-----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, Dk/XNEqioesxuIzzkdwk8behcR+dUVGxOjl7Yq+2xpDDVMNnUjbH98j3VIl2HTh8 t5jSVjuBYksUCFhEdFv7fQ== 0000899243-02-000602.txt : 20020415 0000899243-02-000602.hdr.sgml : 20020415 ACCESSION NUMBER: 0000899243-02-000602 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20020228 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSG SYSTEMS INTERNATIONAL INC CENTRAL INDEX KEY: 0001005757 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 470783182 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27512 FILM NUMBER: 02574812 BUSINESS ADDRESS: STREET 1: 7887 EAST BELLEVIEW AVE STREET 2: SUITE 1000 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037962850 MAIL ADDRESS: STREET 1: 7887 E. BELLVIEW AVE. STREET 2: SUITE 1000 CITY: ENGLEWOOD STATE: CO ZIP: 80111 8-K 1 d8k.txt FORM 8-K DATED 2-28-2002 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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) March 14, 2002 (February 28, 2002) CSG SYSTEMS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-27512 47-0783182 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 7887 East Belleview, Suite 1000 Englewood, Colorado 80111 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (303) 796-2850 Item 2. Acquisition or Disposition of Assets On December 21, 2001, CSG Systems International, Inc. (the "Company") reached an agreement to acquire the billing and customer care assets of Lucent Technologies Inc. ("Lucent"). Lucent's billing and customer care business consists primarily of (i) software products and related consulting services acquired by Lucent when it purchased Kenan Systems Corporation in 1999; (ii) BILLDATS Data Manager mediation software; (iii) software and related technologies developed by Lucent's Bell Laboratories; and (iv) elements of Lucent's sales and marketing organization (collectively, the "Kenan Business"). On February 28, 2002, the Company completed the acquisition (the "Kenan Acquisition"). The Kenan Business is a global provider of convergent billing and customer care software and services that enable communications service providers to bill their customers for a wide variety of existing and next-generation services, including mobile, Internet, wireline, cable, satellite, and energy and utilities, all on a single invoice. The software supports multiple languages and currencies. The Kenan Business' primary product offerings include: (i) Arbor/BP (a core convergent billing platform); (ii) Arbor/OM (a order management platform); and (iii) BILLDATS Data Manager (a billing mediation software product). At closing on February 28, 2002, the aggregate purchase price was approximately $263 million in cash, which may be adjusted based upon the results of an audit of the Kenan Business' net assets as of closing, plus estimated transaction costs of approximately $5 million. The Kenan Acquisition was funded through a $400 million senior secured credit facility (the "Senior Facility") between CSG Systems, Inc., a wholly-owned subsidiary of the Company, and a syndicate of banks, financial institutions and other entities, arranged through BNP Paribas and Lehman Brothers, that closed on February 28, 2002. The proceeds of the Senior Facility will be used (i) to fund the Kenan Acquisition, (ii) pay related fees and expenses, (iii) refinance existing indebtedness and (iv) provide financing for general corporate purposes. The Senior Facility consists of a $100 million, five-year revolving credit facility, a $125 million, five-year Tranche A Term Loan, and a $175 million, six-year Tranche B Term Loan. Upon closing of the Kenan Acquisition, the entire amounts of the Tranche A Term Loan and Tranche B Term Loan were drawn down. The Senior Facility is guaranteed by the Company and each of the Company's direct and indirect domestic subsidiaries. Item 7. Financial Statements and Exhibits (a) Financial statements of businesses acquired. The audited financial statements of the Kenan Business are not included in this Form 8-K report, and will be filed as soon as practicable, but no later than May 14, 2002, by amendment on Form 8-K/A. (b) Pro forma financial information. Pro forma financial information for the Company reflecting the Kenan Acquisition is not currently available, and will be filed as soon as practicable, but no later than May 14, 2002, by amendment on Form 8-K/A. (c) Exhibits. The following exhibits are included: 2.28 Asset Purchase Agreement by and between Lucent Technologies Inc., as Seller, and CSG Systems International, Inc., as Buyer, dated as of December 21, 2001. 2.29 Intellectual Property Agreement by and among Lucent Technologies Inc., Lucent Technologies GRL Corporation, Lucent Technologies Ireland Holding Limited and CSG Systems International, Inc., CSG Software, Inc., CSG Technology Limited, effective as of February 28, 2002. 2.30 Software and Services Master Supply Agreement (North America) by and among Lucent Technologies Inc. and CSG Systems International, Inc. and CSG Software, Inc., dated as of February 28, 2002. 2.31 Software and Services Master Supply Agreement (International) by and among Lucent Technologies Inc. and CSG Systems International, Inc. and CSG Software, Inc., dated as of February 28, 2002. 2.32 Amended and Restated Credit Agreement among CSG Systems International, Inc., as Holdings, CSG Systems, Inc., as Borrower, the Lenders from Time to Time Parties Hereto, BNP Paribas, as Administrative Agent, Lehman Commercial Paper Inc., as Syndication Agent, and Credit Lyonnais New York Branch, the Bank of Nova Scotia and Wells Fargo Bank, National Association, as Co-Documentation Agents, dated as of February 28, 2002. 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. CSG SYSTEMS INTERNATIONAL, INC. Dated: March 14, 2002 By: /s/ Randy Wiese -------------- ----------------------------------- Randy Wiese Vice President and Controller (Principal Accounting Officer) CSG SYSTEMS INTERNATIONAL, INC. Exhibit Index Exhibit Number Description - ------ ----------- 2.28 Asset Purchase Agreement by and between Lucent Technologies Inc., as Seller, and CSG Systems International, Inc., as Buyer, dated as of December 21, 2001. 2.29 Intellectual Property Agreement by and among Lucent Technologies Inc., Lucent Technologies GRL Corporation, Lucent Technologies Ireland Holding Limited and CSG Systems International, Inc., CSG Software, Inc., CSG Technology Limited, effective as of February 28, 2002. 2.30 Software and Services Master Supply Agreement (North America) by and among Lucent Technologies Inc. and CSG Systems International, Inc. and CSG Software, Inc., dated as of February 28, 2002. 2.31 Software and Services Master Supply Agreement (International) by and among Lucent Technologies Inc. and CSG Systems International, Inc. and CSG Software, Inc., dated as of February 28, 2002. 2.32 Amended and Restated Credit Agreement among CSG Systems International, Inc., as Holdings, CSG Systems, Inc., as Borrower, the Lenders from Time to Time Parties Hereto, BNP Paribas, as Administrative Agent, Lehman Commercial Paper Inc., as Syndication Agent, and Credit Lyonnais New York Branch, the Bank of Nova Scotia and Wells Fargo Bank, National Association, as Co-Documentation Agents, dated as of February 28, 2002. EX-2.28 3 dex228.txt ASSET PURCHASE AGREEMENT Exhibit 2.28 ASSET PURCHASE AGREEMENT by and between LUCENT TECHNOLOGIES INC. as Seller and CSG SYSTEMS INTERNATIONAL, INC. as Buyer dated as of December 21, 2001 TABLE OF CONTENTS
Page ---- 1. Definitions............................................................................................ 1 1.1 Defined Terms.................................................................................... 1 1.2 Additional Defined Terms......................................................................... 8 1.3 Other Definitional and Interpretive Matters...................................................... 9 2. Purchase and Sale of the Business...................................................................... 10 2.1 Purchase and Sale of Assets...................................................................... 10 2.2 Excluded Assets.................................................................................. 11 2.3 Purchase Price; Purchase Price Adjustment........................................................ 12 2.4 Assumed Liabilities.............................................................................. 14 2.5 Excluded Liabilities............................................................................. 15 2.6 Further Assurances; Further Conveyances and Assumptions; Consent of Third Parties................ 15 2.7 No Licenses...................................................................................... 16 2.8 Bulk Sales Law................................................................................... 17 2.9 Taxes............................................................................................ 17 3. Representations and Warranties of Seller............................................................... 18 3.1 Organization and Qualification................................................................... 18 3.2 Subsidiaries..................................................................................... 18 3.3 Authorization; Binding Effect.................................................................... 18 3.4 Non-Contravention; Consents...................................................................... 19 3.5 Title to Property; Principal Equipment; Sufficiency of Assets.................................... 20 3.6 Permits, Licenses................................................................................ 20 3.7 Real Estate...................................................................................... 20 3.8 Compliance With Laws; Litigation................................................................. 21 3.9 Business Employees............................................................................... 21 3.10 Contracts........................................................................................ 22 3.11 Environmental Matters............................................................................ 23 3.12 Financial Statements; Absence of Changes......................................................... 23 3.13 Intellectual Property............................................................................ 24 3.14 Brokers.......................................................................................... 26 3.15 Certain Tax Matters.............................................................................. 26 3.16 Receivables...................................................................................... 26 3.17 Customers and Suppliers.......................................................................... 26 3.18 No Undisclosed Material Liabilities.............................................................. 27 3.19 No Other Representations or Warranties........................................................... 27 4. Representations and Warranties of Buyer................................................................ 27 4.1 Organization and Qualification................................................................... 27 4.2 Authorization; Binding Effect.................................................................... 27 4.3 No Violations.................................................................................... 28
-i- 4.4 Brokers.......................................................................................... 28 4.5 Sufficiency of Funds............................................................................. 29 5. Certain Covenants...................................................................................... 29 5.1 Access and Information........................................................................... 29 5.2 Conduct of Business.............................................................................. 30 5.3 Tax Reporting.................................................................................... 32 5.4 Allocation of Consideration...................................................................... 32 5.5 Business Employees............................................................................... 33 5.6 Collateral Agreements; Leased Equipment.......................................................... 37 5.7 Reasonable Commercial Efforts; Supplements and Amendments........................................ 37 5.8 Contacts with Suppliers, Employees and Customers................................................. 38 5.9 Sale by Buyer of Inventory Marked With Seller's Name............................................. 38 5.10 Non-Solicitation of Employees.................................................................... 39 5.11 Non-Competition.................................................................................. 40 5.12 Additional Financial Statements.................................................................. 41 6. Confidential Nature of Information..................................................................... 42 6.1 Confidentiality Agreement........................................................................ 42 6.2 Seller's and Buyer's Proprietary Information..................................................... 42 7. Closing................................................................................................ 43 7.1 Deliveries by Seller or the Subsidiaries......................................................... 44 7.2 Deliveries by Buyer.............................................................................. 44 7.3 Closing Date..................................................................................... 44 7.4 Contemporaneous Effectiveness.................................................................... 45 8. Conditions Precedent to Closing........................................................................ 45 8.1 General Conditions............................................................................... 45 8.2 Conditions Precedent to Buyer's Obligations...................................................... 45 8.3 Conditions Precedent to Seller's Obligations..................................................... 46 8.4 Frustration of Purpose........................................................................... 47 9. Status of Agreements................................................................................... 47 9.1 Survival of Representations and Warranties....................................................... 47 9.2 General Agreement to Indemnify................................................................... 47 9.3 Indemnification Procedures for Third Party Claims................................................ 49 9.4 Indemnification Procedures for Non-Third Party Claims............................................ 50 9.5 Rights and Remedies.............................................................................. 50 10. Miscellaneous Provisions............................................................................... 50 10.1 Notices.......................................................................................... 50 10.2 Expenses......................................................................................... 51 10.3 Entire Agreement; Modification................................................................... 52 10.4 Assignment; Binding Effect; Severability......................................................... 52 10.5 Governing Law.................................................................................... 52
-ii- 10.6 Consent to Jurisdiction.......................................................................... 52 10.7 Waiver of Jury Trial............................................................................. 53 10.8 Execution in Counterparts........................................................................ 53 10.9 Public Announcement.............................................................................. 53 10.10 No Third-Party Beneficiaries..................................................................... 53 11. Termination and Waiver................................................................................. 54 11.1 Termination...................................................................................... 54 11.2 Effect of Termination............................................................................ 54 11.3 Collateral Agreements; Material To Be Returned................................................... 55 11.4 Waiver of Agreement.............................................................................. 55 11.5 Amendment of Agreement........................................................................... 55
-iii- Schedules - --------- Schedule 1.1 Accounts Receivables - ------------ Schedule 2.1(h)(i) Licenses - ------------------ Schedule 2.1(h)(ii) Nonassignable Licenses - ------------------- Schedule 2.1(j) Kenan Systems Name - --------------- Schedule 2.2(f) Excluded Contracts - --------------- Schedule 3.1 Foreign Qualification - ------------ Schedule 3.2 Subsidiaries - ------------ Schedule 3.4(b) Required Consents - --------------- Schedule 3.5(a) Fixed Asset List - --------------- Schedule 3.5(b) Encumbrances - --------------- Schedule 3.5(c) Condition of Principal Equipment - --------------- Schedule 3.5(d) Sufficiency of Assets - --------------- Schedule 3.7(a) Leased Premises; Assumed Leases; Transferred Leasehold Premises - --------------- Schedule 3.7(b) Vacated Owned Real Property - --------------- Schedule 3.8(b) Litigation - --------------- Schedule 3.9(a) Business Employees - --------------- Schedule 3.9(b)(i) Benefit Plans; Additional Benefits - ------------------ Schedule 3.9(b)(ii) Assumed Employee Liabilities - ------------------- Schedule 3.9(b)(iii) Payments - -------------------- Schedule 3.9(c) Union and Collective Bargaining Agreements - --------------- Schedule 3.10(i) Contracts - ---------------- Schedule 3.10(ii) Defaults - ----------------- Schedule 3.12 Financial Statements - ------------- Schedule 3.13(b) Intellectual Property - ---------------- Schedule 3.16 Receivables - ------------- Schedule 3.17 Customers and Suppliers - ------------- Schedule 3.18 Material Undisclosed Liabilities - ------------- Schedule 5.2 Exceptions to Seller's Conduct of Business - ------------ Schedule 5.4 Purchase Price Allocation - ------------ Schedule 5.5(f) Non-U.S. Plan Liabilities - --------------- Schedule 5.6(a) Transition Services - --------------- Schedule 5.6(b) Purchased Leased Equipment - --------------- Schedule 5.8 Employees and Customers - ------------ Exhibits - -------- Exhibit A Form of Assignment and Bill of Sale - --------- Exhibit B Form of Assumption Agreement - --------- Exhibit C Form of Software and Services Master Supply Agreement - --------- Exhibit D Form of Intellectual Property Agreements - --------- Exhibit D-1 Form of Intellectual Property Agreement ----------- Exhibit D-2 Form of Trade Dress Assignment ----------- Exhibit D-3 Form of Trademark Assignment -----------
-iv- Exhibit D-4 Form of Domain Name Transfer Agreement ----------- Exhibit E Form of Transition Services Agreement - --------- Exhibit F Form of Lease Assignment - --------- Exhibit G Form of Sublease - --------- Exhibit H Form of Property License - --------- -v- ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT ("Agreement") dated as of December 21, 2001 by and --------- between LUCENT TECHNOLOGIES INC., a Delaware corporation ("Seller" or "Lucent"), ------ ------ and CSG SYSTEMS INTERNATIONAL, INC., a Delaware corporation ("Buyer"). ----- R E C I T A L S A. WHEREAS, Seller and its Subsidiaries (as hereinafter defined) are, among other things, engaged through Seller's Billing and Customer Care Group in the worldwide production, marketing, sales and distribution of convergent billing and customer care software and in the provision of global consulting services in respect of billing and customer care software (collectively, the "Business"); -------- B. WHEREAS, the Business is composed of certain assets that are currently owned by Seller and the Subsidiaries and certain liabilities in respect of which Seller and the Subsidiaries are currently obligated; C. WHEREAS, Seller and the Subsidiaries desire to sell, transfer and assign to Buyer, and Buyer desires to purchase the Purchased Assets (as hereinafter defined), and to assume the Assumed Liabilities (as hereinafter defined), in each case, as more fully described and upon the terms and subject to the conditions set forth herein; and D. WHEREAS, Seller and/or one or more of the Subsidiaries and Buyer desire to enter into each Assignment and Bill of Sale, each Assumption Agreement, the Supply Agreement, the Intellectual Property Agreements, the Transition Services Agreement, each Lease Assignment, each Sublease and each Property License (each as hereinafter defined and, collectively, the "Collateral Agreements"). --------------------- NOW, THEREFORE, in consideration of the mutual agreements and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby, do hereby agree as follows: 1. Definitions 1.1 Defined Terms For the purposes of this Agreement, the following terms shall have the following meanings: "Accounts Receivable" means all accounts which meet the criteria set forth ------------------- on Schedule 1.1, except for (i) accounts receivable collected in the ordinary course of business consistent with past practice on or after the date hereof prior to the Closing Date and (ii) inter-company accounts receivable. "Affiliate" of any Person means any Person that controls, is controlled by, --------- or is under common control with, such Person. As used herein, the term "control" ------- (including the terms "controlling", "controlled by" and "under common control ----------- ------------- -------------------- with") means the possession, directly or indirectly, of the power to direct or - ---- cause the direction of the management and policies of a Person, whether through ownership of voting securities or other interests, by contract or otherwise. "Assignment and Bill of Sale" means each agreement in substantially the --------------------------- form set forth as Exhibit A. --------- "Assumed Leases" means the Leases, including Seller's interest therein, to -------------- be assumed by the Buyer pursuant to a Lease Assignment and identified on Schedule 3.7(a)(iii). - -------------------- "Assumed Liabilities" means the liabilities and obligations of Seller and ------------------- the Subsidiaries assumed by Buyer pursuant to the Assumption Agreements and Section 2.4. "Assumption Agreement" means each agreement in substantially the form set -------------------- forth as Exhibit B. --------- "Benefit Plan" means each Pension Plan, Welfare Plan and employment, bonus, ------------ pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock option, stock purchase, phantom stock, performance, retirement, thrift, savings, stock bonus, excess benefit, supplemental unemployment, paid time off, perquisite, fringe benefit, vacation, sick leave, severance, disability, death benefit, hospitalization, medical, dental, life insurance, welfare benefit or other plan, program or arrangement (whether written or unwritten), in each case, maintained or contributed to, or required to be maintained or contributed to, by Seller or any of the Subsidiaries for the benefit of any present or former directors, officers or employees of Seller or any of the Subsidiaries. "Business Day" means a day that is not a Saturday, a Sunday or a statutory ------------ or civic holiday in the State of New York. "Business Employees" means the employees of Seller or the Subsidiaries who ------------------ are employed in the Business, to render services primarily in connection with the Business and identified on Schedule 3.9(a) or hired in accordance with --------------- Section 5.2(i) and included on a notice to Buyer in accordance with Section 5.5(a). "Business Records" means all books, records, ledgers and files or other ---------------- similar information, whether in hard copy or computer format, used primarily in the operation or conduct of the Business, including price lists, customer lists, vendor lists, mailing lists, warranty information, catalogs, sales promotion literature, advertising materials, brochures, records of operation, standard forms of documents, manuals of operations or business procedures, research materials, marketing studies and product testing reports required by any national, federal, state, provincial or local court, administrative body or other Governmental Body of any country. -2- "CERCLA" means the Comprehensive Environmental Response, Compensation, and ------ Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et seq., as amended. -- --- "Closing" means the closing of the transactions contemplated under this ------- Agreement. "Closing Date" means the date of the Closing as determined pursuant to ------------ Section 7.3. "COBRA" means Consolidated Omnibus Budget Reconciliation Act of 1985. ----- "Code" means the Internal Revenue Code of 1986, as amended. ---- "Confidentiality Agreement" means the Non-Disclosure Agreement between ------------------------- Seller and Buyer dated August 31, 2001. "Contracts" means all Third-Party contracts, agreements, leases (provided --------- -------- that a lease covering Leased Equipment shall not be considered a Contract for purposes of Section 2.1 unless Buyer has agreed to assume such lease pursuant to Section 5.6(b)), subleases, supply contracts, purchase orders, sales orders and instruments, whether written or oral, used or held for use primarily in the operation or conduct of the Business, to which Seller or a Subsidiary is a party or by which any Purchased Asset may be bound or affected, including any such instrument (i) for the lease of machinery, equipment, furniture or office equipment, (ii) for the provision by a Third Party of goods or services to the Business, (iii) for the sale by the Business of goods or the performance by the Business of services or (iv) for the sale and distribution of products of the Business, but the term "Contracts" shall exclude the Excluded Contracts. --------- "Counsel for Buyer" means Davis Polk & Wardwell, New York, New York. ----------------- "Counsel for Seller" means Sidley Austin Brown & Wood, New York, New York. ------------------ "Credit Agreement" means the Five-Year Amended and Restated Revolving ---------------- Credit Facility Agreement, dated as of February 26, 1998, as amended and restated (the "Credit Agreement"), among Seller, the Lenders thereunder, Salomon Smith Barney Inc., as Syndication Agent, and the Administrative Agent for the Lenders. "Dollars" means legal tender of the United States of America. ------- "Encumbrance" means any lien, claim, charge, security interest, mortgage, ----------- pledge, easement, conditional sale or other title retention agreement, covenant or other similar restriction or Third-Party right affecting the Purchased Assets, other than Permitted Encumbrances. "Environmental Law" means any Law (including, without limitation, common ----------------- law) Governmental Permit, treaty or agreement with any Person that governs the existence of or provides a remedy for release of Hazardous Substances, the protection of persons, natural resources or the environment, the management of Hazardous Substances, or other activities involving Hazardous Substances including under CERCLA or any other similar Law, in each case, as in effect on or prior to the Closing Date or, with respect to representations and warranties -3- made on the date hereof and as of the Closing, on or prior to the date hereof and on or prior to the Closing Date. "Environmental Liability" means any liability arising in connection with or ----------------------- in any way relating to the Seller (or any predecessor of Seller or any prior owner of all or part of its business and assets), any property now or previously owned, leased or operated by such Seller, the Business (as currently or previously conducted), the Purchased Assets or any activities or operations occurring or conducted at the Premises (including, without limitation, offsite disposal), whether accrued, contingent, absolute, determined, determinable or otherwise, which (i) arise under or relate to any Environmental Law and (ii) relate to actions occurring or conditions existing on or prior to the Closing Date (including, without limitation, any matter disclosed or required to be disclosed in Schedules to Article 3 hereto). "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended. "E.U. Acquired Rights Directive" means the Council Directive of 12 March ------------------------------ 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of the transfer of undertakings, businesses or parts of undertakings or businesses. "Excluded Assets" means the rights, properties and assets of the Business --------------- excluded from the Purchased Assets pursuant to Section 2.2. "Excluded Contracts" means any contracts, agreements, leases, subleases, ------------------ supply contracts, purchase orders, sales orders or other instruments (i) identified in Schedule 2.2(f), (ii) under which performance by Seller or an --------------- Affiliate of Seller and any counterparty thereto has been completed and for which there is no remaining warranty, maintenance, indemnity or support obligation or (iii) that constitutes a General Purchase Agreement. "Excluded Taxes" means any liability, obligation or commitment, whether or -------------- not accrued, assessed or currently due and payable, (i) for any Taxes relating to the Purchased Assets for any Pre-Closing Tax Period, except as provided in Section 2.9, and (ii) for Taxes of Seller or any other corporation which has been affiliated with Seller. "Final Determination" means (a) in respect of U.S. Federal income taxes, a ------------------- "determination" as defined in Section 1313(a) of the Code or the execution of an IRS Form 870-AD, and (b) in respect of Taxes other than U.S. Federal income taxes, any final determination of liability in respect of a Tax that under applicable law, is not subject to further appeal, review or modification through proceedings or otherwise (including the expiration of a statute of limitations or a period for filing of claims for refunds, amended returns or appeals from adverse determinations). "Fixtures and Supplies" means all furniture, furnishings and other tangible --------------------- personal property owned by Seller or a Subsidiary and used or held for use primarily in the operation or conduct of the Business, including desks, tables, chairs, file cabinets and other storage devices and office supplies. -4- "GAAP" means United States generally accepted accounting principles. ---- "General Purchase Agreements" means Third-Party supply contracts or other --------------------------- agreements between Seller or an Affiliate of Seller and a Third Party pursuant to which Seller or such Affiliate of Seller purchases products or services from such Third Party for any of Seller's or such Affiliate's businesses other than solely for the Business. "Governmental Body" means any legislative, executive or judicial unit of ----------------- any governmental entity (foreign, federal, state or local) or any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial authority thereof. "Governmental Permits" means all governmental permits and licenses, -------------------- certificates of inspection, approvals or other authorizations issued to Seller or a Subsidiary with respect to the Business and necessary for the operation or conduct of the Business as currently conducted under applicable Laws. "Guarantee Agreement" means the Guarantee and Collateral Agreement, dated ------------------- as of February 22, 2001, made by Lucent and certain affiliates in favor of JPMorgan/The Chase Manhattan Bank, as Collateral Agent for the Secured Parties (as named therein). "Hazardous Substance" means (i) any hazardous, toxic or dangerous waste, ------------------- substance or material defined as such pursuant to any Law, (ii) asbestos or polychlorinated biphenyls, petroleum or other hydro-carbons and (iii) any other chemical, material or substance, exposure to which is regulated by any Governmental Body pursuant to any Law. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, ------- as amended. "Intellectual Property Agreements" means the agreements in substantially -------------------------------- the form set forth as Exhibits D-1 through D-4. ------------------------ "IRS" means the Internal Revenue Service. --- "Law" means any national, federal, state, provincial or local law, statute, --- ordinance, rule, regulation, code, order, judgment, injunction or decree of any country. "Lease" means the lease for any of the Leased Premises. ----- "Lease Assignment" means each assignment agreement with respect to a Lease ---------------- in substantially the form set forth as Exhibit F. --------- "Leased Equipment" means the computers, servers, machinery and equipment ---------------- and other similar items leased and used or held for use by Seller or a Subsidiary primarily in the operation or conduct of the Business, but excluding any such items primarily related to Excluded Assets or Excluded Liabilities. -5- "Leased Premises" means all real property, including buildings, fixtures --------------- and improvements thereon, that is leased by Seller or a Subsidiary from Third Parties and used or held for use by Seller or a Subsidiary primarily in the operation or conduct of the Business, which real property is identified on Schedule 3.7(a). - --------------- "Licenses" means all licenses, agreements and other arrangements under -------- which Seller or a Subsidiary has the right to use any Proprietary Information of a Third Party to the extent used or held for use primarily in the operation or conduct of the Business, including those identified on Schedule 2.1(h)(i). ------------------ "Nonassignable Licenses" means those licenses, agreements or other ---------------------- arrangements of Seller or any of its Affiliates with respect to any Proprietary Information of any Third Party to the extent not used or held for use primarily in the operation of the Business, including those identified on Schedule -------- 2.1(h)(ii). - ---------- "Permitted Encumbrances" means any (i) liens for Taxes, assessments and ---------------------- other governmental charges or of landlords, liens of carriers, warehouseman, mechanics and material men incurred in the ordinary course of business, in each case, for sums not yet due and payable or due but not delinquent or being contested in good faith by appropriate proceedings, (ii) liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations, (iii) licenses granted by Seller or an Affiliate in connection with sales of products in the ordinary course of business and (iv) any Encumbrance or minor imperfection in title and minor encroachments, if any, not material in amount that, individually or in the aggregate, do not materially interfere with the conduct of the Business or with the use of the Purchased Assets and do not materially affect the value of the Purchased Assets. "Person" means any individual, corporation, partnership, firm, association, ------ joint venture, joint stock company, trust, unincorporated organization or other entity, or any governmental body. "Premises" means the Leased Premises and the Transferred Leasehold -------- Premises. "Pre-Closing Tax Period" means any Tax period (or portion thereof) ending ---------------------- on or before the Closing Date. "Principal Equipment" means the computers, servers, machinery and equipment ------------------- and other similar items used or held for use by Seller or a Subsidiary primarily in the operation or conduct of the Business, including the items set forth on Schedule 3.5(a), but not the Leased Equipment. Principal Equipment includes all - --------------- outstanding right, title and interest in and to the warranties received from the manufacturers and distributors of such items and to any related claims, credits, rights of recovery and setoff with respect to such items, but only to the extent such rights are assignable. -6- "Property License" means a license to use a premises which is a Leased ---------------- Premises substantially in the form of Exhibit H hereto. --------- "Proprietary Information" means all information (whether or not protectable ----------------------- by patent, copyright, mask works or trade secret rights) not generally known to the public (except for patents), including works of authorship, inventions, discoveries, patentable subject matter, patents, patent applications, industrial models, industrial designs, trade secrets, trade secret rights, software, works, copyrightable subject matters, copyright rights and registrations, mask works, know-how and show-how, trademarks, trade names, service marks, emblems, logos, insignia and related marks and registrations, specifications, technical manuals and data, libraries, blueprints, drawings, proprietary processes, product information and development work-in-process. "Seller Material Adverse Effect" means any change, effect, event, ------------------------------ occurrence or state of facts that is materially adverse to the business, assets, financial condition or results of operations of the Business, taken as a whole, other than any change, effect, occurrence or state of facts (i) relating to the United States or foreign economies or securities markets in general, (ii) relating to the billing and customer care industry in general and not specifically relating to the Business, (iii) resulting from the public announcement of the transactions contemplated by this Agreement or (iv) resulting from compliance by Seller or any Affiliate with any request of Buyer. "Sublease" means each sublease with respect to a Lease in substantially the -------- form set forth as Exhibit G. --------- "Supply Agreement" means the Software License and Services Master Agreement ---------------- between Seller and Buyer, in substantially the form set forth as Exhibit C. --------- "Taxes" means (i) all taxes of any kind, and all charges, fees, customs, ----- levies, duties, imposts, required deposits or other assessments, including all federal, state, local or foreign net income, capital gains, gross income, gross receipt, property, franchise, sales, use, excise, withholding, payroll, employment, social security, worker's compensation, unemployment, occupation, capital stock, ad valorem, value added, transfer, gains, windfall profits, net worth, asset, transaction, and other taxes, and any interest, penalties or additions to tax with respect thereto, imposed upon any Person by any taxing authority or other Governmental Body under applicable Law or foreign law and (ii) any liability for the payment of any amounts of the type described in the preceding sentence as a result of being party to any agreement or any express or implied obligation to indemnify any other Person. "Tax Return" means any return, report or similar statement required to be ---------- filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax. "Third Party" means any Person not an Affiliate of the other referenced ----------- Person or Persons. -7- "Transferred Leasehold Premises" means the parcels of real property subject ------------------------------ or to be subject to an Assumed Lease, Sublease or Property License. "Transition Services Agreement" means the agreement in substantially the ----------------------------- form set forth as Exhibit F. --------- "Transitional Leases" means the Leases, including Seller's interest ------------------- therein, in respect of which the Transitional Leasehold Interests shall be transferred to Buyer. "Transitional Leasehold Interests" means the leasehold interests to be -------------------------------- transferred to Buyer by Seller or a Subsidiary pursuant to a Sublease or Property License for those parcels of real property that are leased by Seller or such Subsidiary and are identified on Schedule 3.7(a)(i). ------------------ "Unassignable Contract" has the meaning ascribed to such term in the Supply --------------------- Agreements. "Welfare Plan" means each "employee welfare benefit plan" (within the ------------ meaning of Section 3(1) of ERISA). 1.2 Additional Defined Terms For purposes of this Agreement, the following terms shall have the meanings specified in the Sections indicated below: Term Section ---- ------- "Accrued Days"................................ Section 5.5(b) ------------ "Agreement"......................................... Preamble --------- "Asset Acquisition Statement".................... Section 5.4 --------------------------- "Assigned Intellectual Property"................ Section 3.13 ------------------------------ "Assumed Employee Liabilities"................ Section 5.5(g) ---------------------------- "Assumed Pension Obligation".............. Section 5.5(f)(ii) -------------------------- "Business"......................................... Recital A -------- "Business Intellectual Property"............. Section 3.13(b) ------------------------------ "Buyer"............................................. Preamble ----- "Buyer COBRA Obligation"...................... Section 5.5(d) ---------------------- "Buyer International Assignee Cost"........... Section 5.5(b) --------------------------------- "Buyer Material Adverse Effect".................. Section 4.1 ----------------------------- "Collateral Agreements"............................ Recital D --------------------- "Commitment Letters"............................. Section 4.5 ------------------ "Estimated Purchase Price".................... Section 2.3(b) ------------------------ "Excluded Leased Equipment"................... Section 5.5(b) ------------------------- "Excluded Liabilities"........................... Section 2.5 -------------------- "Existing Inventory".......................... Section 5.9(a) ------------------ "Financial Statements"....................... Section 3.12(a) -------------------- "Financing"...................................... Section 4.5 --------- "Financing Entities"............................. Section 4.5 ------------------- -8- "Indemnified Party"........................... Section 9.2(a) ----------------- "Indemnifying Party".......................... Section 9.3(a) ------------------ "Intellectual Property"...................... Section 3.13(a) --------------------- "June 30, 2001 Net Asset Statement"....... Section 3.12(a)(i) --------------------------------- "Legally Required"....................... Section 5.5(g)(iii) ---------------- "Licensed Intellectual Property"............. Section 3.13(a) ------------------------------ "Losses"...................................... Section 9.2(a) ------ "Lucent"............................................ Preamble ------ "Marked Assets"............................... Section 5.9(a) ------------- "Material Contracts"............................ Section 3.10 ------------------ "Negative Amount"............................. Section 2.3(b) --------------- "Net Assets (Liabilities) Statement"......... Section 3.12(a) ---------------------------------- "Nonassignable Assets"........................ Section 2.6(b) -------------------- "Non-U.S. Plans"........................... Section 5.5(g)(i) -------------- "Parallel Structures"......................... Section 2.9(a) ------------------- "Pension Plan"................................ Section 3.9(b) ------------ "Pro Rata Annual Bonuses"..................... Section 5.5(c) ----------------------- "Positive Amount"............................. Section 2.3(b) --------------- "Purchase Price"................................. Section 2.3 -------------- "Purchased Assets"............................... Section 2.1 ---------------- "Purchased Leased Equipment".................. Section 5.6(b) -------------------------- "Relocation and Tuition Benefits"............. Section 5.5(b) ------------------------------- "Required Amount"............................. Section 4.5(b) --------------- "Required Consents"........................... Section 3.4(b) ----------------- "Retention Bonus Liability"................... Section 5.5(b) ------------------------- "Seller"............................................ Preamble ------ "Seller COBRA Obligation"..................... Section 5.5(d) ----------------------- "Seller International Assignee Cost".......... Section 5.5(b) ---------------------------------- "Seller Name"................................. Section 5.9(a) ----------- "Seller Non-U.S. Plan"....................... Schedule 5.5(f) -------------------- "Subsidiary"..................................... Section 3.2 ---------- "Third-Party Claim"........................... Section 9.3(a) ----------------- "Transfer Taxes"................................. Section 2.9 -------------- "Transferred Employees"....................... Section 5.5(a) --------------------- "Transition Date"............................. Section 5.5(a) --------------- 1.3 Other Definitional and Interpretive Matters Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply: Calculation of Time Period. When calculating the period of time before -------------------------- which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such -9- period is a non-Business Day, the period in question shall end on the next succeeding Business Day. Gender and Number. Any reference in this Agreement to gender shall include ----------------- all genders, and words imparting the singular number only shall include the plural and vice versa. Headings. The provision of a Table of Contents, the division of this -------- Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any "Section" are to the corresponding Section of this Agreement unless otherwise specified. Herein. The words such as "herein," "hereinafter," "hereof," and ------ ------ ----------- ------ "hereunder" refer to this Agreement as a whole and not merely to a subdivision --------- in which such words appear unless the context otherwise requires. Including. The word "including" or any variation thereof means "including, --------- --------- ---------- without limitation" and shall not be construed to limit any general statement - ------------------ that it follows to the specific or similar items or matters immediately following it. Schedules and Exhibits. The Schedules and Exhibits attached to this ---------------------- Agreement shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Any matter disclosed by Seller on any one Schedule shall be deemed disclosed for purposes of all other Schedules if reasonably apparent that such matter is relevant. Reasonable Commercial Efforts. The obligation of a party to use reasonable ----------------------------- commercial efforts to accomplish an objective means that the obligated party is required to make a diligent, reasonable and good faith effort to accomplish the applicable objective. Such obligation, however, does not require any unreasonable expenditure of funds or incurrence of liability on the part of the obligated party (in each case, in the context of the expenditure to be made or liability to be incurred); provided, however, that the foregoing shall not limit -------- ------- Seller's obligations under Section 5.2, nor does it require that the obligated party act in a manner that would be contrary to normal commercial practices in order to accomplish the objective. The fact that the objective is or is not actually accomplished is no indication that the obligated party did or did not in fact utilize its reasonable commercial efforts in attempting to accomplish the objective. 2. Purchase and Sale of the Business 2.1 Purchase and Sale of Assets Upon the terms and subject to the conditions of this Agreement, on the Closing Date, Seller shall, and shall cause one or more of the Subsidiaries to, sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller or the applicable Subsidiary, free and clear of any Encumbrances, other than Permitted Encumbrances, all right, title and interest in, to and under the Purchased Assets as the same shall exist on the Closing -10- Date. For purposes of this Agreement, the term "Purchased Assets" means all ---------------- assets, properties and rights used or held for use by Seller or any of its Subsidiaries primarily in the operation or conduct of the Business, whether tangible or intangible, real, personal or mixed, including the assets, properties and rights set forth or described in paragraphs (a) through (j) below (except, in each case, for the Excluded Assets), whether or not any such assets, properties or rights have any value for accounting purposes or are carried or reflected on or specifically referred to in the Financial Statements of the Business: (a) the Assumed Leases; (b) the Transitional Leasehold Interests; (c) the Accounts Receivable; (d) the Principal Equipment and the Purchased Leased Equipment, if any; (e) the Fixtures and Supplies; (f) the Assigned Intellectual Property; (g) the Contracts; (h) the Licenses; (i) the Business Records; (j) subject to the rights set forth on Schedule 2.1(j), the name "Kenan --------------- Systems"; and (k) all rights, claims or causes of action of Seller or any Subsidiary against Third Parties relating to the Purchased Assets, including rights under manufacturer's and vendor's warranties. 