Document:

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

 

 

 

 

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

  	
   

  

 

i

 

	
  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

  	
   

  

 

ii

 

	
  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

  	
   

  

 

iii

 

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”), the
LENDERS from time to time party hereto (the “Lenders”), and JPMORGAN
CHASE BANK, as Administrative Agent (as amended, restated, supplemented or
otherwise modified, the “Agreement”). 
The parties hereto agree as follows:

 

ARTICLE I

Definitions

 

Section 1.01                                Defined
Terms.

 

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

 

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

 

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

 

“Adjusted LIBO Rate” means, with
respect to any Eurodollar Borrowing for any Interest Period, an interest rate
per 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) the
Statutory Reserve Rate.

 

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

 

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

 

“Affiliate” means, with respect to any
Person, any other Person which, directly or indirectly, controls, is controlled
by or is under common control with such Person. 
A Person shall be deemed to be “controlled by” any other Person if such
other Person possesses, directly or indirectly, power (a) to vote 10% or more
of the securities (on a fully diluted basis) of such Person having ordinary
voting 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 Person
whether by contract or otherwise.  It is
understood and agreed that no officer or director of the Parent, the Borrower
or any of their respective subsidiaries in such capacity or any Franchisee in
such capacity shall be deemed to be an Affiliate of the Parent, the Borrower or
any of their respective subsidiaries.

 

 

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

 

“Applicable Percentage” means, with
respect to any Lender, the percentage of the total Commitments represented by
such Lender’s Commitment.  If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.

 

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

 

“Approved Fund” has the meaning
assigned 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 of
the Bank Insurance Fund classified as “well-capitalized” and within supervisory
subgroup “B” (or a comparable successor risk classification) within the meaning
of 12 C.F.R. Part 327 (or any successor provision) to the Federal Deposit
Insurance Corporation for insurance by such Corporation of time deposits made
in dollars at the offices of such member in the United States; provided
that if, as a result of any change in any law, rule or regulation, it is no
longer possible to determine the Assessment Rate as aforesaid, then the
Assessment Rate shall be such annual rate as shall be determined by the
Administrative Agent to be representative of the cost of such insurance to the
Lenders.

 

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

 

“Availability Period” means the period
from and including the Effective Date to but excluding the earlier of the
Maturity 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 Governors
of the Federal Reserve System of the United States of America.

 

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

 

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

 

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

 

2

 

“Business Day” means any day that is
not a Saturday, Sunday or other day on which commercial banks in New York City
are authorized or required by law to remain closed; provided that, when
used in connection with a Eurodollar Loan, the term “Business Day” shall
also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.

 

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

 

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

 

“Change in Control” means (a) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Exchange Act and the rules of
the Securities and Exchange Commission thereunder as in effect on the date
hereof), of Equity Interests representing more than 30% of the aggregate
ordinary voting power represented by the issued and outstanding Equity
Interests of the Parent; (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Parent by Persons who were
neither (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 own
directly or indirectly 100% of the issued and outstanding Equity Interests of
the Borrower.

 

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

 

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

 

“Commitment” means, with respect to
each Lender, the commitment of such Lender to make Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Revolving Credit
Exposure hereunder, as such commitment may be (a) increased pursuant to
Section 2.01(b), (b) reduced from time to time pursuant to
Section 2.07 and (c) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s
Commitment is set forth on Schedule 2.01, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Commitment, as
applicable.  The initial aggregate amount
of the Lenders’ Commitments is $100,000,000.

 

3

 

“Commitment Letter” means the Senior
Credit Facility Commitment Letter dated as of April 22, 2004 from the
Administrative Agent and JP Morgan Securities Inc. to, and accepted and agreed
to by, the Borrower.

 

“Confidential Information” means
information concerning each of the Parent, the Borrower or their respective
Affiliates which is non-public, confidential or proprietary in nature, or any
information that is marked or designated confidential by or on behalf of the
Borrower, which is furnished to any Lender by the Borrower or any of its
Affiliates directly or through the Administrative Agent in connection with this
Agreement or the transactions contemplated hereby (at any time on, before or
after the date hereof) together with all analyses, compilations or other
materials prepared by any Lender or its respective directors, officers,
employees, agents, auditors, consultants or advisors which contain or otherwise
reflect such information.

 

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

 

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

 

“Consolidated Fixed Charges” means,
for any period, the sum of (a) Consolidated Interest Expense for such period
and (b) regular quarterly dividends paid during such period in respect of the
Parent’s  common stock.  On any Calculation Date, the Consolidated
Fixed Charge Coverage Ratio will be calculated after giving effect on a pro
forma basis for the applicable Four Quarter Period to the incurrence of any
Covenant Indebtedness in connection with an Office Acquisition, Franchisee
Expansion or other Acquisition.  For
purposes of determining “Consolidated Fixed Charges,” (1) interest on
outstanding Covenant Indebtedness determined on

 

4

 

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

 

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

 

“Consolidated Indebtedness” means, as
of any date of determination, the total Covenant Indebtedness of the Parent and
its 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 Covenant
Indebtedness (including, without limitation, the interest component of any
payments in respect of Capital Lease obligations but excluding any capitalized
financing costs) accrued during such period (whether or not actually paid
during such period).

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

“Covenant Indebtedness” means, with
respect to any Person, without duplication,

 

(i)                                     its
liabilities for borrowed money;

 

(ii)                                  its
liabilities 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 purchase
price of property acquired by such Person, but including all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property);

 

(iii)                               Capital
Lease Obligations;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

“Effective Date” means, subject to the
satisfaction (or waiver in accordance with Section 9.02) of the conditions
set forth in Section 4.01, the fourth Business Day following the execution
of the underwriting agreement to be entered into in connection with the Parent
Initial Public Offering or such other Business Day thereafter on or prior to
July 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 any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means any
liability, contingent or otherwise (including any liability for damages, costs
of environmental remediation, fines, penalties or indemnities), of the Borrower
or 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 Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release
or threatened release of any Hazardous Materials into the environment or (e)
any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.

 

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

 

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

 

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

 

7

 

“ERISA Event” means (a) any
“reportable event”, as defined in Section 4043 of ERISA or the regulations
issued thereunder with respect to a Plan (other than an event for which the
30-day notice period is waived); (b) the existence with respect to any
Plan of an “accumulated funding deficiency” (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its
ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any
Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from
the Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

 

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

 

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

 

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

 

“Excluded Taxes” means, with respect
to the Administrative Agent, any Lender, the Issuing Bank or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income  by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of any Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.17(b)), any withholding tax that is imposed on
amounts payable to such Lender at the time such Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Lender’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 new
lending office or an assignment, withholding taxes solely to the extent that
the Lender effecting such assignment or designating such new lending office was
entitled, immediately prior to the time of such assignment or designation of
such new lending office, to receive additional amounts from the Borrower with
respect to the applicable withholding tax imposed on such Lender (or such
assignee) pursuant to Section 2.15(a) as a result of such assignment or
designation.

 

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

 

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

 

8

 

transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published on
the 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, the
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

 

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

 

“Financial Officer” means the chief
financial officer, principal accounting officer, treasurer or controller of the
Parent.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Governmental Authority” means the
government of the United States of America, any other nation or any political
subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative 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 or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct

 

9

 

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

 

“Hazardous Materials” means all
explosive or radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.

 

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

 

“Indebtedness” of any Person means,
without duplication, (a) all obligations of such Person for borrowed money
or with respect to deposits or advances made on behalf of such Person by third
parties that are payable by such Person, excluding that portion of any
development advance note or other similar arrangement that is recorded as a
liability on the balance sheet of the Credit Parties, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (d) all
obligations of such Person in respect of the deferred purchase price of
property or services excluding to the extent the payment thereof is contingent,
the deferred purchase price of property acquired by such Person), (e) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (f) all Guarantees by such Person of
Indebtedness of others, (g) all Capital Lease Obligations of such Person,
(h) all obligations, contingent or otherwise, of such Person as an
applicant or account party in respect of letters of credit and letters of
guarantee and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances; provided that, in each of the foregoing
clauses (a) through (i), undisputed accounts payable incurred in the ordinary
course of business that are not more than 180 days past due shall be
excluded.  The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership
in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such Indebtedness
provide that such Person is not liable therefor.

 

“Indemnified Taxes” means Taxes other
than Excluded Taxes and Other Taxes.

 

10

 

“Index Debt” means senior, unsecured,
long-term indebtedness for borrowed money of the Borrower that is not
guaranteed by any other Person or subject to any other credit enhancement.

 

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

 

“Interest Election Request” means a
request by the Borrower to convert or continue a Borrowing in accordance with
Section 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, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than three months’ duration, each day prior to the last day of such
Interest Period that occurs at intervals of three months’ duration after the
first day of such Interest Period.

 

“Interest Period” means, with respect
to any Eurodollar Borrowing, the period commencing on the date of such Borrowing
and ending on the numerically corresponding day in the calendar month that is
one, 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 Day
unless 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 Day
and (ii) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.

 

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

 

“Issuing Bank” means JPMorgan Chase
Bank, in its capacity as the issuer of Letters of Credit hereunder, and its
successors 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 the
Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

 

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

 

“LC Exposure” means, at any time, the
sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at
such time plus (b) the aggregate amount of all LC Disbursements that have not
yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any time
shall be its Applicable Percentage of the total LC Exposure at such time.

 

11

 

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

 

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

 

“LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750
of the Dow Jones Market Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, 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 by
the principal London office of the Person serving as the Administrative Agent
in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period.

 

“Lien” means, with respect to any
asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the 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 right
of a third party with respect to such securities.

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

“Maturity Date” means the fifth
anniversary of the Effective Date.

 

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

 

“Moody’s” means Moody’s Investors
Service, Inc.

 

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

 

“Notes Offering” means the issuance of
the Senior Unsecured Notes pursuant to a private placement on the Effective
Date.

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

“PBGC” means the Pension Benefit
Guaranty Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

 

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

 

“Permitted Encumbrances” means:

 

(a)                                  Liens
imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.04;

 

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

 

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

 

(d)                                 deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business;

 

(e)                                  judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;

 

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

 

14

 

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

 

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

 

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

 

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

 

“Permitted Investments” means:

 

(a)                                  direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from
the date of acquisition thereof;

 

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

 

(c)                                  investments
in certificates of deposit, banker’s acceptances and time deposits maturing
within 180 days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;

 

(d)                                 fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above; and

 

(e)                                  money
market funds that (i) (A) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as
amended, or (B) are rated AAA by S&P and Aaa by Moody’s and (ii) have
portfolio 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.

 

15

 

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

 

“Prime Rate” means the rate of
interest per annum publicly announced from time to time by JPMorgan Chase Bank
as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective from and including the date such
change is publicly announced as being effective.

 

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

 

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

 

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

 

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

 

“Responsible Officer” means the chief
executive officer, any vice president, or any financial officer of the
Borrower.

 

“Restricted Payment” means any
dividend or other distribution (whether in cash, securities or other property)
with respect to any Equity Interests in the Parent or any Subsidiary, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the
Parent or any Subsidiary or any option, warrant or other right to acquire any
such 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 principal
amount of such Lender’s Loans and its LC Exposure at such time.

 

“S&P” means Standard & Poor’s.

 

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

 

“Sole Lead Arranger” means JPMorgan
Securities Inc.

 

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

 

16

 

able to pay all liabilities of
such Person as such liabilities mature and (c) such Person does not have
unreasonably small capital.  In computing
the amount of contingent or unliquidated liabilities at any time, such
liabilities shall be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (in each case as
interpreted in accordance with fraudulent conveyance, bankruptcy, insolvency
and similar laws and other applicable requirements of law.)

 

“Statutory Reserve Rate” means a
fraction (expressed as a decimal), the numerator of which is the number one and
the denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which the Person
serving as the Administrative Agent is subject (a) with respect to the
Base 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 of
the Board).  Such reserve percentages
shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation.  The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.

 

“subsidiary” means, with respect to
any Person (the “parent”) at any date, any corporation, limited
liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent
or by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any subsidiary of
the Parent.

 

“Subsidiary Guaranty” means a
guarantee by a Subsidiary Guarantor of the obligations of the Borrower under
the Credit Documents to which the Borrower is a party in the form attached
hereto 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 is
defined in Section 7701(a)(30) of the Code) and is required to become
party to a Subsidiary Guaranty pursuant to Section 5.10.

 

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

 

17

 

“Three-Month Secondary CD Rate” means,
for any day, the secondary market rate for three-month certificates of deposit
reported 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 information
telephone line of the Federal Reserve Bank of New York (which rate will, under
the current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day) or, if such rate is not
so reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day is not a Business Day, on the next
preceding Business Day) by the Administrative Agent from three negotiable
certificate of deposit dealers of recognized standing selected by it.

 

“Transactions” means the execution,
delivery and performance by the Parent, the Borrower and the Subsidiaries, as
applicable, of this Agreement and the other Credit Documents, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.

 

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

 

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

 

Section 1.02                                Classification
of Loans and Borrowings.  For
purposes of this Agreement, Loans may be classified and referred to by Type (e.g.,
a “Eurodollar Loan”).  Borrowings also
may be classified and referred to by Type (e.g., a “Eurodollar
Borrowing”).

