any appropriation of monies received by it or them
and to reapply the same against any other part or parts of the Guaranteed
Obligations as it or they may see fit, notwithstanding any previous application
howsoever made.
Article 10
Miscellaneous
     Section 10.1. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (a) in the
case of a Credit Party, at its address or facsimile number set forth on the
signature pages hereof, (b) in the case of any Bank or the Administrative Agent,
at its address or facsimile number set forth on the applicable Administrative
Questionnaire or (c) in the case of any party, such other address or facsimile
number as such party may hereafter specify for the purpose by notice to the
Administrative Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Administrative Agent
under Article 2 or Article 8 shall not be effective until received.
     Section 10.2. No Waivers. No failure or delay by the Administrative Agent
or any Bank in exercising any right, power or privilege hereunder or under any
Note shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
     Section 10.3. Expenses; Indemnification. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Administrative Agent, including fees
and disbursements of counsel for the Administrative Agent, in connection with
the preparation and administration of this Agreement and the other Credit
Documents, any waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (ii) if an Event of Default occurs, all
out-of-pocket expenses incurred by the Administrative Agent and each Bank,
including (without

-51-

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

 

duplication) the fees and disbursements of outside counsel and the allocated
cost of inside counsel, in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
          (b) The Borrower agrees to indemnify the Administrative Agent and each
Bank, their respective affiliates and the respective directors, officers, agents
and employees of the foregoing (each an “Indemnitee”) and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder; provided, that no Indemnitee shall have the right
to be indemnified hereunder for (i) such Indemnitee’s own gross negligence or
willful misconduct as determined by a court of competent jurisdiction or
(ii) for any loss asserted by another Indemnitee.
     Section 10.4. Sharing of Set-Offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any Note held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and interest due with
respect to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Banks shall be shared by the Banks in accordance with their
Percentages; provided, that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness hereunder. Each Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any holder of
a participation in a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such participation.
     Section 10.5. Amendment or Waiver, etc. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
shall, without the consent of each Bank, (i) extend the final scheduled maturity
of any Loan or Note, or reduce the rate of interest or fees or extend the time
of payment of interest or fees, or reduce the principal amount thereof (except
to the extent repaid in cash) (provided that any amendment or modification to
the financial definitions in this Agreement or to Section 2.14 shall not
constitute a reduction in the rate of interest or any fees for purposes of this
clause (i)), (ii) release a Guarantor from its Guaranty of the Obligations of
the Borrower (except in connection with the sale of a Subsidiary which is a
Guarantor in accordance with the terms of this Agreement or as otherwise
provided in Section 5.23), (iii) amend, modify or waive any provision of this
Section 10.5, (iv) reduce the percentage specified in the definition of Required

-52-

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

 

Banks, (v) amend or modify any provision of Section 10.6 to add any additional
consent requirements necessary to effect any assignment or participation
thereunder or (vi) consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement; provided, further, that no
such change, waiver, discharge or termination shall (y) increase the Commitments
of any Bank over the amount thereof then in effect without the consent of such
Bank (it being understood that waivers or modifications of conditions precedent,
covenants, Defaults shall not constitute an increase of the Commitment of any
Bank), or (z) without the consent of the Administrative Agent, amend, modify or
waive any provision of Article 7 or any other provision as the same relates to
the rights or obligations of the Administrative Agent.
     Section 10.6. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that neither the Borrower nor any
Guarantor may assign or otherwise transfer any of their respective rights under
this Agreement without the prior written consent of all Banks.
          (b) Any Bank may at any time grant to one or more banks or other
institutions (each a “Participant”) participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Administrative Agent, such Bank shall remain responsible for
the performance of its obligations hereunder, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Bank
in connection with such Bank’s rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder, including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement except to the extent such amendment or waiver would
(i) extend the final scheduled maturity of any Loan or Note in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or fees thereon (except in connection with a waiver of applicability
of any post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant’s participation over the
amount thereof then in effect (it being understood that a waiver of any Default
shall not constitute a change in the terms of such participation, and that an
increase in any Commitment or Loan shall be permitted without the consent of any
participant if the participant’s participation is not increased as a result
thereof) or (ii) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement. In the case of any such
participation, the participant shall not have any rights under this Agreement or
any of the other Credit Documents (the participant’s rights against such Bank in
respect of such participation to be those set forth in the agreement executed by
such Bank in favor of the participant relating thereto) and all amounts payable
by the Borrower hereunder shall be determined as if such Bank had not sold such
participation. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of
Article 8 with respect to its participating interest. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).

