**Exhibit 10.6**

 

 

 

 

CREDIT AGREEMENT

 

dated as of

 

June 25, 2004

 

among

 

JACKSON HEWITT TAX SERVICE INC.,as Parent,

 

JACKSON HEWITT INC.,as Borrower,

 

THE LENDERS PARTY HERETO

 

and

 

JPMORGAN CHASE BANK,as Administrative Agent

 

----

 

J.P. MORGAN SECURITIES INC.,as Sole Bookrunner and Sole Lead Arranger

 

Banc of America Securities and Wachovia Bank,N.A.,as Documentation Agents

 

 

 

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TABLE OF CONTENTS

 

| ARTICLE I  Definitions                      |                                                        |
|--------------------------------------------------|-------------------------------------------------------------|
|                                             |                                                        |
| Section 1.01                                | Defined Terms.                                              |   |
| Section 1.02                                | Classification of Loans and Borrowings.                     |   |
| Section 1.03                                | Terms Generally.                                            |   |
| Section 1.04                                | Accounting Terms; GAAP.                                     |   |
|                                             |                                                        |   |
| ARTICLE II  The Credits                     |                                                        |
|                                             |                                                        |
| Section 2.01                                | Commitments                                                 |   |
| Section 2.02                                | Loans and Borrowings                                        |   |
| Section 2.03                                | Requests for Borrowings                                     |   |
| Section 2.04                                | Letters of Credit                                           |   |
| Section 2.05                                | Funding of Borrowings                                       |   |
| Section 2.06                                | Interest Elections                                          |   |
| Section 2.07                                | Termination and Reduction of Commitments                    |   |
| Section 2.08                                | Repayment of Loans; Evidence of Debt                        |   |
| Section 2.09                                | Prepayment of Loans                                         |   |
| Section 2.10                                | Fees                                                        |   |
| Section 2.11                                | Interest                                                    |   |
| Section 2.12                                | Alternate Rate of Interest                                  |   |
| Section 2.13                                | Increased Costs                                             |   |
| Section 2.14                                | Break Funding Payments                                      |   |
| Section 2.15                                | Taxes                                                       |   |
| Section 2.16                                | Payments Generally; Pro Rata Treatment; Sharing of Set-offs |   |
| Section 2.17                                | Mitigation Obligations; Replacement of Lenders              |   |
|                                             |                                                        |   |
| ARTICLE III  Representations and Warranties |                                                        |
|                                             |                                                        |
| Section 3.01                                | Organization; Powers                                        |   |
| Section 3.02                                | Authorization; Enforceability                               |   |
| Section 3.03                                | Governmental Approvals; No Conflicts                        |   |
| Section 3.04                                | Financial Condition; No Material Adverse Change             |   |
| Section 3.05                                | Properties                                                  |   |
| Section 3.06                                | Litigation and Environmental Matters                        |   |
| Section 3.07                                | Compliance with Laws and Agreements; No Default             |   |
| Section 3.08                                | Investment and Holding Company Status                       |   |

 

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| Section 3.09                     | Taxes                                                       |   |
|---------------------------------------|-------------------------------------------------------------|--------|
| Section 3.10                     | ERISA                                                       |   |
| Section 3.11                     | Solvency                                                    |   |
| Section 3.12                     | Use  of Proceeds                                            |   |
| Section 3.13                     | Margin Regulations                                          |   |
| Section 3.14                     | Disclosure                                                  |   |
|                                  |                                                        |   |
| ARTICLE IV  Conditions           |                                                        |
|                                  |                                                        |
| Section 4.01                     | Effective Date                                              |   |
| Section 4.02                     | Each Credit Event                                           |   |
|                                  |                                                        |   |
| ARTICLE V  Affirmative Covenants |                                                        |
|                                  |                                                        |
| Section 5.01                     | Financial Statements; Ratings Change and  Other Information |   |
| Section 5.02                     | Notices of Material Events                                  |   |
| Section 5.03                     | Existence; Conduct of Business                              |   |
| Section 5.04                     | Payment of Obligations                                      |   |
| Section 5.05                     | Maintenance of Properties; Insurance                        |   |
| Section 5.06                     | Books and Records; Inspection Rights                        |   |
| Section 5.07                     | Compliance with Laws and Contracts                          |   |
| Section 5.08                     | Compliance with Environmental Laws                          |   |
| Section 5.09                     | Use of Proceeds                                             |   |
| Section 5.10                     | New  Material Subsidiaries                                  |   |
|                                  |                                                        |   |
| ARTICLE VI  Negative Covenants   |                                                        |
|                                  |                                                        |
| Section 6.01                     | Maximum Consolidated Leverage Ratio                         |   |
| Section 6.02                     | Minimum Consolidated Fixed Charge Coverage  Ratio           |   |
| Section 6.03                     | Indebtedness                                                |   |
| Section 6.04                     | Liens                                                       |   |
| Section 6.05                     | Fundamental Changes                                         |   |
| Section 6.06                     | Investments, Loans, Advances, Guarantees and Acquisitions   |   |
| Section 6.07                     | Hedging Agreements                                          |   |
| Section 6.08                     | Restricted Payments                                         |   |
| Section 6.09                     | Transactions with Affiliates                                |   |
| Section 6.10                     | Restrictive Agreements                                      |   |
| Section 6.11                     | Transactions with Franchisees                               |   |
| Section 6.12                     | Sale  and Leasebacks                                        |   |
| Section 6.13                     | Accounting Changes                                          |   |

 

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| ARTICLE VII  Events of Default                           |                                                        |
|---------------------------------------------------------------|-------------------------------------------------------------|
|                                                          |                                                        |
| ARTICLE VII                                              | Events of Default                                           |   |
|                                                          |                                                        |   |
| ARTICLE VIII  The Administrative Agent                   |                                                        |
|                                                          |                                                        |
| ARTICLE VIII                                             | The Administrative Agent                                    |   |
|                                                          |                                                        |   |
| ARTICLE IX  Miscellaneous                                |                                                        |
|                                                          |                                                        |
| Section 9.01                                             | Notices                                                     |   |
| Section 9.02                                             | Waivers; Amendments                                         |   |
| Section 9.03                                             | Expenses; Indemnity; Damage Waiver                          |   |
| Section 9.04                                             | Successors and Assigns                                      |   |
| Section 9.05                                             | Survival                                                    |   |
| Section 9.06                                             | Counterparts; Integration; Effectiveness                    |   |
| Section 9.07                                             | Severability                                                |   |
| Section 9.08                                             | Right of Setoff                                             |   |
| Section 9.09                                             | Governing Law; Jurisdiction; Consent to  Service of Process |   |
| Section 9.10                                             | WAIVER OF JURY TRIAL                                        |   |
| Section 9.11                                             | Headings                                                    |   |
| Section 9.12                                             | Confidentiality                                             |   |
| Section 9.13                                             | Interest Rate Limitation                                    |   |
| Section 9.14                                             | USA  Patriot Act                                            |   |
|                                                          |                                                        |   |
| SCHEDULES:                                                    |                                                        |   |
|                                                          |                                                        |   |
| Schedule 2.01 — Commitments                         |                                                        |
| Schedule 6.03 — Existing Indebtedness               |                                                        |
| Schedule 6.04 — Existing Liens                      |                                                        |
| Schedule 6.06 — Existing Investments                |                                                        |
| Schedule 6.09 — Transactions with Affiliates        |                                                        |
| Schedule 6.10 — Existing Restrictions               |                                                        |
|                                                          |                                                        |   |
| EXHIBITS:                                                     |                                                        |
|                                                          |                                                        |   |
| Exhibit A — Form of Assignment and Assumption            |                                                        |
| Exhibit B-1 — Form of Parent Guaranty                    |                                                        |
| Exhibit B-2 — Form of Subsidiary Guaranty                |                                                        |
| Exhibit C-1 — Form of Opinion of Borrower’s Counsel |                                                        |
| Exhibit C-2 — Form of Opinion of Piper Rudnick LLP       |                                                        |

 

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CREDIT AGREEMENT dated as of June 25,2004, among JACKSON HEWITT TAX SERVICE INC., a Delaware corporation (the “Parent”),JACKSON HEWITT INC., a Virginia corporation (the “Borrower”), theLENDERS from time to time party hereto (the “Lenders”), and JPMORGANCHASE BANK, as Administrative Agent (as amended, restated, supplemented orotherwise modified, the “Agreement”). The parties hereto agree as follows:

 

# *ARTICLE I*Definitions

# * *

Section 1.01                                DefinedTerms.

 

As used in this Agreement, the followingterms have the meanings specified below:

 

“ABR”, when used in reference to anyLoan or Borrowing, refers to whether such Loan, or the Loans comprising suchBorrowing, are bearing interest at a rate determined by reference to theAlternate Base Rate.

 

“Acquisition” means (a) an investment(through the acquisition of Equity Interests or otherwise) by the Parent or anySubsidiary in any other Person pursuant to which such Person shall become aSubsidiary or shall be merged with or into the Parent or any Subsidiary, or (b)the acquisition (by purchase, merger, consolidation or otherwise) by the Parentor any Subsidiary of the assets of any Person which constitute all orsubstantially all of the assets of such Person, any division or line ofbusiness of such Person or any other properties or assets of such Person otherthan in the ordinary course of business.

 

“Adjusted LIBO Rate” means, withrespect to any Eurodollar Borrowing for any Interest Period, an interest rateper annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to(a) the LIBO Rate for such Interest Period multiplied by (b) theStatutory Reserve Rate.

 

“Administrative Agent” means JPMorganChase Bank, in its capacity as administrative agent for the Lenders hereunder.

 

“Administrative Questionnaire” meansan Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” means, with respect to anyPerson, any other Person which, directly or indirectly, controls, is controlledby or is under common control with such Person. A Person shall be deemed to be “controlled by” any other Person if suchother Person possesses, directly or indirectly, power (a) to vote 10% or moreof the securities (on a fully diluted basis) of such Person having ordinaryvoting power for the election of directors or managing general partners; or (b)to direct or cause the direction of the management and policies of such Personwhether by contract or otherwise.  It isunderstood and agreed that no officer or director of the Parent, the Borroweror any of their respective subsidiaries in such capacity or any Franchisee insuch capacity shall be deemed to be an Affiliate of the Parent, the Borrower orany of their respective subsidiaries.

 

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“Alternate Base Rate” means, for anyday, a rate per annum equal to the greatest of (a) the Prime Rate ineffect on such day, (b) the Base CD Rate in effect on such dayplus 1% and (c) the Federal Funds Effective Rate in effect on suchday plus 1⁄2 of 1%.  Any change in theAlternate Base Rate due to a change in the Prime Rate, the Base CD Rate orthe Federal Funds Effective Rate shall be effective from and including theeffective date of such change in the Prime Rate, the Base CD Rate or theFederal Funds Effective Rate, respectively.

 

“Applicable Percentage” means, withrespect to any Lender, the percentage of the total Commitments represented bysuch Lender’s Commitment.  If theCommitments have terminated or expired, the Applicable Percentages shall bedetermined based upon the Commitments most recently in effect, giving effect toany assignments.

 

“Applicable Rate” means, for any day,(a) with respect to any ABR Loan, 0.25% per annum and (b) with respect to anyEurodollar Loan, 1.25% per annum.

 

“Approved Fund” has the meaningassigned to such term in Section 9.04.

 

“Assessment Rate” means, for any day,the annual assessment rate in effect on such day that is payable by a member ofthe Bank Insurance Fund classified as “well-capitalized” and within supervisorysubgroup “B” (or a comparable successor risk classification) within the meaningof 12 C.F.R. Part 327 (or any successor provision) to the Federal DepositInsurance Corporation for insurance by such Corporation of time deposits madein dollars at the offices of such member in the United States; providedthat if, as a result of any change in any law, rule or regulation, it is nolonger possible to determine the Assessment Rate as aforesaid, then theAssessment Rate shall be such annual rate as shall be determined by theAdministrative Agent to be representative of the cost of such insurance to theLenders.

 

“Assignment and Assumption” means anassignment and assumption entered into by a Lender and an assignee (with theconsent of any party whose consent is required by Section 9.04), andaccepted by the Administrative Agent, in the form of Exhibit A orany other form approved by the Administrative Agent.

 

“Availability Period” means the periodfrom and including the Effective Date to but excluding the earlier of theMaturity Date and the date of termination of the Commitments.

 

“Base CD Rate” means the sum of (a)the Three-Month Secondary CD Rate multiplied by the Statutory Reserve Rate plus(b) the Assessment Rate.

 

“Board” means the Board of Governorsof the Federal Reserve System of the United States of America.

 

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

 

“Borrowing” means Loans of the sameType, made, converted or continued on the same date and, in the case ofEurodollar Loans, as to which a single Interest Period is in effect.

 

“Borrowing Request” means a request bythe Borrower for a Borrowing in accordance with Section 2.03.

 

2

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“Business Day” means any day that isnot a Saturday, Sunday or other day on which commercial banks in New York Cityare authorized or required by law to remain closed; provided that, whenused in connection with a Eurodollar Loan, the term “Business Day” shallalso exclude any day on which banks are not open for dealings in dollardeposits in the London interbank market.

 

“Calculation Date” means the last dayof each fiscal quarter of the Borrower.

 

“Capital Lease Obligations” of anyPerson means the obligations of such Person to pay rent or other amounts underany lease of (or other arrangement conveying the right to use) real or personalproperty, or a combination thereof, which obligations are required to beclassified and accounted for as capital leases on a balance sheet of suchPerson under GAAP, and the amount of such obligations shall be the capitalizedamount thereof determined in accordance with GAAP.

 

“Change in Control” means (a) theacquisition of ownership, directly or indirectly, beneficially or of record, byany Person or group (within the meaning of the Exchange Act and the rules ofthe Securities and Exchange Commission thereunder as in effect on the datehereof), of Equity Interests representing more than 30% of the aggregateordinary voting power represented by the issued and outstanding EquityInterests of the Parent; (b) occupation of a majority of the seats (other thanvacant seats) on the board of directors of the Parent by Persons who wereneither (i) nominated by the board of directors of the Parent nor (ii)appointed by directors so nominated; or (c) the failure of the Parent to owndirectly or indirectly 100% of the issued and outstanding Equity Interests ofthe Borrower.

 

“Change in Law” means (a) the adoptionof any law, rule or regulation after the date of this Agreement, (b) any changein any law, rule or regulation or in the interpretation or application thereofby any Governmental Authority after the date of this Agreement or (c)compliance by any Lender or the Issuing Bank (or, for purposes ofSection 2.13(b), by any lending office of such Lender or by such Lender’sor the Issuing Bank’s holding company, if any) with any request, guideline ordirective (whether or not having the force of law) of any GovernmentalAuthority made or issued after the date of this Agreement.

 

“Code” means the Internal Revenue Codeof 1986, as amended from time to time.

 

“Commitment” means, with respect toeach Lender, the commitment of such Lender to make Loans and to acquireparticipations in Letters of Credit hereunder, expressed as an amountrepresenting the maximum aggregate amount of such Lender’s Revolving CreditExposure hereunder, as such commitment may be (a) increased pursuant toSection 2.01(b), (b) reduced from time to time pursuant toSection 2.07 and (c) reduced or increased from time to time pursuant toassignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’sCommitment is set forth on Schedule 2.01, or in the Assignment andAssumption pursuant to which such Lender shall have assumed its Commitment, asapplicable.  The initial aggregate amountof the Lenders’ Commitments is $100,000,000.

 

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“Commitment Letter” means the SeniorCredit Facility Commitment Letter dated as of April 22, 2004 from theAdministrative Agent and JP Morgan Securities Inc. to, and accepted and agreedto by, the Borrower.

 

“Confidential Information” meansinformation concerning each of the Parent, the Borrower or their respectiveAffiliates which is non-public, confidential or proprietary in nature, or anyinformation that is marked or designated confidential by or on behalf of theBorrower, which is furnished to any Lender by the Borrower or any of itsAffiliates directly or through the Administrative Agent in connection with thisAgreement or the transactions contemplated hereby (at any time on, before orafter the date hereof) together with all analyses, compilations or othermaterials prepared by any Lender or its respective directors, officers,employees, agents, auditors, consultants or advisors which contain or otherwisereflect such information.

 

“Consolidated EBITDA” means, for anyperiod, Consolidated Net Income (excluding any consolidated net incomeresulting from any Office Acquisition or Franchisee Expansion occurring duringsuch period) after eliminating extraordinary gains and losses, and unusualitems, plus, without duplication, (a) taxes, (b) depreciation and amortization,(c) Consolidated Interest Expense, (d) other non-cash charges, (e) any amountattributable to any non-recurring item including the Litigation Settlement, butexcluding any cash payments made in such period with respect to anynon-recurring item, in the case of clauses (a) through (e) to the extentdeducted in the computation of Consolidated Net Income for such period, and(f)(1) if any Office Acquisition occurred during such period, the product of(A) the amount of the total revenues of the applicable Office for the mostrecently completed period of four consecutive calendar quarters prior to thedate of such Office Acquisition, and (B) the average EBITDA Margin attributableto all Office Acquisitions made by the Borrower during the fiscal yearpreceding the year in which such Office Acquisition occurred; and (2) if anyFranchisee Expansion occurred during such period, the product of (A) theroyalty rate currently in effect for the applicable Franchisee under theapplicable franchise agreement and (B) the amount of the total revenue of suchFranchisee for the most recently completed period of four consecutive calendarquarters prior to the date of such Franchisee Expansion; provided thatthe aggregate amount included in Consolidated EBITDA pursuant to clause (f)shall not exceed 5% of Consolidated EBITDA calculated without giving effect toclause (f).

 

In addition to, and without limitation of,the foregoing, for purposes of this definition, “Consolidated EBITDA” shall becalculated on each Calculation Date after giving effect on a pro forma basisfor the period of such calculation to any EBITDA attributable to the assetswhich are the subject of an Acquisition (other than any Office Acquisition orFranchisee Expansion) during the Four Quarter Period, as if such Acquisitionoccurred on the first day of such Four Quarter Period.

 

“Consolidated Fixed Charges” means,for any period, the sum of (a) Consolidated Interest Expense for such periodand (b) regular quarterly dividends paid during such period in respect of theParent’s****common stock.  On any Calculation Date, the ConsolidatedFixed Charge Coverage Ratio will be calculated after giving effect on a proforma basis for the applicable Four Quarter Period to the incurrence of anyCovenant Indebtedness in connection with an Office Acquisition, FranchiseeExpansion or other Acquisition.  Forpurposes of determining “Consolidated Fixed Charges,” (1) interest onoutstanding Covenant Indebtedness determined on

 

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a fluctuating basis as of anyCalculation Date and which will continue to be so determined thereafter shallbe deemed to have accrued at a fixed rate per annum equal to the rate ofinterest on such Covenant Indebtedness in effect on such Calculation Date; (2)if interest on a Covenant Indebtedness outstanding on any Calculation Date mayoptionally be determined at an interest rate based upon a factor of a prime orsimilar rate, a eurocurrency interbank offered rate, or other rates,  then the interest rate in effect on suchCalculation Date shall be deemed to have been in effect during the Four QuarterPeriod; and (3) notwithstanding clause (1) above, interest on Covenant Indebtednessdetermined on a fluctuating basis, to the extent such interest is covered byinterest rate protection agreements, shall be deemed to accrue at the rate perannum resulting after giving effect to the operation of such agreement.

 

“Consolidated Fixed Charge Coverage Ratio”means, for a Four Quarter Period, the ratio of Consolidated EBITDA for suchFour Quarter Period to Consolidated Fixed Charges for such Four Quarter Period.

 

“Consolidated Indebtedness” means, asof any date of determination, the total Covenant Indebtedness of the Parent andits Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Expense” means,for any period, the sum, for the Parent and its consolidated Subsidiaries(determined in accordance with GAAP), of all interest in respect of CovenantIndebtedness (including, without limitation, the interest component of anypayments in respect of Capital Lease obligations but excluding any capitalizedfinancing costs) accrued during such period (whether or not actually paidduring such period).

 

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

 

“Consolidated Net Income” shall mean,for any period, the net income (or loss) of the Parent and its consolidatedSubsidiaries for such period, determined on a consolidated basis in accordancewith GAAP.

 

“Consolidated Net Tangible Assets”means, as of any date of determination, Consolidated Total Assets afterdeducting “Goodwill” and “Other Intangibles-Net” (or equivalent line item oritems) as shown on the consolidated balance sheet of the Parent and itsSubsidiaries for the most recently ended fiscal quarter.

 

“Consolidated Net Worth” means, as ofany date of determination, all items which in conformity with GAAP would beincluded under stockholders’ equity on a consolidated balance sheet of theParent and its Subsidiaries at such date.

 

“Consolidated Total Assets”  means, as of any date of determination, thetotal assets of the Parent and its Subsidiaries determined on a consolidatedbasis in accordance with GAAP.

 

“Control” means the possession,directly or indirectly, of the power to direct or cause the direction of themanagement or policies of a Person, whether through the ability to

 

5

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exercise voting power, bycontract or otherwise.  “Controlling”and “Controlled” have meanings correlative thereto.

 

“Covenant Indebtedness” means, withrespect to any Person, without duplication,

 

#### (i)                                     itsliabilities for borrowed money;

####  

#### (ii)                                  itsliabilities for the deferred purchase price of property acquired by such Person(excluding (a) accounts payable arising in the ordinary course of business and(b) to the extent the payment thereof is contingent, the deferred purchaseprice of property acquired by such Person, but including all liabilitiescreated or arising under any conditional sale or other title retentionagreement with respect to any such property);

####  

#### (iii)                               CapitalLease Obligations;

####  

#### (iv)                              allliabilities for borrowed money secured by any Lien with respect to any propertyowned by such Person (whether or not it has assumed or otherwise become liable forsuch liabilities);

####  

#### (v)                                 itsredemption obligations in respect of Disqualified Capital Stock to the extentpayable with cash or other consideration (except common stock or equitysecurities); and

####  

#### (vi)                              any****Guarantee of such Person with respect toliabilities of a type described in any clause (i) through (vi) hereof,excluding Franchisee Advance Payments made in connection with programs createdby a Credit Party for the general benefit of the franchisee system.

####  

CovenantIndebtedness of any Person shall include all obligations of such Person of thecharacter described in clauses (i) through (v) to the extent such Personremains legally liable in respect thereof notwithstanding that any suchobligation is deemed to be extinguished under GAAP.  Covenant Indebtedness of any Person shallexclude all liabilities of such Person for the Litigation Settlement and thedevelopment advance notes or other similar arrangements.

 

“Credit Documents” means the CreditAgreement, the Parent Guaranty, the Subsidiary Guaranty, any notes issuedhereunder, the Fee Letter and any amendment, waiver or extension of suchdocuments or any other documents which are mutually agreed by the Borrower andthe Administrative Agent to constitute “Credit Documents.”

 

“Credit Parties” means the Parent, theBorrower and each of the Subsidiary Guarantors.

 

“Default” means any event or conditionwhich constitutes an Event of Default or which upon notice, lapse of time orboth would, unless cured or waived, become an Event of Default.

 

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“Disclosed Matters” means publicfilings with the Securities and Exchange Commission made by the Parent or anyCredit Party as filed on or prior to the Effective Date.

 

“Disqualified Capital Stock” meansmandatorily redeemable preferred stock with mandatory sinking fund orredemption payments prior to the maturity date of the Senior Unsecured Notes.

 

“dollars” or “$” refers tolawful money of the United States of America.