 

Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

 

18

 

Accounting
Terms; GAAP. 
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if
the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until  such notice shall have
been withdrawn or such provision  amended
in accordance herewith.

 

ARTICLE II

The Credits

 

Loan Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s
Commitment or (b) the total Revolving Credit Exposures exceeding the total
Commitments.  Within the foregoing limits
and subject to the terms and conditions set forth herein, the Borrower may
borrow, prepay or repay and reborrow Loans.

 

Loans and
Borrowings.

 

(a)                                  Each Loan shall be
made as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. 
The failure of any Lender to make any Loan required to be made by it
shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

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

 

(c)                                  At the commencement
of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be
in an aggregate amount that is an integral multiple of $1,000,000 and not less
than $3,000,000.  At the time that each
ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is
an integral multiple of $1,000,000 and not less than $3,000,000; provided
that an ABR Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by
Section 2.04(e).  Borrowings of more
than one Type may be outstanding at the same time; provided that there
shall not at any time be more than a total of ten (10) Eurodollar Borrowings
outstanding.

 

19

 

(d)                                 Notwithstanding any
other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Eurodollar Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.

 

Requests for
Borrowings.  To request a Borrowing, the
Borrower 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 City
time, 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.  Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower.  Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:

 

(i)                                     the
aggregate amount of the requested Borrowing;

 

(ii)                                  the
date of such Borrowing, which shall be a Business Day;

 

(iii)                               whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

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

 

(v)                                 the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.

 

If
no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing.  If
no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.  Promptly
following receipt of a  Borrowing Request
in accordance with this Section (or a deemed Borrowing Request pursuant to
Section 2.04(e)), the Administrative Agent shall advise each Lender of the
details thereof and of the amount of such Lender’s Loan to be made as part of
the requested (or deemed requested) Borrowing.

 

Letters of
Credit.

 

(e)                                  General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit for its own
account, in a form reasonably acceptable to the Administrative Agent and the
Issuing Bank, at any time and from time to time during the Availability
Period.  In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

 

20

 

(f)                                    Notice of
Issuance, 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 electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which 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 of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  Each Letter of Credit shall be subject to
ISP 98.  A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent 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) the
total Revolving Credit Exposures shall not exceed the total Commitments.

 

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

 

(h)                                 Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit.  In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees 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 Issuing
Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to be
refunded to the Borrower for any reason. 
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or Event of Default or
reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.

 

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

 

21

 

aggregate principal amount of ABR Loans set forth in
Section 2.01(a), but notwithstanding the limitations as to the time of
funding of a Borrowing set forth in Section 2.05(a) and as to the time of
notice of a proposed Borrowing set forth in Section 2.03, payment by the
Issuing Bank of such draft shall be deemed to constitute a Borrowing Request by
the Borrower for an ABR Loan hereunder (and Section 2.05 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and interest shall
accrue from the date the Issuing Bank makes such payment, which ABR Loan, upon
and to the extent that a Lender shall have funded its Applicable Percentage
thereof, shall constitute such Lender’s ABR Loan hereunder.  If any draft is presented under a Letter of
Credit and (i) the conditions specified in Section 4.02 are not
satisfied or (ii) if the Commitments have been terminated, then the
Borrower will, upon demand by the Administrative Agent or the Issuing Bank, pay
to the Issuing Bank, in immediately available funds, the full amount of such
draft.  If the Borrower fails to make
such payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice,
each Lender shall pay to the Administrative Agent its Applicable Percentage of
the payment then due from the Borrower, in the same manner as provided in
Section 2.05 with respect to Loans made by such Lender (and
Section 2.05 shall apply, mutatis  mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Lenders.  Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear.  Any
payment made by a Lender pursuant to this paragraph to reimburse the Issuing
Bank for any LC Disbursement (other than the funding of ABR Loans as
contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

 

(j)                                     Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in paragraph (e) of this
Section shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement under any and
all circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not strictly comply with the terms of such Letter of
Credit (unless such draft or other document fails to substantially comply with
the terms of such Letter of Credit), or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of,
or provide a right of setoff against, the Borrower’s obligations
hereunder.  Neither the Administrative
Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure to make
any payment thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Issuing Bank;

 

22

 

provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such
determination.  In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may either accept and make payment upon such documents without responsibility
for further investigation, regardless of any notice or information to the
contrary, or refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit.

 

(k)                                  Disbursement
Procedures.  The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay
in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.

 

(l)                                     Interim
Interest.  If the Issuing Bank shall
make any LC Disbursement the payment by the Issuing Bank of which does not
constitute an ABR Loan pursuant to Section 2.04(e), then the unpaid amount
thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the Borrower reimburses
such LC Disbursement, at the rate per annum equal to 2% per annum plus the
Alternate Base Rate plus the Applicable Rate. 
Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Bank, except that interest accrued on and after the date of payment
by any Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.

 

(m)                               Replacement of the
Issuing Bank.  The Issuing Bank may
be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank.  The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.10(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement

 

23

 

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

 

(n)                                 Cash
Collateralization.  If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required Lenders demanding
the deposit of cash collateral pursuant to this paragraph, the Borrower shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in Permitted
Investments equal to the LC Exposure as of such date plus any accrued and
unpaid interest thereon; provided that the obligation to deposit such
cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Borrower
described in clause (h) or (i) of Article VII.  Such deposit shall be held by the Administrative
Agent as collateral for the payment and performance of the obligations of the
Borrower under this Agreement.  The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account.  Other than any interest earned on the
investment of such deposits, which investments shall be made in Permitted
Investments and at the option and sole discretion of the Administrative Agent
and at the Borrower’s risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such
investments shall accumulate in such account. 
Moneys in such account shall be applied by the Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated, be
applied to satisfy other obligations of the Borrower under this Agreement.  If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event
of Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after all Events of Default have
been cured or waived.

 

Funding of
Borrowings.

 

(o)                                 Each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 1:00 p.m., New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders.  The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in New York City and designated by the
Borrower in the applicable Borrowing Request; provided that ABR Loans
made 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 the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of

 

24

 

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

 

Interest Elections.

 

(q)                                 Each Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. 
Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this
Section.  The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing.

 

(r)                                    To make an election
pursuant to this Section, the Borrower shall notify the Administrative Agent of
such election by telephone by the time that a Borrowing Request would be
required under Section 2.03 if the Borrower were requesting a Borrowing of
the Type resulting from such election to be made on the effective date of such
election.  Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

 

(s)                                  Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:

 

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

 

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

 

(iii)                               whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and

 

25

 

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

 

If
any such Interest Election Request requests a Eurodollar Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month’s duration.

 

(t)                                    Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.

 

(u)                                 If the Borrower fails
to deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if a Default or an Event of Default has occurred and is continuing and
the Administrative Agent, at the request of the Required Lenders, so notifies
the 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 Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

(v)                                 No Eurodollar Loan
shall be continued prior to the last Business Day of the Interest Period
applicable thereto or converted, except upon payment of all amounts payable
pursuant to Section 2.14, prior to the last Business Day of the Interest
Period applicable thereto.

 

Termination and
Reduction of Commitments.

 

(w)                               Unless previously
terminated, the Commitments shall terminate on the Maturity Date.

 

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

 

(y)                                 The Borrower shall
notify the Administrative Agent of any election to terminate or reduce the
Commitments under paragraph (b) of this Section at least three
Business 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, the
Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower
pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities or receipt of proceeds from other sources, in which case such notice
may be revoked by the Borrower (by notice to the Administrative Agent on or
prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the

 

26

 

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

 

Repayment of
Loans; Evidence of Debt.

 

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

 

(aa)                            Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.

 

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

 

(cc)                            The entries made in the
accounts maintained pursuant to paragraph (b) or (c) of this Section shall
be prima  facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.

 

(dd)                          Any Lender may request that
Loans 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 of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more
promissory 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 its
registered assigns).

 

Prepayment of
Loans.

 

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

 

(ff)                                The Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment 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 before
the 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 the
date of prepayment.  Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount

 

27

 

of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.07,
then such notice of prepayment may be revoked if such notice of termination is
revoked 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 Borrowing
shall be in an amount that would be permitted in the case of an advance of a
Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.11.

 

Fees.

 

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

 

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

 

28

 

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

 

(ii)                                  The Borrower agrees
to pay the Administrative Agent for its own account fees in the amounts and at
the times set forth in the Fee Letter and the Administrative Agent shall
distribute 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 hereunder
shall be paid on the dates due, in immediately available funds, to the
Administrative Agent (or to the Issuing Bank, in the case of fees payable to
it) for distribution, in the case of facility fees and participation fees, to
the Lenders.  Fees paid shall not be
refundable under any circumstances.

 

Interest.

 

(kk)                            The Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate plus
the Applicable Rate.

 

(ll)                                  The Loans comprising
each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate.

 

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

 

(nn)                          Accrued interest on each Loan
shall be payable in arrears on each Interest Payment Date for such Loan and
upon termination of the Commitments; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on
demand, (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 Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event
of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

 

(oo)                          All interest hereunder shall
be computed on the basis of a year of 360 days, except that interest computed
by reference to the Alternate Base Rate at times when the Alternate Base Rate
is 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 actual
number of days elapsed (including the first day but excluding the last
day).  The applicable Alternate Base Rate
and Adjusted LIBO Rate shall be determined by the Administrative Agent, and
such determination shall be conclusive absent manifest error.

 

29

 

Alternate Rate of Interest.

 

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

 

(pp)                          the Administrative Agent
determines (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate, as applicable, for such Interest Period; or

 

(qq)                          the Administrative Agent is
advised by the Required Lenders that the Adjusted LIBO Rate for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of
making or maintaining their Loans included in such Borrowing for such Interest
Period; or

 

(rr)                                the Administrative
Agent is notified by any Lender that, as a result of a Change in Law, it shall
have become unlawful for such Lender to make or maintain any Loan as, or to
continue or convert any Loan to, a Eurodollar Loan;

 

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

 

Increased Costs.

 

(ss)                            If any Change in Law shall:

 

(i)                                     impose,
modify or deem applicable any reserve, special deposit or similar requirement
against 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 the
Adjusted LIBO Rate) or the Issuing Bank; or

 

(ii)                                  impose
on any Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans or Loans made by such
Lender or any Letter of Credit or participation therein;

 

and
the result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any Eurodollar Loan (or of maintaining its obligation
to make any such Loan) or to increase the cost to such Lender or the Issuing
Bank of participating in, issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.

 

30

 

(tt)                                If any Lender or the
Issuing Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or
the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the
Letters of Credit issued by the Issuing Bank, to a level below that which such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Bank’s policies and the policies of
such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy) by an amount deemed by such Lender in good faith to be material, then
from time to time the Borrower will pay to such Lender or the Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company
for any such reduction suffered.

 

(uu)                          A certificate of a Lender or
the Issuing Bank setting forth the amount or amounts necessary to compensate
such Lender or the Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered
by such Lender or Issuing Bank in good faith to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender or the Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

 

(vv)                          Failure or delay on the part
of any Lender or the Issuing Bank to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s or the Issuing
Bank’s right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or the Issuing Bank pursuant to
this Section for any increased costs or reductions incurred more than 270
days prior to the date that such Lender or the Issuing Bank, as the case may
be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or the Issuing Bank’s intention to
claim compensation therefor; provided  further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

(ww)                      Notwithstanding anything to the
contrary contained in this Section 2.13, Section 2.15 shall govern
exclusively any increased costs relating to Taxes resulting from any Change in
Law.

 

Break Funding
Payments.  In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of
an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert to, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked 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 the
Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.17, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event.  In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be

 

31

 

the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then 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 Period
for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.  A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

Taxes.

 

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

 

(yy)                          In addition, the Borrower
shall pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

 

(zz)                              If the United States
Internal Revenue Service or other Governmental Authority of the United States
or other jurisdiction asserts a claim against the Administrative Agent, a
Lender or the Issuing Bank that the full amount of Indemnified Taxes or Other
Taxes has not been paid, the Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within ten (10) days after written demand
therefor, for the full amount of any such Indemnified Taxes or Other Taxes paid
by the Administrative Agent, such Lender or the Issuing Bank, as the case may
be, on or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable out-of-pocket expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate (along with a
copy of the applicable documents from the United States Internal Revenue
Service or other Governmental Authority of the United States or other
jurisdiction that asserts such claim) as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.

