Exhibit
10.27


 


CREDIT
AGREEMENT


 


This CREDIT AGREEMENT
(this “Agreement”) dated as of May 26, 2005 is made and entered into by
and between JACKSON HEWITT TAX SERVICE INC., a
Delaware corporation (the “Parent”), JACKSON
HEWITT INC., a Virginia corporation (the “Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION (the “Lender”).


 


BACKGROUND
STATEMENT


 


The Parent and the Borrower are parties to
that certain Credit Agreement dated as of June 25, 2004 among the Parent,
the Borrower, the lenders party thereto and JPMorgan Chase Bank, as
Administrative Agent (the “Existing Credit Agreement”).  The Borrower has requested that the Lender
provide a revolving credit facility of up to $50,000,000 to supplement the
facility under the Existing Credit Agreement pursuant to the terms and
conditions set forth herein.  Capitalized
terms used herein without definition shall have the meanings assigned to such
terms in the Existing Credit Agreement.


 


STATEMENT
OF AGREEMENT


 


NOW, THEREFORE, in
consideration of the mutual provisions, covenants and agreements contained
herein, the parties hereto hereby agree as follows:


 


ARTICLE I

REVOLVING LINE OF CREDIT


 


1.1                                 Revolving
Loans.  The Lender hereby establishes
a revolving line of credit (the “Revolving Line of Credit”) in favor of
the Borrower in the aggregate principal amount of up to Fifty Million Dollars
($50,000,000) (the “Commitment”) and agrees to make and remake one or
more loans to the Borrower (each a “Loan” and collectively, the “Loans”),
upon the terms and conditions set forth in this Article I,
from time to time on any Business Day during the period from the Effective Date
through the Loan Termination Date.  The
Borrower may borrow, repay and reborrow any amount of the Revolving Line of
Credit.


 


1.2                                 Borrowings.  In order to make a borrowing under the
Revolving Line of Credit (a “Borrowing”), the Borrower shall give the
Lender written notice (a “Notice of Borrowing”) not later than 12:00
p.m., Charlotte, North Carolina time, on the date of such Borrowing.  Such Notice of Borrowing shall be irrevocable
and shall specify (i) the aggregate principal amount of the Loan to be
made pursuant to such Borrowing, (ii) the requested Borrowing date, which
shall be a Business Day on or after the Effective Date, and (iii) the disbursement
instructions for such Loan.  The
aggregate amount of each such Borrowing shall not be less than $3,000,000 or,
if greater, an integral multiple of $1,000,000 in excess thereof (or if less,
in the amount of the Commitment less the aggregate principal amount of all
Loans outstanding hereunder at such time). 
Receipt of a Notice of Borrowing by the Lender shall be deemed to be a
representation and warranty of the Borrower hereunder that all of the
applicable conditions to Borrowing set forth in Article III
hereof shall have been satisfied as of the date of Borrowing.


 





















 


1.3                                 Interest.


 


(a)                                  The
Borrower will pay interest in respect of the unpaid principal amount of each
Loan, from the date of Borrowing thereof until such principal amount shall be
paid in full at a rate equal to the LIBOR Market Index Rate plus 1.25% per
annum as such rate may change from day to day in accordance with changes in the
LIBOR Market Index Rate.  For purposes
hereof, the “LIBOR Market Interest Rate” for any day shall be the rate for one
month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00 a.m.
London time, on such day, or if such day is not a London business day, then the
immediately preceding London business day (or if not so reported, then as
determined by the Lender from another recognized source or interbank
quotation).  Such interest shall be
computed on the basis of a year consisting of 360 days, as the case may be with
regard to the actual number of days (including the first day but excluding the
last day) elapsed.  Accrued and unpaid
interest shall be due and payable in arrears on the first Business Day of each
month and on the Loan Termination Date and thereafter, on demand.


 


(b)                                 Notwithstanding
any other provision of this Agreement to the contrary, upon and during the
continuance of any Event of Default under this Agreement, at the option of the
Lender without any required notice to the Borrower, the outstanding principal
amount of each of the Loans, and to the full extent permitted by law, all
interest accrued on each of the Loans, shall bear interest at the Default Rate,
and such default interest shall be payable on demand.


 


1.4                                 Payments
and Prepayments.  The Borrower may
prepay the Loans, in whole or in part, at any time and from time to time, upon
written notice to the Lender (a “Prepayment Notice”) received not later
than 11:00 a.m. Charlotte, North Carolina time one Business Day prior to the
date of such prepayment (which shall be a Business Day); provided that each
partial prepayment of such Loans shall be in an aggregate principal amount of
not less than $3,000,000 or if greater, an integral multiple of $1,000,000 in
excess thereof.  The Prepayment Notice
shall be irrevocable and shall specify the proposed date and aggregate
principal amount of prepayment.  Notwithstanding
anything herein to the contrary, the Borrower shall immediately prepay Loans
outstanding hereunder on any date on which the outstanding Loans on such date
exceed the Commitment by an amount equal to such excess.