 

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

 

“Effective Date” means, subject to thesatisfaction (or waiver in accordance with Section 9.02) of the conditionsset forth in Section 4.01, the fourth Business Day following the executionof the underwriting agreement to be entered into in connection with the ParentInitial Public Offering or such other Business Day thereafter on or prior toJuly 15, 2004 which may be agreed to by the Borrower and the Lenders.

 

“Environmental Laws” means all laws,rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions,notices or binding agreements issued, promulgated or entered into by anyGovernmental Authority, relating in any way to the environment, preservation orreclamation of natural resources, the management, release or threatened releaseof any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means anyliability, contingent or otherwise (including any liability for damages, costsof environmental remediation, fines, penalties or indemnities), of the Borroweror any Subsidiary directly or indirectly resulting from or based upon(a) violation of any Environmental Law, (b) the generation, use,handling, transportation, storage, treatment or disposal of any HazardousMaterials, (c) exposure to any Hazardous Materials, (d) the releaseor threatened release of any Hazardous Materials into the environment or (e)any contract, agreement or other consensual arrangement pursuant to whichliability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means shares ofcapital stock, partnership interests, membership interests in a limitedliability company, beneficial interests in a trust or other equity ownershipinterests in a Person, and any warrants, options or other rights entitling theholder thereof to purchase or acquire any such equity interest.

 

“ERISA” means the Employee RetirementIncome Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means any trade orbusiness (whether or not incorporated) that, together with the Borrower, istreated as a single employer under Section 414(b) or (c) of the Code or,solely for purposes of Section 302 of ERISA and Section 412 of theCode, is treated as a single employer under Section 414 of the Code.

 

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“ERISA Event” means (a) any“reportable event”, as defined in Section 4043 of ERISA or the regulationsissued thereunder with respect to a Plan (other than an event for which the30-day notice period is waived); (b) the existence with respect to anyPlan of an “accumulated funding deficiency” (as defined in Section 412 ofthe Code or Section 302 of ERISA), whether or not waived; (c) thefiling pursuant to Section 412(d) of the Code or Section 303(d) ofERISA of an application for a waiver of the minimum funding standard withrespect to any Plan; (d) the incurrence by the Borrower or any of itsERISA Affiliates of any liability under Title IV of ERISA with respect tothe termination of any Plan; (e) the receipt by the Borrower or any ERISAAffiliate from the PBGC or a plan administrator of any notice relating to anintention to terminate any Plan or Plans or to appoint a trustee to administerany Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates ofany liability with respect to the withdrawal or partial withdrawal from anyPlan or Multiemployer Plan; or (g) the receipt by the Borrower or anyERISA Affiliate of any notice, or the receipt by any Multiemployer Plan fromthe Borrower or any ERISA Affiliate of any notice, concerning the imposition ofWithdrawal Liability or a determination that a Multiemployer Plan is, or isexpected to be, insolvent or in reorganization, within the meaning ofTitle IV of ERISA.

 

“Eurodollar”, when used in referenceto any Loan or Borrowing, refers to whether such Loan, or the Loans comprisingsuch Borrowing, are bearing interest at a rate determined by reference to theAdjusted LIBO Rate.

 

“Event of Default” has the meaningassigned to such term in Article VII.

 

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

 

“Excluded Taxes” means, with respectto the Administrative Agent, any Lender, the Issuing Bank or any otherrecipient of any payment to be made by or on account of any obligation of theBorrower hereunder, (a) income or franchise taxes imposed on (or measured by)its net income  by the United States ofAmerica, or by the jurisdiction under the laws of which such recipient isorganized or in which its principal office is located or, in the case of anyLender, in which its applicable lending office is located, (b) any branchprofits taxes imposed by the United States of America or any similar taximposed by any other jurisdiction in which the Borrower is located and (c) inthe case of any Lender (other than an assignee pursuant to a request by theBorrower under Section 2.17(b)), any withholding tax that is imposed onamounts payable to such Lender at the time such Lender becomes a party to thisAgreement (or designates a new lending office) or is attributable to suchLender’s failure to comply with Section 2.15(e); provided, however,that Excluded Taxes shall not include in the case of the designation of a newlending office or an assignment, withholding taxes solely to the extent thatthe Lender effecting such assignment or designating such new lending office wasentitled, immediately prior to the time of such assignment or designation ofsuch new lending office, to receive additional amounts from the Borrower withrespect to the applicable withholding tax imposed on such Lender (or suchassignee) pursuant to Section 2.15(a) as a result of such assignment ordesignation.

 

“Facility Fee Rate” means, for anyday, 0.25% per annum.

 

“Federal Funds Effective Rate” means,for any day, the weighted average (rounded upwards, if necessary, to the next1/100 of 1%) of the rates on overnight Federal funds

 

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transactions with members ofthe Federal Reserve System arranged by Federal funds brokers, as published onthe next succeeding Business Day by the Federal Reserve Bank of New York,or, if such rate is not so published for any day that is a Business Day, theaverage (rounded upwards, if necessary, to the next 1/100 of 1%) of thequotations for such day for such transactions received by the AdministrativeAgent from three Federal funds brokers of recognized standing selected by it.

 

“Fee Letter” means that certain letteragreement dated of even date herewith that sets forth the amount of fees to bepaid to the Administrative Agent by the Borrower and the time of such payments.

 

“Financial Officer” means the chieffinancial officer, principal accounting officer, treasurer or controller of theParent.

 

“Foreign Lender” means any Lender thatis organized under the laws of a jurisdiction other than that in which theBorrower is located.  For purposes ofthis definition, the United States of America, each State thereof and theDistrict of Columbia shall be deemed to constitute a single jurisdiction.

 

“Form S-1” means the Form S-1Registration Statement under the Exchange Act filed with the Securities andExchange Commission by the Parent on March 15, 2004, as amended throughAmendment 6, filed by Parent on June 21, 2004.

 

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

 

“Franchisee” means a Person (otherthan the Borrower or a Subsidiary) that owns and operates a Borrower-licensedOffice.

 

“Franchisee Advance Payments” meansadvances made from time to time by any Credit Party to third parties on behalfof or for the benefit of Franchisees.

 

“Franchisee Expansion” means theissuance of a development advance note or other similar arrangements toFranchisees by the Borrower or any Subsidiary.

 

“GAAP” means generally acceptedaccounting principles in the United States of America.

 

“Governmental Authority” means thegovernment of the United States of America, any other nation or any politicalsubdivision thereof, whether state or local, and any agency, authority,instrumentality, regulatory body, court, central bank or other entityexercising executive, legislative, judicial, taxing, regulatory oradministrative powers or functions of or pertaining to government.

 

“Guarantee” of or by any Person (the “guarantor”)means any obligation, contingent or otherwise, of the guarantor guaranteeing orhaving the economic effect of guaranteeing any Indebtedness or other obligationof any other Person (the “primary obligor”) in any manner, whetherdirectly or indirectly, and including any obligation of the guarantor, direct

 

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or indirect, (a) topurchase or pay (or advance or supply funds for the purchase or payment of)such Indebtedness or other obligation or to purchase (or to advance or supplyfunds for the purchase of) any security for the payment thereof, (b) topurchase or lease property, securities or services for the purpose of assuringthe owner of such Indebtedness or other obligation of the payment thereof,(c) to maintain working capital, equity capital or any other financialstatement condition or liquidity of the primary obligor so as to enable theprimary obligor to pay such Indebtedness or other obligation or (d) as an  account party in respect of any letter ofcredit or letter of guarantee issued to support such Indebtedness orobligation; provided, that the term Guarantee shall not includeendorsements for collection or deposit in the ordinary course of business.

 

“Hazardous Materials” means allexplosive or radioactive substances or wastes and all hazardous or toxicsubstances, wastes or other pollutants, including petroleum or petroleumdistillates, asbestos or asbestos containing materials, polychlorinatedbiphenyls, radon gas, infectious or medical wastes and all other substances orwastes of any nature regulated pursuant to any Environmental Law.

 

“Hedging Agreement” means any interestrate protection agreement, foreign currency exchange agreement, commodity priceprotection agreement or other interest rate, currency exchange rate orcommodity price hedging arrangement.

 

“Indebtedness” of any Person means,without duplication, (a) all obligations of such Person for borrowed moneyor with respect to deposits or advances made on behalf of such Person by thirdparties that are payable by such Person, excluding that portion of anydevelopment advance note or other similar arrangement that is recorded as aliability on the balance sheet of the Credit Parties, (b) all obligationsof such Person evidenced by bonds, debentures, notes or similar instruments,(c) all obligations of such Person under conditional sale or other titleretention agreements relating to property acquired by such Person, (d) allobligations of such Person in respect of the deferred purchase price ofproperty or services excluding to the extent the payment thereof is contingent,the deferred purchase price of property acquired by such Person), (e) allIndebtedness of others secured by (or for which the holder of such Indebtednesshas an existing right, contingent or otherwise, to be secured by) any Lien onproperty owned or acquired by such Person, whether or not the Indebtednesssecured thereby has been assumed, (f) all Guarantees by such Person ofIndebtedness of others, (g) all Capital Lease Obligations of such Person,(h) all obligations, contingent or otherwise, of such Person as anapplicant or account party in respect of letters of credit and letters ofguarantee and (i) all obligations, contingent or otherwise, of such Person inrespect of bankers’ acceptances; provided that, in each of the foregoingclauses (a) through (i), undisputed accounts payable incurred in the ordinarycourse of business that are not more than 180 days past due shall beexcluded.  The Indebtedness of any Personshall include the Indebtedness of any other entity (including any partnershipin which such Person is a general partner) to the extent such Person is liabletherefor as a result of such Person’s ownership interest in or otherrelationship with such entity, except to the extent the terms of such Indebtednessprovide that such Person is not liable therefor.

 

“Indemnified Taxes” means Taxes otherthan Excluded Taxes and Other Taxes.

 

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“Index Debt” means senior, unsecured,long-term indebtedness for borrowed money of the Borrower that is notguaranteed by any other Person or subject to any other credit enhancement.

 

“Information Memorandum” means theConfidential Information Memorandum dated April 22, 2004 relating to theParent, the Borrower and the Transactions.

 

“Interest Election Request” means arequest by the Borrower to convert or continue a Borrowing in accordance withSection 2.06.

 

“Interest Payment Date” means(a) with respect to any ABR Loan, the last day of each March, June,September and December, and (b) with respect to any Eurodollar Loan, thelast day of the Interest Period applicable to the Borrowing of which such Loanis a part and, in the case of a Eurodollar Borrowing with an Interest Period ofmore than three months’ duration, each day prior to the last day of suchInterest Period that occurs at intervals of three months’ duration after thefirst day of such Interest Period.

 

“Interest Period” means, with respectto any Eurodollar Borrowing, the period commencing on the date of such Borrowingand ending on the numerically corresponding day in the calendar month that isone, two, three or six months thereafter, as the Borrower may elect; provided,that (i) if any Interest Period would end on a day other than a Business Day,such Interest Period shall be extended to the next succeeding Business Dayunless such next succeeding Business Day would fall in the next calendar month,in which case such Interest Period shall end on the next preceding Business Dayand (ii) any Interest Period that commences on the last Business Day of acalendar month (or on a day for which there is no numerically corresponding dayin the last calendar month of such Interest Period) shall end on the lastBusiness Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowinginitially shall be the date on which such Borrowing is made and thereaftershall be the effective date of the most recent conversion or continuation ofsuch Borrowing.

 

“ISP 98” means the InternationalStandby Practices, referred to as ISP 98 and published by the InternationalChamber of Commerce, as amended and restated from time to time.

 

“Issuing Bank” means JPMorgan ChaseBank, in its capacity as the issuer of Letters of Credit hereunder, and itssuccessors in such capacity as provided in Section 2.04(i).  The Issuing Bank may, in its discretion,arrange for one or more Letters of Credit to be issued by Affiliates of theIssuing Bank, in which case the term “Issuing Bank” shall include any suchAffiliate with respect to Letters of Credit issued by such Affiliate.

 

“LC Disbursement” means a payment madeby the Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure” means, at any time, thesum of (a) the aggregate undrawn amount of all outstanding Letters of Credit atsuch time plus (b) the aggregate amount of all LC Disbursements that have notyet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any timeshall be its Applicable Percentage of the total LC Exposure at such time.

 

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“Lenders” means the Persons listed onSchedule 2.01 and any other Person that shall have become a party heretopursuant to an Assignment and Assumption, other than any such Person thatceases to be a party hereto pursuant to an Assignment and Assumption.

 

“Letter of Credit” means any letter ofcredit issued pursuant to this Agreement.

 

“LIBO Rate” means, with respect to anyEurodollar Borrowing for any Interest Period, the rate appearing on Page 3750of the Dow Jones Market Service (or on any successor or substitute page of suchService, or any successor to or substitute for such Service, providing ratequotations comparable to those currently provided on such page of such Service,as determined by the Administrative Agent from time to time for purposes ofproviding quotations of interest rates applicable to dollar deposits in theLondon interbank market) at approximately 11:00 a.m., London time, two BusinessDays prior to the commencement of such Interest Period, as the rate for dollardeposits with a maturity comparable to such Interest Period.  In the event that such rate is not availableat such time for any reason, then the “LIBO Rate” with respect to suchEurodollar Borrowing for such Interest Period shall be the rate (roundedupwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of$5,000,000 and for a maturity comparable to such Interest Period are offered bythe principal London office of the Person serving as the Administrative Agentin immediately available funds in the London interbank market at approximately11:00 a.m., London time, two Business Days prior to the commencement ofsuch Interest Period.

 

“Lien” means, with respect to anyasset, (a) any mortgage, deed of trust, lien, pledge, hypothecation,encumbrance, charge or security interest in, on or of such asset, (b) theinterest of a vendor or a lessor under any conditional sale agreement, capitallease or title retention agreement (or any financing lease having substantiallythe same economic effect as any of the foregoing) relating to such asset and(c) in the case of securities, any purchase option, call or similar rightof a third party with respect to such securities.

 

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

 

“Loans” means the loans made by theLenders to the Borrower pursuant to this Agreement.

 

“Material Adverse Effect” means amaterial adverse effect on (a) the business, operations, property, orcondition (financial or otherwise) of the Parent and the Subsidiaries taken asa whole, (b) the ability of the Parent, and the respective Subsidiaries, takenas a whole, to perform their obligations under the Credit Documents or(c) the validity or enforceability of any of the Credit Documents or therights or remedies of the Administrative Agent and the Lenders thereunder.

 

“Material Indebtedness” meansIndebtedness (other than the Loans and Letters of Credit), or obligations inrespect of one or more Hedging Agreements, of any one or more of the Parent andits Subsidiaries in an aggregate principal amount exceeding $3,000,000.  For purposes of determining MaterialIndebtedness, the “principal amount” of the obligations of the Parent or anySubsidiary in respect of any Hedging Agreement at any time shall be the maximum

 

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aggregate amount (giving effectto any netting agreements) that the Parent or such Subsidiary would be requiredto pay if such Hedging Agreement were terminated at such time.

 

“Material Subsidiary” means eachSubsidiary other than Subsidiaries that, in the aggregate, account for no morethan 5% of Consolidated Total Assets, 5% of Consolidated Net Worth or 5% of theconsolidated revenues of the Parent.

 

“Maturity Date” means the fifthanniversary of the Effective Date.

 

“Memorandum” means (i) a PrivatePlacement Memorandum, dated April 23, 2004 together with the Appendicesthereto, including Amendment No. 2 to the Borrower’s RegistrationStatement on Form S-1, and (ii) a supplement to such Placement Memorandum,dated June 18, 2004 including the Appendix thereto consisting of AmendmentNo. 5 to the Borrower’s Registration Statement on Form S-1.

 

“Moody’s” means Moody’s InvestorsService, Inc.

 

“Multiemployer Plan” means amultiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Notes Offering” means the issuance ofthe Senior Unsecured Notes pursuant to a private placement on the EffectiveDate.

 

“Note Purchase Agreement” means theNote Purchase Agreement dated as of June 21, 2004 by and among theBorrower and the purchasers of the Senior Unsecured Notes.

 

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

 

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

 

“Office Acquisition EBITDA” means, forany Office Acquisition for any period, consolidated net income (determined inaccordance with GAAP) of the applicable Office for such period aftereliminating extraordinary gains and losses, and unusual items, plus, withoutduplication, (a) taxes, (b) depreciation and amortization, (c) interestexpense, (d) other non-cash charges and (e) any amount attributable to anynon-recurring item, but excluding any cash payments made in such period withrespect to any non-recurring item, in the case of clauses (a) through (e) tothe extent deducted in the computation of consolidated net income for suchperiod.

 

“Other Taxes” means any and allpresent or future stamp or documentary taxes or any other excise or propertytaxes, charges or similar levies arising from any payment made hereunder orunder any of the other Credit Documents (other than the Parent Guaranty or anySubsidiary Guaranty) or from the execution, delivery or enforcement of, orotherwise with respect to, this Agreement or any of the other Credit Documents(other than the Parent Guaranty or any Subsidiary Guaranty).

 

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“Parent” shall mean Jackson Hewitt TaxService Inc., a Delaware corporation.

 

“Parent Guaranty” means a guarantee bythe Parent of the obligations of Borrower under the Credit Documents, in theform attached hereto as Exhibit B-1.

 

“Parent Initial Public Offering” meansthe registered public offering on the Effective Date by Cendant Corporation ofits entire common stock ownership in the Parent.

 

“Participant” has the meaning assignedto such term in Section 9.04.

 

“PBGC” means the Pension BenefitGuaranty Corporation referred to and defined in ERISA and any successor entityperforming similar functions.

 

“Permitted Acquisition” means anyAcquisition (other than an Office Acquisition or Franchisee Expansion) by theParent or any Subsidiary; provided, that immediately after giving effectto such Acquisition, the Parent shall be in pro forma compliance withSection 5.10, Section 6.01, Section 6.02 andSection 6.05(b) and either (i) if such Acquisition is pursuant to clause(a) of the definition of “Acquisition,” then, immediately following suchAcquisition, such Person is a consolidated Subsidiary or (ii) if suchacquisition is pursuant to clause (b) of the definition of “Acquisition,” then,immediately following such Acquisition, such assets, division, line of businessor other properties or assets are owned by the Parent or a consolidatedSubsidiary.

 

“Permitted Encumbrances” means:

 

(a)                                  Liensimposed by law for taxes that are not yet due or are being contested incompliance with Section 5.04;

 

(b)                                 carriers’,warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liensimposed by law, arising in the ordinary course of business and securingobligations that are not overdue by more than 60 days or are being contested incompliance with Section 5.04;

 

(c)                                  pledgesand deposits made in connection with workers’ compensation, unemploymentinsurance and other social security laws or regulations;

 

(d)                                 depositsto secure the performance of bids, trade contracts, leases, statutoryobligations, surety and appeal bonds, performance bonds and other obligationsof a like nature, in each case in the ordinary course of business;

 

(e)                                  judgmentliens in respect of judgments that do not constitute an Event of Default underclause (k) of Article VII;

 

(f)                                    easements,zoning restrictions, rights-of-way and similar encumbrances on real propertyimposed by law or arising in the ordinary course of business that do not secureany monetary obligations and do not materially detract from the value of theaffected property or interfere with the ordinary conduct of business of theParent or a Subsidiary;

 

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(g)                                 customaryrights of set-off upon deposit accounts and securities accounts of cash infavor of banks or other depositary institutions and other securitiesintermediaries;

 

(h)                                 Liensin the nature of licenses that arise in the ordinary course of business; and

 

(i)                                     anycall or similar rights in the nature of a right of first offer or a firstrefusal right of a third party that is an investor in a joint venture or aSubsidiary in the case of Equity Interests issued by such joint venture orSubsidiary and any call or similar rights on any nominee, trust or directors’qualifying shares or similar arrangements designed to satisfy requirements ofapplicable laws in the case of Equity Interests issued by such joint venture orSubsidiary;

 

provided that the term“Permitted Encumbrances” shall not include any Lien securing Indebtedness.

 

“Permitted Investments” means:

 

(a)                                  directobligations of, or obligations the principal of and interest on which areunconditionally guaranteed by, the United States of America (or by any agencythereof to the extent such obligations are backed by the full faith and creditof the United States of America), in each case maturing within one year fromthe date of acquisition thereof;

 

(b)                                 investmentsin commercial paper maturing within 270 days from the date of acquisitionthereof and having, at such date of acquisition, a credit rating from S&Por from Moody’s of at least A-1 or P-1, as applicable;

 

(c)                                  investmentsin certificates of deposit, banker’s acceptances and time deposits maturingwithin 180 days from the date of acquisition thereof issued or guaranteed by orplaced with, and money market deposit accounts issued or offered by, anydomestic office of any commercial bank organized under the laws of the UnitedStates of America or any State thereof which has a combined capital and surplusand undivided profits of not less than $500,000,000;

 

(d)                                 fullycollateralized repurchase agreements with a term of not more than 30 days forsecurities described in clause (a) above and entered into with a financialinstitution satisfying the criteria described in clause (c) above; and

 

(e)                                  moneymarket funds that (i) (A) comply with the criteria set forth in Securities andExchange Commission Rule 2a-7 under the Investment Company Act of 1940, asamended, or (B) are rated AAA by S&P and Aaa by Moody’s and (ii) haveportfolio assets of at least $5,000,000,000.

 

“Person” means any natural person,corporation, limited liability company, trust, joint venture, association,company, partnership, Governmental Authority or other entity.

 

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“Plan” means any employee pensionbenefit plan (other than a Multiemployer Plan) subject to the provisions ofTitle IV of ERISA or Section 412 of the Code or Section 302 ofERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, ifsuch plan were terminated, would under Section 4069 of ERISA be deemed tobe) an “employer” as defined in Section 3(5) of ERISA.

 

“Prime Rate” means the rate ofinterest per annum publicly announced from time to time by JPMorgan Chase Bankas its prime rate in effect at its principal office in New York City; eachchange in the Prime Rate shall be effective from and including the date suchchange is publicly announced as being effective.

 

“Register” has the meaning assigned tosuch term in Section 9.04.

 

“Related Parties” means, with respectto any specified Person, such Person’s Affiliates and the respective directors,officers, employees, agents and advisors of such Person and such Person’sAffiliates.

 

“Related Transaction Documents” meansthe Memorandum, the Note Purchase Agreement and the Senior Unsecured Notes.

 

“Required Lenders” means, at any time,Lenders having Revolving Credit Exposures and unused Commitments representingmore than 50% of the sum of the total Revolving Credit Exposures and unusedCommitments at such time.

 

“Responsible Officer” means the chiefexecutive officer, any vice president, or any financial officer of theBorrower.

 

“Restricted Payment” means anydividend or other distribution (whether in cash, securities or other property)with respect to any Equity Interests in the Parent or any Subsidiary, or anypayment (whether in cash, securities or other property), including any sinkingfund or similar deposit, on account of the purchase, redemption, retirement,acquisition, cancellation or termination of any such Equity Interests in theParent or any Subsidiary or any option, warrant or other right to acquire anysuch Equity Interests in the Parent or any Subsidiary.

 

“Revolving Credit Exposure” means,with respect to any Lender at any time, the sum of the outstanding principalamount of such Lender’s Loans and its LC Exposure at such time.

 

“S&P” means Standard & Poor’s.

 

“Senior Unsecured Notes” means theFloating Rate Notes issued by the Borrower on the Effective Date in anaggregate amount not to exceed $175,000,000.

 

“Sole Lead Arranger” means JPMorganSecurities Inc.

