-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F9tr/om6r9S3JDxQePpK4qA69xSti6VnX2YDJFq1KlI+YKD/QKpCteF4cduMfsPR 3xCCNSNezRwrkapv8FXqPQ== 0000950134-02-007115.txt : 20020612 0000950134-02-007115.hdr.sgml : 20020612 20020612170634 ACCESSION NUMBER: 0000950134-02-007115 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020610 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20020612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AFFILIATED COMPUTER SERVICES INC CENTRAL INDEX KEY: 0000002135 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 510310342 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12665 FILM NUMBER: 02677596 BUSINESS ADDRESS: STREET 1: 2828 N HASKELL AVE STREET 2: PO BOX 219002 CITY: DALLAS STATE: TX ZIP: 75204 BUSINESS PHONE: 2148416111 MAIL ADDRESS: STREET 1: 2828 N HASKELL CITY: DALLAS STATE: TX ZIP: 75204 FORMER COMPANY: FORMER CONFORMED NAME: ACS INVESTORS INC DATE OF NAME CHANGE: 19940603 FORMER COMPANY: FORMER CONFORMED NAME: AFFILIATED COMPUTER SYSTEMS INC DATE OF NAME CHANGE: 19721130 8-K 1 d97664e8vk.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: (Date of earliest event reported) June 10, 2002 Commission file number 0-24787 AFFILIATED COMPUTER SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 51-0310342 - ---------------------------------------------- --------------------------------- (State or other Jurisdiction of Incorporation) (IRS Employer Identification No.)
2828 NORTH HASKELL DALLAS, TEXAS 75204 (Address of principal executive offices) (Zip Code) (214) 841-6111 (Registrant's telephone number, including area code) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On June 10, 2002, Affiliated Computer Services, Inc. ("ACS") acquired 100% of the stock of AFSA Data Corp., a subsidiary of Fleet Holding Corp. for cash consideration of $410,000,000, plus related transaction costs (the AFSA "Acquisition"). ACS funded the AFSA Acquisition with a combination of cash on hand, borrowings under its existing $450 million credit facility (the "Credit Facility") and borrowings under a new 18-month $375 million interim facility (the "Interim Facility"), led by Goldman Sachs Credit Partners L.P. and Wells Fargo Texas, National Association. The obligations of ACS under the Interim Facility are pari passu with ACS' obligations under the Credit Facility. ITEM 7. EXHIBITS: 10.1 Stock Purchase Agreement dated May 16, 2002 by and among Fleet National Bank, Fleet Holding Corp., and ACS. 10.2 Credit Agreement dated June 10, 2002 between ACS, as Borrower, Goldman Sachs Credit Partners L.P., as Co-Lead Arranger, Sole Bookrunner and Sole Syndication Agent, Wells Fargo Bank Texas, National Association, as Co-Lead Arranger and Administrative Agent and certain other lenders and certain guarantors for a $375 million credit facility. 99.1 Affiliated Computer Services, Inc. Press Release dated June 10, 2002. ITEM 9. ACS hereby incorporates by reference into this Item 9 the information set forth in its press release, dated June 10, 2002, a copy of which is furnished herewith as Exhibit 99.1, and shall not be deemed to be filed. - -------------------------------------------------------------------------------- Page 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: June 12, 2002 Affiliated Computer Services, Inc. By: /s/ Warren Edwards ------------------------------ Warren Edwards Executive Vice President and Chief Financial Officer - -------------------------------------------------------------------------------- Page 3 INDEX TO EXHIBITS
Exhibit No. Description - ----------- ----------- 10.1 Stock Purchase Agreement dated May 16, 2002 be and among Fleet National Bank, Fleet Holding Corp., and Affiliated Computer Services, Inc. 10.2 Credit Agreement dated June 10, 2002 between Affiliated Computer Services, Inc., as Borrower, Goldman Sachs Credit Partners L.P., as Co-Lead Arranger, Sole Bookrunner and Sole Syndication Agent, Wells Fargo Bank Texas, National Association, as Co-Lead Arranger and Administrative Agent and certain other lenders and certain guarantors for a $375 million credit facility. 99.1 Affiliated Computer Services, Inc. Press Release dated June 10, 2002
- -------------------------------------------------------------------------------- Page 4 EX-10.1 3 d97664exv10w1.txt STOCK PURCHASE AGREEMENT EXHIBIT 10.1 STOCK PURCHASE AGREEMENT AMONG FLEET NATIONAL BANK FLEET HOLDING CORP. AND AFFILIATED COMPUTER SERVICES, INC. RELATING TO THE PURCHASE AND SALE OF ALL OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF AFSA DATA CORPORATION dated May 16, 2002 TABLE OF CONTENTS ARTICLE I DEFINITIONS.................................................................................1 Section 1.1 General Provisions..............................................................................1 Section 1.2 Definitions.....................................................................................2 ARTICLE II PURCHASE AND SALE OF SHARES.................................................................8 Section 2.1 Purchase and Sale of Shares.....................................................................8 Section 2.2 Purchase Price..................................................................................9 Section 2.3 Amount Payable at Closing.......................................................................9 Section 2.4 Final Closing Balance Sheet.....................................................................9 Section 2.5 Adjustment to Purchase Price...................................................................11 Section 2.6 Payment and Interest...........................................................................11 ARTICLE III THE CLOSING................................................................................11 Section 3.1 Time and Place of Closing......................................................................11 Section 3.2 Deliveries at Closing..........................................................................12 ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER AND SELLER PARENT......................13 Section 4.1 Organization...................................................................................13 Section 4.2 Authorization of Transaction...................................................................13 Section 4.3 Noncontravention...............................................................................14 Section 4.4 Consents.......................................................................................14 Section 4.5 Brokers' Fees..................................................................................15 Section 4.6 The Company Shares.............................................................................15 ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY.......................................15 Section 5.1 Organization, Qualification, and Corporate Power...............................................15 Section 5.2 Capitalization and Subsidiary..................................................................16 Section 5.3 Noncontravention with respect to the Company...................................................17 Section 5.4 Brokers' Fees..................................................................................17 Section 5.5 Title and Related Matters......................................................................17 Section 5.6 Insurance......................................................................................18 Section 5.7 Financial Statements...........................................................................18 Section 5.8 Absence of Undisclosed Liabilities.............................................................18 Section 5.9 Events Subsequent to December 31, 2001.........................................................18 Section 5.10 Legal Compliance...............................................................................18 Section 5.11 Intellectual Property..........................................................................18 Section 5.12 Contracts......................................................................................18 Section 5.13 Servicing......................................................................................18 Section 5.14 Litigation.....................................................................................18 Section 5.15 Licenses, Registrations or Permits............................................................18 Section 5.16 Labor Relations................................................................................18
Section 5.17 Affiliate Transactions.........................................................................18 Section 5.18 Bank Accounts; Lock Boxes......................................................................18 Section 5.19 Officers and Directors.........................................................................18 Section 5.20 Books and Records..............................................................................18 Section 5.21 Environmental Compliance.......................................................................18 Section 5.22 Accounts Receivable............................................................................18 ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER.........................................18 Section 6.1 Organization...................................................................................18 Section 6.2 Authorization of Transaction...................................................................18 Section 6.3 Noncontravention...............................................................................18 Section 6.4 Consents.......................................................................................18 Section 6.5 Brokers' Fees..................................................................................18 Section 6.6 Investment.....................................................................................18 Section 6.7 Financing......................................................................................18 ARTICLE VII INTERIM COVENANTS..........................................................................18 Section 7.1 Notices and Consents...........................................................................18 Section 7.2 Assignment of Contracts, Approvals, Etc........................................................18 Section 7.3 Full Access....................................................................................18 Section 7.4 Conduct of Business Prior to Closing...........................................................18 Section 7.5 Control of Business............................................................................18 Section 7.6 Insurance; Indemnity Obligations...............................................................18 Section 7.7 Intercompany Borrowings........................................................................18 Section 7.8 Public Announcements...........................................................................18 Section 7.9 Schedule Supplements...........................................................................18 Section 7.10 Exclusivity....................................................................................18 Section 7.11 Corporate Names................................................................................18 Section 7.12 The Trust......................................................................................18 Section 7.13 Transition Services............................................................................18 Section 7.14 Outsourcing Agreement..........................................................................18 Section 7.15 Sublease.......................................................................................18 Section 7.16 Trademark Assignment Agreement.................................................................18 Section 7.17 Loan Servicing Agreements......................................................................18 Section 7.18 Closing........................................................................................18 ARTICLE VIII POST-CLOSING COVENANTS.....................................................................18 Section 8.1 General........................................................................................18 Section 8.2 Litigation Support.............................................................................18 Section 8.3 Non-Competition Agreement......................................................................18 Section 8.4 Nonsolicitation of the Buyer's Employees.......................................................18 Section 8.5 Nondisclosure..................................................................................18 Section 8.6 Reformation....................................................................................18 Section 8.7 Relief.........................................................................................18 Section 8.8 Special Post-Effective Date, Pre-Closing Interim Covenant......................................18 Section 8.9 Treatment of Certain Accounts Receivable.......................................................18
-ii- ARTICLE IX TAXES.....................................................................................18 Section 9.1 Tax Representations............................................................................18 Section 9.2 Section 338 Elections and Forms................................................................18 Section 9.3 Tax Indemnity by Seller........................................................................18 Section 9.4 Tax Indemnity by Buyer.........................................................................18 Section 9.5 Allocation of Certain Taxes....................................................................18 Section 9.6 Filing Responsibility..........................................................................18 Section 9.7 Refunds........................................................................................18 Section 9.8 Cooperation and Exchange of Information........................................................18 Section 9.9 Tax Sharing Agreements.........................................................................18 Section 9.10 Payments.......................................................................................18 Section 9.11 Other Taxes....................................................................................18 Section 9.12 Survival Periods...............................................................................18 ARTICLE X EMPLOYEES AND EMPLOYEE MATTERS.............................................................18 Section 10.1 Employee Benefit Plans.........................................................................18 Section 10.2 Establishment of Company Group Health Plans....................................................18 Section 10.3 Employment of Transferred Employees............................................................18 Section 10.4 401(k) Matching Contribution...................................................................18 Section 10.5 Transferred Employee Benefit Matters...........................................................18 Section 10.6 Vacation Benefits..............................................................................18 Section 10.7 No Third Party Rights..........................................................................18 Section 10.8 Warn Act Requirements..........................................................................18 Section 10.9 Special Provisions for Certain Employees.......................................................18 ARTICLE XI CONDITIONS TO CLOSING......................................................................18 Section 11.1 Conditions to Obligation of the Buyer..........................................................18 Section 11.2 Conditions to Obligations of the Seller and Seller Parent......................................18 ARTICLE XII SURVIVAL, INDEMNIFICATION..................................................................18 Section 12.1 Survival of Representations and Warranties, Covenants and Agreements...........................18 Section 12.2 Indemnification................................................................................18 Section 12.3 Limitations....................................................................................18 Section 12.4 Remedies Exclusive.............................................................................18 Section 12.5 Mitigation.....................................................................................18 Section 12.6 Treatment of Payments..........................................................................18 ARTICLE XIII TERMINATION................................................................................18 Section 13.1 Termination of Agreement.......................................................................18 Section 13.2 Effect of Termination..........................................................................18 ARTICLE XIV MISCELLANEOUS..............................................................................18 Section 14.1 No Third-party Beneficiaries...................................................................18 Section 14.2 Entire Agreement...............................................................................18
-iii- Section 14.3 Succession and Assignment......................................................................18 Section 14.4 Counterparts...................................................................................18 Section 14.5 Headings.......................................................................................18 Section 14.6 Notices........................................................................................18 Section 14.7 Governing Law..................................................................................18 Section 14.8 Waiver Of Jury Trial...........................................................................18 Section 14.9 Amendments and Waivers.........................................................................18 Section 14.10 Severability...................................................................................18 Section 14.11 Expenses.......................................................................................18 Section 14.12 Construction...................................................................................18 Section 14.13 Incorporation of Exhibits and Disclosure Schedules and Confidentiality Agreement...............18 Section 14.14 Disclaimer of Warranties.......................................................................18
-iv- SELLER'S DISCLOSURE SCHEDULE Schedule 5.1 Organization, Qualification and Corporate Power Schedule 5.3 Noncontravention with Respect to the Company Schedule 5.5(b) Leases Schedule 5.5(d) Property Exceptions Schedule 5.6 Insurance Schedule 5.7 Financial Statements Schedule 5.9 Events Subsequent to December 31, 2001 Schedule 5.11(a) Intellectual Property - Owned Intangible Property Schedule 5.11(b) Intellectual Property - Licensed Intangible Property Schedule 5.11(c) Exceptions to Intellectual Property Schedule 5.12 Contracts Schedule 5.14 Litigation Schedule 5.15 Licenses, Permits and Exemptions Schedule 5.16 Labor Relations Schedule 5.17 Affiliate Transactions Schedule 5.18 Bank Accounts Schedule 5.19 Officers and Directors Schedule 5.22 Accounts Receivable Exceptions Schedule 7.3(b) Representatives of Seller Schedule 7.4(a) Conduct of Business Prior to Closing Schedule 7.6(c) Guaranties Schedule 7.16 Trademarks to be Assigned Schedule 9.1 Taxes Schedule 10.1(a) Employee Benefits Schedule 10.1(d) Change of Control Agreements Schedule 10.1(e) Financial Accounting Standards Number 112 Schedule 10.1(g) Retiree Medical Benefits Schedule 10.3(a) Employment Agreements BUYER'S DISCLOSURE SCHEDULE Schedule 7.4(c) Representatives of Buyer -v- EXHIBITS Exhibit A Outsourcing Agreement Terms Exhibit B Education Lending Employees Exhibit C Company Severance Plan Exhibit C-1 Subsidiary Severance Plan Exhibit D Loan Servicing Agreement Amendments Terms Exhibit E Monthly Plan -vi- STOCK PURCHASE AGREEMENT This Agreement is entered into as of May 16, 2002 (the "Agreement"), by and among Affiliated Computer Services, Inc., a Delaware corporation (the "Buyer"), Fleet Holding Corp., a Rhode Island corporation (the "Seller"), and Fleet National Bank, a national banking association (the "Seller Parent"). WHEREAS, the Seller is the owner of 100 shares of common stock, constituting all of the issued and outstanding shares of capital stock of AFSA Data Corporation, a Delaware corporation (the "Company"); and WHEREAS, this Agreement contemplates a transaction in which the Buyer will purchase from the Seller, and the Seller will sell to the Buyer, all of the issued and outstanding shares of capital stock of the Company held by the Seller for the consideration and on the terms and conditions set forth herein; and WHEREAS, the parties will make an election under Section 338(h)(10) of the Internal Revenue Code. NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows. ARTICLE I DEFINITIONS Section 1.1 General Provisions. For all purposes of this Agreement, except as otherwise expressly provided: (a) The terms defined in this Article I have the meanings assigned to them in this Article I and include the plural as well as the singular. (b) All accounting terms used herein have the meanings assigned to them under GAAP, except to the extent otherwise provided herein. (c) All references herein to designated "Articles," "Sections" and other subdivisions and to "Exhibits" and "Disclosure Schedules" are to the designated Articles, Sections and other subdivisions of the body of this Agreement and to the exhibits and other schedules to this Agreement. (d) Pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms. (e) The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. (f) All references herein to the Seller's "knowledge" or "knowledge of Seller" shall mean the actual personal knowledge of Douglas A. Leafstedt, Steven E. Snyder, Colleen Cain, John A. Fassbender, Steven P. Allen and Kent Schnacker. (g) On or prior to the date hereof, the Seller, on the one hand, and the Buyer, on the other, have delivered to each other schedules (respectively, its "Disclosure Schedule") setting forth, among other things, items the disclosure of which is necessary or appropriate either (i) in response to an express informational requirement contained in a provision hereof or (ii) as an exception to one or more representations, warranties or covenants contained in a section of this Agreement. The inclusion of an item on a Disclosure Schedule in response to a disclosure obligation or as an exception to a representation or warranty shall not be deemed an admission by the disclosing party that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect on the disclosing party. (h) "Previously Disclosed" means information set forth in a Disclosure Schedule, whether in response to an express informational requirement or as an exception to one or more representations, warranties or covenants. An item disclosed in one section of a Disclosure Schedule shall be deemed to be disclosed both under such section and under any other section to which such disclosure reasonably relates for all purposes under the Agreement. To the extent information is Previously Disclosed pursuant to the foregoing, the applicable representation, warranty or covenant shall be deemed to be modified by such Previously Disclosed information and references herein to such applicable representation, warranty or covenant shall be deemed to be references to such representation, warranty or covenant as so modified. Section 1.2 Definitions. As used in this Agreement, except as may be otherwise stated herein or in an Exhibit or Disclosure Schedule hereto, the following capitalized terms shall have the meanings set forth below: "Action" means any action, suit, petition, arbitration, inquiry, proceeding or investigation, whether civil or criminal, in law or in equity, by or before any arbitrator or Governmental Entity. "Affiliate" (and, with a correlative meaning, "Affiliated") means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person. As used in this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Agreement" has the meaning set forth in the preface above. "Allocation Agreement" has the meaning set forth in Section 9.2(c) hereof. "Applicable Law" means any domestic federal, state or local statute, law, ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment, decree, -2- policy, administrative or judicial doctrine, guideline or other requirement applicable to the Buyer, the Seller Parent, the Seller, the Company or the Subsidiary, as the case may be. "Assets of the Company" means the assets owned by the Company at any given time. "Business Day" means any day other than a Saturday, Sunday or a day on which the banks in Massachusetts or Texas are authorized by law or executive order to be closed. "Buyer" has the meaning set forth in the preface above. "Buyer's Representatives" has the meaning set forth in Section 7.4(c) hereof. "Buyer Savings Plan" has the meaning set forth in Section 10.5(a) hereof. "Buyer Welfare Plans" has the meaning set forth in Section 10.5(b)(i) hereof. "Closing " has the meaning set forth in Section 3.1 hereof. "Closing Date" has the meaning set forth in Section 3.1 hereof. "COBRA" has the meaning set forth in Section 10.1(g) hereof. "Code" means the Internal Revenue Code of 1986, as amended, and any successor thereto. "Company" has the meaning set forth in the preface above. "Company Benefit Plans" has the meaning set forth in Section 10.1(a) hereof. "Company Employees" means the employees of the Company or the Subsidiary at any given time from the date hereof through the Effective Time. "Company Shares" means 100 shares of common stock, par value $10.00 per share, of the Company held by the Seller. "Company Severance Plan" has the meaning set forth in Section 10.4(b)(v) hereof. "Confidentiality Agreement" means that certain letter agreement dated as of March 26, 2002 by and between Buyer and Ultimate Parent. "Current Company Employees" has the meaning set forth in Section 10.3 hereof. "Damages" means all costs, damages, disbursements or expenses (including, but not limited to interest and reasonable legal, accounting and other professional fees and expenses incurred in the investigation, collection, prosecution and defense of claims and amounts paid in settlement) that are actually imposed or otherwise actually incurred or suffered by the indemnified person, but shall not include incidental, consequential or other special damages. -3- "Disclosure Schedule" has the meaning set forth in Section 1.1(g) hereof. "Effective Time" means 11:59 PM (Eastern Time) on the last day of the month prior to the month in which the Closing occurs. "Effective Time Receivables" has the meaning set forth in Section 8.9 hereof. "Environmental Claim" means any written notice, claim, demand, action, suit, complaint, proceeding or other written communication by any Person alleging liability or potential liability under or relating to any Environmental Laws. "Environmental Laws" means all federal, state and local statutes, laws and regulations relating to pollution or protection of human health or the environment (including air, surface water, ground water, land surface and subsurface strata), including laws and regulations that create duties or obligations regarding the discharge or release, collection, storage, transportation for disposal, treatment or disposal of wastes, materials or substances in the interest of protecting human health or the environment. "Environmental Permits" means any license, permit, franchise, certificate of authority or order, or any extension, modification, amendment or waiver of the foregoing, required to be issued by any Governmental Entity pursuant to any applicable Environmental Laws. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any rules and regulations thereunder. "ERISA Plans" shall have the meaning set forth in Section 10.1(a) hereof. "Estimated Net Book Value" has the meaning set forth in Section 2.3(b) hereof. "Evaluation Materials" has the meaning set forth in the Confidentiality Agreement. "Final Closing Balance Sheet" has the meaning set forth in Section 2.4(b) hereof. "Financial Statements" has the meaning set forth in Section 5.7 hereof. "FSA" has the meaning set forth in Section 10.5(b)(iv) hereof. "GAAP" means United States generally accepted accounting principles and practices as in effect from time to time and applied consistently by the Company and the Subsidiary throughout the periods involved. "Governmental Entity" means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal, or other instrumentality of any government, whether federal, state or local, domestic or foreign. "Guaranties" has the meaning set forth in Section 7.6(c) hereof. -4- "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the related regulations and published interpretations. "Leases" has the meaning set forth in Section 5.5(b) hereof. "Liabilities" means any and all debts, losses, liabilities, offsets, claims, damages, fines, obligations, payments and accounts payable (including, without limitation, those arising out of any award, demand, assessment, settlement, judgment or compromise relating to any Action), and accruals for out-of-pocket costs and expenses (including, without limitation, reasonable attorneys' fees and expenses incurred in investigating, preparing or defending any Action). "Licensed Intangible Properties" has the meaning set forth in Section 5.11 hereof. "Lien" means any lien, pledge, security interest, mortgage, deed of trust, claim, encumbrance, easement, servitude, encroachment, charge or similar right of any other Person of any kind or nature whatsoever, other than those that customarily arise under securities laws in private transactions. "Loan Servicing Agreement Amendments" has the meaning set forth in Section 7.17 hereof. "LOA Employee" has the meaning set forth in Section 10.3 hereof. "LTD Recipient" has the meaning set forth in Section 10.9 hereof. "Material Adverse Effect" means (a) with respect to the Company, any change, effect, event or occurrence resulting in a material adverse effect on the business, financial condition or results of operations of the Company and the Subsidiary, taken as a whole, other than any change, effect, event or occurrence relating to (i) the announcement of the transactions contemplated by this Agreement, or (ii) the breach, default under, acceleration, modification, or amendment or the creation in any Person of a right to accelerate, modify or amend United States Government Contract No. PM94017001, as amended, modified or extended, by and between the United States Department of Education and ACS Government Services, Inc. (as successor to Computer Data Systems, Inc.) and any related subcontracts, or (b) with respect to the Seller or Seller Parent, any change, effect, event or occurrence resulting in a material adverse effect on Seller's or Seller Parent's ability to consummate the transactions contemplated hereby on a timely basis; and (c) with respect to Buyer, any change, event or occurrence resulting in a material adverse effect on Buyer's ability to consummate the transactions contemplated hereby on a timely basis. "Material Contracts" has the meaning set forth in Section 5.12 hereof. "Material Governmental Consent" has the meaning set forth in Section 7.2(c) hereof. "Maximum Indemnification Amount" has the meaning set forth in Section 12.3(a) hereof. "Monthly Plan" shall have the meaning set forth in Section 8.8 hereof. -5- "Names" has the meaning set forth in Section 7.11 hereof. "Net Book Value" means the book value of all Assets of the Company minus the book value of all Liabilities of the Company as reflected on the books and records of the Company as of the Effective Time, all as determined in accordance with GAAP (except no current or deferred income taxes, whether payable or receivable shall be included). "Neutral Auditors" means Ernst & Young, LLP. "Ordinary Course of Business" means the ordinary course of business of a Person consistent with past customs and practice. "Other Taxes" has the meaning set forth in Section 9.11 hereof. "Outsourcing Agreement" has the meaning set forth in Section 7.14 hereof. "Owned Intangible Properties" has the meaning set forth in Section 5.11 hereof. "Parent 401(k) Plan" has the meaning set forth in Section 10.4 hereof. "Parent LTD Plan" has the meaning set forth in Section 10.9 hereof. "Parent Savings Plans" has the meaning set forth in Section 10.5(a) hereof. "Parent Welfare Plans" has the meaning set forth in Section 10.5(b)(i) hereof. "Permitted Liens" means all imperfections of title or Liens (a) that are reflected or reserved against or disclosed on the Financial Statements of the Company, (b) that arise out of Taxes not in default and payable without penalty or interest, (c) of carriers, warehousemen, mechanics, materialmen and other similar Persons or otherwise imposed by law incurred in the Ordinary Course of Business for sums not yet delinquent, (d) that relate to deposits made in the Ordinary Course of Business in connection with workers' compensation, unemployment insurance and other types of social security, (e) in connection with Licensed Intangible Property and Owned Intangible Property the grant of a non-exclusive license for use or other grant of rights with respect to the use of any property under agreements, contracts, leases, licenses, instruments and other arrangements, which grants do not interfere with the current operation or use of the property subject to such Lien, or (f) that are not filed of record and are not material in amount either individually or when aggregated with other Permitted Liens. "Person" means an individual, a partnership (limited or general), a corporation, an association, a company, a trust, a joint venture, an unincorporated organization, a private agency or a Governmental Entity. "Policies" has the meaning set forth in Section 5.6 hereof. "Post-Effective Time Receivables" has the meaning set forth in Section 8.9 hereof. "Preliminary Closing Balance Sheet" has the meaning set forth in Section 2.4(a) hereof. -6- "Purchase Price" has the meaning set forth in Section 2.2 hereof. "Regulated Substance" means (a) any "hazardous substance" or "pollutant" or "contaminant," as such terms are defined in the Comprehensive Environmental Response, Compensation and Liability Act (Title 42 United States Code Section 9601 et seq.), or Title 40 Code of Federal Regulations Part 302, (b) any toxic or hazardous substance, material or waste (whether solid, liquid or gaseous), (c) "petroleum," as that term is defined in the Resource Conservation and Recovery Act, as amended (Title 42 United States Code Section 6691 et seq.), or Title 40 Code of Federal Regulations Section 280.1, or (d) any other substance or waste which is regulated under any applicable Environmental Laws with respect to its discharge or release, collection, storage, transportation for disposal, treatment or disposal. "Returns" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto. "Section 338 Elections" means an election under Section 338 of the Code or any comparable election under other applicable Tax Laws. "Section 338 Forms" means all Returns, documents, statements, and other forms that are required to be submitted to any federal, state, county or other local Taxing Authority in connection with a Section 338 Election. Section 338 Forms shall include, without limitation, any "statement of Section 338 election" and Internal Revenue Service Form 8023 (together with any schedules or attachments thereto) that are required pursuant to Treasury Regulation Section 1.338-1 or Treasury Regulation Section 1.338(h)(10)--1. "Section 338(h)(10) Election" means an election described in Section 338(h)(10) of the Code with respect to the Seller's sale of the Company Shares to the Buyer pursuant to this Agreement. Section 338(h)(10) Election shall include any corresponding election under any other relevant Tax Laws for which a separate election is permissible with respect to the Buyer's acquisition of the Company Shares from the Seller under this Agreement. "Securities Act" means the Securities Act of 1933, as amended. "Seller" has the meaning set forth in the preface above. "Seller Parent" has the meaning set forth in the preface above. "Seller Representatives" has the meaning set forth in Section 7.3(b) hereof. "Specified Receivable Trigger Date" has the meaning set forth in Section 8.9 hereof. "Specified Receivables" has the meaning set forth in Section 8.9(a) hereof. "Straddle Period" has the meaning set forth in Section 9.5(b) hereof. "Sublease" has the meaning set forth in Section 7.15 hereof. -7- "Subsidiary" means Concera Corporation, an Oregon corporation. "Subsidiary Severance Plan" has the meaning set forth in Section 10.5(b)(v) hereof. "Tax Audit" has the meaning set forth in Section 9.8(d) hereof. "Tax Laws" means the Code, U.S. federal, state, county or local, or foreign laws relating to Taxes, and any regulations or official administrative pronouncements released thereunder. "Taxes" means (a) all taxes (whether U.S. federal, state or local or foreign) based upon or measured by income and any other tax whatsoever, including, without limitation, gross receipts, profits, capital, sales, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll, social security, disability, employment, excise, asset, severance, documentary, stamp, or property taxes, duties and similar governmental charges, assessments, fees or levies imposed by or on behalf of any Governmental Entity together with any interest, penalties or additions to tax imposed with respect thereto, (b) any obligations under any agreements or arrangements with respect to any Taxes described in clause (a), and (c) any transferee or secondary liability or joint or several liability in respect of any amounts described in clause (a) imposed by law or as a result of being a member of any affiliated, consolidated, combined, unitary or similar group. "Taxing Authority" means any federal, state, local or foreign governmental authority, quasi-governmental authority, instrumentality or political or other subdivision, department or branch of any of the foregoing, with the legal authority to impose, assess or collect Taxes. "Threshold" has the meaning set forth in Section 12.3(a) hereof. "Trademark Assignment Agreement" has the meaning set forth in Section 7.16 hereof. "Transferred Employees" has the meaning set forth in Section 10.3 hereof. "Trust" shall mean AFSA Data Corporation Trust. "TSA" has the meaning set forth in Section 7.13 hereof. "Ultimate Parent" means FleetBoston Financial Corporation, a Rhode Island corporation. "Unresolved Changes" has the meaning set forth in Section 2.4(c)(iii) hereof. ARTICLE II PURCHASE AND SALE OF SHARES Section 2.1 Purchase and Sale of Shares. Upon the terms and subject to the conditions of this Agreement, at the Closing the Buyer shall purchase, acquire and accept from the Seller, and the Seller shall sell, convey, transfer, assign and deliver to the Buyer, the Company Shares, for the consideration specified herein. -8- Section 2.2 Purchase Price. The total purchase price (the "Purchase Price") payable to the Seller by the Buyer for all of the Company Shares shall be Four Hundred Ten Million Dollars ($410,000,000); provided, however, that if the Net Book Value reflected in the notice given pursuant to Section 2.3(b) or on the Final Closing Balance Sheet exceeds Ninety-Three Million Six Hundred Twelve Thousand Five Hundred Dollars ($93,612,500), then the Purchase Price shall be adjusted upward "dollar for dollar" in an amount equal to such excess, and if such Net Book Value is less than Ninety-Three Million Six Hundred Twelve Thousand Five Hundred Dollars ($93,612,500) then the Purchase Price shall be adjusted downward "dollar for dollar" in an amount equal to such shortfall. Section 2.3 Amount Payable at Closing. (a) At the Closing, the Buyer shall pay to Seller Parent, as agent for the Seller, Four Hundred Ten Million Dollars ($410,000,000). (b) No later than two (2) Business Days prior to the Closing Date, the Seller shall prepare and deliver to the Buyer a notice setting forth the Seller's good faith estimate of the Net Book Value (the "Estimated Net Book Value") as of the Effective Time, together with a schedule setting forth in detail the calculations supporting the Seller's computation thereof. At Closing, if the Estimated Net Book Value exceeds Ninety-Three Million Six Hundred Twelve Thousand Five Hundred Dollars ($93,612,500), then Purchaser shall pay to Seller an amount equal to such excess, and if Estimated Net Book Value is less than Ninety-Three Million Six Hundred Twelve Thousand Five Hundred Dollars ($93,612,500), then the Seller shall pay to the Purchaser the amount of such shortfall. (c) All amounts payable pursuant to this Section 2.3 shall be paid by wire transfer of immediately available funds to such account as has been designated by Seller Parent to the Buyer at least two (2) Business Days prior to the Closing Date. Section 2.4 Final Closing Balance Sheet. (a) Not later than sixty (60) days after the Closing Date, the Seller shall cause the consolidated balance sheet of the Company to be prepared as of the Effective Time in accordance with GAAP (however, no current or deferred income taxes, payable or receivable, shall be reflected on such balance sheet), and shall deliver such balance sheet to the Buyer (the "Preliminary Closing Balance Sheet"). The Seller shall also prepare and deliver to the Buyer with the Preliminary Closing Balance Sheet a schedule setting forth its calculation of Net Book Value based on the Preliminary Closing Balance Sheet as of the Effective Time. (b) If, within thirty (30) days following its receipt of the Preliminary Closing Balance Sheet, the Buyer does not dispute the Preliminary Closing Balance Sheet and/or the Seller's calculation of Net Book Value, such balance sheet shall be deemed to be the closing balance sheet of the Company (the "Final Closing Balance Sheet") for all purposes under this Agreement. (c) In the event the Buyer has any dispute with regard to the calculation of Net Book Value, such dispute shall be resolved in the following manner. -9- (i) The Buyer shall notify the Seller in writing within thirty (30) days after the Buyer's receipt of the Preliminary Closing Balance Sheet, which notice shall specify in reasonable detail the nature of the dispute. (ii) During the thirty (30) day period following the Seller's receipt of such notice, the Buyer and the Seller shall attempt to resolve such dispute and to determine the final calculation of Net Book Value. (iii) If, at the end of the thirty (30) day period specified in subsection (c) (ii) above, the Buyer and the Seller shall have failed to reach a written agreement with respect to all or a portion of such dispute (those items that remain in dispute at the end of such period are the "Unresolved Changes"), the matter shall be referred to the Neutral Auditors within ten (10) days of the end of such period. (iv) Each party hereto agrees to execute, if requested by the Neutral Auditors, a reasonable engagement letter. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditors shall be borne pro rata by the Seller and the Buyer in proportion to the allocation of the dollar amount of the Unresolved Changes, in the aggregate, between the Buyer and the Seller made by the Neutral Auditors such that the party with whom the Neutral Auditors agree more closely pays a lesser proportion of the fees and expenses. The Neutral Auditors shall act as an arbitrator to determine, based solely on the provisions of this Agreement and the presentations by the Seller and the Buyer, or representatives thereof, and not by independent review, only the resolution of the Unresolved Changes. The Neutral Auditors' resolution of the Unresolved Changes, which for each of the Unresolved Changes shall be within the range of values of the amount claimed by either party as to any of the Unresolved Changes, shall be made within thirty (30) days of the submission of the Unresolved Changes to the Neutral Auditors, shall be set forth in a written statement delivered to the Seller and the Buyer and shall be deemed to be mutually agreed upon by the Buyer and the Seller for all purposes of this Agreement. Any changes to the Preliminary Closing Balance Sheet resulting from such resolution of the Unresolved Changes shall be made, and such Preliminary Closing Balance Sheet, as so changed shall be the Final Closing Balance Sheet. (d) During the preparation of the Preliminary Closing Balance Sheet and the period of any dispute within the contemplation of this Section 2.4, the Buyer shall, and shall cause the Company to, (i) provide the Seller and the Seller's authorized representatives with full access to the books, records, facilities and employees of the Company and the Subsidiary, (ii) provide the Seller, within ten (10) Business Days after the Closing Date, with month-end financial information as of the Effective Time, including any information on magnetic tape or diskette requested by the Seller (such information to be consistent with that prepared by the Company in the Ordinary Course of Business prior to the Closing), (iii) cooperate fully with the Seller and the Seller's authorized representatives, including providing, on a timely basis, all information necessary or useful in preparing the Preliminary Closing Balance Sheet, and require Company Employees who become employees of the Buyer to assist the Seller and the Seller's authorized representatives in the preparation of the Preliminary Closing Balance Sheet. -10- Section 2.5 Adjustment to Purchase Price. If, pursuant to the Final Closing Balance Sheet, Net Book Value exceeds Estimated Net Book Value, the Buyer shall pay the Seller, as an adjustment to the Purchase Price, in a manner and with interest as provided in Section 2.6, the amount of such excess. If, pursuant to the Final Closing Balance Sheet, Estimated Net Book Value exceeds Net Book Value, the Seller shall pay to the Buyer, as an adjustment to the Purchase Price, in a manner and with interest as provided in Section 2.6, the amount of such excess. Section 2.6 Payment and Interest. (a) Any payments pursuant to Section 2.5 and this Section 2.6 shall be made within five (5) days after Net Book Value has been finally determined, by wire transfer to the Buyer or the Seller, as the case may be, of immediately available funds from such party to a designated account of such other party. (b) The amount of any payment pursuant to Section 2.5 shall bear interest from and including the day on which the Effective Time occurs but excluding the date of payment at a rate per annum equal for each day during such period to the federal funds effective rate as published daily by the Federal Reserve System. ARTICLE III THE CLOSING Section 3.1 Time and Place of Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Edwards & Angell, 101 Federal Street, 23rd Floor, Boston, Massachusetts, commencing at 10:00 a.m. local time on the second (2nd) Business Day following the date on which all conditions to the obligations of the parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective parties will take at the Closing itself) are satisfied, or on such other date as the Buyer and the Seller may mutually determine (the "Closing Date"). Upon consummation, except as specifically provided for herein, the Closing shall be deemed to be effective for all purposes, including without limitation, for tax, accounting, financial, risk allocation and liability purposes at the Effective Time and each of Seller Parent, Seller and Buyer hereby agree to take such action and to execute such documents as may be reasonably required to effect such intent. Section 3.2 Deliveries at Closing. (a) At the Closing, the Seller shall deliver to the Buyer: (i) Certificates representing all of the Company Shares, duly endorsed in blank or accompanied by duly executed stock powers, together with the certificates representing the Subsidiary shares, minute books, stock record books and other corporate documents relating to the Company and the Subsidiary; -11- (ii) Written tenders of resignation of the Chief Executive Officer of the Company, of each director of each of the Company and the Subsidiary, and of the Secretary of each of the Company and the Subsidiary and of the persons listed on Exhibit B hereto; (iii) The closing documents described in Sections 11.1(c) and (g) hereof; (iv) The Sublease; (v) The Outsourcing Agreement; (vi) The Trademark Assignment Agreement; (vii) The Loan Servicing Agreement Amendments; (viii) The TSA; (ix) An opinion of counsel of Seller Parent and Seller, dated as of the Closing Date, in form and substance reasonably satisfactory to Buyer to the effect that: (1) Each of Seller Parent, Seller, the Company and the Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation; (2) Each of Seller Parent and Seller has the corporate power and authority to enter into and perform its obligations under this Agreement; (3) This Agreement and the other closing documents delivered and executed by any of the Seller Parent or Seller have been duly and validly authorized, executed and delivered by each of Seller Parent and Seller and (assuming due authorization, execution and delivery by Buyer) are legal, valid and binding obligations of each of Seller Parent and Seller to the extent it is a party thereto, enforceable against each of Seller Parent and Seller in accordance with their respective terms, except as enforcement may be limited by receivership, conservatorship, and supervisory powers of bank regulatory agencies generally as well as bankruptcy, insolvency, reorganization, moratorium or other laws of general applicability relating to or affecting creditor's rights, or the limiting effect of rules of law governing specific performance, equitable relief and other equitable remedies or the waiver of rights or remedies; and (x) All other documents, instruments and writings required to be delivered by Seller at or prior to the Closing Date pursuant to this Agreement or otherwise reasonably requested by Buyer in connection herewith. (b) At the Closing, the Buyer shall deliver to Seller Parent, as agent for the Seller: (i) The closing documents described in Section 11.2(c) and (f) hereof; (ii) The Sublease; (iii) The Outsourcing Agreement; (iv) The Loan Servicing Agreement Amendments; -12- (v) The TSA; (vi) An opinion of counsel of Buyer, dated as of the Closing Date, in form and substance reasonably satisfactory to Seller to the effect that: (1) Buyer is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (2) Buyer has the corporate power and authority to enter into and perform its obligations under the Agreement; (3) This Agreement and the other closing documents delivered and executed by Buyer have been duly and validly authorized, executed and delivered by Buyer and (assuming due authorization, execution and delivery by Buyer) are legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general applicability relating to or affecting creditor's rights, or the limiting effect of rules of law governing specific performance, equitable relief and other equitable remedies or the waiver of rights or remedies; and (vii) All other documents, instruments and writings required to be delivered by Buyer at or prior to the Closing Date pursuant to this Agreement or otherwise reasonably requested by Seller in connection herewith. ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER AND SELLER PARENT As a material inducement to the Buyer to enter into this Agreement, Seller Parent and the Seller hereby represent and warrant to the Buyer as follows: Section 4.1 Organization. The Seller is a corporation and Seller Parent is a national banking association, each of which is duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation. Section 4.2 Authorization of Transaction. The Seller and Seller Parent each has the necessary corporate power and authority to execute and deliver this Agreement and the other documents and instruments to be executed by each of them hereunder, to perform its respective obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, the performance by the Seller and Seller Parent of their respective obligations hereunder and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Seller and Seller Parent. No other corporate action or proceeding on the part of the Seller or Seller Parent is necessary to authorize this Agreement or the other documents and instruments to be executed and delivered by the Seller or Seller Parent pursuant hereto or the consummation by the Seller or Seller Parent of the transactions contemplated hereby. When fully executed and delivered, this Agreement and each of the other documents and instruments to be executed and delivered by the Seller or Seller Parent pursuant hereto will constitute valid and binding agreements of the Seller and Seller Parent, enforceable against each of them in accordance with their respective terms, subject to the effect of receivership, conservatorship or supervisory -13- powers of bank regulatory agencies and subject to the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). Section 4.3 Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will directly or indirectly (with or without notice, lapse of time or both) (a) violate any injunction, judgment, order, decree, ruling or other restriction of any Governmental Entity to which the Seller or Seller Parent is subject or any provision of Applicable Law or the charter or bylaws of the Seller or Seller Parent, (b) conflict with, result in a breach of, constitute a default under, or result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller or Seller Parent is a party or by which it is bound, except where any such violation, conflict, breach, default, acceleration, termination, modification, cancellation or failure to give notice or obtain consent would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Seller or Seller Parent, or (c) result in the imposition of any Lien against the Company Shares or any Lien (other than Permitted Liens) against any of the Assets of the Company or any of the assets of the Subsidiary. Section 4.4 Governmental Consents. In connection with the consummation of the sale of the Company Shares by the Seller to the Buyer, no registrations, filings, applications, notices, consents, approvals, orders, qualifications or waivers are required to be made, filed, given or obtained by the Seller or any of its Affiliates, to or from any Governmental Entity, except for those (a) that become applicable solely as a result of the specific regulatory status of the Buyer or its Affiliates, (b) in connection with the applicable requirements, if any, of the Hart-Scott-Rodino Act, (c) pursuant to requirements of any agreement, contract, lease, instrument or other arrangement that Seller or any of its Affiliates (other than the Company or the Subsidiary) are party to, (d) except as set forth on Sections 5.3 and 5.15 of Seller's Disclosure Schedule, pursuant to state registration, licensing or notice requirements that may apply to the Company or the Subsidiary in connection with the sale of the Company Shares by the Seller to the Buyer or (e) that the failure to make, file, give or obtain would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Seller, the Seller Parent or the Company. As of the date hereof, neither Seller Parent nor the Seller is aware of any reason why any consent, approval or waiver necessary to permit consummation of the transactions contemplated by this Agreement, including without limitation all consents, approvals or waivers of any Governmental Entities, will not be received on a timely basis. Section 4.5 Brokers' Fees. Except for Morgan Stanley & Co., whose fees and expenses Seller Parent agrees will be paid by Seller Parent, neither the Seller nor Seller Parent has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Buyer, the Company or the Subsidiary, could become liable or obligated. -14- Section 4.6 The Company Shares. (a) The Seller holds of record and owns beneficially all of the issued and outstanding shares of capital stock of the Company, free and clear of all Liens. Other than such capital stock, there are no outstanding equity securities of the Company. The Seller is not a party to any option, warrant, purchase right, or other contract or commitment that could require the Seller to sell, transfer, or otherwise dispose of any of the Company Shares (other than this Agreement) or requiring the Seller to repurchase, redeem or otherwise acquire, or requiring the registration for sale of any of the capital stock of the Company or the Subsidiary. The Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any of the Company Shares. (b) The delivery at the Closing by Seller to Buyer of the certificates representing the Company Shares, duly endorsed for transfer or accompanied by duly endorsed stock powers, will vest Buyer on the Closing Date with good and marketable title to all of the Company Shares, free and clear of all Liens, other than Liens created by the Buyer or its Affiliates. Seller has the full power, right and authority to vote and transfer the Company Shares and, on the Closing Date, Seller will have the full power, right and authority to vote and transfer the Company Shares. At the Closing, the Company will have good and marketable title to all of the shares of capital stock of the Subsidiary, free and clear of all Liens, other than Liens created by Buyer or its Affiliates. ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY As a material inducement to the Buyer to enter into this Agreement, the Seller Parent and the Seller hereby represent and warrant to the Buyer as follows: Section 5.1 Organization, Qualification, and Corporate Power. Each of the Company and the Subsidiary is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. Each of the Company and the Subsidiary is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such authorization, qualification or good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Each of the Company and the Subsidiary has full corporate power and authority to carry on the businesses in which it is currently engaged and to own and use the properties currently owned and used by each in the conduct of its respective businesses. Section 5.1 of Seller's Disclosure Schedule lists each of the states where each of the Company and the Subsidiary is qualified to do business as of the date of this Agreement. Section 5.2 Capitalization and Subsidiary. (a) The entire authorized capital stock of the Company consists of 100 shares of common stock, par value $10.00 per share, of which 100 shares are issued and outstanding and zero shares are held in treasury. All of the issued and outstanding shares of capital stock of the Company have been duly authorized, are validly issued, fully paid and nonassessable. None of -15- the Company Shares has been issued in violation of any Applicable Law or preemptive right. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, or similar rights with respect to the capital stock of the Company. The Company is not under any obligation to repurchase, redeem or otherwise acquire or requiring registration for sale of any of the capital stock of the Company or the Subsidiary. There are no preemptive rights in respect of any of the capital stock of the Company. (b) The entire authorized capital stock of the Subsidiary consists of 100,000 shares of common stock, par value $1.00 per share, of which 32,380 shares are issued and outstanding and zero shares are held in treasury. Other than such capital stock, there are no outstanding equity securities of the Subsidiary. All of the issued and outstanding shares of capital stock of the Subsidiary have been duly authorized and are validly issued, fully paid and nonassessable and are held of record and owned beneficially by the Company free and clear of all Liens. None of the outstanding shares of capital stock of the Subsidiary has been issued in violation of any Applicable Law or preemptive right. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Subsidiary to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, or similar rights with respect to the capital stock of the Subsidiary. The Subsidiary is not under any obligation to repurchase, redeem or otherwise acquire or requiring registration for sale of any of the capital stock of the Subsidiary. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of any of the capital stock of the Subsidiary. There are no preemptive rights in respect of any capital stock of the Subsidiary. (c) The Company does not own (or have any agreement to acquire), directly or indirectly, any beneficial interest (except as creditor in the Ordinary Course of Business) in any Person other than in the Subsidiary and the Trust. The Subsidiary does not own (or have any agreement to acquire), directly or indirectly, any beneficial interest (except as creditor in the Ordinary Course of Business) in any Person. Section 5.3 Noncontravention with respect to the Company. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will directly or indirectly (with or without notice, lapse of time or both) (a) violate any injunction, judgment, order, decree, or ruling, of any Governmental Entity to which the Company or the Subsidiary is subject or any provision of Applicable Law or the respective charters or bylaws of the Company or of the Subsidiary, (b) except as set forth in Section 5.3 of Seller's Disclosure Schedule, conflict with, result in a breach of, constitute a default under, or result in the acceleration of, create in any party the right to accelerate, terminate, modify or terminate, cancel, or require any notice or consent under any material agreement, contract, lease, license, instrument, or other arrangement to which the Company or the Subsidiary is a party or by which any of them are bound, or (c) result in the imposition of any Lien against any of the Assets of the Company or any of the assets of the Subsidiary (other than a Permitted Lien). -16- Section 5.4 Brokers' Fees. Neither the Company nor the Subsidiary has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. Section 5.5 Title and Related Matters. (a) With the exception of properties disposed of in the Ordinary Course of Business since December 31, 2001, the Company or the Subsidiary has good title to, or holds by valid and existing lease or license, free and clear of all Liens other than Permitted Liens, each piece of real and personal property reflected on the Financial Statements and each piece of real and personal property acquired by the Company or the Subsidiary since December 31, 2001. Neither the Company nor the Subsidiary owns any real property. (b) Section 5.5(b) of Seller's Disclosure Schedule sets forth a list of all leases (including subleases) of real property to which the Company or the Subsidiary is a party (the "Leases"). The Leases are in full force and effect in all material respects and, as of the date hereof, neither the Company nor the Subsidiary has received a notice of default or termination with respect to any of the Leases. Except as set forth in Section 5.5(b) of Seller's Disclosure Schedule, there has not occurred any event which would constitute a material breach by the Company or the Subsidiary of, or material default by the Company or the Subsidiary in, the performance of any covenant, agreement or condition contained in any Lease, and to the Seller's knowledge, no lessor under a Lease is in material breach or default in the performance of any covenant, agreement or condition contained in such Lease. The Company or the Subsidiary has paid all rents and other charges to the extent due under the Leases. (c) With respect to material personal property used by the Company and the Subsidiary in its respective businesses and leased by the Company or the Subsidiary, the Company or the Subsidiary is not in default under the terms of any such lease. (d) The material tangible personal property used by the Company and the Subsidiary are adequate to conduct their respective businesses in all material respects as currently conducted. Except as set forth in Section 5.5(d) of Seller's Disclosure Schedule, to Seller's knowledge, the material items of tangible personal property owned or leased by the Company or the Subsidiary, and the improvements and structures (and the fixtures and appurtenances thereto) located on the real property subject to the Leases are generally in good working order, reasonable wear and tear excepted, and at all times during the past two years have been. (e) The Company and the Subsidiary have good and marketable title to or other right to use, free and clear of all Liens other than Permitted Liens, all tangible assets and property that are material to the business and operations of each of the Company and the Subsidiary as currently conducted. Section 5.6 Insurance. As of the date hereof, the Company and the Subsidiary are, and at all times during the past two years have been, covered by valid and currently effective insurance policies issued in favor of the Seller, Seller Parent and/or the Company and the Subsidiary that, in the judgment of the Seller, are customary for companies of similar size in the -17- industry and locale in which the Company or the Subsidiary operate. Section 5.6 of Seller's Disclosure Schedule sets forth a complete and accurate list of all insurance policies issued in favor of the Ultimate Parent, Seller, Seller Parent and/or the Company and the Subsidiary in connection with the business and operations of the Company and the Subsidiary (the "Policies"). None of the Ultimate Parent, Seller, Seller Parent, the Company or the Subsidiary is in material default with respect to the Policies, and none of the Ultimate Parent, Seller, Seller Parent, the Company or the Subsidiary has received any notice of a cancellation with respect to any of the Policies and, within the last year, none of the Ultimate Parent, Seller, Seller Parent, the Company or the Subsidiary has been refused any insurance coverage sought or applied for with respect to the business of the Company or the Subsidiary. Section 5.7 Financial Statements. Set forth in Section 5.7 of Seller's Disclosure Schedule are true and complete copies of the following: The audited consolidated balance sheets of the Company as of December 31, 2001 and the related consolidated statements of income and cash flows for the years ended December 31, 2001, together with the notes thereto, and the unaudited consolidated balance sheets of the Company as of March 31, 2002 and the related consolidated statements of income for the year 2002 through March 31, 2002 (collectively, the "Financial Statements"). The Financial Statements (a) are based on the books and records of the Company and the Subsidiary and (b) present fairly in all material respects the consolidated financial position and results of operations of the Company and the Subsidiary for the period or as of the date set forth therein, in each case, in accordance with GAAP consistently applied (except as otherwise indicated therein and except that the March 31, 2002 statements are not accompanied by notes or other textual disclosure required by GAAP). The balance sheets included in the Financial Statements do not reflect any material write-up or revaluation not separately identified increasing the book value of any assets other than write-ups or revaluations made in the Ordinary Course of Business, nor have there been any transactions since December 31, 2001 giving rise to any such material special or nonrecurring income or any such material write-up or revaluation other than those made in the Ordinary Course of Business. Section 5.8 Absence of Undisclosed Liabilities. Neither the Company nor the Subsidiary has any Liabilities in excess of $750,000, individually or in the aggregate, that would be required to be recorded under GAAP except Liabilities (a) that are reflected or disclosed on the Financial Statements, (b) that are disclosed in or contemplated by this Agreement, or (c) that were incurred after March 31, 2002 in the Ordinary Course of Business, and that individually or in the aggregate, would not reasonably be expected to cause a Material Adverse Effect. Section 5.9 Events Subsequent to December 31, 2001. Since December 31, 2001, there have been no events that, individually or in the aggregate, have had or would be reasonably expected to have a Material Adverse Effect on the Company nor has there been any sale, assignment or transfer of any of the material Assets of the Company, or material assets of the Subsidiary, other than sales, assignments or transfers of assets in the Ordinary Course of Business. Except with respect to activities undertaken in connection with the transactions contemplated by this Agreement, including the public announcement of the sale of the Company, since December 31, 2001 each of the Company and the Subsidiary has carried on its respective business in all material respects in the Ordinary Course of Business. Except as set forth in Section 5.9 of Seller's Disclosure Schedule, since December 31, 2001, the Company and the -18- Subsidiary have not suffered any material loss, damage, destruction or other casualty to any of the Assets of the Company or assets of the Subsidiary that were not replaced or covered by insurance. Section 5.10 Legal Compliance. Each of the Company and the Subsidiary has complied in all material respects with all Applicable Laws, except where noncompliance would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. It is the intent of the parties that this representation and warranty not apply to matters relating to student loan servicing, Taxes or employees, which are the subjects of Sections 5.13, 9.1 and 10.1, respectively. Section 5.11 Intellectual Property. Set forth in Section 5.11(a) of Seller's Disclosure Schedule hereto is a true and complete listing of all material intangible assets and properties owned by the Company and the Subsidiary as of the date hereof (the "Owned Intangible Properties"). Set forth in Section 5.11(b) of Seller's Disclosure Schedule is a true and complete listing of all material intangible assets and properties which the Company or the Subsidiary licenses or otherwise has the right to use from third parties (the "Licensed Intangible Properties"). The Owned Intangible Properties and the Licensed Intangible Properties constitute all material intangible assets and properties used or necessary in connection with the conduct of the businesses of the Company and the Subsidiary. Except as set forth in Section 5.11(c) of Seller's Disclosure Schedule, the Company or the Subsidiary has good and marketable title to the Owned Intangible Properties, free and clear of all Liens, other than Permitted Liens. Except as set forth in Section 5.11(c) of Seller's Disclosure, either the Company or the Subsidiary has the valid and enforceable right to use the Licensed Intangible Properties in the manner the Licensed Intangible Properties are used in connection with the business of the Company or the Subsidiary as currently conducted, free and clear of all Liens, other than Permitted Liens, except where the failure to have such valid and enforceable rights would not result in a Material Adverse Effect on the Company. To Seller's knowledge, none of the Owned Intangible Properties, nor the Company's or the Subsidiary's use of the Licensed Intangible Properties, violates or infringes against the rights of any third party, except where such violations or infringements would not reasonably be expected to have, individually or in the aggregate a Material Adverse Effect on the Company. To Seller's knowledge, no third party is violating or infringing upon the Owned Intangible Properties. Neither the Company nor the Subsidiary has specifically agreed to indemnify any Person against any charge of infringement with respect to the Owned Intangible Properties or the Licensed Intangible Properties, other than (a) subcontractors, customers, persons granted the right to use such property and software developers engaged by the Company or the Subsidiary, (b) employees, officers and directors of the Company or the Subsidiary, or (c) as set forth in any written agreement granting the Company or the Subsidiary the right to use the Licensed Intangible Properties. Section 5.12 Contracts. Section 5.12 of Seller's Disclosure Schedule hereto lists all oral and written agreements to which the Company or the Subsidiary is a party: (a) That generated annual revenue in excess of $200,000 during the year 2001 or that are expected to generate revenue in excess of $200,000 and have been entered into since January 1, 2002; -19- (b) That commit the Company or the Subsidiary to expend in excess of $200,000 during the year 2002 (but excluding agreements that are dependent upon the volume or number of transactions or services processed or delivered, unless such agreement contains a commitment to expend a minimum amount in excess of $200,000); (c) Limits or restricts the ability of the Company or the Subsidiary to compete or otherwise to conduct its business in any material manner or place; (d) Involves an obligation for borrowed money, a capitalized lease, or provides for a guaranty or surety by the Company or the Subsidiary in respect of any Person other than the Company or the Subsidiary; (e) Contains restrictions with respect to payment of dividends or any other distribution in respect of capital stock; (f) Relates to any loan or advance to, or investment in, any Person by the Company or the Subsidiary or to the making of any such loan, advance or investment in each case involving an amount in excess of $50,000; or (g) Effecting a divestiture or acquisition of any Person or any material Assets of the Company or material assets of the Subsidiary where the agreement provides that the Company or the Subsidiary is subject to indemnity obligations or obligations to perform material services (but excluding all such agreements relating to outsourcing, servicing, servicing acquisition or similar agreements entered into in the Ordinary Course of Business). The agreements set forth in Section 5.12 of Seller's Disclosure Schedule are referred to herein as the "Material Contracts". Except as set forth in Section 5.12 of Seller's Disclosure Schedule, each Material Contract is valid and in full force and effect according to its terms and the Company or the Subsidiary, as applicable, has duly performed in all material respects all its obligations under each Material Contract to the extent that such obligations to perform have accrued, and no breach or default, or, to the Seller's knowledge, alleged breach or default or event which would (with the passage of time, notice or both) constitute a breach or default by the Company or the Subsidiary thereunder, or, to the Seller's knowledge, any other party or obligor with respect thereto, has occurred (and neither the Company or the Subsidiary has received any formal cure notice or written allegation of any intention to terminate or cancel any Material Contract, other than those that have been rescinded). True copies of each of the written agreements identified in Section 5.12 of Seller's Disclosure Schedule, including all substantive amendments, waivers and modifications thereto have been made available to Buyer. Section 5.13 Servicing. The Company is in compliance with Applicable Laws relating to the servicing of student loans, except where noncompliance would not have a Material Adverse Effect on the Company. Section 5.14 Litigation. Except as set forth in Section 5.14 of Seller's Disclosure Schedule, there are no Actions pending or, to the Seller's knowledge, threatened against the Company or the Subsidiary or against any Asset of the Company or asset of the Subsidiary, that -20- (a) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (b) enjoins or seeks to enjoin any significant activity of the Company or the Subsidiary or (c) involves a claim of liability against the Company or the Subsidiary in excess of $250,000. To Seller's knowledge, there does not exist any fact or circumstance that would be reasonably expected to give rise to any such Action. There are no judgments or outstanding orders, injunctions, decrees, stipulations or awards (whether rendered by a court or administrative agency, or by arbitration) against the Company or the Subsidiary. There is no actual or, to the Seller's knowledge, threatened Action which presents a claim to restrain, condition or prohibit the transactions contemplated herein. Section 5.15 Licenses, Registrations or Permits. Each of the Company and the Subsidiary hold all material licenses, registrations or permits (or exemptions therefrom) necessary to conduct the business and operations of the Company and the Subsidiary as presently conducted. Section 5.15 of Seller's Disclosure Schedule sets forth all licenses, registrations or permits held by the Company or the Subsidiary. Each such material license, registration and permit is in full force and effect. No Action is pending, or to the Seller's knowledge, is threatened, seeking the revocation, cancellation, suspension or limitation of any such license registration, permit or exemption. Section 5.16 Labor Relations. There is no organized labor strike, dispute, slowdown or stoppage, or collective bargaining or unfair labor practice claim pending, or to the Seller's knowledge, threatened against or affecting the Company or the Subsidiary. Neither the Company nor the Subsidiary is a party to a collective bargaining agreement or other similar contract or agreement or understanding with any labor organization, group or association. To the Seller's knowledge, no labor organization, collective bargaining representative or group of employees claims to represent a majority of the employees of the Company or the Subsidiary in an appropriate unit of the Company and the Subsidiary. Except as set forth in Section 5.16 of the Seller's Disclosure Schedule, within the last two (2) years prior to the date hereof, neither the Company nor the Subsidiary has been the subject to any representational campaign by any union or other organization or group seeking to become the collective bargaining representative of any of the employees of the Company or of the Subsidiary or been subject to, or to the Seller's knowledge, threatened with any strike or other concerted labor activity or dispute. Each of the Company and the Subsidiary is in material compliance with all Applicable Laws respecting employment practices, terms and conditions of employment and wages and hours and has not engaged in any unfair labor practices. Section 5.17 Affiliate Transactions. Except as set forth in Section 5.17 of Seller's Disclosure Schedule or in the Financial Statements, (a) none of the Seller or any of its Affiliates (other than the Company and the Subsidiary) provides or causes to be provided to the Company or the Subsidiary any material assets, services or facilities and (b) none of the Company or the Subsidiary provides or causes to be provided to the Seller or any of its Affiliates (other than the Company and the Subsidiary) any material assets, services or facilities, in either the case of (a) or (b) other than administrative and corporate services such as financial reporting, treasury, tax compliance, risk management, payroll, cash management, human resources and benefits administration, legal, information technology, corporate sponsored training, group purchasing and other similar services provided by a parent company to its operating subsidiaries. Other than -21- as provided for by this Agreement, the consummation of the transactions contemplated hereby will not (either alone, or upon the occurrence of any act or event, or with the lapse of time, or both) result in any payment arising or becoming due from the Company or the Subsidiary to Seller or any of its Affiliates (other than the Company or the Subsidiary). Section 5.18 Bank Accounts; Lock Boxes. Section 5.18 of Seller's Disclosure Schedule sets forth a list of all banks or other financial institutions with which the Company or the Subsidiary have an account or maintain a lock box or safe deposits box, showing the type and account number of each such account, lock box and safe deposit box. Section 5.19 Officers and Directors. Section 5.19 of Seller's Disclosure Schedule lists all of the current directors and senior officers of each of the Company and the Subsidiary. Section 5.20 Books and Records. The minute books and records of the Company and the Subsidiary contain true, complete and correct records of all actions taken at all meetings and by all written consents in lieu of meetings of the Board of Directors, or any committees thereof, and stockholders of the Company and the Subsidiary since January 1, 2001. Section 5.21 Environmental Compliance. The Company and the Subsidiary have obtained all Environmental Permits required to carry on their respective businesses as now conducted, are in compliance with the terms and conditions of all such Environmental Permits and are in compliance with all applicable Environmental Laws, except for any of the foregoing as would not reasonably be expected to result, individually or in the aggregate, in material liability under or relating to the Environmental Laws. Neither the Company nor the Subsidiary has received any Environmental Claim and neither the Company nor the Subsidiary is aware of any Environmental Claim that has been threatened in writing. Neither the Company nor the Subsidiary has entered into, has agreed to, or is subject to as a party any Environmental Claim that has been received by the Company or the Subsidiary, any material order of any Governmental Entity received by the Company or the Subsidiary, or any material order of any Governmental Entity issued to Company or the Subsidiary under or relating to any Environmental Laws. To the knowledge of the Seller, except as would not reasonably be expected to result, individually or in the aggregate, in material liability under or relating to Environmental Laws, Regulated Substances have not been generated, transported, treated, stored, disposed of, arranged to be disposed of, released or threatened to be released by the Company or the Subsidiary at, on, from or under any of the properties or facilities currently or formerly (within the past two years) owned or leased by the Company or the Subsidiary, in material violation of, or in a manner to a location that would reasonably be expected to give rise to material liability to the Company or the Subsidiary under or relating to, any Environmental Laws. Section 5.22 Accounts Receivable. Except as set forth in Section 5.22 of Seller's Disclosure Schedule, all of the accounts receivable that are recorded on the books of the Company or the Subsidiary are bona fide and represent amounts validly due; provided, however, that this representation shall not apply to any accounts receivables or any other amounts due from Buyer or its Affiliates to the Company or its Subsidiary. -22- ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER As a material inducement to the Seller and Seller Parent to enter into this Agreement, the Buyer hereby represents and warrants to the Seller and Seller Parent as follows: Section 6.1 Organization. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. Section 6.2 Authorization of Transaction. The Buyer has the necessary corporate power and authority to execute and deliver this Agreement and the other documents and instruments to be executed by it hereunder, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, the performance by the Buyer of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Buyer. No other corporate action or proceeding on the part of the Buyer is necessary to authorize this Agreement or the other documents and instruments to be executed and delivered by the Buyer pursuant hereto or the consummation by the Buyer of the transactions contemplated hereby. When fully executed and delivered, this Agreement and each of the other documents and instruments to be executed and delivered by the Buyer pursuant hereto will constitute valid and binding agreements of the Buyer, enforceable against it in accordance with their respective terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). Section 6.3 Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will directly or indirectly (with or without notice, lapse of time or both) (a) violate any injunction, judgment, order, decree, ruling or other restriction of any Governmental Entity to which the Buyer is subject or any provision of Applicable Law or the charter or bylaws of the Buyer or (b) conflict with, result in a breach of, constitute a default under, or result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound, except where any such violation, conflict, breach, default, acceleration, termination, modification, cancellation or failure to give such notices or obtain such consents would not reasonably be expected to have a Material Adverse Effect on the Buyer. Section 6.4 Governmental Consents. In connection with the consummation of the purchase of the Company Shares by the Buyer from the Seller, no registrations, filings, applications, notices, consents, approvals, orders, qualifications or waivers are required to be made, filed, given or obtained by the Buyer or any of its Affiliates, to or from any Governmental Entity except for those (a) that become applicable solely either as a result of the specific regulatory status of the Seller or its Affiliates, (b) in connection with the applicable requirements, if any, of the Hart-Scott-Rodino Act, or (c) the failure to make, file, give or obtain would not -23- have a Material Adverse Effect on the Buyer. As of the date hereof, the Buyer is not aware of any reason why any consent, approval or waiver necessary to permit consummation of the transactions contemplated by this Agreement, including without limitation all consents, approvals or waivers of any Governmental Entities, will not be received on a timely basis. Section 6.5 Brokers' Fees. Except for Goldman, Sachs & Co., whose fees and expenses will be paid by the Buyer, the Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Seller or Seller Parent could become liable or obligated. Section 6.6 Investment. The Buyer is acquiring the Company Shares for investment and not with a view toward or for sale in connection with any distribution thereof, or with any present intention of distributing or selling the Company Shares. The Buyer agrees that the Company Shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act, except pursuant to an exemption from such registration available under such act, and without compliance with state securities laws, in each case, to the extent applicable. Section 6.7 Financing. The Buyer has immediate access to all funds necessary to pay the Purchase Price and related fees and expenses, and the Buyer has the financial capacity to perform all of its other obligations under this Agreement. ARTICLE VII INTERIM COVENANTS The parties agree as follows with respect to the period between the time of execution of this Agreement and the Closing. Section 7.1 Notices and Consents. (a) From the date hereof through the Closing, subject to the terms and conditions herein provided, including Section 7.2, each of the Seller, Seller Parent, and the Buyer agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement and to cooperate in good faith with the other in connection with the foregoing, including using its reasonable best efforts (i) to obtain all consents, approvals and authorizations that are required to be obtained under any Applicable Law, (ii) to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties hereto to consummate the transactions contemplated hereby, (iii) to effect all necessary registrations and filings, including, but not limited to, filings under the Hart-Scott-Rodino Act and submissions of information requested by Governmental Entities, and (iv) to fulfill all conditions to this Agreement. (b) In addition to the foregoing, and not in limitation thereof, each of the Seller, Seller Parent and Buyer covenants and agrees to file the notices required to be filed with any Person in connection with the transactions contemplated hereby within five (5) Business Days of the date -24- hereof, including but not limited to, filing premerger notification under the Hart-Scott-Rodino Act (which shall be filed within two (2) Business Days of the date hereof and each party shall request early termination of the waiting period) and all other notices, registrations, applications or other filings that may be required with any other Governmental Entities. The Seller, Seller Parent, and the Buyer further covenant and agree, with respect to a threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of the parties hereto to consummate the transactions contemplated hereby, to use their respective reasonable best efforts to prevent the entry, enactment or promulgation thereof, as the case may be. Further, each of Buyer and Seller will be given notice of and a reasonable opportunity to participate in contacts with any Governmental Entity regarding antitrust or merger control matters. To the extent permitted by Applicable Law, Buyer and Seller shall provide the other the opportunity to make copies of all material correspondence, filings or communications (or memoranda setting forth the substance thereof) between such party or its representatives, on the one hand, and any Governmental Entity, on the other hand, with respect to this Agreement or the transactions contemplated by this Agreement, except for documents filed pursuant to Item 4(c) of the Hart-Scott-Rodino Notification and Report Form or communications regarding the same or documents or information submitted in response to any request for additional information or documents pursuant to the Hart-Scott-Rodino Act which reveal Seller's or Buyer's negotiating objectives or strategies or purchase price expectations. Buyer and Seller acknowledge that all such information provided pursuant to the foregoing sentence shall be subject to the terms of the Confidentiality Agreement. (c) Buyer and Seller shall notify and keep the other advised as to (i) any material communication from the Federal Trade Commission, the United States Department of Justice or any other Governmental Entity regarding any of the transactions contemplated hereby and (ii) any Action pending and known to such party or, to its knowledge, threatened, which challenges the transactions contemplated hereby. Except as provided herein, Buyer, Seller and Seller Parent shall not take any action inconsistent with their obligations under this Agreement which would materially hinder or delay the consummation of the transactions contemplated by this Agreement. (d) All documents required to be filed by any of Buyer or Seller or any of their respective Affiliates with any Governmental Entity in connection with this Agreement or the transactions contemplated by this Agreement will comply in all material respects with the provisions of Applicable Law. Section 7.2 Assignment of Contracts, Approvals, Etc. (a) Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any contract or permit, or any claim, right or benefit arising thereunder or resulting therefrom, if pursuant to the terms of such contract or permit the purchase and sale of the Company Shares would constitute an attempted assignment thereof, that without the consent of a third party thereto, would constitute a breach or other contravention thereof, be ineffective with respect to any party thereto, or in any way adversely affect the rights of the Buyer, the Company, the Subsidiary or the Seller thereunder. -25- (b) With respect to any contract or permit that by its terms requires the consent of a third party to the purchase and sale of the Company Shares, subject to the provisions of Section 7.2(c) the Seller and the Buyer will use reasonable good faith efforts to obtain as expeditiously as possible the written consent of the other party or parties to such contract or permit. (c) It is, and the Buyer acknowledges that it shall be, the obligation of the Seller (and not the Buyer) to obtain all required consents with respect to any agreement, contract, lease, instrument, arrangement or permit, but that the Seller shall not be obligated to pay any money to any Person or to offer or grant other financial or other accommodations to any Person in connection with obtaining any consent, waiver, confirmation, novation or approval with respect to any contract or permit. The Buyer will use reasonable good faith efforts to assist the Seller in obtaining the required consents. Notwithstanding the foregoing, the failure by the parties to obtain any required consent (other than the failure to obtain any material non-contractual consent to the transfer of the Shares from any Governmental Entity possessing competent regulatory jurisdiction over the Seller or the Seller Parent to the transfer of the Company Shares from Seller to Buyer (the "Material Governmental Consents") and other than the expiration of the waiting period under the Hart-Scott-Rodino Act), waiver, confirmation, novation or approval with respect to any agreement, contract, lease, instrument, arrangement or permit shall not relieve either party from its obligation to consummate at the Closing the transactions contemplated by this Agreement. In addition, no action taken by any third party amending, modifying, terminating or altering performance under any agreement, contract, lease, instrument, arrangement or permit or indicating an intention of doing any of the foregoing shall relieve either party from its obligation to consummate at the Closing the transactions contemplated by the Agreement. (d) For one hundred eighty (180) days following the Closing Date, the Buyer and Seller shall continue to use their commercially reasonable efforts, and shall cooperate with each other, to obtain the aforementioned consents, however, Seller shall not be obligated to pay any money to any Person or to offer or grant other financial or other accommodations to any Person in connection with obtaining any consent, waiver, confirmation, novation or approval with respect to any contract or permit. Section 7.3 Full Access. (a) From the date hereof through the Closing Date, the Seller will permit and will cause the Company and the Subsidiary to permit, representatives of the Buyer to have full access during normal business hours, upon two (2) Business Days' prior notice and in a manner so as not to interfere with the normal business operations of the Company and the Subsidiary, to all premises, properties, personnel, books, records, contracts, and documents of or pertaining to the Company and the Subsidiary, provided, however, that under no circumstances shall the Seller be required to provide to the Buyer and its representatives access to, nor shall any of them have rights to make copies of, (i) tax returns filed by any of the Seller's Affiliates (other than the Company and the Subsidiary), (ii) any information or materials subject to confidentiality agreements with third parties or required to be kept confidential by law, or (iii) any privileged attorney-client communication or document. The Buyer (i) will treat and hold any information it -26- receives from the Seller, the Company, or the Subsidiary in the course of the reviews contemplated by this Section 7.3 as Evaluation Materials in accordance with, and subject to the terms of the Confidentiality Agreement, which is hereby incorporated in this Section 7.3(a) as though fully set forth herein, (ii) will not use any of the Evaluation Materials except in connection with this Agreement, and, (iii) if this Agreement is terminated for any reason whatsoever, upon the written request of the Seller will return to Seller Parent all copies of such Evaluation Materials which are in its possession. The Seller shall not be required to permit any such access or provide any such information to the extent such access or the disclosure of such information in the sole judgment of Seller unreasonably interferes with the Seller, the Company or the Subsidiary or would, in the sole judgment of the Seller, violate or prejudice the rights of the borrowers (including, but not limited to, privacy rights) or other third parties, jeopardize any attorney-client privilege of the Seller or any of its Affiliates, including the Company or the Subsidiary, or contravene any law, rule, regulation, order, judgment or decree binding upon, or any agreement, contract or other arrangement, entered into by, the Seller or any of its Affiliates, the Company or the Subsidiary or jeopardize the Company's or the Subsidiary's rights under any such agreement, contract or other arrangement. (b) All requests for access to the offices, plants, properties, books, and records relating to the business and the affairs of the Company and the Subsidiary shall be made to the representatives of the Seller set forth on the date hereof in Section 7.3(b) of Seller's Disclosure Schedule or to such other representatives as the Seller shall designate in writing to the Buyer (the "Seller Representatives"), who shall be solely responsible for coordinating all such requests and all access permitted hereunder. It is further understood and agreed that neither the Buyer nor its authorized representatives shall contact any of the employees, customers, suppliers, contractors of the Seller or the Company or the Subsidiary or any of the borrowers or anyone else with whom the Company or the Subsidiary has a business relationship in connection with the transactions contemplated hereby, whether in person or by telephone, mail or other means of communication, without the prior authorization of the Seller Representatives. Section 7.4 Conduct of Business Prior to Closing. (a) From the date hereof until the Closing, except as set forth on the date hereof in Section 7.4(a) of Seller's Disclosure Schedule, Seller shall cause the Company and the Subsidiary to carry on their respective businesses in the Ordinary Course of Business and shall use commercially reasonable efforts to preserve intact their current business organization, maintain their assets in good working order (reasonable wear and tear excepted), keep available the services of their current officers and employees and maintain existing relations and goodwill with their suppliers, brokers, customers, landlords, creditors, employees and agents having business relationships with any of them. Without limiting the generality of the foregoing, except as otherwise specifically provided by this Agreement, without the prior consent of the Buyer, Seller will not permit the Company or the Subsidiary to, and neither the Company nor the Subsidiary will, do (nor will any of them authorize or propose or enter into any contract, agreement, commitment or arrangement to do) any of the following: (i) Authorize any direct or indirect redemption or acquisition of any shares of its capital stock; -27- (ii) Split, combine or reclassify any capital stock or issue any other security in respect of, in lieu of or in substitution for shares of capital stock or repurchase, redeem or otherwise acquire any shares of capital stock; (iii) Issue, deliver, pledge, encumber, sell, or purchase any shares of capital stock or securities convertible into, or rights, warrants or options to acquire, any shares of capital stock or other convertible securities; (iv) Acquire or agree to acquire by merging or consolidating with, or by purchasing any portion of the capital stock or assets of, or by any other manner, any business, corporation, partnership, association or other business organization, or any division thereof; (v) Amend its Articles of Incorporation or By-laws; (vi) Grant any increase in the compensation or benefits of, or pay any bonus to, any officer or employee (whether general or otherwise) other than those committed to, by contract or otherwise (other than in the Ordinary Course of Business); (vii) Enter into any employment or compensation agreement with any officer or employee (other than in connection with the hiring of new employees in the Ordinary Course of Business), or terminate the employment of any officer or employee (other than in the Ordinary Course of Business); (viii) Except as provided in Section 10.2 hereof relating to the establishment of group health plans for Company Employees, modify, cancel or establish any Company Benefit Plan in regard to any of its current employees except to the extent required by any Applicable Law; (ix) Except in the Ordinary Course of Business or as required by their terms, amend or terminate any Material Contract; (x) Terminate or fail to use reasonable efforts to renew or preserve any license, permit or registration except where the failure to hold any such license, permit or registration would not reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect; (xi) Sell, transfer, lease, license, mortgage, encumber or otherwise dispose of any assets, rights or liabilities, except (A) in the Ordinary Course of Business, (B) for dispositions of property not greater than $100,000 individually or $500,000 in the aggregate, or (C) as contemplated in connection with this Agreement; (xii) Change any financial or Tax accounting methods, principles, practices or policies, except as required by GAAP; provided, that notwithstanding anything to the contrary herein, no adjustments shall be made to any accruals or reserves reflected in the Financial Statements in contemplation of the transactions contemplated hereby; -28- (xiii) Make any capital expenditure, or commitments with respect thereto, except for capital expenditures that do not exceed $250,000 individually (other than in furtherance of projects already commenced or planned or in the Ordinary Course of Business); (xiv) Incur, assume or guarantee any indebtedness (except for borrowings from the Seller, Seller Parent or any of its Affiliates) or capital leases, or create or permit to become effective any Lien or charge of any kind upon its assets (except pursuant to borrowings from the Seller, Seller Parent or any of its Affiliates) (other than in the Ordinary Course of Business); (xv) (A) Pay, discharge, settle or satisfy any claims, liabilities, obligations or litigation, where such payment, discharge, settlement or satisfaction would have an adverse effect on the Company's financial condition in excess of $250,000, other than the payment, discharge, settlement or satisfaction, in the Ordinary Course of Business or in accordance with their terms, of liabilities reflected or reserved against in the Financial Statements (or the notes thereto) or incurred since the date of such financial statements in the Ordinary Course of Business, or (B) waive any claims or rights of substantial value; or (xvi) Agree to or make any commitment to take any actions prohibited by this Section 7.4. (b) Notwithstanding the provisions of this Section 7.4, nothing in this Agreement shall be construed or interpreted to prevent the Seller, the Company or the Subsidiary from (1) paying or making any cash dividends, (2) making or accepting intercompany or intracompany advances to, from or with the Seller or any of its Affiliates, or (3) engaging in any transaction incident to the normal cash management procedures of the Seller and its Affiliates in the Ordinary Course of Business. (c) Buyer hereby designates the two officers of Buyer or its Affiliates listed on Section 7.4(c) of Buyer's Disclosure Schedule, or such other officers as Buyer may designate upon written notice to Sellers (the "Buyer's Representatives"), to be responsible for determining whether consent to any action prohibited by this Section 7.4 shall be given by Buyer. The Seller Representatives may contact Buyer Representatives with any requests for consent to any action prohibited by this Section 7.4. The Buyer Representatives shall respond promptly in writing to any request for consent to the taking of any action under this Section 7.4. If the Buyer Representatives do not respond to any request within five (5) Business Days of its delivery, such consent will be deemed to have been given. Seller may rely on any consent given in writing by any of the Buyer Representatives. The time periods within which the Buyer Representatives must respond shall commence on the date on which either of the Buyer Representatives is delivered a written request for consent. Section 7.5 Control of Business. Nothing in this Agreement shall give Buyer, directly or indirectly, the right to control or direct the Company's or the Subsidiary's operations prior to Closing. -29- Section 7.6 Insurance; Indemnity Obligations. (a) Seller Parent and its Affiliates shall maintain in effect until the Closing Date all casualty and liability insurance policies in connection with the Company's business (or comparable replacement policies). Effective at 12:00 a.m. eastern time on the day after the Closing Date, all insurance coverage and self-insurance maintained by Seller Parent and its Affiliates (excluding the Company and the Subsidiary) under which the Company and the Subsidiary are insured or self-insured, including any and all bonds or other indemnity obligations (other than Guaranties), shall be cancelled and terminated (except to the extent that they may not, by their terms, be so cancelled or terminated). All premium refunds paid to Seller Parent or its Affiliates (excluding the Company and the Subsidiary) relating to insurance covering the Company and the Subsidiary for all periods ending prior to the Effective Time shall be the property of Seller Parent or its Affiliates, as the case may be, whether such refunds are paid on, before or after the Effective Time. All premium refunds paid to Seller Parent or its Affiliates (excluding the Company or the Subsidiary) relating to insurance covering the Company or the Subsidiary for all periods beginning after the Closing Date shall be the property of the Company whether such refunds are paid on, before or after the Closing Date. From and after the Closing Date, Seller Parent and the Buyer shall cooperate in connection with the adjustment and administration of claims under all such insurance coverage. (b) From the date hereof through the Closing Date, the Buyer and Seller Parent shall cooperate to ensure that no certificate of insurance indicating coverage by Seller Parent or its Affiliates shall be issued after the Closing Date and that all such insurance certificates which are outstanding as of the Closing Date are promptly returned to Seller Parent or its Affiliates, as applicable. Except to the extent indemnifiable by the Seller Parent in accordance with Article IX, Article X or Article XII of this Agreement, in the event that Seller Parent or any of its Affiliates is unable to cancel or terminate any such coverage as of the Closing Date, and Seller Parent or any of its Affiliates thereafter receives a claim or purported claim under any such coverage, the Buyer shall be responsible for all Liabilities incurred by Seller Parent or any of its Affiliates in respect of the same, to the extent that such claim relates to an insurable event which occurs after the Closing Date. (c) From the date hereof until the date that is 150 days after the Closing Date, Seller, Seller Parent and Buyer shall cooperate for the purpose of causing Buyer or one of its Affiliates to be substituted (or such other Person as may be acceptable to the obligee thereunder) in respect of all obligations of the Seller or any of its Affiliates under each of the guaranties, bonds, letters of credit, letters of comfort and other indemnity obligations (the "Guaranties") set forth in Section 7.6(c) of Seller's Disclosure Schedule which by its terms may not be terminated or cancelled, for the Seller or its Affiliates, as the case may be, and to cause the Seller and its Affiliates to be forever released from all liability under such Guaranties for events which occur after the Closing Date. The Seller or its Affiliates will terminate or cancel as of the Closing Date all guaranties, bonds, letters of credit, letters of comfort and other indemnity obligations which by their terms may be terminated or cancelled, so long as such termination or cancellation does not result in a termination or cancellation of the related contract or agreement. -30- (d) In the event that Buyer fails to obtain the unconditional release of Seller or any of its Affiliates from all obligations under the Guaranties as of the Closing Date, Buyer shall either (i) promptly deposit with an escrow agent reasonably acceptable to Seller an amount in cash equal to the aggregate principal or stated amount, as may be applicable, of the Guaranties not so released, which monies shall be held pursuant to an escrow agreement in form and substance reasonably acceptable to Buyer and Seller, or (ii) provide back-up letters of credit issued by one or more commercial banks reasonably satisfactory to Seller, payable to Seller in such aggregate principal or stated amount and otherwise in form and substance reasonably satisfactory to Seller with respect to such Guaranties. Seller shall use its commercially reasonable efforts to keep in place, and Seller will not waive any requirements of or agree to amend any such Guaranty in any material respect without the prior written consent of Buyer which consent shall not be unreasonably withheld, for so long as monies are held in escrow or letters of credit are posted. Any cash deposited in accordance with clause (i) of this Section 7.6(d) shall be held in a segregated interest-bearing account and shall be used solely to satisfy Seller's payment obligations in respect of such Guaranties, and the unused portion of any cash deposit relating to a Guaranty shall be returned to Buyer promptly following the release of Seller or its Affiliates with respect to, or any other termination of, the Guaranties. Section 7.7 Intercompany Borrowings. Prior to Closing, (a) Seller and its Affiliates (other than the Company and the Subsidiary) will pay to the Company the amount owed by Seller or any such Affiliate in respect of any funds borrowed by Seller or such Affiliate from the Company or the Subsidiary and (b) the Company and the Subsidiary will pay to Seller and its Affiliates (other than the Company and the Subsidiary) the amount owed by the Company and the Subsidiary in respect of any funds borrowed by the Company and/or the Subsidiary from the Seller or any of its Affiliates (other than the Company and the Subsidiary). Section 7.8 Public Announcements. Except as otherwise required by law, regulations or rules of any national stock exchange, the parties hereto shall each furnish to the other the text of all public notices and communications, written or oral, proposed to be sent by the furnishing party regarding the transactions contemplated hereby. Except as otherwise required by law, regulations or rules of any national stock exchange, the furnishing party shall not send or transmit such notices or communications or otherwise make them public unless and until the consent of the other party is received, which consent shall not be unreasonably withheld or delayed. Section 7.9 Schedule Supplements. From the date hereof through the fifth (5th) day prior to the Closing Date, the Seller may, by written notice to the Buyer, supplement its Disclosure Schedule (other than Section 7.4(a) of Seller's Disclosure Schedule) to reflect any change or event that occurs after the date of this Agreement or to otherwise correct or amend its Disclosure Schedule; provided, however, that no such supplemental disclosure shall be deemed to cure any breach of any of the Seller's representations or warranties for purposes of Section 11.1 or for purposes of Seller Parent's indemnification obligations under this Agreement. Section 7.10 Exclusivity. From the date hereof until the Closing Date, Seller Parent and the Seller will not (and the Seller will not cause or permit the Company and the Subsidiary to) solicit, initiate, encourage the submission of, respond to or agree to any proposal or offer from any Person relating to the acquisition