2.2 Excluded Assets Anything in Section 2.1 to the contrary notwithstanding, the Purchased Assets shall not include, and neither Seller nor any of the Subsidiaries is selling, transferring, assigning, conveying or delivering to Buyer, and Buyer is not purchasing, acquiring or accepting from Seller or any of the Subsidiaries, any of the rights, properties or assets set forth or described in paragraphs (a) through (j) below (the rights, properties and assets expressly excluded by this Section 2.2 being referred to herein as the "Excluded Assets"): --------------- (a) any cash, cash equivalents, bank deposits or similar cash items, lines of credit, banking facilities, employee receivables of Seller or any Affiliate of Seller, inter-company accounts receivable, or any accounts of Seller or any Subsidiary not meeting the criteria set forth on Schedule 1.1 or collected in ------------ the ordinary course consistent with past practice prior to the Closing Date; -11- (b) any Proprietary Information of Seller or any Affiliate of Seller, other than the Assigned Intellectual Property; (c) any (i) personnel and medical records pertaining to any Business Employee which Seller determines, in its exercise of reasonable business judgment, are confidential; (ii) other books and records that Seller or any Affiliate of Seller is required by Law to retain or that Seller is prohibited by law from transferring; provided, that Buyer shall have the right to make copies -------- of any portions of such retained books and records that directly relate to the Business or any of the Purchased Assets; and (iii) any information management system of Seller or any Affiliate of Seller, other than those used or held for use primarily in the operation or conduct of the Business and contained within computer hardware included as a Purchased Asset pursuant to Section 2.1(c); (d) any claim, right or interest of Seller or any Affiliate of Seller in or to any refund, rebate, abatement or other recovery for Taxes, together with any interest due thereon or penalty rebate arising therefrom, for any Pre- Closing Tax Period; (e) subject to Section 5.9, all "Lucent Technologies"-marked sales and marketing or packaging materials, samples, prototypes, other similar Lucent- identified sales and marketing or packaging materials; (f) the Excluded Contracts and the Nonassignable Licenses; (g) any insurance policies or rights of proceeds thereof; (h) the Excluded Leased Equipment, if any, pursuant to Section 5.6(b); (i) except as specifically provided in Section 5.5, all the assets of the Benefit Plans; and (j) all other assets, properties, interests and rights of Seller or any Affiliate of Seller not used or held for use primarily in the operation or conduct of the Business. 2.3 Purchase Price; Purchase Price Adjustment (a) In consideration of the sale, transfer, assignment, conveyance and delivery by Seller and the Subsidiaries of the Purchased Assets to Buyer, and in addition to assuming the Assumed Liabilities, Buyer shall pay to Seller an aggregate amount equal to Three Hundred Million Dollars ($300,000,000) (subject to the adjustment in Sections 2.3(b) and 2.3(c), the "Purchase Price"). -------------- (b) Not later than five Business Days prior to the Closing Date, Seller shall deliver to Buyer its good faith estimate of the Purchase Price as it will be adjusted pursuant to Section 2.3(c) (the "Estimated Purchase Price") and on ------------------------ the Closing Date Buyer shall pay to Seller the Estimated Purchase Price in cash by wire transfer of immediately available funds to an account designated by Seller's written instructions to Buyer at least two Business Days prior to Closing. If the Estimated Purchase Price exceeds $300,000,000 the amount of such excess is referred to as -12- the "Positive Amount", and if $300,000,000 exceeds the Estimated Purchase Price the amount of such excess is referred to as the "Negative Amount." (c) Purchase Price Adjustment. ------------------------- (i) As promptly as practicable, but in any event not later than 60 days after the Closing Date, Seller shall cause to be prepared and delivered to Buyer a statement of net assets to be sold of the Business as of the Closing Date (the "Closing Date Net Assets Statement") accompanied by a report by --------------------------------- PricewaterhouseCoopers LLP. The Closing Date Net Assets Statement shall (x) fairly present the position of the Business on the Closing Date, (y) include the items consistent with those used in the preparation of the Financial Statements, and (z) be prepared in accordance with GAAP, using the same accounting principles, methods, policies and practices as were used in preparing the Financial Statements. The fees and expenses of PricewaterhouseCoopers LLP and outside consultants in connection with the Closing Date Net Assets Statement shall be shared equally by Seller and Buyer. (ii) Buyer shall make available to Seller and its representatives (at no cost to Seller) such books, records and employees of Buyer as may be necessary for Seller's preparation of the Closing Date Net Assets Statement. (iii) Seller shall make available to Buyer and its representatives (at no cost to Buyer) the work papers, schedules, memoranda and other documents and information prepared or reviewed by Seller in connection with the preparation of the Closing Date Net Assets Statement and the personnel of Seller and PricewaterhouseCoopers LLP who prepared or reviewed the Closing Date Net Assets Statement as may be necessary for Buyer's review of the Closing Date Net Assets Statement. (iv) Within 30 Business Days after the delivery to Buyer of the Closing Date Net Assets Statement, Buyer shall notify Seller of any objections to the Closing Date Net Assets Statement or the amount shown as "Net assets to be sold" (the "Net Asset Amount") thereon, specifying in reasonable detail any ---------------- such objections. If Buyer fails to notify Seller of any objections within such period, Buyer shall be deemed to have agreed to the Net Asset Amount. If Buyer has no objections or if Seller and Buyer resolve all such objections, the Net Asset Amount on the Closing Date Net Assets Statement (with any such changes as may be agreed) shall be final and binding. If Seller and Buyer are unable to resolve Buyer's objections within 10 days from Buyer's objection shall be submitted for resolution to Ernst & Young LLP (the "Auditor"). If Ernst & Young ------- LLP refuses to act, or withdraws, as Auditor, then, within five Business Days of the withdrawal of the Auditor, Buyer and Seller shall jointly agree upon and designate an impartial certified public accounting firm of national standing as successor Auditor (or, if Seller and Buyer are unable to reach agreement as to a successor, to the certified public accounting firm of national standing selected by the American Arbitration Association to whom Seller and Buyer agree to submit such selection), which firm will thereafter be the Auditor. Seller and Buyer shall use reasonable efforts to cause the report of the Auditor to be rendered within 15 Business Days of its appointment, and the Auditor's determination as to the appropriateness and extent of changes (if any) to the Net Asset Amount shall be final and binding. -13- (v) If the Net Asset Amount as finally determined pursuant to Section 2.3(b)(iv) is less than an amount equal to $86,547,000 less the Negative Amount or plus the Positive Amount, as applicable, Seller shall deliver to Buyer, within two Business Days after the final determination of the Net Asset Amount, the amount of such deficit, by wire-transferring such amount together with interest from and including the Closing Date to but excluding the date of payment at the prime rate of Morgan Guaranty Trust Company to the account designated by Buyer in writing to Seller. If the Net Asset Amount to be sold as finally determined pursuant to Section 2.3(b)(iv) is greater than an amount equal to $86,547,000 less the Negative Amount or plus the Positive Amount, as applicable, Buyer shall deliver to Seller, within two Business Days after the final determination of the Net Asset Amount, the amount of such surplus, by wire-transferring such amount together with interest from and including the Closing Date to But excluding the date of payment at the prime rate from time- to-time of Morgan Guaranty Trust Company to the account designated by Seller in writing to Buyer. (vi) The fees and expenses of the Auditor shall be shared equally by Seller and Buyer. 2.4 Assumed Liabilities On the Closing Date, Buyer shall execute and deliver to Seller one or more Assumption Agreements and one or more Lease Assignments or Subleases pursuant to which Buyer shall accept, assume and agree to pay, perform or otherwise discharge, in accordance with the respective terms and subject to the respective conditions thereof, the liabilities and obligations of Seller or a Subsidiary pursuant to and under the Assumed Liabilities. For purposes of this Agreement, the term "Assumed Liabilities" means only the liabilities and obligations set ------------------- forth or described in paragraphs (a) through (d) below, whether or not any such obligation has a value for accounting purposes or is carried or reflected on or specifically referred to in the Financial Statements of the Business: (a) the liabilities and obligations arising on or after the Closing Date under the Assumed Leases and the transferred Licenses and Contracts and those liabilities and obligations which arose prior to or on the Closing Date relating to "Deferred Revenue" shown on the Net Assets (Liabilities) Statement and those arising after the date thereof prior to the Closing Date which would be classified as such; (b) with respect to the Business, any warranty liabilities arising from sales of software or products in the ordinary course of business; (c) all Assumed Employee Liabilities; and (d) all other obligations and liabilities with respect to the Business or the Purchased Assets, known or unknown, absolute or contingent, arising on or after the Closing Date, even if such obligations or liabilities arise from acts, omissions circumstances or state of events before the Closing Date whether or not identified in this Agreement or the Schedules, except for the Excluded Employee Liabilities. -14- 2.5 Excluded Liabilities Buyer shall not assume or be obligated to pay, perform or otherwise assume or discharge any liabilities or obligations of Seller or any of Affiliate of Seller or any of their respective predecessors, whether direct or indirect, known or unknown, absolute or contingent, other than Assumed Liabilities and shall not assume any Excluded Liabilities. For purposes of this Agreement, the term "Excluded Liabilities" means all liabilities or obligations other than -------------------- Assumed Liabilities, including those set forth or described in paragraphs (a) and (d) below, whether or not any such liability or obligation has a value for accounting purposes or is carried or reflected on or specifically referred to in the Financial Statements of the Business: (a) any Excluded Taxes; (b) any Environmental Liability; (c) any liability or obligations relating to an Excluded Asset; and (d) all Excluded Employee Liabilities 2.6 Further Assurances; Further Conveyances and Assumptions; Consent of Third Parties (a) From time to time following the Closing, Seller and Buyer shall, and shall cause their respective Affiliates to, execute, acknowledge and deliver all such further conveyances, notices, assumptions, releases and acquittances and such other instruments, and shall take such further actions, at each such Person's cost and expense, as may be necessary or appropriate fully to assure Buyer and its respective successors or assigns, all the properties, rights, titles, interests, estates, remedies, powers and privileges intended to be conveyed to Buyer under this Agreement and the Collateral Agreements and fully to assure Seller and its Affiliates and their successors and assigns, the assumption of the liabilities and obligations intended to be assumed by Buyer under this Agreement and the Collateral Agreements, and otherwise to make effective the transactions contemplated hereby and thereby (including (i) transferring back to Seller or the applicable Subsidiary any asset or liability not contemplated by this Agreement to be a Purchased Asset or an Assumed Liability, respectively, which asset or liability was transferred to Buyer at the Closing and (ii) transferring to Buyer any asset or liability contemplated by this Agreement to be a Purchased Asset or an Assumed Liability, respectively, which was not transferred to Buyer at the Closing). (b) Nothing in this Agreement nor the consummation of the transactions contemplated hereby shall be construed as an attempt or agreement to assign any Purchased Asset, including any Contract, Unassignable Contract, Assumed Lease, Transitional Leasehold Interest, License, Nonassignable License, certificate, approval, authorization or other right, which by its terms or by Law is nonassignable without the consent of a Third Party or a Governmental Body or is cancelable by a Third Party or would constitute a breach or other contravention of such Purchased Asset or in any way adversely affect the rights of Buyer or Seller thereunder in the event of an assignment ("Nonassignable Assets") unless -------------------- and until such consent shall have -15- been obtained. Seller shall, and shall cause its Affiliates to, use reasonable commercial efforts to cooperate with Buyer at its request in endeavoring to obtain such consents promptly; provided, that such cooperation shall not require -------- Seller or any of its Affiliates to remain secondarily liable or to make any payment to obtain any such consent with respect to any Nonassignable Asset. (c) Buyer and Seller shall use their respective reasonable commercial efforts to obtain, or to cause to be obtained, any consent, substitution, approval or amendment required to novate (which shall not require a payment to the Person from whom novation is sought) all obligations under any and all Contracts or other obligations or liabilities that constitute Assumed Liabilities or to obtain in writing the unconditional release of Seller and its Affiliates so that, in any such case, Buyer and its Affiliates shall be solely responsible for such liabilities and obligations. To the extent permitted by applicable Law, if consents to the assignment thereof cannot be obtained, such Nonassignable Assets shall be held, as of and from the Closing Date, by Seller or the applicable Affiliate of Seller in trust for Buyer and the covenants and obligations thereunder shall be performed by Buyer in Seller's or such Affiliate's name and all benefits and obligations existing thereunder shall be for Buyer's account. Seller shall take or cause to be taken at Buyer's expense such actions in its name or otherwise as Buyer may reasonably request, including subcontracting, sub-licensing or subleasing to Buyer, so as to provide Buyer with the benefits of the Nonassignable Assets and to effect collection of money or other consideration that becomes due and payable under the Nonassignable Assets, and Seller or the applicable Affiliate of Seller shall promptly pay over to Buyer any consideration received by it in respect of all Nonassignable Assets. (d) As of and from the Closing, Seller on behalf of itself and its Affiliates authorizes Buyer, to the extent permitted by applicable Law and the terms of the Nonassignable Assets, at Buyer's expense, to perform all the obligations and receive all the benefits of Seller or its Affiliates under the Nonassignable Assets and appoints Buyer its attorney-in-fact to act in its name on its behalf or in the name of the applicable Affiliate of Seller and on such Affiliate's behalf with respect thereto. (e) Anything in this Agreement to the contrary notwithstanding, unless and until any consent or approval with respect to any Nonassignable Asset has been obtained, such Nonassignable Asset shall not constitute a Purchased Asset and any associated liability shall not constitute an Assumed Liability for any purpose under this Agreement, and, so long as Seller is able to provide Buyer with all material economic benefits of such Nonassignable Asset, the failure of any such consent or approval to be obtained or the failure of any such Nonassignable Asset to constitute a Purchased Asset or any circumstances resulting therefrom shall not, individually or in the aggregate, constitute a Seller Material Adverse Effect or a breach by Seller of any representation, warranty, covenant or agreement contained in this Agreement or a failure of any condition under this Agreement. 2.7 No Licenses Unless expressly set forth in the Intellectual Property Agreements, no title, right or license of any kind is granted to Buyer pursuant to this Agreement with respect to any Proprietary -16- Information of Seller or any Affiliate of Seller, either directly or indirectly, by implication, by estoppel or otherwise. 2.8 Bulk Sales Law Buyer hereby waives compliance by Seller and each of the Subsidiaries with the requirements and provisions of any "bulk-transfer" Laws of any jurisdiction, that may otherwise be applicable with respect to the sale of any or all the Purchased Assets to Buyer. 2.9 Taxes (a) Buyer and Seller shall share equally all applicable Taxes and all recording and filing fees that may be imposed, assessed or payable by reason of the operation or as a result of this Agreement, including the sales, transfers, leases, rentals, licenses and assignments contemplated hereby, except for Seller's or any Subsidiary's net income and capital gains taxes or franchise or other taxes based on Seller's or any Subsidiary's net income ("Transfer Taxes"); -------------- provided, however, that if Buyer acquires the Purchased Assets in a manner such - -------- ------- that following the Closing the Purchased Assets are not held by Buyer and its affiliates through entities in the same jurisdictions as the entities through which the Purchased Assets are currently held by Seller and the Subsidiaries (a "Parallel Structure"), then Buyer shall be liable for any Transfer Taxes to the extent that such Taxes exceed the amount of Transfer Taxes that would have been imposed, assessed or payable had Buyer acquired the Purchased Assets in a Parallel Structure. (b) All real property taxes, personal property taxes and similar ad valorem obligations levied with respect to the Purchased Assets for a taxable period which includes (but does not end on) the Closing Date (collectively, the "Apportioned Obligations") shall be apportioned between Seller and Buyer based ----------------------- on the number of days of such taxable period included in the Pre-Closing Tax Period and the number of days of such taxable period after the Closing Date (with respect to any such taxable period, the "Post-Closing Tax Period"). Seller ----------------------- shall be liable for the proportionate amount of such taxes that is attributable to the Pre-Closing Tax Period, and Buyer shall be liable for the proportionate amount of such taxes that is attributable to the Post-Closing Tax Period. (c) Apportioned Obligations and Transfer Taxes shall be timely paid, and all applicable filings, reports and returns shall be filed, as provided by applicable law. Upon the payment of any Transfer Tax, the paying party shall be entitled to reimbursement from the non-paying party in accordance with Section 2.9(a). With respect to Apportioned Obligations, 10 days prior to the Closing Date, Seller shall provide Buyer with a statement showing its calculation of an estimated amount of all Apportioned Obligations (based upon actual tax bills or assessments or, if not available, tax bills for the prior comparable period) and an apportionment of such estimated amount in accordance with Section 2.9(b). Buyer will have the right to review Seller's statement. If within 5 days after receipt of Seller's statement, Buyer notifies Seller in writing that it objects to the statement, Buyer and Seller agree to resolve any dispute as promptly as possible so that the final estimate of all Apportioned Obligations will be agreed no later than two days prior to the Closing Date. At the Closing, Buyer shall pay Seller the excess, if any, of (i) the Apportioned Obligations actually paid by Seller as of the Closing Date over (ii) the -17- estimated amount of the Apportioned Obligations apportioned to Seller, or, Seller shall pay to Buyer the excess, if any, of (i) the estimated amount of the Apportioned Obligations apportioned to Seller over (ii) the Apportioned Obligations actually paid by Seller as of the Closing Date. If the actual amount of any Apportioned Obligation paid to a Taxing Authority differs from the estimated amount of such tax, then the paying party shall notify the non-paying party and, within 10 days after receipt of such notice, Seller shall pay Buyer or Buyer shall pay Seller, as the case may be, the difference between the payments made in respect of the estimated Apportioned Obligations and the payment that would have been made at Closing if the estimated amount had been based upon the actual amount of Apportioned Obligations. 3. Representations and Warranties of Seller Seller represents and warrants to Buyer that as of the date hereof and as of the Closing: 3.1 Organization and Qualification Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority to own or lease and operate the Purchased Assets owned, leased or operated by it and to carry on its portion of the Business as currently conducted. Seller is duly qualified to do business and is in good standing as a foreign corporation (in any jurisdiction that recognizes such concept) in each jurisdiction, including the jurisdictions listed on Schedule -------- 3.1 in which the Business has material property or operations, where the - --- ownership or operation of the Purchased Assets or the operation or conduct of the Business requires such qualification, except where the failure to be so qualified or in good standing, individually or in the aggregate, together with the failure of one or more Subsidiaries, would not reasonably be expected to have a Seller Material Adverse Effect. 3.2 Subsidiaries Schedule 3.2 sets forth a list of each Affiliate of Seller that is engaged ------------ in the operation or conduct of the Business or that has a right, title or interest in, to or under any asset which is a Purchased Asset or has an obligation which is an Assumed Liability, together with its jurisdiction of organization and the equity ownership thereof by Seller (collectively, the "Subsidiaries"). Each Subsidiary (i) is duly organized and validly existing ------------ under the Laws of its jurisdiction of organization and (ii) has all requisite corporate or similar power and authority to own, lease and operate the Purchased Assets owned, leased or operated by it and to carry on its portion of the Business as currently conducted. 3.3 Authorization; Binding Effect (a) (i) Seller has all requisite corporate power and authority to execute, perform and deliver this Agreement and the Collateral Agreements to which it will be a party and to effect and consummate the transactions contemplated hereby and thereby, and the execution, delivery and performance of this Agreement and the Collateral Agreements to which it will be a party have been duly authorized by all requisite corporate action. -18- (ii) Each Subsidiary that has a right, title or interest in, to or under any asset which is a Purchased Asset or has any obligation which is an Assumed Liability has all requisite corporate power and authority to execute and deliver the Collateral Agreements to which it will be a party and to effect and consummate the transactions contemplated thereby, and the execution, delivery and performance of the Collateral Agreements to which it will be a party have been duly authorized by all requisite corporate action. (b) This Agreement has been duly executed and delivered by Seller and this Agreement is, and the Collateral Agreements to which Seller and each Subsidiary will be a party, when duly executed and delivered by Seller or such Subsidiary will be, valid and legally binding obligations of Seller or such Subsidiary, enforceable against Seller or such Subsidiary, as applicable, in accordance with their respective terms, except to the extent that enforcement of the rights and remedies created hereby and thereby may be affected by bankruptcy, reorganization, moratorium, insolvency and similar Laws of general application affecting the rights and remedies of creditors and by general equity principles. 