 


1.5                                 Use
of Proceeds.  The proceeds of the
Loans shall be used by the Borrower for working capital and general corporate
purposes of the Credit Parties.


 


ARTICLE II

TERM AND TERMINATION


 


2.1                                 Term.  The term of this Agreement shall commence on
the first Business Day following payment in full by the Borrower of the $175
million Floating Rate Senior Notes due June 25, 2009 (the “Effective
Date”).  Prior to the Effective Date,
neither the Borrower nor the Lender shall have any rights or obligations under
this Agreement and none of the Borrower, the Parent, or any of their
Subsidiaries shall be subject to the restrictions set forth herein until the
Effective Date.


 


2.2                                 Termination.  The Revolving Line of Credit and the
Commitment hereunder shall be automatically terminated and the Borrower shall
repay to the Lender the aggregate principal amount of all outstanding Loans
hereunder, together with accrued and unpaid interest thereon, on the earliest
to occur of (i) January 31, 2006, or (ii) the date of termination in whole
of the


 


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aggregate Commitments pursuant to the Existing Credit Agreement by any
party thereto (the “Loan Termination Date”).


 


ARTICLE III

CONDITIONS


 


3.1                                 Conditions
Precedent to Initial Borrowing.  The
obligation of the Lender to make Loans after the Effective Date in connection
with the initial Borrowing hereunder is subject to the satisfaction of the
following conditions precedent:


 


(a)                                  The
Lender shall have received a guarantee in form and substance reasonably
satisfactory to the Lender from each of the Parent, Tax Services of America,
Inc., Delaware corporation and Hewfant, Inc., a Virginia corporation (together
with the Borrower, the “Credit Parties” and each a “Credit Party”).


 


(b)                                 The
Lender shall have received a certificate dated as of a date no later than the
Effective Date from the Secretary of each Credit
Party certifying as to the incumbency and
genuineness of the signature of each officer of such Credit Party executing
this Agreement or any agreement, instrument or other document contemplated
hereby (each a “Credit Document” and collectively, the “Credit
Documents”) and that attached thereto is a true and complete copy of (i)
the articles of incorporation of such Credit Party and all amendments thereto
certified as of a recent date by the Secretary of State of its jurisdiction of
incorporation, (ii) the bylaws of such Credit Party and all amendments thereto
and (iii) resolutions adopted by the Board of Directors of such Credit Party,
authorizing the execution, delivery and performance of the Credit Documents to
which such Credit Party is a party.


 


(c)                                  The
Lender shall have received a certificate from the Secretary of State of the
state of incorporation of each Credit Party, dated as of a recent date, as to
the existence of such Credit Party.


 


(d)                                 The
Lender shall have received an opinion of legal counsel to the Credit Parties
dated as of date no later than the Effective Date in substantially the form
attached hereto as Exhibit A.


 


(e)                                  The
Borrower shall have paid to the Lender when due the upfront fee in clause (1)
of the second paragraph of the Fee Letter dated as of the date hereof between
the Borrower and the Lender (the “Fee Letter”).


 


3.2                                 Conditions
Precedent to Each Borrowing.  The
obligation of the Lender to make any Loans hereunder, including the initial
Loans, is subject to the satisfaction of the following conditions precedent on
the relevant date of Borrowing:


 


(a)                                  All
of the representations and warranties incorporated by reference into this
Agreement shall be true and correct in all material respects (except to the
extent such representations and warranties are otherwise qualified by
materiality in which case they shall be true and correct in all respects) on
the date of such Borrowing before and after giving effect to the Borrowing of
any Loan on such date and the application of the proceeds thereof, as though


 


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made on and as of such date (other than any
representation or warranty that, by its terms, refers to a specific date other
than such date of Borrowing, in which case such representation or warranty
shall be true and correct in all material respects as of such date).


 


(b)                                 No
event has occurred and is continuing or would result from such Borrowing or the
application of proceeds therefrom, that constitutes an Event of Default.


 


(c)                                  The
Borrower shall have paid to the Lender when due all fees and expenses payable
to the Lender under this Agreement or the Fee Letter.