 

(aaa)                      As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the

 

32

 

Administrative Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

(bbb)                   Any Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located (with the United States of
America, each State thereof and the District of Columbia being deemed to
constitute a single jurisdiction for purposes of this Section), or any treaty
to which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate. 
Without limiting the foregoing, each Lender shall, at the time such
Lender becomes a party to this Agreement (or thereafter as reasonably requested
by Borrower), execute and deliver to the Borrower and Administrative Agent (i)
if it is not a “United States Person” (as such term is defined in
Section 7701(a)(30) of the Code), two original copies (or more as the
Borrower or the Administrative Agent shall reasonably request) of the
applicable Internal Revenue Service Form W-8 or other applicable form,
certificate or document prescribed by the United States Internal Revenue
Service certifying as to such Lender’s entitlement to exemption from, or
entitlement to a reduced rate of, withholding or deduction of Taxes, and (ii)
if it is a “United States Person” (as such term is defined in
Section 7701(a)(30) of the Code), two original copies (or more as the
Borrower or the Administrative Agent shall reasonably request) of Internal
Revenue Service Form W-9 (or substitute or successor form).  Each Lender that is not a “United States
Person” (as such term is defined in Section 7701(a)(30) of the Code)
claiming exemption from withholding tax pursuant to its portfolio interest
exception 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) of
the Code), or (C) a controlled foreign corporation related to the Borrower
within the meaning of Section 864(d)(4) of the Code, and (ii) two properly
completed and executed copies of Internal Revenue Service Form W-8BEN.

 

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

 

33

 

Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(ddd)                   The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under
Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York
City time, on the date when due, in immediately available funds, without
set-off or counterclaim.  Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon.  All such payments shall be made to the
Administrative Agent at its offices at 270 Park Avenue, New York, New York,
except payments to be made directly to the Issuing Bank as expressly provided
herein and except that payments pursuant to Sections 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in
dollars.

 

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

 

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

 

34

 

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

 

(ggg)                   Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on which any
payment is due the Administrative Agent for the account of the Lenders or the
Issuing Bank hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due.  In such event, if the Borrower has
not in fact made such payment, then each of the Lenders or the Issuing Bank, as
the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or the Issuing
Bank with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

 

(hhh)                   If any Lender shall fail to make any
payment 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 thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.

 

Mitigation Obligations;
Replacement of Lenders.

 

(iii)                               If any Lender requests
compensation under Section 2.13, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.15, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its
Loans hereunder or to assign its rights and obligations hereunder to another of
its offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable
pursuant 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 and
would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(jjj)                               If any Lender requests
compensation under Section 2.13, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.15, or if any Lender defaults in its
obligation to fund Loans hereunder, then the Borrower may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (i) the Borrower shall have
received the prior written consent of the Administrative Agent, which consent
shall not unreasonably be withheld, (ii) such Lender shall have received

 

35

 

payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of 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 such
assignment resulting from a claim for compensation under Section 2.13 or
payments required to be made pursuant to Section 2.15, such assignment
will result in a reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such  assignment and delegation cease to
apply.

 

ARTICLE III

Representations and Warranties

 

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

 

Organization;
Powers.  Each of the Parent, Borrower and
the Material Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to own or lease its material property and to
carry 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 in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

 

Authorization;
Enforceability.  The Transactions are
within the corporate powers of each of the Parent, the Borrower and each of the
Subsidiaries and have been duly authorized by all necessary corporate and, if
required, stockholder action.  This
Agreement and each other Credit Document has been duly executed and delivered
by each of the Parent, the Borrower and each of the Subsidiaries party hereto
or thereto and constitutes a legal, valid and binding obligation of each of the
Parent, 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 of
whether 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 filing
with, or any other action by, any Governmental Authority, except such as have
been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Parent, the Borrower or any of the Subsidiaries
or any order of any Governmental Authority, (c) will not violate or result
in a default under any material indenture, material agreement or other material
instrument binding upon the Parent, the Borrower or any of the Subsidiaries or
its assets, and (d) will not result in the creation or imposition of any
Lien on any asset of the Parent, the Borrower or any of the Subsidiaries.

 

36

 

Financial Condition;
No Material Adverse Change.

 

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

 

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

 

Properties.

 

(c)                                  Each of the Parent,
the Borrower and the Subsidiaries has good title to, or valid leasehold
interests in, all its real and personal property material to its business free
and clear of any Liens, except liens permitted under Section 6.04 and
minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their
intended 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 its
business, and the use thereof by the Parent, the Borrower and the Subsidiaries
does not infringe upon the rights of any other Person except for such
infringements that, the effect of which individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on the business of
the Parent, the Borrower and the Subsidiaries, taken as a whole.

 

Litigation and
Environmental Matters.

 

(e)                                  Other than to the
extent disclosed in the Disclosed Matters, there are no material actions, suits
or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Parent or the Borrower, threatened against
or affecting the Parent, the Borrower or any of the Subsidiaries (i) as to
which there is a reasonable possibility of an adverse determination that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the business of Parent and its Subsidiaries, taken
as a whole, or (ii) that involve this Agreement, any of the other Credit
Documents or the Transactions.

 

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

 

37

 

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

 

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

 

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

 

Taxes.  Each of the Parent, the Borrower and the
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Parent,
the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate reserves in conformity with GAAP or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.

 

ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected
to result in a Material Adverse Effect. 
The present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent 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 and
the Credit Parties, taken as a whole, are Solvent.

 

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

 

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

 

38

 

Disclosure.  The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it, the
Parent, or any of the Subsidiaries is subject, and all other matters known to
it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.  As
of the Effective Date, the Information Memorandum furnished by the Borrower to
the Administrative Agent, taken as a whole, does not contain any material
misstatement of fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading provided that, with respect to projected financial
information the Parent and the Borrower represent only that such information
was prepared in good faith based upon assumptions believed to be reasonable at
the time; provided  further, that, with respect to general
industry information provided by public or third party sources, the Parent and
the Borrower represent only to the best of their knowledge.  None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) when, taken as a whole, contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Parent and the Borrower represent only that such information
was prepared in good faith based upon assumptions believed to be reasonable at
the time; provided, further, that, with respect to general
industry information provided by public or third party sources, the Parent and
the Borrower represent only to the best of their knowledge.  The Credit Parties have delivered to the
Administrative Agent certain projections relating to the Parent and its
consolidated Subsidiaries and have included certain projections in documents or
materials that have been delivered to the Administrative Agent.  All such projections prepared by or on behalf
of the Parent, the Borrower or the Subsidiaries are based on good faith
estimates and assumptions believed to be reasonable at the time made provided,
however, that the Parent, the Borrower or the Subsidiaries make no
representation or warranty that such assumptions will prove in the future to be
accurate or that the Parent, the Borrower or the Subsidiaries will achieve the
financial results reflected in such projections.

 

ARTICLE IV

Conditions

 

Effective Date.  The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective 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 received
from each party hereto or thereto a counterpart of this Agreement and each of
the other Credit Documents, each executed and delivered by such party.

 

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

 

39

 

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

 

(c)                                  Corporate
Documents for the Credit Parties. 
The Administrative Agent shall have received, with copies for each of
the Lenders, (1) a certificate of the Secretary or an Assistant Secretary of
each Credit Party dated the Effective Date and certifying (i) that attached
thereto is a true and complete copy of the certificate of incorporation and
by-laws of such Credit Party as in effect on the Effective Date, (ii) that
attached thereto is a true and complete copy of resolutions adopted by the
Board of Directors of such Credit Party authorizing the borrowings and other
extensions of credit hereunder (in the case of the Borrower) and the execution,
delivery and performance in accordance with their respective terms of each
Credit Document to which such Credit Party is a party, (iii) as to the
incumbency and specimen signature of each officer of such Credit Party
executing this Agreement or any other document delivered by it in connection
herewith (such certificate to contain a certification by another officer of
such Credit Party as to the incumbency and signature of the officer signing the
certificate referred to in this paragraph (c)) and (iv) with respect to the
Borrower, that attached thereto are true and complete copies of the Related
Transaction Documents and (2) a good standing certificate of (i) the Secretary
of State (or comparable official) of the jurisdiction of incorporation of the
Parent, the Borrower and each other Credit Party, dated as of a date recent to
the Effective Date, certifying that the Parent, the Borrower or such other
Credit Party, as the case may be, is a corporation duly organized and in good
standing under the laws of such jurisdiction, and (ii) except as provided in
Section 4.3 below, the Secretary of State (or comparable official) of each
jurisdiction in which the Parent, the Borrower or any other Credit Party is
required to be qualified to transact business as a foreign corporation, dated
as of a date recent to the Effective Date, certifying that the Parent, the
Borrower or such other Credit Party, as the case may be, is qualified to do
business and is in good standing in each such jurisdiction.

 

(d)                                 Financial
Statements.  The Administrative Agent
and the Lenders shall have received audited consolidated financial statements
of the Parent for the fiscal year ended April 30, 2004 acceptable to the
Administrative Agent and each Lender in its sole discretion.

 

(e)                                  Solvency
Certificate.  The Administrative
Agent shall have received, with copies for each of the Lenders, a certificate
of a Financial Officer stating that each of the Parent and the Borrower is, and
the Credit Parties, taken as a whole, are Solvent after giving effect to the
initial loans and Letters of Credit and the payment of all estimated legal, accounting
and other fees related hereto and thereto.

 

(f)                                    No Material
Adverse Effect.  The Administrative
Agent shall be satisfied that, since the date of the most recent audited
financial statements of the Parent and its Subsidiaries, no events or conditions
shall have occurred that have had, or could reasonably be expected to have, a
Material Adverse Effect.

 

(g)                                 Payment of Fees and
Expenses.  The Administrative Agent
shall be satisfied that all amounts due and payable to the Administrative
Agent, the Sole Lead Arranger and the Lenders pursuant hereto or with regard to
the transactions contemplated hereby (including, without limitation, the fees
required to be paid pursuant to that certain fee letter dated

 

40

 

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

 

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

 

(i)                                     No Default.  At the time of and immediately after giving
effect to the Loans, no Default or Event of Default shall have occurred and be
continuing.

 

(j)                                     Representations
and Warranties.  The representations
and warranties set forth in this Agreement and the other Credit Documents shall
be true and correct in all material respects (except to the extent such
representations and warranties are otherwise qualified by materiality in which
case they shall be true and correct in all respects) on and as of the Effective
Date (unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date).

 

(k)                                  Senior Unsecured
Notes.  The Senior Unsecured Notes
shall have been issued contemporaneously with the execution and delivery of the
Credit Document in amounts and on terms reasonably satisfactory to the
Administrative Agent.

 

(l)                                     Initial Public
Offering.  The Parent Initial Public
Offering shall have occurred in amounts and on terms reasonably satisfactory to
the Administrative Agent.

 

(m)                               Approvals.  All Governmental Authority and material third
party consents or approvals necessary, or in the discretion of the Administrative
Agent, advisable in connection with the Transactions and the continuing
operations of the Parent, the Borrower and the Subsidiaries shall have been
obtained and be in full force and effect.

 

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

 

(o)                                 Officer’s
Certificate.  The Administrative
Agent shall have received, with copies for each of the Lenders, a certificate
of a Responsible Officer to the effect that the conditions set forth in this
Section have been satisfied or waived.

 

(p)                                 Other Documents.  The Administrative Agent shall have received
such other documents and certificates as the Administrative Agent may
reasonably require.

 

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

 

The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to

 

41

 

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

 

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

 

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

 

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

 

Each
Loan and each issuance, renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date
thereof 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 transact
business as a foreign corporation that is set forth on Schedule 4.03,
the good standing certificate of the Secretary of State (or comparable
official) of each such jurisdiction, dated as of a date recent to the Effective
Date, certifying that the Parent, the Borrower or such other Credit Party, as
the case may be, is qualified to do business and is in good standing in each
such jurisdiction shall be delivered to the Administrative Agent, with copies
for each of the Lenders, within 60 days of the date of this Agreement.

 

ARTICLE V

Affirmative Covenants

 

Until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated  and all LC
Disbursements shall have been reimbursed, the Parent and the Borrower jointly
and severally covenant and agree with the Lenders that:

 

Financial Statements; Ratings Change and Other
Information.  The Borrower will furnish
to the Administrative Agent and each Lender:

 

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

 

42

 

form the figures as of the end of and for the previous fiscal year, all
reported on by Deloitte & Touche LLP or other independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Parent and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied; provided that
delivery within the time period specified above of copies of the Parent’s
Annual Report on Form 10-K for such fiscal year (together with the Parent’s
annual report to stockholders, if any, prepared pursuant to Rule 14-a-3 under
the Exchange Act) prepared in accordance with the requirements therefor and
filed with the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this Section 5.01(a);

 

(b)                                 within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Parent, its unaudited consolidated balance sheet as of the end of such
fiscal quarter and related unaudited consolidated statements of operations for
such fiscal quarter and the then elapsed portion of such fiscal year and
statements of cash flows for the then elapsed portion of such fiscal year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Parent and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments; provided that delivery within the time period
specified above of copies of the Parent’s Quarterly Report on Form 10-Q
prepared in accordance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this Section 5.01(b);

 

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

 

(d)                                 concurrently with any
delivery of financial statements under clause (a) or (b) above, a
certificate of a Financial Officer (i) certifying as to whether a
Default or Event of Default has occurred and, if a Default or Event of Default
has occurred, specifying the details thereof and any action taken or proposed
to be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating whether there has been compliance with
Sections 6.01 and 6.02 and (iii) stating whether any change in GAAP
or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate;

 

(e)                                  concurrently with any
delivery of financial statements under clause (a) above, or promptly
thereafter, a letter addressed to the board of directors of the Parent from the
accounting firm that reported on such financial statements stating that, in
connection with the accounting firm’s audits, nothing came to the attention of
such firm that caused it to believe that the Parent failed to comply with
Sections 6.01, 6.02 or 6.03 insofar as such Sections relate to financial and
accounting matters, and that such accounting firm’s audit was not directed
primarily toward obtaining knowledge of noncompliance with such sections;

 

43

 

(f)                                    promptly after such
filings become publicly available, electronic notice of the filing of all
periodic and other reports and proxy statements filed by the Parent or any
Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange;

 

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

 

(h)                                 promptly following any
request therefor, such other information regarding the operations, business
affairs and financial condition of the Parent or any Subsidiary, or compliance
with the terms of this Agreement or any of the other Credit Documents, as the
Administrative Agent or any Lender may reasonably request.