3.4 Non-Contravention; Consents (a) Assuming that all Required Consents have been obtained, the execution, delivery and performance of this Agreement by Seller and the Collateral Agreements by Seller or any Subsidiary that will be a party thereto and the consummation of the transactions contemplated hereby and thereby do not and will not: (i) result in a breach or violation of any provision of Seller's or the applicable Subsidiary's charter, by-laws or similar organizational documents, (ii) violate or result in a breach of or constitute an occurrence of default under any provision of, result in the acceleration or cancellation of any right or obligation or a loss of any benefit to which Seller or a Subsidiary is entitled under, or give rise to a right by any party to terminate, cancel, rescind or amend any right or obligation under, any mortgage, deed of trust, conveyance to secure debt, note, loan, indenture, lien, lease, agreement, instrument, order, judgment, decree or other arrangement or commitment to which Seller or the applicable Subsidiary is a party or by which the Seller or any Subsidiary or any Purchased Asset is bound, (iii) violate any order, judgment, decree, rule or regulation of any court or any other Governmental Body having jurisdiction over Seller, a Subsidiary or the Purchased Assets or (iv) result in the imposition of any Encumbrances on any Purchased Asset other than, in the case of clauses (ii) and (iii), any such violation, breach, defaults, acceleration or cancellation of obligations or rights that, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect. (b) No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to any Person is required to be obtained, made or taken in connection with the execution and delivery of this Agreement or the Collateral Agreements by Seller or any Subsidiary that will be a party thereto or for the consummation of the transactions contemplated hereby or thereby by Seller or such Subsidiary, except for (i) any filings required to be made under the HSR Act and under any foreign antitrust Laws, (ii) consents or approvals of Third Parties, (iii) the items set forth in Schedule 3.4(b) (items --------------- (i), (ii) and (iii) being referred to herein as the "Required Consents") and ----------------- (iv) such consents, approvals, orders, authorizations, -19- registrations, declarations or filings the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect. 3.5 Title to Property; Principal Equipment; Sufficiency of Assets (a) Schedule 3.5(a) lists all personal property used or held for use --------------- primarily in the Business which is included as "Property and Equipment" in the June 30, 2001 Net Asset Statement. (b) Seller or a Subsidiary has good and valid title to, or a valid and binding leasehold interest or license in, all real and personal tangible Purchased Assets free and clear of any Encumbrance other than Permitted Encumbrances, except as set forth in Schedule 3.5(b). --------------- (c) Except as set forth on Schedule 3.5(c), each material item of --------------- Principal Equipment is in good operating condition, in light of its age, for the purposes for which it is currently being used, but is otherwise being transferred on a "where is" and, as to condition, "as is" basis. (d) Except for (i) the assets that will be used in connection with providing services under the Transition Services Agreement, (ii) the items set forth in Sections 2.2(a), 2.2(b) with respect to Proprietary Information of Seller or any Affiliate of Seller which is not significant to the Business, 2.2(c), 2.2(d), 2.2(e), 2.2(g), 2.2(h) and 2.2(i) and (iii) the assets and services listed on Schedule 3.5(d), the Purchased Assets and the Business --------------- Employees and the rights to be acquired under this Agreement and the Collateral Agreements (including the services to be provided pursuant to the Transition Services Agreement) include all assets, personnel and rights that are used or held for use by Seller and the Subsidiaries primarily in the operation or conduct of the Business, and are sufficient in all material respects for the conduct of the Business immediately following the Closing in substantially the same manner as currently conducted. (e) None of the Purchased Assets is an equity interest in any entity. 3.6 Permits, Licenses There are no material Governmental Permits necessary for or used by Seller or any Subsidiary to operate or conduct the Business as currently operated or conducted. 3.7 Real Estate (a) Schedule 3.7(a) contains a complete and accurate list, as of the date --------------- hereof, of the Leased Premises, which list identifies the parcels of real property in respect of which the Assumed Leases and the Transitional Leasehold Interests are to be transferred to Buyer by Seller or a Subsidiary pursuant to a Lease Assignment, Sublease or Property License which will have the principal terms set forth in the Lease Assignment, the Sublease or Property License for each such Leased Premises. Buyer has been provided with a complete and correct copy of each Assumed Lease. Each Assumed Lease and each Transitional Lease is in full force and effect and neither Seller nor any Subsidiary has violated and, to Seller's knowledge, the landlord has not waived any of the material terms or conditions of any Assumed Lease or Transitional Lease and -20- all the material covenants to be performed by the Seller or a Subsidiary and, to Seller's knowledge, the landlord under each Assumed Lease and Transitional Lease have been performed in all material respects. Each of the Transferred Leasehold Premises is in good operating condition for its current use and operation in the Business. Seller or a Subsidiary has good and valid leasehold interest in each of the Transferred Leasehold Premises. (b) Schedule 3.7(b) sets forth a complete and accurate list of all real --------------- property, owned by Seller or a Subsidiary and utilized in the operation of the Business which the Business is to vacate at Closing. 3.8 Compliance With Laws; Litigation (a) Seller and each such Subsidiary is in compliance with all applicable Laws (including Environmental Laws) and all decrees, orders, judgments, permits and licenses of or from Governmental Bodies, with respect to the Business conducted by it and the Subsidiaries, except for instances of noncompliance or possible noncompliance that, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect. (b) Except as set forth on Schedule 3.8(b), there is no action, suit, --------------- proceeding or governmental investigation pending or, to Seller's knowledge, threatened against Seller or any of the Subsidiaries or otherwise affecting any Purchased Asset or the Business that, individually or in the aggregate, could be reasonably expected to have a Seller Material Adverse Effect or which, as of the date hereof, challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated hereby. 3.9 Business Employees (a) Schedule 3.9(a) contains a complete and accurate list of all the --------------- individuals who, as of the date specified, render services as employees of Seller or its Affiliates primarily in connection with the Business, showing for each the name, length of service, position held, functional job category, job location, annual base salary, commission eligibility, short-term incentive plan target and work status (i.e., actively at work, disabled or on approved leave, stating the duration of such leave). (b) Except as set forth in Schedule 3.9(b)(i), with respect to all ------------------ Business Employees, neither Seller nor any Subsidiary currently maintains, contributes to or has any liability under any Benefit Plan. With respect to each of the Benefit Plans identified on Schedule 3.9(b)(i), except as noted on ------------------ Schedule 3.9(b)(i), Seller has made available to the Buyer true and complete - ------------------ copies of the most recent summary plan or other written description thereof. Each Benefit Plan listed on Schedule 3.9(b)(i) has been operated in material ------------------ compliance with its terms and all applicable Laws, including ERISA to the extent applicable. Schedule 3.9(b)(ii) sets forth the amount of the liability with ------------------- respect to accrued days off, relocation costs, tuition benefits and retention bonuses arising from the transactions contemplated herein, in each case as of the date hereof. Each Benefit Plan that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and is intended to ------------ be qualified under Section 401(a) of the Code, has received a favorable determination letter from the Internal Revenue Service with respect to -21- "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and Seller is not aware of any circumstances likely to result in revocation of any such favorable determination letter. Seller will not transfer to Buyer any obligations for retiree health and life benefits under any Benefit Plan. No Business Employee participates in a Benefit Plan which is a "multiemployer plan" (as defined in Section 3(37) of ERISA). Except as set forth on Schedule 3.9(b)(iii) or as ------------------- otherwise disclosed to Buyer in writing as of the date hereof, no current or former director, officer, employee or independent contractor of Seller or any Subsidiary will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced benefits (including acceleration of vesting or exercise of an incentive award) as a result of the transactions contemplated hereby. No amount that could be received (whether in cash, property or vesting of property) as a result of the consummation of the transactions contemplated by this Agreement by any officer, director, employee or independent contractor of Seller or any Subsidiary, who is a "disqualified individual" (as defined in proposed Treasury Regulation Section 1.280G-1), under any compensation agreement that will be assumed by the Buyer, would be characterized as an "excess parachute payment" (as defined in Section 280G of the Code). The transactions contemplated by this Agreement are not transactions described in Section 4069 or 4212(c) of ERISA. (c) With respect to the Business, there is not currently pending or existing and, to Seller's knowledge, there is not threatened, (i) any strike, slowdown, picketing or work stoppage, (ii) any application for certification of a collective bargaining agent or (iii) union organizing activity with respect to any employees of the Business. Except as set forth on Schedule 3.9(c), none of --------------- Business Employees is covered by any union, collective bargaining or other similar labor agreement. 3.10 Contracts Schedule 3.10(i) contains a complete and accurate list of all existing ---------------- Contracts (other than purchase orders, work orders or similar instruments). Each Contract which will require over the remaining full term thereof payments by or to Seller or a Subsidiary of more than $250,000 (a "Material Contract"), ----------------- Assumed Lease or License is valid, binding and enforceable against Seller or the applicable Subsidiary and, to Seller's knowledge, the other parties thereto in accordance with its terms, and is in full force and effect. Except as set forth on Schedule 3.10(ii), neither Seller nor any Subsidiary has received any notice ----------------- that it is in default under or in breach of or is otherwise delinquent in performance under any Material Contract and, to Seller's knowledge, each of the other parties thereto has performed all obligations required to be performed by such party under, and is not in default under, any Material Contract and no event has occurred that, with notice or lapse of time, or both, would constitute such a default, except for breaches, failures of performance or defaults that, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect. True and correct copies (redacted as to the name of the other party or parties thereto other than Seller or a Subsidiary if required by confidentiality provisions thereunder) of each such Material Contract, Assumed Lease and License have been provided to Buyer. -22- 3.11 Environmental Matters (a) There are no actions, suits or proceedings pending, or to the knowledge of the Company, threatened against the Seller or any Subsidiary, with respect to the Business, which assert any claim or seek any remedial action in connection with any Environmental Laws, except for those which, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect; (b) Except for those matters that, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect, none of the Premises included in the Purchased Assets is subject to any on-going investigation by, order from or agreement with any Person relating to (i) any Environmental Law or (ii) any remedial action arising from the release or threatened release of a Hazardous Substance into the environment; (c) To the knowledge of Seller, neither Seller nor any Subsidiary is, with respect to the Business, subject to any judicial or administrative proceeding, order, judgment, decree or settlement alleging or addressing a violation of, or liability under, any Environmental Law that would reasonably be expected to have a Seller Material Adverse Effect; (d) To the knowledge of Seller, neither Seller nor any Subsidiary has received, with respect the Business, any written notice to the effect that it is or may be liable to any Person as a result of the release or threatened release of a Hazardous Substance, except for any such notices relating to matters that, individually or in the aggregate, would not reasonably be expected to have a Seller Material Adverse Effect. (e) The transactions contemplated by this Agreement are not subject to the requirements of any state environmental transfer statutes. 3.12 Financial Statements; Absence of Changes (a) Schedule 3.12 contains true and complete copies of the following ------------- financial statements of the Business (the "Financial Statements"): -------------------- (i) audited statements of net assets to be sold as of September 30, 2000 and June 30, 2001, in each case, with a report by PricewaterhouseCoopers LLP (and, in the case of the latter, the "June 30, 2001 Net Assets Statement"); ---------------------------------- (ii) audited statements of net revenue, cost of revenue and direct operating expenses for the years ended September 30, 1999 and 2000 and nine- months ended June 30, 2001, in each case, with a report by PricewaterhouseCoopers LLP. (b) The Financial Statements were prepared in accordance with GAAP. The Financial Statements were prepared on the basis of the books and records of the Business (in each case, as of the date of such Financial Statements) and present fairly, in all material respects, the financial position of the Business as of the dates thereof and the results of its operations and cash flows for each of the periods then ended in conformity with GAAP. -23- (c) Since June 30, 2001, Seller and the Subsidiaries have conducted and operated the Business in the ordinary course (except in connection with the sale of the Business, as otherwise permitted by Section 5.2 (but only with respect to the period after the date hereof) or pursuant to any request of Buyer) and, since such date, there has not been: (i) any effect, occurrence, development or state of circumstances or facts (including any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the Business or any Purchased Asset) which, individually or in the aggregate, has had or would be reasonably expected to have a Seller Material Adverse Effect, (ii) any (x) employment, change in control, transaction or sale bonus, deferred compensation, severance, retirement, consulting, managerial services or other similar agreement entered into with any current or former director, officer, employee or independent contractor of the Business (or any amendment to any such existing agreement), (y) grant of any severance or termination pay to any current or former director, officer, employee or independent contractor of the Business or (z) change in compensation or other benefits payable to any current or former director, officer, employee or independent contractor of the Business, other than the inclusion of any such individual under the standard terms of a Benefit Plan covering employees of the Business generally or merit or cost-of-living increases in base salary, in each case in the ordinary course of business consistent with past practice, or (iii) any labor dispute involving employees of the Business, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Business, which employees were not subject to a collective bargaining agreement at the date of the Financial Statements, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to employees of the Business. 3.13 Intellectual Property (a) Seller or one of the Subsidiaries owns all of the copyrights, know- how, service marks, trademarks, trade secrets, patents and other intellectual property rights that it is assigning to Buyer pursuant to the Intellectual Property Agreements (collectively, the "Assigned Intellectual Property"). ------------------------------ Seller or one of the Subsidiaries has a valid right to grant the licenses to all of the copyrights, know-how, service marks, trademarks, trade secrets, patents and other intellectual property rights that it licensing to Buyer pursuant to the Intellectual Property Agreements (collectively, the "Licensed Intellectual --------------------- Property"). - --------- (b) Except as set forth in Schedule 3.13(b): ---------------- (i) In connection with the operation of the Business, to Seller's knowledge, none of Seller and any Affiliate of Seller has infringed, misappropriated or otherwise violated any intellectual property rights or other proprietary rights of any third person. There is no suit, or proceeding pending against, or, to the knowledge of management Business Employees and Seller's Intellectual Property Law Department, no suit or proceeding threatened against or written claim affecting, the Business (i) based upon, or challenging or seeking to deny or restrict, the rights of Seller or any Affiliate of Seller in any of the Assigned Intellectual Property or the -24- Licensed Intellectual Property (collectively, the "Business Intellectual --------------------- Property"), (ii) alleging that the use of the Business Intellectual Property or - -------- any services provided, processes used, or products manufactured, used, imported, offered for sale or sold with respect to the Business do or may conflict with, misappropriate, infringe or otherwise violate any intellectual property rights or other proprietary rights of any third party, or (iii) alleging that Seller or any Affiliate of Seller infringed, misappropriated, or otherwise violated any intellectual property rights or other proprietary rights of any third party in connection with the operation of the Business. (ii) To the knowledge of Seller, the Business Intellectual Property constitutes all the intellectual property rights or other proprietary rights owned by or licensed to Seller or an Affiliate of Seller (other than those listed in Schedule 2.1(h)(ii) Nonassignable Licenses) for use in the Business. ------------------- To the knowledge of Seller, there exist no restrictions (other than those listed in Schedule 2.1(h)(ii) Nonassignable Licenses) on the disclosure, use, license ------------------- or transfer of the Business Intellectual Property (other than the restrictions imposed in the Intellectual Property Agreements). The consummation of the transactions contemplated by this Agreement will not alter, impair or extinguish any Business Intellectual Property. (iii) None of the Assigned Intellectual Property material to the operation of the Business has been adjudged invalid or unenforceable in whole or part. To knowledge of management Business Employees and Seller's Intellectual Property Law Department, all such Assigned Intellectual Property is valid and enforceable. (iv) Seller or an Affiliate of Seller holds all right, title and interest in and to all Assigned Intellectual Property. Seller transfers clear title to the Assigned Intellectual Property and offers Licensed Intellectual Property free and clear of any encumbrance which would interfere with the license grant. To the knowledge of Seller, in each case where a patent, trademark registration or trademark application, service mark registration or service mark application, or copyright registration or copyright application included in the Assigned Intellectual Property is held by assignment, the assignment has been duly recorded with the governmental authority from which the patent or registration issued or before which the application or application for registration is pending. To the knowledge of Seller, Seller or an Affiliate of Seller has taken reasonable actions to maintain and protect the Assigned Intellectual Property, including payment of applicable maintenance fees and filing of applicable statements of use. (v) Seller or an Affiliate of Seller has taken reasonable steps to maintain the confidentiality of all confidential intellectual property rights or other proprietary rights. To knowledge of the management Business Employees and Seller's Intellectual Property Law Department, there has been no misappropriation of confidential intellectual property resulting in a material adverse effect on the operation of the Business. To knowledge of management Business Employees and Seller's Intellectual Property Law Department, reasonable effort has been made to ensure confidentiality provisions are in place for those having access to confidential intellectual property which is material to the Business. To knowledge of management Business Employees and Seller's Intellectual Property Law Department, there is no material infringement of the Assigned Intellectual Property by any third party, provided that the -25- foregoing shall not be deemed to apply to the patent that Seller is assigning to Buyer pursuant to the Intellectual Property Agreement, the form of which is attached hereto as Exhibit D-1. ----------- (vi) Seller or an Affiliate of Seller has taken reasonable steps to preserve and maintain records relating to the Business Intellectual Property. 3.14 Brokers Other than JP Morgan Securities, Inc., the fees and expenses of which will be paid by Seller, no broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller or any Affiliate of Seller. 3.15 Certain Tax Matters (a) No material Tax liens have been filed with respect to the Purchased Assets and no material claims are being asserted in writing with respect to the Purchased Assets. (b) No transaction contemplated by this Agreement is subject to withholding under Section 1445 of the Code. (c) All monies required to be withheld with respect to the Purchased Assets (including from employees for income Taxes and social security or other payroll taxes) have been collected or withheld, and either paid to the respective taxing authority or set aside in accounts for such purpose. (d) Seller has timely paid all material Taxes which will have been required to be paid on or prior to the date hereof, the non-payment of which would result in a lien on any Purchased Asset, would otherwise adversely affect the Business or would result in Buyer becoming liable or responsible thereon. 3.16 Receivables Except as set forth in Schedule 3.16, all Accounts Receivable of the ------------- Business (i) have arisen from bona fide transactions by the Seller or a Subsidiary in the ordinary course of its business and represent bona fide claims against debtors for sales and other charges and (ii) are not subject to discount except for normal cash and immaterial trade discounts. 3.17 Customers and Suppliers None of the customers of the Business which individually accounted for more than 5% of the Business' gross revenues during the year ended September 30, 2000 has terminated or indicated in writing that it intends to terminate any agreement with the Business. No material supplier of the Business has indicated in writing that it will stop, or decrease the rate of supplying materials, products or services to the Business, except as set forth on Schedule 3.17. ------------- -26- 3.18 No Undisclosed Material Liabilities There are no liabilities of the Business of any kind whatsoever, whether accrued, contingent, absolute, determined determinable or otherwise, other than: (a) liabilities provided for in the June 30, 2001 Net Asset Statement or disclosed in the notes thereto; (b) liabilities arising in the ordinary course of business since June 30, 2001 until the Closing Date; (c) liabilities disclosed on Schedule 3.18; and ------------- (d) other undisclosed liabilities which, individually or in the aggregate, would not have a Seller Material Adverse Effect. 3.19 No Other Representations or Warranties Except for the representations and warranties contained in this Section 3, none of Seller or any Affiliate of Seller makes any representations or warranties, and Seller hereby disclaims any other representations or warranties, whether made by Seller or any Affiliate of Seller, or any of their respective officers, directors, employees, agents or representatives, with respect to the execution and delivery of this Agreement or any Collateral Agreement, the transactions contemplated hereby or the Business, notwithstanding the delivery or disclosure to Buyer or its representatives of any documentation or other information with respect to any one or more of the foregoing. 4. Representations and Warranties of Buyer Buyer represents and warrants to Seller that as of the date hereof and as of the Closing: 4.1 Organization and Qualification Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and Buyer has all requisite corporate power and authority to carry on its business as currently conducted and to own or lease and operate its properties. Buyer is duly qualified to do business and is in good standing as a foreign corporation (in any jurisdiction that recognizes such concept) in each jurisdiction where the ownership or operation of its assets or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of Buyer to perform its obligations under this Agreement and the Collateral Agreements (a "Buyer Material Adverse ---------------------- Effect"). - ------ 4.2 Authorization; Binding Effect (a) Buyer has all requisite corporate power and authority to execute and deliver this Agreement and the Collateral Agreements and to effect the transactions contemplated hereby and -27- thereby, and the execution, delivery and performance of this Agreement and the Collateral Agreements have been duly authorized by all requisite corporate action. (b) This Agreement has been duly executed and delivered by Buyer and this Agreement is, and the Collateral Agreements, when duly executed and delivered by Buyer, will be, valid and legally binding obligations of Buyer, enforceable against it in accordance with their respective terms, except to the extent that enforcement of the rights and remedies created hereby and thereby may be affected by bankruptcy, reorganization, moratorium, insolvency and similar Laws of general application affecting the rights and remedies of creditors and by general equity principles. 