of all or substantially all of the capital stock or assets of the -31- Company and the Subsidiary (including any acquisition structured as a merger, consolidation, or share exchange). Section 7.11 Corporate Names. The Buyer and the Buyer's Parent acknowledge that, from and after the Closing Date, the Ultimate Parent, Seller, Seller's Parent and their Affiliates shall have the absolute and exclusive proprietary right to all names, marks, trade names and trademarks (collectively, the "Names") incorporating "Fleet", by itself or in combination with any other Name, including, without limitation, the corporate design logo associated with the Ultimate Parent or any of its Affiliates (other than that specifically of the Company or the Subsidiary to the extent it does not incorporate "Fleet"), and that none of the rights thereto or goodwill represented thereby or pertaining thereto are being transferred hereby or in connection herewith. The Buyer and the Buyer's Parent agree that they will not, nor will they permit any of their Affiliates (including the Company and the Subsidiary) to, use any Name, phrase or logo incorporating "Fleet" or the corporate design logo of Ultimate Parent or any of its Affiliates (other than that specifically of the Company or the Subsidiary to the extent it does not incorporate "Fleet") in or on any of their literature, sales materials or products or otherwise in connection with the sale of any products or services. Notwithstanding the foregoing, for a transitional period of 180 days following the Closing Date, the Company and the Subsidiary shall be permitted to use the design logo of Ultimate Party (but not its name) only to the extent that such logo is incorporated with the Company's or Subsidiary's name or logo as displayed on existing stationery, business forms and signage. Section 7.12 The Trust. Prior to Closing, Seller Parent shall resign as trustee of the Trust as of the Closing Date and Buyer shall have secured a successor trustee and such trustee shall have agreed to commence acting as such as of the Closing Date. Section 7.13 Transition Services. At Closing, Buyer and Seller shall have entered into a transition services agreement ("TSA") relating to Seller and its Affiliates providing for the continuation of certain services, including information technology, human resources, tax, accounting and such other services as the parties may agree upon, currently provided to the Company and the Subsidiary, and upon such terms as are mutually acceptable to the Buyer and Seller. Section 7.14 Outsourcing Agreement. At Closing, Seller and/or its Affiliates and Buyer and/or the Company shall have entered into an outsourcing agreement (the "Outsourcing Agreement") upon the terms set forth in Exhibit A, which Outsourcing Agreement shall also contain such other terms that are mutually acceptable to Buyer and Seller. Also, prior to Closing, the employment of those employees of the Company's education lending business unit whose names are set forth on Exhibit B will be transferred from the Company to Seller or an Affiliate of Seller at Seller's expense. Section 7.15 Sublease. Prior to Closing , Seller Parent shall assign its obligations under the lease for the premises located at 473 Third Street, Niagara Falls, New York to the Company pursuant to an assignment agreement that is reasonably acceptable to each of Buyer and Seller. Also prior to Closing, Seller Parent (or one of its Affiliates) shall enter into a sublease (the "Sublease") pursuant to which Seller Parent (or its Affiliate) shall sublease from the Company -32- the space subject to the aforementioned lease that is not occupied by the Company on the same economic and other terms as are contained in the lease assigned to the Company; provided, however, that such Sublease will not obligate the subtenant beyond the end of the current lease term, and which Sublease shall also contain such other terms as are mutually acceptable to Buyer and Seller Parent. Section 7.16 Trademark Assignment Agreement. At Closing, Ultimate Parent and Buyer or the Company and/or the Subsidiary shall enter into a trademark assignment agreement ("Trademark Assignment Agreement") pursuant to which Ultimate Parent shall assign to the Company and/or the Subsidiary the trademarks and other items listed in Section 7.16 of Seller's Disclosure Schedule upon terms that are mutually acceptable to Buyer and Seller. Section 7.17 Loan Servicing Agreements. At Closing, Seller and/or its Affiliates and Buyer and/or the Company shall have entered into agreements (the "Loan Servicing Agreement Amendments") amending Seller's and/or its Affiliates' student loan servicing agreements containing the terms set forth on Exhibit D and such other terms as are mutually acceptable to Buyer and Seller. Section 7.18 Closing. Buyer and Seller shall use their respective best efforts to close the transactions contemplated hereby by June 28, 2002. ARTICLE VIII POST-CLOSING COVENANTS The parties agree as follows with respect to the period following the Closing: Section 8.1 General. Without limiting the provisions of Sections 12.1(b) and (d) and 12.3, following the Closing Date, if any further action is necessary to carry out the purposes of this Agreement, all of the parties hereto will take such further action (including the execution and delivery of such further instruments and documents) as any other party reasonably may request, all at the sole cost and expense of the requesting party (unless the requesting party is entitled to indemnification therefor under the provisions of this Agreement). Section 8.2 Litigation Support. (a) After the Closing Date, upon Seller's reasonable request and without necessity of subpoena, Buyer will cause the Company and the Subsidiary and their representatives and counsel to cooperate fully with Seller and their representatives and counsel for purposes of permitting Seller to address and respond to matters involving Seller or its Affiliates that arise as a result of or otherwise relate to Seller's prior ownership of the Company and the Subsidiary, whether or not related to this Agreement (other than claims by Buyer against Seller), including relating to assets, liabilities or other matters related to the Company or the Subsidiary that are retained by Seller and any claims made by or against Seller or any of its Affiliates, whether involving any Governmental Entity or third party. -33- (b) After the Closing Date, upon Buyer's reasonable request and without necessity of subpoena, Seller and its Affiliates and their representatives and counsel will cooperate with the Company and its representatives and counsel for purposes of permitting Buyer to address and respond to any matters that involve Buyer or the Company or the Subsidiary that arise as a result of or otherwise related to Seller's or its Affiliates' prior affiliation with the Company and the Subsidiary, whether or not related to this Agreement, including any claims made by or against the Company or the Subsidiary, or Buyer or any of its Affiliates, whether involving any Governmental Entity or third party. (c) Such cooperation under Section 8.2(a) and 8.2(b) shall include (i) reasonable access during normal business hours and upon reasonable notice to the appropriate party's and its Affiliates' officers, directors, employees, auditors, counsel, representatives, properties, books, records and operating instructions and procedures, (ii) providing reasonable assistance to the other party in connection with any Actions, including preparation for any Actions such as discovery, depositions and similar activities, and (iii) the right to make and retain copies of all pertinent documents and records relating to any such matters other than (A) tax returns filed by any of such party's Affiliates (other than the Company and the Subsidiary), (B) any information or materials subject to confidentiality agreements with third parties or required to be kept confidential by law or by agreement with borrowers, or (C) any privileged attorney-client communication or document. Buyer's and Seller's obligations under this Section 8.2 are in addition to Buyer's and Seller's other obligations to cooperate with each other contained in this Agreement. Any cooperation hereunder shall be given at the sole cost and expense of the requesting party (unless the requesting party is entitled to indemnification therefor under the provisions of this Agreement). Section 8.3 Non-Competition Agreement. (a) From the Closing Date through December 31, 2006, the Seller and Seller Parent shall not, and shall not permit any of its Affiliates to, in any state in the United States (i) directly or indirectly, either as a principal, partner, agent, manager, stockholder, director, officer or in any other capacity, enter into, or expand any existing business into, the business of (A) servicing student loans or (B) providing management and administrative services to federal, state and local health and human services government agencies, or (C) providing workforce development programs to state and local governments designed to meet the needs of under or unemployed people; provided, however, that ownership of less than 15% of the voting stock of any corporation engaged in servicing student loans or providing management and administrative services to federal, state and local health and human services government agencies or providing workforce development programs to state and local governments designed to meet the needs of under or unemployed people shall not constitute a violation hereof. Nothing contained in this Section 8.3 shall prohibit Seller or its Affiliates from servicing student loans that are held by Seller or its Affiliates. (b) Nothing contained in Section 8.3(a) shall prohibit activities of any Person with which the Seller or any of its Affiliates, including but not limited to Seller Parent, enters into an acquisition, merger or other business combination, so long as the capabilities acquired with respect to servicing student loans or providing management and administrative services to -34- federal, state and local health and human services government agencies or providing workforce development programs to state and local governments designed to meet the needs of under or unemployed people by the Seller or any of its Affiliates does not individually account for 20% of the gross revenue of such Person, following the consummation of any such acquisition, merger or other business combination with any such Person. Section 8.4 Nonsolicitation of the Buyer's Employees. (a) For a period of four (4) years following the Closing Date, neither the Seller nor any of its Affiliates shall, directly or indirectly, offer to hire or entice away (whether as an employee or consultant) or in any other manner persuade or attempt to persuade any officer or employee with a title of senior vice president or greater of the Buyer, the Company or the Subsidiary and, in each case, who were employed by the Company or the Subsidiary at the Effective Time to discontinue his or her relationship with the Buyer; and (b) for a period of two (2) years following the Closing Date, neither the Seller nor any of its Affiliates shall, directly or indirectly, offer to hire or entice away (whether as an employee or consultant) or in any other manner persuade or attempt to persuade any officer or employee with a title of vice president of the Buyer, the Company or the Subsidiary, and, in each case, who were employed by the Company or the Subsidiary at the Effective Time to discontinue his or her relationship with the Buyer, the Company or the Subsidiary; provided, however, that this Section 8.4 shall not apply (x) if any such officer or employee has been terminated by the Buyer, the Company or the Subsidiary for any reason, or (y) if such officer or employee is hired as a result of a general solicitation for employment not specifically targeted to employees of the Buyer or any or its Affiliates. Section 8.5 Nondisclosure. (a) From the Closing Date through September 30, 2007, except as required by Applicable Law or as otherwise permitted under this Agreement and upon reasonable advance notice to Buyer, Seller, and its Affiliates shall not, and Seller shall cause each of Morgan Stanley & Co. and Edwards & Angell, LLP not to, at any time, make use of, divulge or otherwise disclose, directly or indirectly, any material information related to the direct student lending business of the Company that has not been or is not made generally available to the public by the Company or the Subsidiary prior to the Closing Date, and (b) for a period of two (2) years following the Closing Date, except as required by Applicable Law or as otherwise permitted under this Agreement and upon reasonable advance notice to Buyer, Seller, and its Affiliates shall not, and Seller shall cause each of Morgan Stanley & Co. and Edwards & Angell, LLP not to, at any time, make use of, divulge or otherwise disclose, directly or indirectly, any material information related to the business of the Company (other than with respect to the direct student lending business) or the Subsidiary that has not been or is not made generally available to the public by the Company or the Subsidiary prior to the Closing Date, unless in either case such information: (u) is or becomes generally available and known to the public (other than pursuant to disclosure by Seller, its Affiliates and their respective officers, employees or agents); (v) is rightfully received by Seller or any of its representatives, agents or Affiliates from any Person after the Closing Date without restriction on use or disclosure and without breach of any obligation to Buyer; (w) is independently developed after the Closing Date by or for Seller or any of its Affiliates; (x) is disclosed by Buyer or its Affiliates following the Closing Date or (y) is the subject of prior written approval of Buyer. -35- Section 8.6 Reformation. The following provisions shall apply to Section 8.3 and Section 8.4: (a) The necessity of protection against competition from Seller and its Affiliates and the nature and scope of such protection has been carefully considered by the parties to this Agreement based upon the consultation with and advice from their respective legal counsel. The parties agree and acknowledge (i) that the duration, scope and geographic areas applicable to the covenants contained in Section 8.3 and Section 8.4 are fair, reasonable and necessary, and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the Company and Buyer's investment therein and its business goodwill, (ii) that adequate compensation has been received by Seller for such obligations, and (iii) that these obligations do not prevent Seller and Affiliates from earning a livelihood or conducting its remaining businesses. (b) If any provision of Section 8.3 or Section 8.4 is held to be illegal, invalid or unenforceable under present or future laws effective during the terms specified in the applicable section, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of the applicable section a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable, but no such added provision shall be broader or result in a greater limitation of the activities of Seller than is provided in Section 8.3 or 8.4, as applicable, on the date hereof. (c) If the automatic reformation provision contained in the preceding subsection for any reason fails or is held to be illegal, invalid or unenforceable, the parties request that the Governmental Entity making such determination interpret, alter, amend and modify the terms of Section 8.3 or Section 8.4, as applicable, to include as much of the scope, time period and geographic area specified therein as may be possible without rendering any provision of Section 8.3 or 8.4, as applicable, illegal, invalid or unenforceable, but no such modified term shall be broader or result in a greater limitation of the activities of Seller and its Affiliates than is provided in Section 8.3 or 8.4, as applicable, on the date hereof. (d) If any provision of Section 8.3 or Section 8.4 is held to be illegal, invalid or unenforceable under present or future laws during the term of Section 8.3 or Section 8.4, as applicable, the legality, validity and, enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired. Section 8.7 Relief. (a) Seller acknowledges and agrees that damages at law may be insufficient for breach by Seller of any of the covenants in Section 8.3, Section 8.4 or Section 8.5 and Buyer may be entitled to equitable relief in the form of an injunction to prevent irreparable injury without the necessity to post any bond therefor. (b) Nothing in this section shall be construed as prohibiting the Buyer or the Company from pursuing any other remedies, including damages, for breach of Section 8.3, -36- Section 8.4 or Section 8.5. The remedies of Buyer and the Company under this Agreement are cumulative, not exclusive, and may be exercised alternatively, successively or concurrently. The existence of any claim or cause of action of Seller or Seller Parent against Buyer based upon this Agreement shall not constitute a defense to the enforcement of the obligations of Seller under Section 8.3, Section 8.4 or Section 8.5. Section 8.8 Special Post-Effective Date, Pre-Closing Interim Covenant. In addition to the provisions contained in Section 7.4 hereof relating to the operations of the Company between the date hereof and the Closing Date, Seller and Seller Parent agree that (i) no dividend will be taken from the Company following the Effective Time, (ii) all intercompany indebtedness between Seller or Seller Parent and the Company shall be repaid immediately prior to the Effective Time, and (iii) they will not alter the application of Seller or Seller Parent's policies relating to intercompany charges which were taken into consideration in the preparation of the Company's Monthly Plan (the "Monthly Plan") attached hereto as Exhibit E for each month between the Effective Date and the Closing Date, which policies will be applied consistently with such Monthly Plan between the date hereof and the Closing Date. Promptly after the end of the month in which the Closing Date occurs, if the Company's net income before income taxes for such month is less than the Company's projected net income before income taxes for such month as contained in the applicable Monthly Plan (adjusted for the loss of interest income attributable to the foregoing debt repayment), the Buyer will cause the Company to reconcile the Company's actual net income before taxes for such month with such projected net income before income taxes for such month based on such Monthly Plan (adjusted for the loss of interest income attributable to the foregoing debt repayment), and to the extent that any shortfall variances are attributable to violations of the provisions hereof or any other provision of this Agreement, then Seller Parent shall pay promptly an amount in cash to the Company equal to such shortfall variances plus interest as provided in Section 2.6(b) from the end of the month in question. Any disputes arising out of such reconciliation shall be resolved in accordance with the same principles applied to determine the Final Closing Balance Sheet contained in Section 2.4 hereof. As provided in Section 7.7 hereof, prior to the Closing all inter-company indebtedness then outstanding between Seller or Seller Parent and the Company shall be repaid. In addition, Seller or Seller Parent and the Company shall settle all intercompany prepaid and refund items on a pro-rata basis based on the number of days elapsed. Section 8.9 Treatment of Certain Accounts Receivable. (a) In the event that (i) any of the accounts receivable that were recorded on the books of the Company and the Subsidiary as of the Effective Time (the "Effective Time Receivables") are not collected in full within 210 days after the Effective Time, or (ii) any of the accounts receivable that were, in accordance with the Company's past practices, reported as "unbilled" accounts receivable on the books of the Company or the Subsidiary at the Effective Time and are billed by the Company or the Subsidiary within 30 days after the Effective Time (the "Post-Effective Time Receivables" and, together with the Effective Time Receivables, the "Specified Receivables") are not collected in full after application of all accounts receivable reserves within 210 days after the Effective Time, then, notwithstanding any other provision of this Agreement to the contrary, the sole remedy of Buyer shall be to cause Seller to purchase any such Specified -37- Receivables at the net book amount thereof (after taking into account any accounts receivable reserves in effect as of the Closing Date and any payments on such Specified Receivables made after the Effective Time) and no claim may be made based on inaccuracy of any representation or warranty resulting therefrom. If any Specified Receivable is not expected to be collectible until more than 210 days after the Effective Time, as applicable, because payment is not expected to be made under the underlying contract giving rise to such receivable until after the occurrence of a particular event or circumstance (such as conclusion of an audit or achievement of a milestone), then such 210 day period shall not commence until the occurrence of such event; provided that any such period shall not commence later than the first anniversary of the Effective Time. The day on which Seller's obligation to purchase any Specified Receivable is referred to as such Specified Receivable's "Specified Receivable Trigger Date." If Buyer elects to cause Seller to purchase any such Specified Receivables, notice of such election must be received by Seller prior to the 30th day after the applicable Specified Receivable Trigger Date or Buyer will be deemed to have waived any rights with respect to such Specified Receivable. Such notice shall (i) identify a closing date not less than five days nor more than thirty days after such notice is received by Seller upon which the closing of the sale shall occur and (ii) state the purchase price for the Specified Receivable, together with such supporting detail as may be requested by Seller (which may be audited by Seller from time to time upon reasonable advance notice). Seller shall not be obligated to purchase the Specified Receivable unless the Parties, acting reasonably and in good faith, agree on the amount of the receivable outstanding. At the closing, Buyer shall deliver to Seller such instruments of transfer as may be reasonably requested by Seller to evidence the transfer of the Specified Receivable to Seller, and Seller shall pay the purchase price by wire transfer in immediately available funds. (b) Prior to the purchase of any Specified Receivable by Seller, Buyer shall cause the Company or the Subsidiary (as applicable) to diligently pursue collection of such Specified Receivable consistent with the Company's customary past practices. In circumstances where (x) (i) a single account debtor is obligated on more than one Specified Receivable and/or accounts receivable that are not Specified Receivables and (ii) such account debtor makes a single lump sum payment on such receivables without identifying specifically to which receivables such payment relates, such payments shall be allocated to satisfy in full the receivables in order of the dates such receivables were billed or (y) less than the full amount of a Specified Receivable shall have been paid by the account debtor, any payment received relating to the Specified Receivable shall be credited to the Specified Receivable. (c) The Effective Time Receivables shall be identified in a schedule prepared by Seller within five (5) Business Days after the Closing Date and delivered to Buyer, and the Post-Effective Time Receivables shall be identified in a schedule prepared by Buyer within 30 days after the Closing Date and delivered to Seller. Each such schedule will identify the Specified Receivables in reasonable detail, including identifying the account obligor, the outstanding account balance and any reserves related thereto, the aging of the Specified Receivable and the applicable Specified Receivable Trigger Date for each Specified Receivable. (d) In the event that any Specified Receivable is purchased by Seller, if requested by Seller, Buyer shall cause the Company or the Subsidiary to act as collection agent for Seller with -38- respect to such Specified Receivables. In such capacity, Buyer shall cause the Company or the Subsidiary to (i) diligently pursue collection of such Specified Receivables as if such receivables were owned by the Company or the Subsidiary, (ii) remit monies received by the Company or the Subsidiary in such capacity to Seller within three Business Days of receipt and (iii) upon Seller's request, commence litigation to collect such Specified Receivables, if commencing litigation is consistent with the Company's or the Subsidiary's Ordinary Course of Business, the cost of which litigation shall be borne by Seller and shall be subject to Seller's direction. As a fee for acting as collection agent hereunder, the Company may retain 5% of any payments received on such receivables. (e) It is understood that no receivable due from Buyer or any of its Affiliates is or will be a Specified Receivable. (f) Notwithstanding the provisions of Section 8.9(a) it is understood that the obligation of Seller to purchase Specified Receivables shall not be subject to the Threshold and the Maximum Indemnification Amount contained in the Agreement, provided, however, that the Seller shall be entitled to elect to have the amount of any Specified Receivable put to Seller by Buyer pursuant to Section 8.9(a) treated as a claim for indemnification under Article XII, and charged against the Threshold and counted toward the determination of the Maximum Indemnification Amount at its option in lieu of purchasing such Specified Receivable. (g) It is understood that if the Buyer or any of its Affiliates (including the Company and the Subsidiary) receive any payment related to an account receivable that was charged off by the Company or the Subsidiary prior to Effective Time, the amount recovered shall be added to the accounts receivable reserve to be utilized to reduce Seller Parent's exposure under Section 8.9(a). (h) It is understood that if the Company or any of its Affiliates receives any payment in respect of any accounts receivable purchased by Seller pursuant to this Section 8.9, the Company or such Affiliate shall pay the amount of such payment to Seller within ten (10) Business Days of the receipt of such payment by wire transfer of immediately available funds. ARTICLE IX TAXES Section 9.1 Tax Representations. Except as set forth in Section 9.1 of Seller's Disclosure Schedule, Seller represents and warrants that: (a) All Returns required to be filed for taxable periods ending on or prior to the Effective Time by, or with respect to any activities of, the Company or any Subsidiary thereof have been or will be accurately prepared and timely filed in accordance with all Applicable Law, and all Taxes required to be paid on or before the Effective Time with respect to the activities of the Company or any Subsidiary have been or will be paid. -39- (b) Within the last seven (7) years neither the Company nor any Subsidiary thereof has ever been a member of a consolidated federal income tax group of which Ultimate Parent was not the common parent. (c) The Seller is not a "foreign person" under Treasury Regulations Section 1.1445-2(b)(2). (d) There are no pending audits, actions, proceedings, investigations, disputes or claims with respect to any Taxes payable by or asserted against the Company or the Subsidiary and, there is no basis on which any claim for material Taxes can be asserted with respect to the Company or the Subsidiary. Neither the Company nor the Subsidiary has received written notice from any Taxing authority of its intent to examine or audit any of its Tax Returns. (e) Neither the Company nor the Subsidiary is or has been subject to Tax or conducted business in any country other than the United States. (f) No agreements relating to allocation or sharing of, or liability or indemnification for, Taxes exist between either the Company or the Subsidiary and any other Person. (g) All taxes required to be withheld, collected or deposited by the Company or the Subsidiary (including, but not limited to, amounts required to be withheld, collected or deposited with respect to amounts paid or owing to any employee, creditor, independent contractor or other Person) have been timely withheld, collected or deposited and, to the extent required, have been timely paid to the relevant taxing authority. All persons characterized as independent contractors, and not as employees, were properly so characterized for all purposes under all Applicable Laws, including, without limitation, their characterization as independent contractors for income and employment tax withholdings and payments. (h) Neither the Company nor the Subsidiary has made any payments, is obligated to make any payments, and is a party to any agreement that will obligate it to make any payments that will not be deductible under Section 280G of the Code. (i) There are no outstanding agreements or waivers that would extend the statutory period in which a taxing authority may assess or collect a Tax against the Company or the Subsidiary. (j) No closing agreements or settlement agreements pursuant to any provision of any Tax Law have been entered into with any taxing authority by or with respect to the Company or the Subsidiary which requires the Company or the Subsidiary to include any item of income in, or exclude any item of deduction from, any Tax Return for any taxable period ending after the Effective Time. Section 9.2 Section 338 Elections and Forms. (a) The Seller and the Buyer shall jointly make all available Section 338(h)(10) Elections in accordance with applicable Tax Laws and as set forth herein and shall execute Forms 8023 and such other forms as may be necessary to effect such elections consistent with the -40- periods contained in Section 9.2(c). For federal income tax purposes, the Seller represents that its sale of the Company Shares is eligible for, and the Buyer represents that it is qualified to make, such elections. (b) The Buyer and the Seller shall be jointly responsible for the preparation and filing of all Section 338 Forms in accordance with applicable Tax Laws and the terms of this Agreement. The Seller and the Buyer shall execute and deliver to one another such documents or forms as are reasonably requested and are required by any Tax Laws properly to complete the Section 338 Forms. (c) In connection with the Section 338 Elections, the Buyer shall reasonably determine, and Seller shall accept if reasonable, the fair market values of the assets deemed purchased for purposes of the computation of the Aggregate Deemed Sale Price (as defined under applicable Treasury Regulations) of the Company's assets and the allocation of such Aggregate Deemed Sale Price among such assets (the "Allocation Agreement") in accordance with Section 338 of the Code. Such Allocation Agreement shall reflect the value assigned to assets of the Company. The Buyer and the Seller agree that they shall use their reasonable best efforts to revise the Allocation Agreement to the extent necessary to reflect the differences, if any, between the Preliminary Closing Balance Sheet and the Final Closing Balance Sheet no later than sixty (60) days before the last date on which the Section 338(h)(10) Election may be filed. If, sixty (60) days before the last date on which the Section 338(h)(10) Election may be filed, the Buyer and the Seller have not finalized the Allocation Agreement as described above, any disputed aspects of the Allocation Agreement or such revision shall be resolved by the Neutral Auditors twenty (20) days before the last date on which the Section 338(h)(10) Election may be filed. The costs, expenses and fees of the Neutral Auditors shall be borne equally by the Buyer and the Seller. The Buyer and the Seller agree to act in accordance with the allocations contained in the Allocation Agreement in any relevant Returns or similar filings. (d) The Seller and the Buyer agree that, except as required by a final determination with any tax authority, they will report the transfers under this Agreement consistent with the Section 338(h)(10) Elections and will not take, or cause to be taken, any action in connection with the filing of any Return on behalf of the Seller, the Buyer, or their Affiliates or otherwise that would be inconsistent with or prejudice the Section 338(h)(10) Elections or the Allocation Agreement, and they will take all steps necessary to obtain comparable treatment, where applicable, for state income Tax purposes. Section 9.3 Tax Indemnity by Seller Parent. Seller Parent shall be liable for, and shall indemnify and hold the Buyer, the Company and any successor corporations thereto or Affiliates thereof harmless from and against the following: (a) Any and all Taxes for any taxable period ending (or deemed, pursuant to Section 9.5, to end) on or before the Effective Time due or payable by the Company or the Subsidiary, including without limitation, any Taxes resulting from the Company or the Subsidiary ceasing to be a member of Seller's consolidated group and any income Taxes incurred as a result of making the Section 338(h)(10) Election; -41- (b) Any and all Taxes that are imposed on the Company or the Subsidiary pursuant to any obligation to contribute to the payment of a Tax determined on a consolidated, combined or unitary or other group basis with respect to a group of corporations that includes or included the Company or the Subsidiary at any time on or before the Effective Time, including, without limitation, any such obligation arising under Treasury Regulations Section 1.1502-6 or under any similar provision of state, local or foreign law; (c) Any and all Taxes of Seller or any Affiliate (excluding the Company and the Subsidiary); (d) Any Liability (including Taxes) of the Buyer, the Company, or the Subsidiary in connection with or arising from any breach of any representation, agreement, or covenant relating to Taxes made by Seller in this Article IX of this Agreement; and (e) Any lost Tax benefits (based on the present value of such lost benefits, assuming a 15 year reference period and 7% discount factor) resulting from an invalid Section 338 Election caused solely by the failure of the Seller to fulfill its agreements pursuant to Section 9.2 hereof. Section 9.4 Tax Indemnity by Buyer. The Buyer shall be liable for, and shall indemnify and hold Seller and its Affiliates harmless from and against any and all Taxes for any taxable period beginning (or deemed, pursuant to Section 9.5, to begin) after the Effective Time, due or payable by the Buyer, the Company or the Subsidiary and for all Other Taxes (as defined in Section 9.11). Section 9.5 Allocation of Certain Taxes. (a) If the Company is permitted but not required under applicable U.S. state or local Tax Laws to treat the day on which the Effective Time occurs as the last day of a taxable period, the Buyer and the Seller shall treat, and shall cause the Company and the Subsidiary to treat, such day as the last day of a taxable period. (b) Any Taxes for a taxable period beginning before the Effective Time and ending after the Effective Time (a "Straddle Period") shall be apportioned between the Seller and the Buyer based on the actual operations of the Company and the Subsidiary during the portion of such period ending on the day on which the Effective Time occurs and the portion of such period beginning on the day following the day on which the Effective Time occurs, and, for purposes of the provisions of Sections 9.3, 9.4, 9.5 and 9.7, each portion of such period shall be deemed to be a taxable period (whether or not it is in fact a taxable period). Notwithstanding the foregoing sentence, (i) any Taxes for any Straddle Period that are calculated on an annual basis, such as real and personal property taxes, shall be apportioned between Seller and the Buyer based on (a) the number of days in the taxable periods ending on the day on which the Effective Time occurs and (b) the number of days beginning after the day on which the Effective Time occurs and (ii) any transaction with respect to the Company or the Subsidiary (other than any deemed sale of assets resulting from any actual or deemed Section 338 Election) outside the Ordinary Course of Business occurring and after the Effective Time shall be treated for purposes of Sections 9.3, 9.4, 9.5 and 9.7 as occurring at the beginning of the day following the day on which the Effective -42- Time occurs. To the extent (a) estimated Taxes have been paid prior to the Effective Time with respect to a Straddle Period and are not reflected as an asset on the Final Closing Balance Sheet or (b) are reflected as an accrued liability on the Final Closing Balance Sheet, the Seller's liability with respect thereto shall be reduced by that amount; provided further, that, if such payment or accrued liability for Taxes exceeds the Seller's liability as calculated pursuant to this Section 9.5, the Buyer shall pay the Seller the amount of such excess within ten (10) days after the filing of the Return to which such Taxes relate. Upon timely notice from the Buyer, the Seller shall pay to the Buyer, at least ten (10) days prior to the date any payment for Taxes as described in this Section 9.5 is due, the Seller's share of such Taxes as described in this Section 9.5. Section 9.6 Filing Responsibility. (a) The Seller shall prepare and file or shall cause the Company to prepare and file the following Returns with respect to the Company: (i) All income, franchise, gross receipts and similar Tax Returns for any taxable period ending on or before the Effective Time other than Returns referred to in Section 9.5; (ii) All other returns with respect to Taxes (other than income Taxes) required to be filed (taking into account extensions) on or prior to the Effective Time; and (iii) Notwithstanding Section 9.1(a), the Seller shall cause the Company to file all Returns and pay out of the Assets of the Company all Taxes for periods after the Effective Time through the Closing Date. (b) The Buyer and the Company shall, subject to the provisions of Section 9.6(c), make all filings with respect to the Company other than those described in Section 9.6(a). (c) Except as provided in Section 9.6(a)(iii), with respect to any U.S. state or local Return for taxable periods beginning before the Effective Time and ending after the Effective Time, the Buyer shall prepare any such Returns in a manner consistent with past practice unless otherwise required by applicable law, and the Buyer shall submit Returns to the Seller not later than thirty (30) days prior to the due date for filing of such Returns (or if such due date is within forty-five (45) days following the Closing Date, as promptly as practicable following the Closing Date). The Seller shall have the right to review such Returns and to review all work papers and procedures used to prepare any such Return. If the Seller, within ten (10) business days after delivery of any such Return, notifies the Buyer in writing that it objects to any of the items in such Return, the Buyer and Seller shall attempt in good faith to resolve the dispute and, if they are unable to do so, the disputed items shall be resolved (within a reasonable time, taking into account the deadline for filing such Return) by the Neutral Auditors. Upon resolution of all such items, the relevant Return shall be filed on that basis. The costs, fees and expenses of the Neutral Auditors shall be borne equally by the Buyer and the Seller. -43- Section 9.7 Refunds. (a) The Seller shall be entitled to any refunds or credits of Taxes attributable to or arising in taxable periods ending (or deemed, pursuant to Section 9.5, to end) on or before the Effective Time that are not reflected as assets on the Final Closing Balance Sheet. (b) The Buyer or the Company shall be entitled to any refunds or credits of Taxes attributable to or arising in taxable periods beginning (or deemed, pursuant to Section 9.5, to begin) after the Effective Time and those refunds reflected as assets on the Final Closing Balance Sheet. (c) The Buyer shall cause the Company promptly to report to and forward to Seller or to reimburse the Seller for any refunds or credits due the Seller (pursuant to the terms of this Article IX) after receipt thereof, and the Seller shall promptly report to and forward to the Buyer or reimburse the Buyer for any refunds or credits due the Buyer (pursuant to the terms of this Article IX) after receipt thereof. Section 9.8 Cooperation and Exchange of Information. (a) As soon as practicable, but in any event within thirty (30) days after request therefor, from and after the Closing Date, each of Seller and the Buyer shall (and shall cause their respective Affiliates to) provide the other with such cooperation and deliver to the other such information and data to enable each of Seller and the Buyer to complete and file all Returns that it may be required to file with respect to the operations and business of the Company or to respond to audits by any Taxing Authorities with respect to such operations and to otherwise enable each of Seller and the Buyer to satisfy its internal accounting, tax and other legitimate requirements and to enable the Buyer to comply with its obligations set forth in Section 9.6 of this Agreement. Such cooperation and information shall include, without limitation, provision of powers of attorney for the purpose of signing Returns and defending audits and promptly forwarding copies of appropriate notices and forms or other communications received from or sent to any Taxing Authority that relate to the Company and providing copies of all relevant Returns, together with accompanying schedules and related work papers, documents relating to rulings or other determinations by any Taxing Authority and records concerning the ownership and tax basis of property, which Seller, the Buyer or the Company may possess. The Seller, the Buyer and the Company shall make their employees and facilities available on a mutually convenient basis to provide explanation of any documents or information provided hereunder. (b) For a period of six (6) years after the Effective Time, the Buyer shall, and shall cause the Company to, retain all Returns, books and records (including computer files) of, or with respect to the activities of, the Company for all taxable periods ending on or prior to the Effective Time. Thereafter, at the request of Seller, the Buyer shall not dispose of any such Returns, books or records, unless it first offers such Returns, books and records to Seller and Seller fails to accept such offer within sixty (60) days of its being made. However, the Buyer may dispose of such records prior to that time with the prior written consent of Seller, which consent shall not be unreasonably withheld. -44- (c) The Buyer and the Seller and their respective Affiliates shall cooperate in the preparation of all Returns relating in whole or in part to taxable periods ending on or before or including the Effective Time that are required to be filed after such date. Such cooperation shall include, but not be limited to, furnishing prior years' Returns or return preparation packages illustrating previous reporting practices or containing historical information relevant to the preparation of such Returns, and furnishing such other information within such party's possession requested by the party filing such Returns as is relevant to their preparation. In the case of any U.S. state or local or foreign joint, consolidated, combined, unitary or group relief system Returns, such cooperation shall also relate to any other taxable periods in which one party could reasonably require the assistance of the other party in obtaining any necessary information. (d) Seller shall have the right, at its own expense, to control any audit or examination by any Taxing Authority ("Tax Audit"), initiate any claim for refund (including by filing an amended Return), contest, resolve and defend against any assessment, notice of deficiency, or other adjustment or proposed adjustment relating to any and all Taxes for any taxable period ending on or before the Effective Time with respect to the Company, provided that the Seller shall not be entitled to settle, either administratively or after the commencement of litigation, any claim for Taxes which would adversely affect the liability for Taxes of the Buyer or the Company or any Subsidiary for any period after the Effective Time to any extent (including, but not limited to, the imposition of income Tax deficiencies, the reduction of asset basis or cost adjustments, the lengthening of any amortization or depreciation periods, the denial of amortization or depreciation deductions, or the reduction of the loss or credit carry forwards) without the prior written consent of the Buyer, which consent shall not be unreasonably withheld, and such consent shall not be necessary to the extent that the Seller has indemnified the Buyer against the effect of any such settlement. If litigation is required due to the Buyer's failure to reasonably consent, then the Buyer shall be responsible for one-half of the litigation costs incurred by the Seller. The Buyer shall have the right, at its own expense, to control any other Tax Audit, initiate any other claim for refund, and contest, resolve and defend against any other assessment, notice of deficiency, or other adjustment or proposed adjustment relating to Taxes with respect to the Company, provided that, with respect to any U.S. state and local Taxes for any Straddle Period, the Buyer shall not be entitled to settle, either administratively or after the commencement of litigation, any claim regarding such Taxes that would adversely affect the liability for Taxes of the Seller for any period ending on or prior to the Effective Time without the prior written consent of the Seller, which consent shall not be unreasonably withheld and shall not be required to the extent that Buyer has indemnified Seller against the effects of such settlement. If litigation is required due to the Seller's failure to reasonably consent, then the Seller shall be responsible for one-half of the litigation costs incurred by the Buyer. Where consent to a settlement is withheld by the Seller pursuant to this Section, the Seller may continue or initiate any further proceedings at its own expense, provided that the liability of the Buyer, after giving effect to this Agreement, shall not exceed the liability that would have resulted from the settlement or amended return. Seller shall furnish the Buyer and the Company with its cooperation in a manner comparable to that described in Section 9.8(a) to effect the purposes of this Section 9.8(d). (e) If either the Buyer or the Seller (or their respective Affiliates) fails to provide any information requested by the other in the time specified herein, or if no time is specified pursuant -45- to this Section 9.8, within a reasonable period, or otherwise fails to do any act required of it under this Section 9.8, then the failing party shall be obligated, notwithstanding any other provision of this Agreement, to indemnify the other and shall hold the other harmless from and against any and all costs, claims or damages, including, without limitation, all Taxes or deficiencies thereof, payable as a result of such failure, or in the event of a claim for refund, the value of such refund. Section 9.9 Tax Sharing Agreements. Any Tax allocation or sharing agreement or arrangement, whether or not written, that may have been entered into by Seller or any Affiliate of Seller and the Company shall be terminated as to the Company at or prior to the Closing Date, effective as of the Effective Time, and no payments which are owed by or to the Company or any Subsidiary pursuant thereto shall be made thereunder. Section 9.10 Payments. Any payment made pursuant to this Article IX, Article X or Article XII shall be treated by the Seller and the Buyer as an adjustment to the Purchase Price and Seller and the Buyer agree not to take any position inconsistent therewith for any purpose. Section 9.11 Other Taxes. The Buyer agrees to assume liability for and to pay all sales, transfer, stamp, real property transfer and similar Taxes incurred as a result of the sale of the Company Shares ("Other Taxes"). Section 9.12 Survival Periods. The survival periods with regard to representations set forth in Section 9.1 hereof shall be to the expiration of the applicable statutes of limitations. ARTICLE X EMPLOYEES AND EMPLOYEE MATTERS Section 10.1 Employee Benefit Plans. (a) Section 10.1(a) of Seller's Disclosure Schedule lists as of the date hereof (i) each "employee pension benefit plan" as that term is defined in Section 3(2) of ERISA, (ii) each "employee welfare benefit plan" as that term is defined in Section 3(1) of ERISA (such plans being hereinafter referred to collectively as the "ERISA Plans"), and (iii) each material other incentive compensation, bonus, stock option, stock purchase, severance pay, unemployment benefit, vacation pay, health, life or other insurance (including Section 125 cafeteria plans or flexible benefit plans), fringe benefit, or other employee benefit plan, program, agreement or arrangement, maintained or contributed to as of the date hereof by the Seller Parent or its Affiliates, the Company or the Subsidiary in respect of or for the benefit of any Company Employee or any former employee, director, independent contractor or leased employee with respect to service for the Company or the Subsidiary (and their eligible dependents and beneficiaries) (collectively, together with the ERISA Plans, referred to hereinafter as the "Company Benefit Plans"). (b) With respect to the ERISA Plans: -46- (i) Neither the Company or the Subsidiary, any of the ERISA Plans, any trust created thereunder, or any trustee or administrator thereof, has engaged in any transaction as a result of which the Company or the Subsidiary would reasonably be expected to be subject to any material liability pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant to Section 502(i) or (l) of ERISA or a tax imposed pursuant to Section 4975 of the Code; and (ii) No liability under Title IV of ERISA has been incurred by the Company or the Subsidiary (other than liability for premiums due to the Pension Benefit Guaranty Corporation) unless such liability has been, or prior to the Closing Date will be, satisfied in full and no amendment has occurred which has required or could require the Company, the Subsidiary or the Buyer to provide security to any such plan; and (iii) Each of such ERISA Plans has been operated and administered in substantial compliance with all material provisions of the governing documents and with all material provisions of Applicable Law; and (iv) Each of such ERISA Plans that is intended to be "qualified" within the meaning of Section 401(a) of the Code has been determined by the IRS to be so qualified by issuance and receipt of a favorable determination letter or reliance upon an opinion letter which states that the ERISA Plan meets all requirements under the Code and that any trust(s) associated with such ERISA Plan is tax exempt under Section 501(a) of the Code. Nothing has occurred since the date of the most recent such determination (other than the effective date of certain amendments to the Code the remedial amendment period for which has not yet expired) that would adversely affect the qualified status of such ERISA Plans; and (v) No actual or threatened disputes, lawsuits, claims (other than routine claims for benefits), investigations, audits or complaints to, or by, any person or governmental entity have been filed with respect to the ERISA Plans or the Company or the Subsidiary in connection with any ERISA Plans or the fiduciaries responsible for such ERISA Plans, and no facts or conditions exist which could subject the Buyer, the Company or the Subsidiary to any liability (other than routine claims for benefits) under the terms of the ERISA Plans or Applicable Law. (c) None of the ERISA Plans is a "multiemployer plan" as that term is defined in Section 3(37) of ERISA. (d) Except as set forth in Section 10.1(d) of Seller's Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any material payment (including without limitation, severance, unemployment compensation, golden parachute or otherwise) becoming due from the Company or the Subsidiary under any Company Benefit Plan; (ii) materially increase any benefits otherwise payable under any Company Benefit Plan; or (iii) accelerate the time of payment or vesting, or increase the amount of, any compensation due to any Company Employee. The only severance agreements or severance policies applicable to the Company or the Subsidiary in the -47- event of a change in control of the Company are the agreements and policies specifically referred to in Section 10.1(d) of Seller's Disclosure Schedule. (e) No booked or unbooked liability exists which is, or should be, accounted for by the Company in accordance with Financial Accounting Standards Number 106. No unbooked liability exists which is, or should be, accounted for by the Company in accordance with Financial Accounting Standards Number 112 except for such amounts disclosed in Section 10.1(e) of Seller's Disclosure Schedule. (f) There are no agreements which will provide payments to any officer, employee or highly compensated individual which will be "parachute payments" under Section 280G or Section 4999 of the Code for which the Buyer or the Company would have withholding liability or that would result in loss of tax deductions under Section 280G of the Code. (g) All ERISA Plans that are "employee welfare benefit plans" including health care flexible spending accounts have been operated in substantial compliance with the group health plan continuation coverage requirements of Section 4980B of the Code to the extent the requirements are applicable. Except for liability to provide coverage under the continuation of coverage provisions of Section 4980B of the Code, Sections 601-608 of ERISA ("COBRA") and applicable state continuation of coverage statutes, except as set forth in Section 10.1(g) of the Seller's Disclosure Schedule, neither the Seller Parent or its Affiliates or the Company or the Subsidiary has made any commitments prior to the Closing Date relating to present or future retiree medical benefits with respect to any Transferred Employee or is required to provide retiree medical benefits to any Transferred Employee. In addition no present or future liability whatsoever shall exist for the Buyer, the Company or the Subsidiary relating to any program described in Section 10.1(g) of the Seller's Disclosure Schedule. (h) With respect to each Company Benefit Plan, the Seller has furnished or made available to Buyer true, correct and complete copies of the following (to the extent applicable); (1) the plan documents and summary plan descriptions; (2) the most recent determination letter received from the Internal Revenue Service; (3) the most recent annual report; (4) all related trust agreements, insurance contracts or other funding agreements that implement such plans; and (5) all other documents, records or other materials related thereto reasonably requested by Buyer which would disclose any special plan features which would adversely affect the Buyer, the Company, the Subsidiary or Transferred Employees. Section 10.2 Establishment of Company Group Health Plans. Not later than the Closing Date, Seller shall cause the Company to establish, maintain and sponsor group health plans for Company Employees employed by the Company and their eligible dependents, which group health plans shall be substantially similar to the group health plans offered to such Company Employees by the Ultimate Parent. Section 10.3 Employment of Transferred Employees. Buyer shall cause all Current Company Employees to remain employed by the Company and the Subsidiary as