 

“Solvent” means, with respect to anyPerson as of any date of determination, that, as of such date, (a) the fairvalue of the assets of such Person is greater than the total amount ofliabilities (including contingent and unliquidated liabilities) of such Person,(b) such Person is

 

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able to pay all liabilities ofsuch Person as such liabilities mature and (c) such Person does not haveunreasonably small capital.  In computingthe amount of contingent or unliquidated liabilities at any time, suchliabilities shall be computed at the amount that, in light of all the facts andcircumstances existing at such time, represents the amount that can reasonablybe expected to become an actual or matured liability (in each case asinterpreted in accordance with fraudulent conveyance, bankruptcy, insolvencyand similar laws and other applicable requirements of law.)

 

“Statutory Reserve Rate” means afraction (expressed as a decimal), the numerator of which is the number one andthe denominator of which is the number one minus the aggregate of the maximumreserve percentages (including any marginal, special, emergency or supplementalreserves) expressed as a decimal established by the Board to which the Personserving as the Administrative Agent is subject (a) with respect to theBase CD Rate, for new negotiable nonpersonal time deposits in dollars of over$100,000 with maturities approximately equal to three months and(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding(currently referred to as “Eurocurrency Liabilities” in Regulation D ofthe Board).  Such reserve percentagesshall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed toconstitute eurocurrency funding and to be subject to such reserve requirementswithout benefit of or credit for proration, exemptions or offsets that may beavailable from time to time to any Lender under such Regulation D or anycomparable regulation.  The StatutoryReserve Rate shall be adjusted automatically on and as of the effective date ofany change in any reserve percentage.

 

“subsidiary” means, with respect toany Person (the “parent”) at any date, any corporation, limitedliability company, partnership, association or other entity the accounts ofwhich would be consolidated with those of the parent in the parent’sconsolidated financial statements if such financial statements were prepared inaccordance with GAAP as of such date, as well as any other corporation, limitedliability company, partnership, association or other entity (a) of whichsecurities or other ownership interests representing more than 50% of theequity or more than 50% of the ordinary voting power or, in the case of apartnership, more than 50% of the general partnership interests are, as of suchdate, owned, controlled or held, or (b) that is, as of such date,otherwise Controlled, by the parent or one or more subsidiaries of the parentor by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any subsidiary ofthe Parent.

 

“Subsidiary Guaranty” means aguarantee by a Subsidiary Guarantor of the obligations of the Borrower underthe Credit Documents to which the Borrower is a party in the form attachedhereto as Exhibit B-2.

 

“Subsidiary Guarantor” means Hewfant,Inc., a Virginia corporation, Tax Services of America, Inc., a Delaware corporation,or any other Subsidiary that is a “United States Person” (as such term isdefined in Section 7701(a)(30) of the Code) and is required to becomeparty to a Subsidiary Guaranty pursuant to Section 5.10.

 

“Taxes” means any and all present orfuture taxes, levies, imposts, duties, deductions, charges or withholdingsimposed by any Governmental Authority.

 

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“Three-Month Secondary CD Rate” means,for any day, the secondary market rate for three-month certificates of depositreported as being in effect on such day (or, if such day is not a Business Day,the next preceding Business Day) by the Board through the public informationtelephone line of the Federal Reserve Bank of New York (which rate will, underthe current practices of the Board, be published in Federal Reserve StatisticalRelease H.15(519) during the week following such day) or, if such rate is notso reported on such day or such next preceding Business Day, the average of thesecondary market quotations for three-month certificates of deposit of majormoney center banks in New York City received at approximately 10:00 a.m., NewYork City time, on such day (or, if such day is not a Business Day, on the nextpreceding Business Day) by the Administrative Agent from three negotiablecertificate of deposit dealers of recognized standing selected by it.

 

“Transactions” means the execution,delivery and performance by the Parent, the Borrower and the Subsidiaries, asapplicable, of this Agreement and the other Credit Documents, the borrowing ofLoans, the use of the proceeds thereof and the issuance of Letters of Credithereunder.

 

“Type”, when used in reference to anyLoan or Borrowing, refers to whether the rate of interest on such Loan, or onthe Loans comprising such Borrowing, is determined by reference to the AdjustedLIBO Rate or the Alternate Base Rate.

 

“Withdrawal Liability” means liabilityto a Multiemployer Plan as a result of a complete or partial withdrawal fromsuch Multiemployer Plan, as such terms are defined in Part I ofSubtitle E of Title IV of ERISA.

 

Section 1.02                                Classificationof Loans and Borrowings.  Forpurposes of this Agreement, Loans may be classified and referred to by Type (e.g.,a “Eurodollar Loan”).  Borrowings alsomay be classified and referred to by Type (e.g., a “EurodollarBorrowing”).

 

Terms Generally.  The definitions of terms herein shall applyequally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronounshall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and“including” shall be deemed to be followed by the phrase “withoutlimitation”.  The word “will” shall beconstrued to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) anydefinition of or reference to any agreement, instrument or other documentherein shall be construed as referring to such agreement, instrument or otherdocument as from time to time amended, supplemented or otherwise modified(subject to any restrictions on such amendments, supplements or modificationsset forth herein), (b) any reference herein to any Person shall be construed toinclude such Person’s successors and assigns, (c) the words “herein”, “hereof”and “hereunder”, and words of similar import, shall be construed to refer tothis Agreement in its entirety and not to any particular provision hereof, (d)all references herein to Articles, Sections, Exhibits and Schedules shall beconstrued to refer to Articles and Sections of, and Exhibits and Schedules to,this Agreement and (e) the words “asset” and “property” shall be construed tohave the same meaning and effect and to refer to any and all tangible andintangible assets and properties, including cash, securities, accounts andcontract rights.

 

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AccountingTerms; GAAP. Except as otherwise expressly provided herein, all terms of anaccounting or financial nature shall be construed in accordance with GAAP, asin effect from time to time; provided that, if the Borrower notifies theAdministrative Agent that the Borrower requests an amendment to any provisionhereof to eliminate the effect of any change occurring after the date hereof inGAAP or in the application thereof on the operation of such provision (or ifthe Administrative Agent notifies the Borrower that the Required Lendersrequest an amendment to any provision hereof for such purpose), regardless ofwhether any such notice is given before or after such change in GAAP or in theapplication thereof, then such provision shall be interpreted on the basis ofGAAP as in effect and applied immediately before such change shall have becomeeffective until  such notice shall havebeen withdrawn or such provision  amendedin accordance herewith.

 

# *ARTICLE II*The Credits

# * *

Loan Commitments.  Subject to the terms and conditions set forthherein, each Lender agrees to make Loans to the Borrower from time to timeduring the Availability Period in an aggregate principal amount that will notresult in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’sCommitment or (b) the total Revolving Credit Exposures exceeding the totalCommitments.  Within the foregoing limitsand subject to the terms and conditions set forth herein, the Borrower mayborrow, prepay or repay and reborrow Loans.

 

Loans andBorrowings.

 

### (a)                                  Each Loan shall bemade as part of a Borrowing consisting of Loans made by the Lenders ratably inaccordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by itshall not relieve any other Lender of its obligations hereunder; providedthat the Commitments of the Lenders are several and no Lender shall beresponsible for any other Lender’s failure to make Loans as required.

###  

### (b)                                 Subject toSection 2.13, each Borrowing shall be comprised entirely of ABR Loans orEurodollar Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make anyEurodollar Loan by causing any domestic or foreign branch or Affiliate of suchLender to make such Loan; provided that any exercise of such optionshall not affect the obligation of the Borrower to repay such Loan inaccordance with the terms of this Agreement.

###  

### (c)                                  At the commencementof each Interest Period for any Eurodollar Borrowing, such Borrowing shall bein an aggregate amount that is an integral multiple of $1,000,000 and not lessthan $3,000,000.  At the time that eachABR Borrowing is made, such Borrowing shall be in an aggregate amount that isan integral multiple of $1,000,000 and not less than $3,000,000; providedthat an ABR Borrowing may be in an aggregate amount that is equal to the entireunused balance of the total Commitments or that is required to finance thereimbursement of an LC Disbursement as contemplated bySection 2.04(e).  Borrowings of morethan one Type may be outstanding at the same time; provided that thereshall not at any time be more than a total of ten (10) Eurodollar Borrowingsoutstanding.

 

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### (d)                                 Notwithstanding anyother provision of this Agreement, the Borrower shall not be entitled torequest, or to elect to convert or continue, any Eurodollar Borrowing if theInterest Period requested with respect thereto would end after the MaturityDate.

###  

Requests forBorrowings.  To request a Borrowing, theBorrower shall notify the Administrative Agent of such request by telephone (a)in the case of a Eurodollar Borrowing, not later than 12:00 Noon, New York Citytime, three (3) Business Days before the date of the proposed Borrowing or (b)in the case of an ABR Borrowing, not later than 12:00 Noon, New York City time,on the date of the proposed Borrowing.  Eachsuch telephonic Borrowing Request shall be irrevocable and shall be confirmedpromptly by hand delivery or telecopy to the Administrative Agent of a writtenBorrowing Request in a form approved by the Administrative Agent and signed bythe Borrower.  Each such telephonic andwritten Borrowing Request shall specify the following information in compliancewith Section 2.02:

 

#### (i)                                     theaggregate amount of the requested Borrowing;

####  

#### (ii)                                  thedate of such Borrowing, which shall be a Business Day;

####  

#### (iii)                               whethersuch Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

####  

#### (iv)                              inthe case of a Eurodollar Borrowing, the initial Interest Period to beapplicable thereto, which shall be a period contemplated by the definition ofthe term “Interest Period”; and

####  

#### (v)                                 thelocation and number of the Borrower’s account to which funds are to bedisbursed, which shall comply with the requirements of Section 2.05.

####  

Ifno election as to the Type of Borrowing is specified, then the requestedBorrowing shall be an ABR Borrowing.  Ifno Interest Period is specified with respect to any requested EurodollarBorrowing, then the Borrower shall be deemed to have selected an InterestPeriod of one month’s duration.  Promptlyfollowing receipt of a  Borrowing Requestin accordance with this Section (or a deemed Borrowing Request pursuant toSection 2.04(e)), the Administrative Agent shall advise each Lender of thedetails thereof and of the amount of such Lender’s Loan to be made as part ofthe requested (or deemed requested) Borrowing.

 

Letters ofCredit.

 

### (e)                                  General.  Subject to the terms and conditions set forthherein, the Borrower may request the issuance of Letters of Credit for its ownaccount, in a form reasonably acceptable to the Administrative Agent and theIssuing Bank, at any time and from time to time during the AvailabilityPeriod.  In the event of anyinconsistency between the terms and conditions of this Agreement and the termsand conditions of any form of letter of credit application or other agreementsubmitted by the Borrower to, or entered into by the Borrower with, the IssuingBank relating to any Letter of Credit, the terms and conditions of thisAgreement shall control.

 

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### (f)                                    Notice ofIssuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit(or the amendment, renewal or extension of an outstanding Letter of Credit),the Borrower shall hand deliver or telecopy (or transmit by electroniccommunication, if arrangements for doing so have been approved by the IssuingBank) to the Issuing Bank and the Administrative Agent (reasonably in advanceof the requested date of issuance, amendment, renewal or extension) a noticerequesting the issuance of a Letter of Credit, or identifying the Letter ofCredit to be amended, renewed or extended, and specifying the date of issuance,amendment, renewal or extension (which shall be a Business Day), the date onwhich such Letter of Credit is to expire (which shall comply with paragraph (c)of this Section), the amount of such Letter of Credit, the name and address ofthe beneficiary thereof and such other information as shall be necessary toprepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, theBorrower also shall submit a letter of credit application on the Issuing Bank’sstandard form in connection with any request for a Letter of Credit.  Each Letter of Credit shall be subject toISP 98.  A Letter of Credit shall beissued, amended, renewed or extended only if (and upon issuance, amendment,renewal or extension of each Letter of Credit the Borrower shall be deemed torepresent and warrant that), after giving effect to such issuance, amendment,renewal or extension (i) the LC Exposure shall not exceed $10,000,000 and (ii) thetotal Revolving Credit Exposures shall not exceed the total Commitments.

###  

### (g)                                 Expiration Date.  Each Letter of Credit shall expire at orprior to the close of business on the earlier of (i) the date one year afterthe date of the issuance of such Letter of Credit (or, in the case of anyrenewal or extension thereof, one year after such renewal or extension); providedthat any Letter of Credit with a one-year term may provide for the renewalthereof for additional one-year periods (which shall in no event extend beyondthe date referred to in this paragraph (c)) and (ii) the date that is fiveBusiness Days prior to the Maturity Date.

###  

### (h)                                 Participations.  By the issuance of a Letter of Credit (or anamendment to a Letter of Credit increasing the amount thereof) and without anyfurther action on the part of the Issuing Bank or the Lenders, the Issuing Bankhereby grants to each Lender, and each Lender hereby acquires from the IssuingBank, a participation in such Letter of Credit equal to such Lender’s ApplicablePercentage of the aggregate amount available to be drawn under such Letter ofCredit.  In consideration and infurtherance of the foregoing, each Lender hereby absolutely and unconditionallyagrees to pay to the Administrative Agent, for the account of the Issuing Bank,such Lender’s Applicable Percentage of each LC Disbursement made by the IssuingBank and not reimbursed by the Borrower on the date due as provided inparagraph (e) of this Section, or of any reimbursement payment required to berefunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquireparticipations pursuant to this paragraph in respect of Letters of Credit isabsolute and unconditional and shall not be affected by any circumstancewhatsoever, including any amendment, renewal or extension of any Letter ofCredit or the occurrence and continuance of a Default or Event of Default orreduction or termination of the Commitments, and that each such payment shallbe made without any offset, abatement, withholding or reduction whatsoever.

###  

### (i)                                     Reimbursement.  In the case of any draft presented under aLetter of Credit which is required to be paid at any time on or before theMaturity Date and provided that the conditions specified inSection 4.02 are then satisfied, and subject to the limitations as to the

 

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### aggregate principal amount of ABR Loans set forth inSection 2.01(a), but notwithstanding the limitations as to the time offunding of a Borrowing set forth in Section 2.05(a) and as to the time ofnotice of a proposed Borrowing set forth in Section 2.03, payment by theIssuing Bank of such draft shall be deemed to constitute a Borrowing Request bythe Borrower for an ABR Loan hereunder (and Section 2.05 shall apply, mutatismutandis, to the payment obligations of the Lenders), and interest shallaccrue from the date the Issuing Bank makes such payment, which ABR Loan, uponand to the extent that a Lender shall have funded its Applicable Percentagethereof, shall constitute such Lender’s ABR Loan hereunder.  If any draft is presented under a Letter ofCredit and (i) the conditions specified in Section 4.02 are notsatisfied or (ii) if the Commitments have been terminated, then theBorrower will, upon demand by the Administrative Agent or the Issuing Bank, payto the Issuing Bank, in immediately available funds, the full amount of suchdraft.  If the Borrower fails to makesuch payment when due, the Administrative Agent shall notify each Lender of theapplicable LC Disbursement, the payment then due from the Borrower in respectthereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice,each Lender shall pay to the Administrative Agent its Applicable Percentage ofthe payment then due from the Borrower, in the same manner as provided inSection 2.05 with respect to Loans made by such Lender (andSection 2.05 shall apply, mutatismutandis, to the paymentobligations of the Lenders), and the Administrative Agent shall promptly pay tothe Issuing Bank the amounts so received by it from the Lenders.  Promptly following receipt by theAdministrative Agent of any payment from the Borrower pursuant to thisparagraph, the Administrative Agent shall distribute such payment to theIssuing Bank or, to the extent that Lenders have made payments pursuant to thisparagraph to reimburse the Issuing Bank, then to such Lenders and the IssuingBank as their interests may appear.  Anypayment made by a Lender pursuant to this paragraph to reimburse the IssuingBank for any LC Disbursement (other than the funding of ABR Loans ascontemplated above) shall not constitute a Loan and shall not relieve theBorrower of its obligation to reimburse such LC Disbursement.

###  

### (j)                                     ObligationsAbsolute.  The Borrower’s obligationto reimburse LC Disbursements as provided in paragraph (e) of thisSection shall be absolute, unconditional and irrevocable, and shall beperformed strictly in accordance with the terms of this Agreement under any andall circumstances whatsoever and irrespective of (i) any lack of validity orenforceability of any Letter of Credit or this Agreement, or any term orprovision therein, (ii) any draft or other document presented under a Letter ofCredit proving to be forged, fraudulent or invalid in any respect or anystatement therein being untrue or inaccurate in any respect, (iii) payment bythe Issuing Bank under a Letter of Credit against presentation of a draft orother document that does not strictly comply with the terms of such Letter ofCredit (unless such draft or other document fails to substantially comply withthe terms of such Letter of Credit), or (iv) any other event or circumstancewhatsoever, whether or not similar to any of the foregoing, that might, but forthe provisions of this Section, constitute a legal or equitable discharge of,or provide a right of setoff against, the Borrower’s obligationshereunder.  Neither the AdministrativeAgent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shallhave any liability or responsibility by reason of or in connection with theissuance or transfer of any Letter of Credit or any payment or failure to makeany payment thereunder (irrespective of any of the circumstances referred to inthe preceding sentence), or any error, omission, interruption, loss or delay intransmission or delivery of any draft, notice or other communication under orrelating to any Letter of Credit (including any document required to make adrawing thereunder), any error in interpretation of technical terms or anyconsequence arising from causes beyond the control of the Issuing Bank;

 

22

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### provided that the foregoing shall not beconstrued to excuse the Issuing Bank from liability to the Borrower to theextent of any direct damages (as opposed to consequential damages, claims inrespect of which are hereby waived by the Borrower to the extent permitted byapplicable law) suffered by the Borrower that are caused by the Issuing Bank’sfailure to exercise care when determining whether drafts and other documentspresented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, inthe absence of gross negligence or willful misconduct on the part of theIssuing Bank (as finally determined by a court of competent jurisdiction), theIssuing Bank shall be deemed to have exercised care in each suchdetermination.  In furtherance of theforegoing and without limiting the generality thereof, the parties agree that,with respect to documents presented which appear on their face to be insubstantial compliance with the terms of a Letter of Credit, the Issuing Bankmay either accept and make payment upon such documents without responsibilityfor further investigation, regardless of any notice or information to thecontrary, or refuse to accept and make payment upon such documents if suchdocuments are not in strict compliance with the terms of such Letter of Credit.

###  

### (k)                                  DisbursementProcedures.  The Issuing Bank shall,promptly following its receipt thereof, examine all documents purporting torepresent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify theAdministrative Agent and the Borrower by telephone (confirmed by telecopy) ofsuch demand for payment and whether the Issuing Bank has made or will make anLC Disbursement thereunder; provided that any failure to give or delayin giving such notice shall not relieve the Borrower of its obligation toreimburse the Issuing Bank and the Lenders with respect to any such LCDisbursement.

###  

### (l)                                     InterimInterest.  If the Issuing Bank shallmake any LC Disbursement the payment by the Issuing Bank of which does notconstitute an ABR Loan pursuant to Section 2.04(e), then the unpaid amountthereof shall bear interest, for each day from and including the date such LCDisbursement is made to but excluding the date that the Borrower reimbursessuch LC Disbursement, at the rate per annum equal to 2% per annum plus theAlternate Base Rate plus the Applicable Rate. Interest accrued pursuant to this paragraph shall be for the account ofthe Issuing Bank, except that interest accrued on and after the date of paymentby any Lender pursuant to paragraph (e) of this Section to reimburse theIssuing Bank shall be for the account of such Lender to the extent of suchpayment.

###  

### (m)                               Replacement of theIssuing Bank.  The Issuing Bank maybe replaced at any time by written agreement among the Borrower, theAdministrative Agent, the replaced Issuing Bank and the successor IssuingBank.  The Administrative Agent shallnotify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall becomeeffective, the Borrower shall pay all unpaid fees accrued for the account ofthe replaced Issuing Bank pursuant to Section 2.10(b).  From and after the effective date of any suchreplacement, (i) the successor Issuing Bank shall have all the rights andobligations of the Issuing Bank under this Agreement with respect to Letters ofCredit to be issued thereafter and (ii) references herein to the term “IssuingBank” shall be deemed to refer to such successor or to any previous IssuingBank, or to such successor and all previous Issuing Banks, as the context shallrequire.  After the replacement of anIssuing Bank hereunder, the replaced Issuing Bank shall remain a party heretoand shall continue to have all the rights and obligations of an Issuing Bankunder this Agreement

 

23

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### with respect to Letters of Credit issued by it prior to suchreplacement, but shall not be required to issue additional Letters of Credit.

###  

### (n)                                 CashCollateralization.  If any Event ofDefault shall occur and be continuing, on the Business Day that the Borrowerreceives notice from the Administrative Agent or the Required Lenders demandingthe deposit of cash collateral pursuant to this paragraph, the Borrower shalldeposit in an account with the Administrative Agent, in the name of theAdministrative Agent and for the benefit of the Lenders, an amount in PermittedInvestments equal to the LC Exposure as of such date plus any accrued andunpaid interest thereon; provided that the obligation to deposit suchcash collateral shall become effective immediately, and such deposit shallbecome immediately due and payable, without demand or other notice of any kind,upon the occurrence of any Event of Default with respect to the Borrowerdescribed in clause (h) or (i) of Article VII.  Such deposit shall be held by the AdministrativeAgent as collateral for the payment and performance of the obligations of theBorrower under this Agreement.  TheAdministrative Agent shall have exclusive dominion and control, including theexclusive right of withdrawal, over such account.  Other than any interest earned on theinvestment of such deposits, which investments shall be made in PermittedInvestments and at the option and sole discretion of the Administrative Agentand at the Borrower’s risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on suchinvestments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent toreimburse the Issuing Bank for LC Disbursements for which it has not beenreimbursed and, to the extent not so applied, shall be held for thesatisfaction of the reimbursement obligations of the Borrower for the LCExposure at such time or, if the maturity of the Loans has been accelerated, beapplied to satisfy other obligations of the Borrower under this Agreement.  If the Borrower is required to provide anamount of cash collateral hereunder as a result of the occurrence of an Eventof Default, such amount (to the extent not applied as aforesaid) shall be returnedto the Borrower within three Business Days after all Events of Default havebeen cured or waived.

###  

Funding ofBorrowings.

 

### (o)                                 Each Lender shall makeeach Loan to be made by it hereunder on the proposed date thereof by wiretransfer of immediately available funds by 1:00 p.m., New York City time, tothe account of the Administrative Agent most recently designated by it for suchpurpose by notice to the Lenders.  TheAdministrative Agent will make such Loans available to the Borrower by promptlycrediting the amounts so received, in like funds, to an account of the Borrowermaintained with the Administrative Agent in New York City and designated by theBorrower in the applicable Borrowing Request; provided that ABR Loansmade to finance the reimbursement of an LC Disbursement as provided in Section 2.04(e)shall be remitted by the Administrative Agent to the Issuing Bank.

###  

### (p)                                 Unless theAdministrative Agent shall have received notice from a Lender prior to theproposed date of any Borrowing that such Lender will not make available to theAdministrative Agent such Lender’s share of such Borrowing, the AdministrativeAgent may assume that such Lender has made such share available on such date inaccordance with paragraph (a) of this Section and may, in reliance uponsuch assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in factmade its share of

 

24

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### the applicable Borrowing available to the Administrative Agent, thenthe applicable Lender and the Borrower severally agree to pay to theAdministrative Agent forthwith on demand such corresponding amount withinterest thereon, for each day from and including the date such amount is madeavailable to the Borrower to but excluding the date of payment to theAdministrative Agent, at (i) in the case of such Lender, the greater of theFederal Funds Effective Rate and a rate determined by the Administrative Agentin accordance with banking industry rules on interbank compensation or (ii) inthe case of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to theAdministrative Agent, then such amount shall constitute such Lender’s Loanincluded in such Borrowing as of the date of such Borrowing.