4.3 No Violations (a) The execution, delivery and performance of this Agreement and the Collateral Agreements by Buyer and the consummation of the transactions contemplated hereby and thereby do not and will not (i) result in a breach or violation of any provision of Buyer's charter or by-laws, (ii) violate or result in a breach of or constitute an occurrence of default under any provision of, result in the acceleration or cancellation of any obligation or to a loss of any benefit to which Buyer is entitled under, or give rise to a right by any party to terminate or amend its obligations under, any mortgage, deed of trust, conveyance to secure debt, note, loan, indenture, lien, lease, agreement, instrument, order, judgment, decree or other arrangement or commitment to which Buyer is a party or by which it or its assets or properties are bound or (iii) violate any order, judgment, decree, rule or regulation of any court or any other Governmental Body having jurisdiction over Buyer or any of its properties, other than, in the case of clauses (ii) and (iii), any such violation, breach, default, acceleration or cancellation of obligations or rights that, individually or in the aggregate, would not reasonably be expected to have a Buyer Material Adverse Effect. (b) No consent of, approval of, order or authorization of, or registration, declaration or filing with, or notice to, or other action by, any Person is required to be obtained, made or taken by Buyer in connection with the execution and delivery of this Agreement and the Collateral Agreements or the consummation of the transactions contemplated hereby or thereby by Buyer, except for (i) any filings required to be made under the HSR Act and under foreign antitrust Laws and (ii) such consents, approvals, orders, authorizations, registrations, declarations or filings the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to have a Buyer Material Adverse Effect. 4.4 Brokers Other than Lehman Brothers Inc., the fees and expenses of which will be paid by Buyer, no broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by or on behalf of Buyer or any Affiliate of Buyer. -28- 4.5 Sufficiency of Funds Buyer has provided Seller with a true and correct copy of the commitment letters (the "Commitment Letters") it has received from BNP Paribas, Lehman ------------------ Commercial Paper Inc. and Lehman Brothers Inc. (the "Financing Entities"), to ------------------ provide financing for the transactions hereunder (the "Financing"). The --------- aggregate proceeds of the Financing together with Buyer's other available funds are in an amount sufficient to consummate the transactions contemplated hereby, including, without limitation, to pay the aggregate Purchase Price and related fees and expenses (such amounts, the "Required Amounts"). As of the date ---------------- hereof, none of the Commitment Letters relating to the Financing referred to above has been withdrawn and Buyer does not know of any facts or circumstances that may reasonably be expected to result in any of the conditions set forth in the Commitment Letters not being satisfied or that it will not have the Required Amounts on the Closing Date. 5. Certain Covenants 5.1 Access and Information (a) Seller shall, and shall cause its Affiliates to, give to Buyer and its officers, employees, accountants, counsel, financial advisors, and other representatives, during Seller's or the applicable Affiliate's normal business hours throughout the period prior to the Closing, access as reasonably requested to all of Seller's or the applicable Affiliate's offices, books, contracts, commitments, reports of examination and records (excluding personnel and medical records) primarily relating to the Business or the Purchased Assets (but excluding the Excluded Assets and Excluded Liabilities and subject to any limitations that are reasonably required to preserve any applicable attorney- client privilege or Third-Party confidentiality obligation). Seller shall, and shall cause its Affiliates to, assist and cooperate with Buyer Access Parties in making such investigation and shall cause its employees, counsel, accountants, engineers, consultants and other non-employee representatives to be reasonably available to Buyer Access Parties for such purposes and shall furnish to Buyer Access Parties such financial and operating data and other information relating to the Business as such Persons may reasonably request. Seller agrees to provide the Financing Entities with such financial and operating data (including information to complete schedules for agreements providing for the Financing) as they may reasonably request. No investigation by Buyer Access Parties or other information received by Buyer Access Parties shall operate as a waiver of any representation or warranty made by Seller hereunder. Buyer agrees to promptly notify Seller of any facts or circumstances which may reasonably be expected to result in the Financing not being available on the Closing Date and to keep Seller reasonably informed of its activities with respect to the Financing. (b) Throughout the period prior to closing, Buyer shall promptly notify Seller and its counsel and financial advisors of any change in facts or circumstances that may reasonably be expected to result in any conditions set forth in any Commitment Letter not being satisfied or otherwise result in Seller not having the Required Amount on the Closing Date. (c) After the Closing Date, Seller and Buyer shall, and shall cause their respective Affiliates to, provide to each other and to their respective officers, employees, counsel and other -29- representatives, upon request (subject to any limitations that are reasonably required to preserve any applicable attorney-client privilege or Third-Party confidentiality obligation), reasonable access for inspection and copying of all Business Records, Licenses, Contracts, books of account, financial records, including accountants work papers, and any other information relating to the Business existing as of the Closing Date or the Purchased Assets, and shall make their respective personnel reasonably available for interviews, depositions and testimony in any legal matter concerning transactions contemplated by this Agreement, the operations or activities relating to the Business or the Purchased Assets and as otherwise may be necessary or desirable to enable the party requesting such assistance to: (i) comply with any reporting, filing or other requirements imposed by any Governmental Body; (ii) assert or defend any claims or allegations in any litigation or arbitration or in any administrative or legal proceeding, other than claims or allegations that one party to this Agreement has asserted against the other; or (iii) subject to clause (ii) above, perform its obligations under this Agreement. The party requesting such information or assistance shall reimburse the other party for all reasonable and necessary out-of-pocket costs and expenses incurred by such party in providing such information and in rendering such assistance. The access to files, books and records contemplated by this Section 5.1(c) shall be during normal business hours and upon reasonable prior notice and shall be subject to such reasonable limitations as the party having custody or control thereof may impose to preserve the confidentiality of information contained therein. (d) Buyer shall preserve all Business Records for at least seven (7) years after the Closing Date. After this seven-year period and at least ninety (90) days prior to the planned destruction of any Business Records, Buyer shall notify Seller in writing and shall make available to Seller for a period of 60 days, upon its request, such Business Records. Buyer further agrees that, to the extent Business Records are placed in storage, they will be indexed in such a manner as to make individual document retrieval possible in an expeditious manner. (e) Notwithstanding anything to the contrary in this Section 5.1, Buyer and Seller agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Business and the Purchased Assets (including, without limitation, access to books and records) as is reasonably necessary for the filing of all Tax returns, the making of any election relating to Taxes, the preparation for any audit by any taxing authority, and the prosecution or defense of any claim, suit or proceeding relating to any Tax. Buyer and Seller shall retain all books and records with respect to Taxes pertaining to the Purchased Assets for a period of at least seven years following the Closing Date. At the end of such period, each party shall provide the other with at least ninety days prior written notice before destroying any such books and records, during which period the party receiving such notice can elect to take possession, at its own expense, of such books and records. Seller and Buyer shall cooperate with each other in the conduct of any audit or other proceeding relating to Taxes involving the Purchased Assets or the Business. 5.2 Conduct of Business From and after the date of this Agreement and until the Closing Date, except as set forth on Schedule 5.2 or as Buyer shall otherwise consent to in ------------ writing, Seller and each of the Subsidiaries, with respect to the Business: -30- (a) will carry on the Business in the ordinary course consistent with past practice and use reasonable commercial efforts to preserve the Business, keep available the services of the Business Employees and preserve the relationships of the Business with customers, suppliers, licensors, licensees, distributors and third parties with whom the Business deals; (b) will not permit, other than in the ordinary course of business consistent with past practice or as may be required by Law or a Governmental Body, all or any of the Purchased Assets (real or personal, tangible or intangible) to be sold or otherwise disposed of, licensed or subjected to any Encumbrance (other than a Permitted Encumbrance); (c) will not sell, lease, license, transfer or dispose of any asset that would otherwise be a Purchased Asset except in the ordinary course of business consistent with past practice; (d) will not acquire any asset having a value of $250,000 or more that will be a Purchased Asset; (e) will not terminate, cancel or rescind, or materially extend or materially amend or modify any Material Contract except in the ordinary course of business consistent with past practice; (f) will not incur or assume any liabilities, obligations, other than in the ordinary course of business consistent with past practice or that will constitute Excluded Liabilities; (g) will not incur or assume any indebtedness for borrowed money. (h) will not take or agree to take any action which would cause any representation or warranty of Seller in this Agreement to be or become untrue or inaccurate in any material respect or intentionally omit to take or agree to omit to take any action necessary to prevent any such representation or warranty from being untrue in any material respect; (i) will administer its employee vacation and paid time off policy, including year-to-year carryover allowances, in accordance with past practice with respect to Business Employees and will not (x) increase the rate of compensation or benefits for any current or former director, officer, employee or independent contractor of the Business or otherwise enter into or alter any employment, change in control, transaction or sale bonus, deferred compensation, severance, retirement, consulting or managerial services agreement with respect to any current or former director, officer, employee or independent contractor of the Business, except for normal merit or cost-of-living increases to non- executive employees, the hiring of new employees (each a "New Hire") to replace employees with a maximum of $100,000 in total annual target compensation, including base pay, bonuses and commissions and in each case in the ordinary course of business consistent with past practice, (y) establish, adopt, enter into or modify any collective bargaining agreement or compensation or benefit plan, in each case covering any current director, officer, employee or independent contractor of the Business, other than amendments that would not impose additional costs on Buyer or amendments to Benefit Plans required by Law; and -31- (j) will not enter into any agreement or commitment or take or commit to take any action which would cause a violation of any of the foregoing, including any Tax election or settlement with respect to the Purchased Assets or will not take any action that will compromise any material, federal, state, local or foreign income Tax liability with respect to the Purchased Assets. 5.3 Tax Reporting Seller and Buyer acknowledge and agree that (i) Seller will be responsible for and will perform all Tax withholding, payment and reporting duties with respect to any wages and other compensation paid by Seller or any Subsidiary to any Business Employee in connection with the operation or conduct of the Business prior to or on the Closing Date and (ii) Buyer will be responsible for and will perform all Tax withholding, payment and reporting duties with respect to any wages and other compensation paid by Buyer to any Transferred Employee in connection with the operation or conduct of the Business after the Closing Date. 5.4 Allocation of Consideration (a) Seller and Buyer recognize their mutual obligations pursuant to Section 1060 of the Code to file timely IRS Form 8594 (the "Asset Acquisition ----------------- Statement") with each of their respective federal income Tax Returns. - --------- Accordingly, Seller and Buyer shall, within the later of (i) 60 days after the Closing and (ii) 14 days after the Net Asset Amount is finally determined under Section 2.3(c), each deliver to the other party a proposed statement, allocating the Purchase Price (plus Assumed Liabilities and any other consideration, to the extent required to be taken into account under Section 1060 of the Code) among the Purchased Assets and the covenants of Seller (including those set forth in the Collateral Agreements) and the statutory jurisdictions in which these assets reside. (b) Following the delivery of the proposed statements, the parties will use reasonable commercial efforts to agree on an allocation and an Asset Acquisition Statement. If, within 15 days after delivery of the proposed statements, Seller and Buyer are unable, in good faith, to reach such an agreement, Seller and Buyer will each use their respective proposed allocation statements. If, within 15 days after delivery of the proposed statements, Seller and Buyer shall have agreed on an allocation and an Asset Acquisition Statement, then Seller and Buyer shall file the Asset Acquisition Statement in the form so agreed and will act in accordance with the Asset Acquisition Statement in the preparation, filing and audit of any Tax Return. (c) If an adjustment is made with respect to the Purchase Price pursuant to Section 2.3(c), and such adjustment has not been taken into account previously, then the Asset Acquisition Statement shall be adjusted in accordance with Section 1060 of the Code. Buyer and Seller agree to file any additional information return required to be filed pursuant to Section 1060 of the Code. -32- 5.5 Business Employees (a) Between the date hereof and the Closing, Seller shall promptly notify Buyer in writing of (i) any offer of employment to any New Hire in accordance with Section 5.2(h), indicating for each, the name, start date, position, functional job category, job location, base salary, commission eligibility and short-term incentive plan target and (ii) the termination of the employment or commencement of any disability or leave of absence of any Business Employee, indicating, where relevant, the term of any such approved leave of absence. As of the applicable Transition Date, Buyer shall make offers of employment to each Business Employee who is, as of such Transition Date, actively at work with Seller or is absent due to vacation, holiday, illness, leave of absence, short- term disability or other approved leave of absence (including under the Family and Medical Leave Act or workers' compensation) and who presents himself or herself to return to work within the greater of 180 days (or such longer time as may be required by a collective bargaining agreement) after such Transition Date or the duration of the approved leave of absence, but excluding any Business Employees on long-term disability. The applicable "Transition Date" for each --------------- Business Employee shall be (i) with respect to Business Employees employed within the U.S. or the U.K. as of the Closing Date, the date following the Closing Date and (ii) with respect to Business Employees employed in any country other than the U.S. or U.K. as of the Closing Date, the date that Buyer has established a legal and staff structure for the hiring of such Business Employees in such country, but in no event later than the date 180 days following the Closing Date, unless otherwise provided under the final terms of the Transition Services Agreement. Seller shall not terminate, and shall cause its Affiliates not to terminate, the employment of any Business Employee with Seller or its Affiliates after the Closing Date and prior to the applicable Transition Date for such Business Employee without the prior written consent of Buyer and shall make such Business Employees available to provide services to Buyer following the Closing Date in accordance with the terms and conditions agreed under the Transition Services Agreement. As of the date immediately following the applicable Transition Date for a Business Employee, Seller and its Affiliates shall cease to employ such Business Employee as an employee or independent contractor. Seller and Buyer intend that the transactions contemplated by this Agreement shall not constitute an event entitling any Business Employee to severance benefits. Business Employees who accept Buyer's offer of employment, as of the effective date of their employment with Buyer, are referred to as "Transferred Employees". Employment with Buyer of Transferred --------------------- Employees shall be effective as of the applicable Transition Date, provided that the employment of Business Employees receiving short-term disability benefits or on approved leave of absence on the applicable Transition Date will become effective as of the date they present themselves for work with Buyer if such date is within the greater of 180 days (or such longer time as may be required by a collective bargaining agreement) after the applicable Transition Date or the duration of the approved leave of absence; provided, further, that Buyer's -------- obligation to employ any such Business Employee receiving short-term disability benefits, or on approved leave of absence on the applicable Transition Date shall be subject to the availability of a comparable position at such time, subject to applicable Law, and if no such comparable position is available, such Business Employee shall receive severance benefits from Buyer in accordance with the broad-based severance policy of Buyer applicable to Buyer's employee (and Buyer shall assume all liabilities relating to its failure to -33- employ any such Business Employee in the same position or a comparable position upon such employee's ability to return to work in accordance with applicable Law). (b) During the period commencing as of a Transferred Employee's employment with Buyer and ending as of the first anniversary of the Closing, Buyer shall provide to such Transferred Employee (i) in the case of a U.S. Transferred Employee, an annualized salary equal to 105% of the annualized base salary provided to such Transferred Employee by Seller immediately prior to Closing, and in the case of a non-U.S. Transferred Employee, an annualized salary equal to the annualized base salary provided to such Transferred Employee by Seller immediately prior to Closing, (ii) a bonus opportunity at least as favorable as the bonus opportunity provided by Seller immediately prior to the Closing and (iii) the benefits provided to similarly situated employees of Buyer. With respect to the Transferred Employees, each employee medical, dental, vision care and prescription drug plan, program, policy and arrangement of Buyer shall waive any pre-existing condition exclusion (to the extent such exclusion was waived under any similar plan of Seller or its Affiliates) and any proof of insurability and shall recognize for purposes of satisfying any deductibles, co- pays and out-of-pocket maximums during the calendar year in which the Closing occurs, any payment made towards deductibles, co-pays and out-of-pocket maximums for such calendar year under any similar plan of Seller or its Affiliates. Seller agrees to transfer the cafeteria plan accounts and experience of Transferred Employees to substantially equivalent plans that exist or will be established by Buyer. Seller and Buyer agree to determine the terms and conditions of such transfer. All service by a Transferred Employee with Seller, including service with predecessor employers that was recognized by Seller and its Affiliates shall be recognized by Buyer for purposes of vacation entitlement and participation and vesting under the benefits of Buyer, including any defined benefit or defined contribution pension plans, welfare benefit plans and severance plans of Buyer. Buyer will continue to provide relocation assistance to those Transferred Employees receiving it as of the Closing Date and tuition assistance to those Transferred Employees who are receiving such benefits as of the Closing Date for the academic session then in effect (the "Relocation and -------------- Tuition Benefits"). With respect to Transferred Employees who are on - ---------------- international assignment as of the Closing Date, Buyer will provide the benefits provided under Seller's international assignee program as in effect as of Closing, including repatriation upon completion of assignment, completion bonuses, Tax equalization and Tax Return preparation, the costs of which shall be allocated between Buyer and Seller based on the portion of the international assignment occurring before the Closing Date (which shall be the "Seller ------ International Assignee Costs") and on or after the Closing Date , which shall be - ---------------------------- the "Buyer International Assignee Costs"). Buyer shall assume all liabilities ---------------------------------- and obligations of Seller or any Subsidiary with respect to and honor the vacation, personal days and floating holidays accrued but unused by each Transferred Employee as of the Closing and shall be solely liable for such accruals (the "Accrued Days"). Buyer shall assume and honor all liabilities and ------------ obligations of Seller under the retention bonus arrangement with the Transferred Employees described in Schedule 3.9(b)(ii) and shall be solely liable for such bonuses (the "Retention Bonus Liability"). ------------------------- (c) Seller shall make and be responsible for the payment of all accrued but unpaid incentive compensation of each Transferred Employee for all periods prior to the Closing Date (the "Pro Rata Annual Bonuses"). ----------------------- -34- (d) Seller shall be responsible for and shall defend, indemnify and hold harmless Buyer for any failure to provide health continuation coverage (including any penalties, excise taxes or interest resulting from the failure to provide continuation coverage) required by Section 4980B of the Code (i) due to qualifying events with respect to each Business Employee who does not accept employment with Buyer and (ii) due to qualifying events with respect to each Transferred Employee which occur on or before the Closing Date, or, with respect to any Transferred Employee who does not commence employment with Buyer as of the date immediately following the Closing Date as a result of short term disability or leave of absence, due to qualifying events which occur before commencement of such Transferred Employee's employment with Buyer (the "Seller ------ COBRA Obligation"). Buyer shall be responsible for and shall defend, indemnify - ---------------- and hold harmless Seller for any failure to provide health continuation coverage (including any penalties, excise taxes or interest resulting from the failure to provide continuation coverage) required by Section 4980B of the Code due to qualifying events with respect to each Transferred Employee which occur after the commencement of such Transferred Employee's employment with Buyer (the "Buyer COBRA Obligation"). Seller shall be responsible for providing any ---------------------- applicable COBRA notices to any Business Employee in respect of events occurring prior to such Business Employee's commencement of employment with Buyer. (e) Seller hereby acknowledges that for FICA and FUTA Tax purposes, Buyer qualifies as a successor employer with respect to the Transferred Employees. In connection with the foregoing, at Buyer's option, Seller agrees to follow the "Alternative Procedures" set forth in Section 5 of Revenue Procedure 96-60. Buyer shall notify Seller of its intention to follow the "Alternative Procedures" on or immediately after the Closing Date. If the "Alternative Procedures" are followed, Seller and Buyer understand that Buyer shall assume Seller's entire obligation to furnish a Form W-2, Wage and Tax Statement to the Transferred Employees notwithstanding Section 5.3. In addition to all records relating to the Transferred Employees that Seller shall deliver to Buyer as of the Closing Date or as otherwise required by this Agreement, Seller