of the Closing Date (hereinafter collectively referred to as the "Transferred Employees") in the same or -48- comparable positions, and in the aggregate, at the same or comparable total compensation (including base pay and bonus but excluding any qualified or non-qualified defined benefit pension benefit), as are offered by the Buyer to its current employees in similar positions and in similar geographic locations, except as otherwise provided in this Agreement. For purposes of this paragraph, the term "Current Company Employees" shall mean persons who are actively at work for the Company or the Subsidiary as of the Closing Date and shall include all full-time and part-time employees, employees on vacation or who have taken a personal day or occasional absence day as currently defined in the Seller's, the Company's or the Subsidiary's policies or similar short term leaves for reasons other than illness or disability. Current Company Employees shall not include those employees of the Company or the Subsidiary on leave of absence, including short-term leave for illness, workers' compensation, military leave, maternity leave, leave under the Family and Medical Leave Act of 1993, short-term disability, salary continuation, on layoff with recall rights, and employees on other Company or Subsidiary approved leaves of absence with a legal or contractual right to reinstatement ("LOA Employees"). If an LOA Employee returns to active service within six (6) months of the Closing Date, the Buyer, the Company or the Subsidiary shall offer him or her employment at that time effective upon return to active service. Until such time as a LOA Employee returns to active service, such employee shall be the responsibility of the Seller Parent and its Affiliates and not the Company, the Subsidiary or the Buyer, for all purposes including but not limited to, benefits and compensation. LOA Employees who do not return to active employment with the Company or the Subsidiary within six (6) months after the Closing Date shall not become Transferred Employees. (a) Assumption of Employment and Other Agreements. On and after the Closing Date, except as otherwise provided in this Agreement, the Company shall assume all obligations under, and be bound by the provisions, of each employment agreement or any other agreement by Seller Parent, Seller and their Affiliates and the Company and the Subsidiary relating to conditions of employment, employment, separation, or severance that are listed in Section 10.3 of the Seller's Disclosure Schedule in connection with the Transferred Employees for the term of each agreement as provided therein. Section 10.3(a) of Seller's Disclosure Schedule is a list of such agreements (other than Company Benefit Plans) between the Seller Parent, the Seller or its Affiliates, and the Company or the Subsidiary and any Transferred Employee that is or could reasonably be expected to become a liability of the Buyer, the Company or the Subsidiary. (b) Recognition of Transferred Employee Service. On and after the Closing Date, Buyer shall cause the Company and the Subsidiary to recognize the service of each Transferred Employee for the Company and the Subsidiary, the Ultimate Parent, the Seller Parent, the Seller and their Affiliates before the Closing Date for all employment-related purposes (other than benefit accrual under any qualified or non-qualified defined benefit pension plan) determined in accordance with the practices and procedures of the Ultimate Parent and its Affiliates and the Company and the Subsidiary in effect on the date hereof. (c) No Accrual under Parent Plans. Transferred Employees shall not accrue benefits under or remain covered under any employee benefit policies, plans, arrangements, programs, practices, or agreements of Seller Parent or any of its Affiliates after the Closing Date. No -49- liability arising from or related to such benefit policies, plans, arrangements, programs, practices or agreements of Seller Parent or any of its Affiliates shall be transferred to or remain with Buyer, the Company or the Subsidiary after the Closing Date. (d) No Duplicate Benefits. Nothing in this Agreement shall cause duplicate benefits to be paid or provided to or with respect to any Transferred Employees under any employee benefit policies, plans, arrangements, programs, practices or agreements. References herein to a benefit with respect to a Transferred Employee shall include, where applicable, benefits with respect to any eligible dependents and beneficiaries of such Transferred Employee under the same employee benefit policy, plan, arrangement, program, practice or agreement. Section 10.4 401(k) Matching Contribution. Buyer shall provide an employer matching contribution to each Transferred Employee, who, prior to the Closing Date, participated in the FleetBoston Financial Corporation Savings Plan (the "Parent 401(k) Plan") and who is employed by the Buyer or the Company or the Subsidiary on the Closing Date in an amount equal to the employer matching contribution that such Transferred Employee would have received under the Parent 401(k) Plan for participation in the Parent 401(k) Plan for the period beginning January 1, 2002 and ending on the Closing Date had the Transferred Employee been an active participant in the Parent 401(k) Plan on December 31, 2002. Section 10.5 Transferred Employee Benefit Matters. (a) Savings Plans. Buyer shall take all action necessary and appropriate to ensure that, as soon as practicable after the Closing Date, Buyer or the Company maintains or adopts one or more retirement savings plans (hereinafter referred to in the aggregate as the "Buyer Savings Plans" and individually as a "Buyer Savings Plan") effective as of the Closing Date, and shall cause each Transferred Employee and their eligible dependents to be eligible to participate in the Buyer Savings Plan as soon as practicable after the Closing Date. The terms of the Buyer Savings Plan shall provide that the Transferred Employees employed by the Company shall have the right to make direct rollovers to such plan of their accounts in qualified defined contribution plans maintained by the Seller Parent and its Affiliates ("Parent Savings Plans"), including a direct rollover of any notes evidencing loans made to such Transferred Employees employed by the Company. Buyer shall take any and all action necessary and appropriate to ensure that, after the Closing Date, the Transferred Employees employed by the Subsidiary continue to participate in one or more retirement savings plans maintained or adopted by the Subsidiary or, at the election of the Buyer, become eligible to participate in a Buyer Savings Plan. (b) Welfare Benefits. (i) After the Closing Date, the Buyer may elect to have Transferred Employees employed by the Company continue to participate in the group health plans established on or before the Closing Date pursuant to Section 10.2 of this Agreement and may elect to have Transferred Employees employed the Subsidiary continue to participate in the group health and welfare plans maintained by the Subsidiary. Alternatively, the Buyer may elect to take all action necessary and appropriate to ensure that, as soon as practicable after the Closing Date, -50- Buyer or the Company or the Subsidiary maintains or adopts one or more employee welfare benefit plans, including medical, health, dental, flexible spending account, accident, life, short-term disability, and long-term disability and other employee welfare benefit plans effective as of the Closing Date for the benefit of the Transferred Employees (the "Buyer Welfare Plans"), and shall cause each Transferred Employee and their eligible dependents to be eligible to participate in the Buyer Welfare Plans as soon as practicable after the Closing Date. For purposes of determining eligibility to participate in each Buyer Welfare Plan, each Transferred Employee shall be credited with service, determined under the terms of the corresponding welfare plans maintained by Seller Parent and its Affiliates (hereinafter referred to collectively as the "Parent Welfare Plans") and the Company or the Subsidiary on the Closing Date. A service credit will be issued to those Transferred Employees with restrictions on coverage for pre-existing conditions or requirements for evidence of insurability under the Buyer Welfare Plans provided, however, that any such service credit shall not result in greater coverage for a Transferred Employee than the coverage such Transferred Employee was entitled to under a Parent Welfare Plan or any other group health and welfare plans in which such Transferred Employees participated before the Closing Date. Transferred Employees shall receive credit under the Buyer Welfare Plans for co-payments and payments under a deductible limit made by them and for out-of-pocket maximums applicable to them during the plan year of the Parent Welfare Plan in accordance with the corresponding Parent Welfare Plans. As soon as practicable after the Closing Date, Seller Parent shall deliver to Buyer a list of the Transferred Employees who had credited service under a Parent Welfare Plan, together with each such Transferred Employee's service, co-payment amounts, and deductible and out-of-pocket limits under such plan. This Agreement does not impose any requirement on the Company, the Subsidiary or Buyer to provide any benefit to domestic partners or adult dependents (other than spouses) of Transferred Employees or to provide post-retirement medical or other post-retirement welfare plan coverage to any Transferred Employee, except to the extent required under the continuation of coverage provisions of Section 4980B of the Code and ERISA, and any applicable state law. The Seller Parent, Seller and its Affiliates (other than the Company or the Subsidiary) shall provide or continue to provide retiree health and welfare benefits to retirees, their surviving spouses and other inactive employees who are receiving or are entitled to elect to receive retiree health and welfare benefits. The Seller Parent, Seller and its Affiliates (other than the Company or the Subsidiary) shall indemnify the Buyer, the Company or the Subsidiary for any claim or action arising from any such termination of retiree health and welfare benefit program or plan in existence prior to the Closing Date. (ii) Buyer shall refer to Seller Parent and its Affiliates and Seller Parent and its Affiliates shall assume responsibility for any claim under a Parent Welfare Plan made by a Transferred Employee on or after the Closing Date arising from a disability or loss incurred on or before the Closing Date, except to the extent that such liability has been accrued on the Final Balance Sheet and not paid to the Seller Parent or an Affiliate (other than the Company or the Subsidiary) or an employee benefit plan of the Seller Parent or one of its Affiliates (other than the Company or the Subsidiary). Nothing in this Section 10.5(b) shall require the Seller Parent or any Affiliate, or the Parent Welfare Plans to make any payment or to provide any benefit not otherwise provided by the terms of the Parent Welfare Plans. For purposes of this paragraph, a claim is deemed incurred when the services that are the subject of the claim are performed; in the -51- case of life insurance when the death occurs and in the case of long-term disability benefits, when the disability occurs. (iii) Seller Parent, Buyer, their respective Affiliates, and the Parent Welfare Plans and the Buyer Welfare Plans shall assist and cooperate with each other in the disposition of claims made under the Parent Welfare Plans, and in providing each other with any records, documents, or other information within its control or to which it has access that is reasonably requested by any other as necessary or appropriate to the disposition, settlement, or defense of such claims. (iv) Except for the flexible spending account (the "FSA") balances described in Section 10.5(b)(vi), nothing in this Agreement shall require the Seller Parent or its Affiliates to transfer assets or reserves with respect to benefits under the Parent Welfare Plans to Buyer or the Buyer Welfare Plans. (v) Exhibit C is a true and correct copy of the Company's severance plan ("Company Severance Plan") and Exhibit C-1 is a true and correct copy of the Subsidiary's severance plan ("Subsidiary Severance Plan"). The Buyer shall be responsible for any severance benefits payable to any Transferred Employee following the Closing Date in accordance with the following: (A) During the period commencing on the Closing Date and ending on the first year anniversary thereof, the Buyer shall provide Transferred Employees of the Company with severance benefits under the circumstances provided in, and calculated in accordance with, the Company Severance Plan and shall provide Transferred Employees of the Subsidiary with severance benefits under the circumstances provided in, and calculated in accordance with, the Subsidiary Severance Plan; provided however that for purposes of calculating benefits under each such plan, the Buyer shall recognize each Transferred Employee's combined service with the Company, the Subsidiary, the Ultimate Parent, the Seller Parent, the Seller and its Affiliates and their respective successors, predecessors and assigns prior to the Effective Time and with the Buyer and its Affiliates. (B) During the period beginning on the Closing Date and ending on the first year anniversary thereof, neither the Buyer nor any of its Affiliates shall amend any provision of the Company Severance Plan or the Subsidiary Severance Plan, except as required by Applicable Law. (C) For any Transferred Employee who is terminated by the Buyer after the first year anniversary of the Closing Date, the Buyer shall make severance payments pursuant to the applicable severance policy (if any such policy covering such persons is in effect) maintained by the Buyer or its Affiliates for the benefit of employees of the Buyer in effect on the date of termination. (vi) As of the Closing Date, Seller Parent or its Affiliates shall cause the portion of the FSA applicable to Transferred Employees to be segregated into a separate -52- component and all account balances of the Transferred Employees in the FSA shall be transferred to a flexible spending account that Buyer shall cause to be maintained for the duration of the calendar year in which the Closing Date occurs. (vii) Seller Parent and its Affiliates will provide COBRA coverage after the Closing Date to any eligible employee of the Company and the Subsidiary (and the employee's eligible dependents) who was covered by a Parent Welfare Plan prior to the Closing Date who experienced a "qualifying event" as defined in COBRA prior to the Closing Date and who is not employed by the Company or the Subsidiary or by Buyer or one of its Affiliates immediately after the Closing Date, provided such employees and/or dependents make or have made a proper COBRA election and pay all required premiums. Buyer shall provide or shall cause the Company or the Subsidiary to provide COBRA coverage after the Closing Date to any Transferred Employee (and the employee's eligible dependents) who is employed by the Company or the Subsidiary or by Buyer or one of its Affiliates immediately after the Closing if the Transferred Employee (or the Transferred Employee's eligible dependents) experiences a "qualifying event," as defined in COBRA, on or after the Closing Date, provided such employees and/or dependents make or have made a proper COBRA election and pay all required premiums. (c) Termination of Participation in Parent and Affiliate Plans. Prior to Closing Date, Seller Parent and its Affiliates shall take all necessary actions to remove the Company and the Subsidiary from participation in Company Benefit Plans sponsored by Seller Parent and its Affiliates (other than the Company and the Subsidiary). Section 10.6 Vacation Benefits. On or after the Closing Date, Buyer shall cause the Company and the Subsidiary to: (i) assume all liabilities of Seller Parent or its Affiliates with respect to any accrued but unused vacation time of Transferred Employees that is an accrued liability on the Company's Final Balance Sheet; and (ii) allow Transferred Employees to receive paid time off on or after the Closing Date for any unused vacation time accrued prior to the Closing Date in accordance with the policies in effect prior to the Closing Date. Seller Parent and its Affiliates shall have no liability to pay Transferred Employees for the vacation time described in this Section 10.6. For a one year period following the Closing Date, each Transferred Employee shall receive vacation benefits that are equivalent to vacation benefits provided by the Company or the Subsidiary to such employee as of the Closing Date. After the one year anniversary of the Closing Date, Transferred Employees shall be eligible for vacation benefits in accordance with the Buyer's vacation plan or policy. Section 10.7 No Third Party Rights. This Agreement is not intended, and it shall not be construed, to create third party beneficiary rights in the Company Employees (including any beneficiaries or dependents thereof) under or with respect to any plan, program or arrangement described in or contemplated by this Agreement and shall not confer upon any such employee the right to continued employment for any period of time following the Closing Date except as otherwise provided in Section 10.3(a) with respect to employment agreements. Section 10.8 Warn Act Requirements. On and after the Closing Date, Buyer shall be responsible with respect to Transferred Employees and their beneficiaries for compliance with -53- the Worker Adjustment and Retraining Notification Act of 1988 and any other similar Applicable Law, including any requirement to provide for and discharge any and all notifications, benefits, and liabilities to Transferred Employees and government agencies that might be imposed thereunder as a result of the consummation of the transactions contemplated by this Agreement. Section 10.9 Special Provisions for Certain Employees. Any individual employed by the Company or the Subsidiary who immediately prior to the Closing Date either (i) is currently receiving long-term disability benefits under a long-term disability plan sponsored by Seller Parent or its Affiliates (the "Parent LTD Plan"), (ii) has been approved for receipt of long-term disability benefits under the Parent LTD Plan or (iii) becomes disabled prior to the Closing Date but is within the elimination period as of the Closing Date and ultimately becomes entitled to long term disability benefits under the Parent LTD Plan (collectively, an "LTD Recipient") shall be treated as a Transferred Employee if and when the LTD Recipient recovers from his or her disabling condition and returns to active service with Buyer or the Company or the Subsidiary within six (6) months after the Closing Date. If any LTD Recipient does not recover from his or her disabling condition and return to active service within six (6) months of the Closing Date, Seller Parent and its Affiliates shall continue to cover such LTD Recipient under a Parent LTD Plan and the Buyer, Company and Subsidiary shall have no obligation to offer to provide employment to such LTD Recipient. Nothing herein shall require Buyer or the Company or the Subsidiary to reemploy, reinstate or reactivate an LTD Recipient, except to the extent an LTD Recipient has a right to re-employment, reinstatement or reactivation. ARTICLE XI CONDITIONS TO CLOSING Section 11.1 Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the transactions contemplated by this Agreement is subject to satisfaction, at or prior to the Closing of each of the following conditions unless the Buyer in its sole discretion shall have waived such satisfaction: (a) Each of the representations and warranties of the Seller and Seller Parent set forth in this Agreement shall be true and correct in all respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date; provided, however, that for the purposes of this paragraph, such representations and warranties shall be deemed to be true and correct in all respects unless the failure or failures of such representations and warranties to be so true and correct, either individually or in the aggregate, will have or are reasonably likely to have a Material Adverse Effect on the Company. (b) On or prior to the Closing Date, the Seller and Seller Parent shall have performed and complied in all material respects with all of the covenants to be performed or complied with by it at or prior to the Closing Date. (c) The president or any vice president of the Seller shall have delivered to the Buyer a certificate to the effect that each of the conditions specified above in Sections 11.1(a) and 11.1(b) is satisfied. -54- (d) There shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement. (e) The applicable waiting periods under the Hart-Scott-Rodino Act shall have expired or been terminated and any Material Governmental Consent shall have been obtained. (f) There shall not have occurred any event that, individually or in the aggregate, has had a Material Adverse Effect on the Company. (g) The Buyer shall have received from the Seller certified copies of resolutions duly adopted by the Board of Directors of the Seller authorizing the execution and performance of this Agreement and the other documents contemplated hereby and the transactions contemplated hereby. (h) The Buyer shall have received the opinion of counsel referred to in Section 3.2(a)(ix). (i) The Seller and Seller Parent shall have executed and delivered the TSA, the Outsourcing Agreement, the Sublease, the Trademark Assignment Agreement and the Loan Servicing Agreement Amendments. Section 11.2 Conditions to Obligations of the Seller and Seller Parent. The obligations of the Seller and Seller Parent to consummate the transactions contemplated by this Agreement is subject to satisfaction, at or prior to the Closing, of each of the following conditions unless the Seller in its sole discretion shall have waived such satisfaction: (a) Each of the representations and warranties of the Buyer set forth in this Agreement shall be true and correct in all respects as of the date of this Agreement (except to the extent such representations and warranties speak of an earlier date) and as of the Closing Date; provided, however, that for the purposes of this paragraph, such representations and warranties shall be deemed to be true and correct in all respects unless the failure or failures of such representations and warranties to be so true and correct, either individually or in the aggregate, will have or are reasonably likely to have a Material Adverse Effect on the Buyer. (b) On or prior to the Closing Date, the Buyer shall have performed and complied in all material respects with all of its covenants to be performed or complied with by it at or prior to the Closing Date. (c) The president or any vice president of the Buyer shall have delivered to the Seller a certificate to the effect that each of the conditions specified above in Section 11.2(a) through Section 11.2(b) is satisfied. (d) There shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement. (e) The applicable waiting periods under the Hart-Scott-Rodino Act shall have expired or been terminated and any Material Governmental Consent shall have been obtained. -55- (f) The Seller shall have received from the Buyer certified copies of resolutions duly adopted by the Board of Directors of the Buyer authorizing the execution and performance of this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby. (g) The Seller shall have received the opinion of counsel referred to in Section 3.2(b)(vi). (h) The Buyer and/or the Company shall have executed and delivered the TSA, the Sublease, the Outsourcing Agreement, the Trademark Assignment Agreement and the Loan Servicing Agreement Amendments. ARTICLE XII SURVIVAL, INDEMNIFICATION Section 12.1 Survival of Representations and Warranties, Covenants and Agreements. (a) All of the representations and warranties of the Seller and Seller Parent contained in Articles IV, V, and Section 10.1 of this Agreement shall survive the Closing hereunder and continue in full force and effect for a period of eighteen (18) months thereafter, except that (i) the representations and warranties set forth in Section 4.5, Section 4.6, Section 5.2(b), Section 5.4 and Section 10.1(e) hereof shall survive indefinitely, (ii) the representations and warranties set forth in Section 5.21 shall survive until barred by the applicable statutes of limitations, and (iii) the representations and warranties set forth in Section 9.1 shall survive as provided for in Section 9.12. All claims for actual fraud shall survive the Closing hereunder until barred by the applicable statutes of limitations. (b) Covenants and agreements of the Seller and Seller Parent contained in this Agreement that are to be performed prior to the Closing shall survive the Closing hereunder for a period equal to eighteen (18) months after the Closing Date or, in the case of any covenants or agreements to be performed after the Closing, shall survive for one (1) year after the date on which such post-Closing covenant or agreement was required to have been performed. (c) All of the representations and warranties of the Buyer contained in Article VI of this Agreement shall survive the Closing hereunder and continue in full force and effect for a period of eighteen (18) months thereafter, except that the representations and warranties set forth in Section 6.5 shall survive indefinitely. All claims for actual fraud shall survive the Closing hereunder until barred by the applicable statute of limitations. (d) Covenants and agreements of the Buyer contained in this Agreement that are to be performed prior to the Closing shall survive the Closing hereunder for a period equal to eighteen (18) months after the Closing Date or, in the case of any covenants or agreements to be performed after the Closing, shall survive for one (1) year after the date on which such post-Closing covenant or agreement was required to have been performed. -56- Section 12.2 Indemnification. (a) Subject to the provisions of this Agreement, Seller Parent agrees to indemnify and hold the Buyer and its Affiliates (including the Company and the Subsidiary), predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages resulting from or relating to: (i) A breach by the Seller or Seller Parent of any representation or warranty made by the Seller or Seller Parent in this Agreement; (ii) A breach by the Seller or Seller Parent of any covenant or agreement made by the Seller or Seller Parent in this Agreement to be performed (A) prior to Closing or (B) after Closing; and (iii) Any and all Liabilities relating to pre-Effective Time acts or omissions by the Company or the Subsidiary in connection with the matters asserted in that certain letter dated April 12, 1997; provided, however, that any Liabilities for post-Effective Time acts or omissions by the Company or the Subsidiary shall be the sole responsibility of the Company and the Subsidiary. (b) Subject to the provisions of this Agreement, the Buyer agrees to indemnify and hold the Seller and its Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages, resulting from or relating to: (i) A breach by the Buyer of any representation or warranty made by the Buyer in this Agreement; (ii) A breach by the Buyer of any covenant or agreement made by the Buyer in this Agreement; (iii) Any and all Liabilities of the Company or the Subsidiary or any and all Liabilities arising out of or in connection with any of the business, assets, operations or activities of the Company or the Subsidiary (including any predecessor of the Company or the Subsidiary and any former business, asset, operation, activity or subsidiary of the Company or the Subsidiary), heretofore, currently or hereafter owned or conducted, as the case may be, including, without limitation, any Liability based on negligence, gross negligence, strict liability, intentional tort or any other theory of liability, whether in law (whether common or statutory) or equity; provided, however, nothing contained in this Section 12.2(b)(iii) shall impair the indemnification obligations of Seller Parent in Section 12.2(a) hereof or make Buyer responsible for any litigation asserted against the Seller or Seller Parent for acts or omissions taken by Seller or Seller Parent directly, as opposed to litigation asserted against the Seller or Seller Parent solely in its capacity as a stockholder of the Company; and (iv) Any and all Guaranties. -57- (c) Seller Parent's and Buyer's respective indemnification obligations with respect to Taxes are governed exclusively by Article IX; provided, however, that the procedures outlined in Section 12.3(d) shall be followed with respect to claims made pursuant to Article IX. (d) Anything contained in this Agreement to the contrary notwithstanding, Buyer shall have no right of indemnification for any loss, Liabilities or Damages sustained by any Person as a result of the parties' failure or inability to obtain any or all required consents, waivers, confirmations, notifications or approvals, with respect to any requirement of any Governmental Entity (except with respect to any Material Governmental Consent), or any agreement, contract, lease, license, permit, instrument or other arrangement or for any termination, amendment, modification or other change to any of the foregoing after the date hereof. Further, any loss, Liability or Damage sustained or incurred, as a result of the parties' failure or inability to obtain any or all required consents, waivers, confirmations, notifications or approvals, with respect to any requirement of any Governmental Entity (except with respect to any Material Governmental Consent), or any agreement, contract, lease, license, permit, instrument or other arrangement or for any termination, amendment, modification or other change to any of the foregoing after the date hereof shall not be counted toward determining whether the Threshold or Maximum Indemnification Amount has been reached. Notwithstanding the foregoing, nothing contained in this Section 12.2(d) shall relieve Seller Parent or Seller of its obligation under Sections 7.1 or 7.2 and any loss, Liabilities or Damages, sustained or incurred by Buyer or any of its Affiliates solely as a result of Seller Parent's or the Seller's failure to perform such obligations under Section 7.1 or 7.2 shall be counted toward determining whether the Threshold or Maximum Indemnification Amount has been reached. (e) Seller Parent's and Buyer's respective indemnification obligations pursuant to Sections 12.2(a)(i) and 12.2(b)(i) hereof shall be determined without giving effect to any qualification or exception with respect to "material", "materially", "material adverse effect", "knowledge of Seller", "Seller's knowledge" or similar language contained in any representation or warranty of Seller or Seller's Parent or Buyer or Buyer's Parent, respectively; provided, however, any such qualification or exception contained in Sections 4.3, 4.4, 5.7, the first two sentences of 5.9 and 5.14 shall still be given effect. Seller Parent's indemnification obligation pursuant to Section 12.2(a)(i), with respect to only the representation and warranty contained in Section 5.8, shall be determined without giving effect to the dollar threshold contained therein; provided, however, that with respect to individual indemnification claims that are in an amount less than $20,000, Seller Parent shall have no liability for a breach of Section 5.8 unless and until the total of all such claims is $1,000,000, at which time all such claims shall be indemnifiable and shall be considered in determining whether the Threshold and the Maximum Indemnification Amount has been reached. Section 12.3. Limitations. (a) Anything contained in this Agreement to the contrary notwithstanding, (i) the Buyer (on behalf of itself and any of its Affiliates) shall not make any claim for indemnification pursuant to Section 12.2(a)(i) and/or Section 12.2(a)(ii)(A) until the aggregate amount of all such claims exceeds Four Million Dollars ($4,000,000) (the "Threshold") and if the Threshold is exceeded, Seller Parent shall be required to pay only the amount of the excess over the -58- Threshold; provided, however, the Seller Parent's obligation and liability for any and all breaches of the representations and warranties set forth in Section 4.5, Section 4.6, Section 5.2(b), Section 5.4, Section 9.1, Section 10.1(e) or for claims for actual fraud or for claims made pursuant to Section 12.2(a)(ii)(B) or Section 12.2(a)(iii) hereof shall not be subject to the Threshold and shall not count toward determining whether the Threshold or the Maximum Indemnification Amount has been reached and (ii) Seller Parent shall not be required to make indemnification payments to the extent indemnification payments would exceed in the aggregate Forty Million Dollars ($40,000,000) (the "Maximum Indemnification Amount"). In determining the foregoing Threshold and in otherwise determining the amount to which any indemnified party is entitled to assert a claim for indemnification pursuant to this Article XII, only actual Damages, net of all Tax benefits and applicable insurance payments, and no consequential, incidental or other special damages or losses shall be indemnifiable. All parties hereto waive any claim to exemplary or punitive damages. Seller Parent, the Seller and the Buyer acknowledge and agree that any event, transaction, circumstance, or liability, whether contingent or accrued, for which an adequate specific reserve has been established on the Final Closing Balance Sheet, shall not be used at any time as the basis of any claim for indemnification under Article IX or Article XII, or considered in any way in determining whether the Threshold or the Maximum Indemnification Amount has been reached. In addition, in connection with an alleged breach of the Seller Parent's or Seller's representations, warranties and covenants under this Agreement, the Buyer's Damages shall be net of all reserves established on the Final Closing Balance Sheet specifically in connection with the particular item or contingency in dispute (exclusive of any general corporate reserve). In no event shall Seller Parent or Buyer be required to make any indemnification payments to the extent that the total of all indemnification payments made pursuant to this Agreement would exceed in the aggregate the Purchase Price. (b) The obligation of Seller Parent to indemnify the Buyer under Section 9.1 and Section 12.2(a) above shall expire, with respect to any representation, warranty, covenant or agreement of the Seller or Seller Parent, on the date on which the survival of such representation, warranty, covenant or agreement shall expire in accordance with Section 12.1 above, except with respect to any written claims for indemnification which the Buyer has delivered to Seller Parent prior to such date or with respect to any breach of the representations and warranties in Sections 4.5, Section 4.6, Section 5.2(b), Section 5.4, Section 10.1(e) and for claims made pursuant to Section 12.2(a)(iii) for which the obligation to indemnify shall be perpetual. (c) The obligation of Buyer to indemnify under Section 12.2(b) above shall expire, with respect to any representation, warranty, covenant or agreement of the Seller or Seller Parent, on the date on which the survival of such representation, warranty, covenant or agreement shall expire in accordance with Section 12.1 above, except with respect to written claims for indemnification which Seller Parent has delivered to the Buyer prior to such date or with respect to any breach of the representations and warranties of the Buyer in Section 6.5, for which the obligation to indemnify shall be perpetual. In determining the amount to which Seller or Seller Parent is entitled to assert a claim for indemnification pursuant to this Article XII, only actual Damages, net of all Tax benefits and applicable insurance payments, and no consequential, incidental or other special damages or losses shall be indemnifiable. -59- (d) Promptly after receipt by an indemnified party under this Article XII of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Article XII, notify the indemnifying party in writing of the claim or the commencement of that action stating in reasonable detail the nature and basis of such claim and a good faith estimate of the amount thereof, provided that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to the indemnified party unless and only to the extent such failure materially and adversely prejudices the ability of the indemnifying party to defend against or mitigate damages arising out of such claim. If any claim shall be brought against an indemnified party, it shall notify the indemnifying party thereof and the indemnifying party shall be entitled to participate therein, and to assume the defense thereof with counsel reasonably satisfactory to the indemnified party, and to settle and compromise any such claim or action; provided, however, that the indemnifying party shall not agree or consent to the application of any equitable relief upon the indemnified party without its written consent. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable for other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that if the indemnifying party elects not to assume such defense, the indemnified party may retain counsel satisfactory to it and to defend, compromise or settle such claim on behalf of and for the account and risk of the indemnifying party, and the indemnifying party shall pay all reasonable fees and expenses of such counsel for the indemnified party promptly as statements therefore are received; and, provided, further, that the indemnified party shall not consent to entry of any judgment or enter into any settlement or compromise without the written consent of the indemnifying party which consent shall not be unreasonably withheld. The Buyer, the Seller and Seller Parent each agree to render to each other such assistance as may reasonably be requested in order to insure the proper and adequate defense of any such claim or proceeding. The indemnified party shall also have the right to select its own counsel, at its own expense, to represent the indemnified party and to participate in the defense of such claim, as applicable. Section 12.4 Remedies Exclusive. Except as otherwise specifically provided in Section 2.4, Section 8.6, Section 8.7 and Article IX, the remedies provided in this Article XII shall be the exclusive remedies of the parties hereto (except with respect to claims for actual fraud) from and after the Closing in connection with any breach of a representation or warranty, or non-performance, partial or total, of any covenant or agreement contained herein. The provisions of this Article XII shall apply to claims for indemnification asserted as between the parties hereto as well as to third-party claims. Section 12.5 Mitigation. The parties shall cooperate with each other with respect to resolving any indemnifiable claim, including by making commercially reasonable efforts to mitigate or resolve any such claim or liability. Each party shall use commercially reasonable efforts to address any claims or liabilities that may provide a basis for an indemnifiable claim such that each party shall respond to any claims or liabilities in the same manner it would respond to such claims or liabilities in the absence of the indemnification provisions of this Agreement. In the event that any party shall willfully fail to make such commercially reasonable efforts to mitigate or resolve any claim or liability, then notwithstanding anything else to the contrary contained herein, the other party shall not be required to indemnify any Person for any -60- indemnifiable loss that could reasonably be expected to have been avoided if such party, as the case may be, had made such efforts. Section 12.6 Treatment of Payments. All payments made pursuant to this Article XII (but not pursuant of Article IX) shall be treated as an adjustment to the Purchase Price. ARTICLE XIII TERMINATION Section 13.1 Termination of Agreement. This Agreement may be terminated as follows: (a) By the mutual written consent of the Seller and the Buyer; (b) Either the Seller or the Buyer if the closing contemplated by Section 2.1 hereof has not occurred by the close of business on September 30, 2002 and if the failure to consummate the transactions contemplated hereby on or before such date pursuant to the terms of this Agreement did not result from the failure by the party seeking termination of this Agreement to fulfill any undertaking or commitment provided for herein that is required to be fulfilled prior to such closing; and (c) Either the Seller or the Buyer if the other party has, in any material respect, breached any representation, warranty, covenant or agreement contained herein and such breach has not been or cannot be cured by the earlier of (i) thirty (30) days after the date on which written notice of such breach is given to the party committing such breach or (ii) the Closing Date. (d) By Seller or the Buyer if any event or condition exists which would render impossible the satisfaction of the conditions to Closing set forth in Sections 11.1(e) and 11.2(e). Section 13.2 Effect of Termination. (a) If any party terminates this Agreement pursuant to Section 13.1 above, all rights and obligations of the parties hereunder shall terminate without any liability of any party to any other party; provided, however, that the provisions contained in (a) Section 7.3 hereof and (b) the Confidentiality Agreement, shall survive any termination of this Agreement indefinitely (notwithstanding any provision herein or therein to the contrary); and provided; further that the provisions contained in Section 7.14 shall survive any termination of this Agreement pursuant to Sections 13.1(b) and 13.1(d). (b) A termination under Section 13.1 shall not relieve any party of any liability for a breach of any covenant or agreement under this Agreement, or be deemed to constitute a waiver of any available remedy (including specific performance if available) for any such breach. -61- ARTICLE XIV MISCELLANEOUS Section 14.1 No Third-party Beneficiaries. Except as specifically set forth herein with respect to Company Employees, this Agreement shall not confer any rights or remedies upon any Person other than the parties and their respective successors and permitted assigns. Section 14.2 Entire Agreement. This Agreement (including the documents referred to herein) and the Disclosure Schedules and Exhibits hereto and the Confidentiality Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and there are no other understandings, agreements, or representations by or among the parties, written or oral, related in any way to the subject matter hereof. Section 14.3 Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns. No party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other parties hereto. Section 14.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Section 14.5 Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. Section 14.6 Notices. All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax or other electronic transmission service to the appropriate address or number as set forth below. Notices to the Seller or Seller Parent shall be addressed to: Fleet National Bank 100 Federal Street Boston, MA 02110 Attn: Terrence P. Laughlin Fax: 617-434-2729 with copies to: V. Duncan Johnson Edwards & Angell, LLP 2800 Financial Plaza Providence, RI 02903-2499 Fax: 401-276-6611 -62- or at such other address and to the attention of such other Person as the Seller may designate by written notice to the Buyer. Notices to the Buyer shall be addressed to: Affiliated Computer Services, Inc. 2828 North Haskell Dallas, TX 75204 Attn: Chief Executive Officer General Counsel Fax: 214-823-5746 with a copy to: Baker Botts LLP 2001 Ross Avenue Suite 700 Dallas, TX 75201 Attn: Neel Lemon Fax: 214-661-4954 or at such other address and to the attention of such other Person as the Buyer may designate by written notice to the Seller. Section 14.7 Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. SECTION 14.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF SUCH PARTY'S OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY (OTHER THAN THE CONFIDENTIALITY AGREEMENT), AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONCERNED WITH THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY HERETO, NOR ANY ASSIGNEE OR SUCCESSOR OF A PARTY HERETO SHALL -63- SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANYWAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. Section 14.9 Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. Either party hereto may, only by an instrument in writing, waive compliance by the other party hereto with any term or provision of this Agreement on the part of such other party hereto to be performed or complied with. The waiver by any party hereto of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach. Section 14.10 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. Section 14.11 Expenses. Except as otherwise provided herein, whether or not the transaction contemplated hereby are consummated, each of the parties hereto will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. The Buyer shall pay all filing or other fees payable to Governmental Entities, including but not limited to filing fees due in connection with any pre-merger notification pursuant to the Hart-Scott-Rodino Act. Section 14.12 Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Section 14.13 Incorporation of Exhibits and Disclosure Schedules and Confidentiality Agreement. The Exhibits, and Disclosure Schedules and Confidentiality Agreement identified in this Agreement are incorporated herein by reference and made a part hereof. -64- Section 14.14 Disclaimer of Warranties. (a) Except as to those matters expressly covered by the representations and warranties in this Agreement, the Seller is selling its ownership interest in the Company on an "as is, where is, with all faults" basis and it is the explicit intent of each party hereto that neither the Seller nor any of its Affiliates is making any representation or warranty whatsoever, express or implied, beyond those expressly given in this Agreement. The Buyer acknowledges that neither the Seller nor any of its representatives or any other Person has made any representation or warranty, express or implied, as to the accuracy or completeness of any memoranda, charts or summaries heretofore made available by the Seller or their representatives to the Buyer or any other information which is not included in this Agreement or Seller's Disclosure Schedules or Exhibits hereto, and neither the Seller nor any of its representatives or any other Person will have or be subject to any liability to the Buyer, any Affiliate of the Buyer or any other Person resulting from the distribution of any such information to, or use of any such information by, the Buyer, any Affiliate of the Buyer or any of their agents, consultants, accountants, counsel or other representatives. The Seller makes no representations or warranties with respect to any estimates, projections, forecasts or forward-looking information provided to the Buyer. There is no assurance that any estimated, projected or forecasted results will be achieved. Neither the Seller nor any other Person shall have any liability or indemnification obligation to Buyer or any other Person resulting from Buyer's use of any information, projections, demands or materials made available to Buyer in certain "data rooms", "management presentations", "break-out" sessions, responses to questions submitted on behalf of Buyer, whether orally or in writing, or in any other form in expectation of the furtherance of the transactions contemplated in this Agreement. (b) Anything contained in this Agreement to the contrary notwithstanding, Seller makes no representations or warranties with respect to the United States Government Contract No. PM94017001, as amended, modified or extended, by and between the United States Department of Education and ACS Government Services, Inc. (as successor to Computer Data Systems, Inc.), and including to the extent any such contract, agreement, instrument or other arrangement has been incorporated into any other contract, agreement, instrument or other arrangement to which the Company or the Subsidiary is a party. This provision shall not limit any other disclaimer contained in the Agreement. -65- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. FLEET NATIONAL BANK By: ------------------------------------- Title: ---------------------------------- FLEET HOLDING CORP. By: ------------------------------------- Title: ---------------------------------- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. AFFILIATED COMPUTER SERVICES, INC. By: ------------------------------------- Title: ---------------------------------- EX-10.2 4 d97664exv10w2.txt CREDIT AGREEMENT EXHIBIT 10.2 CREDIT AGREEMENT BETWEEN AFFILIATED COMPUTER SERVICES, INC., BORROWER GOLDMAN SACHS CREDIT PARTNERS L.P., CO-LEAD ARRANGER, SOLE BOOKRUNNER AND SOLE SYNDICATION AGENT WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, CO-LEAD ARRANGER AND ADMINISTRATIVE AGENT CERTAIN LENDERS AND CERTAIN SUBSIDIARY GUARANTORS $375,000,000 SENIOR CREDIT FACILITY JUNE 10, 2002 TABLE OF CONTENTS
PAGE ---- SECTION 1: Definitions And Terms...............................................................1 1.1 Definitions..................................................................................1 1.2 Time References.............................................................................20 1.3 Other References............................................................................20 1.4 Accounting Principles.......................................................................21 SECTION 2: COMMITMENTS........................................................................21 2.1 Term Commitments............................................................................21 2.2 Procedure for Term Loan Borrowing...........................................................21 SECTION 3: TERMS OF PAYMENT...................................................................22 3.1 Notes and Payments..........................................................................22 3.2 Interest and Principal Payments.............................................................22 3.3 Interest Options............................................................................24 3.4 Quotation of Rates..........................................................................24 3.5 Default Rate................................................................................24 3.6 Interest Recapture..........................................................................24 3.7 Interest Calculations.......................................................................24 3.8 Maximum Rate................................................................................25 3.9 Interest Periods............................................................................26 3.10 Conversions.................................................................................25 3.11 Order of Application........................................................................25 3.12 Sharing of Payments, Etc....................................................................26 3.13 Offset......................................................................................26 3.14 Booking Borrowings..........................................................................27 3.15 Basis Unavailable or Inadequate for LIBOR...................................................27 3.16 Additional Costs............................................................................27 3.17 Change In Laws..............................................................................29 3.18 FUNDING LOSS................................................................................29 3.19 Taxes.......................................................................................29 SECTION 4: FEES...............................................................................31 4.1 Treatment of Fees...........................................................................31 4.2 Agent's Fees................................................................................31 SECTION 5: SECURITY...........................................................................31 5.1 Subsidiary Guaranty.........................................................................31 5.2 [Reserved]..................................................................................32 5.3 Additional Security and Subsidiary Guaranties...............................................32 5.4 Further Assurances..........................................................................32 SECTION 6: CONDITIONS PRECEDENT...............................................................32 SECTION 7: REPRESENTATIONS AND WARRANTIES.....................................................35 7.1 Purpose and Regulations G, T, U and X.......................................................35 7.2 Corporate Existence, Good Standing, and Authority...........................................35 7.3 Subsidiaries and Names......................................................................35 7.4 Authorization and Contravention.............................................................36 7.5 Binding Effect..............................................................................36 7.6 Financials and Existing Debt................................................................36
7.7 Solvency....................................................................................36 7.8 Litigation..................................................................................36 7.9 Taxes.......................................................................................36 7.10 Environmental Matters.......................................................................37 7.11 Employee Plans..............................................................................37 7.12 Properties; Liens...........................................................................37 7.13 Government Regulations......................................................................38 7.14 Transactions with Affiliates................................................................38 7.15 Debt........................................................................................38 7.16 Leases......................................................................................38 7.17 Labor Matters...............................................................................38 7.18 Intellectual Property.......................................................................38 7.19 Insurance...................................................................................39 7.20 Full Disclosure.............................................................................39 7.21 Pari Passu Debt.............................................................................39 7.22 Contingent "Earn-Out" Payments..............................................................39 SECTION 8: AFFIRMATIVE COVENANTS..............................................................40 8.1 Certain Items Furnished.....................................................................40 8.2 Use of Credit...............................................................................41 8.3 Books and Records...........................................................................41 8.4 Inspections.................................................................................41 8.5 Taxes.......................................................................................41 8.6 Payment of Obligation.......................................................................41 8.7 Expenses....................................................................................41 8.8 Maintenance of Existence, Assets, and Business..............................................42 8.9 Insurance...................................................................................42 8.10 Environmental Matters.......................................................................42 8.11 Indemnification.............................................................................42 8.12 Chief Executive Office; Material Agreements.................................................43 8.13 Environmental Laws..........................................................................44 8.14 After-Acquired Subsidiaries.................................................................44 SECTION 9: NEGATIVE COVENANTS.................................................................44 9.1 Debt. No Company may have any Debt except Permitted Debt....................................44 9.2 Loans, Advances, Acquisitions and Investments...............................................44 9.3 Liens.......................................................................................48 9.4 Employee Plans..............................................................................48 9.5 Transactions with Affiliates................................................................48 9.6 Compliance with Laws and Documents..........................................................48 9.7 Issuance of Securities......................................................................48 9.8 Distributions...............................................................................48 9.9 Disposition of Assets.......................................................................49 9.10 Mergers, Consolidations, and Dissolutions...................................................49 9.11 Assignment..................................................................................49 9.12 Fiscal Year and Accounting Methods..........................................................49 9.13 New Businesses..............................................................................49 9.14 Government Regulations......................................................................50