 

Notices of
Material Events.  The Borrower will
furnish to the Administrative Agent and each Lender prompt notice of the
following:

 

(i)                                     the occurrence of
any Default or Event of Default;

 

(j)                                     the filing or
commencement of any action, suit or proceeding by or before any arbitrator or
Governmental Authority against or affecting the Parent, the Borrower or any
Affiliate thereof that, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect;

 

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

 

(l)                                     any other
development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.

 

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

 

Existence;
Conduct of Business.  Each of the Parent
and the Borrower will, and will cause each of the Material Subsidiaries to, do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of the business of the Parent
and its Subsidiaries taken as a whole; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 6.05.

 

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

 

44

 

where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Parent, the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

 

Maintenance of
Properties; Insurance.  Each of the
Parent and the Borrower will, and will cause each of the Subsidiaries to,
(a) keep and maintain all property material to the conduct of its business
in 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 maintained
by companies engaged in the same or similar businesses.

 

Books and
Records; Inspection Rights.  Each of the
Parent and the Borrower will, and will cause each of the Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities.  Each of the Parent and the
Borrower will, and will cause each of the Subsidiaries to, permit any
representatives designated by the Administrative Agent, upon reasonable prior
notice, to visit and inspect its properties during regular business hours, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested (provided
that reasonable access to such books and records and properties shall be made
available to the Lenders if an Event of Default has occurred and is
continuing).

 

Compliance with Laws and Contracts.  Each of the Parent and the Borrower will, and
will cause each of the Subsidiaries to, (i) comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property and (ii) comply with the terms and conditions of each material
contract, 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 not
reasonably be expected to result in a Material Adverse Effect.

 

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

 

Use of
Proceeds.  The
proceeds of the Loans will be used only to finance the working capital needs,
potential acquisitions and for other general corporate purposes of the Borrower
and its Subsidiaries in the ordinary course of business.  No Letter of Credit and no part of the
proceeds 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 the
Board, including Regulations T, U and X. 
Letters of Credit will be issued only to support obligations incurred by
the Parent and its Subsidiaries for general corporate purposes.

 

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

 

45

 

Subsidiary (other than a Subsidiary that is
not a “United States Person”, as such term is defined in
Section 7701(a)(30) of the Code) to execute and deliver a Subsidiary
Guaranty, together with such documents as the Administrative Agent may request
evidencing corporate action taken to authorize such execution and delivery and
the incumbency and signatures of the officers of such Material Subsidiary.

 

ARTICLE VI

Negative Covenants

 

Until (i) the Commitments have expired or
terminated, (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 the
Borrower covenants and agrees with the Lenders that:

 

Maximum Consolidated Leverage Ratio.  The Consolidated Leverage Ratio shall not, as
determined as of the last day of each fiscal quarter ending during the periods
set 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 Coverage
Ratio.  The Consolidated Fixed Charge
Coverage Ratio shall not, as determined as of the last day of each fiscal
quarter ending during the periods set forth below, be less than the minimum
ratio 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 permit
to exist any Indebtedness, except:

 

(a)                                  Indebtedness created
hereunder and under the other Credit Documents;

 

(b)                                 Indebtedness existing
on the date hereof, or required to be incurred pursuant to a contractual
obligation in existence on the date hereof and, which in either case is

 

46

 

set forth in Schedule 6.03, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof;

 

(c)                                  Indebtedness of the
Parent to any Subsidiary and of any Subsidiary to the Parent or any other
Subsidiary;

 

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

 

(e)                                  Indebtedness of the
Parent or any Subsidiary incurred to finance the acquisition, construction or
improvement of any assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; provided that (i)
such Indebtedness is incurred prior to or within ninety (90) days after such
acquisition or the completion of such construction or improvement and does not
exceed the cost of such acquisition, construction or improvement and (ii) the
aggregate principal amount of Indebtedness permitted by this clause (e) shall
not exceed $5,000,000 at any time outstanding;

 

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

 

(g)                                 Indebtedness of the
Parent or any Subsidiary as an account party in respect of letters of credit; provided
that the aggregate amount of Indebtedness permitted by this clause (g) shall
not exceed $2,000,000 at any time outstanding;

 

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

 

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

 

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

 

47

 

(k)                                  liabilities for the
Litigation 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 permit
to exist any Lien on any property or asset now owned or hereafter acquired by
it, or assign or sell any income or revenues (including accounts receivable) or
rights in respect of any thereof, except:

 

(l)                                     Permitted
Encumbrances;

 

(m)                               any Lien on any property
or asset of the Parent or any Subsidiary existing on the date hereof and set
forth in Schedule 6.04; provided that (i) such Lien shall not apply
to any other property or asset of the Parent or any Subsidiary and (ii) such Lien
shall secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

 

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

 

(o)                                 Liens on assets
acquired, constructed or improved by the Parent or any Subsidiary; provided
that (i) such security interests secure Indebtedness permitted by
clause (e) of Section 6.03, (ii) such security interests and the
Indebtedness secured thereby are incurred prior to or within ninety
(90) days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed the
cost of acquiring, constructing or improving such assets and (iv) such
security interests shall not apply to any other property or assets of the
Parent or any Subsidiary; and

 

(p)                                 Liens not otherwise
permitted hereunder which secure obligations not exceeding in the aggregate
fifteen percent (15%) of Consolidated Net Tangible Assets.

 

Fundamental Changes.

 

(q)                                 Each of the  Parent and the Borrower will not, and will
not permit any Material Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) all or substantially all of its assets, or all or
substantially all of the stock of any of the Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve, except
that, if at the time thereof and immediately after giving effect thereto no
Default or Event of Default shall have occurred and be continuing (i) any
Person may merge into the Parent or the Borrower in a transaction in which the
Parent or the Borrower  is the
surviving corporation, (ii) any Subsidiary may merge into any Subsidiary
or any other Person in a transaction in which the surviving entity is a
Subsidiary, (iii) any Subsidiary

 

48

 

may sell, transfer, lease or otherwise dispose of its assets to the
Parent or the Borrower  or to
another Subsidiary and (iv) any Subsidiary may liquidate or dissolve if the
Parent or the Borrower  determines
in good faith that such liquidation or dissolution is in the best interests of
the Borrower and such liquidation or dissolution is not materially
disadvantageous to the Lenders; provided that any such merger involving
a Person that is not a wholly owned Subsidiary immediately prior to such merger
shall not be permitted unless also permitted by Section 6.06.

 

(r)                                    The Parent and the
Borrower will not, and will not permit any of the Subsidiaries to, engage in
any business, if, as a result, the general nature of the business of the Credit
Parties taken as a whole, would be substantially changed from the general
nature of the business of the Credit Parties taken as a whole, on the Effective
Date.

 

Investments,
Loans, Advances, Guarantees and Acquisitions. 
Each of the Parent and the Borrower will not, and will not permit any of
the Subsidiaries to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) 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 obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit
(an “Investment”), except:

 

(s)                                  Permitted
Investments;

 

(t)                                    Investments
existing on the date hereof or required to be made pursuant to a contractual
obligation in existence on the date hereof and any extensions or renewals
thereof, in either case as set forth in Schedule 6.06;

 

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

 

(v)                                 Investments made by
the Parent to any Subsidiary and made by any Subsidiary to the Parent or any
other Subsidiary;

 

(w)                               Guarantees constituting
Indebtedness permitted by Section 6.03;

 

(x)                                   Investments in
connection with pledges, deposits, payments or performance bonds made or given
in 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 received
in connection with the bankruptcy or reorganization of, or settlement of
delinquent accounts and disputes with, customers, suppliers or any other
Person;

 

(z)                                   Investments received
as part of a redemption or payment of or for, as a dividend on, or as a distribution
in respect of, other Investments permitted by this Section;

 

49

 

(aa)                            Office Acquisitions and
Franchisee Expansions;

 

(bb)                          Franchisee Advance Payments;

 

(cc)                            Investments in Franchisees;

 

(dd)                          Permitted Acquisitions;

 

(ee)                            Investments not otherwise
permitted hereunder in an aggregate amount not to exceed $5,000,000 during the
term of this Agreement; and

 

(ff)                                Investments by the
Parent or its Subsidiaries in accounts receivable owing to them, if created or
acquired in the ordinary course of business and payable in accordance with
customary trade terms (including the dating of accounts receivable and
extensions of payments in the ordinary course of business).

 

Hedging Agreements.  No Credit Party will enter into any Hedging
Agreement except Hedging Agreements entered into in the ordinary course of
business to hedge or manage risks to which a Credit Party is exposed in the
conduct 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 to
pay or make, directly or indirectly, any Restricted Payment, except (a) the
Parent may declare and pay dividends with respect to its Equity Interests
payable solely in additional shares of its common stock or warrants, options or
other rights entitling the holder thereof to purchase or acquire shares of its
common stock, (b) Subsidiaries may declare and pay dividends ratably with respect
to their Equity Interests, (c) the Parent may make Restricted Payments pursuant
to and in accordance with stock option plans or other benefit plans for
management or employees of the Parent, the Borrower and the Subsidiaries, (d)
any Subsidiary may make Restricted Payments to the Parent and the Borrower or
any of the Subsidiaries, (e) the Parent may make Restricted Payments not
otherwise permitted hereunder in an aggregate amount since the Effective Date
not to exceed 30% of Consolidated Net Income for the period commencing on May
1, 2003 and ending on April 30 of the fiscal year preceding the year in
which such Restricted Payment is made, on a cumulative basis, (f) the Parent
may use proceeds from the underwriters’ over-allotment option in the Parent Initial
Public Offering for repurchases of Equity Interests in the Parent and (g) the
Parent may make the Restricted Payment described in Section 6.09(f).

 

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

 

50

 

Restrictive Agreements.  Each of the Borrower and the Parent will not,
and will not permit any of the Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Parent or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Parent or any other
Subsidiary or to guarantee Indebtedness of the Parent or any other Subsidiary; provided
that (i) the foregoing shall not apply to restrictions and conditions imposed
by law, by this Agreement or by the Note Purchase Agreement (or any replacement
thereof permitted pursuant to Section 6.03(j)), (ii) the foregoing shall
not apply to restrictions and conditions existing on the date hereof identified
on Schedule 6.10 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary 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 by
any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (v) clause (a) of the foregoing shall not apply to
customary provisions in leases and other contracts restricting the assignment
thereof.

 

Transactions
with Franchisees. 
Each of the Parent and the Borrower will not and will not permit any of
the 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 the
Borrower, as applicable, that in such officer’s reasonable business judgment,
will provide economic benefit to the Parent or one of its Subsidiaries.

 

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

 

Accounting Changes.  Each of the Parent and the Borrower will not
and will not permit any of the Subsidiaries to (i) make any material change in
accounting principles or reporting practices, except as are made in conformity
with GAAP and the Borrower provides subsequent notice of such change to the
Administrative Agent concurrently with any delivery of financial statements
under Section 5.01(a) or Section 5.01(b), or as are otherwise
consented to by the Administrative Agent or (ii) change its fiscal year or
quarters or the method of determination thereof.

 

51

 

ARTICLE VII

Events of Default

 

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

 

(a)                                  the Borrower shall
fail to pay any principal of any Loan or any reimbursement obligation in
respect of any LC Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise;

 

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

 

(c)                                  any representation or
warranty made or deemed made by or on behalf of the Parent, the Borrower or any
of the Subsidiaries in or in connection with this Agreement or any other Credit
Document or any amendment or modification hereof or thereof or waiver hereunder
or thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or any
other Credit Document or any amendment or modification hereof or thereof or
waiver hereunder or thereunder, shall prove to have been incorrect in any
material respect when made or deemed made;

 

(d)                                 the Parent or the
Borrower shall fail to observe or perform any covenant, condition or agreement
contained 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 legal
existence only),  5.08 or 5.09 or in
Article VI;

 

(e)                                  the Parent or the
Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.01(a), (b) or (c) or Section 5.07 and such
failure shall continue unremedied for a period of five (5) Business Days;

 

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

 

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

 

(h)                                 any event or condition
occurs that results in any Material Indebtedness becoming due prior to its
scheduled maturity or that enables or permits the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due (after giving effect to applicable
grace periods), or to require the

 

52

 

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

 

(i)                                     an involuntary
proceeding 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 part
of its assets, under any  Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Parent, the Borrower or
any Material Subsidiary or for a substantial part of its assets, and, in any
such case, such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall be entered;

 

(j)                                     the Parent, the
Borrower or any Material Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (i) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, the Borrower or any Material
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (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, the
Borrower or any Material Subsidiary shall generally not pay its debts as they
become due or shall admit in writing its inability or failure to pay its debts
as they become due;

 

(l)                                     one or more
judgments for the payment of money in an aggregate amount (not paid or fully
covered by insurance, as to which the insurer has acknowledged coverage) in
excess of $5,000,000  shall be
rendered against the Borrower, any Subsidiary or any combination thereof and
the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any Subsidiary to enforce any such judgment;

 

(m)                               an ERISA Event shall
have occurred that, in the opinion of the Required Lenders, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect; or

 

(n)                                 a Change in Control
shall occur;

 

then, and in every such event (other than an
event with respect to the Borrower described in clause (i) or (j) of this
Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by
notice to the Borrower, take either or both of the following actions, at the
same or different times:  (i) terminate the Commitments, and
thereupon the Commitments shall terminate

 

53

 

immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become  due and payable
immediately, 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 with
respect to the Borrower described in clause (i) or (j) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and 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 Bank
hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto.