 


ARTICLE IV

INCORPORATION BY REFERENCE


 


The terms and conditions of the Existing Credit Agreement set forth in Section 2.13
(Increased Costs), Section 2.15 (Taxes), Article III (Representations
and Warranties), Article V (Affirmative Covenants), Article VI
(Negative Covenants) and Article VII (Events of Default) thereof (other
than provisions therein relating to letters of credit or the Issuing Bank) and
all defined terms used therein and all exhibits and schedules to the Existing
Credit Agreement relating thereto are specifically incorporated herein by
reference with the same force and effect as if the same were set out in this
Agreement in full.  Notwithstanding the
foregoing, except as otherwise provided herein, all references in such
incorporated provisions to the “Administrative Agent”, a “Lender” or the “Lenders”
or words of similar import or to “this Agreement”, “hereof”, “hereto” or “hereunder”
or words of similar import shall, without further reference, mean and refer to
the Lender under this Agreement and to this Agreement, respectively; all references
in such incorporated provisions to the “Borrower” shall, without further
reference, mean and refer to the Borrower hereunder; all references in such
incorporated provisions to a “Loan” or the “Loans” or a “Borrowing” or the “Borrowings”
or words of similar import shall, without further reference, mean and refer to
a “Loan” or the “Loans” or a “Borrowing” or the “Borrowings” as appropriate,
hereunder; all references in such incorporated provisions to a “Commitment” or
the “Commitments” shall, without further reference, mean and refer to the
facility hereunder; all references in such incorporated provisions to the “Maturity
Date” shall, without further reference, mean and refer to the Loan Termination
Date hereunder.  The incorporation by
reference into this Agreement of the terms and conditions of the Existing
Credit Agreement is for convenience only, and this Agreement and the Existing
Credit Agreement shall at all times be, and be deemed to be and treated as,
separate and distinct loan obligations. 
The incorporation by reference into this Agreement of the terms and
conditions of the Existing Credit Agreement shall not be affected or impaired
by any subsequent expiration or termination of the Existing Credit Agreement or
any amendment, waiver or modification thereto except as expressly agreed by the
Lender in writing.  In the event of any
conflict between the provisions of the Existing Credit Agreement and this
Agreement, the terms of this Agreement shall govern.


 


The Borrower, by its execution of this
Agreement, hereby agrees to amend and restate this Agreement at the request of
the Lender to set forth in full the provisions incorporated by reference herein
from the Existing Credit Agreement and to modify the terms and provisions of
this Agreement as appropriate to provide for the inclusion of additional
lenders upon any assignment or proposed assignment by the Lender of its rights
and obligations hereunder effected


 


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in accordance with Section 5.8 hereof.  In addition, the Borrower hereby agrees to
notify the Lender promptly and in any event within three Business Days of any
amendment, supplement or other modification to the Existing Credit Agreement and, at the request of the Lender, to enter into any amendment or supplement to this
Agreement proposed by the Lender to incorporate comparable amendments,
supplements or other modifications to this Agreement.


 


ARTICLE V

MISCELLANEOUS


 


5.1                                 Expenses.  The Borrower hereby agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Lender in connection
with the preparation, execution, delivery, administration, modification,
amendment and enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement and any other instruments or documents to be
delivered in connection herewith, including, without limitation, the reasonable
fees and disbursements of counsel for the Lender with respect thereto and with
respect to advising the Lender as to its rights and responsibilities under this
Agreement and such other agreements and documents.


 


5.2                                 Amendment;
Waiver.  No amendment or waiver of
any provision of this Agreement, nor consent to any departure by the Borrower
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Borrower and the Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.


 


5.3                                 Notices/Payments.  All payments by the Borrower with respect of the
principal of, interest on or fees relating to the Loans shall be made by wire
transfer of immediately available funds to Wachovia Bank, National Association,
ABA Routing No. 063000021, Summit, New Jersey, Beneficiary Account:
0101-0145916-0002088, Beneficiary Name: 
Commercial Loan Services, Payment, NC6885.  All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic or telex)
and mailed, telecopied, telexed or delivered, if to the Parent or the Borrower,
to such party at 7 Sylvan Way, Parsippany, New Jersey 07054 Attention:  Mark L. Heimbouch, Chief Financial Officer,
Facsimile: (973) 496-2760 with a copy to Skadden, Arps, Slate, Meagher &
Flom LLP, Four Times Square, New York, NY 10036, Attention:  James M. Douglas, Facsimile:  (917) 777-2181; and, if to the Lender, to
Wachovia Bank, National Association, Charlotte Plaza Building, 201 South
College Street, 8th floor, NC 0680, Charlotte, North Carolina 28288,
Facsimile: (704) 383-0288 with a copy to Wachovia Bank, National Association,
190 River Road, Summit, New Jersey 07901-1444, Attention: James Petronchak,
Facsimile: (908) 598-3800, or, as to each party, at such other address as shall
be designated by such party in a written notice to the other party.  All such notices and communications shall,
when mailed, telecopied or telexed, be effective when deposited in the mails,
telecopied or confirmed by telex answerback, respectively, except that notices
to the Lender pursuant to the provisions of Articles 1, 2 or 3 shall not be effective until
received by the Lender.


 


5.4                                 No
Waiver.  No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of


 


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any other right. 
The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.