ii 9.15 Strict Compliance...........................................................................50 9.16 Prepayments of Subordinated Notes...........................................................50 9.17 Changes Relating to Subordinated Notes......................................................50 SECTION 10: FINANCIAL COVENANTS.............................................................51 10.1 Net Worth...................................................................................51 10.2 Funded Debt/Adjusted EBITDA Ratio...........................................................51 10.3 Fixed-Charge Coverage.......................................................................52 SECTION 11: DEFAULT.........................................................................52 11.1 Payment of Obligation.......................................................................52 11.2 Covenants...................................................................................52 11.3 Debtor Relief...............................................................................52 11.4 Attachment..................................................................................52 11.5 Payment of Judgments........................................................................52 11.6 Government Action...........................................................................52 11.7 Misrepresentation...........................................................................52 11.8 Ownership of Companies......................................................................53 11.9 Change of Control of the Borrower...........................................................53 11.10 Other Funded Debt........................................................................53 11.11 SEC Reporting Requirements...............................................................54 11.12 Validity and Enforceability..............................................................54 11.13 Material Agreements......................................................................54 11.14 Material Adverse Event...................................................................54 11.15 Existing Credit Agreement Documents and Subordinated Notes...............................54 11.16 Employee Benefit Plans...................................................................55 SECTION 12: RIGHTS AND REMEDIES.............................................................55 12.1 Remedies Upon Default.......................................................................55 12.2 Company Waivers.............................................................................56 12.3 Performance by the Administrative Agent.....................................................56 12.4 Not in Control..............................................................................56 12.5 Course of Dealing...........................................................................57 12.6 Cumulative Rights...........................................................................57 12.7 Application of Proceeds.....................................................................57 12.8 Certain Proceedings.........................................................................57 12.9 Expenditures by Lenders.....................................................................57 12.10 Diminution in Value of Collateral........................................................57 12.11 Expenses; Indemnification................................................................58 SECTION 13: THE ADMINISTRATIVE AGENT AND LENDERS............................................59 13.1 Administrative Agent........................................................................59 13.2 Expenses....................................................................................61 13.3 Proportionate Absorption of Losses..........................................................61 13.4 Delegation of Duties; Reliance..............................................................61 13.5 Limitation of Administrative Agent's Liability..............................................62 13.6 Default.....................................................................................63 13.7 [Reserved]..................................................................................63 13.8 Limitation of Liability.....................................................................63 13.9 Relationship of Lenders.....................................................................63
iii 13.10 Benefits of Agreement....................................................................63 13.11 Other Agents.............................................................................63 SECTION 14: MISCELLANEOUS...................................................................63 14.1 Non-Business Days...........................................................................63 14.2 Communications..............................................................................64 14.3 Form and Number of Documents................................................................64 14.4 Exceptions to Covenants.....................................................................64 14.5 Survival....................................................................................64 14.6 Governing Law...............................................................................64 14.7 Invalid Provisions..........................................................................64 14.8 Amendments, Consents, Conflicts, and Waivers................................................64 14.9 Multiple Counterparts.......................................................................65 14.10 Parties..................................................................................65 14.11 Submission To Jurisdiction; Waivers......................................................67 14.12 Confidentiality Obligations..............................................................68 14.13 Entirety.................................................................................69 14.14 WAIVERS OF JURY TRIAL....................................................................69 SECTION 15: SUBSIDIARY GUARANTY.............................................................69 15.1 The Guaranty................................................................................69 15.2 Bankruptcy..................................................................................70 15.3 Nature of Liability.........................................................................70 15.4 Independent Obligation......................................................................71 15.5 Authorization...............................................................................71 15.6 Reliance....................................................................................71 15.7 Subordination...............................................................................71 15.8 Waivers; Consents...........................................................................71 15.9 Limitation..................................................................................73 15.10 Additional Guarantors....................................................................73
iv CREDIT AGREEMENT THIS CREDIT AGREEMENT is entered into as of June 10, 2002, between AFFILIATED COMPUTER SERVICES, INC., a Delaware corporation (the "BORROWER"), the Lenders (as defined below), GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Lead Arranger, Sole Bookrunner and Sole Syndication Agent for the Lenders, WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as Co-Lead Arranger and Administrative Agent, and the Subsidiary Guarantors (defined below). The Borrower has entered into a Stock Purchase Agreement, dated as of May 16, 2002, as amended (the "STOCK PURCHASE AGREEMENT"), with Fleet National Bank and Fleet Holding Corp. (collectively, the "SELLER") pursuant to which the Borrower has agreed to acquire all of the outstanding capital stock of AFSA Data Corporation ("AFSA") for total cash consideration of $410,000,000 (subject to adjustment as provided in the Stock Purchase Agreement) (the "AFSA ACQUISITION"). The Borrower has requested that the Lenders extend a $375,000,000 senior credit facility to the Borrower to be used by the Borrower to finance a portion of the cost of the AFSA Acquisition and to pay related fees and expenses. The Lenders are willing to extend the requested credit facility on the terms and conditions of this Agreement. ACCORDINGLY, for adequate and sufficient consideration, the Borrower, the Lenders, and the Agents agree as follows: SECTION 1: Definitions And Terms. 1.1 Definitions. As used in the Loan Documents: "ACCOUNTS RECEIVABLE FINANCING" means any transaction or series of transactions that may be entered into by the Borrower or any of its Subsidiaries pursuant to which the Borrower or any of its Subsidiaries may sell, convey, grant a security interest in, or otherwise transfer, undivided percentage interests in the Receivables Program Assets. "ACCOUNTS RECEIVABLE FINANCING AMOUNt" means, with respect to any Accounts Receivable Financing and, without duplication, the aggregate outstanding principal amount of the undivided percentage interests in the Receivables Program Assets representing Rights to be paid a specified principal amount from such Receivables Program Assets. "ACQUISITION" means any transaction or series of related transactions for the purpose of, or resulting in, directly or indirectly, (a) the acquisition by any Company of (i) all or substantially all of the assets of a Person, or (ii) of any line of business, or division or selected assets of a Person, (b) the acquisition by any Company of more than fifty percent (50%) of any class of Voting Stock (or similar ownership interests) of any Person, or (c) a merger, consolidation, amalgamation, or other combination by any Company with another Person; provided that in any merger or similar transaction involving the Borrower, the Borrower must be the surviving entity. "ADJUSTED EBITDA" means EBITDA adjusted (a) as permitted, and in accordance with, Article 11 of Regulation S-X of the 1933 Act, and (b) to give effect to any Permitted Acquisition which occurred during the period of calculation, as if such Permitted Acquisition occurred on the first day of such period, by increasing, if positive, or decreasing, if negative, EBITDA by the EBITDA of such newly-acquired business during such period of calculation occurring prior to the date of such Permitted Acquisition; provided that, if EBITDA is proposed to be adjusted for any Permitted Acquisition, the consideration (in cash or any other consideration) for which Acquisition is $50,000,000 or more, then to be included within the period of calculation, and such adjustment: (i) the Person acquired or from which such business was acquired shall have completed (prior to such Acquisition) audited Financials covering periods within 15 months prior to the closing date of such Permitted Acquisition accompanied by an unqualified opinion of an independent certified public accountant; or (ii) the Borrower shall provide to the Administrative Agent a written report completed by an independent certified public accountant acceptable to the Administrative Agent which substantiates in all material respects the EBITDA of the acquired entity or business using due diligence procedures acceptable to the Administrative Agent. "ADMINISTRATIVE AGENT" means, at any time, Wells Fargo Bank Texas, National Association, or its successor or assigns appointed under SECTION 13, acting as the Administrative Agent for the Lenders under the Loan Documents. "ADVANCE" means, as to any Person, a loan, advance or extension of credit to, or purchase or commitment to purchase any evidences of Debt of, another Person. "AFFILIATE" of a Person means any other individual or entity that directly or indirectly controls, is controlled by, or is under common control with that Person. For purposes of this definition (a) "control," "controlled by," and "under common control with" mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of voting securities or other interests, by contract, or otherwise), and (b) any individual or entity who beneficially owns, directly or indirectly, 20% or more (in number of votes) of the securities having ordinary voting power for the election of directors (or individuals performing similar functions) of another Person and any individual who is an officer or director of another Person is conclusively presumed to control that Person. "AFTER-ACQUIRED SUBSIDIARY" means each Subsidiary acquired or formed after the Closing Date. "AFSA" is defined in the preamble to this Agreement. "AFSA ACQUISITION" is defined in the preamble to this Agreement. "AGENTS" means, collectively, the Administrative Agent, the Syndication Agent and the Arranger, and "Agent" means any one of the Agents. "AGREEMENT" means this Credit Agreement. 2 "APPLICABLE MARGIN" means, as of any date of determination, a percentage set forth below and determined on the basis of the Borrower's S&P Rating and Moody's Rating (collectively, the "RATING"); provided, that (i) if there is a split between the Ratings, then the tier corresponding to the higher Rating shall be used (unless any Rating is below that which is set forth in Tier IV, in which case the tier corresponding to the lower Rating shall be used), (ii) in the event that no Rating is issued by either S&P or Moody's, then the most recently applicable Tier shall be used and (iii) in the event that only one Rating is issued, that Rating shall be used:
Rating Applicable Margin for Tier S&P Rating/Moody's Rating LIBOR Borrowings - ---- ------------------------- --------------------- I >BBB+/Baa1 0.850% II BBB+/Baa1 1.000% III BBB/Baa2 1.125% IV BBB-/Baa3 1.375% V The Applicable Margin applicable to LIBOR Borrowings and Base-Rate Borrowings for each tier shall increase by (i) 0.50% on the date that is six months after the Closing Date and (ii) an additional 0.50% on the date that is nine months after the Closing Date. "ARRANGER" means, collectively, Goldman Sachs Credit Partners L.P., in its capacity as Co-Lead Arranger, and Wells Fargo Bank Texas, National Association, in its capacity as Co-Lead Arranger. "ASSET SALE" means any Disposition of any property or series of related Dispositions of property (excluding any such Disposition permitted by CLAUSE (a) or (b) of SECTION 9.9), or any casualty or condemnation of property. "ASSIGNEE" is defined in SECTION 14.10(c). "ASSIGNMENT" is defined in SECTION 14.10(c). "BASE RATE" means, for any day, the greater of either (a) the annual interest rate most recently announced by Wells Fargo Bank Texas, National Association at its principal office in San Francisco, California, as its prime rate, with the understanding that such prime rate is one of its base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference to the prime rate, and is evidenced by the recording of such prime rate after its announcement in such internal publication or publications as Wells Fargo Bank Texas, National Association may designate, automatically fluctuating upward and downward without special notice to the Borrower or any other Person, or (b) the sum of the Federal-Funds Rate plus 0.5%. "BASE-RATE BORROWING" means a Borrowing bearing interest at the Base Rate. "BORROWER" is defined in the preamble to this Agreement. 3 "BORROWING" means any amount of Term Loan disbursed on the Closing Date. "BORROWING REQUEST" means a request, subject to SECTION 2.2, substantially in the form of EXHIBIT C-1. "BUSINESS DAY" means (a) for purposes of any LIBOR Borrowing, a day when commercial banks are open for international business in London, England other than a Saturday, Sunday or any other day on which commercial banks in New York City are authorized by Law to be closed, and (b) for all other purposes, any day other than Saturday, Sunday, and any other day on which commercial banks are authorized by Law to be closed in Texas or New York. "CAPITAL EXPENDITURES" means expenditures for the acquisition, construction, improvement or replacement of land, buildings, equipment or other fixed or capital assets or leaseholds (including, without limitation, investments in customer's securities or purchases of software or other customer assets under outsourcing contracts entered into after the Closing Date and payments under Capital Leases, but excluding expenditures properly chargeable to repairs or maintenance). "CAPITAL LEASE" means any capital lease or sublease that is required by GAAP to be capitalized on a balance sheet. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq. "CLOSING DATE" means the date upon which this Agreement has been executed by the Borrower and the Credit Parties and all conditions precedent specified in SECTION 6 have been satisfied or waived. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMITMENT" means, as to any Lender, the obligation of such Lender to make a Term Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading "Commitment" opposite such Lender's name on SCHEDULE 1. The original aggregate amount of the Commitments is $375,000,000. "COMMITMENT PERCENTAGE" means, for any Lender, the percentage that such Lender's Commitment then constitutes of the aggregate Commitments then in effect (or, after the Term Loans are made, the percentage which such Lender's Term Loan constitutes of the aggregate Term Loans of the Lenders). "COMPANIES" means, at any time, the Borrower and each of its Subsidiaries (including, without limitation, upon consummation of the AFSA Acquisition, AFSA and its Subsidiaries). "COMPLIANCE CERTIFICATE" means a certificate substantially in the form of EXHIBIT C-3 as signed by a Responsible Officer. 4 "CONSTITUENT DOCUMENTS" means, with respect to any Person, its articles or certificate of incorporation, bylaws, partnership agreements, organizational documents, limited liability company agreements, trust agreement, or such other document as may govern such Person's formation, organization, and management. "CONVERSION NOTICE" means a request, subject to SECTION 3.10, substantially in the form of EXHIBIT C-2. "CREDIT PARTIES" means the Agents and the Lenders. "CURRENT FINANCIALS", unless otherwise specified, means the financial statements described in SECTION 6(f). "CURRENT MATURITIES OF LONG-TERM DEBT" means, as of any date, the aggregate amount of all regularly scheduled principal payments and capitalized lease payments on all long-term Debt of the Companies that are due and payable within 12 months of such date, excluding such Debt payable in connection with the Existing Credit Agreement and this Agreement. "DEBT" means, of any Person, at any time, and without duplication, all obligations, contingent or otherwise, which in accordance with GAAP should be classified upon such Person's balance sheet as liabilities, but in any event including the sum of the following: (a) all obligations for borrowed money; (b) all obligations evidenced by bonds, debentures, notes, or similar instruments; (c) all obligations to pay the deferred purchase price of property or services except trade accounts payable arising in the ordinary course of business; (d) all direct or contingent obligations in respect of letters of credit; (e) liabilities secured (or for which the holder of the Debt has an existing Right, contingent or otherwise to be so secured) by any Lien existing on property owned or acquired by that Person; (f) lease obligations that have been (or under GAAP should be) capitalized for financial reporting purposes; plus (g) all guaranties, endorsements, and other contingent obligations for Debt of others. "DEBTOR LAWS" means the Bankruptcy Code of the United States of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, or similar Laws affecting creditors' Rights. "DEFAULT" is defined in SECTION 11. "DEFAULT RATE" means, for any day, an annual interest rate equal from day to day to the lesser of either (a) the rate then applicable to Base-Rate Borrowings plus 2% or (b) the Maximum Rate. "DISPOSITION" means, with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance or other disposition. "DISTRIBUTION" means, with respect to any shares of any Stock issued by a Person, (a) the retirement, redemption, purchase, or other acquisition for value of those securities, 5 (b) the declaration or payment of any dividend on or with respect to those securities, (c) any loan or advance by that Person to, or other investment by that Person in, the holder of any of those securities, and (d) any other payment by that Person with respect to those securities. "DOMESTIC SUBSIDIARY" means, at any time, any Subsidiary organized under the Laws of, or domiciled within, the United States of America or one of its states. "EBITDA" means, for any period as to any Person, on a consolidated basis, and without duplication, the sum of (a) the amount of Operating Income ("OPERATING INCOME") of such Person (calculated in the same manner as such line item in the Borrower's income statement contained in the Borrower's 2001 Annual Report for the fiscal year ended June 30, 2001) for the period (whether positive or negative), plus (b) depreciation, amortization, interest and tax expense (based on the Borrower's income) deducted in calculating the amount of such Operating Income, plus (c) any extraordinary losses included within Operating Income, subject to the prior review and approval for such inclusion by the Administrative Agent, minus (d) any extraordinary gains included within Operating Income, minus (e) EBITDA (as defined in (a) through (d) above) of Non-Guaranteeing Subsidiaries which have been the subject of a Permitted IPO. "ELIGIBLE ASSIGNEE" means (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity that is an "accredited investor" (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses; provided, that neither the Borrower nor any Affiliate of the Borrower shall qualify as an Eligible Assignee. "EMPLOYEE PLAN" means any employee-pension-benefit plan (a) covered by Title IV of ERISA and established or maintained by the Borrower or any ERISA Affiliate (other than a Multiemployer Plan) and (b) established or maintained by the Borrower or any ERISA Affiliate, or to which the Borrower or any ERISA Affiliate contributes, under the Laws of any foreign country. "ENVIRONMENTAL INVESTIGATION" means any environmental site assessment, investigation, audit, compliance audit, or compliance review conducted at any time or from time to time, whether at the request of the Administrative Agent or any Lender, upon the order or request of any Tribunal, or at the voluntary instigation of any Company, concerning any Real Property or the business operations or activities of any Company, including, without limitation (a) air, soil, groundwater, or surface-water sampling and monitoring, and (b) preparation and implementation of any closure or remedial plans. "ENVIRONMENTAL LAW" means any applicable Law that relates to protection of the environment or to the regulation of any Hazardous Substances, including, without limitation, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C Section 6901 et 6 seq.), the Clean Water Act (33 U.S.C Section 1251 et seq.), the Clean Air Act (42 U.S.C Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C Section 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C Section 136 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C Section 11001 et seq.), the Safe Drinking Water Act (42 U.S.C Section 201 and Section 300 et seq.), the Rivers and Harbors Act (33 U.S.C Section 401 et seq.), the Oil Pollution Act (33 U.S.C Section 2701 et seq.), analogous state and local Laws, and any analogous future enacted or adopted Law. "ENVIRONMENTAL LIABILITY" means any liability, loss, fine, penalty, charge, lien, damage, cost, or expense of any kind to the extent that it results (a) from the violation of any Environmental Law, (b) from the Release or threatened Release of any Hazardous Substance, or (c) from actual or threatened damages to natural resources. "ENVIRONMENTAL PERMIT" means any permit, or license, from any Person defined in CLAUSE (a) of the definition of Tribunal that is required under any Environmental Law for the lawful conduct of any business, process, or other activity. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and rules and regulations promulgated thereunder. "ERISA AFFILIATE" means any Person that, for purposes of Title IV of ERISA, is a member of the Borrower's controlled group or is under common control with the Borrower within the meaning of Section 414 of the Code (which provisions are deemed by this Agreement to apply to Foreign Persons). "EXISTING ADMINISTRATIVE AGENT" means the administrative agent under the Existing Credit Agreement. "EXISTING CREDIT AGREEMENT" means the Credit Agreement entered into as of May 12, 2000, between the Borrower, the lenders parties thereto, Wells Fargo Bank Texas, National Association, as administrative agent and co-lead arranging agent for such lenders, Bank One, N.A., as syndication agent and co-lead arranging agent for such lenders, Suntrust Bank, as documentation agent for such lenders, and the Bank of Tokyo Mitsubishi, Ltd., as co-agent for such lenders, and certain subsidiary guarantors, as such agreement may be amended, restated or otherwise modified from time to time. "EXISTING LENDERS" means the lenders from time to time parties to the Existing Credit Agreement. "FEDERAL-FUNDS RATE" means, for any day, the annual rate (rounded upwards, if necessary, to the nearest 0.01%) determined (which determination is conclusive and binding, absent manifest error) by the Administrative Agent to be equal to (a) the weighted average of the rates on overnight federal-funds transactions with member banks of the Federal Reserve System arranged by federal-funds brokers on that day, as published by the Federal Reserve Bank of New York on the next Business Day, or (b) if those rates are not published for any day, the average of the quotations at approximately 7 10:00 a.m. received by the Administrative Agent from three federal-funds brokers of recognized standing selected by the Administrative Agent in its sole discretion. "FINANCIALS" of a Person means balance sheets, profit and loss statements, reconciliations of capital and surplus, and statements of cash flow prepared (a) according to GAAP (subject to year end audit adjustments with respect to interim Financials) and (b) except as stated in SECTION 1.4, in comparative form to prior year-end figures or corresponding periods of the preceding fiscal year or other relevant period, as applicable. "FIXED-CHARGE COVERAGE RATIO" means, for any period, on a consolidated basis as to the Companies, and without duplication, the ratio of (a) the sum of (i) EBITDA, minus (ii) Capital Expenditures (excluding payments under Capital Leases) minus (iii) Taxes actually paid in cash (each of the foregoing items (i), (ii) and (iii) calculated for the twelve month period then ending) to (b) the sum of (i) Interest Expense plus (ii) payments under Capital Leases, plus (iii) cash dividends paid (each of the foregoing items (i), (ii) and (iii) calculated for the twelve month period then ending) plus (iv) Current Maturities of Long-Term Debt. "FOREIGN" means, in respect of any Person, organized under the Laws of a jurisdiction other than, or domiciled outside of, the United States of America or one of its states. "FOREIGN SUBSIDIARY" means any Subsidiary that is both Foreign and not a Domestic Subsidiary. "FUNDED DEBT" means, at any time, on a consolidated basis as to the Companies, and without duplication, the sum of: (a) all obligations for borrowed money (whether as a direct obligor on a promissory note, bond, debenture or other similar instrument, as a contingent obligation for undrawn and uncancelled letters of credit or similar instruments, as a reimbursement obligor for a drawing under a letter of credit or similar instrument, or as any other type of obligor), plus (b) all Capital Lease obligations (other than the interest component of such obligations) of any Company plus (c) any Accounts Receivable Financing Amount. "FUNDED DEBT/ADJUSTED EBITDA RATIO" means, for any date of determination, the ratio of Funded Debt at the end of the most recently completed fiscal quarter to Adjusted EBITDA of the Companies for the most recently completed four fiscal quarters. "FUNDING LOSS" means any loss, expense, or reduction in yield (but not any Applicable Margin) that any Lender reasonably incurs because (a) the Borrower fails or refuses (for any reason whatsoever other than a default by the Administrative Agent or that Lender claiming that loss, expense, or reduction in yield) to take any Borrowing that it has requested under this Agreement, or (b) the Borrower prepays or pays any Borrowing or converts any Borrowing to a Borrowing of another Type, in each case, other than on the last day of the applicable Interest Period. 8 "FUNDING OFFICE" means the office of the Administrative Agent located at 1445 Ross Avenue, 3rd Floor, Dallas, Texas 75202, Attention of Zach Johnson (Telecopy No. (214) 969-0370. "GAAP" means generally accepted accounting principles of the Accounting Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board that are applicable from time to time. "HAZARDOUS SUBSTANCE" means any substance that is designated, defined, classified, or regulated as a hazardous waste, hazardous material, pollutant, contaminant, explosive, corrosive, flammable, infectious, carcinogenic, mutagenic, radioactive, or toxic or hazardous substance under any Environmental Law, including, without limitation, any hazardous substance within the meaning of Section 101(14) of CERCLA. "INTEREST EXPENSE" means, for any period, the aggregate total interest expense of the Companies paid on a consolidated basis for such period, including, without limitation, to the extent included in interest expense, the interest component of capital leases, all commissions, discounts and other fees and charges owed with respect to letters of credit, commitment fees and net costs under interest rate protection agreements, all as determined in conformity with GAAP. Solely for purposes of SECTION 10, Interest Expense shall not include any non-cash interest expense. "INTEREST PERIOD" is determined under SECTION 3.9. "INVESTMENT" means, as to any Company, any Acquisition of, investment in, capital contribution to, or purchase of Stock, bonds, notes, debentures or other debt securities of, any other Person. "LAWS" means all applicable statutes, laws, treaties, ordinances, rules, regulations, orders, writs, injunctions, decrees, judgments, opinions, and interpretations of any Tribunal. "LENDERS" means the financial institutions named on SCHEDULE 1, and, subject to this Agreement, their respective successors and permitted assigns (but not any Participant who is not otherwise a party to this Agreement). "LIBOR" means, for a LIBOR Borrowing and for each day during the relevant Interest Period, the rate per annum determined on the basis of the rate for deposits in United States dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Dow Jones Markets screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Dow Jones Markets screen (or otherwise on such screen), "LIBOR" shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the annual interest rate (rounded upward, if necessary, to the nearest 0.01%) equal to the rate that deposits in United States dollars are offered to the Administrative Agent in the London interbank market at approximately 11:00 a.m. London time two (2) 9 Business Days before the first day of that Interest Period in an amount comparable to that LIBOR Borrowing and having a maturity approximately equal to that Interest Period. In all such cases, LIBOR shall be equal the rate as so determined divided by one minus the Reserve Requirement (expressed as a decimal). "LIBOR BORROWING" means a Borrowing bearing interest at the sum of LIBOR plus the Applicable Margin. "LIEN" means any lien, mortgage, security interest, pledge, assignment, charge, title retention agreement, or encumbrance of any kind and any other arrangement for a creditor's claim to be satisfied from assets or proceeds prior to the claims of other creditors or the owners (other than title of the lessor under an operating lease). "LITIGATION" means any action by or before any Tribunal. "LOAN DOCUMENTS" means (a) this Agreement, certificates and reports delivered under this Agreement, and exhibits and schedules to this Agreement, (b) all agreements, documents, and instruments in favor of any Credit Party ever delivered under this Agreement or otherwise delivered in connection with all or any part of the Obligation (other than Assignments), (c) the letter agreements described in SECTION 4.2, and (d) all renewals, extensions, and restatements of, and amendments and supplements to, any of the foregoing. "MATERIAL ADVERSE CHANGE" means since June 30, 2001, (A) any change in the capital stock or long-term Debt of the Borrower and its Subsidiaries taken as a whole (other than (i) AFSA and its Subsidiary and (ii) as disclosed pursuant to SEC filings made by the Borrower prior to May 16, 2002) or any adverse change in or affecting the business, financial condition, or results of operations of the Borrower and its Subsidiaries taken as a whole (other than AFSA and its Subsidiary) or (B) any change, effect, event or occurrence resulting in a material adverse effect on the business, financial condition or results of operations of AFSA and its Subsidiary, taken as a whole, other than any change, effect, event or occurrence relating to (y) an announcement of the transactions contemplated by the AFSA Acquisition or (z) the breach, default under, acceleration, modification, or amendment or the creation in any Person of a right to accelerate, modify or amend United States Government Contract No. PM94017001, as amended, modified, or extended, by and between the United States Department of Education and ACS Government Services, Inc. (as successor to Computer Data Systems, Inc.) and any related subcontracts, provided that any termination of or notice of termination with respect to such contract or related subcontracts shall constitute a material adverse effect with respect to the AFSA and its Subsidiary, taken as a whole, which in any such case under clause (A) the Syndication Agent and the Administrative Agent, in their judgment, deem material. "MATERIAL ADVERSE EVENT" means any circumstance, development or event that, individually or collectively, is reasonably expected to result (at any time before the Obligation is fully paid and performed) in any (a) impairment of (i) the ability of the Obligors, taken as a whole, to perform any of their payment or other material obligations 10 under any Loan Document, (ii) the validity or enforceability of any of the Loan Documents or the ability of any Credit Party to enforce any of those obligations or any of their respective Rights under the Loan Documents, or (b) material and adverse effect on the business, assets, property, condition (financial or otherwise), results of operations or prospects of the Companies taken as a whole since June 30, 2001 (assuming the AFSA Acquisition had occurred on such date). "MATERIAL AGREEMENT" means any written or oral agreement, contract, commitment or understanding under which any Company is obligated to make payments in excess of $40,000,000 in any fiscal year or is entitled to receive revenues in any fiscal year in excess of 5% of the Borrower's consolidated annual revenues for such year. "MATURITY DATE" means December 10, 2003. "MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for a Lender, the maximum non-usurious amount and the maximum non-usurious rate of interest that, under applicable Law, that Lender is permitted to contract for, charge, take, reserve, or receive on the Obligation. "MOODY'S" means Moody's Investors Service, Inc., or, if Moody's no longer publishes ratings, another nationally recognized ratings agency acceptable to the Administrative Agent. "MOODY'S RATING" means the most recently-announced rating from time to time of Moody's assigned to any class of long-term senior, unsecured debt securities issued by the Borrower, as to which no letter of credit, guaranty (excluding guaranties of Subsidiaries), or third-party credit support is in place, regardless of whether all or any part of such Debt has been issued at the time such rating was issued. "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code (or any similar type of plan established or regulated under the Laws of any foreign country) to which the Borrower or any ERISA Affiliate is making, or has made, or is accruing, or has accrued, an obligation to make contributions. "NET CASH PROCEEDS" (a) in connection with any Asset Sale, the proceeds thereof in the form of cash and cash equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or by the disposition of any non-cash consideration received in connection therewith or otherwise, but only as and when received) of such Asset Sale, net of attorneys' fees, accountants' fees, investment banking fees, amounts required to be applied to the repayment of Debt secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (b) in connection with any issuance or sale of Stock (including, 11 without limitation, pursuant to a Subject Securities Issuance or a Permitted IPO) or any incurrence of Debt, the cash proceeds received from such issuance or incurrence, net of attorneys' fees, investment banking fees, accountants' fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith. "NET INCOME" of any Person means that Person's profit or loss after deducting its Tax expense. "NET WORTH" means, at any time and for any Person, its stockholders' equity (less the par value of any treasury stock) under GAAP. "1933 ACT" means the Securities Act of 1933, as amended. "1934 ACT" means the Securities and Exchange Act of 1934, as amended. "NON-GUARANTEEING SUBSIDIARIES" means Domestic Subsidiaries which are not Subsidiary Guarantors, and Foreign Subsidiaries which are not Subsidiary Guarantors or whose stock or equity interests have not been pledged to the Existing Administrative Agent. "NOTE" means a promissory note substantially in the form of the attached EXHIBIT A-1. "OBLIGATION" means all present and future (a) Debts, liabilities, and obligations of any Obligor to any Credit Party or any Affiliate of any Credit Party arising under any Loan Document, whether principal, interest, fees, costs, attorneys' fees, or otherwise, and (b) renewals, extensions, and modifications of any of the foregoing. "OBLIGORS" means the Borrower, the Subsidiary Guarantors, and each other Person obligated to pay any of the Obligation or on any of whose assets any Credit Party has a Lien to secure the Obligation. "OSHA" means the Occupational Safety and Health Act of 1970, 29 U.S.C Section 651 et seq. "OTHER DEBT BASKET" means an amount equal to the product of (i) Adjusted EBITDA of the Companies calculated for each Rolling Period multiplied by (ii) 1.25. "PARTICIPANT" is defined in SECTION 14.10(b). "PBGC" means the Pension Benefit Guaranty Corporation. "PERMITTED ACQUISITION" means: (a) an Acquisition by any Company with respect to which each of the following requirements shall have been satisfied: 12 (i) as of the closing of such Acquisition, such Acquisition has been approved and recommended by the board of directors of the Person to be acquired or from which such business is to be acquired, if such Acquisition is material to such Person; (ii) if the consideration for such Acquisition is greater than $100,000,000, the Person acquired or from which such business was acquired shall have completed (prior to such Acquisition) audited Financials covering periods within 15 months prior to the closing of such Acquisition, accompanied by an opinion of an independent certified public accountant, provided, however, that if such opinion is qualified for any reason, this requirement shall not be satisfied until the Administrative Agent has reviewed and approved (in its discretion) a written explanation for such qualification provided by the Borrower; (iii) as of the closing of such Acquisition, after giving effect to such Acquisition, the Companies, on a consolidated basis, must be Solvent; (iv) as of the closing of such Acquisition, (A) no event has occurred and is continuing or circumstance exists which would, upon the lapse of any grace or cure period in SECTION 11.2, result in a Default, or (B) no Default shall exist or occur as a result of, and after giving effect to, such Acquisition; (v) the making and performance of the related acquisition agreements with respect to such Acquisition, and all other agreements, documents, and actions required thereunder, will not violate any provision of any Laws, except where such violation could not be a Material Adverse Event, and will not violate any provisions of the Constituent Documents of any Company, or constitute a default under any agreement by which any Company or its respective property may be bound, except where such default could not be a Material Adverse Event; (vi) as of the closing of such Acquisition, (A) if such Acquisition is structured as a merger with the Borrower, then the Borrower must be the surviving entity after giving effect to such merger and (B) if such Acquisition is structured as a stock/equity acquisition, then the acquiring Company shall own not less than a fifty-one percent (51%) interest in the entity being acquired; (vii) to the extent required to comply with SECTIONS 5.1(a), the Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent, such documents and instruments as it shall require to evidence the joinder of any After-Acquired Subsidiary to the Subsidiary Guaranty promptly after the date of such Acquisition; and 13 (viii) if the Borrower receives a Moody's Rating or S&P Rating less than Baa3 or BBB- respectively, the Borrower must obtain the prior written consent of the Required Lenders if the cash consideration of such Acquisition exceeds twenty percent (20%) of the Borrower's Net Worth calculated based on the Borrower's then most recent quarterly Financials; (b) the AFSA Acquisition; (c) Acquisitions by one Company of, or--with respect to purchases of assets, businesses or divisions--from, a Person that, prior to such Acquisition, is a Company; and (d) any other Acquisition for which the prior written consent of the Required Lenders has been obtained. "PERMITTED DEBT" means: (a) the Obligation; (b) existing Debt of the Companies set forth in SCHEDULE 9.1; (c) trade payables, accrued taxes, and other liabilities that do not constitute Funded Debt; (d) endorsements of negotiable instruments in the ordinary course of business; (e) Capital Leases; (f) Debt owed to, and guarantees or contingent liabilities with respect to obligations of, any Company; (g) guarantees of obligations of Companies under equipment leasing agreements entered into in the ordinary course of business; (h) the Subordinated Notes and any other subordinated Debt to the extent the Rights with respect to such Debt rank at all times subordinate and inferior to the Rights of the Credit Parties under the Loan Documents on terms no less favorable to the Credit Parties than those which are customary for high yield subordinated Debt securities; (i) Debt arising under the Existing Credit Agreement, provided that the aggregate outstanding principal amount of such Debt may not exceed $500,000,000 at any time; (j) Debt (other than other Permitted Debt) arising as a result of a Lien permitted under CLAUSE (l) of the definition of Permitted Liens, provided that (i) 14 such Debt (other than other Permitted Debt) shall be repaid within ninety (90) days of the relevant Permitted Acquisition (unless such Debt is otherwise permitted under any other clause of this definition) and (ii) the aggregate amount of such Debt (other than other Permitted Debt) may not exceed the fair market value of the assets being acquired in the relevant Permitted Acquisition; and (k) other Debt (other than other Permitted Debt), provided that the aggregate principal amount of such Debt, together with the sum of (i) the outstanding principal amount of the Term Loans at the time such Debt is issued, (ii) the outstanding principal amount of any Accounts Receivable Financing permitted by SECTION 9.9(c) at the time such Debt is issued and (iii) the aggregate outstanding principal amount of any other Debt (not otherwise permitted under this definition) at the time such Debt is issued, does not exceed the Other Debt Basket at such time. "PERMITTED IPO" means an initial public offering in accordance with the 1933 Act of Stock of any Subsidiary for which the following requirements are satisfied: (a) more than 50% of the Voting Stock of such Subsidiary is retained by a Company; (b) the Stock offering listing is made on the New York, American, NASDAQ or over-the-counter, domestic stock exchanges; (c) the Net Worth of the Subsidiaries subject to such offerings never exceeds twenty percent (20%) of Total Net Worth, individually or in the aggregate, as determined based on the then most recent quarterly Financials; (d) the Adjusted EBITDA of the Subsidiaries subject to such offerings never exceeds twenty percent (20%) of Adjusted EBITDA of the Companies on a consolidated basis, individually or in the aggregate, as determined based on the then most recent quarterly Financials; (e) before the effective date of such offering, the Borrower has delivered a Compliance Certificate demonstrating compliance with the Loan Documents (including the financial covenants of SECTION 10) after giving effect to the offering, provided that the Funded Debt/Adjusted EBITDA Ratio reflected in such Compliance Certificate shall not be greater than 2.50 to 1.00 (excluding the EBITDA of the Subsidiaries subject to such offerings); and (f) as of the effective date of such offering, no Default or Potential Default shall exist or occur as a result of, and after giving effect to, such offering. "PERMITTED LIENS" means: (a) Liens that secure Permitted Debt, and cover the assets, described in ITEM 1 of SCHEDULE 9.1 and CLAUSE (e) in the definition of Permitted Debt (together with any renewal, extension, amendment, or modification of any such Lien) so 15 long as (i) in the case of existing Liens securing Debt described in ITEM 1 of SCHEDULE 9.1, the total principal amount secured by those Liens never exceeds the greater of either the total principal amount secured as of March 31, 2000 or the total maximum principal amount that may be borrowed and secured as reflected on such schedule, and (ii) in the case of Liens securing Debt described in CLAUSE (e) in the definition of Permitted Debt, those Liens never cover any assets except the assets leased with that Permitted Debt; (b) Liens granted to the Existing Administrative Agent in connection with Foreign Subsidiaries whose stock or equity interests have been pledged to the Existing Administrative Agent; (c) any interest or title of a lessor in assets being leased under an operating lease that does not constitute Debt; (d) banker's Liens and Rights of set off or recoupment; (e) pledges or deposits, that may not cover any other assets except cash proceeds of such pledges or deposits arising in the ordinary course of business, made to secure payment of workers' compensation, unemployment insurance, or other forms of governmental insurance or benefits or to participate in any fund in connection with workers' compensation, unemployment insurance, pensions, or other social security programs; (f) good-faith pledges or deposits, that may not cover any other assets except cash proceeds of such pledges or deposits arising in the ordinary course of business, (a) for 10% or less (or more if for the purchase of equipment) of the amounts due under, and made to secure, any Company's performance of bids, tenders, contracts (except for the repayment of borrowed money), or leases, or (b) made to secure statutory obligations, surety or appeal bonds, or indemnity, performance, or other similar bonds benefiting any Company in the ordinary course of its business; (g) zoning and similar restrictions on the use of, and easements, restrictions, covenants, title defects, and similar encumbrances on, real property that do not materially impair the use of the real property and that are not violated by existing or proposed structures or land use; (h) if no Lien has been filed in any jurisdiction or agreed to (a) claims and Liens for Taxes not yet due and payable, (b) mechanic's Liens and materialman's Liens for services or materials and similar Liens incident to construction and maintenance of real property, in each case for which payment is not yet due and payable, (c) landlord's Liens for rental not yet due and payable, and (d) Liens of warehousemen and carriers and similar Liens securing obligations that are not yet due and payable; (i) the following, if the validity or amount is being contested in good faith and by appropriate and lawful proceedings diligently conducted, reserve or other appropriate provision (if any) required by GAAP has been made, levy and execution has not issued or continues to be stayed, they do not individually or 16 collectively detract materially from the value of the property of the Person in question or materially impair the use of that property in the operation of its business: (a) claims and Liens for Taxes; (b) claims and Liens upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process before adjudication of a dispute on the merits; (c) claims and Liens of mechanics, materialmen, warehousemen, carriers, landlords, or other like Liens; (d) Liens incident to construction and maintenance of real property; and (e) adverse judgments, attachments, or orders on appeal for the payment of money; (j) Liens on the Receivables Program Assets created pursuant to any Receivables Documents evidencing Accounts Receivables Financings permitted by SECTION 9.9(c); (k) Liens to secure purchase money Debt in the equipment financed thereby constituting Permitted Debt; and (l) Liens assumed in connection with any Permitted Acquisition, which Liens are in existence at the time of such Permitted Acquisition and not created in contemplation of such Permitted Acquisition and which do not cover any assets other than assets acquired pursuant to such Permitted Acquisition, provided such assumed Liens are released and terminated within ninety (90) days following the effective date of such Permitted Acquisition (unless such Liens are otherwise permitted under any other clause of this definition). "PERSON" means any individual, entity, or Tribunal. "POTENTIAL DEFAULT" means any event's occurrence or any circumstance's existence that would, upon any required notice, time lapse, or both, become a Default. "PRO RATA" and "PRO RATA PART" mean, at any time when determined for any Lender, its Commitment Percentage. "REAL PROPERTY" means any land, buildings, fixtures, and other improvements to land now or in the future directly or indirectly owned by any Company, leased to or otherwise operated by any Company, or subleased by any Company to any other Person. "RECEIVABLES" means all Rights of the Borrower or any Subsidiary (as the "SELLER" under Receivables Documents) to payments (whether constituting accounts, chattel paper, instruments, general intangibles, or otherwise, including the Right to payment of any interest or finance charges). "RECEIVABLES DOCUMENTS" means one or more receivables purchase agreements entered into by one or more Subsidiaries, and each other instrument, agreement, and document entered into by such Subsidiary evidencing Accounts Receivable Financing. "RECEIVABLES PROGRAM ASSETS" means (a) all Receivables in which undivided percentage interests are transferred by any Company pursuant to Receivables Documents, (b) all Receivables Related Assets with respect to the Receivables described in CLAUSE 17 (a) of this definition, and (c) all collections (including recoveries) and other proceeds of the assets described in the foregoing clauses. "RECEIVABLES RELATED ASSETS" means (i) any Rights arising under the documentation governing or relating to Receivables (including Rights and respective Liens securing such Receivables and other credit support in respect of such Receivables), and (ii) any proceeds of such Receivables in any lock boxes or accounts in which such proceeds are deposited. "RELATED FUND" means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "RELEASE" means any "release" as defined under any Environmental Law. "REPRESENTATIVES" means representatives, officers, directors, employees, accountants, attorneys, and agents. "REQUIRED LENDERS" means, at any time, Lenders who's Commitment Percentages aggregate at least 66?%. "RESERVE REQUIREMENT" means, for any LIBOR Borrowing and for the relevant Interest Period, the total reserve requirements (including all basic, supplemental, emergency, special, marginal, and other reserves required by applicable Law) actually applicable to the eurocurrency fundings or liabilities of Wells Fargo Bank Texas, National Association, as of the first day of that Interest Period. "RESPONSIBLE OFFICER" means the Borrower's chairman, president, chief executive officer, chief financial officer, general counsel, or treasurer. "RIGHTS" means rights, remedies, powers, privileges, and benefits. "ROLLING PERIOD" means, on any date of determination, the most recent four fiscal quarters ended on March 31, June 30, September 30, or December 31 (as the case may be). "S&P" means Standard & Poor's Ratings Group, a division of The McGraw Hill Corporation, a New York corporation, or if S&P no longer publishes ratings, then another nationally recognized ratings agency acceptable to the Administrative Agent. "S&P RATING" means the most recently-announced rating from time to time of S&P assigned to any class of long-term senior, unsecured debt securities issued by the Borrower, as to which no letter of credit, guaranty (excluding guaranties of Subsidiaries), or third-party credit support is in place, regardless of whether all or any part of such Debt has been issued at the time such rating was issued. "SEC" means the Securities and Exchange Commission. 