 

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

 

The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default or Event of
Default has occurred and is continuing, (b) the Administrative Agent shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02) or
in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default or Event of Default unless and until written
notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the
contents of any

 

54

 

certificate, report or other
document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions 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 forth
in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

 

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

 

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

 

Subject to the appointment and acceptance of
a successor Administrative Agent as provided in this paragraph, the
Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower.  Upon any
such resignation, the Required Lenders shall have the right, in consultation
with the Borrower, provided that no Default and Event of Default has
occurred and is continuing to appoint a successor.  If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank.  Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.

 

55

 

Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.

 

ARTICLE IX

Miscellaneous

 

Notices.

 

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

 

(i)                                     if
to the Borrower or to the Parent, to the Borrower or the Parent at Jackson
Hewitt Inc. or Jackson Hewitt Tax Service Inc., as applicable, 7 Sylvan Way,
Parsippany, New Jersey 07054, Attention of Mark L. Heimbouch, Chief Financial
Officer  (Telecopy No. (973) 496-2760) with a copy (which shall not
constitute notice) to Skadden, Arps, Slate, Meagher & Flom LLP, Four Times
Square, New York, NY 10036, Attn: James Douglas (Facsimile No: (917) 777-2868);

 

(ii)                                  if
to the Administrative Agent, to JPMorgan Chase Bank, Loan and Agency Services
Group, 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)                               if
to the Issuing Bank, to it at JPMorgan Chase Bank, Loan and Agency Services
Group, 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)                              if
to any Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.

 

(b)                                 Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant
to Article

 

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

 

(c)                                  Any party hereto may
change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto.

 

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

 

Waivers; Amendments.

 

(e)                                  No failure or delay
by the Administrative Agent, the Issuing Bank or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative
Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement
or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. 
Without limiting the generality of the foregoing, the making of a Loan
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default or Event of Default, regardless of whether the Administrative Agent,
any Lender or the Issuing Bank may have had notice or knowledge of such Default
or Event of Default at the time.

 

(f)                                    Neither this
Agreement nor any other Credit Document nor any provision hereof or thereof may
be waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the
Borrower 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 the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any
Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment or result in the
expiration date of any Letter of Credit being after the fifth Business Day
prior to the Maturity Date, without the written consent of each Lender affected
thereby, (iv) change Section 2.16(b) or (c) in a manner that would alter
the pro rata sharing of payments required thereby , without the written consent
of each Lender, (v) change any of the provisions of this Section or the
definition of “Required Lenders” or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights

 

57

 

hereunder or make any determination or grant any consent hereunder,
without the  written consent of each
Lender or (vi) release any Guarantor from its obligations under the applicable
Parent Guaranty or Subsidiary Guaranty (other than in accordance with the terms
thereof); provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or the
Issuing Bank hereunder without the prior written consent of the Administrative
Agent 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 the
Administrative Agent and its Affiliates, including the reasonable and
documented fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facility provided for
herein, the preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable and documented out-of-pocket expenses incurred by the Issuing Bank
in connection with the issuance, amendment, renewal or extension of any Letter
of Credit or any demand for payment thereunder and (iii) all reasonable and
documented out-of-pocket expenses incurred by the Administrative Agent, the
Issuing Bank or any Lender, including the reasonable and documented fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such reasonable and documented out-of-pocket expenses
incurred during  any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

 

(h)                                 The Borrower shall
indemnify the Administrative Agent, the Issuing Bank and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the
reasonable and documented fees, charges and disbursements of any counsel
(including any additional counsel after notice to the Borrower of such
retention) for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any agreement or instrument contemplated hereby,
the performance by the parties hereto of their respective obligations hereunder
or the consummation of the Transactions or any other transactions contemplated
hereby, (ii) any Loan or Letter of Credit or the use of the proceeds
therefrom (including any refusal by the Issuing Bank to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on
or from any property owned or operated by the Parent or any of its
Subsidiaries, or any Environmental Liability related in any way to the Parent
or 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 whether
any Indemnitee is a party thereto; provided that (A) the Borrower shall
not be liable for any settlement of any proceeding effected without the
Borrower’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 or
willful misconduct of such Indemnitee.

 

(i)                                     To the extent that
the Borrower fails to pay any amount required to be paid by it to the Administrative
Agent or the Issuing Bank under paragraph (a) or (b) of this Section, each
Lender 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 the
time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent or the Issuing
Bank in its capacity as such.

 

(j)                                     To the extent
permitted 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 actual
damages) arising out of, in connection with, or as a result of, this Agreement
or any agreement or instrument contemplated hereby, the Transactions, any Loan
or Letter of Credit or the use of the proceeds thereof.

 

(k)                                  All amounts due under
this Section shall be payable not later than ten (10) days after written
demand therefor.

 

Successors and Assigns.

 

(l)                                     The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of the Issuing Bank that issues any Letter of Credit), except
that (i) neither the Borrower nor the Parent may assign or otherwise transfer
any of its rights or obligations hereunder or under any of the other Credit
Documents without the prior written consent of each Lender (and any attempted
assignment or transfer by the Parent or the Borrower without such consent shall
be null and void) and (ii) no Lender may assign or otherwise transfer its
rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in paragraph (c) of this Section) and, to the extent
expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(m)                               (i)  Subject to the conditions set forth in
paragraph (b)(ii) below, any Lender may assign to one or more assignees all or
a portion of its rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it and its LC
Exposure) with the prior written consent (such consent not to be unreasonably
withheld) of:

 

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

 

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or, if an Event of Default has occurred and
is continuing, any other assignee;

 

(B)                                the
Administrative Agent; and

 

(C)                                the
Issuing Bank.

 

(ii)                                  Assignments
shall be subject to the following additional conditions:

 

(A)                              except
in the case of an assignment to a Lender or an Affiliate of a Lender or to an
Approved Fund, an assignment of the entire remaining amount of the assigning
Lender’s Commitment or Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that
no such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing;

 

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

 

(C)                                the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500; and

 

(D)                               the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.

 

For the purposes of this
Section 9.04(b), the term “Approved Fund” means any Person (other
than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

(iii)                               Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall

 

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cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and
9.03).  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with paragraph (c) of this Section.

 

(iv)                              The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loans and LC
Disbursements owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary.  The Register
shall be available for inspection by the Borrower, the Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

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

 

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

 

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as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. 
To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were
a Lender.

 

(ii)                                  A
Participant shall not be entitled to receive any greater payment under
Section 2.13, 2.14 or 2.15 than the applicable Lender would have been
entitled 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’s
prior written consent.  A Participant
shall not be entitled to the benefits of Section 2.15 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.

 

(o)                                 Any Lender may at any
time pledge or assign, or grant a security interest in, all or any portion of
its rights under this Agreement to secure obligations of such Lender, including
without limitation any pledge or assignment or grant of a security interest to
secure obligations to a Federal Reserve Bank, and this Section shall not
apply to any such pledge or assignment or grant of a security interest; provided
that no such pledge or assignment or grant of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee
or assignee or grantee for such Lender as a party hereto.

 

Survival.  All covenants, agreements, representations
and warranties made by the Parent and the Borrower herein, in the other Credit
Documents and in the certificates or other instruments  delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, the Issuing Bank or any Lender may have had
notice or knowledge of any Default or Event of Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated.  The provisions of Sections 2.13, 2.14, 2.15
and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination or cancellation of
the Letters of Credit and the Commitments or the termination of this Agreement
or any provision hereof.

 

Counterparts;
Integration; Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede 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 become
effective when it shall have been executed by the Parent, the Borrower and the

 

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

 

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

 

Right of
Setoff.  If an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest 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 and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Parent or the Borrower against any of and all the
obligations of the Parent and the Borrower now or hereafter existing under this
Agreement and the other Credit Documents which are held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement or any of the other Credit Documents and although such
obligations may be unmatured.  The rights
of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

 

Governing Law;
Jurisdiction; Consent to Service of Process.

 

(p)                                 This Agreement shall
be construed in accordance with and governed by the law of the State of New
York.  Each of the Parent and the
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or any of
the other Credit Documents, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in
such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. 
Nothing in this Agreement or any of the other Credit Documents shall
affect any right that the Administrative Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any of the other Credit Documents against the Parent, the Borrower or its
properties in the courts of any jurisdiction.

 

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

 

63

 

arising out of or relating to this Agreement or any of the other Credit
Documents in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(r)                                    Each party to this
Agreement irrevocably consents to service of process in the manner provided for
notices in Section 9.01.  Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

 

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

 

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

 

Confidentiality.  Neither the Administrative Agent, the Issuing
Bank nor any Lender shall use in violation of applicable law or disclose the
Confidential Information; provided that the Confidential Information may
be disclosed (a) to its Affiliates and its and its Affiliates’ advisors
(other than those covered by clause (b) below) that agree to keep such
Confidential Information confidential as provided in this Section, (b) to
its directors, officers, employees and agents, including accountants, legal
counsel and other advisors that (1) need to know the Confidential Information
in connection with this Agreement and the transactions contemplated hereby and
(2) are covered by internal procedures or codes of conduct or are subject to
professional ethical standards regarding confidentiality and are informed of
the confidential nature of such Confidential Information and directed to keep
such Confidential Information confidential as provided in this Section,
(c) to the extent requested by any regulatory authority, (d) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, provided that the Administrative Agent, the Issuing Bank
or such Lender, as the case may be, shall request confidential treatment of
such Confidential Information to the extent permitted by applicable law and the
Administrative Agent, the Issuing Bank or such Lender, as the case may be,
shall, to the extent permitted by applicable law, promptly inform the Borrower
with respect thereto so that the Borrower may seek appropriate protective
relief to the extent permitted by applicable law, provided  further
that 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

 

64

 

required and shall disclose the Confidential
Information in a manner reasonably designed to preserve its confidential nature
and shall cooperate with the Borrower’s counsel to enable the Borrower to
attempt to obtain a protective order or other reliable assurance that
confidential treatment will be accorded to the Confidential Information, (e) to
any other party to this Agreement, (f) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (g) subject to an agreement containing
provisions substantially the same as those of this Section, to (1) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (2) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating
to the Borrower and its obligations, (h) with the consent of the Borrower,
(i) to the extent such Confidential Information (1) becomes publicly
available other than as a result of a breach of this Section or
(2) becomes available to the Administrative Agent, the Issuing Bank or any
Lender 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 ordinary
course of business; provided that except as otherwise permitted
hereunder the Parent and Subsidiaries shall not be identified to any third
parties and no disclosure of any Confidential Information shall be made to any
third 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 Related
Parties or this Agreement or the transactions contemplated hereby without the
prior written consent of the Borrower. 
The obligations of the Agent and any Lender under this
Section shall survive termination or expiration of this Agreement.

 

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

 

65

 

USA Patriot
Act.  Each Lender hereby notifies the
Parent and the Borrower that pursuant to the requirements of the USA Patriot
Act (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 the
Parent and the Borrower, which information includes the name and address of the
Parent and the Borrower and other information that will allow such Lender to
identify the Parent and the Borrower in accordance with the Act.  In connection therewith, each Lender hereby
agrees to provide only such information that is, in such Lender’s sole
determination, required by the Act and to provide such information in a manner
that is consistent with the confidentiality provisions set forth in
Section 9.12.

 

*   *  
*   *   *

 

66

 

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

 

	
   

  	
  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

  
					

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Eugene S. Smith

  	
   

  
	
   

  	
  Name:

  	
  Eugene S. Smith

  
	
   

  	
  Title:

  	
  Vice PresidentExhibit 10.13

 

 

 

Jackson Hewitt Tax Service Inc.

 

and

 

Jackson Hewitt Inc.

 

 

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

 

 

 

Note Purchase Agreement

 

 

 

Dated as of June 21, 2004

 

 

 

 

Table of Contents

 

	
  Section

  	
   

  	
  Heading

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Authorization of Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Description of Notes

  	
   

  
	
  Section 1.2.

  	
   

  	
  Note Interest Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Sale and Purchase of Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Notes

  	
   

  
	
  Section 2.2.