###  

Interest Elections.

 

### (q)                                 Each Borrowinginitially shall be of the Type specified in the applicable Borrowing Requestand, in the case of a Eurodollar Borrowing, shall have an initial InterestPeriod as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to adifferent Type or to continue such Borrowing and, in the case of a EurodollarBorrowing, may elect Interest Periods therefor, all as provided in thisSection.  The Borrower may elect differentoptions with respect to different portions of the affected Borrowing, in whichcase each such portion shall be allocated ratably among the Lenders holding theLoans comprising such Borrowing, and the Loans comprising each such portionshall be considered a separate Borrowing.

###  

### (r)                                    To make an electionpursuant to this Section, the Borrower shall notify the Administrative Agent ofsuch election by telephone by the time that a Borrowing Request would berequired under Section 2.03 if the Borrower were requesting a Borrowing ofthe Type resulting from such election to be made on the effective date of suchelection.  Each such telephonic InterestElection Request shall be irrevocable and shall be confirmed promptly by handdelivery or telecopy to the Administrative Agent of a written Interest ElectionRequest in a form approved by the Administrative Agent and signed by theBorrower.

###  

### (s)                                  Each telephonic andwritten Interest Election Request shall specify the following information incompliance with Section 2.02:

###  

#### (i)                                     theBorrowing to which such Interest Election Request applies and, if differentoptions are being elected with respect to different portions thereof, theportions thereof to be allocated to each resulting Borrowing (in which case theinformation to be specified pursuant to clauses (iii) and (iv) below shall bespecified for each resulting Borrowing);

####  

#### (ii)                                  theeffective date of the election made pursuant to such Interest Election Request,which shall be a Business Day;

####  

#### (iii)                               whetherthe resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;and

 

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#### (iv)                              ifthe resulting Borrowing is a Eurodollar Borrowing, the Interest Period to beapplicable thereto after giving effect to such election, which shall be aperiod contemplated by the definition of the term “Interest Period”.

####  

Ifany such Interest Election Request requests a Eurodollar Borrowing but does notspecify an Interest Period, then the Borrower shall be deemed to have selectedan Interest Period of one month’s duration.

 

### (t)                                    Promptly followingreceipt of an Interest Election Request, the Administrative Agent shall adviseeach Lender of the details thereof and of such Lender’s portion of eachresulting Borrowing.

###  

### (u)                                 If the Borrower failsto deliver a timely Interest Election Request with respect to a EurodollarBorrowing prior to the end of the Interest Period applicable thereto, then,unless such Borrowing is repaid as provided herein, at the end of such InterestPeriod such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provisionhereof, if a Default or an Event of Default has occurred and is continuing andthe Administrative Agent, at the request of the Required Lenders, so notifiesthe Borrower, then, so long as a Default or an Event of Default is continuing(i) no outstanding Borrowing may be converted to or continued as a EurodollarBorrowing and (ii) unless repaid, each Eurodollar Borrowing shall be convertedto an ABR Borrowing at the end of the Interest Period applicable thereto.

###  

### (v)                                 No Eurodollar Loanshall be continued prior to the last Business Day of the Interest Periodapplicable thereto or converted, except upon payment of all amounts payablepursuant to Section 2.14, prior to the last Business Day of the InterestPeriod applicable thereto.

###  

Termination andReduction of Commitments.

 

### (w)                               Unless previouslyterminated, the Commitments shall terminate on the Maturity Date.

###  

### (x)                                   The Borrower may atany time terminate, or from time to time reduce, the Commitments; providedthat (i) each reduction of the Commitments shall be in an amount that is anintegral multiple of $5,000,000 and (ii) the Borrower shall not terminate orreduce the Commitments if, after giving effect to any concurrent prepayment ofthe Loans in accordance with Section 2.09, the Revolving Credit Exposureswould exceed the total Commitments.

###  

### (y)                                 The Borrower shallnotify the Administrative Agent of any election to terminate or reduce theCommitments under paragraph (b) of this Section at least threeBusiness Days prior to the effective date of such termination or reduction,specifying such election and the effective date thereof.  Promptly following receipt of any notice, theAdministrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrowerpursuant to this Section shall be irrevocable; provided that anotice of termination of the Commitments delivered by the Borrower may statethat such notice is conditioned upon the effectiveness of other creditfacilities or receipt of proceeds from other sources, in which case such noticemay be revoked by the Borrower (by notice to the Administrative Agent on orprior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the

 

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### Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among theLenders in accordance with their respective Commitments.

###  

Repayment ofLoans; Evidence of Debt.

 

### (z)                                   The Borrower herebyunconditionally promises to pay to the Administrative Agent for the account ofeach Lender the then unpaid principal amount of each Loan on the Maturity Date.

###  

### (aa)                            Each Lender shall maintainin accordance with its usual practice an account or accounts evidencing theindebtedness of the Borrower to such Lender resulting from each Loan made bysuch Lender, including the amounts of principal and interest payable and paidto such Lender from time to time hereunder.

###  

### (bb)                          The Administrative Agentshall maintain accounts in which it shall record (i) the amount of eachLoan made hereunder, the Type thereof and the Interest Period applicablethereto, (ii) the amount of any principal or interest due and payable orto become due and payable from the Borrower to each Lender hereunder and(iii) the amount of any sum received by the Administrative Agent hereunderfor the account of the Lenders and each Lender’s share thereof.

###  

### (cc)                            The entries made in theaccounts maintained pursuant to paragraph (b) or (c) of this Section shallbe primafacie evidence of the existence and amounts of theobligations recorded therein; provided that the failure of any Lender orthe Administrative Agent to maintain such accounts or any error therein shallnot in any manner affect the obligation of the Borrower to repay the Loans inaccordance with the terms of this Agreement.

###  

### (dd)                          Any Lender may request thatLoans made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare,execute and deliver to such Lender a promissory note payable to the order ofsuch Lender (or, if requested by such Lender, to such Lender and its registeredassigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by suchpromissory note and interest thereon shall at all times (including afterassignment pursuant to Section 9.04) be represented by one or morepromissory notes in such form payable to the order of the payee named therein(or, if such promissory note is a registered note, to such payee and itsregistered assigns).

###  

Prepayment ofLoans.

 

### (ee)                            The Borrower shall have theright at any time and from time to time to prepay any Borrowing in whole or inpart, subject to prior notice in accordance with paragraph (b) of this Section.

###  

### (ff)                                The Borrower shallnotify the Administrative Agent by telephone (confirmed by telecopy) of anyprepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing,not later than 11:00 a.m., New York City time, three Business Days beforethe date of prepayment or (ii) in the case of prepayment of an ABR Borrowing,not later than 11:00 a.m., New York City time, one Business Day before thedate of prepayment.  Each such noticeshall be irrevocable and shall specify the prepayment date and the principalamount

 

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### of each Borrowing or portion thereof to be prepaid; providedthat, if a notice of prepayment is given in connection with a conditionalnotice of termination of the Commitments as contemplated by Section 2.07,then such notice of prepayment may be revoked if such notice of termination isrevoked in accordance with Section 2.07. Promptly following receipt of any such notice relating to a Borrowing,the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowingshall be in an amount that would be permitted in the case of an advance of aBorrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall beapplied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accruedinterest to the extent required by Section 2.11.

###  

Fees.

 

### (gg)                          The Borrower agrees to pay tothe Administrative Agent for the account of each Lender a facility fee, which shallaccrue at the Facility Fee Rate on the daily amount of the Commitment of suchLender (whether used or unused) during the period from and including theEffective Date to but excluding the date on which such Commitment terminates; providedthat, if such Lender continues to have any Revolving Credit Exposure after itsCommitment terminates, then such facility fee shall continue to accrue on thedaily amount of such Lender’s Revolving Credit Exposure from and including thedate on which its Commitment terminates to but excluding the date on which suchLender ceases to have any Revolving Credit Exposure.  Accrued facility fees shall be payable inarrears on the last day of March, June, September and December ofeach year and on the date on which the Commitments terminate, commencing on thefirst such date to occur after the date hereof; provided that anyfacility fees accruing after the date on which the Commitments terminate shallbe payable on demand.  All facility feesshall be computed on the basis of a year of 360 days and shall be payable forthe actual number of days elapsed (including the first day but excluding thelast day).

###  

### (hh)                          The Borrower agrees to pay(i) to the Administrative Agent for the account of each Lender a participationfee with respect to its participations in Letters of Credit, which shall accrueat the same Applicable Rate used to determine the interest rate applicable toEurodollar Loans on the average daily amount of such Lender’s LC Exposure(excluding any portion thereof attributable to unreimbursed LC Disbursements)during the period from and including the Effective Date to but excluding thelater of the date on which such Lender’s Commitment terminates and the date onwhich such Lender ceases to have any LC Exposure, and (ii) to the Issuing Banka fronting fee, which shall accrue at the rate or rates per annum separatelyagreed upon between the Borrower and the Issuing Bank on the average dailyamount of the LC Exposure (excluding any portion thereof attributable tounreimbursed LC Disbursements) during the period from and including theEffective Date to but excluding the later of the date of termination of theCommitments and the date on which there ceases to be any LC Exposure, as wellas the Issuing Bank’s standard fees with respect to the issuance, amendment,renewal or extension of any Letter of Credit or processing of drawingsthereunder.  Participation fees andfronting fees accrued through and including the last day of March, June, September andDecember of each year shall be payable on the third Business Day followingsuch last day, commencing on the first such date to occur after the EffectiveDate; provided that all such fees shall be payable on the date on whichthe Commitments terminate and any such fees accruing after the date on whichthe Commitments terminate shall be payable on demand.  Any

 

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### other fees payable to the Issuing Bank pursuant to this paragraph shallbe payable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basisof a year of 360 days and shall be payable for the actual number of dayselapsed (including the first day but excluding the last day).

###  

### (ii)                                  The Borrower agreesto pay the Administrative Agent for its own account fees in the amounts and atthe times set forth in the Fee Letter and the Administrative Agent shalldistribute to each Lender from such fees when paid a fee in the amount of 0.5%of such Lender’s Commitment.

###  

### (jj)                                  All fees payable hereundershall be paid on the dates due, in immediately available funds, to theAdministrative Agent (or to the Issuing Bank, in the case of fees payable toit) for distribution, in the case of facility fees and participation fees, tothe Lenders.  Fees paid shall not berefundable under any circumstances.

###  

Interest.

 

### (kk)                            The Loans comprising eachABR Borrowing shall bear interest at the Alternate Base Rate plusthe Applicable Rate.

###  

### (ll)                                  The Loans comprisingeach Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for theInterest Period in effect for such Borrowing plus the Applicable Rate.

###  

### (mm)                      Notwithstanding the foregoing, ifany principal of or interest on any Loan or any fee or other amount payable bythe Borrower hereunder is not paid when due, whether at stated maturity, uponacceleration or otherwise, such overdue amount shall bear interest, to theextent permitted by applicable law, after as well as before judgment, at a rateper annum equal to (i) in the case of overdue principal of any Loan, 2% plusthe  rate otherwise applicable to suchLoan as provided in the preceding paragraphs of this Section or (ii) inthe case of any other amount, 2% plus the rate applicable to ABR Loans asprovided in paragraph (a) of this Section.

###  

### (nn)                          Accrued interest on each Loanshall be payable in arrears on each Interest Payment Date for such Loan andupon termination of the Commitments; provided that (i) interestaccrued pursuant to paragraph (c) of this Section shall be payable ondemand, (ii) in the event of any repayment or prepayment of any Loan(other than a prepayment of an ABR Loan prior to the end of the AvailabilityPeriod), accrued interest on the principal amount repaid or prepaid shall bepayable on the date of such repayment or prepayment and (iii) in the eventof any conversion of any Eurodollar Loan prior to the end of the currentInterest Period therefor, accrued interest on such Loan shall be payable on theeffective date of such conversion.

###  

### (oo)                          All interest hereunder shallbe computed on the basis of a year of 360 days, except that interest computedby reference to the Alternate Base Rate at times when the Alternate Base Rateis based on the Prime Rate shall be computed on the basis of a year of 365 days(or 366 days in a leap year), and in each case shall be payable for the actualnumber of days elapsed (including the first day but excluding the lastday).  The applicable Alternate Base Rateand Adjusted LIBO Rate shall be determined by the Administrative Agent, andsuch determination shall be conclusive absent manifest error.

 

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Alternate Rate of Interest.

 

If prior to the commencement of any InterestPeriod for a Eurodollar Borrowing:

 

### (pp)                          the Administrative Agentdetermines (which determination shall be conclusive absent manifest error) thatadequate and reasonable means do not exist for ascertaining the Adjusted LIBORate, as applicable, for such Interest Period; or

###  

### (qq)                          the Administrative Agent isadvised by the Required Lenders that the Adjusted LIBO Rate for such InterestPeriod will not adequately and fairly reflect the cost to such Lenders ofmaking or maintaining their Loans included in such Borrowing for such InterestPeriod; or

###  

### (rr)                                the AdministrativeAgent is notified by any Lender that, as a result of a Change in Law, it shallhave become unlawful for such Lender to make or maintain any Loan as, or tocontinue or convert any Loan to, a Eurodollar Loan;

###  

thenthe Administrative Agent shall give notice thereof to the Borrower and theLenders by telephone or telecopy as promptly as practicable thereafter and,until the Administrative Agent notifies the Borrower and the Lenders that thecircumstances giving rise to such notice no longer exist, (i) any InterestElection Request that requests the conversion of any Borrowing to, orcontinuation of any Borrowing as, a Eurodollar Borrowing shall be ineffectiveand (ii) if any Borrowing Request requests a Eurodollar Borrowing, suchBorrowing shall be made as an ABR Borrowing and (iii) in the case of clause (c)above, all outstanding Eurodollar Borrowings shall be immediately converted toABR Borrowings.

 

Increased Costs.

 

### (ss)                            If any Change in Law shall:

###  

#### (i)                                     impose,modify or deem applicable any reserve, special deposit or similar requirementagainst assets of, deposits with or for the account of, or credit extended by,any Lender (except any such reserve requirement to the extent reflected in theAdjusted LIBO Rate) or the Issuing Bank; or

####  

#### (ii)                                  imposeon any Lender or the Issuing Bank or the London interbank market any othercondition affecting this Agreement or Eurodollar Loans or Loans made by suchLender or any Letter of Credit or participation therein;

####  

andthe result of any of the foregoing shall be to increase the cost to such Lenderof making or maintaining any Eurodollar Loan (or of maintaining its obligationto make any such Loan) or to increase the cost to such Lender or the IssuingBank of participating in, issuing or maintaining any Letter of Credit or toreduce the amount of any sum received or receivable by such Lender or theIssuing Bank hereunder (whether of principal, interest or otherwise), then theBorrower will pay to such Lender or the Issuing Bank, as the case may be, suchadditional amount or amounts as will compensate such Lender or the IssuingBank, as the case may be, for such additional costs incurred or reductionsuffered.

 

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### (tt)                                If any Lender or theIssuing Bank determines that any Change in Law regarding capital requirementshas or would have the effect of reducing the rate of return on such Lender’s orthe Issuing Bank’s capital or on the capital of such Lender’s or the IssuingBank’s holding company, if any, as a consequence of this Agreement or the Loansmade by, or participations in Letters of Credit held by, such Lender, or theLetters of Credit issued by the Issuing Bank, to a level below that which suchLender or the Issuing Bank or such Lender’s or the Issuing Bank’s holdingcompany could have achieved but for such Change in Law (taking intoconsideration such Lender’s or the Issuing Bank’s policies and the policies ofsuch Lender’s or the Issuing Bank’s holding company with respect to capitaladequacy) by an amount deemed by such Lender in good faith to be material, thenfrom time to time the Borrower will pay to such Lender or the Issuing Bank, asthe case may be, such additional amount or amounts as will compensate suchLender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding companyfor any such reduction suffered.

###  

### (uu)                          A certificate of a Lender orthe Issuing Bank setting forth the amount or amounts necessary to compensatesuch Lender or the Issuing Bank or its holding company, as the case may be, asspecified in paragraph (a) or (b) of this Section shall be deliveredby such Lender or Issuing Bank in good faith to the Borrower and shall beconclusive absent manifest error.  TheBorrower shall pay such Lender or the Issuing Bank, as the case may be, theamount shown as due on any such certificate within 10 days after receiptthereof.

###  

### (vv)                          Failure or delay on the partof any Lender or the Issuing Bank to demand compensation pursuant to thisSection shall not constitute a waiver of such Lender’s or the IssuingBank’s right to demand such compensation; provided that the Borrowershall not be required to compensate a Lender or the Issuing Bank pursuant tothis Section for any increased costs or reductions incurred more than 270days prior to the date that such Lender or the Issuing Bank, as the case maybe, notifies the Borrower of the Change in Law giving rise to such increasedcosts or reductions and of such Lender’s or the Issuing Bank’s intention toclaim compensation therefor; providedfurther that, if the Changein Law giving rise to such increased costs or reductions is retroactive, thenthe 270-day period referred to above shall be extended to include the period ofretroactive effect thereof.

###  

### (ww)                      Notwithstanding anything to thecontrary contained in this Section 2.13, Section 2.15 shall governexclusively any increased costs relating to Taxes resulting from any Change inLaw.

###  

Break FundingPayments.  In the event of (a) thepayment of any principal of any Eurodollar Loan other than on the last day ofan Interest Period applicable thereto (including as a result of an Event ofDefault), (b) the conversion of any Eurodollar Loan other than on the lastday of the Interest Period applicable thereto, (c) the failure to borrow,convert to, continue or prepay any Eurodollar Loan on the date specified in anynotice delivered pursuant hereto (regardless of whether such notice may berevoked under Section 2.09(b) and is revoked in accordance therewith) or(d) the assignment of any Eurodollar Loan other than on the last day of theInterest Period applicable thereto as a result of a request by the Borrowerpursuant to Section 2.17, then, in any such event, the Borrower shallcompensate each Lender for the loss, cost and expense attributable to suchevent.  In the case of a Eurodollar Loan,such loss, cost or expense to any Lender shall be deemed to include an amountdetermined by such Lender to be

 

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the excess, if any, of (i) the amount ofinterest which would have accrued on the principal amount of such Loan had suchevent not occurred, at the Adjusted LIBO Rate that would have been applicableto such Loan, for the period from the date of such event to the last day of thethen current Interest Period therefor (or, in the case of a failure to borrow,convert or continue, for the period that would have been the Interest Periodfor such Loan), over (ii) the amount of interest which would accrue onsuch principal amount for such period at the interest rate which such Lenderwould bid were it to bid, at the commencement of such period, for dollardeposits of a comparable amount and period from other banks in the eurodollarmarket.  A certificate of any Lendersetting forth any amount or amounts that such Lender is entitled to receivepursuant to this Section shall be delivered to the Borrower and shall beconclusive absent manifest error.  TheBorrower shall pay such Lender the amount shown as due on any such certificatewithin 10 days after receipt thereof.

 

Taxes.

 

### (xx)                              Any and all payments byor on account of any obligation of the Borrower hereunder shall be made freeand clear of and without deduction for any Indemnified Taxes or Other Taxes; providedthat if the Borrower shall be required to deduct any Indemnified Taxes or OtherTaxes from such payments, then (i) the sum payable shall be increased asnecessary so that after making all required deductions (including deductionsapplicable to additional sums payable under this Section) the AdministrativeAgent, each Lender or the Issuing Bank (as the case may be) receives an amountequal to the sum it would have received had no such deductions been made,(ii) the Borrower shall make such deductions and (iii) the Borrowershall pay the full amount deducted to the relevant Governmental Authority inaccordance with applicable law.

###  

### (yy)                          In addition, the Borrowershall pay any Other Taxes to the relevant Governmental Authority in accordancewith applicable law.

###  

### (zz)                              If the United StatesInternal Revenue Service or other Governmental Authority of the United Statesor other jurisdiction asserts a claim against the Administrative Agent, aLender or the Issuing Bank that the full amount of Indemnified Taxes or OtherTaxes has not been paid, the Borrower shall indemnify the Administrative Agent,each Lender and the Issuing Bank, within ten (10) days after written demandtherefor, for the full amount of any such Indemnified Taxes or Other Taxes paidby the Administrative Agent, such Lender or the Issuing Bank, as the case maybe, on or with respect to any payment by or on account of any obligation of theBorrower hereunder (including Indemnified Taxes or Other Taxes imposed orasserted on or attributable to amounts payable under this Section) and anypenalties, interest and reasonable out-of-pocket expenses arising therefrom orwith respect thereto, whether or not such Indemnified Taxes or Other Taxes werecorrectly or legally imposed or asserted by the relevant GovernmentalAuthority.  A certificate (along with acopy of the applicable documents from the United States Internal RevenueService or other Governmental Authority of the United States or otherjurisdiction that asserts such claim) as to the amount of such payment orliability delivered to the Borrower by a Lender or the Issuing Bank, or by theAdministrative Agent on its own behalf or on behalf of a Lender or the IssuingBank, shall be conclusive absent manifest error.

###  

### (aaa)                      As soon as practicable after anypayment of Indemnified Taxes or Other Taxes by the Borrower to a GovernmentalAuthority, the Borrower shall deliver to the

 

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### Administrative Agent the original or a certified copy of a receiptissued by such Governmental Authority evidencing such payment, a copy of thereturn reporting such payment or other evidence of such payment reasonablysatisfactory to the Administrative Agent.

###  

### (bbb)                   Any Lender that is entitled to anexemption from or reduction of withholding tax under the law of thejurisdiction in which the Borrower is located (with the United States ofAmerica, each State thereof and the District of Columbia being deemed toconstitute a single jurisdiction for purposes of this Section), or any treatyto which such jurisdiction is a party, with respect to payments under thisAgreement shall deliver to the Borrower (with a copy to the AdministrativeAgent), at the time or times prescribed by applicable law, such properlycompleted and executed documentation prescribed by applicable law or reasonablyrequested by the Borrower as will permit such payments to be made withoutwithholding or at a reduced rate. Without limiting the foregoing, each Lender shall, at the time suchLender becomes a party to this Agreement (or thereafter as reasonably requestedby Borrower), execute and deliver to the Borrower and Administrative Agent (i)if it is not a “United States Person” (as such term is defined inSection 7701(a)(30) of the Code), two original copies (or more as theBorrower or the Administrative Agent shall reasonably request) of theapplicable Internal Revenue Service Form W-8 or other applicable form,certificate or document prescribed by the United States Internal RevenueService certifying as to such Lender’s entitlement to exemption from, orentitlement to a reduced rate of, withholding or deduction of Taxes, and (ii)if it is a “United States Person” (as such term is defined inSection 7701(a)(30) of the Code), two original copies (or more as theBorrower or the Administrative Agent shall reasonably request) of InternalRevenue Service Form W-9 (or substitute or successor form).  Each Lender that is not a “United StatesPerson” (as such term is defined in Section 7701(a)(30) of the Code)claiming exemption from withholding tax pursuant to its portfolio interestexception shall execute and deliver to the Borrower and Administrative Agent(i) a statement of such Lender, signed under penalty of perjury, that it is not(A) a “bank” as described in Section 881(c)(3)(A) of the Code, (B) a 10%shareholder of the Borrower (within the meaning of Section 871(h)(3)(B) ofthe Code), or (C) a controlled foreign corporation related to the Borrowerwithin the meaning of Section 864(d)(4) of the Code, and (ii) two properlycompleted and executed copies of Internal Revenue Service Form W-8BEN.