18 "SELLER" is defined in the preamble to this Agreement. "SENIOR DEBT" means Debt of the Companies which ranks pari passu (without giving effect to any Liens) with the Rights of the Credit Parties to this Agreement and the other Loan Documents. "SOLVENT" means, as to any Person, that (a) the aggregate fair market value of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable it to pay its Debts as they mature, and (c) it does not have unreasonably small capital to conduct its businesses, but for purposes of determining whether a Company is Solvent, any net intercompany payables owed by one Company to another shall be considered as equity. "STOCK" means all shares, general or limited partnership interests, membership interests, or other ownership interests (regardless of how designated) of or in a corporation, partnership, limited liability company, trust, or other entity, whether voting or non-voting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the 1934 Act) and any and all warrants, rights or options to purchase any of the foregoing. "STOCK PURCHASE AGREEMENT" is defined in the preamble to this Agreement. "SUBJECT SECURITIES ISSUANCE" means any issuance by the Borrower of its equity securities. "SUBORDINATED NOTES" means (i) the Borrower's 3.5% Convertible Subordinated Notes Due February 15, 2006, in the principal amount of $316,990,000 and (ii) any notes issued by the Borrower in exchange for such notes if the notes so issued are subject to the same terms as the original Subordinated Notes. "SUBSIDIARY" of any Person means any entity of which more than 50% of the Voting Stock is owned of record or beneficially, directly or indirectly, by that Person. Unless otherwise specified or the context otherwise requires, "SUBSIDIARY" refers to a Subsidiary of the Borrower and a Subsidiary of any other Company. "SUBSIDIARY GUARANTORS" means the Subsidiaries of the Borrower from time to time parties to this Agreement, and "SUBSIDIARY GUARANTOR" means any one of the Subsidiary Guarantors. "SUBSIDIARY GUARANTY" means (a) the guaranty provided by Subsidiary Guarantors pursuant to SECTION 15 of this Agreement, and (b) any amendments, modifications, supplements, restatements, ratifications, or reaffirmations thereof made in accordance with the Loan Documents. "SYNDICATION AGENT" means Goldman Sachs Credit Partners L.P., in its capacity as syndication agent. 19 "TAXES" means, for any Person, taxes, assessments, or other governmental charges or levies imposed upon it, its income, or any of its properties, franchises, or assets. "TERM LOAN" is defined in SECTION 2.1. "TOTAL NET WORTH" means, on any date of computation, the consolidated Net Worth of the Companies. "TRIBUNAL" means any (a) local, state, territorial, federal, or foreign judicial, executive, regulatory, administrative, legislative, or governmental agency, board, bureau, commission, department, or other instrumentality, (b) private arbitration board or panel, or (c) central bank. "TYPE" means any type of Borrowing determined with respect to the applicable interest option. "VOTING STOCK" means Stock of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions). "WHOLLY-OWNED SUBSIDIARY" means any Company, other than the Borrower or any Company listed on SCHEDULE 7.7, with respect to which 100% of the issued and outstanding shares of Voting Stock (excluding shares of capital stock held under employee stock option plans) of such Company is owned by another Company. 1.2 Time References. Unless otherwise specified, in the Loan Documents (a) time references (e.g., 10:00 a.m.) are to time in Dallas, Texas, and (b) in calculating a period from one date to another, the word "from" means "from and including" and the word "to" or "until" means "to but excluding." 1.3 Other References. Unless otherwise specified, in the Loan Documents (a) where appropriate, the singular includes the plural and vice versa, and words of any gender include each other gender, (b) heading and caption references may not be construed in interpreting provisions, (c) monetary references are to currency of the United States of America, (d) section, paragraph, annex, schedule, exhibit, and similar references are to the particular Loan Document in which they are used, (e) references to "telecopy," "facsimile," "fax," or similar terms are to facsimile or telecopy transmissions, (f) references to "including" mean including without limiting the generality of any description preceding that word, (g) the rule of construction that references to general items that follow references to specific items are limited to the same type or character of those specific items is not applicable in the Loan Documents, (h) references to any Person include that Person's heirs, personal representatives, successors, trustees, receivers, and permitted assigns, (i) references to any Law include every amendment or supplement to it, rule and regulation adopted under it, and successor or replacement for it, and (j) references to any Loan Document or other document include every renewal and extension of it, amendment and supplement to it, and replacement or substitution for it. 20 1.4 Accounting Principles. Unless otherwise specified, in the Loan Documents (a) GAAP determines all accounting and financial terms and compliance with financial covenants, (b) GAAP in effect on the date of this Agreement determines compliance with financial covenants, (c) otherwise, all accounting principles applied in a current period must be comparable in all material respects to those applied during the preceding comparable period, and (d) while the Borrower has any consolidated Subsidiaries (i) all accounting and financial terms and compliance with reporting covenants must be on a consolidated basis, as applicable, and (ii) compliance with financial covenants must be on a consolidated basis. If the Borrower or any Credit Party determines that a change in GAAP from that in effect on the date hereof has altered the treatment of certain financial data to its detriment under this Agreement, then such party may, by written notice to the others and the Administrative Agent not later than ten (10) days after the effective date of such change in GAAP, request renegotiation of the financial covenants affected by such change. If the Borrower and the Required Lenders have not agreed on revised covenants within thirty (30) days after delivery of such notice, then, for purposes of this Agreement, GAAP will mean generally accepted accounting principles on the date just prior to the date on which the change that gave rise to the renegotiation occurred. SECTION 2: COMMITMENTS. Subject to the provisions in the Loan Documents, each Lender severally but not jointly agrees to extend credit to the Borrower in accordance with the following provisions. 2.1 Term Commitments. Subject to the terms and conditions hereof, each Lender severally agrees to make a term loan (a "TERM LOAN") to the Borrower on the Closing Date in an amount not to exceed the amount of the Commitment of such Lender. 2.2 Procedure for Term Loan Borrowing. (a) The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., three business days prior to the Closing Date, if all or any portion of the Term Loans are initially to be part of a LIBOR Borrowing or one Business Day prior to the anticipated Closing Date, otherwise) by delivering a Borrowing Request requesting that the Lenders make the Term Loans on the Closing Date and specifying the amount to be borrowed. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender thereof. (b) Funding. Each Lender shall remit its Pro Rata Part of each requested Borrowing to the Administrative Agent's principal office in Dallas, Texas, in funds that are available for immediate use by the Administrative Agent by 12:00 noon on the Closing Date. Subject to receipt of those funds, the Administrative Agent shall (unless to its actual knowledge any of the applicable conditions precedent have not been satisfied by the Borrower or waived by the requisite Lenders under SECTION 14.8) make those funds available to the Borrower by wiring the funds to or for the account of the Borrower at the direction of the Borrower. (c) Funding Assumed. Absent contrary written notice from a Lender, the Administrative Agent may assume that each Lender has made its Pro Rata Part of the Term Loan available to the Administrative Agent on the Closing Date, and the 21 Administrative Agent may, in reliance upon such assumption (but shall not be required to), make available to the Borrower a corresponding amount. If a Lender fails to make its Pro Rata Part of the Term Loan available to the Administrative Agent on the Closing Date, the Administrative Agent may recover the applicable amount on demand, (i) from that Lender together with interest, commencing on the Closing Date and ending on (but excluding) the date the Administrative Agent recovers the amount from that Lender, at an annual interest rate equal to the Federal Funds Rate, or (ii) if that Lender fails to pay its amount upon demand, then from the Borrower. No Lender is responsible for the failure of any other Lender to make its Pro Rata Part of any Borrowing available as required by SECTION 2.2(b); provided, however, that the failure of any Lender to make its Pro Rata Part of any Borrowing so available does not excuse any other Lender from making its Pro Rata Part of any Borrowing so available. SECTION 3: TERMS OF PAYMENT. 3.1 Notes and Payments. (a) Notes. The Term Loans shall, at the request of any Lender delivered to the Administrative Agent, be evidenced by a Note, payable to such Lender in the stated amount of its initial Commitment. (b) Payment. The Borrower must make each payment and prepayment on the Obligation to the Administrative Agent's Funding Office in Dallas in immediately available funds by 1:00 p.m. on the day due; otherwise, but subject to SECTION 3.8, those funds continue to accrue interest as if they were received on the next Business Day. The Administrative Agent shall promptly pay to each Lender the part of any payment or prepayment to which that Lender is entitled under this Agreement. (c) Payment Assumed. Unless the Administrative Agent has received notice from the Borrower prior to the date on which any payment is due under this Agreement that the Borrower will not make that payment in full, the Administrative Agent may assume that the Borrower has made the full payment due and the Administrative Agent may (but shall not be obligated to), in reliance upon that assumption, cause to be distributed to each Lender on that date the amount then due to each Lender. If and to the extent the Borrower does not make the full payment due to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand the amount distributed to that Lender by the Administrative Agent together with interest for each day from the date that Lender received payment from the Administrative Agent until the date that Lender repays the Administrative Agent (unless such repayment is made on the same day as such distribution), at an interest rate equal to the Federal-Funds Rate. 3.2 Interest and Principal Payments.(a)Interest. Accrued interest on each LIBOR Borrowing is due and payable on the last day of its respective Interest Period. If any Interest Period for a LIBOR Borrowing is greater than three months, then accrued interest is also due and payable on the date three months after the commencement of the Interest Period. Until converted to a LIBOR Borrowing under SECTION 3.10(b), accrued interest 22 on each Base-Rate Borrowing is due and payable on the fifth (5th) day of each January, April, July, and October, commencing on the first of those dates that follows the Closing Date, and on the Maturity Date. (b) Principal. The Term Loans are due and payable on the Maturity Date. (c) Optional Prepayments. Before the occurrence of the Maturity Date, the Borrower may prepay, without penalty and in whole or in part, the Term Loans, so long as (i) each voluntary partial prepayment must be in a principal amount not less than (A) $500,000 or a greater integral multiple of $100,000 if a prepayment of Base-Rate Borrowings, or (B) $5,000,000 or a greater integral multiple of $1,000,000 if a prepayment of LIBOR Borrowings, (ii) the Borrower shall give prior written and irrevocable notice to the Administrative Agent (A) at least three (3) Business Days before any prepayment of a LIBOR Borrowing or (B) at least one Business Day before any prepayment of a Base-Rate Borrowing, and (iii) the Borrower shall pay any related Funding Loss upon demand. Conversions under SECTION 3.10 are not prepayments. (d) Mandatory Prepayments. (i) If any Stock (including Stock issued pursuant to a Subject Securities Issuance or a Permitted IPO, but excluding Net Cash Proceeds of any issuance of Stock in connection with employee and director stock option plans granted in the ordinary course of business or pursuant to existing warrants, options or other acquisition rights granted in the ordinary course of business) or Debt shall be issued or incurred by any Company (other than Permitted Debt (other than Debt permitted under CLAUSES (h) and (k) of the definition of Permitted Debt except in each case of clauses (h) and (k), Debt incurred in the ordinary course of business)), an amount equal to 100% of the Net Cash Proceeds thereof shall be applied within the first Business Day following receipt of such Net Cash Proceeds toward the prepayment of the Term Loans. (ii) If on any date any Company shall receive Net Cash Proceeds from any Asset Sale then such Net Cash Proceeds shall be applied within the first Business Day following receipt of such Net Cash Proceeds toward the prepayment of the Term Loans, provided that (A) no such prepayment shall be required until the aggregate Net Cash Proceeds of all such Asset Sales subsequent to the Closing Date exceed $25,000,000 and then only to the extent such aggregate Net Cash Proceeds exceed $25,000,000 and (B) to the extent such Net Cash Proceeds are Net Cash Proceeds of a casualty or condemnation event, the relevant Company shall be permitted to reinvest such Net Cash Proceeds to replace or repair the assets which were the subject of such casualty or condemnation event within 270 days after the occurrence thereof (such Company shall deliver a notice to the Administrative Agent prior to the required prepayment date 23 of its intent to so reinvest such Net Cash Proceeds and, to the extent not so reinvested during such period, the portion of the Net Cash Proceeds which have not been so reinvested shall be applied to prepay the Term Loans on the last day of such period). (iii) For purposes of this Section, the Net Cash Proceeds of an Accounts Receivable Financing shall be treated as Net Cash Proceeds of the incurrence of Debt by a Company. 3.3 Interest Options. Borrowings shall bear interest at an annual rate equal to the lesser of (i) or (ii): (i) the Base Rate or LIBOR, in each case plus the Applicable Margin (in each case as designated or deemed designated by the Borrower) or (ii) the Maximum Rate. Each change in the Base Rate and Maximum Rate is effective, without notice to the Borrower or any other Person, upon the effective date of change. 3.4 Quotation of Rates. The Borrower may call the Administrative Agent before delivering a Borrowing Request to receive an indication of the interest rates then in effect, but the indicated rates do not bind the Administrative Agent or the Lenders or affect the interest rate that is actually in effect when the Borrower makes a Borrowing Request. 3.5 Default Rate. If permitted by Law, all past-due Term Loans and past-due interest accruing thereon bears interest from the date due (stated or by acceleration) at the Default Rate until paid, regardless whether payment is made before or after entry of a judgment. 3.6 Interest Recapture. If the designated interest rate applicable to any Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is limited to the Maximum Rate, but any subsequent reductions in the designated rate shall not reduce the interest rate thereon below the Maximum Rate until the total amount of accrued interest equals the amount of interest that would have accrued if that designated rate had always been in effect. If at maturity (stated or by acceleration), or at final payment of the Term Loans, the total interest paid or accrued is less than the interest that would have accrued if the designated rates had always been in effect, then, at that time and to the extent permitted by Law, the Borrower shall pay an amount equal to the difference between (a) the lesser of the amount of interest that would have accrued if the designated rates had always been in effect and the amount of interest that would have accrued if the Maximum Rate had always been in effect, and (b) the amount of interest actually paid or accrued on the Term Loans. 3.7 Interest Calculations. Interest will be calculated on the basis of actual number of days (including the first day but excluding the last day) elapsed but computed as if each calendar year consisted of 360 days (unless the calculation would result in an interest rate greater than the Maximum Rate, or in the case of interest on Base-Rate Borrowings in which event interest will be calculated on the basis of a year of 365 or 366 days, as the case may be). All interest rate determinations and calculations by the Administrative Agent are conclusive and binding absent manifest error. 24 3.8 Maximum Rate. Regardless of any provision contained in any Loan Document, no Credit Party is entitled to contract for, charge, take, reserve, receive, or apply, as interest on all or any part of the Obligation, any amount in excess of the Maximum Rate, and, if any Credit Party ever does so, then any excess shall be treated as a partial prepayment of principal and any remaining excess shall be refunded to the Borrower. In determining if the interest paid or payable exceeds the Maximum Rate, the Borrower and the Credit Parties shall, to the maximum extent permitted under applicable Law, (a) treat all Borrowings as but a single extension of credit (and the Credit Parties and the Borrower agree that is the case and that provision in this Agreement for multiple Borrowings is for convenience only), (b) characterize any nonprincipal payment as an expense, fee, or premium rather than as interest, (c) exclude voluntary prepayments and their effects, and (d) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the Obligation. However, if the Obligation is paid in full before the end of its full contemplated term, and if the interest received for its actual period of existence exceeds the Maximum Amount, the Credit Parties shall refund any excess (and Credit Parties may not, to the extent permitted by Law, be subject to any penalties provided by any Laws for contracting for, charging, taking, reserving, or receiving interest in excess of the Maximum Amount). If the Laws of the State of Texas are applicable for purposes of determining the "MAXIMUM RATE" or the "MAXIMUM AMOUNT," then those terms mean the "WEEKLY CEILING" from time to time in effect under Texas Finance Code Section 303.305. The Borrower agrees that Chapter 346 of the Texas Finance Code, as amended (which regulates certain revolving credit loan accounts and revolving triparty accounts), does not apply to the Obligation. 3.9 Interest Periods. When the Borrower requests any LIBOR Borrowing, the Borrower may elect the applicable interest period (each an "INTEREST PERIOD"), which may be, at the Borrower's option, one, two, three, or six months for LIBOR Borrowings, subject to SECTION 14.1 and the following conditions: (a) the initial Interest Period for a LIBOR Borrowing commences on a conversion date, and each subsequent Interest Period applicable to any Borrowing commences on the day when the next preceding applicable Interest Period expires; (b) if any Interest Period for a LIBOR Borrowing begins on a day for which no numerically corresponding Business Day in the calendar month at the end of the Interest Period exists, then the Interest Period ends on the last Business Day of that calendar month; (c) if the Borrower is required to pay any portion of a LIBOR Borrowing before the end of its Interest Period in order to comply with the payment provisions of the Loan Documents, the Borrower shall also pay any related Funding Loss; and (d) no more than ten Interest Periods may be in effect at one time. 3.10 Conversions. So long as no Default or Potential Default exists, the Borrower may (a) convert a LIBOR Borrowing on the last day of the applicable Interest Period to a Base-Rate Borrowing, (b) convert a Base-Rate Borrowing at any time to a LIBOR Borrowing, and (c) elect a new Interest Period for a LIBOR Borrowing. That election may be made by telephonic request to the Administrative Agent no later than 12:00 p.m. noon on the third Business Day before the conversion date or the last day of the Interest Period, as the case may be (for conversion to a LIBOR Borrowing or election of a new Interest Period), and no later than 12:00 p.m. noon on the last day of the Interest Period (for conversion to a Base-Rate Borrowing). The Borrower shall provide a 25 Conversion Notice to the Administrative Agent no later than two (2) days after the date of the conversion or election. Absent the Borrower's telephonic request for conversion or election of a new Interest Period or if a Default or Potential Default exists, then, a LIBOR Borrowing shall be deemed converted to a Base-Rate Borrowing effective when the applicable Interest Period expires. 3.11 Order of Application. (a) No Default. Except as provided in SECTION 3.11(b), any payment shall be applied to the Obligation, except as otherwise specifically provided in the Loan Documents, in the order and manner as the Borrower directs. (b) Default. If a Default or Potential Default exists or if the Borrower fails to give direction, any payment (including proceeds from the exercise of any Rights) shall be applied in the following order: (i) to all fees and expenses for which the Credit Parties have not been paid or reimbursed in accordance with the Loan Documents (and if such payment is less than all unpaid or unreimbursed fees and expenses, then the payment shall be paid against unpaid and unreimbursed fees and expenses in the order of incurrence or due date); (ii) to accrued interest on the Term Loans; (iii) to the Term Loans and (iv) to the remaining Obligation in the order and manner Required Lenders deem appropriate. (c) Pro Rata. Each payment or prepayment shall be distributed to each Lender in accordance with its Pro Rata Part of that payment or prepayment. 3.12 Sharing of Payments, Etc. If any Lender obtains any payment or prepayment with respect to the Obligation (whether voluntary, involuntary, or otherwise, including, without limitation, as a result of exercising its Rights under SECTION 3.13) that exceeds the part of that payment or prepayment that it is then entitled to receive under the Loan Documents, then that Lender shall purchase from the other Lenders participations that will cause the purchasing Lender to share the excess payment or prepayment ratably with each other Lender. If all or any portion of any excess payment or prepayment is subsequently recovered from the purchasing Lender, then the purchase shall be rescinded and the purchase price restored to the extent of the recovery. The Borrower agrees that any Lender purchasing a participation from another Lender under this section may, to the fullest extent permitted by Law, exercise all of its Rights of payment (including the Right of offset) with respect to that participation as fully as if that Lender were the direct creditor of the Borrower in the amount of that participation. 3.13 Offset. If a Default exists, each Lender is entitled to exercise (for the benefit of all Lenders in accordance with SECTION 3.12) the Rights of offset and banker's lien against each and every account and other property, or any interest therein, that any Company may now or hereafter have with, or which is now or hereafter in the possession of, that Lender to the extent of the full amount of the Obligation owed (directly or participated) to it. 26 3.14 Booking Borrowings. To the extent permitted by Law, any Lender may make, carry, or transfer its Borrowings at, to, or for the account of any of its branch offices or the office or branch of any of its Affiliates. However, no Affiliate or branch is entitled to receive any greater payment under SECTION 3.16 than the transferor Lender would have been entitled to receive with respect to those Borrowings, and a transfer may not be made if, as a direct result of it, SECTION 3.15 or 3.17 would apply to any of the Obligation. If any of the conditions of SECTIONS 3.16 or 3.17 ever apply to a Lender, that Lender shall, to the extent possible, carry or transfer its Borrowings at, to, or for the account of any of its branch offices or the office or branch of any of its Affiliates so long as the transfer is consistent with the other provisions of this section, does not create any burden or adverse circumstance for that Lender that would not otherwise exist, and eliminates or ameliorates the conditions of SECTIONS 3.16 or 3.17 as applicable. 3.15 Basis Unavailable or Inadequate for LIBOR. If, on or before any date when LIBOR is to be determined for a Borrowing, the Administrative Agent reasonably determines that the basis for determining the applicable rate is not available or any Lender reasonably determines that the resulting rate does not accurately reflect the cost to that Lender of making or converting Borrowings at that rate for the applicable Interest Period, then the Administrative Agent shall promptly notify the Borrower and the Lenders of that determination (which is conclusive and binding on the Borrower absent manifest error) and the applicable Borrowing shall be a Base-Rate Borrowing. Until the Administrative Agent notifies the Borrower that those circumstances no longer exist, the Lenders' commitments under this Agreement to make, or to convert to, LIBOR Borrowings, as the case may be, are suspended. 3.16 Additional Costs. Each Lender severally and not jointly agrees to notify the Administrative Agent, the other Credit Parties, and the Borrower within 180 days after it has actual knowledge that any circumstances exist that would give rise to any payment obligation by the Borrower under CLAUSES (a) through (c) below. Although no Lender shall have any liability to any other Credit Party, or any Company for its failure to give that notice, the Borrower is not obligated to pay any amounts under those clauses that arise, accrue, or are imposed more than 180 days before that notice to the extent it is applicable to those amounts. Any Lender demanding payment of any additional costs under this section must generally be making similar demand for similar additional costs under credit agreements to which it is party that contain similar provisions to this section. (a) Reserves. With respect to any LIBOR Borrowing (i) if any change in any present Law, any change in the interpretation or application of any present Law, or any future Law imposes, modifies, or deems applicable (or if compliance by any Lender with any requirement of any Tribunal results in) any requirement that any reserves (including, without limitation, any marginal, emergency, supplemental, or special reserves) be maintained (other than any reserve included in the Reserve Requirement), and if (ii) those reserves reduce any sums receivable by that Lender under this Agreement or increase the costs incurred by that Lender in advancing or maintaining any portion of any LIBOR Borrowing, then (iii) that Lender (through the Administrative Agent) shall deliver to the Borrower a certificate setting forth in reasonable detail the calculation of the amount necessary to compensate it for its reduction or increase (which 27 certificate is conclusive and binding absent manifest error), and (iv) the Borrower shall pay that amount to that Lender within five (5) Business Days after demand. The provisions of and undertakings and indemnification in this CLAUSE (a) survive the satisfaction and payment of the Obligation and termination of this Agreement. (b) Capital Adequacy. With respect to any Borrowing, if any change in any present Law, any change in the interpretation or application of any present Law, or any future Law regarding capital adequacy, or if compliance by any Lender with any request, directive, or requirement imposed in the future by any Tribunal regarding capital adequacy, or if any change in its written policies or in the risk category of this transaction, in any of the foregoing events or circumstances, reduces the rate of return on its capital as a consequence of its obligations under this Agreement to a level below that which it otherwise could have achieved (taking into consideration its policies with respect to capital adequacy) by an amount deemed by it to be material (and it may, in determining the amount, utilize reasonable assumptions and allocations of costs and expenses and use any reasonable averaging or attribution method), then (unless the effect is already reflected in the rate of interest then applicable under this Agreement) the Administrative Agent or that Lender (through the Administrative Agent) shall notify the Borrower and deliver to the Borrower a certificate setting forth in reasonable detail the calculation of the amount necessary to compensate it (which certificate is conclusive and binding absent manifest error), and the Borrower shall pay that amount to the Administrative Agent or that Lender within five (5) Business Days after demand. Notwithstanding the foregoing sentence, the Borrower shall not be obligated to pay such amount unless notice thereof is given within ninety (90) Business Days after any such Lender actually incurs such reduction in its return. The Lenders are not aware of any event that would so reduce their rate of return as of the date hereof. If any such event giving rights to a demand by any Lender for compensation under this SECTION 3.16(b) occurs specifically with respect to such Lender, and generally with respect to national banks similarly situated for loans of the same classification, the Borrower may elect to prepay the Obligation in full within one hundred twenty (120) days after receipt of the above-described certificate from the Administrative Agent by giving written notice to the Administrative Agent or that Lender through the Administrative Agent) of such election not more than five (5) Business Days after receipt of such certificate from the Administrative Agent; provided, however, that if the Borrower does not prepay the Obligation within such 120-day period despite having given such notice, this Agreement shall remain in full force and effect as if such notice was never given. The provisions of and undertakings and indemnification in this CLAUSE (b) shall survive the satisfaction and payment of the Obligation and termination of this Agreement. (c) HLT. Neither the Borrower nor any Lender is aware of any circumstances which would result in classifying this transaction as a "highly leveraged transaction" as of the Closing Date under "HLT" guidelines promulgated by any Tribunal (including, without limitation, the Office of the Comptroller of the Currency). If any Tribunal or any Lender (as it interprets "HLT guidelines" promulgated by any Tribunal) classifies this transaction as a "highly leveraged transaction," such Lender (through the Administrative Agent) shall promptly notify the Borrower of such classification and the 28 applicable interest rate margin in all contexts shall be increased by 1% as of the date of such notice. (d) Taxes. Subject to SECTION 3.19, any Taxes payable by any Credit Party or ruled (by a Tribunal) payable by a Credit Party in respect of this Agreement or any other Loan Document shall, if permitted by Law, be paid by the Borrower, together with interest and penalties, if any, except for Taxes payable on or measured by the overall net income of that Credit Party (or that Credit Party, as the case may be, together with any other Person with whom that Credit Party files a consolidated, combined, unitary, or similar Tax return) and except for interest and penalties incurred as a result of the gross negligence or willful misconduct of any Credit Party. The Credit Party (through the Administrative Agent) shall notify the Borrower and deliver to the Borrower a certificate setting forth in reasonable detail the calculation of the amount of payable Taxes, which certificate is conclusive and binding (absent manifest error), and the Borrower shall pay that amount to the Administrative Agent for its account or the account of that Credit Party, as the case may be within five (5) Business Days after demand. If that Credit Party subsequently receives a refund of the Taxes paid to it by the Borrower, then the recipient shall promptly pay the refund to the Borrower. 3.17 Change In Laws. If any Law makes it unlawful for any Lender to make or maintain LIBOR Borrowings, then that Lender shall promptly notify the Borrower and the Administrative Agent, and (a) as to undisbursed funds, that requested Borrowing shall be made as a Base-Rate Borrowing, and (b) as to any outstanding Borrowing (i) if maintaining the Borrowing until the last day of the applicable Interest Period is unlawful, the Borrowing shall be converted to a Base-Rate Borrowing as of the date of notice, in which event the Borrower will be required to pay any related Funding Loss, or (ii) if not prohibited by Law, the Borrowing shall be converted to a Base-Rate Borrowing as of the last day of the applicable Interest Period, or (iii) if any conversion will not resolve the unlawfulness, the Borrower shall promptly prepay the Borrowing, without penalty but with related Funding Loss. 3.18 FUNDING LOSS. THE BORROWER SHALL INDEMNIFY EACH LENDER AGAINST, AND PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER DEMANDS THAT THE BORROWER PAY ANY FUNDING LOSS, THAT LENDER SHALL DELIVER TO THE BORROWER AND THE ADMINISTRATIVE AGENT A CERTIFICATE SETTING FORTH IN REASONABLE DETAIL THE BASIS FOR IMPOSING THE FUNDING LOSS AND THE CALCULATION OF THE AMOUNT, WHICH CALCULATION IS CONCLUSIVE AND BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF AND UNDERTAKINGS AND INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT. 3.19 Taxes. (a) Any and all payments by the Borrower to or for the account of any Credit Party hereunder or under any other Loan Document shall be made free and 29 clear of and without deduction for any and all present or future Taxes, excluding, in the case of each Credit Party, Taxes based on or measured by its income, and franchise taxes imposed on it, by the jurisdiction under the Laws of which such Credit Party (or its Applicable Lending Office) is organized or any political subdivision thereof (such income and franchise Taxes being "EXCLUDED TAXES"). (b) In addition, the Borrower agrees to pay any and all present or future stamp or documentary Taxes and any other excise or property Taxes or charges or similar levies which arise from any payment made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "OTHER TAXES"). (c) The Borrower agrees to indemnify each Credit Party for the full amount of Taxes (other than Excluded Taxes) and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this SECTION 3.19) paid by such Credit Party (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto. (d) Each Lender organized under the Laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by the Borrower or the Administrative Agent (but only so long as such Lender remains lawfully able to do so), shall provide the Borrower and the Administrative Agent with (i) Internal Revenue Service Form W-8 BEN or Form W-8 ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, (ii) Internal Revenue Service Form W-8 BEN or Form W-8 ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, and (iii) any other form or certificate required by any taxing authority (including any certificate required by Sections 871(h) and 881(c) of the Code), certifying that such Lender is entitled to an exemption from or a reduced rate of tax on payments pursuant to this Agreement or any of the other Loan Documents. (e) For any period with respect to which a Lender has failed to provide the Borrower and the Administrative Agent with the appropriate form pursuant to SECTION 3.19 (unless such failure is due to a change in any Laws occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under SECTION 3.19(c) with respect to Taxes imposed by the United States; provided, however, that should a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes (other than Excluded Taxes) because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. 30 (f) If the Borrower is required to pay additional amounts to or for the account of any Lender pursuant to this SECTION 3.19, then such Lender will agree to use reasonable efforts to change the jurisdiction of its applicable lending office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. (g) Within thirty (30) days after the date of any payment of Taxes or Other Taxes, the Borrower will provide to the Administrative Agent (upon its request) a copy of the reports required by the applicable taxing authority and accompanying such payment. (h) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this SECTION 3.19 shall survive the termination of the Commitments and the payment in full of the Term Loans for the applicable period of the statute of limitations. SECTION 4: FEES. 4.1 Treatment of Fees. The fees described in this SECTION 4 represent compensation for services rendered and to be rendered separate and apart from the lending of money or the provision of credit, and (a) are not compensation for the use, detention, or forbearance of money, (b) are in addition to, and not in lieu of, interest and expenses otherwise described in this Agreement, (c) are payable in accordance with SECTION 3.1, (d) are non-refundable, (e) to the fullest extent permitted by Law, bear interest, if not paid when due, at the Default Rate, and (f) are calculated on the basis of a year of 360 days. 4.2 Agent's Fees. The Borrower shall (i) pay to Administrative Agent, solely for its own account, the fees described in the letter agreement (as it may be renewed, extended, or modified) dated as of May 16, 2002, between the Borrower and the Administrative Agent and (ii) pay to the Agents, solely for their own account, the fees described in the letter agreement (as it may be renewed, extended or modified) dated as of May 16, 2002, among the Borrower and the Agents. SECTION 5: SECURITY. 5.1 Subsidiary Guaranty. As an inducement to the Lenders to enter into this Agreement: (a) the Borrower shall cause all of its present and future direct and indirect Domestic Subsidiaries for which at least 70% of each of their Voting Stock is owned of record or beneficially by a Company, whether now existing or in the future formed or acquired, to unconditionally guarantee in favor of the Credit Parties the full payment and performance of the Obligation pursuant to the Subsidiary Guaranty. (b) [RESERVED]. 31 (c) If, (i) as a result of any disposition permitted under SECTION 9.9, more than 50% of the Voting Stock of a Subsidiary Guarantor is transferred, sold or assigned to a Person who is not an Affiliate, or (ii) a Subsidiary Guarantor is the subject of a Permitted IPO, then the Administrative Agent shall, provided no Default or Potential Default is then in existence, release the Subsidiary Guaranty with respect to such Subsidiary Guarantor. (d) The Borrower shall not cause any Subsidiary to guarantee the Existing Credit Agreement, or create (or cause to be created) any Lien to secure the Existing Credit Agreement (other than Liens granted in connection with a pledge of stock or equity interests of a Foreign Subsidiary to the Existing Administrative Agent), without contemporaneously causing such Subsidiary to deliver a corresponding Subsidiary Guaranty, or creating (or causing to be created) a corresponding security interest, in favor of the Lenders (any such security interest to be shared equally and ratably with the Existing Lenders). 5.2 [RESERVED]. 5.3 Additional Security and Subsidiary Guaranties. The Lenders may, without notice or demand and without affecting any Company's (or any other Person's) obligations under the Loan Documents, from time to time (a) receive from any Person and hold collateral for the payment of all or any part of the Obligation and exchange, enforce, or release such collateral or any part thereof and (b) accept and hold any endorsement or guaranty of payment of all or any part of the Obligation and release such endorser or guarantor, or any Person who has given any other security for the payment of all or any part of the Obligation, or any other Person in any way obligated to pay all or any part of the Obligation. 5.4 Further Assurances.The Borrower shall, and shall cause each other appropriate Company to, perform the acts, duly authorize, execute, acknowledge, deliver, file, and record any additional writings, and pay all filings fees and costs as the Administrative Agent or the Required Lenders may reasonably deem appropriate or necessary to preserve and protect the Rights of the Administrative Agent and the Lenders under any Loan Document. SECTION 6: CONDITIONS PRECEDENT. The agreement of each Lender to make its Term Loan pursuant to SECTION 2.1 is subject to the satisfaction, prior to or concurrently with the making of such Term Loan on the Closing Date (but in any event no later than September 30, 2002) of the following conditions precedent: (a) Credit Agreement. The Administrative Agent shall have received (i) this Agreement, executed and delivered by each Agent, the Borrower, each Subsidiary Guarantor and each Lender listed on SCHEDULE 1, and (ii) upon consummation of the AFSA Acquisition, an After-Acquired Subsidiary Guaranty, substantially in the form of EXHIBIT B, executed and delivered by AFSA and each of its Domestic Subsidiaries as to which at least 70% of its Voting Stock is owned of record or beneficially by AFSA or another such Subsidiary. 32 (b) Acquisition, etc. (i) The AFSA Acquisition shall have been consummated for an aggregate purchase price not exceeding $410,000,000 (subject to adjustment as provided in the Stock Purchase Agreement) pursuant to the Stock Purchase Agreement, and no material provision thereof shall have been amended, waived or otherwise modified without the prior written consent of the Syndication Agent, the Administrative Agent and the Required Lenders. (ii) The AFSA Acquisition shall have been consummated in accordance with all applicable material requirements of Law. (iii) The capital and ownership structure of the Companies shall be satisfactory to the Syndication Agent after giving effect to the AFSA Acquisition. (c) Fees. The Lenders and the Agents shall have received all fees (including, without limitation, all fees payable pursuant to SECTION 4) required to be paid, and all expenses for which invoices have been presented, on or before the Closing Date. (d) Constituent Documents; Incumbency. Administrative Agent shall have received (i) sufficient copies of each Constituent Document for the Borrower and each Subsidiary Guarantor, as applicable, certified as true and correct by a Responsible Officer of such Company, and, with respect to ACS, AFSA and its Subsidiary, certified as of a recent date by the appropriate governmental official, each dated the Closing Date or a recent date prior thereto; (ii) signature and incumbency certificates of the officers of such Person executing the Loan Documents to which it is a party; (iii) resolutions of the Board of Directors or similar governing body of the Borrower and each Subsidiary Guarantor approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; and (iv) a good standing certificate from the applicable Tribunal of each of Borrower's and each Subsidiary Guarantor's jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business and where it generates greater than $25,000,000 in revenue, each dated a recent date prior to the Closing Date. (e) Approvals. All governmental and third party approvals necessary or, in the reasonable discretion of the Syndication Agent and the Administrative Agent, advisable in connection with the AFSA Acquisition, the financing contemplated hereby and the continuing operations of the Companies shall have been obtained and be in full force and effect, and all applicable waiting periods shall have 33 expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the AFSA Acquisition or the financing thereof. (f) Financial Statements. Each of the Lenders shall have received and shall be satisfied with (i) audited consolidated Financials of the Borrower for the fiscal year ending June 30, 2001, (ii) a copy of the 10-Q filing for the quarter ending March 30, 2002, (iii) audited Financials for AFSA and its Subsidiary covering periods within 15 months prior to the Closing Date, accompanied by an opinion of an independent certified public accountant, provided, however, that if such opinion is qualified for any reason, this requirement shall not be satisfied until the Administrative Agent has reviewed and approved (in its discretion) a written explanation for such qualification provided by the Borrower and (iv) to the extent that the Closing Date is later than July 31, 2002, a copy of the unaudited consolidated Financials of the Borrower for the fourth quarter ending June 30, 2002, which shall be delivered to the Agents on or about July 31, 2002 or as soon as available. (g) Pro Forma Balance Sheet. Each of the Lenders shall have received and shall be satisfied with (i) a pro forma consolidated balance sheet of the Borrower as at the date of the most recent consolidated balance sheet of the Borrower delivered pursuant to CLAUSE (f) above, adjusted to give effect to the consummation of the AFSA Acquisition and the financings contemplated hereby as if such transactions had occurred on such date and (ii) a pro forma calculation of the EBITDA of AFSA for the twelve-month period ended March 31, 2002, adjusted to give effect to any cost savings associated therewith calculated in accordance with Regulations S-X under the 1933 Act (such receipt and satisfaction to be evidenced by such Lender's execution of this Agreement). (h) Solvency Certificate. Each of the Lenders shall have received and shall be satisfied with a solvency certificate of the chief financial officer of the Borrower which shall document that the Companies, on a consolidated basis, are Solvent after giving effect to the AFSA Acquisition and the other transactions contemplated hereby (such receipt and satisfaction to be evidenced by such Lender's execution of this Agreement). (i) Officer's Certificate. The Arranger shall have received and be satisfied with a certificate from the chief financial officer of the Borrower demonstrating that after the incurrence of the Obligation, the Borrower is in compliance with the "OTHER DEBT BASKET" as such term is defined in the Existing Credit Agreement. (j) Credit Rating. The Borrower shall have a minimum S&P Rating of at least "BBB-" and a minimum Moody's Rating of at least "Baa3," in each case with a stable outlook. (k) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions: 34 (i) the legal opinion of William L. Deckelman, Jr., general counsel to Obligors, substantially in the form of EXHIBIT D; and (ii) the legal opinion of Baker Botts L.L.P., outside counsel to Obligors, substantially in the form of EXHIBIT E. (l) Representation and Warranties; No Default. The Arranger and the Administrative Agent shall receive an officer's certificate stating that each of the representations and warranties made by any of the Obligors in or pursuant to the Loan Documents shall be true and correct on and as of such date as if made on and as of such date and there shall be no Material Adverse Change, Default or Potential Default in existence at the time of, or immediately after giving effect to, the making of the Term Loans. SECTION 7: REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Credit Parties, as of the Closing Date, as follows: 7.1 Purpose and Regulations G, T, U and X. (a) The Borrower will use the proceeds of the Term Loans to finance the AFSA Acquisition and to pay related fees and expenses. (b) No Company is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulations G, T, U, or X of the Board of Governors of the Federal Reserve System, as amended. No part of the proceeds of any Borrowing will be used, directly or indirectly, for a purpose that violates any Law, including, without limitation, Regulations G, T, U, or X. 7.2 Corporate Existence, Good Standing, and Authority. Each Company is duly organized, validly existing, and in good standing under the Laws of its jurisdiction of organization. Except where not a Material Adverse Event, each Company is duly qualified to transact business and is in good standing in each jurisdiction where the nature and extent of its business and properties require due qualification and good standing (each of which jurisdictions is identified on SCHEDULE 7.3). Each Company possesses all requisite authority and power to conduct its business as is now being conducted and as proposed under the Loan Documents to be conducted and to own and operate its assets as now owned and operated and as proposed to be owned and operated under the Loan Documents. 7.3 Subsidiaries and Names. SCHEDULE 7.3 describes (a) all of the Borrower's direct and indirect Subsidiaries, (b) all Companies, (c) every name or trade name used by each Company during the five-year period before the date of this Agreement, (d) every change of each Company's name during the four-month period before the date of this Agreement, (e) the chief executive office, and location of books and records of each Company, (f) the percentage of shares of outstanding capital stock (or similar voting interests) of each Subsidiary held by a Company, and (g) the Company holding such 35 stock (or similar voting interests). All of the outstanding shares of capital stock (or similar voting interests) of the Borrower's Subsidiaries are (a) duly authorized, validly issued, fully paid, and nonassessable, (b) owned of record and beneficially as described in that schedule or those writings, free and clear of any Liens, except Permitted Liens, and (c) not subject to any warrants, options, or other acquisition Rights of any Person that could result in the holders of such warrants, options, or other acquisition Rights owning, in the aggregate, a percentage greater than 15% of the outstanding shares of Stock or (iii) any transfer restriction except restrictions imposed by securities Laws and general corporate Laws. 7.4 Authorization and Contravention. The execution and delivery by each Obligor of each Loan Document to which it is a party and the performance by it of its obligations under those Loan Documents (a) are within its organizational power, (b) have been duly authorized by all necessary organizational action, (c) require no action by or filing with any Tribunal (except any action or filing that has been taken or made on or before the Closing Date), (d) do not violate any provision of its Constituent Documents, and (e) do not violate any provision of Law applicable to it or any material agreement to which it is a party except violations that individually or collectively are not a Material Adverse Event. 7.5 Binding Effect. Upon execution and delivery by all parties to it, each Loan Document will constitute a legal and binding obligation of each Obligor party to it, enforceable against it in accordance with that Loan Document's terms except as that enforceability may be limited by Debtor Laws and general principles of equity. 7.6 Financials and Existing Debt. The Current Financials were prepared in accordance with GAAP and present fairly, in all material respects, the Companies' and AFSA's consolidated financial condition, results of operations, and, where applicable, cash flows as of the dates and for the periods covered thereby (subject only to normal year-end adjustments for interim statements) except, with respect to the current Financials of AFSA and its Subsidiary, as otherwise indicated therein, and except that the March 31, 2002 statements are not accompanied by notes or other textual disclosure required by GAAP. No Material Adverse Event has occurred and is continuing. 7.7 Solvency. On the Closing Date, the Borrower is Solvent. Except for Subsidiaries set forth in SCHEDULE 7.7, each Company is Solvent. 7.8 Litigation. Except as disclosed on SCHEDULE 7.8, and matters covered (subject to reasonable and customary deductible and retention) by insurance or indemnification agreements (a) no Company is subject to, or aware of the threat of, any Litigation that is reasonably likely to be determined adversely to any Company and, if so adversely determined, is a Material Adverse Event, and (b) no outstanding and unpaid judgments against any Company exist that would be a Material Adverse Event. 7.9 Taxes. Except as disclosed on SCHEDULE 7.9, and with respect to all existing Tax liabilities which individually are greater than $1,000,000, (a) all Tax returns of each Company required to be filed have been filed (or extensions have been granted) 36 before delinquency, and (b) all Taxes imposed upon each Company that are due and payable have been paid before delinquency except as being contested as permitted by SECTION 8.5. 7.10 Environmental Matters. Except as disclosed on SCHEDULE 7.10: (a) No Company's ownership of its assets violates any applicable Environmental Law, other than such violations that would not constitute a Material Adverse Event. (b) No Company has received notice from any Tribunal that it has actual or potential Environmental Liability and no Company has knowledge that it has any Environmental Liability, which actual or potential Environmental Liability in either case constitutes a Material Adverse Event. (c) No Company has received notice from any Tribunal that any Real Property is affected by, and no Company has knowledge that any Real Property is affected by, any Release of any Hazardous Substance which constitutes a Material Adverse Event. 7.11 Employee Plans. Except as disclosed on SCHEDULE 7.11, (a) no Employee Plan subject to ERISA has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA or Section 412 of the Code), (b) neither the Borrower nor any ERISA Affiliate has incurred liability, except for liabilities for premiums that have been paid or that are not past due, under ERISA to the PBGC in connection with any Employee Plan, (c) neither the Borrower nor any ERISA Affiliate has withdrawn in whole or in part from participation in a Multiemployer Plan in a manner that has given rise to a withdrawal liability under Title IV of ERISA, (d) neither the Borrower nor any ERISA Affiliate has engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code), (e) no "reportable event" (as defined in Section 4043 of ERISA) has occurred excluding events for which the notice requirement is waived under applicable PBGC regulations, (f) neither the Borrower nor any ERISA Affiliate has any liability, or is subject to any Lien, under ERISA or the Code to or on account of any Employee Plan, (g) each Employee Plan subject to ERISA and the Code complies in all material respects, both in form and operation, with ERISA and the Code, and (h) no Multiemployer Plan subject to the Code is in reorganization within the meaning of Section 418 of the Code. The present value of all benefit liabilities within the meaning of Title IV of ERISA under each Employee Plan (based on those actuarial assumptions used to fund such Employee Plan) did not, as of the last annual valuation date for the 1999 plan year of such Plan, exceed the value of the assets of such Employee Plan, and the total present values of all benefit liabilities within the meaning of Title IV of ERISA of all Employee Plans (based on the actuarial assumptions used to fund each such Plan) did not, as of the respective annual valuation dates for the 1999 plan year of each such Plan, exceed the value of the assets of all such plans. 