shall timely provide Buyer with any and all other information (and in such format and media) as it shall reasonably request to properly comply with the requirements in the preceding sentence, which in no event shall be more than 10 Business Days from the date of a written request for such information. (f) (i) Where applicable Law of any non-U.S. jurisdiction provides for the transfer of employment of the Business Employees upon a sale of the Business, (x) Buyer or its subsidiaries shall assume and honor all terms and conditions of employment in respect of such Business Employees to the extent required to accomplish such transfer of employment and (y) Buyer and Seller agree to take such actions as are reasonably practicable (including the assumption, if necessary, of potential or actual liabilities relating to the employment of such Business Employees) such that the employment of such Business Employees will transfer to the Buyer and its subsidiaries as a matter of Law on the applicable Transition Date. Where the applicable Law of any non-U.S. jurisdiction do not provide for the transfer of employment of the Business Employees upon the sale of the Business, Buyer shall offer to employ such Business Employees as of the applicable Transition Date at the same salary and wages payable by Seller and the Subsidiaries to such Business Employees immediately prior to the Closing Date and on terms and conditions of employment which replicate those provided by Seller and the Subsidiaries -35- immediately prior to the Closing Date as and to the extent required by applicable Law (including the E.U. Acquired Rights Directive) or as a result of negotiation with applicable works councils. All offers of employment made by Buyer and its subsidiaries shall be sufficient to avoid statutory severance obligations, other than where such severance is automatic, in which event such severance shall be borne by Seller. Buyer shall bear all expenses of any compensation resulting from negotiations with works councils and agreed to by Buyer for which Seller is not specifically liable under this Agreement. Nothing herein shall be construed as a representation or guarantee by Seller that Business Employees will accept Buyer's or its subsidiaries' offer of employment or will continue in employment following the Closing Date. Buyer and Seller agree to comply with all applicable local Laws and collective agreements pertaining to the subject matter of this Agreement. (ii) To the extent Legally Required: (A) liabilities under the Seller Non-U.S. Plan set forth on Schedule 5.5(f) to or relating to Transferred --------------- Employees (the "Assumed Pension Obligation") shall be assumed by the appropriate -------------------------- non-U.S. plan of Buyer or an Affiliate of Buyer; and (B) a portion of any assets of the Seller Non-U.S. Plan shall be transferred to the appropriate non-U.S. plan of Buyer or an Affiliate of Buyer in accordance with this Section 5.5(f)(ii). If the Seller Non-U.S. Plan specifies a transfer basis, that basis shall be used to compute the asset transfer amount. Otherwise, the asset transfer amount shall be the amount for each Transferred Employee that has been individually funded/insured for that employee if funding/insuring is performed on an individual-by-individual basis. If neither of the two immediately preceding sentences apply, the asset transfer amount for each Transferred Employee shall be the accumulated benefit obligation multiplied by the present benefit obligation funded percentage, both determined on the basis of the actuarial methods and assumptions used by Seller for purposes of Seller's financial disclosure under FAS 87 and FAS 106 for such plans as of September 30, 2001. Where required, the parties hereto will use reasonable efforts to obtain any necessary consents to such transfer of assets and liabilities. (iii) For purposes of this Section 5.5(g), "Legally Required" means ---------------- required under the laws of the country, the labor union, works council or collective bargaining agreement, including mandated waiting periods before which working conditions (including benefits) cannot be changed, and upon receiving required agreement from individual employees and/or plan trustees, foundation boards and members and any other organizations having a recognized right to determine or affect benefits and/or funding of a plan. (g) Except as explicitly provided in the Transition Services Agreement, Buyer shall be solely responsible for, and shall indemnify and hold Seller harmless from (in accordance with Section 9.2) (A) the Relocation and Tuition Benefits, Buyer International Assignee Cost, Accrued Days, Retention Bonus Liability, Buyer COBRA Obligation and Assumed Pension Obligation and (B) all compensation and benefit obligations and liabilities relating to any Transferred Employee (and his or her dependents or beneficiaries) earned, accrued or incurred after the date such Transferred Employee commences employment with Buyer and all obligations and liabilities relating to workers compensation claims and Employment Law Claims to the extent arising from events or conditions first coming into existence after the date such Transferred Employee commences employment with Buyer (the "Assumed Employee ---------------- -36- Liabilities"). Except as explicitly provided in the Transition Services - ----------- Agreement, Seller shall retain and be solely responsible for, and shall indemnify and hold Buyer harmless from (in accordance with Section 9.2) (X) all employment-related obligations and liabilities relating to each Business Employee (and his or her dependents or beneficiaries) with respect to whom Buyer has fulfilled its obligations, if any, under this Section 5.5 to offer or ----------- transfer employment, but who does not become a Transferred Employee as described above and (Y) all compensation and benefit obligations and liabilities relating to any Transferred Employee (and his or her dependents or beneficiaries) earned, accrued or incurred prior to the date such Transferred Employee commences employment with Buyer and all obligations and liabilities relating to workers compensation claims and Employment Law Claims to the extent arising from events or conditions existing prior to the date such Transferred Employee commences employment with Buyer, including the Seller COBRA Obligations, Seller International Assignee Cost and the Pro Rata Annual Bonuses, but excluding the Assumed Employee Liabilities (the "Excluded Employee Liabilities"). For purposes ----------------------------- of this Section 5.5 the term "Employment Law Claims" includes all claims, ----------- --------------------- charges, complaints, proceedings, investigations and audits relating to terms and conditions of employment, hiring, firing, promotion, supervision, occupational safety and health, workplace, wages and hours, employment practices or treatment of employees. The term "employment-related obligations and liabilities" includes all obligations and liabilities relating to or arising in connection with an employee's employment with the Business, including, without limitation, obligations and liabilities relating to compensation, benefits, workers compensation and any Employment Law Claims. 5.6 Collateral Agreements; Leased Equipment (a) Prior to the Closing Date, Seller and Buyer shall negotiate in good faith the term, the rent and the incomplete terms of the form of Subleases and Property Licenses, the schedules for the services to be attached to the Transition Services Agreement and the Supply Agreement; such services to include the services described in Schedule 5.6(a). On or prior to the Closing Date, --------------- Buyer shall execute and deliver to Seller, and Seller or the applicable Subsidiary shall execute and deliver to Buyer the Collateral Agreements. (b) Prior to the Closing Date, Seller shall provide Buyer with the costs and other terms applicable to the Leased Equipment and Buyer shall decide whether such Leased Equipment will (i) transfer to Buyer as of the Closing Date by Buyer assuming the leases for such equipment, in which case such lease agreement shall be deemed a Contract hereunder, (ii) be acquired by Buyer as of the Closing Date by Buyer paying for the costs of purchasing such equipment to the applicable Third Party pursuant to the leases (as set forth on Schedule -------- 5.6(b) as of the Closing, the "Purchased Leased Equipment") or (iii) remain the - ------ -------------------------- property of the Seller or a Subsidiary as of the Closing Date (the "Excluded -------- Leased Equipment"). - ---------------- 5.7 Reasonable Commercial Efforts; Supplements and Amendments (a) Each of the parties agrees to use its reasonable commercial efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this -37- Agreement, including using reasonable commercial efforts to accomplish the following: (i) the taking of all acts necessary to cause the conditions to Closing to be satisfied as promptly as practicable, (ii) the obtaining of all necessary actions or nonactions, waivers, consents and approvals from Governmental Bodies and the making of all necessary registrations and filings (including, without limitation, filings under the HSR Act and the providing of information and material in the event of a second request under the HSR Act) and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by any Governmental Body; provided -------- that Buyer shall not be required to divest itself of any material portion of its business or of the Business to obtain such consent, (iii) the obtaining of all necessary consents, approvals or waivers from third parties, (iv) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Body vacated or reversed, (v) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement and (vi) Buyer obtaining the Financing (provided, however, that with -------- ------- respect to the foregoing, Seller shall be obligated only to provide access and information pursuant to Section 5.1). (b) From time to time prior to the Closing, in order to make the information contained in any Schedule timely, complete and accurate, Seller or Buyer may amend or supplement any Schedule but any such amendment or supplement will not cure any breach of a representation or warranty made by the Seller as of the date of this Agreement or be deemed to apply to any representation or warranty to be made as of Closing Date nor have any effect for purposes of determining whether the condition set forth in Section 8.2(a) has been satisfied. 5.8 Contacts with Suppliers, Employees and Customers Prior to the Closing, Buyer shall not contact any Business Employees (other than senior management of the Business) in connection with or pertaining to any subject matter of this Agreement except in conjunction with Seller or as permitted by Seller and Seller agrees to work with Buyer in preparing a joint communication to the Business Employees. In addition, prior to Closing, (a) Buyer may contact any customer that is predominately a customer of the Business; provided that Buyer shall reasonably concurrently advise Seller of any such - -------- contact and (b) Buyer will not contact (i) any customer or supplier of the Business who is a party to an Excluded Contract or an Unassignable Contract or (ii) without the prior written consent of the Seller which consent will not be unreasonably withheld, any customer or supplier of the Business who has a significant business relationship with Seller (separate and apart from the Business) and is listed on Schedule 5.8. ------------ 5.9 Sale by Buyer of Inventory Marked With Seller's Name (a) Buyer and Seller agree as follows: (i) as soon as reasonably practicable but in any event no longer than two months after the Closing Date, Buyer shall remove "Lucent", "Lucent Technologies", "Bell Labs", the Lucent Innovation Ring logo and any other similar mark (the "Seller Name") and any ----------- -38- other emblem, mark, insignia, trademark, design or logo previously or currently used by Seller or any of its Affiliates that is not part of the Assigned Intellectual Property being transferred to Buyer from all buildings, offices and signs of the Business; (ii) immediately after the Closing Date, Buyer shall use reasonable commercial efforts to cease using the Seller Name and any other emblem, mark, insignia, trademark, design or logo previously or currently used by Seller or any of its Affiliates that is not part of the Assigned Intellectual Property in all invoices, letterhead, advertising and promotional materials, office forms and business cards; (iii) as soon as reasonably practicable but in any event no longer than three months after the Closing Date, Buyer shall cease using the Seller Name and any other trademark, design or logo previously or currently used by Seller or any of its Affiliates that is not part of the Assigned Intellectual Property in external electronic databases, web sites, product instructions, packaging (except as provided below) and other materials, printed or otherwise (all such materials, together with buildings, offices and signs of the Business described in clause (i) above, "Marked Assets"); ------------- (iv) Buyer shall not be obligated to change the Seller Name of goods in the hands of dealers, distributors, representatives, agents and customers at the time of the expiration of a time period set forth in Section 5.8(i) and (iii) above provided such goods have been shipped or distributed in the ordinary course of business consistent with past practice. (v) Buyer shall have the right to use the Seller Name in advertising that was placed by Seller or any Subsidiary prior to Closing. (vi) Seller hereby grants to Buyer a limited right to use Seller's Name and associated trademarks, designs and logos with regard to the Marked Assets during the periods specified in clauses (i) and (iii) above. (b) In no event shall Buyer or any Affiliate of Buyer advertise or hold itself out as Lucent or an Affiliate of Lucent after the Closing Date. 5.10 Non-Solicitation of Employees (a) None of Seller, any of its representatives or any of its Affiliates will at any time prior to 18 months from the Closing Date, directly or indirectly, solicit the employment of any Business Employee without Buyer's prior written consent. The term "solicit the employment" shall not be deemed to include generalized searches for employees through media advertisements, employment firms or otherwise that are not focused on Persons employed by Buyer or any successor. This restriction shall not apply to any Transferred Employee whose employment with the Buyer or its successor is involuntarily terminated by Buyer or its successor after the Closing. Solicitation of employment shall be deemed to occur if the Persons who perform such solicitation (except as permitted herein) are Persons employed by Seller or any Subsidiary or division of Seller in the human resources area or are management level employees of Seller or a Subsidiary or division of Seller who have hiring responsibility or authority. -39- (b) None of Buyer, any of its representatives or any of its Affiliates will at any time prior to 18 months from the Closing Date, directly or indirectly, solicit the employment, without Seller's prior written consent, of any employee of Seller who is employed in the Integrated Network Solutions or Bell Laboratories group of Seller. The term "solicit the employment" shall not be deemed to include generalized searches for employees through media advertisements, employment firms or otherwise that are not focused on Persons employed by Seller. This restriction shall not apply to any employee whose employment with Seller or its successor is involuntarily terminated by Seller or its successor after the Closing. Solicitation of employment shall be deemed to occur if the Persons who perform such solicitation (except as permitted herein) are Persons employed by Buyer or any Subsidiary or division of Buyer in the human resources area or are management level employees of Buyer or any subsidiary or division of Buyer who have hiring responsibility or authority. 5.11 Non-Competition (a) Seller agrees that, as part of the consideration for the payment of the Purchase Price, until the 30 months anniversary of the Closing Date, neither Seller nor any Subsidiary will, directly or indirectly, engage in any business or have any ownership interest in a business that develops, markets, sells, implements or supports software products in the billing and customer care business and service areas, including, but not limited to, ordering, billing, billing mediation and revenue assurance, except that Seller may (i) use, develop, sublicense and install related functionality in Lucent products and provide consulting services with respect thereto as long as the related functionality does not directly compete with the products of the Business sold to Buyer hereunder, (ii) perform its obligations or exercise its rights under and pursuant to the Supply Agreement or with respect to any Unassignable Contract as to which the Supply Agreement has been terminated to meet its obligations under such Unassignable Contract, and/or (iii) purchase or otherwise acquire by merger, purchase of assets, stock, controlling interest or otherwise any Person or business or engage in any similar merger and acquisition activity with any Person the business of which is not in competition with the Business. In addition, for these purposes, ownership of securities of a company whose securities are publicly traded under a recognized securities exchange not in excess of 15% of any class of such securities shall not be considered to be competition with the Business. For purposes of clause (iii) of the first sentence of this Section 5.11(a), a Person shall not be considered to be competing with the Business if such Person derives less than 25% of its revenues from products that compete with the Business. (b) If the restriction contained in Section 5.11(a) shall have been breached or violated during any time or times in which it applies, the 30-month time period (and any extension thereof) shall be extended by such number of days during which the restriction shall have been breached or violated. (c) If any provision contained in this Section 5.11 shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Section, but this Section shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. It is the intention of the parties that if any of the restrictions covenants contained herein is held to be for a length of time which is not permitted by applicable law, or in any way construed to be too broad or to any extent -40- invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable law, a court of competent jurisdiction shall construe sand interpret or reform this Section to provide for a covenant having the maximum enforceable time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such applicable law. (d) Seller acknowledges that the restrictions set forth in Section 5.11(a) constitute a material inducement to Buyer's entering into and performing this Agreement. Seller further acknowledges, stipulates and agrees that a breach of said obligation could result in irreparable harm and continuing damage to Buyer for which there may be no adequate remedy at law and further agrees that in the event of any breach of such obligation, Buyer may be entitled to injunctive relief and to such other relief as is proper under the circumstances. 5.12 Additional Financial Statements. (a) Seller, at Buyer's expense for the costs of Pricewaterhouse Coopers LLP and its outside consultants, shall prepare and deliver to Buyer as soon as practicable but not later than in the case of subclauses (i) and (ii) January 14, 2002, and in the case of subclauses (iii) and (iv) February 15, 2002 (i) an audited statement of net assets to be sold as of September 30, 2001 (with comparables as of September 30, 2000), with a report by PricewaterhouseCoopers LLP; (ii) an audited statement of net revenue, cost of revenue and direct operating expenses for the years ended September 30, 2001 (with comparables for the year ended September 30, 2000), with a report by PricewaterhouseCoopers LLP; and (iii) an unaudited statement of net assets to be sold as of December 31, 2001 (with comparables as of December 31, 2000) reviewed by PricewaterhouseCoopers LLP pursuant to SAS #71; (iv) an unaudited statement of net revenue, cost of revenue and direct operating expenses for the calendar quarter ended December 31, 2001 (with comparables for the calendar quarter ended December 31, 2000) reviewed by PricewaterhouseCoopers LLP pursuant to SAS #71. Seller will make its representatives and representatives of PricewaterhouseCoopers LLP and its outside consultants available to answer questions relating to the statements to be delivered by Seller; provided that -------- all out-of-pocket costs of PricewaterhouseCoopers LLP and outside consultants incurred by Seller in connection therewith shall be for the account of Buyer. (b) If the Buyer (i) shall be obligated pursuant to the rules of the Securities and Exchange Commission (the "SEC") to provide financial statements with respect to the Business for any period(s) ending after December 31,2001 or as of any date after December 31, 2001 in connection with any filing made pursuant to the Securities Act of 1933 or Exchange Act of 1934 (including as part of the presentation of any required pro forma financial statements) or (ii) shall be advised by the underwriters or initial purchasers in connection with any offering of its securities that such financial statements are advisable in order to assure a successful marketing of such offering, then Seller shall use its commercially reasonable efforts to engage Seller's accountants, PricewaterhouseCoopers LLC, so long as they are independent for purposes of the Securities Act of 1933, or another "Big 5" accounting firm or other nationally recognized accounting firm reasonably acceptable to Buyer, to conducting an audit of, or if no audit is required, to perform the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing -41- Standards No. 71, Interim Financial Information, with respect to, such financial information and (to the extent required by the SEC or deemed advisable by the underwriters or initial purchasers) the comparable period in the prior year and shall use reasonable commercial efforts to facilitate any such audit or review. Seller will also reasonably cooperate with Buyer, in connection with any such filing, or filing of any statement delivered pursuant to subsection (a) hereof, or financing, and shall use reasonable commercial efforts to cause any accounting firm referred to above to provide such reasonable cooperation as well; provided that all costs incurred by Seller in connection with cooperating -------- with Buyer (including any audit or review by PricewaterhouseCoopers LLC and consultants) shall be for the account of Buyer. 6. Confidential Nature of Information 6.1 Confidentiality Agreement Buyer agrees that the Confidentiality Agreement shall apply to (a) all documents, materials and other information that it shall have obtained regarding Seller or its Affiliates during the course of the negotiations leading to the consummation of the transactions contemplated hereby (whether obtained before or after the date of this Agreement), any investigations made in connection therewith and the preparation of this Agreement and related documents and (b) all analyses, reports, compilations, evaluations and other materials prepared by Buyer or its counsel, accountants or financial advisors that contain or otherwise reflect or are based upon, in whole or in part, any of the provided information; provided, that subject to Section 6.2(a), the Confidentiality -------- Agreement shall terminate as of the Closing and shall be of no further force and effect thereafter with respect to information relating to the Business or any Purchased Asset. 