-53-

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

 

          (c) Any Bank (or any Bank together with one or more other Banks) may
(A) assign all or a portion of its outstanding Obligations hereunder to (i) its
parent company and/or any affiliate of such Bank which is at least 50% owned by
such Bank or its parent company, (ii) to one or more Banks or (iii) in the case
of a Bank that is a fund that invests in bank loans, any other fund that invests
in bank loans and is managed or advised by the same investment advisor of such
Bank or by an Affiliate of such investment advisor or (B) assign all, or, if
less than all, a portion equal to at least U.S. $5,000,000 in the aggregate for
the assigning Bank or assigning Banks, of such outstanding Obligations hereunder
to one or more Eligible Transferees, each of which assignees shall become a
party to this Agreement as a Bank by execution of an Assignment and Assumption
Agreement, provided that, (i) upon the surrender of the relevant Notes by the
assigning Bank (or, upon such assigning Bank’s indemnifying the Borrower for any
lost Note pursuant to a customary indemnification agreement) new Notes will be
issued, at the Borrower’s expense, to such new Bank and to the assigning Bank
upon the request of such new Bank or assigning Bank, such new Notes to be in
conformity with the requirements of Section 2.4 (with appropriate
modifications), (ii) the consent of the Administrative Agent shall be required
in connection with any assignment to an Eligible Transferee pursuant to clause
(B) above (which consent shall not be unreasonably withheld or delayed),
(iii) so long as no Default or Event of Default exists, the consent of the
Borrower shall be required in connection with any assignment to an Eligible
Transferee pursuant to clause (B) above (which consent shall not be unreasonably
withheld or delayed), (iv) the Administrative Agent shall receive at the time of
each such assignment, from the assigning or assignee Bank, the payment of a
non-refundable assignment fee of U.S. $3,500, which fee shall not be subject to
reimbursement from the Borrower, and (v) no such transfer or assignment will be
effective until recorded by the Administrative Agent. To the extent of any
assignment pursuant to this Section 10.6(c), the assigning Bank shall be
relieved of its obligations hereunder with respect to its assigned Commitments.
At the time of each assignment pursuant to this Section 10.6(c) to a Person
which is not already a Bank hereunder and which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for Federal income
tax purposes, the respective assignee Bank shall, to the extent legally entitled
to do so, provide to the Borrower the appropriate Internal Revenue Service forms
described in Section 8.4(d).
          (d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
          (e) Notwithstanding anything to the contrary contained herein, any
Bank (a “Granting Bank”) may grant to a special purpose funding vehicle (a
“SPC”), identified as such in writing from time to time by the Granting Bank to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Bank would otherwise be obligated
to make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Bank shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Bank to the same extent, and as if, such
Loan were made by such Granting Bank. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under this

-54-

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

 

Agreement (all liability for which shall remain with the Granting Bank). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof relating to claims, if any, under
this Agreement. In addition, notwithstanding anything to the contrary contained
in this subsection (e), any SPC may (i) with notice to, but without the prior
written consent of, the Borrower and the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Bank or to any financial institutions (consented to by the
Borrower and Administrative Agent) providing liquidity and/or credit support to
or for the account of such SPC to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC. This section
may not be amended without the written consent of the SPC.
          (f) No assignee, Participant or other transferee of any Bank’s rights
shall be entitled to receive any greater payment under Section 8.3 or 8.4 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made (i) with the Borrower’s prior written
consent or (ii) by reason of the provisions of Section 8.2, 8.3 or 8.4 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or (iii) at a time when the circumstances giving rise to such
greater payment did not exist.
     Section 10.7. Collateral. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is not
relying upon any “margin stock” (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.
     Section 10.8. Governing Law; Submission to Jurisdiction. This Agreement and
each Note shall be governed by and construed in accordance with the laws of the
State of New York. The Borrower and Guarantors hereby submit to the nonexclusive
jurisdiction of the United States District Court for the Northern District of
Illinois and of any Illinois State court sitting in the City of Chicago for
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby. The Borrower and Guarantors irrevocably
waive, to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
     Section 10.9. Counterparts; Integration; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Administrative Agent of
counterparts

-55-

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

 