7.12 Properties; Liens. Each Company has good and marketable title to all its property reflected on the Current Financials as being owned by it except for property that 37 is obsolete or that has been disposed of in the ordinary course of business between the date of the Current Financials and the date of this Agreement. No Lien exists on any property of any Company except Permitted Liens. No Company is party or subject to any agreement, instrument, or order which in any way restricts any Company's ability to allow Liens to exist upon any of its assets except relating to Permitted Liens. 7.13 Government Regulations. No Company is subject to regulation under (a) the Public Utility Holding Company Act 1935, the Federal Power Act, the Investment Company Act of 1940, the Interstate Commerce Act (as any of the preceding acts have been amended), or any other Law (other than Regulation X of the Board Governors of the Federal Reserve System) which regulates the incurrence of Debt, or (b) a "utility" as defined in Chapter 35 of the Texas Business and Commerce Code, as amended. 7.14 Transactions with Affiliates. Except for executive compensation arrangements of the Borrower, transactions with other Companies and as otherwise disclosed on SCHEDULE 7.14 or permitted by SECTION 9.5, no Company is a party to a material transaction with any of its Affiliates. For purposes of this SECTION 7.14, such transactions are "material" if they require any Company to pay over the course of such transactions, more than $5,000,000 with respect to any individual transaction. 7.15 Debt. No Company has any Debt except Permitted Debt. 7.16 Leases. Except as disclosed on SCHEDULE 7.16, (a) each Company enjoys peaceful and undisturbed possession under all leases necessary for the operation of its properties and assets, and (b) all material leases under which any Company is a lessee are in full force and effect. 7.17 Labor Matters. After consultation with executive officers of the Companies responsible for labor matters and issues, and except as disclosed on SCHEDULE 7.17, (a) no actual or threatened strikes, labor disputes, slow downs, walkouts, work stoppages, or other concerted interruptions of operations that involve employees of any Company as of the date hereof, (b) hours worked by and payment made to the employees of any Company or any predecessor of such Company have not been in material violation of the Fair Labor Standards Act or any other applicable Laws pertaining to labor matters, (c) all material payments due from any Company for employee health and welfare insurance, including, without limitation, workers compensation insurance, have been paid or accrued as a liability on its books, and (d) the business activities and operations of each Company are materially in compliance with OSHA and other applicable health and safety Laws. 7.18 Intellectual Property. Except as disclosed on SCHEDULE 7.18, (a) each Company owns or has the right to use all material licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applications and trade names necessary to continue to conduct its businesses as presently conducted by it and proposed to be conducted by it immediately after the date of this Agreement, (b) each Company is conducting its business without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual 38 property right of others, except where such Company is actively defending against such claim of infringement or such claim (if adversely determined) would not result in a Material Adverse Event, and (c) no infringement or claim of infringement by others of any material license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property of any Company exists, except where such Company is actively prosecuting to cease such infringement and such infringement (if it continued unabated) would not result in a Material Adverse Event. The Borrower and each Company have an active program to identify, and protect against infringement or abandonment, their respective licenses, patents, copyrights, service marks, trademarks, trade names, trade secrets and other intellectual property. 7.19 Insurance. Each Company maintains with financially sound, responsible, and reputable insurance companies or associations (or, as to workers' compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdictions in which it operates) insurance concerning its properties and businesses against such casualties and contingencies and in such types and in such amounts (and with co-insurance and deductibles) as is customary in the case of same or similar businesses. 7.20 Full Disclosure. Each material fact or condition relating to the Loan Documents or the financial condition or prospects, business, or property of the Companies that is a Material Adverse Event has been disclosed in writing to the Administrative Agent and the Lenders. All information previously furnished to the Credit Parties in connection with the Loan Documents was, and all information furnished in the future by any Company to any Credit Party will be, true and accurate in all material respects or based on reasonable estimates on the date the information is stated or certified. 7.21 Pari Passu Debt. The Obligors will at all times ensure that the claims and rights of the Credit Parties under this Agreement and the other Loan Documents will not be subordinate to, and will rank at all times at least pari passu (without giving effect to any Liens) with, all other Debt of the Companies, except with respect to the Subordinated Notes (or any other Permitted Debt described in CLAUSE (i) of the definition thereof, which shall (at all times) remain subordinate and inferior to the Obligations). The Obligors will not amend, modify or supplement any credit agreement, notes or other document relating to its Debt in any manner that would make them more onerous to the respective Obligor than the provisions of this Agreement and the other Loan Documents as in effect from time to time. 7.22 Contingent "Earn-Out" Payments. SCHEDULE 7.22 describes all material contractual agreements entered into by any Company to make contingent ("EARN-OUT") payments based on the financial performance of its Subsidiaries. For purposes of this SECTION 7.22, such transactions are "material" if they require any Company to pay over the course of such transactions, more than $5,000,000 with respect to any individual transaction. 39 SECTION 8: AFFIRMATIVE COVENANTS. Until the Obligation has been fully paid and performed, the Borrower covenants and agrees with the Credit Parties that, without first obtaining the Administrative Agent's written notice of the Required Lenders' consent to the contrary: 8.1 Certain Items Furnished. The Borrower shall furnish the following to the Administrative Agent, which will, in turn, provide to each Credit Party: (a) Annual Financials, Etc. Promptly after preparation but no later than ninety (90) days after the last day of each fiscal year of the Borrower, Financials showing the Companies' consolidated financial condition and results of operations as of, and for the year ended on, that last day, accompanied by (i) the opinion, without material qualification, of any nationally-recognized independent certified public accounting firm which is included within the group commonly referred to as the "Big Five" or any other such firm reasonably acceptable to the Required Lenders, based on an audit using generally accepted auditing standards, that the consolidated portion of those Financials were prepared in accordance with GAAP and present fairly, in all material respects, the Companies' consolidated financial condition and results of operations, and (ii) a Compliance Certificate. (b) Quarterly Financials, Etc. Promptly after preparation but no later than sixty (60) days after the last day of each of the first three fiscal quarters of the Borrower each year, Financials showing the Companies' consolidated financial condition and results of operations for that fiscal quarter and for the period from the beginning of the current fiscal year to the last day of that fiscal quarter, accompanied by a Compliance Certificate. (c) Other Reports. Promptly after preparation thereof, and if requested by the Agents, true copies of all reports, statements, documents, plans and other written communications furnished by or on behalf of the Borrower to its stockholders, the SEC, or the PBGC, and, if requested by the Administrative Agent, any other Tribunal. (d) Employee Plans. As soon as possible and within thirty (30) days after the Borrower knows that any event which would constitute a reportable event under Section 4043(b) of Title IV of ERISA with respect to any Employee Plan subject to ERISA has occurred, or that the PBGC has instituted or will institute proceedings under ERISA to terminate that plan, deliver a certificate of a Responsible Officer of the Borrower setting forth details as to that reportable event and the action which the Borrower or an ERISA Affiliate, as the case may be, proposes to take with respect to it, together with a copy of any notice of that reportable event which may be required to be filed with the PBGC, or any notice delivered by the PBGC evidencing its intent to institute those proceedings or any notice to the PBGC that the plan is to be terminated, as the case may be. For all purposes of this section, the Borrower is deemed to have all knowledge of all facts attributable to the plan administrator under ERISA. 40 (e) Other Notices. Notice, promptly after the Borrower knows, of (i) the existence and, if requested by the Administrative Agent, status of any Litigation that, if determined adversely to any Company, would be a Material Adverse Event, (ii) any change in any material fact or circumstance represented or warranted by any Company in any Loan Document, or (iii) a Default or Potential Default, specifying the nature thereof and what action the Companies have taken, are taking, or propose to take. (f) SEC Filings. Promptly after the filing thereof, a true, correct, and complete copy of each Form 10-K, and Form 10-Q, filed by or on behalf of any Company with the SEC to be delivered with the Compliance Certificate next due. (g) Change in Ratings. Promptly upon the receipt of notice thereof, and in any event within five (5) Business Days after any change in the Moody's Rating or the S&P Rating, notice of such change. (h) Other Information. Promptly upon request therefor by any Credit Party, such information (not otherwise required to be furnished under the Loan Documents) respecting the business affairs, assets, and liabilities of the Companies, and such opinions, certifications, and documents, in addition to those mentioned in this Agreement, as reasonably requested. 8.2 Use of Credit. The Borrower shall, and shall cause the Companies to, use the proceeds of Borrowings only for the purposes represented in this Agreement. 8.3 Books and Records. Each Company shall maintain books, records, and accounts necessary to prepare Financials in accordance with GAAP. 8.4 Inspections. Each Company shall allow any Credit Party (or their respective Representatives) to inspect any of its properties, to review reports, files, and other records and to make and take away copies, to conduct tests or investigations, and to discuss any of its affairs, conditions, and finances with its other creditors, directors, officers, employees, or representatives from time to time, during reasonable business hours, or, after notice to the Borrower, with any creditor of any Company. 8.5 Taxes. Each Company shall promptly pay when due any and all Taxes except Taxes that are being contested in good faith by lawful proceedings diligently conducted, against which reserve or other provision required by GAAP has been made, and in respect of which levy and execution of any Lien sufficient to be enforced has been and continues to be stayed. 8.6 Payment of Obligation. Each Company shall promptly pay (or renew and extend) all of its Debt as it becomes due (other than the Subordinated Notes and Debt owed to any Person other than Lenders, the validity or amount of which is being contested in good faith by appropriate proceedings diligently conducted and a reserve or other provision required by GAAP has been made). 8.7 Expenses. Promptly after demand accompanied by an invoice describing the costs, fees, and expenses in reasonable detail, the Borrower shall pay (a) all costs, 41 fees, and expenses paid or incurred by the Administrative Agent incident to any Loan Document (including, without limitation, the reasonable fees and expenses of the Administrative Agent's counsel in connection with the negotiation, preparation, delivery, and execution of the Loan Documents and any related amendment, waiver, or consent) and (b) all reasonable costs and expenses incurred by the Administrative Agent or any Lender in connection with the enforcement of the obligations of any Company under the Loan Documents or the exercise of any Rights under the Loan Documents (including, without limitation, reasonable allocated costs of in-house counsel, other reasonable attorneys' fees, and court costs), all of which are part of the Obligation, bearing interest, (if not paid within ten (10) Business Days after demand accompanied by an invoice describing the costs, fees, and expenses in reasonable detail) at the Default Rate until paid. 8.8 Maintenance of Existence, Assets, and Business. Each Company shall (a) maintain its corporate existence and good standing in its state of organization (except as permitted under SECTIONS 9.9 AND 9.10), (b) except where not a Material Adverse Event (i) maintain its authority to transact business and good standing in all other states, (ii) maintain all licenses, permits, and franchises (including, without limitation, Environmental Permits) necessary for its business, (iii) keep all of its material assets that are useful in and necessary to its business in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs and replacements. 8.9 Insurance. Each Company shall, at its cost and expense, maintain with financially sound, responsible, and reputable insurance companies or associations, or, as to workers' compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdictions in which it operates, insurance concerning its properties and businesses against casualties and contingencies and of types and in amounts (and with co-insurance and deductibles) as shall be reasonably satisfactory to the Administrative Agent, with loss payable to the Administrative Agent as its interest may appear, and provide the Administrative Agent with evidence of such insurance within thirty (30) days after the Closing Date. 8.10 Environmental Matters. Each Company shall (a) operate and manage its businesses and otherwise conduct its affairs in compliance with all Environmental Laws and Environmental Permits except to the extent noncompliance does not constitute a Material Adverse Event, (b) promptly deliver to the Administrative Agent a copy of any notice received from any Tribunal alleging that any Company is not in compliance with any Environmental Law or Environmental Permit if the allegation constitutes a Material Adverse Event, and (c) promptly deliver to the Administrative Agent a copy of any notice received from any Tribunal alleging that any Company has any potential Environmental Liability if the allegation constitutes a Material Adverse Event. 8.11 Indemnification. (a) As used in this section: (i) "Indemnitor" means the Borrower and (pursuant to the Subsidiary Guaranty) each other Subsidiary Guarantor; (ii) "Indemnitee" means each Agent, each Lender, each present and future Affiliate of any 42 Agent or any Lender, each present and future Representative of any Agent, any Lender, or any of their Affiliates, and each present and future successor and assign of Administrative Agent, any Lender, or any of their Affiliates or Representatives; and (iii) "Indemnified Liabilities" means all present and future, known and unknown, fixed and contingent, administrative, investigative, judicial, and other claims, demands, actions, causes of action, investigations, suits, proceedings, amounts paid in settlement, damages, judgments, penalties, court costs, liabilities, and obligations, and all present and future costs, expenses, and disbursements (including, without limitation, all reasonable attorneys' fees and expenses whether or not suit or other proceeding exists or any Indemnitee is party to any suit or other proceeding) in any way related to any of the foregoing, that may at any time be imposed on, incurred by, or asserted against any Indemnitee and in any way relating to or arising out of any (A) Loan Document, any transaction contemplated by any Loan Document, collateral, or real property, (B) Environmental Liability in any way related to any Company, predecessor, collateral, real property, or act, omission, status, ownership, or other relationship, condition, or circumstance contemplated by, created under, or arising pursuant to or in connection with any Loan Document, or (C) Indemnitee's sole or concurrent ordinary negligence. (b) Each Indemnitor shall jointly and severally indemnify each Indemnitee from and against, protect and defend each Indemnitee from and against, hold each Indemnitee harmless from and against, and on demand pay or reimburse each Indemnitee for, all Indemnified Liabilities. (c) The foregoing provisions (i) are not limited in amount even if that amount exceeds the Obligation, (ii) include, without limitation, reasonable fees and expenses of attorneys and other costs and expenses of Litigation or preparing for Litigation and damages or injury to Persons, property, or natural resources arising under any statutory or common Law, punitive damages, fines, and other penalties, and (iii) are not affected by the source or origin of any Hazardous Substance, and (iv) are not affected by any Indemnitee's investigation, actual or constructive knowledge, course of dealing, or waiver. (d) Each Indemnitee is entitled to be indemnified under the Loan Documents for its own negligence. However, no Indemnitee is entitled to be indemnified under the Loan Documents for its own fraud, gross negligence, or willful misconduct. (e) The provisions of and indemnification and other undertakings under this section survive the satisfaction of the Obligation and the termination of the Loan Documents. 8.12 Chief Executive Office; Material Agreements. The Borrower shall not relocate its chief executive office (from the location listed in SCHEDULE 7.3) unless prior thereto it gives the Administrative Agent thirty (30) days written notice of such proposed location. Each Company shall notify the Administrative Agent of the occurrence of any default under any Material Agreement. In addition, no Company will amend, modify, surrender, impair, forfeit, cancel, or terminate, or permit the amendment, modification, 43 surrender, impairment, forfeiture, cancellation, or termination of, any Material Agreement (other than amendments or modifications which could not, individually or collectively, be a Material Adverse Event, and cancellations or terminations of contracts when the other party thereto has defaulted thereunder). 8.13 Environmental Laws. Each Company shall conduct its business so as to comply with all applicable Environmental Laws and shall promptly take corrective action to remedy any non-compliance with any Environmental Law, except where failure to so comply or take such action would not reasonably be expected to result in a Material Adverse Event. Each Company shall maintain a system which, in its reasonable business judgment, will assure its continued compliance with Environmental Laws. 8.14 After-Acquired Subsidiaries. To the extent required to comply with SECTION 5.1(a), the Borrower shall, and shall cause each other Company to: (a) cause each After-Acquired Subsidiary that is a Domestic Subsidiary (or a Subsidiary Guarantor that has converted from one organizational type to another), to become a Subsidiary Guarantor pursuant to SECTION 15.10 promptly after the date of its Acquisition, formation or conversion; (b) [RESERVED]; and (c) thirty (30) days after the Acquisition (or conversion) of any Domestic Subsidiary, the Administrative Agent shall be provided with: (x) a formation, existence and good standing certificate from the applicable Tribunal (customarily issuing such certificates) of the jurisdiction of organization of such After-Acquired Subsidiary; and (y) an Officer's Certificate of such After-Acquired Subsidiary certifying (i) its Constituent Documents, (ii) resolutions of its board of directors (or similar governing body) approving and authorizing the execution, delivery, and performance of the Loan Documents to be executed by such After-Acquired Subsidiary, and (iii) signatures and incumbency of its officers executing the Loan Documents to be executed by such After-Acquired Subsidiary. SECTION 9: NEGATIVE COVENANTS. Until the Obligation has been fully paid and performed, the Borrower covenants and agrees with the Credit Parties that, without first obtaining Administrative Agent's written notice of Required Lenders' consent to the contrary: 9.1 Debt. No Company may have any Debt except Permitted Debt. 9.2 Loans, Advances, Acquisitions and Investments. (a) Loans and Advances. No Company may, directly or indirectly, make any Advance to any other Person, other than: (i) Advances between (x) the Borrower or any Subsidiary Guarantor, and (y) Domestic Subsidiaries that are Subsidiary Guarantors; 44 (ii) Advances between (x) the Borrower or any Subsidiary Guarantor, and (y) any Foreign Subsidiary whose stock or equity interests has been pledged to the Existing Administrative Agent; provided that the Borrower or any Subsidiary Guarantor may not make an Advance to any such Foreign Subsidiary if, at the time of making such Advance, the amount of aggregate unpaid Advances by the Borrower or any Subsidiary Guarantor, to: (A) any such Foreign Subsidiary exceeds fifteen percent (15%) of the Companies' Adjusted EBITDA (based on the twelve (12) calendar month period most recently then-ended (for which financial statements are available) prior to the date of determination), or (B) all such Foreign Subsidiaries exceeds twenty-five percent (25%) of the Companies' Adjusted EBITDA (based on the twelve (12) calendar month period most recently then-ended (for which financial statements are available) prior to the date of determination); (iii) Advances between (x) the Borrower, any Subsidiary Guarantor, or any Foreign Subsidiary whose stock or equity interests has been pledged to the Existing Administrative Agent, and (y) any other Person, provided that the Borrower, any such Subsidiary Guarantor, or any such Foreign Subsidiary may not make an Advance to any such other Person if, at the time of making such Advance, the amount of aggregate unpaid Advances made by the Borrower, any such Subsidiary Guarantor or any such Foreign Subsidiary, to: (A) (any such other Person exceeds seven and one-half percent (7.5%) of the Companies' Adjusted EBITDA (based on the twelve (12) calendar month period most recently then-ended (for which financial statements are available) prior to the date of determination), or (B) all such other Persons exceeds fifteen percent (15%) of the Companies' Adjusted EBITDA 45 (based on the twelve (12) calendar month period most recently then-ended (for which financial statements are available) prior to the date of determination); (iv) in addition to other Advances permitted under this SECTION 9.2, (x) Advances between Non-Guaranteeing Subsidiaries, and (y) Advances between Foreign Subsidiaries whose stock or equity interests has been pledged to the Existing Administrative Agent; provided that, in the case of Advances by any Subsidiary that is not a Subsidiary Guarantor to any other Company permitted in this SECTION 9.2, the repayment Rights of such Subsidiary making such Advance shall (at all times) be subject, subordinate and inferior to the Rights of the Lenders under the Loan Documents in accordance with a subordination agreement in form and substance acceptable to Administrative Agent; (v) trade and customer accounts or notes receivable which are for goods furnished or services rendered in the ordinary course of business and are payable in accordance with customary trade terms; (vi) notes received by a Company as consideration from an asset disposition permitted under SECTION 9.9; (vii) Advances existing on the Closing Date and identified on SCHEDULE 9.1, and renewals and extensions (but no increases) thereof; (viii) Advances by a Company with its own funds, to another Company; provided that such Advance may not exceed, at the time such Advance is made, an amount equal to the difference between (i) the Companies' consolidated cash on hand reflected in the balance sheet of the Borrower and its consolidated Subsidiaries at such time, minus (ii) the principal amount then outstanding under the Existing Credit Agreement; and (ix) Advances arising from Investments permitted under SECTION 9.2(b)(xviii) AND (xix). (b) Acquisitions and Investments. No Company may, directly or indirectly, make any Acquisition, or any Investment (other than Advances which are permitted by SECTION 9.2(a) above) in any Person, other than: (i) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States of America; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality 46 thereof and, at the time of acquisition, having an investment grade rating obtainable from either Moody's or S&P, and not listed in "Credit Watch" published by S&P (iii) commercial paper, other than commercial paper issued by a Company, maturing no more than ninety (90) days after the date of creation thereof and, at the time of acquisition, having an investment grade rating from either S&P or Moody's; (iv) investment grade domestic and eurodollar certificates of deposit or time deposits or bankers' acceptances maturing within one year after the date of acquisition thereof issued by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $250,000,000; (v) [RESERVED]; (vi) common Stock for which there is a public market; (vii) variable rate preferred stock, auction market preferred stock, remarketed preferred stock, and preferred stock funds having an investment grade rating from either Moody's or S&P (viii) variable rate demand notes or variable rate demand bonds having an investment grade rating from either Moody's or S&P (ix) repurchase agreements collateralized with instruments or securities described in CLAUSES (i) through (VIII) of this SECTION 9.2(b); (x) other instruments having an investment grade rating from either Moody's or S&P (xi) money market funds, mutual funds or other funds that invest in instruments or securities described in CLAUSES (i) through (x) of this SECTION 9.2(b); (xii) Investments in Subsidiary Guarantors; (xiii) Investments in Non-Guaranteeing Subsidiaries provided that neither the Borrower nor any Subsidiary Guarantor may make an Investment in a Non-Guaranteeing Subsidiary if, at the time of making such Investment, the amount of aggregate Investments made by the Borrower and the Subsidiary Guarantors in Non-Guaranteeing Subsidiaries exceeds (A) with respect to any individual Non-Guaranteeing Subsidiary, seven and one-half percent (7.5%) of the Companies' Adjusted EBITDA, or (B) with respect to the aggregate of all such Non-Guaranteeing Subsidiaries, fifteen percent (15%) of the Companies' Adjusted EBITDA, in each period the calculation of the Companies' Adjusted EBITDA under subparagraphs (A) and (B) immediately preceding to be based on the twelve (12) calendar months most recently then-ended (for which financial statements are available) prior to the date of determination; (xiv) Permitted Acquisitions; (xv) Investments in Subsidiaries formed after the Closing Date provided that each such Subsidiary complies with SECTION 8.14; (xvi) (A) in addition to Permitted Acquisitions, Stock acquired by any Company in any other Person, and/or (B) Investments in any Foreign Subsidiary whose stock or equity interests has been pledged to the Existing Administrative Agent; provided that at the time such Stock is acquired, or such Investment is made, the sum of (W) the aggregate consideration paid (including cash and Stock of a Company) for such Stock or the aggregate Investment made in such Foreign Subsidiary, plus (X) the aggregate of such consideration paid for all such Stock since May 12, 2000, plus (Y) the aggregate of all such Investments (excluding Investments otherwise permitted in this SECTION 9.2(b)) made in such Foreign Subsidiaries since May 12, 2000, does not exceed (Z) 20% of Total Net Worth (calculated on a pro forma basis including such Stock which is the subject of the acquisition or including such Investments being made in such Foreign Subsidiaries); (xvii) any Investment made as a result of the receipt of non-cash consideration from a sale of assets that was made in compliance with this Agreement; (xviii) Investments in securities of trade creditors, wholesalers, suppliers, or customers received pursuant to any plan of reorganization or similar arrangement; and (xix) Investments received in 47 settlement of trade accounts receivables created in the ordinary course of business and owing to any Company or in satisfaction of judgments or claims. 9.3 Liens. No Company may (a) create, incur, or suffer or permit to be created or incurred or to exist any Lien upon any of its assets except Permitted Liens or (b) enter into or permit to exist any arrangement or agreement that directly or indirectly prohibits any Company from creating or incurring any Lien on any of its assets except (i) the Loan Documents, (ii) any lease that places a Lien prohibition on only the property subject to that lease, (iii) arrangements and agreements that apply only to property subject to Permitted Liens, (iv) Senior Debt which is Permitted Debt and (v) Debt permitted under CLAUSE (h) of the definition of Permitted Debt (which arrangement or agreement shall permit all Senior Debt (including, without limitation, the Term Loans and any refinancing thereof or increase thereto) to be secured by Liens). 9.4 Employee Plans. Except as disclosed on SCHEDULE 7.11 or where not a Material Adverse Event, no Company may permit any of the events or circumstances described in SECTION 7.11 to exist or occur. 9.5 Transactions with Affiliates. Except for executive compensation arrangements of the Borrower, and as disclosed on SCHEDULE 7.14, no Company may, directly or indirectly, enter into any material transaction (including, without limitation, the sale or exchange of property or the rendering of service) with any of its Affiliates (who are not Companies), other than transactions in the ordinary course of business and upon fair and reasonable terms no less favorable than could be obtained in an arm's-length transaction with a Person that was not its Affiliate. For purposes of this SECTION 9.5, such transactions are "material" if they require any Company to pay over the course of such transactions more than $5,000,000 with respect to any individual transaction. 9.6 Compliance with Laws and Documents. No Company may (a) violate the provisions of any Laws (including, without limitation, OSHA and Environmental Laws) applicable to it or of any material agreement to which it is a party if that violation alone, or when aggregated with all other violations, would be a Material Adverse Event, (b) violate in any material respect any provision of its charter or bylaws, or (c) repeal, replace, or amend any provision of its charter or bylaws if that action would be a Material Adverse Event. 9.7 Issuance of Securities. Except as permitted under Section 9.9, the Borrower may not, nor may the Borrower permit any Subsidiary to, directly or indirectly, issue, sell, or otherwise dispose of any shares of Stock of any Subsidiary of any class, or any securities convertible into or exchangeable for any such shares except (i) issuances, sales and other dispositions of Stock of a Subsidiary, provided that after giving effect to such issuance, sale or other disposition, such Subsidiary will continue to be a Subsidiary of the Borrower, (ii) as otherwise permitted under SECTION 9.9, or (iii) Stock under existing employee stock option plans of the Borrower. 9.8 Distributions. No Company may declare, make, or pay any Distribution except (i) that Subsidiaries may declare dividends (subject to applicable Law) to the 48 Borrower or another Subsidiary from time to time, or make Advances in compliance with SECTION 9.2 and (ii) dividends payable in the form of capital stock of the Borrower. 9.9 Disposition of Assets. No Company may, directly or indirectly, sell, lease, or otherwise dispose of all or any substantial or material assets, other than (a) sales of inventory in the ordinary course of business, (b) sales of equipment for a fair and adequate consideration, provided that if any such equipment is sold, and a replacement is necessary for the proper operation of the business of such Company, such Company will replace such equipment, (c) the sale, assignment, transfer or other disposition of percentage interests in the Receivables Program Assets pursuant to any Accounts Receivables Financing approved in an advance by the Agents (in their sole discretion, not unreasonably withheld), so long as the aggregate Accounts Receivable Financing Amount payable from the Receivables Program Assets to the purchasers under all such Accounts Receivables Financings does not exceed $125,000,000, (d) other dispositions of assets (including, but not limited to, sales or dispositions of Subsidiary Stock) which do not exceed, in the aggregate for all such dispositions during each fiscal year, ten percent (10%) of the Borrower's Net Worth for the immediately preceding fiscal year plus ten percent (10%) of the amount of equity issuances since the end of the prior fiscal year, (e) a Permitted IPO, and (f) issuances, sales and other dispositions of Stock of a Subsidiary permitted under SECTION 9.7. 9.10 Mergers, Consolidations, and Dissolutions. No Company may liquidate, wind up, dissolve, merge or consolidate with any other Person except: (i) as may be permitted under SECTION 9.7 OR 9.9, (ii) any merger or consolidation of a Subsidiary into another Subsidiary or into the Borrower, (iii) any liquidation, dissolution or conversion of a Subsidiary, or (iv) a Permitted Acquisition structured as a merger with Borrower, provided the Borrower is the surviving entity (after giving effect to the merger). 9.11 Assignment. No Company may assign or transfer any of its Rights, duties, or obligations under any of the Loan Documents. 9.12 Fiscal Year and Accounting Methods. No Company may change its fiscal year more than once during the term of this Agreement (except that a Subsidiary may change its fiscal year at any time to match the Borrower's fiscal year), and then only after giving written notice of its intent to make such change to the Administrative Agent. No Company shall change its method of accounting (other than changes with which the Company's auditors have concurred, or immaterial changes in methods). 9.13 New Businesses. No Company may, directly or indirectly, engage in any business which is substantially different from the businesses in which the Companies are presently engaged, and the Companies shall continue to conduct the businesses in which they are presently engaged in substantially the same fashion (including, without limitation, contracts for compute cycles), other than the engagement of a Company in a new business (through an Acquisition of an existing business permitted under the terms of this Agreement or the formation of a de novo business permitted under the terms of this Agreement) which does not require: (a) any individual expenditure or investment by the Companies in excess of an amount equal to 7.5% of the consolidated assets of the 49 Companies immediately prior thereto and which does not involve a business which in the immediately preceding twelve (12) calendar months had gross revenues in excess of an amount equal to 20% of the consolidated gross revenues of the Companies during such period; or (b) an aggregate expenditure or investment by the Companies in excess of an amount equal to (i) 10% of the consolidated assets of the Companies, or (ii) 30% of gross revenues of the Companies based on the twelve (12) calendar months most recently then-ended; for purposes of this SECTION 9.13, consolidated assets and gross revenues shall be determined as of the most recent quarterly Financials delivered under SECTION 8.1 prior to such expenditure or investment. 9.14 Government Regulations. No Company may conduct its business in such a way that it will become (a) subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the Interstate Commerce Act (as any of the preceding acts have been amended), or any other Law (other than Regulation X of the Board of Governors of the Federal Reserve System) which regulates the incurrence of Debt, or (b) a "utility" as defined in Chapter 35 of the Texas Business and Commerce Code, as amended. 9.15 Strict Compliance. No Company may indirectly do anything that it may not directly do under any covenant in any Loan Document. 9.16 Prepayments of Subordinated Notes. The Borrower may not prepay or cause to be prepaid any principal of, or any interest on, any of the Subordinated Notes except: (a) exchanges of Subordinated Notes for other Subordinated Notes; (b) conversions of Debt under the Subordinated Notes to equity of the Borrower that is not mandatorily redeemable; and (c) cash redemptions of Subordinated Notes the aggregate amount of which never exceeds $3,000,000. 9.17 Changes Relating to Subordinated Notes. The Borrower may not agree to any change or amendment to the terms of the Subordinated Notes (or any indenture or agreement in connection therewith) if the effect of such change or amendment is to: (a) increase the interest rate on the Subordinated Notes; (b) change the dates upon which payments of principal or interest are due on the Subordinated Notes other than to extend such dates; (c) change any default or event of default or covenant other than to delete or make less restrictive any default or covenant provision therein, or add any covenant with respect to the Subordinated Notes; (d) change the redemption or prepayment provisions of such the Subordinated Notes other than to extend the dates therefor or to reduce the premiums payable in connection therewith; (e) grant any security, collateral or guaranty to secure payment of the Subordinated Notes; or (f) change or amend any other term if such change or amendment would materially increase the obligations of the obligor or 50 confer additional material rights to the holder of the Subordinated Notes in a manner adverse to the Borrower, the Administrative Agent, or any Lender. SECTION 10: FINANCIAL COVENANTS. Until the Obligation has been fully paid and performed, the Borrower covenants and agrees with the Administrative Agent and the Lenders that, without first obtaining the Administrative Agent's written notice of the Required Lenders' consent to the contrary, it may not directly or indirectly permit: 10.1 Net Worth. The Companies' Net Worth, determined as of the last day of each fiscal quarter of the Borrower, to be less than the sum of (a) $500,000,000, plus (b) 75% of the Companies' cumulative net income (without deduction for losses) commencing with the fiscal quarter ending immediately after May 12, 2000, plus (c) fifty percent (50%) of the gross proceeds of any Subject Securities Issuance (including changes in Net Worth due to any conversion of Debt permitted under CLAUSE (h) of the definition of Permitted Debt to Stock of the Borrower but excluding gross proceeds from the exercise of Rights under existing employee stock option plans of the Borrower) occurring following May 12, 2000, plus (d) the net proceeds of any Permitted IPO occurring after May 12, 2000 and in compliance with SECTION 9.7(b). 10.2 Funded Debt/Adjusted EBITDA Ratio. The Funded Debt/Adjusted EBITDA Ratio to ever be more than 3.00:1.00 10.3 Fixed-Charge Coverage. The Fixed-Charge Coverage Ratio for the most recently completed four fiscal quarters of the Borrower as of the last day of each fiscal quarter of the Borrower to ever be less than 1.25 to 1.00. SECTION 11: DEFAULT. The term "DEFAULT" means the occurrence of any one or more of the following: 11.1 Payment of Obligation. The failure or refusal of any Obligor to pay any portion of the Obligation, as the same becomes due in accordance with the terms of the Loan Documents. 11.2 Covenants. Any Company's failure or refusal to punctually and properly perform, observe, and comply with any covenant (other than covenants to pay the Obligation), agreement or condition applicable to it contained in any of the Loan Documents: (a) In SECTIONS 8.1 through 8.4, 8.7, 8.8, 8.10 through 8.14, 9.2(b), 9.5, 9.7 through 9.12, and 9.14 through 9.17; or (b) In SECTIONS 10.1, 10.2, OR 10.3, and that failure or refusal continues for twenty (20) Business Days after any Company has knowledge thereof (or for a period of twenty (20) days after knowledge of such failure or refusal would normally have come to the attention of the chief financial officer of such Company in the ordinary course of business); or 51 (c) In SECTIONS 5.1, 8.5, 8.6, 8.9, 9.2(a), 9.3, 9.4, 9.6, 9.13, or, if such Debt has been assumed in connection with an Acquisition, SECTION 9.1, and that failure or refusal continues for thirty (30) days after any Company has knowledge thereof (or for a period of thirty (30) days after knowledge of such failure or refusal would normally have come to the attention of the chief financial officer of such Company in the ordinary course of business); or (d) Any other covenant, agreement or condition other than covenants listed in CLAUSES (a) - (c) preceding, and such failure or refusal continues for a period of ten (10) days after any Company has knowledge thereof (or for a period of ten (10) days after knowledge of such failure or refusal would normally have come to the attention of the chief financial officer of such Company in the ordinary course of business). 11.3 Debtor Relief. The Borrower or any other Company (other than those Companies disclosed on SCHEDULE 7.7) shall not be Solvent, or any Company (a) fails to pay its Debts generally as they become due, (b) voluntarily seeks, consents to, or acquiesces in the benefit of any Debtor Laws, or (c) becomes a party to or is made the subject of any proceeding provided for by any Debtor Laws, other than as a creditor or claimant, that could suspend or otherwise adversely affect the Rights of any Credit Party granted in the Loan Documents (unless, in the event such proceeding is involuntary, the petition instituting same is dismissed within sixty (60) days after its filing). 11.4 Attachment. The failure of any Company to have discharged within thirty (30) days after commencement any attachment, sequestration, or similar proceeding against any asset which is material to the Companies as a consolidated entity. 11.5 Payment of Judgments. Any Company fails to pay any final, non-appealable judgment or order for the payment of money in excess of $20,000,000 rendered against it or any of its assets and enforcement proceedings shall have been commenced by any creditor upon any such judgment or order and remain unstayed. Notwithstanding the foregoing sentence, it shall not be a Default if the validity or amount of such judgment or order is being contested in good faith by lawful proceedings diligently conducted and a reserve or other provision required by GAAP has been made. 11.6 Government Action. Where it is a Material Adverse Event, from and after the Closing Date and individually or collectively for all of the Companies, (a) a final non-appealable order is issued by any Tribunal (including, but not limited to, the United States Justice Department) seeking to cause any Company to divest a significant portion of its assets under any antitrust, restraint of trade, unfair competition, industry regulation, or similar Laws, or (b) any Tribunal condemning, seizing, or otherwise appropriating, or taking custody or control of all or any substantial portion of the assets of the Companies, as a consolidated entity. 11.7 Misrepresentation. Any material representation or warranty made by any Company in any Loan Document at any time proves to have been materially incorrect when made. 52 11.8 Ownership of Companies. Except as may be otherwise provided in this Agreement: (a) One or more Companies fail to own, beneficially and of record, with power to vote, 100% of the issued and outstanding shares of Voting Stock (or similar voting interests) of the Wholly-Owned Subsidiaries. (b) For the Borrower's Subsidiaries that are not Wholly-Owned Subsidiaries, (i) one or more Companies fail to own, beneficially and of record, with power to vote, more than 50% (or at least the percentage reflected on SCHEDULE 7.3) of the issued and outstanding Voting Stock (or similar voting interests) of such Subsidiaries sufficient to constitute control of such Subsidiary, or (ii) such Subsidiaries incur Debt to any Person other than Permitted Debt. 11.9 Change of Control of the Borrower. The individuals who, as of the date of this Agreement, constitute the members of the Borrower's board of directors (for purposes of this SECTION 11.9, the "INCUMBENT BOARD") do not constitute or cease for any reason to constitute at least 66 2/3% of: (a) The Borrower's board of directors; or (b) The surviving corporation's board of directors in the event of any merger or consolidation (if permitted by SECTION 9.2(b)) involving the Borrower; or (c) The controlling entity's board of directors, the comparable body if there is no board of directors, or voting control if there is no comparable body, in the event that the surviving corporation under CLAUSE (b) above is directly or indirectly controlled by that entity. For purposes of this SECTION 11.9, any individual who becomes a member of the board of directors or comparable body or who obtains a voting interest, as applicable under CLAUSES (a), (b), or (c) above, after the date of this Agreement and whose appointment to the board, or nomination for election, was (i) approved or ratified by a vote of the individuals comprising at least 50% of the then incumbent board, or (ii) who was appointed by the chairman of the board, shall thereafter be deemed to be a member of the incumbent board. 11.10 Other Funded Debt. In respect of any Debt (other than the Obligation, Debt arising under the Existing Credit Agreement and Debt arising under the Subordinated Notes) individually or collectively of at least $10,000,000 (a) any default or other event or condition occurs or exists (other than a mandatory prepayment as a result of disposition of assets if permitted by the Loan Documents) beyond the applicable grace or cure period (and solely with respect to the Debt set forth in ITEMS 2 and 4 of SCHEDULE 9.1, such default or other event or condition continues for twenty (20) Business Days beyond such grace or cure period) the effect of which is to cause or to permit any holder of that Funded Debt to cause, whether or not it elects to cause, any of that Funded Debt to 53 become due before its stated maturity or regularly scheduled payment dates, or (b) any of that Debt is declared to be due and payable or required to be prepaid by any Company before its stated maturity (and solely with respect to the Debt set forth in ITEMS 2 and 4 of SCHEDULE 9.1, such prepayment is not made by the Borrower within twenty (20) Business Days after such guaranty is called). Notwithstanding the foregoing sentence, it shall not be a Default if (y) either (i) the validity or amount of such accelerated Debt is being contested in good faith by lawful proceedings diligently conducted, or (ii) a nonappealable judgment has been entered against any Company with respect to such Debt, and such judgment is satisfied within ninety (90) days after it is entered, and (z) a reserve or other provision required by GAAP has been made. 11.11 SEC Reporting Requirements. The Borrower fails to comply with any applicable reporting requirements of the 1934 Act, for which the failure to report would constitute a Material Adverse Event. 11.12 Validity and Enforceability. Once executed, this Agreement (including, but not limited to, the Subsidiary Guaranty) or any Note ceases to be in full force and effect in any material respect or is declared to be null and void or its validity or enforceability is contested in writing by any Company party to it or any Company party to it denies in writing that it has any further liability or obligations under it except in accordance with that document's express provisions or as the appropriate parties under SECTION 14.8 below may otherwise agree in writing. 11.13 Material Agreements. The occurrence of a default under any other Material Agreement (other than any Material Agreement described in SECTION 11.15) which results in the acceleration of payment of any amounts payable by any Company in excess of $10,000,000. Notwithstanding the foregoing sentence, it shall not be a default if (y) either (i) the validity or amount of such accelerated payment is being contested in good faith by lawful proceedings diligently conducted, or (ii) a nonappealable judgment has been entered against any Company with respect to Material Agreement Debt, and such judgment is satisfied within ninety (90) days after it is entered, and (z) a reserve or other provision required by GAAP has been made. 11.14 Material Adverse Event. The occurrence of any Material Adverse Event, and the situation giving rise thereto is not corrected to the satisfaction of the Administrative Agent and the Lenders within twenty (20) days after notice thereof from the Administrative Agent to the Borrower. 11.15 Existing Credit Agreement Documents and Subordinated Notes. With respect to the Existing Credit Agreement Documents or Subordinated Notes: (i) the occurrence of a default or event of default beyond any applicable grace or notice and cure periods, (ii) any payment or prepayment shall become past due beyond any applicable grace or notice and cure periods under any agreement, document, or instrument executed or delivered in connection therewith or evidencing same, or (iii) the maturity of any of such Debt is accelerated or declared to be due and payable or required to be prepaid (other than regularly scheduled mandatory prepayments). 54 11.16 Employee Benefit Plans. If any of the following constitute a Material Adverse Event: (a) a "Reportable Event" or "Reportable Events," or a failure to make a required installment or other payment (within the meaning of Section 412(n)(1) of the Code), shall have occurred with respect to any Employee Plan or Plans that is expected to result in liability of the Borrower to the PBGC or to an Employee Plan; or (b) the Borrower or any ERISA Affiliate has provided to any affected party a sixty (60) day notice of intent to terminate an Employee Plan pursuant to a distress termination in accordance with Section 4041(c) of ERISA if the liability expected to be incurred as a result of such termination will exceed $1,000,000.00; or (c) a trustee shall be appointed by a United States district court to administer any such Employee Plan; or (d) the PBGC shall institute proceedings (including giving notice of intent thereof) to terminate any such Employee Plan; or (e) (i) the Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability (within the meaning of section 4201 of ERISA) to such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate does not have reasonable grounds for contesting such withdrawal liability or is not contesting such withdrawal liability in a timely and appropriate manner and (iii) the amount of such withdrawal liability specified in such notice, when aggregated with all other amounts required to be paid to Multiemployer Plans in connection with withdrawal liabilities (determined as of the date or dates of such notification), exceeds $1,000,000.00; or (f) the Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if solely as a result of such reorganization or termination the aggregate annual contributions of the Borrower and its ERISA Affiliates to all Multiemployer Plans that are then in reorganization or have been or are being terminated have been or will be increased over the amounts required to be contributed to such Multiemployer Plans for their most recently completed plan years by an amount exceeding $1,000,000.00. SECTION 12: RIGHTS AND REMEDIES. 12.1 Remedies Upon Default. (a) Debtor Relief. If a Default exists under SECTION 11.3, the commitment to extend credit under this Agreement automatically terminates, and the entire unpaid balance of the Obligation automatically becomes due and payable without any action of any kind whatsoever. 55 (b) Other Defaults. If any Default exists, subject to the terms of SECTION 13.5(b), the Administrative Agent may (with the consent of, and must, upon the request of, the Required Lenders), do any one or more of the following: (i) if the maturity of the Obligation has not already been accelerated under SECTION 12.1(a), declare the entire unpaid balance of all or any part of the Obligation immediately due and payable, whereupon it is due and payable; (ii) terminate the commitments of Lenders to extend credit under this Agreement; (iii) reduce any claim to judgment; and (iv) exercise any and all other legal or equitable Rights afforded by the Loan Documents, by applicable Laws, or in equity. (c) Offset. If a Default exists, to the extent permitted by applicable Law, each Lender may exercise the Rights of offset and banker's lien against each and every account and other property, or any interest therein, which any Company may now or hereafter have with, or which is now or hereafter in the possession of, that Lender to the extent of the full amount of the Obligation owed to that Lender. 12.2 Company Waivers. To the extent permitted by Law, each Obligor waives presentment and demand for payment, protest, notice of intention to accelerate, notice of acceleration, and notice of protest and nonpayment, and agrees that its liability with respect to all or any part of the Obligation is not affected by any renewal or extension in the time of payment of all or any part of the Obligation, by any indulgence, or by any release or change in any security for the payment of all or any part of the Obligation. 12.3 Performance by the Administrative Agent. If any Company's covenant, duty, or agreement is not performed in accordance with the terms of the Loan Documents, Administrative Agent may, while a Default exists, at its option (but subject to the approval of the Required Lenders), perform or attempt to perform that covenant, duty, or agreement on behalf of that Company (and any amount expended by the Administrative Agent in its performance or attempted performance is payable by the Obligors, jointly and severally, to the Administrative Agent on demand, becomes part of the Obligation, and bears interest at the Default Rate from the date of the Administrative Agent's expenditure until paid). However, the Administrative Agent does not assume and shall never have, except by its express written consent, any liability or responsibility for the performance of any Company's covenants, duties, or agreements. 12.4 Not in Control. Nothing in any Loan Documents gives or may be deemed to give to any Credit Party the Right to exercise control over any Company's Real Property, other assets, affairs, or management or to preclude or interfere with any Company's compliance with any Law or require any act or omission by any Company that may be harmful to Persons or property. Any "Material Adverse Event" or other materiality or substantiality qualifier of any representation, warranty, covenant, agreement, or other provision of any Loan Document is included for credit documentation purposes only and does not imply or be deemed to mean that any Credit Party acquiesces in any non-compliance by any Company with any Law, document, or otherwise or does not expect the Companies to promptly, diligently, and continuously carry out all appropriate removal, remediation, compliance, closure, or other activities required or appropriate in accordance with all Environmental Laws. The Credit Parties' 56 powers are limited to the Rights provided in the Loan Documents. All of those Rights exist solely, and may be exercised in any manner calculated by the Administrative Agent or the Lenders in their respective good faith business judgment to assure payment and performance of the Obligation. 