###  

### (ccc)                      If the Administrative Agent or aLender determines, in its sole discretion, that it has received a refund of anyTaxes or Other Taxes as to which it has been indemnified by the Borrower orwith respect to which the Borrower has paid additional amounts pursuant to thisSection 2.15, it shall pay over such refund to the Borrower (but only tothe extent of indemnity payments made, or additional amounts paid, by theBorrower under this Section 2.15 with respect to the Taxes or Other Taxesgiving rise to such refund), net of all out-of-pocket expenses of theAdministrative Agent or such Lender and without interest (other than anyinterest paid by the relevant Governmental Authority with respect to suchrefund); provided that the Borrower, upon the request of theAdministrative Agent or such Lender, agrees to repay the amount paid over tothe Borrower (plus any penalties, interest or other charges imposed by therelevant Governmental Authority) to the Administrative Agent or such Lender inthe event the Administrative Agent or such Lender is required to repay suchrefund to such Governmental Authority. This Section shall not be construedto require the Administrative Agent or any Lender to make available its taxreturns (or any other information relating to its taxes which it deems confidential)to the Borrower or any other Person.

 

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PaymentsGenerally; Pro Rata Treatment; Sharing of Set-offs.

 

### (ddd)                   The Borrower shall make each paymentrequired to be made by it hereunder (whether of principal, interest, fees orreimbursement of LC Disbursements, or of amounts payable underSection 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New YorkCity time, on the date when due, in immediately available funds, withoutset-off or counterclaim.  Any amountsreceived after such time on any date may, in the discretion of theAdministrative Agent, be deemed to have been received on the next succeedingBusiness Day for purposes of calculating interest thereon.  All such payments shall be made to theAdministrative Agent at its offices at 270 Park Avenue, New York, New York,except payments to be made directly to the Issuing Bank as expressly providedherein and except that payments pursuant to Sections 2.13, 2.14, 2.15 and9.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute anysuch payments received by it for the account of any other Person to theappropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on aday that is not a Business Day, the date for payment shall be extended to thenext succeeding Business Day, and, in the case of any payment accruinginterest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made indollars.

###  

### (eee)                      If at any time insufficient fundsare received by and available to the Administrative Agent to pay fully allamounts of principal, unreimbursed LC Disbursements, interest and fees then duehereunder, such funds shall be applied (i) first, towards payment ofinterest and fees then due hereunder, ratably among the parties entitledthereto in accordance with the amounts of interest and fees then due suchparties, and (ii) second, towards payment of principal and unreimbursed LCDisbursements then due hereunder, ratably among the parties entitled thereto inaccordance with the amounts of principal and unreimbursed LC Disbursements thendue such parties.

###  

### (fff)                            If any Lender shall, byexercising any right of set-off or counterclaim or otherwise, obtain payment inrespect of any principal of or interest on any of its Loans or participationsin LC Disbursements resulting in such Lender receiving payment of a greaterproportion of the aggregate amount of its Loans and participations in LCDisbursements and accrued interest thereon than the proportion received by anyother Lender, then the Lender receiving such greater proportion shall purchase(for cash at face value) participations in the Loans and participations in LCDisbursements of other Lenders to the extent necessary so that the benefit ofall such payments shall be shared by the Lenders ratably in accordance with theaggregate amount of principal of and accrued interest on their respective Loansand participations in LC Disbursements; provided that (i) if anysuch participations are purchased and all or any portion of the payment givingrise thereto is recovered,  suchparticipations shall be rescinded and the purchase price restored to the extentof such recovery, without interest, and (ii) the provisions of thisparagraph shall not be construed to apply to any payment made by the Borrowerpursuant to and in accordance with the express terms of this Agreement or anypayment obtained by a Lender as consideration for the assignment of or sale ofa participation in any of its Loans or participations in LC Disbursements toany assignee or participant, other than to the Borrower or any Subsidiary orAffiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing andagrees, to the extent it may effectively do so under applicable law, that anyLender acquiring a participation pursuant to the

 

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### foregoing arrangements may exercise against the Borrower rights ofset-off and counterclaim with respect to such participation as fully as if suchLender were a direct creditor of the Borrower in the amount of suchparticipation.

###  

### (ggg)                   Unless the Administrative Agentshall have received notice from the Borrower prior to the date on which anypayment is due the Administrative Agent for the account of the Lenders or theIssuing Bank hereunder that the Borrower will not make such payment, theAdministrative Agent may assume that the Borrower has made such payment on suchdate in accordance herewith and may, in reliance upon such assumption,distribute to the Lenders or the Issuing Bank, as the case may be, the amountdue.  In such event, if the Borrower hasnot in fact made such payment, then each of the Lenders or the Issuing Bank, asthe case may be, severally agrees to repay to the Administrative Agentforthwith on demand the amount so distributed to such Lender or the IssuingBank with interest thereon, for each day from and including the date suchamount is distributed to it to but excluding the date of payment to theAdministrative Agent, at the greater of the Federal Funds Effective Rate and arate determined by the Administrative Agent in accordance with banking industryrules on interbank compensation.

###  

### (hhh)                   If any Lender shall fail to make anypayment required to be made by it pursuant to Section 2.04(d) or (e),2.05(b) or 2.16(d), then the Administrative Agent may, in its discretion(notwithstanding any contrary provision hereof), apply any amounts thereafterreceived by the Administrative Agent for the account of such Lender to satisfysuch Lender’s obligations under such Sections until all such unsatisfiedobligations are fully paid.

###  

Mitigation Obligations;Replacement of Lenders.

 

### (iii)                               If any Lender requestscompensation under Section 2.13, or if the Borrower is required to pay anyadditional amount to any Lender or any Governmental Authority for the accountof any Lender pursuant to Section 2.15, then such Lender shall use reasonableefforts to designate a different lending office for funding or booking itsLoans hereunder or to assign its rights and obligations hereunder to another ofits offices, branches or affiliates, if, in the judgment of such Lender, suchdesignation or assignment (i) would eliminate or reduce amounts payablepursuant to Section 2.13 or 2.15, as the case may be, in the future and(ii) would not subject such Lender to any unreimbursed cost or expense andwould not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay allreasonable costs and expenses incurred by any Lender in connection with anysuch designation or assignment.

###  

### (jjj)                               If any Lender requestscompensation under Section 2.13, or if the Borrower is required to pay anyadditional amount to any Lender or any Governmental Authority for the accountof any Lender pursuant to Section 2.15, or if any Lender defaults in itsobligation to fund Loans hereunder, then the Borrower may, at its sole expenseand effort, upon notice to such Lender and the Administrative Agent, requiresuch Lender to assign and delegate, without recourse (in accordance with andsubject to the restrictions contained in Section 9.04), all its interests,rights and obligations under this Agreement to an assignee that shall assumesuch obligations (which assignee may be another Lender, if a Lender acceptssuch assignment); provided that (i) the Borrower shall havereceived the prior written consent of the Administrative Agent, which consentshall not unreasonably be withheld, (ii) such Lender shall have received

 

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### payment of an amount equal to the outstanding principal of its Loansand participations in LC Disbursements, accrued interest thereon, accrued feesand all other amounts payable to it hereunder, from the assignee (to the extentof such outstanding principal and accrued interest and fees) or the Borrower(in the case of all other amounts) and (iii) in the case of any suchassignment resulting from a claim for compensation under Section 2.13 orpayments required to be made pursuant to Section 2.15, such assignmentwill result in a reduction in such compensation or payments.  A Lender shall not be required to make anysuch assignment and delegation if, prior thereto, as a result of a waiver bysuch Lender or otherwise, the circumstances entitling the Borrower to requiresuch  assignment and delegation cease toapply.

###  

# *ARTICLE III*Representations and Warranties

# * *

Each of the Borrower and Parent representsand warrants to the Lenders that:

 

Organization;Powers.  Each of the Parent, Borrower andthe Material Subsidiaries is duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its organization, has allrequisite power and authority to own or lease its material property and tocarry on its business as now conducted and, except where the failure to do so,individually or in the aggregate, could not reasonably be expected to result ina Material Adverse Effect, is qualified to do business in, and is in goodstanding in, every jurisdiction where such qualification is required.

 

Authorization;Enforceability.  The Transactions arewithin the corporate powers of each of the Parent, the Borrower and each of theSubsidiaries and have been duly authorized by all necessary corporate and, ifrequired, stockholder action.  ThisAgreement and each other Credit Document has been duly executed and deliveredby each of the Parent, the Borrower and each of the Subsidiaries party heretoor thereto and constitutes a legal, valid and binding obligation of each of theParent, the Borrower and each of the Subsidiaries party thereto or thereto,enforceable in accordance with its terms, subject to applicable bankruptcy,insolvency, reorganization, moratorium or other laws affecting creditors’rights generally and subject to general principles of equity, regardless ofwhether considered in a proceeding in equity or at law.

 

Governmental Approvals;No Conflicts.  The Transactions(a) do not require any consent or approval of, registration or filingwith, or any other action by, any Governmental Authority, except such as havebeen obtained or made and are in full force and effect, (b) will notviolate any applicable law or regulation or the charter, by-laws or otherorganizational documents of the Parent, the Borrower or any of the Subsidiariesor any order of any Governmental Authority, (c) will not violate or resultin a default under any material indenture, material agreement or other materialinstrument binding upon the Parent, the Borrower or any of the Subsidiaries orits assets, and (d) will not result in the creation or imposition of anyLien on any asset of the Parent, the Borrower or any of the Subsidiaries.

 

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Financial Condition;No Material Adverse Change.

 

### (a)                                  The Parent hasheretofore furnished to the Lenders its consolidated balance sheet andstatements of income, stockholders equity and cash flows as of and for thefiscal years ended April 30, 2003 and April 30, 2004, respectively,reported on by Deloitte & Touche LLP, independent public accountants.  Such financial statements present fairly, inall material respects, the financial condition and results of operations andcash flows of the Parent and its consolidated Subsidiaries as of such dates andfor such periods in accordance with GAAP.

###  

### (b)                                 Since April 30,2004, no events and conditions have occurred that have had, or would reasonablybe expected to have, a material adverse effect on the business, operations,property or condition (financial or otherwise), of the Parent and itsconsolidated Subsidiaries, taken as a whole.

###  

Properties.

 

### (c)                                  Each of the Parent,the Borrower and the Subsidiaries has good title to, or valid leaseholdinterests in, all its real and personal property material to its business freeand clear of any Liens, except liens permitted under Section 6.04 andminor defects in title that do not interfere with its ability to conduct itsbusiness as currently conducted or to utilize such properties for theirintended purposes.

###  

### (d)                                 Each of the Parent,the Borrower and the Subsidiaries owns, or is licensed to use, all trademarks,tradenames, copyrights, patents and other intellectual property material to itsbusiness, and the use thereof by the Parent, the Borrower and the Subsidiariesdoes not infringe upon the rights of any other Person except for suchinfringements that, the effect of which individually or in the aggregate, couldnot reasonably be expected to have a material adverse effect on the business ofthe Parent, the Borrower and the Subsidiaries, taken as a whole.

###  

Litigation andEnvironmental Matters.

 

### (e)                                  Other than to theextent disclosed in the Disclosed Matters, there are no material actions, suitsor proceedings by or before any arbitrator or Governmental Authority pendingagainst or, to the knowledge of the Parent or the Borrower, threatened againstor affecting the Parent, the Borrower or any of the Subsidiaries (i) as towhich there is a reasonable possibility of an adverse determination that,individually or in the aggregate, could reasonably be expected to have amaterial adverse effect on the business of Parent and its Subsidiaries, takenas a whole, or (ii) that involve this Agreement, any of the other CreditDocuments or the Transactions.

###  

### (f)                                    Neither the Parent,the Borrower nor any of the Subsidiaries (i) has failed to comply with anyEnvironmental Law or to obtain, maintain or comply with any permit, license orother approval required under any Environmental Law the failure of which couldreasonably be expected to have a material adverse effect on the business ofParent and its Subsidiaries taken as a whole, (ii) has become subject toany Environmental Liability that, individually or in the aggregate, could reasonablybe expected to have a material adverse effect on the business of the Parent andits Subsidiaries taken as a whole, (iii) has received notice of any claimwith respect to any Environmental Liability that, individually or in theaggregate,

 

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### could reasonably be expected to have a material adverse effect on thebusiness of the Parent and its Subsidiaries, taken as a whole or(iv) knows of any basis for any Environmental Liability that, individuallyor in the aggregate, could reasonably be expected to have a material adverseimpact on the business of the Parent and its consolidated Subsidiaries, takenas a whole.

###  

Compliance withLaws and Agreements; No Default.  Each ofthe Parent, the Borrower and the Subsidiaries is in compliance with all laws,regulations and orders of any Governmental Authority applicable to it or itsproperty and all indentures, agreements and other instruments binding upon itor its property, except where the failure to do so, individually or in theaggregate, could not reasonably be expected to result in a Material AdverseEffect.  No Default or Event of Defaulthas occurred and is continuing.

 

Investment andHolding Company Status.  Neither theParent, the Borrower nor any of the Subsidiaries is (a) an “investmentcompany” as defined in, or subject to regulation under, the Investment CompanyAct of 1940, as amended, or (b) a “holding company” as defined in, orsubject to regulation under, the Public Utility Holding Company Act of 1935, asamended.

 

Taxes.  Each of the Parent, the Borrower and theSubsidiaries has timely filed or caused to be filed all Tax returns and reportsrequired to have been filed and has paid or caused to be paid all Taxesrequired to have been paid by it, except (a) Taxes that are beingcontested in good faith by appropriate proceedings and for which the Parent,the Borrower or such Subsidiary, as applicable, has set aside on its booksadequate reserves in conformity with GAAP or (b) to the extent that thefailure to do so could not reasonably be expected to result in a MaterialAdverse Effect.

 

ERISA.  No ERISA Event has occurred or is reasonablyexpected to occur that, when taken together with all other ERISA Events forwhich liability is reasonably expected to occur, could reasonably be expectedto result in a Material Adverse Effect. The present value of all accumulated benefit obligations of allunderfunded Plans (based on the assumptions used for purposes of Statement ofFinancial Accounting Standards No. 87) did not, as of the date of the mostrecent financial statements reflecting such amounts, exceed by more than$10,000,000 the fair market value of the assets of all such underfunded Plans.

 

Solvency.  Each of the Borrower and the Parent is andthe Credit Parties, taken as a whole, are Solvent.

 

Useof Proceeds.  The Letters of Credit andthe proceeds of the Loans that have been disbursed to or on behalf of theBorrower have not been used by any Credit Party for purposes other than tofinance the working capital needs, acquisitions, or general corporate purposesof the Parent, the Borrower and the Subsidiaries.

 

Margin Regulations.  No Credit Party is engaged in the business ofextending credit for the purpose of purchasing or carrying margin stock (withinthe meaning of Regulation U of the Federal Reserve Board), and no proceeds ofany Loan, and no Letter of Credit, will be used by any Credit Party to purchaseor carry any such margin stock or to extend credit to others for the purpose ofpurchasing or carrying any such margin stock in contravention of Regulation T,U or X of the Board.

 

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Disclosure.  The Borrower has disclosed to the Lenders allagreements, instruments and corporate or other restrictions to which it, theParent, or any of the Subsidiaries is subject, and all other matters known toit, that, individually or in the aggregate, could reasonably be expected toresult in a Material Adverse Effect.  Asof the Effective Date, the Information Memorandum furnished by the Borrower tothe Administrative Agent, taken as a whole, does not contain any materialmisstatement of fact or omit to state any material fact necessary to make thestatements therein, in the light of the circumstances under which they weremade, not misleading provided that, with respect to projected financialinformation the Parent and the Borrower represent only that such informationwas prepared in good faith based upon assumptions believed to be reasonable atthe time; providedfurther, that, with respect to generalindustry information provided by public or third party sources, the Parent andthe Borrower represent only to the best of their knowledge.  None of the reports, financial statements, certificatesor other information furnished by or on behalf of the Borrower to theAdministrative Agent or any Lender in connection with the negotiation of thisAgreement or delivered hereunder (as modified or supplemented by otherinformation so furnished) when, taken as a whole, contains any materialmisstatement of fact or omits to state any material fact necessary to make thestatements therein, in the light of the circumstances under which they weremade, not misleading; provided that, with respect to projected financialinformation, the Parent and the Borrower represent only that such informationwas prepared in good faith based upon assumptions believed to be reasonable atthe time; provided, further, that, with respect to generalindustry information provided by public or third party sources, the Parent andthe Borrower represent only to the best of their knowledge.  The Credit Parties have delivered to theAdministrative Agent certain projections relating to the Parent and itsconsolidated Subsidiaries and have included certain projections in documents ormaterials that have been delivered to the Administrative Agent.  All such projections prepared by or on behalfof the Parent, the Borrower or the Subsidiaries are based on good faithestimates and assumptions believed to be reasonable at the time made provided,however, that the Parent, the Borrower or the Subsidiaries make norepresentation or warranty that such assumptions will prove in the future to beaccurate or that the Parent, the Borrower or the Subsidiaries will achieve thefinancial results reflected in such projections.

 

# *ARTICLE IV*Conditions

# * *

Effective Date.  The obligations of the Lenders to make Loansand of the Issuing Bank to issue Letters of Credit hereunder shall not becomeeffective until the date on which each of the following conditions is satisfied(or waived in accordance with Section 9.02):

 

### (a)                                  Credit Documents.  The Administrative Agent shall have receivedfrom each party hereto or thereto a counterpart of this Agreement and each ofthe other Credit Documents, each executed and delivered by such party.

###  

### (b)                                 Opinion of Counsel.  The Administrative Agent shall have receiveda favorable written opinion (addressed to the Administrative Agent and theLenders and dated the Effective Date) of (i) Skadden, Arps, Slate, Meagher& Flom LLP, counsel for the Parent and

 

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### Tax Services of America, Inc., substantially in the form of ExhibitC-1 and (ii) Piper Rudnick LLP, counsel for the Borrower and Hewfant, Inc.,substantially in the form of Exhibit C-2.

###  

### (c)                                  CorporateDocuments for the Credit Parties. The Administrative Agent shall have received, with copies for each ofthe Lenders, (1) a certificate of the Secretary or an Assistant Secretary ofeach Credit Party dated the Effective Date and certifying (i) that attachedthereto is a true and complete copy of the certificate of incorporation andby-laws of such Credit Party as in effect on the Effective Date, (ii) thatattached thereto is a true and complete copy of resolutions adopted by theBoard of Directors of such Credit Party authorizing the borrowings and otherextensions of credit hereunder (in the case of the Borrower) and the execution,delivery and performance in accordance with their respective terms of eachCredit Document to which such Credit Party is a party, (iii) as to theincumbency and specimen signature of each officer of such Credit Partyexecuting this Agreement or any other document delivered by it in connectionherewith (such certificate to contain a certification by another officer ofsuch Credit Party as to the incumbency and signature of the officer signing thecertificate referred to in this paragraph (c)) and (iv) with respect to theBorrower, that attached thereto are true and complete copies of the RelatedTransaction Documents and (2) a good standing certificate of (i) the Secretaryof State (or comparable official) of the jurisdiction of incorporation of theParent, the Borrower and each other Credit Party, dated as of a date recent tothe Effective Date, certifying that the Parent, the Borrower or such otherCredit Party, as the case may be, is a corporation duly organized and in goodstanding under the laws of such jurisdiction, and (ii) except as provided inSection 4.3 below, the Secretary of State (or comparable official) of eachjurisdiction in which the Parent, the Borrower or any other Credit Party isrequired to be qualified to transact business as a foreign corporation, datedas of a date recent to the Effective Date, certifying that the Parent, theBorrower or such other Credit Party, as the case may be, is qualified to dobusiness and is in good standing in each such jurisdiction.

###  

### (d)                                 FinancialStatements.  The Administrative Agentand the Lenders shall have received audited consolidated financial statementsof the Parent for the fiscal year ended April 30, 2004 acceptable to theAdministrative Agent and each Lender in its sole discretion.

###  

### (e)                                  SolvencyCertificate.  The AdministrativeAgent shall have received, with copies for each of the Lenders, a certificateof a Financial Officer stating that each of the Parent and the Borrower is, andthe Credit Parties, taken as a whole, are Solvent after giving effect to theinitial loans and Letters of Credit and the payment of all estimated legal, accountingand other fees related hereto and thereto.

###  

### (f)                                    No MaterialAdverse Effect.  The AdministrativeAgent shall be satisfied that, since the date of the most recent auditedfinancial statements of the Parent and its Subsidiaries, no events or conditionsshall have occurred that have had, or could reasonably be expected to have, aMaterial Adverse Effect.

###  

### (g)                                 Payment of Fees andExpenses.  The Administrative Agentshall be satisfied that all amounts due and payable to the AdministrativeAgent, the Sole Lead Arranger and the Lenders pursuant hereto or with regard tothe transactions contemplated hereby (including, without limitation, the feesrequired to be paid pursuant to that certain fee letter dated

 

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### as of April 22, 2004 among the Parent, the Administrative Agentand the Sole Lead Arranger) have been or are simultaneously being paid.

###  

### (h)                                 Commitment Letter.  Each of the terms and conditions set forth inthe Commitment Letter shall have been satisfied or waived in writing by theAdministrative Agent.

###  

### (i)                                     No Default.  At the time of and immediately after givingeffect to the Loans, no Default or Event of Default shall have occurred and becontinuing.

###  

### (j)                                     Representationsand Warranties.  The representationsand warranties set forth in this Agreement and the other Credit Documents shallbe true and correct in all material respects (except to the extent suchrepresentations and warranties are otherwise qualified by materiality in whichcase they shall be true and correct in all respects) on and as of the EffectiveDate (unless stated to relate solely to an earlier date, in which case suchrepresentations and warranties shall be true and correct in all materialrespects as of such earlier date).

###  

### (k)                                  Senior UnsecuredNotes.  The Senior Unsecured Notesshall have been issued contemporaneously with the execution and delivery of theCredit Document in amounts and on terms reasonably satisfactory to theAdministrative Agent.

###  

### (l)                                     Initial PublicOffering.  The Parent Initial PublicOffering shall have occurred in amounts and on terms reasonably satisfactory tothe Administrative Agent.

###  

### (m)                               Approvals.  All Governmental Authority and material thirdparty consents or approvals necessary, or in the discretion of the AdministrativeAgent, advisable in connection with the Transactions and the continuingoperations of the Parent, the Borrower and the Subsidiaries shall have beenobtained and be in full force and effect.

###  

### (n)                                 Litigation.  No litigation by any Person shall be pendingor, to either the Parent’s or the Borrower’s knowledge, threatened with respectto the Transaction or any documentation executed in connection therewith orwhich the Administrative Agent or any of the Lenders shall determine wouldreasonably be expected to have a Material Adverse Effect.

###  

### (o)                                 Officer’sCertificate.  The AdministrativeAgent shall have received, with copies for each of the Lenders, a certificateof a Responsible Officer to the effect that the conditions set forth in thisSection have been satisfied or waived.

###  

### (p)                                 Other Documents.  The Administrative Agent shall have receivedsuch other documents and certificates as the Administrative Agent mayreasonably require.