 


5.5                                 Survival.  All representations, warranties and
agreements made by or on behalf of the Credit Parties in this Agreement and the
other Credit Documents shall survive the execution and delivery hereof or
thereof and the making and repayment of the Loans.  In addition, notwithstanding anything herein
or under applicable law to the contrary, the provisions of this Agreement and
the other Credit Documents relating to indemnification or payment of costs and
expenses shall survive the payment in full of all Loans, the termination of the
Commitment, and any termination of this Agreement or any of the other Credit
Documents.


 


5.6                                 Indemnification.  The Borrower hereby agrees to indemnify the
Lender and hold it harmless against any and all losses, claims, damages and
liabilities of or to the Lender in connection with or as a result of this
Agreement, the Revolving Line of Credit, any Loan or any application of the
proceeds of any Loan on the same terms and to the same extent as the “Lenders” are so indemnified
pursuant to the Existing Credit Agreement.


 


5.7                                 Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein
without the prior written consent of the Lender.


 


5.8                                 Assignments;
Participations.  The Lender may
assign to one or more Persons all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of the
Revolving Line of Credit and the Loans owing to it) on the same terms and
subject to the same conditions as are set forth for assignments by lenders
under the Existing Credit Agreement.  In
connection with any such assignment, the Borrower agrees to execute and deliver
such documentation as the Lender or any such permitted assignee may reasonably
request to evidence such assignment and the rights and obligations of such
assignee hereunder.  The Lender may sell
participations to one or more banks or other entities (other than the Borrower
or any of its affiliates) in or
to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of the Revolving Line of Credit and the Loans owing to it); provided,
however, that (i) the Lender’s obligations under this Agreement
(including, without limitation, the Revolving Line of Credit hereunder) shall
remain unchanged, (ii) the Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender’s rights and obligations under this Agreement and
(iv) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of this Agreement or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest
on, the Loans or any fees or other amounts payable hereunder, in each case to
the extent subject to such participation, or postpone any date fixed for any
payment of principal of, or interest on, the Loans or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation.


 


5.9                                 Maximum
Interest Rate.  Nothing contained in
this Agreement shall be deemed to establish or require the payment of interest
to the Lender at a rate in excess of the maximum rate


 


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permitted by governing law.  In the event that the rate of interest
required to be paid under this Agreement exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid hereunder shall be
automatically reduced to the maximum rate permitted by governing law and any
amounts collected in excess of the permissible amount shall be deemed a
prepayment of principal on the Loans.


 


5.10                           [Intentionally
Deleted.]


 


5.11                           Counterparts.  This Agreement may be executed in separate
counterparts by the parties hereto, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.  Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall be effective as
delivery of an originally executed counterpart of this Agreement.


 


5.12                           Governing
Law.  This Agreement and the other
Credit Documents shall (except as may be expressly otherwise provided in any
Credit Document) be governed by, and construed in accordance with, the law of
the State of New York (including Sections 5-1401 and 5-1402 of the New York
General Obligations Law, but excluding all other choice of law and conflicts of
law rules).


 


5.13                           Waiver
of Jury Trial.  EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


5.14                           Submission
to Jurisdiction; Waiver of Venue; Service of Process.


 


(a)                                  The
Parent and the Borrower each irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the courts of the
Supreme Court of State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or any other Credit Document, or for recognition or
enforcement of any judgment, and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such state court or, to the fullest
extent permitted by applicable law, in such federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the


 


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judgment or in any other manner provided by law.  Nothing in this Agreement or in any other
Credit Document shall affect any right that the Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Credit
Document against the Parent, the Borrower or any other Credit Party or its
properties in the courts of any jurisdiction.


 


(b)                                 Each
of the Parent and the Borrower irrevocably and unconditionally waives, to the
fullest extent permitted by applicable law, any objection that it may now or
hereafter have to the laying of venue of any action or proceeding arising out
of or relating to this Agreement or any other Credit Document in any court
referred to in Section 5.14(a).  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.


 


(c)                                  Each
party hereto irrevocably consents to service of process in the manner provided
for notices in Section 5.3.  Nothing in this Agreement will affect the
right of any party hereto to serve process in any other manner permitted by
applicable law.


 


5.15                           Severability.  To the extent any provision of this Agreement
is prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.


 


(signatures on following
page)


 


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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.


 


 


	
   

  	
   

  	
  JACKSON
  HEWITT TAX SERVICE INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Mark L.
  Heimbouch

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Mark
  L. Heimbouch

  
	
   

  	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JACKSON
  HEWITT INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Mark L.
  Heimbouch

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Mark
  L. Heimbouch

  
	
   

  	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Eugene S.
  Smith

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Eugene
  S. Smith

  
	
   

  	
   

  	
   

  	
  Title:
  Senior Vice President

  



 


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