6.2 Seller's and Buyer's Proprietary Information (a) Except as provided in Sections 6.2(b) and (d), after the Closing and for a period of five years following the Closing Date, each of Seller and Buyer agree that it will keep confidential all Proprietary Information of the other party or its Affiliates that is received, or made available, in the course of the transactions contemplated hereby, including, for purposes of this Section 6.2, information about the Business' business plans and strategies, marketing ideas and concepts, (including with respect to unannounced products and services), present and future product plans, pricing, volume estimates, financial data, product enhancement information, business plans, marketing plans, sales strategies, customer information (including customers' applications and environments), market testing information, development plans, specifications, customer requirements, configurations, designs, plans, drawings, apparatus, sketches, software, hardware, data, prototypes, connecting requirements or other technical and business information, except, in the case of Buyer's obligation, for such Proprietary Information as is conveyed to Buyer as part of the Purchased Assets. (b) Notwithstanding the foregoing, such Proprietary Information shall not be deemed confidential and neither Seller nor Buyer shall have any obligation with respect to any such Proprietary Information that: -42- (i) at the time of disclosure was already known to Seller or Buyer, as the case may be, other than as a result of this transaction, free of restriction as evidenced by documentation in Seller's or Buyer's possession, as the case may be; (ii) is or becomes publicly known through publication, inspection of a product or otherwise, and through no negligence or other wrongful act of Seller or Buyer, as the case may be; (iii) is received by Seller or Buyer, as the case may be, from a Third Party without similar restriction and without breach of any agreement; (iv) to the extent it is independently developed by Seller or Buyer, as the case may be; or (v) is, subject to Section 6.2(c), required to be disclosed under applicable Law or judicial process. (c) If Seller (or any of its Affiliates) or Buyer (or any of its Affiliates), as the case may be, is requested or required (by oral question, interrogatory, request for information or documents, subpoena, civil investigative demand or similar process) to disclose any Proprietary Information, such party will promptly notify the other party of such request or requirement and will cooperate with such other party such that such other party may seek an appropriate protective order or other appropriate remedy. If, in the absence of a protective order or the receipt of a waiver hereunder, a party (or any of its Affiliates) is, in the opinion of its counsel (which may be internal counsel), compelled to disclose the Proprietary Information or else stand liable for contempt or suffer other censure or significant monetary or non-monetary penalty, such party (or its Affiliate) may disclose only so much of the Proprietary Information to the Person compelling disclosure as is required by Law. Seller or Buyer, as the case may be, will exercise its (and will cause its Affiliates to exercise their) reasonable commercial efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded to such Proprietary Information. (d) Except to the extent that disclosure thereof is required under accounting, stock exchange or federal securities or labor relations Laws disclosure obligations, the terms and conditions of this Agreement and the Collateral Agreements, and all attachments and amendments hereto and thereto shall be considered Proprietary Information protected under this Article 6. Anything in this Article 6 to the contrary notwithstanding, if any such Proprietary Information is also subject to a limitation on disclosure or use contained in another written agreement between Buyer and Seller or either of their respective Affiliates that is more restrictive than the limitation contained in this Article 6, then the limitation in such agreement shall supersede this Article 6. 7. Closing At the Closing, the following transactions shall take place: -43- 7.1 Deliveries by Seller or the Subsidiaries On the Closing Date, Seller shall, or shall cause a Subsidiary to, deliver to Buyer the following: (a) the Collateral Agreements executed by Seller or the Subsidiary a party thereto; (b) all consents, waivers or approvals theretofore obtained by Seller with respect to the sale of the Purchased Assets or the consummation of the transactions contemplated by this Agreement and the Collateral Agreements; (c) a certificate of an appropriate officer of Seller, dated the Closing Date, certifying the fulfillment of the conditions set forth in Sections 8.2(a) and (b); and (d) all such other bills of sale, assignments and other instruments of assignment, transfer or conveyance as Buyer may reasonably request or as may be otherwise necessary to evidence and effect the sale, transfer, assignment, conveyance and delivery of the Purchased Assets to Buyer and to put Buyer in actual possession or control of the Purchased Assets. (e) evidence of the obtaining of or filings with respect to the Required Consents. 7.2 Deliveries by Buyer On the Closing Date, Buyer shall deliver to Seller the following: (a) the Purchase Price as provided in Section 2.3; (b) the Collateral Agreements executed by Buyer; (c) a certificate of an appropriate officer of Buyer, dated the Closing Date, certifying the fulfillment of the conditions set forth in Sections 8.3(a) and (b); and (d) all such other documents and instruments as Seller may reasonably request or as may be otherwise necessary or desirable to evidence and effect the assumption by Buyer of the Assumed Liabilities. 7.3 Closing Date The Closing shall take place at the offices of Counsel to Seller, located at 875 Third Avenue, New York, New York 10022, at 10:00 a.m. local time within five Business Days following the date on which the last of the conditions specified in Article 8 to be satisfied or waived has been satisfied or waived, or at such other place or time or on such other date as Seller and Buyer may agree upon in writing (such date and time being referred to herein as the "Closing Date"). ------------ -44- 7.4 Contemporaneous Effectiveness All acts and deliveries prescribed by this Article 7, regardless of chronological sequence, will be deemed to occur contemporaneously and simultaneously on the occurrence of the last act or delivery, and none of such acts or deliveries will be effective until the last of the same has occurred. 8. Conditions Precedent to Closing 8.1 General Conditions The respective obligations of Buyer and Seller to effect the Closing of the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing, of each of the following conditions: (a) No Injunctions. No provision of any applicable law or order of any -------------- court or administrative agency shall be in effect that enjoins, restrains, conditions or prohibits consummation of this Agreement or any Collateral Agreement. (b) Governmental Approvals. Any applicable waiting period under the HSR ---------------------- Act relating to the transactions contemplated by this Agreement or the Collateral Agreements shall have expired or been terminated, and the European Commission shall have issued a decision under Article 6(1)(b) or 8(2) of Council Regulation No. 4064/89 of the European Community, as amended (or shall be deemed to have done so under Article 10(b) thereof), declaring the transactions contemplated hereby compatible with the EC Common Market. All authorization, consents, orders, declarations or approvals of, or filings with, or terminations or expirations of waiting periods imposed by, any governmental or regulatory authority, domestic or foreign, which the failure to obtain, make or occur would have the effect of making any of the transactions contemplated hereby illegal or would have a Seller Material Adverse Effect shall have been obtained, made or occurred. (c) Certain Proceedings. There shall not be threatened, instituted or ------------------- pending any action or proceeding by any governmental authority or agency, domestic, foreign or supranational (i) seeking to restrain, prohibit or otherwise interfere in any material manner with the ownership or operation by Buyer or any of its Affiliates of all or any material portion of the Purchased Assets or the business or assets of Buyer or any of its Affiliates or to compel Buyer or any of its Affiliates to dispose of or hold separate all or any material portion of the Purchased Assets or of Buyer or any of its Affiliates or (ii) seeking to required divestiture by Buyer or any of its Affiliates of any material amount of Purchased Assets. 8.2 Conditions Precedent to Buyer's Obligations The obligations of Buyer to effect the Closing of the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing, of each of the following conditions, any of which may be waived in writing by Buyer: -45- (a) Representations and Warranties of Seller True at Closing. The -------------------------------------------------------- representations and warranties of Seller contained in this Agreement or in any schedule, certificate or document delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby (A) that are qualified by materiality or Seller Material Adverse Effect shall be true and correct and (B) that are not qualified by materiality or Seller Material Adverse Effect shall be true and correct in all material respects, in each case, at and as of the Closing Date, as though such representations and warranties were made at and as of the Closing Date, except as affected by (i) actions or omissions specifically permitted or allowed under this Agreement and (ii) to the extent that such representations and warranties are made as of a specified date, in which case, such representations and warranties shall be true and correct in all material respects as of such dates. (b) Performance by Seller. Seller and each Subsidiary shall have --------------------- performed in all material respects all obligations and agreements and complied in all material respects with all covenants required by this Agreement to be performed or complied with by it prior to or at the Closing, including executing the Collateral Agreements. (c) Notice and Release. Seller shall have notified the Administrative ------------------ Agent under the Credit Agreement as to the transactions contemplated by this Agreement and Seller shall have delivered to Buyer a copy of a letter from the Collateral Agent under the Guarantee Agreement releasing any security interest in the Purchased Assets, pursuant to the Credit Agreement or the Guarantee Agreement. 8.3 Conditions Precedent to Seller's Obligations The obligations of Seller to effect the Closing of the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing, of each of the following conditions, any of which may be waived in writing by Seller: (a) Representations and Warranties of Buyer True at Closing. The ------------------------------------------------------- representations and warranties of Buyer contained in this Agreement or in any certificate or document delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby (A) that are qualified by materiality or Seller Material Adverse Effect shall be true and correct and (B) that are not qualified by materiality or Seller Material Adverse Effect shall be true and correct in all material respects, in each case, at and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date, except to the extent that such representations and warranties are made as of a specified date, in which case, such representations and warranties shall be true and correct in all material respects as of such dates. (b) Performance by Buyer. Buyer shall have performed in all material -------------------- respects all obligations and agreements and complied in all material respects with all covenants required by this Agreement to be performed or complied with by it prior to or at the Closing, including executing the Collateral Agreements. -46- 8.4 Frustration of Purpose Neither Seller or Buyer may rely on the failure of any condition in Sections 8.1.8.2 or 8.3, as the case may be, to be satisfied if such failure was caused by such party's failure to use reasonable efforts to consummate the transactions contemplated by the Agreement as required by Section 5.7. 9. Status of Agreements The rights and obligations of Buyer and Seller under this Agreement shall be subject to the following terms and conditions: 9.1 Survival of Representations and Warranties The representations and warranties of Buyer and Seller contained in this Agreement shall survive the Closing solely for purposes of this Article 9 and such representations and warranties shall terminate at the close of business on the date that is eighteen months after the Closing Date, except for the representations and warranties made pursuant to Section 3.5(b) and Section 3.9(b), which shall terminate 30 months and 36 months after the Closing Date, respectively. Neither Seller nor Buyer shall have any liability whatsoever with respect to any such representations or warranties after such date Notwithstanding the preceding sentence, any representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party from whom such indemnity may be sought prior to such time . 9.2 General Agreement to Indemnify (a) Seller and Buyer shall indemnify, defend and hold harmless the other party hereto, any Affiliate thereof, and any director, officer or employee of such other party or Affiliate thereof (each an "Indemnified Party" and, in the ----------------- case of the Buyer, a "Buyer Indemnified Party" and, in the case of the Seller, a ----------------------- "Seller Indemnified Party"), from and against any and all claims, actions, ------------------------ suits, proceedings, liabilities, obligations, losses, and damages, amounts paid in settlement, interest, costs and expenses (including reasonable attorney's fees, court costs and other out-of-pocket expenses incurred in investigating, preparing or defending the foregoing) (collectively, "Losses") incurred or ------ suffered by any Indemnified Party to the extent that the Losses arise by reason of, or result from (i) subject to Section 9.1 and subsection (e) and (f) of this Section 9.2, any breach of any representation or warranty of such party contained in this Agreement or (ii) the breach by such party of any covenant or agreement of such party contained in this Agreement to the extent not waived by the other party. (b) Seller further agrees to indemnify and hold harmless each Buyer Indemnified Party from and against any Losses incurred by a Buyer Indemnified Party arising out of, resulting from, or relating to: (i) the Excluded Liabilities and (ii) Buyer's waiver of any applicable Bulk Sales Laws. -47- (c) Buyer further agrees to indemnify and hold harmless each Seller Indemnified Party with respect to: (i) any failure of Buyer to discharge any of the Assumed Liabilities and (ii) any claims, causes of actions, charges or suits asserted or brought by any Transferred Employee against Seller or its Subsidiaries arising out of or in connection with the Buyer's failure to offer employment to, or Buyer's termination of employment with Buyer or its Affiliates of, any Transferred Employee (including, for the purposes of this sub-paragraph, any Business Employee who would otherwise be considered by definition a Transferred Employee under this Agreement but for the fact they were not offered employment by Buyer and were to be offered employment with Buyer pursuant to Section 5.5(a)), including claims for severance or other separation benefits and employment discrimination claims. (d) Amounts payable in respect of the parties' indemnification obligations shall be treated as an adjustment to the Purchase Price unless a Final Determination or change in applicable law (including a revenue ruling or other similar pronouncement) causes any such amount not to constitute an adjustment to the Purchase Price for Federal Tax purposes. In the event of such a Final Determination or change in applicable law, Buyer or Seller, as the case may be, shall pay an amount that reflects the hypothetical Tax consequences of the receipt or accrual of such payment, using the maximum statutory rate (or rates, in the case of an item that affects more than one Tax) applicable to the recipient of such payment for the relevant year, reflecting for example, the effect of deductions available for interest paid or accrued and for Taxes such as state and local income Taxes; provided, that Buyer shall only be required to -------- pay to Seller the excess of the amount so calculated over the additional Tax or Taxes that would have been imposed if such payment had been treated as an adjustment to the Purchase Price. Buyer and Seller agree to cooperate in the preparation of a supplemental Asset Acquisition Statement as required by Section 5.4 and Treasury Reg. (S) 1.1060-1(e) as a result of any adjustment to the Purchase Price pursuant to the first sentence of this subsection. Whether or not the Indemnifying Party (as defined below) chooses to defend or prosecute any Third-Party Claim (as defined in Section 9.3(a)) both parties hereto shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith or as provided in Section 5.1. (e) The amount of the Indemnifying Party's liability under this Agreement shall be net of any applicable insurance proceeds actually received and other savings, including Tax savings, that have been realized by, the Indemnified Party. If the Tax savings have not been realized at the time the Indemnifying Party makes a payment under Section 9, then the Indemnified Party shall pay to the Indemnifying Party an amount equal to the actual Tax savings realized by the Indemnified Party at the time so realized, provided, that the amount of such -------- payment shall not exceed the amount of any indemnity payment made by the Indemnifying Party with respect to the claim giving rise to the Tax savings. The amount of any such Tax savings for any Tax period shall be the amount of the reduction in Taxes payable to a Taxing Authority with respect to such Tax period as compared to the Taxes that would have been payable to a Taxing Authority by the Indemnified Party in the absence of such Tax savings. -48- (f) The Indemnifying Party's liability for all claims made under Section 9.2(a) (i) shall be subject to the following limitations: (i) the Indemnifying Party shall have no liability for such claims until the aggregate amount of the Losses incurred (determined without regard to any materiality qualification or qualification with reference to Seller Material Adverse Affect or Buyer Material Adverse Effect contained in any representation or warranty giving rise to the claim for indemnity hereunder) shall exceed 0.5% of Purchase Price, in which case the Indemnifying Party shall be liable only for the portion of the Losses exceeding 0.5% of Purchase Price, (ii) the Indemnified Party shall have no liability for any individual items where the Loss relating thereto is less than $25,000 (and such items shall be aggregated for purposes of clause (i)) and (iii) the Indemnifying Party's aggregate liability for all such claims shall not exceed 30% of Purchase Price. (g) Absent fraud and subject to Section 9.5, the indemnification provided in this Article 9 shall be the sole and exclusive remedy after the Closing Date for damages available to the parties to this Agreement for breach of any of the terms, conditions, representations or warranties contained herein or any right, claim or action arising from the transactions contemplated by this Agreement or any Collateral Agreement; provided, this exclusive remedy for damages does not -------- preclude a party from bringing an action for specific performance or other equitable remedy to require a party to perform its obligations under this Agreement or any Collateral Agreement. (h) Notwithstanding anything contained in this Agreement to the contrary, no party shall be liable to the other party for any indirect, special, punitive, exemplary or consequential loss or damage arising out of this Agreement; provided, that the foregoing shall not be construed to preclude recovery by the - -------- Indemnified Party in respect of Losses directly incurred from Third Party Claims. Both parties shall take commercially reasonable actions to mitigate their damages. (i) The rights to indemnification under this Section 9.2 shall not be subject to set-off for any claim by the Indemnifying Party against any Indemnified Party, whether or not arising from the same event giving rise to such Indemnified Party's claim for indemnification. 9.3 Indemnification Procedures for Third Party Claims (a) The Indemnified Party seeking indemnification under this Agreement shall promptly notify the party against whom indemnification is sought (the "Indemnifying Party") of the assertion of any claim, or the commencement of any ------------------ action, suit or proceeding by any Third Party, in respect of which indemnity may be sought hereunder and shall give the Indemnifying Party such information with respect thereto as the Indemnifying Party may reasonably request, but failure to give such notice shall not relieve the Indemnifying Party of any liability hereunder (unless the Indemnifying Party has suffered material prejudice by such failure). The Indemnifying Party shall have the right, but not the obligation, exercisable by written notice to the Indemnified Party within thirty days of receipt of notice from the Indemnified Party of the commencement of or assertion of any claim, action, suit or proceeding by a Third Party in respect of which indemnity may be sought hereunder (a "Third-Party Claim"), to assume the defense ----------------- and control the settlement of such Third-Party Claim that (i) involves (and continues to involve) solely money damages or (ii) involves (and continues to involve) claims for both money damages -49- and equitable relief against the Indemnified Party that cannot be severed, where the claims for money damages are the primary claims asserted by the Third Party and the claims for equitable relief are incidental to the claims for money damages. (b) The Indemnifying Party or the Indemnified Party, as the case may be, shall have the right to participate in (but not control), at its own expense, the defense of any Third-Party Claim that the other is defending, as provided in this Agreement. (c) The Indemnifying Party, if it has assumed the defense of any Third- Party Claim as provided in this Agreement, shall not consent to a settlement of, or the entry of any judgment arising from, any such Third-Party Claim without the Indemnified Party's prior written consent (which consent shall not be unreasonably withheld) unless such settlement or judgment relates solely to monetary damages. The Indemnifying Party shall not, without the Indemnified Party's prior written consent, enter into any compromise or settlement that (i) commits the Indemnified Party to take, or to forbear to take, any action or (ii) does not provide for a complete release by such Third Party of the Indemnified Party. The Indemnified Party shall have the sole and exclusive right to settle any Third-Party Claim, on such terms and conditions as it deems reasonably appropriate, to the extent such Third-Party Claim involves equitable or other non-monetary relief against the Indemnified Party, and shall have the right to settle any Third-Party Claim involving money damages for which the Indemnifying Party has not assumed the defense pursuant to this Section 9.3. 9.4 Indemnification Procedures for Non-Third Party Claims In the event an Indemnified Party shall claim a right to payment pursuant to this Agreement for other than a Third-Party Claim, such Indemnified Party shall send written notice of such claim to the Indemnifying Party and such notice shall specify the basis for such claim in reasonable detail, but failure to give such notice or so specify such claim shall not relieve the Indemnifying Party of any liability hereunder (unless the Indemnifying Party has suffered material prejudice by such failure). As promptly as possible after the Indemnified Party has given such notice, the Indemnified Party and the Indemnifying Party shall attempt to resolve such claim by mutual agreement before resorting to other legal means to resolve such claim. 9.5 Rights and Remedies The rights and remedies of Seller and Buyer provided for under this Agreement shall not effect the rights or remedies of Seller or Buyer provided for under any of the Collateral Agreements. 10. Miscellaneous Provisions 10.1 Notices All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given upon receipt if (i) mailed by certified or registered mail, return receipt requested, (ii) sent by Federal Express or other express carrier, fee prepaid, (iii) sent via facsimile -50- with receipt confirmed or (iv) delivered personally, addressed as follows or to such other address or addresses of which the respective party shall have notified the other. (a) If to Seller, to: Lucent Technologies Inc. Attn: Executive Vice President, Corporate Operations 600 Mountain Avenue Murray Hill, NJ 07974-0636 United States of America Facsimile: (908) 582-3560 With a copy to: Lucent Technologies Inc. Attn: Vice President - Law 600 Mountain Avenue Murray Hill, NJ 07974-0636 United States of America Facsimile: (908) 582-6978 and: Sidley Austin Brown & Wood 875 Third Avenue New York, NY 10022 United States of America Attn: Irving L. Rotter Facsimile: (212) 906-2021 (b) If to Buyer, to: CSG Systems International, Inc. 7887 East Belleview Avenue Ste. 1000 Englewood, CO 80111 United States of America Attn: Joseph T. Ruble, Senior Vice President and General Counsel, Corporate Development Facsimile: (303) 804-4012 With a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 United States of America Attn: George R. Bason, Jr. Facsimile: (212) 450-4000 10.2 Expenses Except as otherwise provided in this Agreement, each party to this Agreement will bear all the fees, costs and expenses that are incurred by it in connection with the transactions contemplated hereby, whether or not such transactions are consummated. -51- 10.3 Entire Agreement; Modification The agreement of the parties, which consists of this Agreement, the Schedules and Exhibits hereto and the documents referred to herein, sets forth the entire agreement and understanding between the parties and supersedes any prior agreement or understanding, written or oral, relating to the subject matter of this Agreement. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby, and in accordance with Section 11.5. 