###  

### (q)                                 Date of Closing.  The underwriting agreement to be entered intoin connection with the Parent Initial Public Offering shall have been executedand four Business Days shall have passed since such execution.

###  

TheAdministrative Agent shall notify the Borrower and the Lenders of the EffectiveDate, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, theobligations of the Lenders to make Loans and of the Issuing Bank to issueLetters of Credit hereunder shall not become effective unless each of the foregoingconditions is satisfied (or waived pursuant to

 

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Section 9.02)at or prior to 3:00 p.m., New York City time, on July 15, 2004 (and, inthe event such conditions are not so satisfied or waived, the Commitments shallterminate at such time).

 

Each CreditEvent.  The obligation of each Lender tomake a Loan, and of the Issuing Bank to issue, renew or extend any Letter ofCredit, is subject to the satisfaction of the following conditions:

 

### (r)                                    The representationsand warranties set forth in this Agreement and the other Credit Documents shallbe true and correct in all material respects (except to the extent suchrepresentations and warranties are otherwise qualified by materiality in whichcase they shall be true and correct in all respects) on and as of the date ofsuch Loan or the date of issuance, renewal or extension of such Letter ofCredit, as applicable (unless stated to relate solely to an earlier date, inwhich case such representations and warranties shall be true and correct in allmaterial respects as of such earlier date).

###  

### (s)                                  At the time of andimmediately after giving effect to such Loan or the issuance, renewal orextension of such Letter of Credit, as applicable, no Default or Event ofDefault shall have occurred and be continuing.

###  

EachLoan and each issuance, renewal or extension of a Letter of Credit shall bedeemed to constitute a representation and warranty by the Borrower on the datethereof as to the matters specified in paragraphs (a) and (b) of this Section.

 

Post Closing Deliveries.  For each jurisdiction in which the Parent,the Borrower or any other Credit Party is required to be qualified to transactbusiness as a foreign corporation that is set forth on Schedule 4.03,the good standing certificate of the Secretary of State (or comparableofficial) of each such jurisdiction, dated as of a date recent to the EffectiveDate, certifying that the Parent, the Borrower or such other Credit Party, asthe case may be, is qualified to do business and is in good standing in eachsuch jurisdiction shall be delivered to the Administrative Agent, with copiesfor each of the Lenders, within 60 days of the date of this Agreement.

 

# *ARTICLE V*Affirmative Covenants

# * *

Until the Commitments have expired or beenterminated and the principal of and interest on each Loan and all fees payablehereunder shall have been paid in full and all Letters of Credit shall haveexpired or terminated  and all LCDisbursements shall have been reimbursed, the Parent and the Borrower jointlyand severally covenant and agree with the Lenders that:

 

Financial Statements; Ratings Change and OtherInformation.  The Borrower will furnishto the Administrative Agent and each Lender:

 

### (a)                                  within 90 daysafter the end of each fiscal year of the Parent, its audited consolidatedbalance sheet and related consolidated statements of operations, stockholders’equity and cash flows as of the end of and for such year, setting forth in eachcase in comparative

 

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### form the figures as of the end of and for the previous fiscal year, allreported on by Deloitte & Touche LLP or other independent publicaccountants of recognized national standing (without a “going concern” or likequalification or exception and without any qualification or exception as to thescope of such audit) to the effect that such consolidated financial statementspresent fairly in all material respects the financial condition and results ofoperations of the Parent and its consolidated Subsidiaries on a consolidatedbasis in accordance with GAAP consistently applied; provided thatdelivery within the time period specified above of copies of the Parent’sAnnual Report on Form 10-K for such fiscal year (together with the Parent’sannual report to stockholders, if any, prepared pursuant to Rule 14-a-3 underthe Exchange Act) prepared in accordance with the requirements therefor andfiled with the Securities and Exchange Commission shall be deemed to satisfythe requirements of this Section 5.01(a);

###  

### (b)                                 within 45 daysafter the end of each of the first three fiscal quarters of each fiscal year ofthe Parent, its unaudited consolidated balance sheet as of the end of suchfiscal quarter and related unaudited consolidated statements of operations forsuch fiscal quarter and the then elapsed portion of such fiscal year andstatements of cash flows for the then elapsed portion of such fiscal year,setting forth in each case in comparative form the figures for thecorresponding period or periods of (or, in the case of the balance sheet, as ofthe end of) the previous fiscal year, all certified by one of its FinancialOfficers as presenting fairly in all material respects the financial conditionand results of operations of the Parent and its consolidated Subsidiaries on a consolidatedbasis in accordance with GAAP consistently applied, subject to normal year-endaudit adjustments; provided that delivery within the time periodspecified above of copies of the Parent’s Quarterly Report on Form 10-Qprepared in accordance with the requirements therefor and filed with theSecurities and Exchange Commission shall be deemed to satisfy the requirementsof this Section 5.01(b);

###  

### (c)                                  on or before the datethat is 90 days after the beginning of each fiscal year, financial projectionsof the Parent and its consolidated Subsidiaries for such fiscal year;

###  

### (d)                                 concurrently with anydelivery of financial statements under clause (a) or (b) above, acertificate of a Financial Officer (i) certifying as to whether aDefault or Event of Default has occurred and, if a Default or Event of Defaulthas occurred, specifying the details thereof and any action taken or proposedto be taken with respect thereto, (ii) setting forth reasonably detailedcalculations demonstrating whether there has been compliance withSections 6.01 and 6.02 and (iii) stating whether any change in GAAPor in the application thereof has occurred since the date of the auditedfinancial statements referred to in Section 3.04 and, if any such changehas occurred, specifying the effect of such change on the financial statementsaccompanying such certificate;

###  

### (e)                                  concurrently with anydelivery of financial statements under clause (a) above, or promptlythereafter, a letter addressed to the board of directors of the Parent from theaccounting firm that reported on such financial statements stating that, inconnection with the accounting firm’s audits, nothing came to the attention ofsuch firm that caused it to believe that the Parent failed to comply withSections 6.01, 6.02 or 6.03 insofar as such Sections relate to financial andaccounting matters, and that such accounting firm’s audit was not directedprimarily toward obtaining knowledge of noncompliance with such sections;

 

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### (f)                                    promptly after suchfilings become publicly available, electronic notice of the filing of allperiodic and other reports and proxy statements filed by the Parent or anySubsidiary with the Securities and Exchange Commission, or any GovernmentalAuthority succeeding to any or all of the functions of said Commission, or withany national securities exchange;

###  

### (g)                                 promptly after Moody’sor S&P shall have announced a change in the rating established or deemed tohave been established for the Index Debt, written notice of such rating change;and

###  

### (h)                                 promptly following anyrequest therefor, such other information regarding the operations, businessaffairs and financial condition of the Parent or any Subsidiary, or compliancewith the terms of this Agreement or any of the other Credit Documents, as theAdministrative Agent or any Lender may reasonably request.

###  

Notices ofMaterial Events.  The Borrower willfurnish to the Administrative Agent and each Lender prompt notice of thefollowing:

 

### (i)                                     the occurrence ofany Default or Event of Default;

###  

### (j)                                     the filing orcommencement of any action, suit or proceeding by or before any arbitrator orGovernmental Authority against or affecting the Parent, the Borrower or anyAffiliate thereof that, if adversely determined, could reasonably be expectedto result in a Material Adverse Effect;

###  

### (k)                                  the occurrence of anyERISA Event that, alone or together with any other ERISA Events that haveoccurred, could reasonably be expected to result in liability of the Parent,the Borrower or any of the Subsidiaries which could reasonably be expected toresult in a Material Adverse Effect; and

###  

### (l)                                     any otherdevelopment that results in, or could reasonably be expected to result in, aMaterial Adverse Effect.

###  

Eachnotice delivered under this Section shall be followed within five (5)Business Days by a statement of a Financial Officer or of an executive officerof the Borrower setting forth the details of the event or development requiringsuch notice and any action taken or proposed to be taken with respect thereto.

 

Existence;Conduct of Business.  Each of the Parentand the Borrower will, and will cause each of the Material Subsidiaries to, door cause to be done all things necessary to preserve, renew and keep in fullforce and effect its legal existence and the rights, licenses, permits,privileges and franchises material to the conduct of the business of the Parentand its Subsidiaries taken as a whole; provided that the foregoing shallnot prohibit any merger, consolidation, liquidation or dissolution permittedunder Section 6.05.

 

Payment ofObligations.  Each of the Parent and theBorrower will, and will cause each of the Subsidiaries to, pay its obligations,including Tax liabilities, that, if not paid, could result in a Material AdverseEffect before the same shall become delinquent or in default, except

 

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where (a) the validity or amount thereof isbeing contested in good faith by appropriate proceedings, (b) the Parent, theBorrower or such Subsidiary has set aside on its books adequate reserves withrespect thereto in accordance with GAAP and (c) the failure to make paymentpending such contest could not reasonably be expected to result in a MaterialAdverse Effect.

 

Maintenance ofProperties; Insurance.  Each of theParent and the Borrower will, and will cause each of the Subsidiaries to,(a) keep and maintain all property material to the conduct of its businessin good working order and condition, ordinary wear and tear excepted, and(b) maintain, with financially sound and reputable insurance companies,insurance in such amounts and against such risks as are customarily maintainedby companies engaged in the same or similar businesses.

 

Books andRecords; Inspection Rights.  Each of theParent and the Borrower will, and will cause each of the Subsidiaries to, keepproper books of record and account in which full, true and correct entries aremade of all dealings and transactions in relation to its business andactivities.  Each of the Parent and theBorrower will, and will cause each of the Subsidiaries to, permit anyrepresentatives designated by the Administrative Agent, upon reasonable priornotice, to visit and inspect its properties during regular business hours, toexamine and make extracts from its books and records, and to discuss itsaffairs, finances and condition with its officers and independent accountants,all at such reasonable times and as often as reasonably requested (providedthat reasonable access to such books and records and properties shall be madeavailable to the Lenders if an Event of Default has occurred and iscontinuing).

 

Compliance with Laws and Contracts.  Each of the Parent and the Borrower will, andwill cause each of the Subsidiaries to, (i) comply with all laws, rules,regulations and orders of any Governmental Authority applicable to it or itsproperty and (ii) comply with the terms and conditions of each materialcontract, agreement and indenture to which it is a party, except, in each case,where the failure to do so, individually or in the aggregate, could notreasonably be expected to result in a Material Adverse Effect.

 

Compliance with Environmental Laws.  Each of the Parent and the Borrower will, andwill cause each of the Subsidiaries to, comply in all material respects withall applicable Environmental Laws, the failure of which could reasonably beexpected to result in a Material Adverse Effect.

 

Use ofProceeds.  Theproceeds of the Loans will be used only to finance the working capital needs,potential acquisitions and for other general corporate purposes of the Borrowerand its Subsidiaries in the ordinary course of business.  No Letter of Credit and no part of theproceeds of any Loan will be used by any Credit Party, whether directly or indirectly,for any purpose that entails a violation of any of the Regulations of theBoard, including Regulations T, U and X. Letters of Credit will be issued only to support obligations incurred bythe Parent and its Subsidiaries for general corporate purposes.

 

New MaterialSubsidiaries.  Promptly and in any eventwithin ten (10) Business Days following the (i) organization or acquisition ofany new Material Subsidiary or (ii) delivery of financial statements pursuantto Section 5.01 that indicate that a Subsidiary (other than the Borrower)not at such time a Subsidiary Guarantor is a Material Subsidiary, cause suchMaterial

 

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Subsidiary (other than a Subsidiary that isnot a “United States Person”, as such term is defined inSection 7701(a)(30) of the Code) to execute and deliver a SubsidiaryGuaranty, together with such documents as the Administrative Agent may requestevidencing corporate action taken to authorize such execution and delivery andthe incumbency and signatures of the officers of such Material Subsidiary.

 

# *ARTICLE VI*Negative Covenants

# * *

Until (i) the Commitments have expired orterminated, (ii) the principal of and interest on each Loan and all fees  payable hereunder have been paid in full,(iii) all Letters of Credit have expired or terminated or been cancelled and(iv) all LC Disbursements have been reimbursed, each of the Parent and theBorrower covenants and agrees with the Lenders that:

 

Maximum Consolidated Leverage Ratio.  The Consolidated Leverage Ratio shall not, asdetermined as of the last day of each fiscal quarter ending during the periodsset forth below, exceed the maximum ratio set forth below opposite such period:

 

| **Each  Fiscal Quarter Ending  During the Period** | ** ** | **Maximum Consolidated  Leverage Ratio** | ** ** |
|----------------------------------------------------|------------|------------------------------------------|------------|
| Effective Date through April 30, 2005         |       | 3.25 to 1.00                             |       |
| May 1, 2005 through April 30, 2006            |       | 3.00 to 1.00                             |       |
| May 1, 2006 through the Maturity Date              |       | 2.50 to 1.00                             |       |

 

Minimum Consolidated Fixed Charge CoverageRatio.  The Consolidated Fixed ChargeCoverage Ratio shall not, as determined as of the last day of each fiscalquarter ending during the periods set forth below, be less than the minimumratio set forth below opposite such period:

 

| **Each  Fiscal Quarter Ending  During the Period** | ** ** | **Minimum Fixed Charge  Coverage Ratio** | ** ** |
|----------------------------------------------------|------------|------------------------------------------|------------|
| Effective Date through April 30, 2006         |       | 3.00 to 1.00                             |       |
| May 1, 2006 through the Maturity Date              |       | 3.50 to 1.00                             |       |

 

Indebtedness.  Each of the Parent and the Borrower will not,and will not permit any of the Subsidiaries to, create, incur, assume or permitto exist any Indebtedness, except:

 

### (a)                                  Indebtedness createdhereunder and under the other Credit Documents;

###  

### (b)                                 Indebtedness existingon the date hereof, or required to be incurred pursuant to a contractualobligation in existence on the date hereof and, which in either case is

 

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### set forth in Schedule 6.03, and extensions, renewals andreplacements of any such Indebtedness that do not increase the outstandingprincipal amount thereof;

###  

### (c)                                  Indebtedness of theParent to any Subsidiary and of any Subsidiary to the Parent or any otherSubsidiary;

###  

### (d)                                 Guarantees by theParent of Indebtedness of any Subsidiary and by any Subsidiary of Indebtednessof the Parent or any other Subsidiary (including, without limitation, theGuarantee by certain Subsidiaries of the Senior Unsecured Notes);

###  

### (e)                                  Indebtedness of theParent or any Subsidiary incurred to finance the acquisition, construction orimprovement of any assets, including Capital Lease Obligations and anyIndebtedness assumed in connection with the acquisition of any such assets orsecured by a Lien on any such assets prior to the acquisition thereof, andextensions, renewals and replacements of any such Indebtedness that do notincrease the outstanding principal amount thereof; provided that (i)such Indebtedness is incurred prior to or within ninety (90) days after suchacquisition or the completion of such construction or improvement and does notexceed the cost of such acquisition, construction or improvement and (ii) theaggregate principal amount of Indebtedness permitted by this clause (e) shallnot exceed $5,000,000 at any time outstanding;

###  

### (f)                                    Indebtedness of anyPerson that becomes a Subsidiary after the date hereof and extensions, renewalsand replacements of any such Indebtedness that do not increase the outstandingprincipal amount thereof; provided that (i) such Indebtedness exists atthe time such Person becomes a Subsidiary and is not created in contemplationof or in connection with such Person becoming a Subsidiary and (ii) theaggregate principal amount of Indebtedness permitted by this clause (f) shallnot exceed $5,000,000 at any time outstanding;

###  

### (g)                                 Indebtedness of theParent or any Subsidiary as an account party in respect of letters of credit; providedthat the aggregate amount of Indebtedness permitted by this clause (g) shallnot exceed $2,000,000 at any time outstanding;

###  

### (h)                                 other Indebtedness ofthe Parent or any Subsidiary not otherwise permitted in this Section; providedthat the aggregate principal amount of Indebtedness permitted by this clause(h) at any time outstanding shall not exceed fifteen percent (15%) ofConsolidated Net Tangible Assets;

###  

### (i)                                     Indebtednessarising from the honoring by a bank or other financial institution of a check,draft or similar instrument drawn against insufficient funds in the ordinarycourse of business; provided that such Indebtedness is extinguishedwithin five (5) Business Days of incurrence;

###  

### (j)                                     the Senior UnsecuredNotes and at any time, to the extent that the Borrower has repaid all or aportion of the outstanding principal amount of the Senior Unsecured Notes,additional Indebtedness of the Borrower on terms not materially morerestrictive than this Agreement (as determined in the reasonable judgment ofthe Administrative Agent) to the Senior Unsecured Notes the aggregate principalamount at any time outstanding of which shall not exceed fifty percent (50%) ofthe principal amount of the Senior Unsecured Notes repaid at such time; and

 

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### (k)                                  liabilities for theLitigation Settlement to the extent not past due.

###  

Liens.  Each of the Parent and the Borrower will not,and will not permit any of the Subsidiaries to, create, incur, assume or permitto exist any Lien on any property or asset now owned or hereafter acquired byit, or assign or sell any income or revenues (including accounts receivable) orrights in respect of any thereof, except:

 

### (l)                                     PermittedEncumbrances;

###  

### (m)                               any Lien on any propertyor asset of the Parent or any Subsidiary existing on the date hereof and setforth in Schedule 6.04; provided that (i) such Lien shall not applyto any other property or asset of the Parent or any Subsidiary and (ii) such Lienshall secure only those obligations which it secures on the date hereof andextensions, renewals and replacements thereof that do not increase theoutstanding principal amount thereof;

###  

### (n)                                 any Lien existing onany property or asset prior to the acquisition thereof by the Parent or anySubsidiary or existing on any property or asset of any Person that becomes aSubsidiary after the date hereof prior to the time such Person becomes aSubsidiary; provided that (i) such Lien is not created incontemplation of or in connection with such acquisition or such Person becominga Subsidiary, as the case may be, (ii) such Lien shall not apply to anyother property or assets of the Parent or any Subsidiary and (iii) such Lienshall secure only those obligations which it secures on the date of suchacquisition or the date such Person becomes a Subsidiary, as the case may beand extensions, renewals and replacements thereof that do not increase theoutstanding principal amount thereof;

###  

### (o)                                 Liens on assetsacquired, constructed or improved by the Parent or any Subsidiary; providedthat (i) such security interests secure Indebtedness permitted byclause (e) of Section 6.03, (ii) such security interests and theIndebtedness secured thereby are incurred prior to or within ninety(90) days after such acquisition or the completion of such construction orimprovement, (iii) the Indebtedness secured thereby does not exceed thecost of acquiring, constructing or improving such assets and (iv) suchsecurity interests shall not apply to any other property or assets of theParent or any Subsidiary; and

###  

### (p)                                 Liens not otherwisepermitted hereunder which secure obligations not exceeding in the aggregatefifteen percent (15%) of Consolidated Net Tangible Assets.

###  

Fundamental Changes.

 

### (q)                                 Each of the  Parent and the Borrower will not, and willnot permit any Material Subsidiary to, merge into or consolidate with any otherPerson, or permit any other Person to merge into or consolidate with it, orsell, transfer, lease or otherwise dispose of (in one transaction or in aseries of transactions) all or substantially all of its assets, or all orsubstantially all of the stock of any of the Subsidiaries (in each case,whether now owned or hereafter acquired), or liquidate or dissolve, exceptthat, if at the time thereof and immediately after giving effect thereto noDefault or Event of Default shall have occurred and be continuing (i) anyPerson may merge into the Parent or the Borrower in a transaction in which theParent or the Borrower****is thesurviving corporation, (ii) any Subsidiary may merge into any Subsidiaryor any other Person in a transaction in which the surviving entity is aSubsidiary, (iii) any Subsidiary

 

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### may sell, transfer, lease or otherwise dispose of its assets to theParent or the Borrower****or toanother Subsidiary and (iv) any Subsidiary may liquidate or dissolve if theParent or the Borrower****determinesin good faith that such liquidation or dissolution is in the best interests ofthe Borrower and such liquidation or dissolution is not materiallydisadvantageous to the Lenders; provided that any such merger involvinga Person that is not a wholly owned Subsidiary immediately prior to such mergershall not be permitted unless also permitted by Section 6.06.

###  

### (r)                                    The Parent and theBorrower will not, and will not permit any of the Subsidiaries to, engage inany business, if, as a result, the general nature of the business of the CreditParties taken as a whole, would be substantially changed from the generalnature of the business of the Credit Parties taken as a whole, on the EffectiveDate.

###  

Investments,Loans, Advances, Guarantees and Acquisitions. Each of the Parent and the Borrower will not, and will not permit any ofthe Subsidiaries to, purchase, hold or acquire (including pursuant to anymerger with any Person that was not a wholly owned Subsidiary prior to suchmerger) any capital stock, evidences of indebtedness or other securities(including any option, warrant or other right to acquire any of the foregoing)of, make or permit to exist any loans or advances to, guarantee any obligationsof, or make or permit to exist any investment or any other interest in, anyother Person, or purchase or otherwise acquire (in one transaction or a seriesof transactions) any assets of any other Person constituting a business unit(an “Investment”), except:

 

### (s)                                  PermittedInvestments;

###  

### (t)                                    Investmentsexisting on the date hereof or required to be made pursuant to a contractualobligation in existence on the date hereof and any extensions or renewalsthereof, in either case as set forth in Schedule 6.06;

###  

### (u)                                 Investments by each ofthe Parent and the Borrower existing on the date hereof in the capital stock ofthe Subsidiaries;

###  

### (v)                                 Investments made bythe Parent to any Subsidiary and made by any Subsidiary to the Parent or anyother Subsidiary;

###  

### (w)                               Guarantees constitutingIndebtedness permitted by Section 6.03;

###  

### (x)                                   Investments inconnection with pledges, deposits, payments or performance bonds made or givenin the ordinary course of business in connection with or to secure statutory,regulatory or similar obligations including obligations under insurance,health, disability, safety or environmental obligations;

###  

### (y)                                 Investments receivedin connection with the bankruptcy or reorganization of, or settlement ofdelinquent accounts and disputes with, customers, suppliers or any otherPerson;

###  

### (z)                                   Investments receivedas part of a redemption or payment of or for, as a dividend on, or as a distributionin respect of, other Investments permitted by this Section;

 

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### (aa)                            Office Acquisitions andFranchisee Expansions;

###  

### (bb)                          Franchisee Advance Payments;

###  

### (cc)                            Investments in Franchisees;

###  

### (dd)                          Permitted Acquisitions;

###  

### (ee)                            Investments not otherwisepermitted hereunder in an aggregate amount not to exceed $5,000,000 during theterm of this Agreement; and

###  

### (ff)                                Investments by theParent or its Subsidiaries in accounts receivable owing to them, if created oracquired in the ordinary course of business and payable in accordance withcustomary trade terms (including the dating of accounts receivable andextensions of payments in the ordinary course of business).

###  

Hedging Agreements.  No Credit Party will enter into any HedgingAgreement except Hedging Agreements entered into in the ordinary course ofbusiness to hedge or manage risks to which a Credit Party is exposed in theconduct of its business or the management of its liabilities.