  	
   

  	
  Guaranty

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Conditions to Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Representations
  and Warranties

  	
   

  
	
  Section 4.2.

  	
   

  	
  Performance;
  No Default

  	
   

  
	
  Section 4.3.

  	
   

  	
  Compliance Certificates

  	
   

  
	
  Section 4.4.

  	
   

  	
  Opinions
  of Counsel

  	
   

  
	
  Section 4.5.

  	
   

  	
  Purchase
  Permitted by Applicable Law, Etc

  	
   

  
	
  Section 4.6.

  	
   

  	
  Related
  Transactions

  	
   

  
	
  Section 4.7.

  	
   

  	
  Payment
  of Special Counsel Fees

  	
   

  
	
  Section 4.8.

  	
   

  	
  Private
  Placement Number

  	
   

  
	
  Section 4.9.

  	
   

  	
  Changes
  in Corporate Structure

  	
   

  
	
  Section 4.10.

  	
   

  	
  Subsidiary
  Guaranty

  	
   

  
	
  Section 4.11.

  	
   

  	
  Proceedings and Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Representations and Warranties of the Company
  and the Issuer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Organization; Power and Authority

  	
   

  
	
  Section 5.2.

  	
   

  	
  Authorization,
  Etc

  	
   

  
	
  Section 5.3.

  	
   

  	
  Disclosure

  	
   

  
	
  Section 5.4.

  	
   

  	
  Organization
  and Ownership of Shares of Subsidiaries

  	
   

  
	
  Section 5.5.

  	
   

  	
  Financial
  Statements

  	
   

  
	
  Section 5.6.

  	
   

  	
  Compliance
  with Laws, Other Instruments, Etc

  	
   

  
	
  Section 5.7.

  	
   

  	
  Governmental
  Authorizations, Etc

  	
   

  
	
  Section 5.8.

  	
   

  	
  Litigation;
  Observance of Statutes and Orders

  	
   

  
	
  Section 5.9.

  	
   

  	
  Taxes

  	
   

  
	
  Section 5.10.

  	
   

  	
  Title
  to Property; Leases

  	
   

  
	
  Section 5.11.

  	
   

  	
  Licenses,
  Permits, Etc

  	
   

  
	
  Section 5.12.

  	
   

  	
  Compliance
  with ERISA

  	
   

  
	
  Section 5.13.

  	
   

  	
  Private Offering by the Company

  	
   

  
	
  Section 5.14.

  	
   

  	
  Use of Proceeds; Margin Regulations

  	
   

  
	
  Section 5.15.

  	
   

  	
  Existing Debt; Future Liens

  	
   

  

 

2

 

	
  Section 5.16.

  	
   

  	
  Foreign Assets Control Regulations, Etc

  	
   

  
	
  Section 5.17.

  	
   

  	
  Status under Certain Statutes

  	
   

  
	
  Section 5.18.

  	
   

  	
  Environmental
  Matters

  	
   

  
	
  Section 5.19.

  	
   

  	
  Solvency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Representations of the Purchaser

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  Purchase
  for Investment

  	
   

  
	
  Section 6.2.

  	
   

  	
  Source
  of Funds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Information as to Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  Financial
  and Business Information

  	
   

  
	
  Section 7.2.

  	
   

  	
  Officer’s
  Certificate

  	
   

  
	
  Section 7.3.

  	
   

  	
  Inspection

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Payment of the Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  Required
  Payments

  	
   

  
	
  Section 8.2.

  	
   

  	
  Optional
  Prepayment of the Notes with LIBOR Breakage Amount

  	
   

  
	
  Section 8.3.

  	
   

  	
  Maturity;
  Surrender, Etc.

  	
   

  
	
  Section 8.4.

  	
   

  	
  Purchase
  of Notes

  	
   

  
	
  Section 8.5.

  	
   

  	
  Change in Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Affirmative Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Compliance
  with Law

  	
   

  
	
  Section 9.2.

  	
   

  	
  Insurance

  	
   

  
	
  Section 9.3.

  	
   

  	
  Maintenance
  of Properties

  	
   

  
	
  Section 9.4.

  	
   

  	
  Payment
  of Taxes and Claims

  	
   

  
	
  Section 9.5.

  	
   

  	
  Corporate
  Existence, Etc

  	
   

  
	
  Section 9.6.

  	
   

  	
  Additional
  Subsidiary Guarantors

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Negative Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
   

  	
  Consolidated
  Leverage Ration

  	
   

  
	
  Section 10.2.

  	
   

  	
  Consolidated
  Fixed Charge Coverage Ratio

  	
   

  
	
  Section 10.3.

  	
   

  	
  Limitation
  on Liens

  	
   

  
	
  Section 10.4

  	
   

  	
  Restricted
  Payments

  	
   

  
	
  Section 10.5.

  	
   

  	
  Sales
  of Assets

  	
   

  
	
  Section 10.6.

  	
   

  	
  Merger,
  Consolidation

  	
   

  
	
  Section 10.7.

  	
   

  	
  Nature of Business

  	
   

  
	
  Section 10.8.

  	
   

  	
  Transactions
  with Affiliates

  	
   

  
	
  Section 10.9.

  	
   

  	
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Guaranty by the Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
   

  	
  Guaranty
  by the Company

  	
   

  

 

3

 

	
  Section 11.2.

  	
   

  	
  Guaranty of Payment and Performance

  	
   

  
	
  Section 11.3.

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Events of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  Remedies
  on Default, Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
   

  	
  Acceleration

  	
   

  
	
  Section 13.2.

  	
   

  	
  Other
  Remedies

  	
   

  
	
  Section 13.3.

  	
   

  	
  Rescission

  	
   

  
	
  Section 13.4.

  	
   

  	
  No Waivers or Election of Remedies, Expenses, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Registration; Exchange; Substitution of
  Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
   

  	
  Registration
  of Notes

  	
   

  
	
  Section 14.2.

  	
   

  	
  Transfer
  and Exchange of Notes

  	
   

  
	
  Section 14.3.

  	
   

  	
  Replacement
  of Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 15.

  	
   

  	
  Payments on Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 15.1.

  	
   

  	
  Place
  of Payment

  	
   

  
	
  Section 15.2.

  	
   

  	
  Home
  Office Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
   

  	
  Expenses,
  Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 16.1.

  	
   

  	
  Transaction
  Expenses

  	
   

  
	
  Section 16.2.

  	
   

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Survival of Representations and Warranties;
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Amendment and Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.1.

  	
   

  	
  Requirements

  	
   

  
	
  Section 18.2.

  	
   

  	
  Solicitation
  of Holders of Notes

  	
   

  
	
  Section 18.3.

  	
   

  	
  Binding
  Effect, Etc

  	
   

  
	
  Section 18.4.

  	
   

  	
  Notes
  Held by Company, Issuer, Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Reproduction of Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.

  	
   

  	
  Confidential Information

  	
   

  

 

4

 

	
  Section 22.

  	
   

  	
  Substitution of Purchaser

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 23.

  	
   

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 23.1.

  	
   

  	
  Successors
  and Assigns

  	
   

  
	
  Section 23.2.

  	
   

  	
  Payments
  Due on Non-Business Days

  	
   

  
	
  Section 23.3.

  	
   

  	
  Severability

  	
   

  
	
  Section 23.4.

  	
   

  	
  Construction

  	
   

  
	
  Section 23.5.

  	
   

  	
  Counterparts

  	
   

  
	
  Section 23.6.

  	
   

  	
  Governing
  Law

  	
   

  

 

5

 

	
  Schedule A

  	
  —

  	
  Information Relating To Purchasers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule B

  	
  —

  	
  Defined
  Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 5.4

  	
  —

  	
  Subsidiaries of the Company, Ownership of
  Subsidiary Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 10.3

  	
  —

  	
  Existing
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 1

  	
  —

  	
  Form
  of Floating Rate Senior Note due June 25, 2009

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 2.2

  	
  —

  	
  Subsidiary Guaranty

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 4.4(a)

  	
  —

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 4.4(b)

  	
  —

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 4.4(c)

  	
  —

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

  	
   

  

 

6

 

Jackson Hewitt Tax Service Inc.

7 Sylvan Way

Parsippany, New Jersey 07054

 

and

 

Jackson Hewitt Inc.

c/o Jackson Hewitt Tax Service Inc.

7 Sylvan Way

Parsippany, New Jersey 07054

 

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

 

Dated as of

June 21, 2004

 

To the Purchasers listed in

the attached Schedule A:

 

Ladies and Gentlemen:

 

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

 

Section 1.                                            Authorization
of Notes.

 

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

 

Section 1.2.                                          Note
Interest Rate.

 

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

 

7

 

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

 

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

 

Section 2.                                            Sale and
Purchase of Notes.

 

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

 

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

 

Section 3.                                            Closing.

 

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

 

8

 

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

 

Section 4.                                            Conditions
to Closing.

 

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

 

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

 

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

 

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

 

Section 4.3.                                          Compliance
Certificates.

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

Section 6.                                            Representations
of the Purchaser.

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

(d)                                 the Source is a
governmental plan; or

 

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

 

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

 

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

 

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

 

19

 

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

 

Section 7.                                            Information
as to Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

Section 8.                                            Payment of
the Notes.

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

Section 8.5.                                          Change
in Control.

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

Section 9.                                            Affirmative
Covenants.

 

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

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

Section 10.                                      Negative Covenants.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

Section 11.                                      Guaranty by the
Company.

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

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

 

38

 

Section 12.                                      Events of
Default.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

Section 13.                                      Remedies
on Default, Etc.

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

Section 14.                                                                          Registration;
Exchange; Substitution of Notes.

 

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

 

42

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

Section 15.                                      Payments on
Notes.

 

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

 

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

 

44

 

Section 16.                                      Expenses,
Etc.

 

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

 

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

 

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

 

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

 

Section 18.                                      Amendment and
Waiver.

 

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

 

45

 

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

 

Section 18.2.                                   Solicitation
of Holders of Notes.

 

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

 

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

 

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

 

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

 

46

 

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

 

Section 19.                                      Notices.

 

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

 

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

 

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

 

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

 

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

 

Section 20.                                      Reproduction of
Documents.

 

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

 

Section 21.                                      Confidential
Information.

 

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

 

47

 

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

 

Section 22.                                      Substitution of
Purchaser.

 

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

 

48

 

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

 

Section 23.                                      Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

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

 

49

 

*  
*   *   *   *

 

50

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

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  Jackson Hewitt
  Tax Service Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Lister

  
	
   

  	
   

  	
  Name:  

  	
  Michael D.
  Lister

  
	
   

  	
   

  	
  Title:

  	
  President and
  Chief Executive

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jackson Hewitt Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Lister

  
	
   

  	
   

  	
  Name:  

  	
  Michael D.
  Lister

  
	
   

  	
   

  	
  Title:

  	
  President and
  Chief Executive

  
	
   

  	
   

  	
  Officer

  

 

51

 

Accepted as of the first date
written above.

 

	
   

  	
  SunAmerica Life
  Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  AIG Global
  Investment Corp.,

  Investment Adviser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lori J. White

  
	
   

  	
   

  	
  Name:  

  	
  Lori J. White

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

Jackson Hewitt Tax Service Inc.

Note Purchase Agreement

 

52

 

Accepted as of the first date
written above.

 

	
   

  	
  Monumental Life
  Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary T. Pech

  
	
   

  	
   

  	
  Name:  

  	
  Mary T. Pech

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

53

 

Accepted as of the first date
written above.

 

 

	
   

  	
  ING USA Annuity
  and Life Insurance Company

  
	
   

  	
  ING Life
  Insurance and Annuity Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ING Investment
  Management LLC, as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher P. Lyons

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christopher P.
  Lyons

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  
						

 

54

 

Accepted as of the first date
written above.

 

	
   

  	
  Connecticut
  General Life Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CIGNA
  Investments, Inc. (authorized agent)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah B. Wiacek

  
	
   

  	
   

  	
  Name:  

  	
  Deborah B.
  Wiacek

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  

 

55

 

Accepted as of the first date
written above.

 

 

	
   

  	
  Principal Life
  Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Principal Global
  Investors, LLC

  a Delaware limited liability company, its

  authorized signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher J. Henderson

  
	
   

  	
   

  	
  Name:  

  	
  Christopher J.
  Henderson

  
	
   

  	
   

  	
  Title:

  	
  Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth D. Swanson

  
	
   

  	
   

  	
  Name:  

  	
  Elizabeth D.
  Swanson

  
	
   

  	
   

  	
  Title:

  	
  Counsel

  

 

56

 

Accepted as of the first date
written above.