hereof signed by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by the
Administrative Agent in form satisfactory to it of telegraphic, facsimile or
other written confirmation from such party of execution of a counterpart hereof
by such party) and each of the other conditions specified in Section 3.1 have
been satisfied.
     Section 10.10. Waiver of Jury Trial. Each of the Borrower, the Agent and
the Banks hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
     Section 10.11. Limitation on Interest. It is the intention of the parties
hereto to comply with all applicable usury laws, whether now existing or
hereafter enacted. Accordingly, notwithstanding any provision to the contrary in
this Agreement, the other Credit Documents or any other document evidencing,
securing, guaranteeing or otherwise pertaining to indebtedness of the Borrower
to the Banks, in no contingency or event whatsoever, whether by acceleration of
the maturity of indebtedness of the Borrower to the Banks or otherwise, shall
the interest contracted for, charged or received by any Bank exceed the maximum
amount permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provisions of this Agreement, the other Credit Documents or
any other document evidencing, securing, guaranteeing or otherwise pertaining to
indebtedness of the Borrower to the Banks, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances any
Bank shall ever receive anything of value as interest or deemed interest by
applicable law under this Agreement, the other Credit Documents or any other
document evidencing, securing, guaranteeing or otherwise pertaining to
indebtedness of the Borrower to the Banks or otherwise an amount that would
exceed the highest lawful amount, such amount that would be excessive interest
shall be applied to the reduction of the principal amount owing in connection
with this Agreement or on account of any other indebtedness of the Borrower to
the Banks, and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal owing in connection with this Agreement
and such other indebtedness, such excess shall be refunded to the Borrower. In
determining whether or not the interest paid or payable with respect to
indebtedness of the Borrower to the Banks, under any specific contingency,
exceeds the maximum nonusurious rate permitted under applicable law, the
Borrower and the Banks shall, to the maximum extent permitted by applicable law,
(a) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof, (c)
amortize, prorate, allocate and spread the total amount of interest throughout
the full term of such indebtedness so that the actual rate of interest on
account of such indebtedness does not exceed the maximum amount permitted by
applicable law, and/or (d) allocate interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a rate
greater than that permitted by law. Notwithstanding the foregoing, if for any
period of time interest on any of the Borrower’s Obligations is calculated at
the maximum rate permissible under applicable law rather than the applicable
rate under this Agreement, and thereafter such applicable rate becomes less than
the maximum rate permissible under applicable law, the rate of interest payable
on the Borrower’s Obligations shall remain at the maximum rate permissible

-56-

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

 

under applicable law until the Banks have received the amount of interest which
such Banks would have received during such period on the Borrower’s Obligations
had the rate of interest not been limited to the maximum rate permissible under
applicable law during such period. The terms and provisions of this paragraph
shall control and supersede every other conflicting provision of this Agreement
and the other Credit Documents.
     Section 10.12. Currency Equivalent Generally. For the purposes of making
valuations or computations under this Agreement (but not for the purposes of the
preparation of any financial statements delivered pursuant hereto), and in
particular, without limitation, for purposes of valuations or computations under
Sections 5.9(g), 5.15, 5.17 and 6.1(j), unless expressly provided otherwise,
where a reference is made to a U.S. Dollar amount, in order to determine the
amount of Canadian Dollars to be considered as the amount in U.S. Dollars, such
amount of Canadian Dollars shall be the U.S. Dollar Equivalent of such amount.
     Section 10.13. USA Patriot Act. Each Bank that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies the Borrower that pursuant to
the requirements of the Act, it is required to obtain, verify, and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Bank to
identify the Borrower in accordance with the Act.
     Section 10.14. Confidentiality. Each of the Administrative Agent and the
Banks agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors to the extent any such Person has a need to know such
Information (it being understood that the Persons to whom such disclosure is
made will first be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority (including any self-regulatory authority, such as
the National Association of Insurance Commissioners), (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party hereto, (e) in connection with the exercise of any
remedies hereunder or under any other Credit Document or any suit, action or
proceeding relating to this Agreement or any other Credit Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 10.14, to
(A) any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement or (B) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower or any Subsidiary and its obligations,
(g) with the prior written consent of the Borrower, (h) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this Section 10.14 or (B) becomes available to the Administrative Agent or any
Bank on a non-confidential basis from a source other than the Borrower or any
Subsidiary or any of their directors, officers, employees or agents, including
accountants, legal counsel and other advisors, (i) to rating agencies if
requested or required by such agencies in connection with a rating relating to
the Loans or Commitments hereunder, or (j) to entities which compile and publish
information about the syndicated loan market, provided that only basic
information about the pricing and structure of the transaction evidenced hereby
may be disclosed pursuant to this subsection (j). For purposes

-57-

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

 

of this Section, “Information” means all information received from the Borrower
or any of the Subsidiaries or from any other Person on behalf of the Borrower or
any Subsidiary relating to the Borrower or any Subsidiary or any of their
respective businesses including any information obtained pursuant to the
inspection rights contained in Section 5.6, other than any such information that
is available to the Administrative Agent or any Bank on a non-confidential basis
prior to disclosure by the Borrower or any of its Subsidiaries or from any other
Person on behalf of the Borrower or any of the Subsidiaries.
[Signature Pages to Follow]

-58-

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

 

     In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                      Alliance Data Systems Corporation, as Borrower    
 
                    By   /s/ Michael D. Kubic                  
 
      Name   Michael D. Kubic    
 
      Title   Senior Vice President    
 
      Address:   800 Tech Center Drive    
 
          Gahanna, OH 43230    
 
      Attention:   Treasurer    
 
      Telephone:   (614) 729-4701    
 
      Facsimile:   (614) 729-4899    
 
                    With a copy to:    
 