 

Restricted Payments.  Each of the Borrower and the Parent will not,and will not permit any of the Subsidiaries to, declare or make, or agree topay or make, directly or indirectly, any Restricted Payment, except (a) theParent may declare and pay dividends with respect to its Equity Interestspayable solely in additional shares of its common stock or warrants, options orother rights entitling the holder thereof to purchase or acquire shares of itscommon stock, (b) Subsidiaries may declare and pay dividends ratably with respectto their Equity Interests, (c) the Parent may make Restricted Payments pursuantto and in accordance with stock option plans or other benefit plans formanagement or employees of the Parent, the Borrower and the Subsidiaries, (d)any Subsidiary may make Restricted Payments to the Parent and the Borrower orany of the Subsidiaries, (e) the Parent may make Restricted Payments nototherwise permitted hereunder in an aggregate amount since the Effective Datenot to exceed 30% of Consolidated Net Income for the period commencing on May1, 2003 and ending on April 30 of the fiscal year preceding the year inwhich such Restricted Payment is made, on a cumulative basis, (f) the Parentmay use proceeds from the underwriters’ over-allotment option in the Parent InitialPublic Offering for repurchases of Equity Interests in the Parent and (g) theParent may make the Restricted Payment described in Section 6.09(f).

 

Transactions withAffiliates.  Each of the Borrower and theParent will not, and will not permit any of the Subsidiaries to, sell, lease orotherwise transfer any material property or material assets to, or purchase,lease or otherwise acquire any property or assets from, or otherwise engage inany other material transactions with, any of its Affiliates, except (a) uponfair and reasonable terms not materially less favorable to the Parent, theBorrower or such Subsidiary than could be obtained on an arm’s-length basiswith a Person not an Affiliate, (b) transactions between or among the Parentand its wholly-owned Subsidiaries not involving any other Affiliate, (c) anyIndebtedness permitted by Section 6.03(c), (d) any Restricted Paymentpermitted by Section 6.08, (e) transactions set forth onSchedule 6.09 and (f) the special dividend described in the Form S-1to be paid to Cendant Corporation on or after the Effective Date.

 

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Restrictive Agreements.  Each of the Borrower and the Parent will not,and will not permit any of the Subsidiaries to, directly or indirectly, enterinto, incur or permit to exist any agreement or other arrangement thatprohibits, restricts or imposes any condition upon (a) the ability of theParent or any Subsidiary to create, incur or permit to exist any Lien upon anyof its property or assets, or (b) the ability of any Subsidiary to paydividends or other distributions with respect to any shares of its capitalstock or to make or repay loans or advances to the Parent or any otherSubsidiary or to guarantee Indebtedness of the Parent or any other Subsidiary; providedthat (i) the foregoing shall not apply to restrictions and conditions imposedby law, by this Agreement or by the Note Purchase Agreement (or any replacementthereof permitted pursuant to Section 6.03(j)), (ii) the foregoing shallnot apply to restrictions and conditions existing on the date hereof identifiedon Schedule 6.10 (but shall apply to any extension or renewal of, or anyamendment or modification expanding the scope of, any such restriction orcondition), (iii) the foregoing shall not apply to customary restrictions andconditions contained in agreements relating to the sale of a Subsidiary pendingsuch sale, provided such restrictions and conditions apply only to theSubsidiary that is to be sold and such sale is permitted hereunder, (iv) clause(a) of the foregoing shall not apply to restrictions or conditions imposed byany agreement relating to secured Indebtedness permitted by this Agreement ifsuch restrictions or conditions apply only to the property or assets securingsuch Indebtedness and (v) clause (a) of the foregoing shall not apply tocustomary provisions in leases and other contracts restricting the assignmentthereof.

 

Transactionswith Franchisees. Each of the Parent and the Borrower will not and will not permit any ofthe Subsidiaries to engage in any material transactions with any Franchisee,except on such terms as are agreed to by an officer of the Parent or theBorrower, as applicable, that in such officer’s reasonable business judgment,will provide economic benefit to the Parent or one of its Subsidiaries.

 

Saleand Leasebacks.  Each of the Parent andthe Borrower will not and will not permit any of the Subsidiaries to enter intoany arrangement with any Person providing for the leasing by Parent, theBorrower or any Subsidiary of real or personal property that has been or is tobe sold or transferred by Parent, the Borrower or such Subsidiary to suchPerson or to any other Person to whom funds have been or are to be advanced bysuch Person on the security of such property or rental obligations of Parent,the Borrower or such Subsidiary unless such arrangement is entered into inconnection with the financing of the acquisition of such property through theproceeds of a Capital Lease Obligation permitted by Section 6.03(e) andthe sale or transfer of such property occurs within thirty days following theacquisition thereof by Parent, the Borrower or any of the Subsidiaries.

 

Accounting Changes.  Each of the Parent and the Borrower will notand will not permit any of the Subsidiaries to (i) make any material change inaccounting principles or reporting practices, except as are made in conformitywith GAAP and the Borrower provides subsequent notice of such change to theAdministrative Agent concurrently with any delivery of financial statementsunder Section 5.01(a) or Section 5.01(b), or as are otherwiseconsented to by the Administrative Agent or (ii) change its fiscal year orquarters or the method of determination thereof.

 

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# *ARTICLE VII*Events of Default

# * *

If any of the following events (“Events ofDefault”) shall occur:

 

### (a)                                  the Borrower shallfail to pay any principal of any Loan or any reimbursement obligation inrespect of any LC Disbursement when and as the same shall become due andpayable, whether at the due date thereof or at a date fixed for prepaymentthereof or otherwise;

###  

### (b)                                 the Borrower shallfail to pay any interest on any Loan or any fee or any other amount (other thanan amount referred to in clause (a) of this Article) payable under thisAgreement, when and as the same shall become due and payable, and such failureshall continue unremedied for a period of three (3) Business Days;

###  

### (c)                                  any representation orwarranty made or deemed made by or on behalf of the Parent, the Borrower or anyof the Subsidiaries in or in connection with this Agreement or any other CreditDocument or any amendment or modification hereof or thereof or waiver hereunderor thereunder, or in any report, certificate, financial statement or otherdocument furnished pursuant to or in connection with this Agreement or anyother Credit Document or any amendment or modification hereof or thereof orwaiver hereunder or thereunder, shall prove to have been incorrect in anymaterial respect when made or deemed made;

###  

### (d)                                 the Parent or theBorrower shall fail to observe or perform any covenant, condition or agreementcontained in Section 5.01 (other than clauses (a), (b) and (c)), 5.02,5.03 (with respect to the maintenance of the Parent’s or the Borrower’s legalexistence only),  5.08 or 5.09 or inArticle VI;

###  

### (e)                                  the Parent or theBorrower shall fail to observe or perform any covenant, condition or agreementcontained in Section 5.01(a), (b) or (c) or Section 5.07 and suchfailure shall continue unremedied for a period of five (5) Business Days;

###  

### (f)                                    the Parent, theBorrower or any of the Subsidiaries shall fail to observe or perform anycovenant, condition or agreement contained in this Agreement (other than thosespecified in clause (a), (b), (d) or (e) of this Article), the Parent Guaranty,the Subsidiary Guaranty or any other Credit Document, and such failure shallcontinue unremedied for a period of thirty (30) days after the Parent, theBorrower or any of the Subsidiaries obtains knowledge thereof;

###  

### (g)                                 the Parent, theBorrower or any of the Subsidiaries shall fail to make any payment(whether of principal or interest and regardless of amount) in respect of anyMaterial Indebtedness, when and as the same shall become due and payable;

###  

### (h)                                 any event or conditionoccurs that results in any Material Indebtedness becoming due prior to itsscheduled maturity or that enables or permits the holder or holders of anyMaterial Indebtedness or any trustee or agent on its or their behalf to causeany Material Indebtedness to become due (after giving effect to applicablegrace periods), or to require the

 

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### prepayment, repurchase, redemption or defeasance thereof, prior to itsscheduled maturity; provided that this clause (h) shall not applyto secured Indebtedness that becomes due as a result of the voluntary sale ortransfer of the property or assets securing such Indebtedness;

###  

### (i)                                     an involuntaryproceeding shall be commenced or an involuntary petition shall be filed seeking(i) liquidation, reorganization or other relief in respect of the Parent,the Borrower or any Material Subsidiary or its debts, or of a substantial partof its assets, under any  Federal, stateor foreign bankruptcy, insolvency, receivership or similar law now or hereafterin effect or (ii) the appointment of a receiver, trustee, custodian,sequestrator, conservator or similar official for the Parent, the Borrower orany Material Subsidiary or for a substantial part of its assets, and, in anysuch case, such proceeding or petition shall continue undismissed for60 days or an order or decree approving or ordering any of the foregoingshall be entered;

###  

### (j)                                     the Parent, theBorrower or any Material Subsidiary shall (i) voluntarily commence anyproceeding or file any petition seeking liquidation, reorganization or otherrelief under any Federal, state or foreign bankruptcy, insolvency, receivershipor similar law now or hereafter in effect, (ii) consent to the institutionof, or fail to contest in a timely and appropriate manner, any proceeding orpetition described in clause (i) of this Article, (iii) apply for orconsent to the appointment of a receiver, trustee, custodian, sequestrator,conservator or similar official for the Parent, the Borrower or any MaterialSubsidiary or for a substantial part of its assets, (iv) file an answeradmitting the material allegations of a petition filed against it in any suchproceeding, (v) make a general assignment for the benefit of creditors or(vi) take any action for the purpose of effecting any of the foregoing;

###  

### (k)                                  the Parent, theBorrower or any Material Subsidiary shall generally not pay its debts as theybecome due or shall admit in writing its inability or failure to pay its debtsas they become due;

###  

### (l)                                     one or morejudgments for the payment of money in an aggregate amount (not paid or fullycovered by insurance, as to which the insurer has acknowledged coverage) inexcess of $5,000,000****shall berendered against the Borrower, any Subsidiary or any combination thereof andthe same shall remain undischarged for a period of 30 consecutive daysduring which execution shall not be effectively stayed, or any action shall belegally taken by a judgment creditor to attach or levy upon any assets of theBorrower or any Subsidiary to enforce any such judgment;

###  

### (m)                               an ERISA Event shallhave occurred that, in the opinion of the Required Lenders, when taken togetherwith all other ERISA Events that have occurred, could reasonably be expected toresult in a Material Adverse Effect; or

###  

### (n)                                 a Change in Controlshall occur;

###  

then, and in every such event (other than anevent with respect to the Borrower described in clause (i) or (j) of thisArticle), and at any time thereafter during the continuance of such event, theAdministrative Agent may, and at the request of the Required Lenders shall, bynotice to the Borrower, take either or both of the following actions, at thesame or different times:  (i) terminate the Commitments, andthereupon the Commitments shall terminate

 

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immediately, and(ii) declare the Loans then outstanding to be due and payable in whole (orin part, in which case any principal not so declared to be due and payable maythereafter be declared to be due and payable), and thereupon the principal ofthe Loans so declared to be due and payable, together with accrued interestthereon and all fees and other obligations of the Borrower accrued hereunder,shall become  due and payableimmediately, without presentment, demand, protest or other notice of any kind,all of which are hereby waived by the Borrower; and in case of any event withrespect to the Borrower described in clause (i) or (j) of this Article, theCommitments shall automatically terminate and the principal of the Loans thenoutstanding, together with accrued interest thereon and all fees and otherobligations of the Borrower accrued hereunder, shall automatically become dueand payable, without presentment, demand, protest or other notice of any kind,all of which are hereby waived by the Borrower.

 

# *ARTICLE VIII*The Administrative Agent

# * *

Each of the Lenders and the Issuing Bankhereby irrevocably appoints the Administrative Agent as its agent andauthorizes the Administrative Agent to take such actions on its behalf and toexercise such powers as are delegated to the Administrative Agent by the termshereof, together with such actions and powers as are reasonably incidentalthereto.

 

The bank serving as the Administrative Agenthereunder shall have the same rights and powers in its capacity as a Lender asany other Lender and may exercise the same as though it were not theAdministrative Agent, and such bank and its Affiliates may accept depositsfrom, lend money to and generally engage in any kind of business with theBorrower or any Subsidiary or other Affiliate thereof as if it were not theAdministrative Agent hereunder.

 

The Administrative Agent shall not have anyduties or obligations except those expressly set forth herein.  Without limiting the generality of theforegoing, (a) the Administrative Agent shall not be subject to anyfiduciary or other implied duties, regardless of whether a Default or Event ofDefault has occurred and is continuing, (b) the Administrative Agent shallnot have any duty to take any discretionary action or exercise anydiscretionary powers, except discretionary rights and powers expresslycontemplated hereby that the Administrative Agent is required to exercise inwriting as directed by the Required Lenders (or such other number or percentageof the Lenders as shall be necessary under the circumstances as provided inSection 9.02), and (c) except as expressly set forth herein, theAdministrative Agent shall not have any duty to disclose, and shall not beliable for the failure to disclose, any information relating to the Borrower orany of its subsidiaries that is communicated to or obtained by the bank servingas Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liablefor any action taken or not taken by it with the consent or at the request ofthe Required Lenders (or such other number or percentage of the Lenders asshall be necessary under the circumstances as provided in Section 9.02) orin the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed notto have knowledge of any Default or Event of Default unless and until writtennotice thereof is given to the Administrative Agent by the Borrower or aLender, and the Administrative Agent shall not be responsible for or have anyduty to ascertain or inquire into (i) any statement, warranty orrepresentation made in or in connection with this Agreement, (ii) thecontents of any

 

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certificate, report or otherdocument delivered hereunder or in connection herewith, (iii) theperformance or observance of any of the covenants, agreements or other terms orconditions set forth herein, (iv) the validity, enforceability,effectiveness or genuineness of this Agreement or any other agreement,instrument or document, or (v) the satisfaction of any condition set forthin Article IV or elsewhere herein, other than to confirm receipt of itemsexpressly required to be delivered to the Administrative Agent.

 

The Administrative Agent shall be entitled torely upon, and shall not incur any liability for relying upon, any notice,request, certificate, consent, statement, instrument, document or other writingbelieved by it to be genuine and to have been signed or sent by the properPerson.  The Administrative Agent alsomay rely upon any statement made to it orally or by telephone and believed byit to be made by the proper Person, and shall not incur any liability forrelying thereon.  The AdministrativeAgent may consult with legal counsel (who may be counsel for the Borrower),independent accountants and other experts selected by it, and shall not beliable for any action taken or not taken by it in accordance with the advice ofany such counsel, accountants or experts.

 

The Administrative Agent may perform any andall its duties and exercise its rights and powers by or through any one or moresub-agents appointed by the Administrative Agent.  The Administrative Agent and any suchsub-agent may perform any and all its duties and exercise its rights and powersthrough their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to anysuch sub-agent and to the Related Parties of the Administrative Agent and anysuch sub-agent, and shall apply to their respective activities in connectionwith the syndication of the credit facility provided for herein as well asactivities as Administrative Agent.

 

Subject to the appointment and acceptance ofa successor Administrative Agent as provided in this paragraph, theAdministrative Agent may resign at any time by notifying the Lenders, theIssuing Bank and the Borrower.  Upon anysuch resignation, the Required Lenders shall have the right, in consultationwith the Borrower, provided that no Default and Event of Default hasoccurred and is continuing to appoint a successor.  If no successor shall have been so appointedby the Required Lenders and shall have accepted such appointment within30 days after the retiring Administrative Agent gives notice of itsresignation, then the retiring Administrative Agent may, on behalf of theLenders and the Issuing Bank, appoint a successor Administrative Agent whichshall be a bank with an office in New York, New York, or an Affiliate of anysuch bank.  Upon the acceptance of itsappointment as Administrative Agent hereunder by a successor, such successorshall succeed to and become vested with all the rights, powers, privileges andduties of the retiring Administrative Agent, and the retiring AdministrativeAgent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to asuccessor Administrative Agent shall be the same as those payable to itspredecessor unless otherwise agreed between the Borrower and suchsuccessor.  After the AdministrativeAgent’s resignation hereunder, the provisions of this Article andSection 9.03 shall continue in effect for the benefit of such retiringAdministrative Agent, its sub-agents and their respective Related Parties inrespect of any actions taken or omitted to be taken by any of them while it wasacting as Administrative Agent.

 

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Each Lender acknowledges that it has, independentlyand without reliance upon the Administrative Agent or any other Lender andbased on such documents and information as it has deemed appropriate, made itsown credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,independently and without reliance upon the Administrative Agent or any otherLender and based on such documents and information as it shall from time totime deem appropriate, continue to make its own decisions in taking or nottaking action under or based upon this Agreement, any related agreement or anydocument furnished hereunder or thereunder.

 

# *ARTICLE IX*Miscellaneous

# * *

Notices.

 

### (a)                                  Except in the case ofnotices and other communications expressly permitted to be given by telephone(and subject to paragraph (b) below), all notices and other communicationsprovided for herein shall be in writing and shall be delivered by hand orovernight courier service, mailed by certified or registered mail or sent bytelecopy, as follows:

###  

#### (i)                                     ifto the Borrower or to the Parent, to the Borrower or the Parent at JacksonHewitt Inc. or Jackson Hewitt Tax Service Inc., as applicable, 7 Sylvan Way,Parsippany, New Jersey 07054, Attention of Mark L. Heimbouch, Chief FinancialOfficer  (Telecopy No. (973) 496-2760) with a copy (which shall notconstitute notice) to Skadden, Arps, Slate, Meagher & Flom LLP, Four TimesSquare, New York, NY 10036, Attn: James Douglas (Facsimile No: (917) 777-2868);

####  

#### (ii)                                  ifto the Administrative Agent, to JPMorgan Chase Bank, Loan and Agency ServicesGroup, 1111 Fanin, 10th Floor, Houston, Texas 77002, Attention of Trey Chavez(Telecopy No. (713) 750-2932), with a copy (which shall not constitute notice)to Kirkland & Ellis LLP, 200 East Randolph Drive, Chicago, Illinois 60601,Attention of Linda K. Myers, P.C. (Telecopy No. (312) 861-2200);

####  

#### (iii)                               ifto the Issuing Bank, to it at JPMorgan Chase Bank, Loan and Agency ServicesGroup, 1111 Fanin, 10th Floor, Houston, Texas 77002, Attention of Trey Chavez(Telecopy No. (713) 750-2932), with a copy (which shall not constitute notice)to Kirkland & Ellis LLP, 200 East Randolph Drive, Chicago, Illinois 60601,Attention of Linda K. Myers, P.C. (Telecopy No. (312) 861-2200); and

####  

#### (iv)                              ifto any Lender, to it at its address (or telecopy number) set forth in itsAdministrative Questionnaire.

####  

### (b)                                 Notices and othercommunications to the Lenders hereunder may be delivered or furnished byelectronic communications pursuant to procedures approved by the AdministrativeAgent; provided that the foregoing shall not apply to notices pursuantto Article

 

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### II unless otherwise agreed by the Administrative Agent and theapplicable Lender.  The AdministrativeAgent or the Borrower may, in its discretion, agree to accept notices and othercommunications to it hereunder by electronic communications pursuant toprocedures approved by it; provided that approval of such procedures maybe limited to particular notices or communications.

###  

### (c)                                  Any party hereto maychange its address or telecopy number for notices and other communicationshereunder by notice to the other parties hereto.

###  

### (d)                                 All notices,communications, requests and demands to or upon the respective parties heretomade in accordance with the provisions of this Agreement shall be deemed tohave been duly given or made when delivered, or, in the case of telecopynotice, when received.

###  

Waivers; Amendments.

 

### (e)                                  No failure or delayby the Administrative Agent, the Issuing Bank or any Lender in exercising anyright or power hereunder shall operate as a waiver thereof, nor shall anysingle or partial exercise of any such right or power, or any abandonment ordiscontinuance of steps to enforce such a right or power, preclude any other orfurther exercise thereof or the exercise of any other right or power.  The rights and remedies of the AdministrativeAgent, the Issuing Bank and the Lenders hereunder are cumulative and are notexclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreementor consent to any departure by the Borrower therefrom shall in any event beeffective unless the same shall be permitted by paragraph (b) of thisSection, and then such waiver or consent shall be effective only in the specificinstance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loanor issuance of a Letter of Credit shall not be construed as a waiver of anyDefault or Event of Default, regardless of whether the Administrative Agent,any Lender or the Issuing Bank may have had notice or knowledge of such Defaultor Event of Default at the time.

###  

### (f)                                    Neither thisAgreement nor any other Credit Document nor any provision hereof or thereof maybe waived, amended or modified except pursuant to an agreement or agreements inwriting entered into by the Borrower and the Required Lenders or by theBorrower and the Administrative Agent with the consent of the Required Lenders;provided that no such agreement shall (i) increase  the Commitment of any Lender without thewritten consent of such Lender, (ii) reduce the principal amount of any Loan orLC Disbursement or reduce the rate of interest thereon, or reduce any feespayable hereunder, without the written consent of each Lender affected thereby,(iii) postpone the scheduled date of payment of the principal amount of anyLoan or LC Disbursement, or any interest thereon, or any fees payablehereunder, or reduce the amount of, waive or excuse any such payment, orpostpone the scheduled date of expiration of any Commitment or result in theexpiration date of any Letter of Credit being after the fifth Business Dayprior to the Maturity Date, without the written consent of each Lender affectedthereby, (iv) change Section 2.16(b) or (c) in a manner that would alterthe pro rata sharing of payments required thereby , without the written consentof each Lender, (v) change any of the provisions of this Section or thedefinition of “Required Lenders” or any other provision hereof specifying thenumber or percentage of Lenders required to waive, amend or modify any rights

 

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### hereunder or make any determination or grant any consent hereunder,without the  written consent of eachLender or (vi) release any Guarantor from its obligations under the applicableParent Guaranty or Subsidiary Guaranty (other than in accordance with the termsthereof); provided further that no such agreement shall amend, modify orotherwise affect the rights or duties of the Administrative Agent or theIssuing Bank hereunder without the prior written consent of the AdministrativeAgent or the Issuing Bank, as the case may be.

###  

Expenses; Indemnity; Damage Waiver.

 

### (g)                                 The Borrower shall pay(i) all reasonable and documented out-of-pocket expenses incurred by theAdministrative Agent and its Affiliates, including the reasonable anddocumented fees, charges and disbursements of counsel for the AdministrativeAgent, in connection with the syndication of the credit facility provided forherein, the preparation and administration of this Agreement or any amendments,modifications or waivers of the provisions hereof (whether or not thetransactions contemplated hereby or thereby shall be consummated), (ii) allreasonable and documented out-of-pocket expenses incurred by the Issuing Bankin connection with the issuance, amendment, renewal or extension of any Letterof Credit or any demand for payment thereunder and (iii) all reasonable anddocumented out-of-pocket expenses incurred by the Administrative Agent, theIssuing Bank or any Lender, including the reasonable and documented fees,charges and disbursements of any counsel for the Administrative Agent, theIssuing Bank or any Lender, in connection with the enforcement or protection ofits rights in connection with this Agreement, including its rights under thisSection, or in connection with the Loans made or Letters of Credit issuedhereunder, including all such reasonable and documented out-of-pocket expensesincurred during  any workout,restructuring or negotiations in respect of such Loans or Letters of Credit.