12.5 Course of Dealing. The acceptance by any Credit Party of any partial payment on Obligation is not a waiver of any Default then existing. No waiver by the Administrative Agent, Required Lenders, or any other Credit Party of any Default is a waiver of any other then-existing or subsequent Default. No delay or omission by the Administrative Agent, the Required Lenders, or any other Credit Party in exercising any Right under the Loan Documents impairs that Right or is a waiver thereof or any acquiescence therein, nor will any single or partial exercise of any Right preclude other or further exercise thereof or the exercise of any other Right under the Loan Documents or otherwise. 12.6 Cumulative Rights. All Rights available to any Credit Party under the Loan Documents are cumulative of and in addition to all other Rights granted to any Credit Party at law or in equity, whether or not the Obligation is due and payable and whether or not any Credit Party has instituted any suit for collection, foreclosure, or other action in connection with the Loan Documents. 12.7 Application of Proceeds. Any and all proceeds ever received by any Credit Party from the exercise of any Rights pertaining to the Obligation shall be applied to the Obligation according to SECTION 3. 12.8 Certain Proceedings. The Borrower shall promptly execute and deliver, or cause the execution and delivery of, all applications, certificates, instruments, registration statements, and all other documents and papers reasonably requested by any Credit Party in connection with the obtaining of any consent, approval, registration (other than securities Law registrations), qualification, permit, license, or authorization of any Tribunal or other Person necessary or appropriate for the effective exercise of any Rights under the Loan Documents. Because the Borrower agrees that any Credit Party's remedies at Law for failure of the Borrower to comply with the provisions of this section would be inadequate and that failure would not be adequately compensable in damages, the Borrower agrees that the covenants of this section may be specifically enforced. 12.9 Expenditures by Lenders. Any sums spent by any Credit Party in the exercise of any Right under any Loan Document is payable by the Companies to the Administrative Agent within five (5) Business Days after demand, becomes part of the Obligation, and bears interest at the Default Rate from the date spent until the date repaid. 12.10 Diminution in Value of Collateral. Neither the Administrative Agent nor any Lender has any liability or responsibility whatsoever for any diminution in or loss of value of any collateral now or in the future securing payment or performance of any of the Obligation (other than diminution in or loss of value caused by their or its own gross negligence or willful misconduct). 57 12.11 Expenses; Indemnification. (a) The Borrower agrees to pay on demand all costs and expenses of Administrative Agent and the Arranger in connection with the syndication, preparation, execution, delivery, administration, modification, and amendment of this Agreement, the other Loan Documents, and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent and the Arranger (including the cost of internal counsel) with respect thereto and with respect to advising Administrative Agent as to its Rights and responsibilities under the Loan Documents. The Borrower further agrees to pay on demand all costs and expenses of the Credit Parties, if any (including, without limitation, reasonable attorneys' fees and expenses and the cost of internal counsel), in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) of the Loan Documents and the other documents to be delivered hereunder. (b) The Borrower agrees to indemnify and hold harmless the Credit Parties and each of their respective Affiliates and their respective officers, directors, employees, agents, and advisors (each, an "INDEMNIFIED Party") from and against any and all claims, damages, losses, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation, or proceeding or preparation of defense in connection therewith) the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Obligation (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation, or other proceeding to which the indemnity in this SECTION 12.11 applies, such indemnity shall be effective whether or not such investigation, litigation, or proceeding is brought by any Company, its directors, shareholders, or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against the Credit Parties or any of their respective Affiliates or any of their respective directors, officers, employees, attorneys, agents, and advisers, on any theory of liability, for special, indirect, consequential, or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of any Borrowing. (c) No Credit Party or any Affiliate, officer, director, employee, attorney, or agent of any Credit Party shall be liable for any error of judgment or act done in good faith, or be otherwise liable or responsible under any circumstances whatsoever (INCLUDING SUCH PERSON'S NEGLIGENCE), except for such Person's gross negligence or willful misconduct. No Credit Party or any Affiliate, officer, director, employee, attorney, or agent of any Credit Party shall have any liability with respect to, and each Company hereby waives, releases, and agrees not to sue any of them upon, any 58 claim for any special, indirect, incidental, or consequential damage suffered or incurred by any Company or any of its Affiliates in connection with, arising out of, or in any way related to this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. Each Company hereby waives, releases, and agrees not to sue any Credit Party or any Affiliate, officer, director, employee, attorney, or agent of any Credit Party for exemplary or punitive damages in respect of any claim in connection with, arising out of, or in any way related to this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. (d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this SECTION 12.11 shall survive the payment in full of the Obligation and all other amounts payable under this Agreement. SECTION 13: THE ADMINISTRATIVE AGENT AND LENDERS. 13.1 Administrative Agent. (a) Appointment. Each Lender appoints the Administrative Agent (including, without limitation, each successor to the Administrative Agent in accordance with this SECTION 13) as its nominee and agent to act in its name and on its behalf (and the Administrative Agent and each such successor accepts that appointment): (i) to act as its nominee and on its behalf in and under all Loan Documents; (ii) to arrange the means whereby its funds are to be made available to the Borrower under the Loan Documents; (iii) to take any action that it properly requests under the Loan Documents (subject to the concurrence of other Lenders as may be required under the Loan Documents); (iv) to receive all documents and items to be furnished to it under the Loan Documents; (v) to promptly distribute to it all material information, requests, documents, and items received from the Borrower under the Loan Documents; (vi) to promptly distribute to it its ratable part of each payment or prepayment (whether voluntary, as proceeds of collateral upon or after foreclosure, as proceeds of insurance thereon, or otherwise) in accordance with the terms of the Loan Documents; and (vii) to deliver to the appropriate Persons requests, demands, approvals, and consents received from it. However, the Administrative Agent is not required to take any action that exposes the Administrative Agent to personal liability or that is contrary to any Loan Document or applicable Law. (b) Successor. The Administrative Agent may assign all of its Rights and obligations as the Administrative Agent under the Loan Documents to any of its Affiliates, which Affiliate shall then be the successor the Administrative Agent under the Loan Documents. The Administrative Agent may also voluntarily resign and shall resign upon the request of Required Lenders for cause (i.e., the Administrative Agent is continuing to fail to perform its responsibilities under the Loan Documents). If the initial, or any successor to, the Administrative Agent ever ceases to be a party to this Agreement or if either of the initial, or any successor to, the Administrative Agent ever resigns (whether voluntarily or at the request of the Required Lenders), then Required Lenders 59 shall appoint a successor to the Administrative Agent from among Lenders (other than the resigning the Administrative Agent). If the Required Lenders fail to appoint a successor to such the Administrative Agent within thirty (30) days after the resigning the Administrative Agent has given notice of resignation or Required Lenders have removed the resigning Administrative Agent, then the resigning Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, that (i) must be a commercial bank having a combined capital and surplus of at least $1,000,000,000 (as shown on its most recently published statement of condition), and (ii) must be consented to by the Borrower, which consent shall not be unreasonably delayed or withheld. Upon its acceptance of appointment as successor Administrative Agent, the successor Administrative Agent succeeds to and becomes vested with all of the Rights of the prior Administrative Agent, and the prior Administrative Agent is discharged from its duties and obligations as Administrative Agent under the Loan Documents, and each Lender shall execute the documents that any Lender, the resigning or removed Administrative Agent, or the successor Administrative Agent reasonably request to reflect the change. After the Administrative Agent's resignation or removal as Administrative Agent under the Loan Documents, the provisions of this Agreement inure to its benefit as to any actions taken or not taken by it while it was Administrative Agent under the Loan Documents. (c) Rights as Lender. The Administrative Agent, in its capacity as a Lender, has the same Rights under the Loan Documents as any other Lender and may exercise those Rights as if it were not acting as Administrative Agent. The term "Lender", unless the context otherwise indicates, includes each Administrative Agent. Administrative Agent's resignation or removal does not impair or otherwise affect any Rights that it has or may have in its capacity as an individual Lender. Each Lender and the Borrower agree that the Administrative Agent is not a fiduciary for the Lenders or for the Borrower, but Administrative Agent is simply acting in the capacity described in this Agreement to alleviate administrative burdens for the Borrower and the Lenders, that the Administrative Agent has any duties or responsibilities to Lenders or the Borrower except those expressly set forth in the Loan Documents, and that the Administrative Agent in its capacity as a Lender has the same Rights as any other Lender. (d) Other Activities. Any Credit Party may now or in the future be engaged in one or more loan, letter of credit, leasing, or other financing transactions with the Borrower, act as trustee or depositary for the Borrower, or otherwise be engaged in other transactions with the Borrower (collectively, the "OTHER ACTIVITIES") not the subject of the Loan Documents. Without limiting the Rights of Lenders specifically set forth in the Loan Documents, neither the Administrative Agent nor any Lender is responsible to account to the other Lenders for those other activities, and no Lender shall have any interest in any other Lender's activities, any present or future guaranties by or for the account of the Borrower that are not contemplated by or included in the Loan Documents, any present or future offset exercised by the Administrative Agent or any Lender in respect of those other activities, any present or future property taken as security for any of those other activities, or any property now or hereafter in the Administrative Agent's or any other Lender's possession or control that may be or become security for the obligations of the Borrower arising under the Loan Documents by reason of the 60 general description of indebtedness secured or of property contained in any other agreements, documents, or instruments related to any of those other activities (but, if any payments in respect of those guaranties or that property or the proceeds thereof is applied by the Administrative Agent or any Lender to reduce the Obligation, then each Lender is entitled to share ratably in the application as provided in the Loan Documents). 13.2 Expenses. Each Lender shall pay its Pro Rata Part of any reasonable expenses (including, without limitation, court costs, reasonable attorneys' fees and other costs of collection) incurred by the Administrative Agent (while acting in such capacity) in connection with any of the Loan Documents if the Administrative Agent is not reimbursed from other sources within thirty (30) days after incurrence. Each Lender is entitled to receive its Pro Rata Part of any reimbursement that it makes to the Administrative Agent if the Administrative Agent is subsequently reimbursed from other sources. 13.3 Proportionate Absorption of Losses. Except as otherwise provided in the Loan Documents, nothing in the Loan Documents gives any Lender any advantage over any other Lender insofar as the Obligation is concerned or relieves any Lender from ratably absorbing any losses sustained with respect to the Obligation (except to the extent unilateral actions or inactions by any Lender result in the Borrower or any other obligor on the Obligation having any credit, allowance, set off, defense, or counterclaim solely with respect to all or any part of that Lender's Pro Rata Part of the Obligation). 13.4 Delegation of Duties; Reliance. The Lenders may perform any of their duties or exercise any of their Rights under the Loan Documents by or through the Administrative Agent, and The Lenders and the Administrative Agent may perform any of their duties or exercise any of their Rights under the Loan Documents by or through their respective Representatives. The Administrative Agent, The Lenders, and their respective Representatives (a) are entitled to rely upon (and shall be protected in relying upon) any written or oral statement believed by them to be genuine and correct and to have been signed or made by the proper Person and, with respect to legal matters, upon opinion of counsel selected by the Administrative Agent or that Lender (but nothing in this CLAUSE (a) permits the Administrative Agent to rely on (i) oral statements if a writing is required by this Agreement or (ii) any other writing if a specific writing is required by this Agreement), (b) are entitled to deem and treat each Lender as the owner and holder of its portion of the Obligation for all purposes until, written notice of the assignment or transfer is given to and received by the Administrative Agent (and any request, authorization, consent, or approval of any Lender is conclusive and binding on each subsequent holder, assignee, or transferee of or Participant in that Lender's portion of the Obligation until that notice is given and received), (c) are not deemed to have notice of the occurrence of a Default unless a responsible officer of the Administrative Agent, who handles matters associated with the Loan Documents and transactions thereunder, has actual knowledge or the Administrative Agent has been notified by a Lender or the Borrower, and (d) are entitled to consult with legal counsel (including counsel for the Borrower), independent accountants, and other experts selected by the Administrative Agent and are not liable for any action taken or not taken in good faith by it in accordance with the advice of counsel, accountants, or experts. Each Agent may execute 61 any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 13.5 Limitation of Administrative Agent's Liability. (a) Exculpation. Neither the Administrative Agent nor any of its respective Affiliates or Representatives will be liable for any action taken or omitted to be taken by it or them under the Loan Documents in good faith and believed by them to be within the discretion or power conferred upon them by the Loan Documents or be responsible for the consequences of any error of judgment (except for fraud, gross negligence, or willful misconduct), and neither the Administrative Agent nor any of its Affiliates or Representatives has a fiduciary relationship with any Lender by virtue of the Loan Documents (but nothing in this Agreement negates the obligation of the Administrative Agent to account for funds received by them for the account of any Lender). (b) Indemnity. Unless indemnified to its satisfaction against loss, cost, liability, and expense, the Administrative Agent is not compelled to do any act under the Loan Documents or to take any action toward the execution or enforcement of the powers thereby created or to prosecute or defend any suit in respect of the Loan Documents. If the Administrative Agent requests instructions from the Lenders, or the Required Lenders, as the case may be, with respect to any act or action in connection with any Loan Document, the Administrative Agent is entitled to refrain (without incurring any liability to any Person by so refraining) from that act or action unless and until it has received instructions. In no event, however, may the Administrative Agent or any of its Representatives be required to take any action that it or they determine could incur for it or them criminal or onerous civil liability. Without limiting the generality of the foregoing, no Lender has any right of action against the Administrative Agent as a result of the Administrative Agent's acting or refraining from acting under this Agreement in accordance with instructions of the Required Lenders. (c) Reliance. The Administrative Agent is not responsible to any Lender or any Participant for, and each Lender represents and warrants that it has not relied upon the Administrative Agent in respect of, (i) the creditworthiness of any Company and the risks involved to that Lender, (ii) the effectiveness, enforceability, genuineness, validity, or the due execution of any Loan Document (except by the Administrative Agent), (iii) any representation, warranty, document, certificate, report, or statement made therein (except by the Administrative Agent) or furnished thereunder or in connection therewith, (iv) the adequacy of any collateral now or hereafter securing the Obligation or the existence, priority, or perfection of any Lien now or hereafter granted or purported to be granted on the collateral under any Loan Document, or (v) observation of or compliance with any of the terms, covenants, or conditions of any Loan Document on the part of any Company. EACH LENDER AGREES TO INDEMNIFY THE ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES AND HOLD THEM HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S PRO RATA PART OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, 62 ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES, AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER THAT MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING TO OR ARISING OUT OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THE LOAN DOCUMENTS IF THE ADMINISTRATIVE AGENT OR ITS REPRESENTATIVES ARE NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH THE ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR THEIR OWN ORDINARY NEGLIGENCE, NEITHER ADMINISTRATIVE AGENT NOR ITS REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR THEIR OWN FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 13.6 Default. While a Default exists, the Lenders agree to promptly confer in order that the Required Lenders or the Lenders, as the case may be, may agree upon a course of action for the enforcement of the Rights of the Lenders. The Administrative Agent is entitled to act or refrain from taking any action (without incurring any liability to any Person for so acting or refraining) unless and until it has received instructions from the requisite Lenders. In actions with respect to any Company's property, the Administrative Agent is acting for the ratable benefit of each Lender. 13.7 [RESERVED]. 13.8 Limitation of Liability. No Credit Party or any Participant will incur any liability to any other Credit Party or Participant except for acts or omissions in bad faith, and no Credit Party or Participant will incur any liability to any other Person for any act or omission of any other Credit Party or any Participant. 13.9 Relationship of Lenders. The Loan Documents do not create a partnership or joint venture among the Credit Parties. 13.10 Benefits of Agreement. None of the provisions of this section inure to the benefit of any Company or any other Person except the Credit Parties. Therefore, no Company or any other Person is responsible or liable for, entitled to rely upon, or entitled to raise as a defense, in any manner whatsoever, the failure of any Credit Party to comply with these provisions. 13.11 Other Agents. The Agents (other than the Administrative Agent) shall have no duties or liabilities under this Agreement and shall be entitled to the benefits of this SECTION 13 (and SECTIONS 8.11 and 12.11) to the same extent as the Administrative Agent. SECTION 14: MISCELLANEOUS. 14.1 Non-Business Days. Any payment or action that is due under any Loan Document on a non-Business Day may be delayed until the next-succeeding Business Day (but interest shall continue to accrue on any applicable payment until payment is in fact made) unless the payment concerns a LIBOR Borrowing, in which case if the next-succeeding Business Day is in the next calendar month, then such payment shall be made on the next-preceding Business Day. 63 14.2 Communications. Unless otherwise specifically provided, whenever any Loan Document requires or permits any consent, approval, notice, request, or demand from one party to another, communication must be in writing (which may be by telex or fax) to be effective and shall be deemed to have been given (a) if by telex, when transmitted to the appropriate telex number and the appropriate answer back is received, (b) if by fax, when transmitted to the appropriate fax number (and all communications sent by fax must be confirmed promptly thereafter by telephone; but any requirement in this parenthetical shall not affect the date when the fax shall be deemed to have been delivered), (c) if by mail, on the third Business Day after it is enclosed in an envelope and properly addressed, stamped, sealed, and deposited in the appropriate official postal service, or (d) if by any other means, when actually delivered. Until changed by notice pursuant to this Agreement, the address (and fax number) for the Borrower and the Administrative Agent are stated beside their respective signatures to this Agreement and for each Lender is stated beside its name on SCHEDULE 1. 14.3 Form and Number of Documents. The form, substance, and number of counterparts of each writing to be furnished under this Agreement must be satisfactory to the Administrative Agent and its counsel. 14.4 Exceptions to Covenants. No Company may take or fail to take any action that is permitted as an exception to any of the covenants contained in any Loan Document if that action or omission would result in the breach of any other covenant contained in any Loan Document. 14.5 Survival. All covenants, agreements, undertakings, representations, and warranties made in any of the Loan Documents survive all closings under the Loan Documents and, except as otherwise indicated, are not affected by any investigation made by any party. 14.6 Governing Law. This Agreement and the rights and obligations of the parties under this Agreement shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. 14.7 Invalid Provisions. Any provision in any Loan Document held to be illegal, invalid, or unenforceable is fully severable; the appropriate Loan Document shall be construed and enforced as if that provision had never been included; and the remaining provisions shall remain in full force and effect and shall not be affected by the severed provision. The Administrative Agent, the Lenders, and each Company party to the affected Loan Document agree to negotiate, in good faith, the terms of a replacement provision as similar to the severed provision as may be possible and be legal, valid, and enforceable. 14.8 Amendments, Consents, Conflicts, and Waivers. (a) Required Lenders. Unless otherwise specifically provided (i) the provisions of this Agreement may be amended, modified, or waived, and a Subsidiary Guaranty may be amended, or fully or partially released, only by an 64 instrument in writing executed by the Borrower, the Administrative Agent, and the Required Lenders and supplemented only by documents delivered or to be delivered in accordance with the express terms of this Agreement, and (ii) the other Loan Documents may only be the subject of an amendment, modification, or waiver that has been approved by the Required Lenders and the Borrower. (b) All Lenders. Except as specifically otherwise provided in this SECTION 14.8, any amendment to or consent or waiver under this Agreement or any Loan Document that purports to accomplish any of the following must be by an instrument in writing executed by the Borrower and the Administrative Agent and executed (or approved, as the case may be) by each Lender affected thereby: (i) extends the due date or decreases the amount of any scheduled payment or amortization of the Obligation beyond the date specified in the Loan Documents; (ii) decreases any rate or amount of interest, fees, or other sums payable to the Administrative Agent or the Lenders under this Agreement (except such reductions as are contemplated by this Agreement); (iii) changes the definition of "Commitment," "Required Lenders" or "Pro Rata Part"; (iv) increases or extends the date of expiry of any one or more Lenders' Commitment; or (v) changes this CLAUSE (b) or any other matter specifically requiring the consent of all Lenders under this Agreement. (c) Fees to the Agents. Any amendment or consent or waiver with respect to fees payable solely to the Administrative Agent or to the Agents under a separate letter agreement must be executed in writing only by the Administrative Agent and the Borrower or the Agents and the Borrower, as the case may be. (d) Conflicts. Any conflict or ambiguity between the terms and provisions of this Agreement and terms and provisions in any other Loan Document is controlled by the terms and provisions of this Agreement. (e) Waivers. No course of dealing or any failure or delay by the Administrative Agent, any Lender, or any of their respective Representatives with respect to exercising any Right of the Administrative Agent or any Lender under this Agreement operates as a waiver thereof. A waiver must be in writing and signed by the Administrative Agent and the Lenders (or the Required Lenders, if permitted under this Agreement) to be effective, and a waiver will be effective only in the specific instance and for the specific purpose for which it is given. 14.9 Multiple Counterparts. Any Loan Document may be executed in a number of identical counterparts (including, at the Administrative Agent's discretion, counterparts or signature pages executed and transmitted by fax) with the same effect as if all signatories had signed the same document. All counterparts must be construed together to constitute one and the same instrument. 14.10 Parties. (a) Parties Bound. Each Loan Document binds and inures to the parties to it, any intended beneficiary of it, and each of their respective successors and 65 permitted assigns. No Company may assign or transfer any Rights or obligations under any Loan Document without first obtaining all the Lenders' consent, and any purported assignment or transfer without the Lenders' consent is void. No Lender may transfer, pledge, assign, sell any participation in, or otherwise encumber its portion of the Obligation except as permitted by CLAUSES (b) or (c) below. (b) Participations. Any Lender may (subject to the provisions of this section, in accordance with applicable Law, in the ordinary course of its business, and at any time) sell to one or more Persons (each a "PARTICIPANT") participating interests in its portion of the Obligation. The selling Lender remains a "Lender" under the Loan Documents, the Participant does not become a "Lender" under the Loan Documents, and the selling Lender's obligations under the Loan Documents remain unchanged. The selling Lender remains solely responsible for the performance of its obligations and remains the holder of its Term Loan for all purposes under the Loan Documents. The Borrower and the Administrative Agent shall continue to deal solely and directly with the selling Lender in connection with that Lender's Rights and obligations under the Loan Documents, and each Lender must retain the sole right and responsibility to enforce due obligations of the Companies. Participants have no Rights under the Loan Documents except as provided below. Subject to the following, each Lender may obtain (on behalf of its Participants) the benefits of SECTION 3 with respect to all participations in its part of the Obligation outstanding from time to time so long as the Borrower is not obligated to pay any amount in excess of the amount that would be due to that Lender under SECTION 3 calculated as though no participations have been made. No Lender may sell any participating interest under which the Participant has any Rights to approve any amendment, modification, or waiver of any Loan Document except as to matters in SECTION 14.8(b)(i) AND (ii). (c) Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its Rights and obligations under the Loan Documents, including, without limitation, all or a portion of Term Loans owing to it or other Obligations (provided, however, that each such assignment shall be of a uniform, and not varying, percentage of all Rights and obligations under and in respect of any Loan): (i) to any Person meeting the criteria of clause (i) of the definition of the term of "Eligible Assignee" upon the giving of notice to the Borrower and Administrative Agent; and (ii) to any Person meeting the criteria of clause (ii) of the definition of the term of "Eligible Assignee" and, to any such Person (except in the case of assignments made by or to the Syndication Agent), consented to by each of the Borrower and Administrative Agent (such consent not to be (x) unreasonably withheld or delayed or, (y) in the case of the Borrower, required at any time a Default or Potential Default shall have occurred and then be continuing); provided, further each such assignment pursuant to this Section 14.10(c)(ii) shall be in an aggregate 66 amount of not less than $5,000,000 (or such lesser amount as may be agreed to by the Borrower and Administrative Agent or as shall constitute the aggregate amount of the Term Loans of the assigning Lender). (d) Mechanics. The assigning Lender and the assignee thereof shall execute and deliver to Administrative Agent and the Borrower an assignment and assumption agreement in substantially the form of EXHIBIT F (an "ASSIGNMENT"), together with (i) a processing and recordation fee of $500 in the case of assignments pursuant to Section 14.10(c)(i) or made by or to the Syndication Agent, and $2,000 in the case of all other assignments (except that only one fee shall be payable in the case of contemporaneous assignments to Related Funds), and (ii) such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment may be required to deliver to Administrative Agent pursuant to Section 3.19(d). The Effective Date in each Assignment must (unless a shorter period is agreeable to the Borrower and the Administrative Agent) be at least five (5) Business Days after it is executed and delivered by the assignor Lender and the Assignee to the Administrative Agent and the Borrower for acceptance. Once that Assignment is accepted by the Administrative Agent and the Borrower, and subject to all of the following occurring, then, on and after the Effective Date stated in it, (i) the Assignee automatically becomes a party to this Agreement and, to the extent provided in that Assignment, has the Rights and obligations of a Lender under the Loan Documents, (ii) the assignor Lender, to the extent provided in that Assignment, is released from its obligations under this Agreement and its reimbursement obligations under this Agreement and, in the case of an Assignment covering all of the remaining portion of the assignor Lender's Rights and obligations under the Loan Documents, that Lender ceases to be a party to the Loan Documents, (iii) the Borrower shall execute and deliver to the assignor Lender and the Assignee the appropriate Notes, if requested, in accordance with this Agreement following the transfer, and (iv) upon delivery of the Notes, if any, under CLAUSE (III) preceding, the assignor Lender shall return to the Borrower all Notes, if any, previously delivered to that Lender under this Agreement. Notwithstanding the foregoing, no Assignee may be recognized as a party to the Loan Documents (and the assigning Lender shall continue to be treated for all purposes as the party to the Loan Documents) with respect to the Rights and obligations assigned to that Assignee until the actions described in CLAUSES (III) and (IV) have occurred and until the Assignment to such Assignee is registered on the books of the Borrower as to both principal and any stated interest. The Obligation is registered on the books of the Borrower as to both principal and any stated interest, and transfers of (as opposed to participations in) principal and interest of the Obligation may only be made in accordance with this SECTION 14.10. 14.11 Submission To Jurisdiction; Waivers. Each of the Borrower and each Subsidiary Guarantor hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the 67 non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower, as the case may be at its address set forth on SCHEDULE 1 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; and (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. The scope of each of the foregoing waivers is intended to be all encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. THE BORROWER AND EACH SUBSIDIARY GUARANTOR ACKNOWLEDGES THAT THESE WAIVERS ARE A MATERIAL INDUCEMENT TO THE ADMINISTRATIVE AGENT'S AND EACH LENDER'S AGREEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT THE ADMINISTRATIVE AGENT AND EACH LENDER HAVE ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS AGREEMENT, AND THAT THE ADMINISTRATIVE AGENT AND EACH LENDER WILL CONTINUE TO RELY ON EACH OF THESE WAIVERS IN RELATED FUTURE DEALINGS. THE BORROWER AND EACH SUBSIDIARY GUARANTOR FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THESE WAIVERS WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY AGREES TO EACH WAIVER FOLLOWING CONSULTATION WITH LEGAL COUNSEL. The waivers in this section are irrevocable, meaning that they may not be modified either orally or in writing, and these waivers apply to any future renewals, extensions, amendments, modifications, or replacements in respect of the applicable Loan Document. In connection with any Litigation, this Agreement may be filed as a written consent to a trial by the court. 14.12 Confidentiality Obligations. All nonpublic information furnished by any Company to the Administrative Agent or the Lenders pursuant to this Agreement (that is designated by such Company to the Administrative Agent and the Lenders as nonpublic information) will be treated as confidential, but nothing herein contained shall limit or impair the Administrative Agent's or any Lender's Rights (and the Administrative Agent or such Lender shall be entitled) (a) to disclose the same to any Tribunal, if required to do so, or to any prospective or actual Assignee or Participant (provided that such prospective 68 or actual Assignee or Participant agrees to comply with this SECTION 14.12), or to the respective affiliates, directors, officers, employees, attorneys, and agents of the Administrative Agent or such Lender or any prospective or actual Assignee or Participant, (b) to use such information to the extent pertinent to an evaluation of the Obligation, (c) to enforce compliance for the terms and conditions of the Loan Documents, or (d) to take any action which the Administrative Agent or such Lender deems necessary to protect its interests if a Default has occurred and is continuing. 14.13 Entirety. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE BORROWER, THE LENDERS, AND THE ADMINISTRATIVE AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 14.14 WAIVERS OF JURY TRIAL. THE BORROWER, EACH SUBSIDIARY GUARANTOR, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. SECTION 15: SUBSIDIARY GUARANTY. 15.1 The Guaranty. In order to induce the Credit Parties to enter into this Agreement and to extend credit hereunder and in recognition of the direct benefits to be received by Subsidiary Guarantors from the proceeds of the Term Loans made to the Borrower hereunder, each Subsidiary Guarantor hereby, unconditionally and irrevocably, guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, by acceleration or otherwise, of any and all of the Obligation. If any or all of the Obligation becomes due and payable, each Subsidiary Guarantor unconditionally, jointly and severally, promises to pay such Obligation to the Credit Parties, or order, on demand, together with any and all expenses which may be incurred by each Credit Party in collecting any of the Obligation. The word "OBLIGATION" is used in this SECTION 15 in its most comprehensive sense and includes any and all advances, debts, obligations (including obligations which, but for any automatic stay under the Debtor Laws, would become due, and including interest accruing after the maturity of the Term Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), and obligations of the Borrower arising in connection with this Agreement or any other Loan Document, in each case, heretofore, now, or hereafter made, incurred, or created, whether voluntarily or involuntarily, absolute or contingent, liquidated or unliquidated, determined or undetermined, whether or not such indebtedness is from time to time reduced, or extinguished and thereafter increased or incurred, whether the Borrower may be liable individually or jointly with others, whether or not recovery upon such indebtedness may be or hereafter become barred by any statute of 69 limitations, and whether or not such indebtedness may be or hereafter become otherwise unenforceable. 15.2 Bankruptcy. Additionally, each Subsidiary Guarantor, jointly and severally, unconditionally and irrevocably guarantees the payment of any and all indebtedness of the Borrower to the Credit Parties whether or not due or payable by the Borrower upon the occurrence in respect of the Borrower of any of the events specified in SECTION 11.3, and unconditionally promises to pay such indebtedness to the Credit Parties, or order, on demand, in lawful money of the United States. 15.3 Nature of Liability. The liability of each Subsidiary Guarantor hereunder is exclusive and independent of any security for or other guaranty of the indebtedness of the Borrower whether executed by such Subsidiary Guarantor, any other guarantor, or by any other party, and the liability of such Subsidiary Guarantor hereunder shall not be affected or impaired by (a) any direction as to application of payment by the Borrower, or by any other party, or (b) any other continuing or other guaranty, undertaking, or maximum liability of a guarantor or of any other party as to the indebtedness of the Borrower, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination, or increase, decrease, or change in personnel by the Borrower, or (e) any payment made to any Credit Party on the indebtedness which such Credit Party repays the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium, or other debtor relief proceeding, and each Subsidiary Guarantor waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding. This Subsidiary Guaranty is intended to be an irrevocable, absolute, continuing guaranty of payment and is not a guaranty of collection. This Subsidiary Guaranty may not be revoked by any Subsidiary Guarantor; provided, however, if, according to applicable law, it shall ever be determined or held that a guarantor under a continuing guaranty such as this Subsidiary Guaranty shall have the absolute right, notwithstanding the express agreement of such a guarantor otherwise, to revoke such guaranty as to any Obligation which has then not yet arisen, then any Subsidiary Guarantor may deliver to the Administrative Agent written notice that such Subsidiary Guarantor will not be liable hereunder for any of the Obligation created, incurred, or arising after the giving of such notice, and such notice will be effective as to such Subsidiary Guarantor from and after (but not before) such times as said written notice is actually delivered to and received by and receipted for in writing by the Administrative Agent; provided that such notice shall not in any way affect, impair, or limit the liability and responsibility of any other person or entity with respect to any of the Obligation theretofore existing or thereafter existing, arising, renewed, extended, or modified; provided, further, that such notice shall not affect, impair, or release the liability and responsibility of such Subsidiary Guarantor with respect to any of the Obligation created, incurred, or arising prior to the receipt of such notice by the Administrative Agent as aforesaid, or in respect of any renewals, extensions, or modifications of such Obligation, or in respect of interest or costs of collection thereafter incurred on or with respect to such Obligation, or with respect to attorneys' fees thereafter becoming payable hereunder with respect to such Obligation, and shall continue to be effective with respect to any Obligation arising or created after any attempted revocation by any Subsidiary Guarantor. 70 15.4 Independent Obligation. The obligations of each Subsidiary Guarantor hereunder are independent of the obligations of any other guarantor or the Borrower, and a separate action or actions may be brought and prosecuted against each Subsidiary Guarantor whether or not action is brought against any other guarantor or the Borrower and whether or not any other guarantor or the Borrower be joined in any such action or actions. Each Subsidiary Guarantor waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to each Subsidiary Guarantor. 15.5 Authorization. Each Subsidiary Guarantor authorizes the Credit Parties without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to (a) renew, compromise, extend, increase, accelerate, or otherwise change the time for payment of, or otherwise change the terms of the indebtedness or any part thereof in accordance with this Subsidiary Guaranty, including any increase or decrease of the rate of interest thereon, (b) take and hold security from any guarantor or any other party for the payment of this guaranty or the indebtedness and exchange, enforce, waive, and release any such security, (c) apply such security and direct the order or manner of sale thereof as the Credit Parties in their discretion may determine, and (d) release or substitute any one or more endorsers, guarantors, the Borrower, or other obligors. 15.6 Reliance. It is not necessary for any Credit Party to inquire into the capacity or powers of any Company or the officers, directors, partners, or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. 15.7 Subordination. Any indebtedness of the Borrower now or hereafter held by any Subsidiary Guarantor is hereby subordinated to the indebtedness of the Borrower to the Credit Parties; and such indebtedness of the Borrower to any Subsidiary Guarantor, if the Administrative Agent, after a Default has occurred and is continuing, so requests, shall be collected, enforced, and received by such Subsidiary Guarantor as trustee for the Credit Parties and be paid over to the Credit Parties on account of the indebtedness of the Borrower to the Credit Parties, but without affecting or impairing in any manner the liability of such Subsidiary Guarantor under the other provisions of this Guaranty. Prior to the transfer by any Subsidiary Guarantor of any note or negotiable instrument evidencing any indebtedness of the Borrower to such Subsidiary Guarantor, such Subsidiary Guarantor shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. 15.8 Waivers; Consents. (a) Each Subsidiary Guarantor waives any right (except as shall be required by applicable statute and cannot be waived) to require any Credit Party to (i) proceed against the Borrower, any other guarantor, or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor, or any other 71 party, or (iii) pursue any other remedy in any Credit Party's power whatsoever. Each Subsidiary Guarantor waives any defense based on or arising out of any defense of the Borrower, any other guarantor, or any other party other than payment in full of the indebtedness, including, without limitation, any defense based on or arising out of the disability of the Borrower, any other guarantor, or any other party, or the unenforceability of the indebtedness or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full of the indebtedness. The Credit Parties may, at their election, foreclose on any security held by any Credit Party by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Administrative Agent and the Lenders may have against the Borrower or any other party, or any security, without affecting or impairing in any way the liability of any Subsidiary Guarantor hereunder except to the extent the indebtedness has been paid. Each Subsidiary Guarantor waives any defense arising out of any such election by the Credit Parties, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Subsidiary Guarantor against the Borrower or any other party or any security. (b) Each Subsidiary Guarantor waives all presentments, demands for performance, protests, and notices, including without limitation notices of nonperformance, notice of protest, notices of dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation, or incurring of new or additional indebtedness. Each Subsidiary Guarantor assumes all responsibility for being and keeping itself informed of the Borrower's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the indebtedness and the nature, scope, and extent of the risks which each Subsidiary Guarantor assumes and incurs hereunder, and agrees that the Credit Parties shall have no duty to advise Subsidiary Guarantors of information known to them regarding such circumstances or risks. (c) Any Credit Party may at any time and from time to time without the consent of, or notice to, any Subsidiary Guarantor, without incurring responsibility to such Subsidiary Guarantor, without impairing or releasing the obligations of such Subsidiary Guarantor hereunder, upon or without any terms or conditions and in whole or in part: (i) change the manner, place, or terms of payment of, and/or change or extend the time of payment of, renew, or alter, any of the Obligation, any security therefor, or any liability incurred directly or indirectly in respect thereof, and the guaranty herein made shall apply to the Obligation as so changed, extended, renewed, or altered; (ii) sell, exchange, release, surrender, realize upon, or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Obligation or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset there against; (iii) exercise or refrain from exercising any rights against the Borrower, any other guarantor, or others or otherwise act or refrain from acting; (iv) settle or compromise any of the Obligation, any security therefor, or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to creditors of the Borrower (other than the 72 Credit Parties); (v) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Credit Parties regardless of what liabilities of such Borrower remain unpaid; (vi) consent to or waive any breach of, or any act, omission or default under, any of the Loan Documents, or any of the instruments or agreements referred to therein, or otherwise amend, modify, or supplement any of the Loan Documents or any of such other instruments or agreements; and/or (vii) act or fail to act in any manner referred to in this Subsidiary Guaranty which may deprive such Subsidiary Guarantor of its right to subrogation against the Borrower to recover full indemnity for any payments made pursuant to this Subsidiary Guaranty. 15.9 Limitation. It is the intention of Subsidiary Guarantors and the Credit Parties that the amount of the Obligation guaranteed hereby shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer, or other similar laws applicable to Subsidiary Guarantors. Accordingly, anything herein or in any other Loan Document notwithstanding, the maximum liability of each Subsidiary Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Subsidiary Guarantor under applicable federal and state laws relating to the insolvency of debtors. 15.10 Additional Guarantors. From time to time subsequent to the time hereof, After-Acquired Subsidiaries may become parties hereto as additional Subsidiary Guarantors by executing a counterpart to this Subsidiary Guaranty in the form of EXHIBIT B. Upon delivery of any such counterpart to the Administrative Agent, notice of which is hereby waived by each Subsidiary Guarantor, each such After-Acquired Subsidiary shall be a Subsidiary Guarantor and shall be a party hereto as if such After-Acquired Subsidiary were an original signatory hereof. Each Subsidiary Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Subsidiary Guarantor hereunder, or by any election by the Administrative Agent not to cause any After-Acquired Subsidiary to become a Subsidiary Guarantor hereunder. This Subsidiary Guaranty shall be fully effective as to any Subsidiary Guarantor that is or becomes a party hereto regardless of whether any such person becomes or fails to become or ceases to be a Subsidiary Guarantor hereunder. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGES FOLLOW. 73 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. AFFILIATED COMPUTER SERVICES, INC., as the Borrower By: /s/ Nancy P. Vineyard ------------------------------------------ Name: Nancy P. Vineyard Title: Senior Vice President and Treasurer GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Lead Arranger, Sole Bookrunner, Sole Syndication Agent and a Lender By: /s/ Stephen King ------------------------------------------ Authorized Signatory WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as Co-Lead Arranger, Administrative Agent and a Lender By: /s/ Zach Johnson ------------------------------------------ Name: Zach Johnson Title: Vice President S-1 Signature Page to ACS Credit Agreement ACS BRC HOLDINGS, INC. ACS BUSINESS PROCESS SOLUTIONS, INC. ACS BUSINESS RESOURCES CORPORATION ACS COMMUNICATIONS INDUSTRY SERVICES, INC. ACS DATA ENTRY, INC. ACS DEFENSE, INC. ACS DESKTOP SOLUTIONS, INC. ACS ENTERPRISE SOLUTIONS, INC. ACS FEDERAL HEALTHCARE, INC. ACS GOVERNMENT SERVICES, INC. (a MARYLAND CORPORATION) ACS GOVERNMENT SERVICES, INC. (a TEXAS CORPORATION) ACS GOVERNMENT SYSTEMS, INC. ACS HEALTH CARE, INC. ACS HEALTHCARE SOLUTIONS, INC. ACS IMAGE SOLUTIONS, INC. ACS LEGAL SOLUTIONS, INC. ACS LENDER SERVICES, INC. ACS LENDING, INC. ACS OUTSOURCING SOLUTIONS, INC. ACS PACE GROUP, INC. ACS RTS HOLDINGS, INC. ACS SECURITIES SERVICES, INC. ACS SHARED SERVICES, INC. ACS STATE & LOCAL SOLUTIONS, INC. ACS STATE HEALTHCARE, LLC ACS STATE HEALTH SERVICES, INC. ACS TRADEONE MARKETING, INC. ACS TRANSFIRST, INC. ACS/ECG HOLDINGS, LLC ASEC INTERNATIONAL, INCORPORATED BETAC CORPORATION BETAC INTERNATIONAL CORPORATION BIRCH & DAVIS HOLDINGS, INC. CDSI INTERNATIONAL, INC. CODERITE, INC. COMPUTER DATA SYSTEMS SALES, INC. COMPUTER SYSTEMS DEVELOPMENT, INC. DATACOM MUNICIPAL SYSTEMS OF PENNSYLVANIA, INC. DIGITAL INFORMATION SYSTEMS COMPANY, LLC. DMV ON-LINE ACCESS, INC. GENIX CSI, INC. GOVERNMENT RECORDS SERVICES, INC. HEALTH TECHNOLOGY ACQUISITION COMPANY S-2 LATRON COMPUTER SYSTEMS, INC. LATRON HOLDINGS, INC. LOCKHEED MARTIN INTEGRATED SOLUTIONS COMPANY LOGAN SERVICES, INC. MIDASPLUS, INC. OUTSOURCED ADMINISTRATIVE SYSTEMS, INC. PRETS HOLDINGS, INC. SYNETICS INCORPORATED TENACITY MANUFACTURING COMPANY, INC. TITLE RECORDS CORPORATION TRANSACTION PROCESSING SPECIALISTS, INC. S-3 Signature Page to ACS Credit Agreement as Subsidiary Guarantors By: /s/ Nancy P. Vineyard ------------------------------------------------ Name: Nancy P. Vineyard, as Treasurer of each S-4 MG/A FIELDS ROAD LIMITED PARTNERSHIP, as a Subsidiary Guarantor By: ACS GOVERNMENT SERVICES, INC., its General Partner By: /s/ Nancy P. Vineyard ----------------------------------- Name: Nancy P. Vineyard Title: Treasurer S-5 FCTC TRANSFER SERVICES, L.P., as a Subsidiary Guarantor By: /s/ Stuart Chagrin ------------------------------------ Name: Stuart Chagrin Title: General Partner S-6 ACS PROPERTIES, INC., as a Subsidiary Guarantor By: /s/ Richard Kitchen -------------------------------- Name: Richard Kitchen Title: Treasurer S-7 ACS MARKETING, LP, as a Subsidiary Guarantor By: AFFILIATED COMPUTER SERVICES, INC., its General Partner By: /s/ Nancy P. Vineyard -------------------------------------- Name: Nancy P. Vineyard Title: Treasurer S-8 EX-99.1 5 d97664exv99w1.txt PRESS RELEASE EXHIBIT 99.1 MONDAY JUNE 10, 5:01 PM EASTERN TIME PRESS RELEASE SOURCE: ACS, Inc. ACS COMPLETES ACQUISITION OF AFSA DATA CORPORATION DALLAS, June 10 /PRNewswire-FirstCall/ -- ACS (NYSE: ACS - News), a premier provider of business process and information technology outsourcing solutions, announced today that it has completed the acquisition of AFSA Data Corporation (AFSA), a wholly-owned subsidiary of FleetBoston Financial Corporation. Headquartered in Long Beach, California, with more than 3,500 employees nationwide, AFSA is the nation's largest and most experienced education services company, servicing a student loan portfolio of 8.1 million borrowers with outstanding loans of approximately $85 billion. Additionally, AFSA is a leading business process outsourcer for federal, state, and local governments for a variety of health and human services programs, including Medicare, Medicaid, children's health insurance programs (CHIP), and welfare-to- workforce services. The $410 million purchase price, along with related transaction costs, was funded from the previously announced $375 million 18-month interim credit facility from Goldman, Sachs & Co. and Wells Fargo N.A., borrowings from ACS' existing revolving credit facility, and existing cash on hand. The company intends to replace this interim credit facility with long-term financing and is in the process of reviewing its options. ACS, a Fortune 1000 company with more than 38,000 people in 35 countries, provides business process and information technology outsourcing solutions to world-class commercial and government clients. The company's Class A common stock trades on the New York Stock Exchange under the symbol "ACS". ACS makes technology work. Visit ACS on the Internet at http://www.acs-inc.com . The statements in this news release that do not directly relate to historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties, many of which are outside the Company's control. As such, no assurance can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Factors could cause actual results to differ materially from such forward-looking statements. For a description of these factors, see the Company's prior filings with the Securities and Exchange Commission, including the most recent Form 10-K. ACS disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future event, or otherwise. SOURCE: ACS, Inc. -----END PRIVACY-ENHANCED MESSAGE-----