 

	
   

  	
   

  	
  The Travelers
  Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John A. Wills

  
	
   

  	
   

  	
  Name:  

  	
  John A. Wills

  
	
   

  	
   

  	
  Title:

  	
  Investment
  Officer

  

 

57

 

Information
Relating to Purchasers

 

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SunAmerica Life Insurance Company
c/o AIG Global Investment Group

  2929 Allen Parkway, A36-01

  Houston, Texas  77019-2155

  Attention:  Legal Department –
  Investment Management

  Fax:  (713) 831-2328

  	
   

  	
  $

  	
  65,000,000

  	
   

  
					

 

Payments

 

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

 

The Bank of New York

ABA #021-000-018

BNF Account #: 
IOC 566

Credit to: 
SunAmerica Life Insurance Company / GIC

OBI=PPN# and Prin:
$            Int: $

 

Notices

 

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

 

AIG Global Investment Group

c/o The Bank of New York

Attention: 
P&I Department

P.O. Box 19266

Newark, NJ 
07195

Phone:  (212)
437-6557

Fax:  (212)
437-6467

 

Duplicate payment notices
and compliance information to:

 

SunAmerica Life Insurance Company / GIC

c/o AIG Global Investment Group

2929 Allen Parkway, Suite A36-04

 

SCHEDULE A

(to Note Purchase Agreement)

 

A-58

 

Houston, Texas 
77019-2155

Attn:  Private
Placement Department

Fax Number: 
(713) 831-1072

 

All other correspondence
to:

 

AIG Global Investment Group

2929 Allen Parkway, A36-01

Houston, Texas 
77019-2155

Attention: 
Legal Department – Investment Management

Fax:  (713)
831-2328

 

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

 

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

 

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

 

A-59

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Monumental Life Insurance Company
c/o AEGON USA Investment Management, LLC

  Attention:  Director of Private
  Placements

  4333 Edgewood Road N.E.

  Cedar Rapids, Iowa  52499-5335

  Phone:  (319) 369-2432

  Fax:  (319) 369-2666

  	
   

  	
  $

  	
  35,000,000

  	
   

  
					

 

Payments

 

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

 

Citibank, N.A.

111 Wall Street

New York, New York 
10043

ABA #021000089

DDA #36218394

FBO MONLIFE 847785

 

Notices

 

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

 

AEGON USA Investment Management, LLC

Attention: 
Custody Operations-Privates

4333 Edgewood Road N.E.

Cedar Rapids, Iowa 
52499-7013

 

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

 

AEGON USA Investment Management, LLC

Attention: 
Lizz Taylor – Private Placements

400 West Market Street, 10th Floor

Louisville, Kentucky 
40202

Phone:  (502)
560-2639

Fax:  (502)
560-2030

 

A-60

 

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

 

Taxpayer I.D. Number: 
52-0419790

 

A-61

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ING USA Annuity and Life Insurance Company
c/o ING Investment Management LLC

  5780 Powers Ferry Road NW, Suite 300

  Atlanta, Georgia  30327-4349

  Attention:  Private Placements

  Fax Number:  (770) 690-5057

  	
   

  	
  $

  	
  20,000,000

  	
   

  
					

 

Payments

 

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

 

The Bank of New York

ABA #021000018

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

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

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

 

Notices

 

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

 

ING Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia 
30327-4349

Attention: 
Operations/Settlements

Fax Number: 
(770) 690-4886

 

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

 

ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, MN 
55401-2121

Attention: 
Martin Rosacker

Phone:  (612)
342-7138

Fax Number: 
(612) 372-5368

 

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

 

Taxpayer I.D. Number: 
41-0991508

 

A-62

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ING USA Annuity and Life Insurance Company
c/o ING Investment Management LLC

  5780 Powers Ferry Road NW, Suite 300

  Atlanta, Georgia  30327-4349

  Attention:  Private Placements

  Fax Number:  (770) 690-5057

  	
   

  	
  $

  	
  3,000,000

  	
   

  
					

 

Payments

 

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

 

The Bank of New York

ABA #021000018

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

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

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

 

Notices

 

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

 

ING Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia 
30327-4349

Attention: 
Operations/Settlements

Fax Number: 
(770) 690-4886

 

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

 

ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, MN 
55401-2121

Attention: 
Martin Rosacker

Phone:  (612)
342-7138

Fax Number: 
(612) 372-5368

 

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

 

Taxpayer I.D. Number: 
41-0991508

 

A-63

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ING Life Insurance and Annuity Company
c/o ING Investment Management LLC

  5780 Powers Ferry Road NW, Suite 300

  Atlanta, Georgia  30327-4349

  Attention:  Private Placements

  Fax Number:  (770) 690-5057

  	
   

  	
  $

  	
  2,000,000

  	
   

  
					

 

Payments

 

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

 

The Bank of New York

ABA #021000018

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

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

Attention: 
P&I Department

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

 

Notices

 

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

 

ING Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia 
30327-4349

Attention: 
Operations/Settlements

Fax Number: 
(770) 690-4886

 

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

 

ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, MN 
55401-2121

Attention: 
Martin Rosacker

Phone:  (612)
342-7138

Fax Number: 
(612) 372-5368

 

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

 

Taxpayer I.D.
Number:  71-0294708

 

A-64

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Connecticut General Life Insurance Company

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  c/o Cigna Retirement & Investment
  Services

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  280 Trumbull Street

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  Hartford, Connecticut  06103

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Attention:   Private and
  Alternative Investments, H16B

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Fax:   860-534-7203

  	
   

  	
   

  	
   

  

 

Payments

 

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

 

J. P. Morgan Chase Bank

BNF=CIGNA Private Placements/AC=9009001802

ABA #021000021

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

 

Address for Notices
Related to Payments:

 

CIG & Co.

c/o Cigna Investments, Inc.

Attention: 
Private and Alternative Investments, H16B

280 Trumbull Street

Hartford, Connecticut 
06103

Fax: 
860-534-7203

 

with a copy to:

 

J. P. Morgan Chase Bank

14201 Dallas Parkway, 13th Floor

Dallas, Texas 
75254

Attention: Heather Frisina, Mail Code 300-116

Fax: 
469-477-1904

 

Address for All Other
Notices:

 

CIG & Co.

 

A-65

 

c/o Cigna Retirement & Investment Services

Attention: 
Private and Alternative Investments, H16B

280 Trumbull Street

Hartford, Connecticut 
06103

Fax: 
860-534-7203

 

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

 

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

 

A-66

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Principal Life Insurance Company
c/o Principal Global Investors, LLC

  Attn:  Fixed Income Private Placements

  711 High Street, G-26

  Des Moines, Iowa  50392-0800

  	
   

  	
  $

  	
  20,000,000

  	
   

  
					

 

Payments

 

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

 

ABA #121000248

Wells Fargo
Bank, N.A.

San Francisco,
CA

For credit to
Principal Life Insurance Company

Account No.
0000014752

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

Attn:  (cusip number – Issuer’s name)

 

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

 

All Notices to:

 

Principal
Global Investors, LLC

ATTN:  Fixed Income Private Placements

711 High
Street, G26

Des Moines,
IA  50392-0800

 

and via Email: Privateplacements2@exchange.principal.com

 

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

 

Principal
Global Investors, LLC

Attention:  Investment Accounting  Fixed Income Securities

711 High
Street

 

A-67

 

Des Moines,
Iowa  50392-0960

 

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

 

Taxpayer I.D. Number:  42-0127290

 

A-68

 

	
  Name and Address of Purchaser

  	
   

  	
  Principal
  Amount

  of Notes to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Travelers Insurance Company
242 Trumbull Street

  P. O. Box 150449

  Hartford, Connecticut  06115-0449

  Attention:  Private Placements, 7th
  Floor

  Facsimile:  860-308-8545

  	
   

  	
  $

  	
  10,000,000

  	
   

  
					

 

Payments

 

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

 

The Travelers Insurance Company

Consolidated Private Placement Account No.
910-2-587434

JP Morgan Chase Bank

One Chase Manhattan Plaza

New York, New York 
10081

ABA No. #021000021

 

Notices

 

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

 

The Travelers Insurance Company

242 Trumbull Street

P. O. Box 150449

Hartford, Connecticut  06115-0449

Attention: Cashier, 5th Floor

Facsimile: 
869-308-8556

 

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

 

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

 

A-69

 

Defined
Terms

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SCHEDULE B

(to Note Purchase Agreement)

 

B-70

 

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

 

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

 

“Cendant” is defined
in Section 4.6.

 

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

 

“Closing” is defined
in Section 3.

 

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

 

“Common Stock” is
defined in Section 3.

 

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

 

“Confidential Information”
is defined in Section 21.

 

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

 

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

 

B-71

 

effect to clause (f).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-72

 

Subsidiaries
for the most recently ended fiscal quarter.

 

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

 

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

 

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

 

(a)           its liabilities for
borrowed money;

 

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

 

(c)           its Capital Lease
Obligations;

 

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

 

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

 

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

 

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

 

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

 

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

 

B-73

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Event of Default”
is defined in Section 12.

 

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

 

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

 

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

 

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

 

B-74

 

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

 

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

 

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

 

“Governmental Authority”
means

 

(a)           the government of

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-75

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“IPO” is defined in
Section 3.

 

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

 

B-76

 

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

 

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

 

“LIBOR Breakage Amount” is
defined in Section 8.2.

 

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

 

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

 

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

 

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

 

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

 

“Memorandum” is
defined in Section 5.3.

 

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

 

B-77

 

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

 

“Notes” is defined
in Section 1.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-78

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-79

 

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

 

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

 

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

 

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

 

B-80

 

Subsidiaries of the Company, Ownership of
Subsidiary Stock

 

	
  Subsidiary

  	
   

  	
  State of

  Incorporation

  	
   

  	
  Stockholder

  
	
  Jackson Hewitt Inc.

  	
   

  	
  Virginia

  	
   

  	
  100% owned by the Company

  
	
  Tax Services of America, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100% owned by the Issuer

  
	
  Hewfant, Inc.

  	
   

  	
  Virginia

  	
   

  	
  100% owned by the Issuer

  

 

 

SCHEDULE 5.4

(to Note Purchase Agreement)

 

E-1-81

 

Existing
Liens

 

None

 

SCHEDULE 10.3

(to Note Purchase Agreement)

 

E-1-82

 

[Form of Note]

 

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

 

Jackson Hewitt Inc.

 

Floating Rate Senior Note due June 25,
2009

 

	
  No. 
  [              ]

  	
   

  	
  [Date]

  
	
  $[                    ]

  	
   

  	
  PPN 468201 A* 9

  

 

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

 

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

 

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

 

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

 

EXHIBIT 1

(to Note Purchase Agreement)

 

E-1-83

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  Jackson
  Hewitt Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

E-1-84

 

Subsidiary Guaranty

 

 

dated as of June 21, 2004

 

 

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

due June 25, 2009

of

Jackson Hewitt Inc.

 

 

Exhibit 2.2

(to Note Purchase
Agreement)

 

85

 

TABLE
OF CONTENTS

 

(Not a part of the
Agreement)

 

	
  Section

  	
   

  	
  Heading

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Parties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Recitals

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Guaranty
  of Notes and Note Purchase Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Guaranty
  of Payment and Performance.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  General
  Provisions Relating to the Guaranty

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Representations
  and Warranties of the Guarantors.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Amendments,
  Waivers, Consents and Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attachments to Subsidiary Guaranty:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A
       —     Guaranty Joinder

  	
   

  	
   

  
								

 

 

Subsidiary Guaranty

 

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

due June 25, 2009

of

Jackson Hewitt Inc.

 

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

 

Recitals

 

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

 

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

 

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

 

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

 

87

 

follows:

 

Section 1.               Definitions.

 

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

 

Section 2.               Guaranty
of Notes and Note Purchase Agreement.

 

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

 

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

 

Section 3.               Guaranty
of Payment and Performance.

 

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

 

88

 

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

 

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

 

Section 4.               General
Provisions Relating to the Guaranty.

 

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

 

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

 

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

 

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

 

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

 

89

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

90

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

91

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

92

 

default.

 

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

 

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

 

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

 

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

 

93

 

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

 

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

 

Section 5.               Representations
and Warranties of the Guarantors.

 

Each Guarantor
represents and warrants to each Holder that:

 

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

 

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

 

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

 

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

 

94

 

performance by such Guarantor of this Guaranty.

 

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

 

Section 6.               Amendments,
Waivers, Consents and Termination.

 

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

 

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

 

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

 

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

 

95

 

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

 

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

 

Section 7.               Notices.

 

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

 

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

 

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

 

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

 

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

 

Section 8.               Miscellaneous.

 

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

 

96

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

	
   

  	
  Tax Services of America, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title

  

 

97

 

	
   

  	
   

  
	
   

  	
  Hewfant, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

98

 

Guaranty
Joinder

 

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

due June 25, 2009

of

Jackson Hewitt Inc.

 

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

 

Recitals

 

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

 

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

 

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

 

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

 

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

 

Exhibit A

(to Subsidiary Guarnaty)

 

99

 

in the manner set forth in the Guaranty.