###  

### (h)                                 The Borrower shallindemnify the Administrative Agent, the Issuing Bank and each Lender, and eachRelated Party of any of the foregoing Persons (each such Person being called an“Indemnitee”) against, and hold each Indemnitee harmless from, any and alllosses, claims, damages, liabilities and related expenses, including thereasonable and documented fees, charges and disbursements of any counsel(including any additional counsel after notice to the Borrower of suchretention) for any Indemnitee, incurred by or asserted against any Indemniteearising out of, in connection with, or as a result of (i) the execution ordelivery of this Agreement or any agreement or instrument contemplated hereby,the performance by the parties hereto of their respective obligations hereunderor the consummation of the Transactions or any other transactions contemplatedhereby, (ii) any Loan or Letter of Credit or the use of the proceedstherefrom (including any refusal by the Issuing Bank to honor a demand forpayment under a Letter of Credit if the documents presented in connection withsuch demand do not strictly comply with the terms of such Letter of Credit),(iii) any actual or alleged presence or release of Hazardous Materials onor from any property owned or operated by the Parent or any of itsSubsidiaries, or any Environmental Liability related in any way to the Parentor any of its Subsidiaries, or (iv) any actual or prospective claim,litigation, investigation or proceeding relating to any of the foregoing,whether based on contract, tort or any other theory and regardless of whetherany Indemnitee is a party thereto; provided that (A) the Borrower shallnot be liable for any settlement of any proceeding effected without theBorrower’s written consent (such consent not to be unreasonably withheld) and(B) such indemnity shall not, as to any

 

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### Indemnitee, be available to the extent that such losses, claims,damages, liabilities or related expenses resulted from the gross negligence orwillful misconduct of such Indemnitee.

###  

### (i)                                     To the extent thatthe Borrower fails to pay any amount required to be paid by it to the AdministrativeAgent or the Issuing Bank under paragraph (a) or (b) of this Section, eachLender severally agrees to pay to the Administrative Agent or the Issuing Bank,as the case may be, such Lender’s Applicable Percentage (determined as of thetime that the applicable unreimbursed expense or indemnity payment is sought)of such unpaid amount; provided that the unreimbursed expense orindemnified loss, claim, damage, liability or related expense, as the case maybe, was incurred by or asserted against the Administrative Agent or the IssuingBank in its capacity as such.

###  

### (j)                                     To the extentpermitted by applicable law, the Borrower shall not assert, and hereby waives,any claim against any Indemnitee, on any theory of liability, for special,indirect, consequential or punitive damages (as opposed to direct or actualdamages) arising out of, in connection with, or as a result of, this Agreementor any agreement or instrument contemplated hereby, the Transactions, any Loanor Letter of Credit or the use of the proceeds thereof.

###  

### (k)                                  All amounts due underthis Section shall be payable not later than ten (10) days after writtendemand therefor.

###  

Successors and Assigns.

 

### (l)                                     The provisions ofthis Agreement shall be binding upon and inure to the benefit of the partieshereto and their respective successors and assigns permitted hereby (includingany Affiliate of the Issuing Bank that issues any Letter of Credit), exceptthat (i) neither the Borrower nor the Parent may assign or otherwise transferany of its rights or obligations hereunder or under any of the other CreditDocuments without the prior written consent of each Lender (and any attemptedassignment or transfer by the Parent or the Borrower without such consent shallbe null and void) and (ii) no Lender may assign or otherwise transfer itsrights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed orimplied, shall be construed to confer upon any Person (other than the parties hereto,their respective successors and assigns permitted hereby (including anyAffiliate of the Issuing Bank that issues any Letter of Credit), Participants(to the extent provided in paragraph (c) of this Section) and, to the extentexpressly contemplated hereby, the Related Parties of each of theAdministrative Agent, the Issuing Bank and the Lenders) any legal or equitableright, remedy or claim under or by reason of this Agreement.

###  

### (m)                               (i)  Subject to the conditions set forth inparagraph (b)(ii) below, any Lender may assign to one or more assignees all ora portion of its rights and obligations under this Agreement (including all ora portion of its Commitment and the Loans at the time owing to it and its LCExposure) with the prior written consent (such consent not to be unreasonablywithheld) of:

###  

##### (A)                              theBorrower, provided that no consent of the Borrower shall be required foran assignment to a Lender, an Affiliate of a Lender

 

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##### or, if an Event of Default has occurred andis continuing, any other assignee;

#####  

##### (B)                                theAdministrative Agent; and

#####  

##### (C)                                theIssuing Bank.

#####  

#### (ii)                                  Assignmentsshall be subject to the following additional conditions:

####  

##### (A)                              exceptin the case of an assignment to a Lender or an Affiliate of a Lender or to anApproved Fund, an assignment of the entire remaining amount of the assigningLender’s Commitment or Loans, the amount of the Commitment or Loans of theassigning Lender subject to each such assignment (determined as of the date theAssignment and Assumption with respect to such assignment is delivered to theAdministrative Agent) shall not be less than $1,000,000 unless each of theBorrower and the Administrative Agent otherwise consent, provided thatno such consent of the Borrower shall be required if an Event of Default hasoccurred and is continuing;

#####  

##### (B)                                eachpartial assignment shall be made as an assignment of a proportionate part ofall the assigning Lender’s rights and obligations under this Agreement;

#####  

##### (C)                                theparties to each assignment shall execute and deliver to the AdministrativeAgent an Assignment and Assumption, together with a processing and recordationfee of $3,500; and

#####  

##### (D)                               theassignee, if it shall not be a Lender, shall deliver to the AdministrativeAgent an Administrative Questionnaire.

#####  

For the purposes of thisSection 9.04(b), the term “Approved Fund” means any Person (otherthan a natural person) that is engaged in making, purchasing, holding orinvesting in bank loans and similar extensions of credit in the ordinary courseof its business and that is administered or managed by (a) a Lender, (b) anAffiliate of a Lender or (c) an entity or an Affiliate of an entity thatadministers or manages a Lender.

 

#### (iii)                               Subjectto acceptance and recording thereof pursuant to paragraph (b)(iv) of thisSection, from and after the effective date specified in each Assignment andAssumption the assignee thereunder shall be a party hereto and, to the extentof the interest assigned by such Assignment and Assumption, have the rights andobligations of a Lender under this Agreement, and the assigning Lenderthereunder shall, to the extent of the interest assigned by such Assignment andAssumption, be released from its obligations under this Agreement (and, in thecase of an Assignment and Assumption covering all of the assigning Lender’srights and obligations under this Agreement, such Lender shall

 

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#### cease to be a party hereto but shall continueto be entitled to the benefits of Sections 2.13, 2.14, 2.15 and9.03).  Any assignment or transfer by aLender of rights or obligations under this Agreement that does not comply withthis Section shall be treated for purposes of this Agreement as a sale bysuch Lender of a participation in such rights and obligations in accordancewith paragraph (c) of this Section.

####  

#### (iv)                              TheAdministrative Agent, acting for this purpose as an agent of the Borrower,shall maintain at one of its offices a copy of each Assignment and Assumptiondelivered to it and a register for the recordation of the names and addressesof the Lenders, and the Commitment of, and principal amount of the Loans and LCDisbursements owing to, each Lender pursuant to the terms hereof from time totime (the “Register”).  The entries inthe Register shall be conclusive, in the absence of manifest error, and theBorrower, the Administrative Agent, the Issuing Bank and the Lenders may treateach Person whose name is recorded in the Register pursuant to the terms hereofas a Lender hereunder for all purposes of this Agreement, notwithstandingnotice to the contrary.  The Registershall be available for inspection by the Borrower, the Issuing Bank and anyLender, at any reasonable time and from time to time upon reasonable priornotice.

####  

#### (v)                                 Uponits receipt of a duly completed Assignment and Assumption executed by anassigning Lender and an assignee, the assignee’s completed AdministrativeQuestionnaire (unless the assignee shall already be a Lender hereunder), theprocessing and recordation fee referred to in paragraph (b)(ii)(C) of thisSection and any written consent to such assignment required by paragraph(b)(i) of this Section, the Administrative Agent shall accept such Assignmentand Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposesof this Agreement unless it has been recorded in the Register as provided inthis paragraph.

####  

### (n)                                 (i) Any Lender may,without the consent of the Borrower, the Administrative Agent or the IssuingBank, sell participations to one or more banks or other entities (a“Participant”) in all or a portion of such Lender’s rights and obligationsunder this Agreement (including all or a portion of its Commitment and theLoans owing to it); provided that (A) such Lender’s obligations underthis Agreement shall remain unchanged, (B) such Lender shall remain solelyresponsible to the other parties hereto for the performance of such obligationsand (C) the Borrower, the Administrative Agent, the Issuing Bank and theother Lenders shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to whicha Lender sells such a participation shall provide that such Lender shall retainthe sole right to enforce this Agreement and to approve any amendment,modification or waiver of any provision of this Agreement; provided thatsuch agreement or instrument may provide that such Lender will not, without theconsent of the applicable Participant, agree to any amendment, modification orwaiver described in the first proviso to Section 9.02(b) that affects suchParticipant.  Subject to paragraph(c)(ii) of this Section, the Borrower agrees that each Participant shall beentitled to the benefits of and subject to Sections 2.13, 2.14 and 2.15 to thesame extent

 

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### as if it were a Lender and had acquired its interest by assignmentpursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitledto the benefits of Section 9.08 as though it were a Lender, providedsuch Participant agrees to be subject to Section 2.16(c) as though it werea Lender.

###  

#### (ii)                                  AParticipant shall not be entitled to receive any greater payment underSection 2.13, 2.14 or 2.15 than the applicable Lender would have beenentitled to receive with respect to the participation sold to such Participant,unless the sale of the participation to such Participant is made with the Borrower’sprior written consent.  A Participantshall not be entitled to the benefits of Section 2.15 unless the Borroweris notified of the participation sold to such Participant and such Participantagrees, for the benefit of the Borrower, to comply with Section 2.15(e) asthough it were a Lender.

####  

### (o)                                 Any Lender may at anytime pledge or assign, or grant a security interest in, all or any portion ofits rights under this Agreement to secure obligations of such Lender, includingwithout limitation any pledge or assignment or grant of a security interest tosecure obligations to a Federal Reserve Bank, and this Section shall notapply to any such pledge or assignment or grant of a security interest; providedthat no such pledge or assignment or grant of a security interest shall releasea Lender from any of its obligations hereunder or substitute any such pledgeeor assignee or grantee for such Lender as a party hereto.

###  

Survival.  All covenants, agreements, representationsand warranties made by the Parent and the Borrower herein, in the other CreditDocuments and in the certificates or other instruments  delivered in connection with or pursuant tothis Agreement shall be considered to have been relied upon by the other partieshereto and shall survive the execution and delivery of this Agreement and themaking of any Loans and issuance of any Letters of Credit, regardless of anyinvestigation made by any such other party or on its behalf and notwithstandingthat the Administrative Agent, the Issuing Bank or any Lender may have hadnotice or knowledge of any Default or Event of Default or incorrectrepresentation or warranty at the time any credit is extended hereunder, andshall continue in full force and effect as long as the principal of or anyaccrued interest on any Loan or any fee or any other amount payable under thisAgreement is outstanding and unpaid or any Letter of Credit is outstanding andso long as the Commitments have not expired or terminated.  The provisions of Sections 2.13, 2.14, 2.15and 9.03 and Article VIII shall survive and remain in full force andeffect regardless of the consummation of the transactions contemplated hereby,the repayment of the Loans, the expiration or termination or cancellation ofthe Letters of Credit and the Commitments or the termination of this Agreementor any provision hereof.

 

Counterparts;Integration; Effectiveness.  ThisAgreement may be executed in counterparts (and by different parties hereto ondifferent counterparts), each of which shall constitute an original, but all ofwhich when taken together shall constitute a single contract.  This Agreement and any separate letteragreements with respect to fees payable to the Administrative Agent constitutethe entire contract among the parties relating to the subject matter hereof andsupersede any and all previous agreements and understandings, oral or written,relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall becomeeffective when it shall have been executed by the Parent, the Borrower and the

 

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Administrative Agent and when theAdministrative Agent shall have received counterparts hereof which, when takentogether, bear the signatures of each of the other parties hereto, andthereafter shall be binding upon and inure to the benefit of the parties heretoand their respective successors and assigns. Delivery of an executed counterpart of a signature page of thisAgreement by telecopy shall be effective as delivery of a manually executedcounterpart of this Agreement.

 

Severability.  Any provision of this Agreement held to beinvalid, illegal or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such invalidity, illegality orunenforceability without affecting the validity, legality and enforceability ofthe remaining provisions hereof; and the invalidity of a particular provisionin a particular jurisdiction shall not invalidate such provision in any otherjurisdiction.

 

Right ofSetoff.  If anEvent of Default shall have occurred and be continuing, each Lender and each ofits Affiliates is hereby authorized at any time and from time to time, to thefullest extent permitted by law, to set off and apply any and all deposits(general or special, time or demand, provisional or final) at any time held andother obligations at any time owing by such Lender or Affiliate to or for thecredit or the account of the Parent or the Borrower against any of and all theobligations of the Parent and the Borrower now or hereafter existing under thisAgreement and the other Credit Documents which are held by such Lender,irrespective of whether or not such Lender shall have made any demand underthis Agreement or any of the other Credit Documents and although suchobligations may be unmatured.  The rightsof each Lender under this Section are in addition to other rights andremedies (including other rights of setoff) which such Lender may have.

 

Governing Law;Jurisdiction; Consent to Service of Process.

 

### (p)                                 This Agreement shallbe construed in accordance with and governed by the law of the State of NewYork.  Each of the Parent and theBorrower hereby irrevocably and unconditionally submits, for itself and itsproperty, to the nonexclusive jurisdiction of the Supreme Court of the State ofNew York sitting in New York County and of the United States District Court ofthe Southern District of New York, and any appellate court from any thereof, inany action or proceeding arising out of or relating to this Agreement or any ofthe other Credit Documents, or for recognition or enforcement of any judgment,and each of the parties hereto hereby irrevocably and unconditionally agreesthat all claims in respect of any such action or proceeding may be heard anddetermined in such New York State or, to the extent permitted by law, insuch Federal court.  Each of the partieshereto agrees that a final judgment in any such action or proceeding shall beconclusive and may be enforced in other jurisdictions by suit on the judgmentor in any other manner provided by law. Nothing in this Agreement or any of the other Credit Documents shallaffect any right that the Administrative Agent, the Issuing Bank or any Lendermay otherwise have to bring any action or proceeding relating to this Agreementor any of the other Credit Documents against the Parent, the Borrower or itsproperties in the courts of any jurisdiction.

###  

### (q)                                 Each of the Parent andthe Borrower hereby irrevocably and unconditionally waives, to the fullest extentit may legally and effectively do so, any objection which it may now orhereafter have to the laying of venue of any suit, action or proceeding

 

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### arising out of or relating to this Agreement or any of the other CreditDocuments in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocablywaives, to the fullest extent permitted by law, the defense of an inconvenientforum to the maintenance of such action or proceeding in any such court.

###  

### (r)                                    Each party to thisAgreement irrevocably consents to service of process in the manner provided fornotices in Section 9.01.  Nothing inthis Agreement will affect the right of any party to this Agreement to serveprocess in any other manner permitted by law.

###  

WAIVER OFJURY TRIAL.  EACH PARTY HERETO HEREBYWAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAYHAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISINGOUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THETRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT ORANY OTHER THEORY).  EACH PARTY HERETO(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTYHAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, INTHE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TOENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS ANDCERTIFICATIONS IN THIS SECTION.

 

Headings.  Article and Section headings andthe Table of Contents used herein are for convenience of reference only, arenot part of this Agreement and shall not affect the construction of, or betaken into consideration in interpreting, this Agreement.

 

Confidentiality.  Neither the Administrative Agent, the IssuingBank nor any Lender shall use in violation of applicable law or disclose theConfidential Information; provided that the Confidential Information maybe disclosed (a) to its Affiliates and its and its Affiliates’ advisors(other than those covered by clause (b) below) that agree to keep suchConfidential Information confidential as provided in this Section, (b) toits directors, officers, employees and agents, including accountants, legalcounsel and other advisors that (1) need to know the Confidential Informationin connection with this Agreement and the transactions contemplated hereby and(2) are covered by internal procedures or codes of conduct or are subject toprofessional ethical standards regarding confidentiality and are informed ofthe confidential nature of such Confidential Information and directed to keepsuch Confidential Information confidential as provided in this Section,(c) to the extent requested by any regulatory authority, (d) to theextent required by applicable laws or regulations or by any subpoena or similarlegal process, provided that the Administrative Agent, the Issuing Bankor such Lender, as the case may be, shall request confidential treatment ofsuch Confidential Information to the extent permitted by applicable law and theAdministrative Agent, the Issuing Bank or such Lender, as the case may be,shall, to the extent permitted by applicable law, promptly inform the Borrowerwith respect thereto so that the Borrower may seek appropriate protectiverelief to the extent permitted by applicable law, providedfurtherthat in the event that such protective remedy or other remedy is not obtained,the Administrative Agent, the Issuing Bank or such Lender, as the case may be,shall furnish only that portion of the Confidential Information that is legally

 

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required and shall disclose the ConfidentialInformation in a manner reasonably designed to preserve its confidential natureand shall cooperate with the Borrower’s counsel to enable the Borrower toattempt to obtain a protective order or other reliable assurance thatconfidential treatment will be accorded to the Confidential Information, (e) toany other party to this Agreement, (f) in connection with the exercise of anyremedies hereunder or any suit, action or proceeding relating to this Agreementor the enforcement of rights hereunder, (g) subject to an agreement containingprovisions substantially the same as those of this Section, to (1) any assigneeof or Participant in, or any prospective assignee of or Participant in, any ofits rights or obligations under this Agreement or (2) any actual or prospectivecounterparty (or its advisors) to any swap or derivative transaction relatingto the Borrower and its obligations, (h) with the consent of the Borrower,(i) to the extent such Confidential Information (1) becomes publiclyavailable other than as a result of a breach of this Section or(2) becomes available to the Administrative Agent, the Issuing Bank or anyLender on a nonconfidential basis from a source other than the Borrower, or (j)solely for internal purposes by any Issuing Bank or Lender in the ordinarycourse of business; provided that except as otherwise permittedhereunder the Parent and Subsidiaries shall not be identified to any thirdparties and no disclosure of any Confidential Information shall be made to anythird party, either directly or indirectly. Neither the Agent nor any Lender shall make any public announcement,advertisement, statement or communication regarding the Borrower or any RelatedParties or this Agreement or the transactions contemplated hereby without theprior written consent of the Borrower. The obligations of the Agent and any Lender under thisSection shall survive termination or expiration of this Agreement.

 

Interest RateLimitation.  Notwithstanding anythingherein to the contrary, if at any time the interest rate applicable to anyLoan, together with all fees, charges and other amounts which are treated asinterest on such Loan under applicable law (collectively the “Charges”),shall exceed the maximum lawful rate (the “Maximum Rate”) which may becontracted for, charged, taken, received or reserved by the Lender holding suchLoan in accordance with applicable law, the rate of interest payable in respectof such Loan hereunder, together with all Charges payable in respect thereof,shall be limited to the Maximum Rate and, to the extent lawful, the interestand Charges that would have been payable in respect of such Loan but were notpayable as a result of the operation of this Section shall be cumulatedand the interest and Charges payable to such Lender in respect of other Loansor periods shall be increased (but not above the Maximum Rate therefor) untilsuch cumulated amount, together with interest thereon at the Federal FundsEffective Rate to the date of repayment, shall have been received by such Lender.

 

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USA PatriotAct.  Each Lender hereby notifies theParent and the Borrower that pursuant to the requirements of the USA PatriotAct (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”),it is required to obtain, verify and record information that identifies theParent and the Borrower, which information includes the name and address of theParent and the Borrower and other information that will allow such Lender toidentify the Parent and the Borrower in accordance with the Act.  In connection therewith, each Lender herebyagrees to provide only such information that is, in such Lender’s soledetermination, required by the Act and to provide such information in a mannerthat is consistent with the confidentiality provisions set forth inSection 9.12.

 

*   *  *   *   *

 

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IN WITNESS WHEREOF, the parties hereto havecaused this Agreement to be duly executed by their respective authorizedofficers as of the day and year first above written.

 
|   | JACKSON HEWITT TAX SERVICE INC.                          |
|--------|----------------------------------------------------------|
|   |                                                     |
|   |                                                     |
|   | By                                                       | /s/ Mark Heimbouch |   |
|   | Name:  Mark Heimbouch                               |
|   | Title:  Chief Financial Officer                     |
|   | Address:  7 Sylvan Way,  Parsippany, NJ  07054 |
|   | Taxpayer ID Number:  20-0779692                     |
|   |                                                     |
|   |                                                     |
|   | JACKSON HEWITT INC.                                      |
|   |                                                     |
|   |                                                     |
|   | By                                                       | /s/ Mark Heimbouch |   |
|   | Name:  Mark Heimbouch                               |
|   | Title:  Chief Financial Officer                     |
|   | Address:  7 Sylvan Way,  Parsippany, NJ  07054 |
|   | Taxpayer ID Number:  54-1349705                     |

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

----

 
|   | JPMORGAN CHASE BANK,               |
|--------|------------------------------------|
|   | individually and as Administrative |
|   | Agent                              |
|   |                               |
|   |                               |
|   | By                                 | /s/ Tina L. Ruyter |   |
|   | Name:                              | Tina L. Ruyter |
|   | Title:                             | Vice President |
|        |                                    |  |  |  |

 

----

 
|   | CITIBANK F.S.B. |
|--------|-----------------|
|   |            |
|   |            |
|   | By              | /s/ Kristen Burke |   |
|   | Name:           | Kristen Burke |
|   | Title:          | Vice President |
|        |                 |  |  |  |

 

----

 
|   | CREDIT SUISSE FIRST BOSTON,       |
|--------|-----------------------------------|
|   | acting through its Cayman Islands |
|   | Branch                            |
|   |                              |
|   |                              |
|   | By                                | /s/ James P. Moran |   |
|   | Name:                             | James P. Moran |
|   | Title:                            | Director |
|   |                              |   |
|   |                              |
|   | By                                | /s/ Cassandra Droogan |   |
|   | Name:                             | Cassandra Droogan |
|   | Title:                            | Associate |
|        |                                   |  |  |  |

 

----

 
|   | HSBC BANK USA |
|--------|---------------|
|   |          |
|   |          |
|   | By            | /s/ Joseph Travaglione |   |
|   | Name:         | Joseph Travaglione |
|   | Title:        | Vice President |
|        |               |  |  |  |

 

----

 
|   | MANUFACTURERS AND     |
|--------|-----------------------|
|   | TRADERS TRUST COMPANY |
|   |                  |
|   |                  |
|   | By                    | /s/ Brooks W. Thropp |   |
|   | Name:                 | Brooks W. Thropp |
|   | Title:                | Vice President |
|        |                       |  |  |  |

 

----

 
|   | MERRILL LYNCH CAPITAL  CORPORATION |
|--------|------------------------------------|
|   |                               |
|   |                               |
|   | By                                 | /s/ Chantal Simon |   |
|   | Name:                              | Chantal Simon |
|   | Title:                             | Authorized Signatory |
|        |                                    |  |  |  |

 

----

 
|   | PNC BANK, NATIONAL   ASSOCIATION |
|--------|----------------------------------|
|   |                             |
|   |                             |
|   | By                               | /s/ Brian Daugherty |   |
|   | Name:                            | Brian Daugherty |
|   | Title:                           | Vice President |
|        |                                  |  |  |  |

 

----

 
|   | THE BANK OF NEW YORK |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By                   | /s/ Stephen G. Necel |   |
|   | Name:                | Stephen G. Necel |
|   | Title:               | Vice President |
|        |                      |  |  |  |

 

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|   | WACHOVIA BANK, NATIONAL  ASSOCIATION |
|--------|--------------------------------------|
|   |                                 |
|   |                                 |
|   | By                                   | /s/ Eugene S. Smith |   |
|   | Name:                                | Eugene S. Smith |
|   | Title:                               | Vice President |
|        |                                      |  |  |  |

 

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