               
 
      Address:   17655 Waterview Parkway    
 
          Dallas, TX 75252    
 
      Attention:   General Counsel    
 
      Telephone:   (972) 348-5677    
 
      Facsimile:   (972) 348-5150    
 
                    ADS Alliance Data Systems, Inc., as a Guarantor    
 
                    By   /s/ Michael D. Kubic                  
 
      Name   Michael D. Kubic    
 
      Title   Senior Vice President    
 
      Address:   800 Tech Center Drive    
 
          Gahanna, OH 43230    
 
      Attention:   Treasurer    
 
      Telephone:   (614) 729-4701    
 
      Facsimile:   (614) 729-4899    
 
                    With a copy to:    
 
               
 
      Address:   17655 Waterview Parkway    
 
          Dallas, TX 75252    
 
      Attention:   General Counsel    
 
      Telephone:   (972) 348-5677    
 
      Facsimile:   (972) 348-5150    

[Credit Agreement]

S- 1

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

 

                      Epsilon Marketing Services, LLC, as a Guarantor    
 
                    By   /s/ John W. Scullion                  
 
      Name   John W. Scullion    
 
      Title   President    
 
      Address:   800 Tech Center Drive    
 
          Gahanna, OH 43230    
 
      Attention:   Treasurer    
 
      Telephone:   (614) 729-4701    
 
      Facsimile:   (614) 729-4899    
 
                    With a copy to:    
 
               
 
      Address:   17655 Waterview Parkway    
 
          Dallas, TX 75252    
 
      Attention:   General Counsel    
 
      Telephone:   (972) 348-5677    
 
      Facsimile:   (972) 348-5150    
 
                    Epsilon Data Management, LLC, as a Guarantor    
 
                    By   /s/ Alan M. Utay                  
 
      Name   Alan M. Utay    
 
      Title   Vice President    
 
      Address:   800 Tech Center Drive    
 
          Gahanna, OH 43230    
 
      Attention:   Treasurer    
 
      Telephone:   (614) 729-4701    
 
      Facsimile:   (614) 729-4899    
 
                    With a copy to:    
 
               
 
      Address:   17655 Waterview Parkway    
 
          Dallas, TX 75252    
 
      Attention:   General Counsel    
 
      Telephone:   (972) 348-5677    
 
      Facsimile:   (972) 348-5150    

[Credit Agreement]

S- 2

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

 

                      Alliance Data Foreign Holdings, Inc., as a Guarantor    
 
                    By   /s/ John W. Scullion                  
 
      Name   John W. Scullion    
 
      Title   President    
 
      Address:   800 Tech Center Drive    
 
          Gahanna, OH 43230    
 
      Attention:   Treasurer    
 
      Telephone:   (614) 729-4701    
 
      Facsimile:   (614) 729-4899    
 
                    With a copy to:    
 
               
 
      Address:   17655 Waterview Parkway    
 
          Dallas, TX 75252    
 
      Attention:   General Counsel    
 
      Telephone:   (972) 348-5677    
 
      Facsimile:   (972) 348-5150    

[Credit Agreement]

S- 3

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

 

                      Bank of Montreal, as Administrative Agent    
 
               
 
  By   /s/  Mark W. Piekos                  
 
      Name   Mark W. Piekos    
 
               
 
      Title   Managing Director    
 
               

[Credit Agreement]

S- 4

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

 

                      BMO Capital Markets Financing, Inc.    
 
               
 
  By   /s/ Mark W. Piekos                   
 
      Name   Mark W. Piekos     
 
               
 
      Title   Managing Director     
 
               

[Credit Agreement]

S- 5

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

 

Pricing Schedule
     “Euro-Dollar Margin” means, (i) for any day during the period from the
Effective Date through but excluding the first Start Date (as defined below) to
occur on or about March 31, 2007, 0.90% per annum and (ii) from and after the
first day of any fiscal quarter of the Borrower beginning on or about March 31,
2007 (the “Start Date”) to and including the last day of such fiscal quarter,
the applicable percentage per annum set forth below in the appropriate row under
the column corresponding to the Borrower’s Senior Leverage Ratio as calculated
for the last day of the fiscal quarter of the Borrower ended immediately prior
to such Start Date; provided that at all times during which financial statements
have not been delivered when required pursuant to Section 5.1(a) or (b), as the
case may be, the Euro-Dollar Margin shall be as set forth below under the column
heading “Level III.”
     “Base Rate Margin” means 0%.

                          Status   Level I   Level II   Level III
Senior Leverage Ratio
    <1.50       ³1.50<2.00       ³2.00  
Euro-Dollar Margin
    0.60 %     0.90 %     1.20 %

Appendix I