 

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

 

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

 

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

 

	
   

  	
  [Name of Additional Guarantor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  Its

  

 

100

 

The Purchasers Listed on Schedule A

to the Note Purchase Agreement

June    , 2004

 

Form of
Opinion of Special Counsel

to
the Company and the Issuer

 

DRAFT SUBJECT TO REVISION
BY OPINION COMMITTEE

 

Exhibit 4.4(a)

 

June 25, 2004

 

The Purchasers Listed on

Schedule A to the

Note Purchase Agreement referred to below

 

Re:    Jackson
Hewitt Inc. Floating Rate Senior Notes 

 

Ladies and Gentlemen:

 

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

 

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

 

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

 

(a)                                  an executed copy of the Purchase
Agreement;

 

Exhibit 4.4(a)

(to  Note Purchase Agreement)

 

101

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

102

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

103

 

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

 

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

 

104

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

105

 

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

 

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

 

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

 

106

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

107

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

108

 

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

 

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

 

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

 

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

 

109

 

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

 

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

 

12.                                 No
Governmental Approval, which has not been obtained or taken and is not in full
force and effect, is required to authorize, or is required as a condition to,
the execution or delivery of each of the Transaction Documents by the Company,
the Issuer and the Subsidiary Guarantors or the consummation by the Company,
the Issuer or the Subsidiary Guarantors of the transactions contemplated
thereby, including the sale and issuance of the Securities by the Issuer.

 

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

 

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

 

110

 

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

 

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

 

 

	
   

  	
  Very truly yours,

  

 

111

 

Schedule I

Foreign Qualification

 

 

	
  Jurisdiction

  	
   

  	
  Certificate

  	
   

  	
  Status

  
	
  New York

  	
   

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

  	
   

  	
   

  
	
  New Jersey

  	
   

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

  	
   

  	
   

  

 

Exhibit 4.4(a)

(to Note Purchase
Agreement)

 

112

 

Schedule II

Applicable Contracts

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8.               Letter
Agreement for Steven L. Barnett.

 

9.               Letter
Agreement for Richard P. Enchura.

 

10.         Letter
Agreement for Perb B. Fortner.

 

11.         Letter
Agreement for William A. Scavone.

 

12.         Letter
Agreement for Jeanmarie Cooney.

 

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

 

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

 

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

 

 

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

 

17.         Form
of Franchise Agreement.

 

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

 

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

 

 

Schedule III

Applicable Orders

 

None.

 

 

The Purchasers Listed on Schedule A

to the Note Purchase Agreement

June    , 2004

 

Form of Opinion of Special Counsel

to the
Issuer

 

Exhibit 4.4(b)

 

June   , 2004

 

The Purchasers Listed on

Schedule A to the

Note Purchase Agreement referred to below

 

Re:    Jackson Hewitt, Inc. Floating Rate Senior
Notes 

 

Ladies and Gentlemen:

 

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

 

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

 

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

 

(a)                                  an executed copy of the Purchase
Agreement;

 

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

 

Exhibit 4.4(b)

(to Note Purchase
Agreement)

 

116

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

117

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

118

 

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

 

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

 

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

 

119

 

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

 

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

 

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

 

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

 

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

 

120

 

paragraph 5 below);

 

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

 

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

 

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

 

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

 

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

 

121

 

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

 

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

 

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

 

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

 

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

 

6.                                       No
Governmental Approval, which has not been obtained or taken and is not in full
force and effect, is required to authorize, or is required as a condition to,
the execution or delivery by JHI of the Purchase Agreement or HFI of the HFI
Subsidiary Guaranty.

 

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

 

122

 

violate any provision of Applicable Law.

 

8.                                       To our knowledge, there are no regulatory matters
or governmental proceedings pending to which JHI is a party or to which any
property of the JHI is subject that would have been required to be disclosed
pursuant to Item 103 of Regulation S-K of the General Rules and Regulations
under the Securities Act of 1933 that are not so disclosed in the Registration
Statement as of its date.

 

This letter is furnished only to each of the
Purchasers and is solely for the Purchasers’ benefit in connection with the
closing under the Purchase Agreement occurring today pursuant to the Purchase
Agreement.  Without our prior written
consent, this letter may not be used, circulated, quoted or otherwise referred
to for any other purpose or relied upon by, or assigned to, any other person
for any purpose, including any other person that acquires Securities or that
seeks to assert the Purchasers’ rights in respect of this letter (other than
the Purchasers’ successor in interest by means of merger, consolidation,
transfer of a business or other similar transaction); provided, however,
that any Qualified Institutional Buyer, as that term is defined in Rule 144A
under the Securities Act (“QIB”), that purchases Securities from any of the
Purchasers (or any such QIB) from time to time may rely on this opinion subject
to all assumptions, qualifications, limitations and exceptions stated herein,
as if addressed to such person and dated as of the date hereof, it being
understood that we do not express any opinion as to any such sales to a QIB and
that we do not assume any obligation to update or otherwise confirm this
opinion following the sale of the Securities to the Purchasers on the date
hereof for any reason or to opine on the effect of any such sales, and provided
further that this opinion may be furnished to any governmental authority
having jurisdiction over the Purchasers to the extent required by applicable
law or regulation, to the National Association of Insurance Commissioners of
the United States and rating agencies.

 

	
   

  	
  Very truly yours,

  

 

123

 

Schedule I

Foreign Qualification of JHI

 

	
  Jurisdiction

  	
   

  	
  Certificate

  	
   

  	
  Status

  
	
  Texas

  	
   

  	
   

  	
   

  	
   

  
	
  Illinois

  	
   

  	
   

  	
   

  	
   

  
	
  Florida

  	
   

  	
   

  	
   

  	
   

  
	
  New York

  	
   

  	
   

  	
   

  	
   

  
	
  Maryland

  	
   

  	
   

  	
   

  	
   

  

 

124

 

Schedule II

Applicable Orders

 

None.

 

125

 

Form of Opinion of Special Counsel

to the
Purchasers

 

June 25, 2004

 

To the Purchasers named on

  Schedule I attached hereto

 

	
  Re:

  	
  $175,000,000
  Floating Rate Senior Notes due June 25, 2009

  	
   

  
	
   

  	
  of

  	
   

  
	
   

  	
  Jackson
  Hewitt Inc.

  	
   

  

 

Ladies and Gentlemen:

 

We have acted as
your special counsel in connection with your separate purchases on the date
hereof of $175,000,000 aggregate principal amount of the Floating Rate Senior
Notes due June 25, 2009, (the “Notes”) of Jackson Hewitt Inc., a
Virginia corporation (the “Issuer”), issued under and pursuant to
the Note Purchase Agreement dated as of June 21, 2004 (the “Note Purchase Agreement”),
among Jackson Hewitt Tax Service Inc., a Delaware corporation, (the “Company”),
the Issuer and each of you.  Terms used
and not otherwise defined herein shall have the respective meanings set forth
in the Note Purchase Agreement.

 

In that
connection, we have examined the following:

 

(a)           The Note Purchase Agreement;

 

(b)           The Subsidiary Guaranty;

 

(c)           A copy of the Amended and Restated
Certificate of Incorporation of the Issuer and all amendments thereto certified
by the State Corporate Commission of the Commonwealth of Virginia and the
Certificate of the State Corporate Commission of the Commonwealth of Virginia
evidencing that the Issuer is in good standing in such Commonwealth (the “Good
Standing Certificate”);

 

(d)           A copy of the By-laws of the Issuer,
as amended to the date hereof, and a copy of the resolutions adopted by the
Board of Directors of the Issuer with respect to the authorization of the Note
Purchase Agreement, the issuance, sale and delivery of the

 

Exhibit 4.4(c)

(to Note Purchase
Agreement)

 

126

 

Notes and related matters, each as certified by the
Secretary of the Issuer;

 

(e)           A copy of the Certificate of
Incorporation of the Company and all amendments thereto certified by the
Secretary of the State of Delaware and the Certificate of the Secretary of State
of the State of Delaware evidencing that the Company is in good standing in
such state (the “Company Good Standing Certificate”);

 

(f)            A copy of the By-laws of the
Company, as amended to the date hereof, and a copy of the resolutions adopted
by the Board of Directors of the Company with respect to the authorization of
the Note Purchase Agreement and related matters, each as certified by the
Secretary of the Company;

 

(g)           A copy of the Certificate of
Incorporation of Tax Services of America, Inc., a Delaware corporation, and a
copy of the Amended and Restated Certificate of Incorporation of Hewfant, Inc.,
a Virginia corporation, each a party to the Subsidiary Guaranty, (the “Subsidiary
Guarantors”) and all amendments thereto certified by the Secretary
of State, or the equivalent thereof, for the respective Subsidiary Guarantor
and the Certificates of the Secretary of State of the State, or the equivalent
thereof, evidencing that the Subsidiary Guarantors are in good standing in
their respective jurisdictions (the “Subsidiary Guarantors Good Standing Certificates”);

 

(h)           A copy of the By-laws of each
Subsidiary Guarantor as amended to the date hereof, and a copy of the
resolutions adopted by the Board of Directors of each Subsidiary Guarantor with
respect to the authorization of the Subsidiary Guaranty and related matters,
each as certified by the Secretary of the Subsidiary Guarantors;

 

(i)            The opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel for the Company and the Issuer, dated
the date hereof and delivered responsive to Section 4.4(a) of the Note
Purchase Agreement;

 

(j)            The opinion of Piper Rudnick, LLP,
special counsel to the Company and the Issuer, dated the date hereof and
delivered responsive to Section 4.4(b) of the Note Purchase Agreement;

 

(k)           The Notes delivered on the date
hereof;

 

(l)            Such certificates of officers of the
Company, the Issuer and of public officials as we have deemed necessary to give
the opinions hereinafter expressed; and

 

(m)          Such other documents and matters of
law as we have deemed necessary to give the opinions hereinafter expressed.

 

127

 

We believe that the opinions referred to in clauses (i) and (j) above
are satisfactory in scope and form and that you are justified in relying
thereon.  Our opinion as to matters
referred to in paragraph 1 below is based solely upon an examination of
the Articles of Incorporation of the Issuer, the Good Standing Certificate and
the general business corporation law of the Commonwealth of Virginia.  Our opinion as to matters referred to in
paragraph 2 below is based solely upon an examination of the Certificate
of Incorporation of the Company, the Company Good Standing Certificate and the
general business corporation law of the State of Delaware.  Our opinion as to matters referred to in
paragraph 3 below is based solely upon an examination of the Certificate
of Incorporation, or the equivalent thereof, of each Subsidiary Guarantor, each
Subsidiary Guarantor Good Standing Certificate and the general business
corporation law of the State of Delaware and the Commonwealth of Virginia.  We have also relied, as to certain factual
matters, upon appropriate certificates of public officials and officers of the
Issuer, the Company and the Subsidiary Guarantors and upon representations of
the Company, the Issuer and you delivered in connection with the issuance and
sale of the Notes.

 

Based upon the
foregoing, we are of the opinion that:

 

1.             The Issuer is a corporation, validly existing and in
good standing under the laws of the Commonwealth of Virginia and has the
corporate power and the corporate authority to execute and deliver the Note
Purchase Agreement and to issue the Notes.

 

2.             The Company is a corporation, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and the corporate authority to execute and deliver the Note Purchase
Agreement.

 

3.             Tax Services of America, Inc., is a corporation, validly
existing and in good standing under the laws of the State of Delaware and
Hewfant, Inc., is a corporation validly existing and in good standing under the
laws of the Commonwealth of Virginia,  and each, as Subsidiary Guarantor, has the
corporate power and the corporate authority to execute and deliver the
Subsidiary Guaranty Agreement.

 

4.             The Note Purchase Agreement has been duly authorized by
all necessary corporate action on the part of the Issuer and the Company, has
been duly executed and delivered by the Issuer and the Company and constitutes
the legal, valid and binding contract of both the Issuer and the Company
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting creditors’ rights generally,
and general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).

 

5.             The Subsidiary Guaranty has been duly authorized by all
necessary

 

128

 

corporate action on the part of each Subsidiary
Guarantor, has been duly executed and delivered by each Subsidiary Guarantor
and constitutes the legal, valid and binding contract of each Subsidiary
Guarantor enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors’ rights
generally, and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at
law).

 

6.             The Notes have been duly authorized by all necessary
corporate action on the part of the Issuer, and the Notes being delivered on
the date hereof have been duly executed and delivered by the Issuer and
constitute the legal, valid and binding obligations of the Issuer enforceable
in accordance with their terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors’ rights generally, and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law).

 

Our opinion is
limited to the laws of the State of New York, the general business corporation
law of the State of Delaware and the Commonwealth of Virginia and the Federal
laws of the United States and we express no opinion on the laws of any other
jurisdiction.  This opinion may be
relied upon by the successors and assigns of the Purchasers, including
subsequent transferees of the Notes.

 

	
   

  	
  Respectfully submitted,

  
	
   

  
	
   

  
	
  JRFisher:SLeist

  

 

129

 

Schedule
I

 

SunAmerica Life Insurance Company

c/o AIG Global Investment Group

Houston, Texas

 

Monumental Life Insurance Company

c/o AEGON USA Investment Management, LLC

Cedar Rapids, Iowa

 

ING USA Annuity and Life Insurance Company

c/o ING Investment Management LLC

Atlanta, Georgia

 

ING Life Insurance and Annuity Company

c/o ING Investment Management LLC

Atlanta, Georgia

 

Connecticut General Life Insurance Company

c/o CIGNA Retirement & Investment Services

Hartford, Connecticut

 

Principal Life Insurance Company

c/o Principal Global Investors, LLC

Des Moines, Iowa

 

The Travelers Insurance Company

Hartford, Connecticut

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