10.4 Assignment; Binding Effect; Severability This Agreement may not be assigned by any party hereto without the other party's written consent; provided that Buyer may (i) assign, convey or sell this -------- Agreement to a wholly owned subsidiary and (ii) may designate one or several wholly owned subsidiaries as buyer(s) of specified Purchased Assets, subject, in each case, to Buyer remaining liable for all obligations of Buyer hereunder. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors, legal representatives and permitted assigns of each party hereto. The provisions of this Agreement are severable, and in the event that any one or more provisions are deemed illegal or unenforceable the remaining provisions shall remain in full force and effect unless the deletion of such provision shall cause this Agreement to become materially adverse to either party, in which event the parties shall use reasonable commercial efforts to arrive at an accommodation that best preserves for the parties the benefits and obligations of the offending provision. 10.5 Governing Law THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK IRRESPECTIVE OF THE CHOICE OF LAWS PRINCIPLES OF THE STATE OF NEW YORK (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AS TO ALL MATTERS, INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, ENFORCEABILITY, PERFORMANCE AND REMEDIES. 10.6 Consent to Jurisdiction Buyer irrevocably submits, and Seller irrevocably submits, and agrees to cause the Subsidiaries to irrevocably submit to the jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and each agrees that no such action, suit or proceeding relating to this Agreement or any transaction contemplated hereby shall be brought by it or any of its Affiliates except in such courts). Buyer further agrees, and Seller further agrees, and agrees to cause the Subsidiaries to agree, that service of any process, summons, notice or document by U.S. registered mail to such person's respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding -52- sentence. Buyer irrevocably and unconditionally waives (and agrees not to plead or claim), and Seller irrevocably and unconditionally waives (and agrees not to plead or claim), and agrees to cause the Subsidiaries to irrevocably and unconditionally waive (and not to plead or claim), to the fullest extent permitted by applicable law, any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Supreme Court of the State of New York, New York County, or (ii) the United States District Court for the Southern District of New York or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. 10.7 Waiver of Jury Trial Each party hereby waives, and agrees to cause each of its Affiliates to waive, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement. Each party (i) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 10.7. 10.8 Execution in Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.9 Public Announcement Prior to the signing of this Agreement, Seller and Buyer shall prepare a mutually agreeable release announcing the transaction contemplated hereby. Except for such press release, neither Seller nor Buyer shall, without the approval of the other, make any press release or other announcement concerning the existence of this Agreement or the terms of the transactions contemplated by this Agreement, except as and to the extent that any such party shall be so obligated by Law, in which case the other party shall be advised and the parties shall use their reasonable commercial efforts to cause a mutually agreeable release or announcement to be issued; provided, that the foregoing shall not -------- preclude communications or disclosures necessary to comply with accounting, stock exchange or federal securities Law disclosure obligations. 10.10 No Third-Party Beneficiaries Nothing in this Agreement, express or implied, is intended to or shall (a) confer on any Person other than the parties hereto and their respective successors or assigns any rights (including Third-Party beneficiary rights), remedies, obligations or liabilities under or by reason of this Agreement or (b) constitute the parties hereto as partners or as participants in a joint venture. This Agreement shall not provide Third Parties with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to the terms of this Agreement. Nothing in this Agreement shall be construed as giving to any Business Employee, or any other individual, (i) any right or entitlement under any Benefit Plan, policy or -53- procedure maintained by Seller, except as expressly provided in such Benefit Plan, policy or procedure or (ii) any right or entitlement to any employment with, or compensation or benefits from Buyer. No Third Party shall have any rights under Section 502, 503 or 504 of ERISA or any regulations thereunder because of this Agreement that would not otherwise exist without reference to this Agreement. No Third Party shall have any right, independent of any right that exist irrespective of this Agreement, under or granted by this Agreement, to bring any suit at law or equity for any matter governed by or subject to the provisions of this Agreement. 11. Termination and Waiver 11.1 Termination This Agreement may be terminated at any time prior to the Closing Date by: (a) Mutual Consent. The mutual written consent of Buyer and Seller; -------------- (b) Failure of Buyer Condition. Buyer upon written notice to Seller if -------------------------- any of the conditions to the Closing set forth in Section 8.2 shall have become incapable of fulfillment and shall not have been waived in writing by Buyer; (c) Failure of Seller Condition. Seller upon written notice to Buyer if --------------------------- any of the conditions to the Closing set forth in Section 8.3 shall have become incapable of fulfillment and shall not have been waived in writing by Seller; (d) Court or Administrative Order. Buyer or Seller if there shall be in ----------------------------- effect a final, non-appealable order of a court or government administrative agency of competent jurisdiction prohibiting the consummation of the transactions contemplated hereby; (e) Delay. The Buyer or Seller if the Closing shall not have occurred by ----- May 1, 2002; provided, that the party seeking termination pursuant to clause (b), (c) or (e) - -------- is not then in breach in any material respect of any of its representations, warranties, covenants or agreements contained in this Agreement. 11.2 Effect of Termination If this Agreement is terminated in accordance with Section 11.1, this Agreement shall become void and have no effect, without any liability on the part of any party or its directors, officers or stockholders, except for the obligations of the parties hereto as provided in Article 6 relating to the obligations of Buyer and Seller to keep confidential certain information, and for the rights and obligations of the parties hereto as provided in Sections 10.1, 10.2, 10.5, 10.6, 10.7, 10.9 and 11.2. Nothing in this Section 11.2 shall be deemed to release either party from any liability for any willful and material breach of any obligation hereunder. -54- 11.3 Collateral Agreements; Material To Be Returned (a) In the event of the termination of this Agreement in accordance with Section 11.1, the transactions contemplated by this Agreement shall be terminated, without further action by any party hereto, and each of Seller and Buyer shall immediately enter into, or cause its relevant Affiliates to enter into, written consents to terminate each Collateral Agreement. (b) Furthermore, in the event that this Agreement is terminated as provided herein: (i) Buyer shall return all documents and other material received from Seller or any Affiliate of Seller or any representative of Seller or any Affiliate of Seller relating to the Business or the transactions contemplated by this Agreement, whether obtained before or after the execution of this Agreement, to Seller; and (ii) Seller shall return all documents and other material received from Buyer or any Affiliate of Buyer or any representative of Buyer or any Affiliate of Buyer relating to Buyer or the transactions contemplated by this Agreement, whether obtained before or after the execution of this Agreement, to Buyer. 11.4 Waiver of Agreement Any term or condition hereof may be waived at any time prior to the Closing Date by the party hereto which is entitled to the benefits thereof by action taken by its Board of Directors or its duly authorized officer or employee, whether before or after the action of such party; provided, however, that such -------- ------- action shall be evidenced by a written instrument duly executed on behalf of such party by its duly authorized officer or employee. The failure of either party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision nor shall it in any way affect the validity of this Agreement or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. 11.5 Amendment of Agreement This Agreement may be amended with respect to any provision contained herein at any time prior to the Closing Date by action of the parties hereto taken by their Boards of Directors or by their duly authorized officers or employees, whether before or after such party's action; provided, that such -------- amendment shall be evidenced by a written instrument duly executed on behalf of each party by its duly authorized officer or employee. -55- IN WITNESS WHEREOF, each party has caused this Agreement to be duly executed on its behalf by its duly authorized officer as of the date first written above. LUCENT TECHNOLOGIES INC. By: /s/ William T. O'Shea ----------------------------- Name: William T. O'Shea Title: Executive Vice President CSG SYSTEMS INTERNATIONAL, INC. By: /s/ Jack Pogge ----------------------------- Name: Jack Pogge Title: President EX-2.29 4 dex229.txt INTELLECTUAL PROPERTY AGREEMENT Exhibit 2.29 ================================================================================ INTELLECTUAL PROPERTY AGREEMENT BY AND AMONG LUCENT TECHNOLOGIES INC. LUCENT TECHNOLOGIES GRL CORPORATION LUCENT TECHNOLOGIES IRELAND HOLDING LIMITED AND CSG SYSTEMS INTERNATIONAL, INC. CSG SOFTWARE, INC. CSG TECHNOLOGY LIMITED EFFECTIVE AS OF FEBRUARY 28, 2002 ================================================================================ INTELLECTUAL PROPERTY AGREEMENT TABLE OF CONTENTS ARTICLE I DEFINITIONS........................................................... 1 ARTICLE II ASSIGNMENT OF SOFTWARE............................................... 2 ARTICLE III SOFTWARE LICENSES................................................... 3 ARTICLE IV ASSIGNMENT OF INFORMATION............................................ 4 ARTICLE V LICENSES TO INFORMATION............................................... 5 ARTICLE VI ASSIGNED PATENT...................................................... 6 ARTICLE VII PATENT LICENSES..................................................... 7 ARTICLE VIII ASSIGNMENT OF TRADEMARKS, TRADE DRESS AND DOMAIN NAMES............ 8 ARTICLE IX ASSIGNMENT OF COPYRIGHTS............................................. 9 ARTICLE X FURNISHING OF SOFTWARE, TECHNICAL INFORMATION AND ASSIGNED TRADEMARK-RELATED INFORMATION................................................... 9 ARTICLE XI EXPORT CONTROL....................................................... 9 ARTICLE XII TERM AND TERMINATION................................................ 10 ARTICLE XIII ASSIGNABILITY...................................................... 10 ARTICLE XIV LICENSES TO RELATED COMPANIES AND IMPROVEMENTS...................... 11 ARTICLE XV DISCLAIMER AND COVENANTS............................................. 11 ARTICLE XVI GENERAL PROVISIONS.................................................. 13 ARTICLE XVII DISPUTE RESOLUTION................................................. 16 ARTICLE XVIII NOTICES AND STATEMENTS............................................ 17
INTELLECTUAL PROPERTY AGREEMENT THIS INTELLECTUAL PROPERTY AGREEMENT (this "Agreement") is made by and --------- among Lucent Technologies Inc., a Delaware corporation ("Lucent, Inc."), having ----------- an office at 600 Mountain Avenue, Murray Hill, New Jersey 07974-0636 USA, Lucent Technologies GRL Corporation, a Delaware corporation ("Lucent-GRL"), having an ---------- office at 2400 SW 145 Avenue, Miramar, Florida 33027 USA, Lucent Technologies Ireland Holding Limited, an Irish corporation ("Lucent IST"), having an office ---------- at 1 Earlsfort Centre, Lower Hatch Street, Dublin, Ireland and CSG Systems International, Inc., a Delaware corporation ("CSG Systems" or "Buyer"), having ----------- an office at 7887 East Belleview Ave., Suite 1000, Englewood, CO 80111, CSG Software, Inc., a Delaware corporation having an office at 7887 East Belleview Ave., Suite 1000, Englewood, CO 80111, ("CSG Software") and CSG Technology Limited, a Bermuda company having an office at 7887 East Belleview Ave., Suite 1000, Englewood, CO 80111, ("CSG Technology"). CSG Software and CSG Technology are sometimes referred to herein individually as a "Relevant Buyer" or "Relevant Licensee" as defined in Appendix H. Lucent, Lucent-GRL, Lucent IST and Buyer, Relvant Buyer, and Relevant Licensee are sometimes referred to herein individually as a "Party" and collectively as the "Parties". "Lucent" means ----- ------- Lucent, Inc., Lucent-GRL and Lucent IST, as appropriate. RECITALS A. WHEREAS, Lucent and Buyer, are parties to a certain Asset Purchase Agreement dated as of December 21, 2001 (the "Purchase Agreement") pursuant to ------------ ------------------ which Lucent is selling and Buyer is acquiring certain Purchased Assets, as that term is defined in the Purchase Agreement, relating to the Business (as defined below). This Agreement, provided as Exhibit D-1 of the Purchase Agreement, shall be executed by all Parties and shall become effective on February 28, 2002 (the "Effective Date"); -------------- B. WHEREAS, Lucent and its Subsidiaries are, among other things, engaged through Lucent's Billing and Customer Care Group ("Kenan") in the worldwide ----- production, marketing, sales and distribution of convergent billing and customer care software systems (collectively, the "Business"); and -------- C. WHEREAS, Lucent, Lucent-GRL and Lucent IST are willing to license or assign certain intellectual property rights to Buyer in accordance with the terms hereof. NOW, THEREFORE, in consideration of the mutual agreements and covenants herein contained and intending to be legally bound thereby, the Parties agree as follows: ARTICLE I DEFINITIONS 1.01 Definitions. Unless otherwise defined in Appendix A attached hereto or ----------- defined in the body of this Agreement, as used in this Agreement any term in initial capital letters shall have the meaning ascribed thereto in the Purchase Agreement. ARTICLE II ASSIGNMENT OF SOFTWARE 2.01 Assignment of Assigned Software. Subject to receipt of the consideration ------------------------------- set forth in the Purchase Agreement and Section 2.02 hereof, Lucent hereby irrevocably transfers and assigns to the Relevant Buyer all of Lucent's present worldwide right, title and interest in and to the Assigned Software, including all copyright, trade secret, and other intellectual property rights specific thereto. Such transfer and assignment does not include a transfer or assignment of, or license under, any patents; any such license under any such patents being specifically set forth in Article VII. 2.02 License to Assigned Software. In partial consideration for the transfer ---------------------------- and assignment of the Assigned Software by Lucent to the Relevant Buyer pursuant to Section 2.01, the Relevant Buyer grants to Lucent, a personal, nonexclusive, non-transferable (except as provided in Article XII), irrevocable, worldwide, fully paid-up license (i) to use, copy, perform, display or distribute and otherwise use (including the right to sublicense) (to the full extent provided in 17 United States Code Section 106) the Assigned Software in a stand-alone state solely for internal use within Lucent or any of its Related Companies and (ii) to create, use, copy, perform or display the Assigned Software (or its functionality) only to the extent necessary for the purpose of supporting, repairing, selling or offering for sale products or services (other than billing and customer care products or services). Such license does not include a license under any patents; any such license under any such patents being specifically set forth in Article VI. 2.03 Delivery of Assigned Software. Lucent agrees to cause the Business ----------------------------- Employees, at the Closing, to deliver to the Relevant Buyer copies of all Code of whatever kind in whatever medium that embody the Assigned Software and any related Documentation. To Lucent's knowledge, a copy of all of the Assigned Software already is in possession of such Business Employees or is part of the Purchased Assets. However, Lucent agrees to take all steps reasonably requested by the Relevant Buyer (in writing) in connection with delivering to the Relevant Buyer any missing parts of the Assigned Software to the extent such Assigned Software is available within Lucent at the time of the request. Further, in connection with this Section 2.03, the Parties agree that they shall use reasonable commercial efforts to minimize any adverse effects on the Business while Lucent attempts to locate the missing parts of the Assigned Software requested by the Relevant Buyer. 2.04 Procurement and Use of Assigned Software. The grant to Lucent from the ----------------------------------------- Relevant Buyer in Section 2.02(ii) shall include a personal, non-transferable (except as provided in Article XII) and nonexclusive right to communicate portions of and grant nonexclusive sublicenses (of the same scope as the licenses granted to Lucent in Section 2.02(ii)) to such Assigned Software to customers, suppliers, sublicensees or other third parties as necessary with respect to any products or services (other than billing and customer care products or services) of the businesses in which Lucent or any of its Related Companies deploys the functionality of the Assigned Software. 2 ARTICLE III SOFTWARE LICENSES 3.01 Licensed Software. Subject to the receipt of the consideration set forth ----------------- in the Purchase Agreement, Lucent grants to the Relevant Licensee a fully paid- up, worldwide, irrevocable, non-transferable (except as provided in Article XII) and nonexclusive license to use, copy, perform, distribute, display or otherwise use (to the full extent provided in 17 United States Code Section 106) the Licensed Software in connection with the manufacture, use, sale, offer for sale, lease, license and importation of Licensed Products, including all copyright, trade secret and other intellectual property rights in the Licensed Software in which Lucent or its Related Companies have a right to license as of the Effective Date including, solely with respect to Licensed Products, the right (i) to modify and create Derivative Works of such Licensed Software; (ii) to sublicense (but only of a scope commensurate with the scope of the Relevant Licensee's license and only to the extent that Lucent has a right to authorize the Relevant Licensee to grant such a sublicense and provided that Lucent shall not be obligated to pay any consideration for such sublicense authorization) or otherwise transfer copies (in Object Code form only) of the Licensed Software and Derivative Works therefrom, in whole or in part for use solely in the scope of the Business; and (iii) to combine the Licensed Software and Derivative Works therefrom with other software or hardware solely in the scope of the Business. Such license does not include a license under any patents; any such license under any such patents being specifically set forth in Article VII. 3.02 Delivery of Licensed Software. Lucent agrees to cause the Business ----------------------------- Employees, at the Closing, to deliver to the Relevant Licensee copies of all Code of whatever kind in whatever medium that embody the Licensed Software. To Lucent's knowledge, a copy of all of the Licensed Software already is in possession of such Business Employees or is part of the Purchased Assets. However, Lucent agrees to take all steps reasonably requested by the Relevant Licensee (in writing and for a period of 1 year after the Effective Date) in connection with delivering to the Relevant Licensee any missing parts of the Licensed Software to the extent such Licensed Software is available within Lucent at the time of such request. 3.03 Retained Copies of Assigned Software and Licensed Software. To Lucent's ---------------------------------------------------------- knowledge, Lucent has attempted to retain adequate copies of Assigned Software and Licensed Software. However, the Parties recognize that the best or only available copy of certain Assigned Software and Licensed Software may reside, prior to or after the Closing Date, within the Business or in the possession of the Business Employees, and that Lucent may require certain access to or copies of the Assigned Software and Licensed Software for procurement purposes or other purposes consistent with this Agreement or the Supply Agreement, which, because of inadvertence or oversight, a copy was not retained by or made available to Lucent prior to the Closing Date. To that end, the Relevant Buyer and the Relevant Licensee agrees, upon receiving a written request from Lucent, to make a good faith effort to locate and provide, to the extent such Assigned Software or Licensed Software is available, within a commercially reasonable amount of time after receipt of Lucent's written request, copies of all or any portion of the Assigned Software and Licensed Software deemed necessary by Lucent or one of its Related Companies to exercise rights consistent with this Agreement. Any reasonable costs associated 3 with the assembling, copying and delivering of such requested Assigned Software and Licensed Software shall be borne by Lucent. 3.04 No Duty to Maintain Software. As of the Effective Date, neither Party is ---------------------------- required to maintain or repair Assigned Software or Licensed Software for the benefit of the other Party. ARTICLE IV ASSIGNMENT OF INFORMATION 4.01 Assignment of Assigned Technical Information. Subject to receipt of the -------------------------------------------- consideration set forth in the Purchase Agreement (and full satisfaction of all other material obligations thereunder), Lucent hereby irrevocably transfers and assigns to the Relevant Buyer all of Lucent's present worldwide right, title and interest in and to the Assigned Technical Information including all copyright trade secret and intellectual property rights specific thereto. Such transfer and assignment does not include a transfer or assignment of, or license under, any patents; any such license under any such patents being specifically set forth in Article VII. 4.02 License to Assigned Technical Information. In consideration for the ----------------------------------------- transfer and assignment of the Assigned Technical Information by Lucent to the Relevant Buyer pursuant to Section 4.01, the Relevant Buyer grants to Lucent a personal, nonexclusive, non-transferable (except as provided in Article XII), irrevocable worldwide, fully paid-up license (i) to use, copy, distribute (pursuant to Section 4.03 and subject to confidentiality provisions at least as restrictive as those in Section 14.03) or otherwise use the Assigned Technical Information solely for internal use within Lucent or any of its Related Companies, and (ii) to create, use, copy, display, distribute, sublicense or otherwise use (to the full extent provided in 17 United States Code section 106) Derivative works from the Assigned Technical Information or the functionality described in the Assigned Technical Information with respect to supporting, repairing or offering for sale products or services (other than billing and customer care products or services). Such license does not include a license under any patents; any such license under any such patents being specifically set forth in Article VI. 4.03 Delivery of Assigned Technical Information. Lucent agrees to cause the ------------------------------------------ Business Employees, at the Closing, to deliver to the Relevant Buyer copies of all documents of whatever kind in whatever medium that embody the Assigned Technical Information. To Lucent's knowledge, all of the Assigned Technical Information already is in possession of such Business Employees or is part of the Purchased Assets. However, Lucent agrees to take all steps reasonably requested by the Relevant Buyer (in writing and for a period of one year after the Effective Date) in connection with delivering to the Relevant Buyer any missing parts of the Assigned Technical Information to the extent such Assigned Technical Information is available within Lucent at the time of such request. Further, in connection with this Section 4.03, the Parties agree that they shall use reasonable commercial efforts to minimize any adverse effects on the Business while Lucent attempts to locate the missing parts of the Assigned Technical Information requested by the Relevant Buyer. 4 4.04 Procurement and Use of Assigned Technical Information. The grant to ------------------------------------------------------ Lucent from the Relevant Buyer in Section 4.02(ii) shall include a personal, non-transferable (except as provided in Article XII) and nonexclusive right to communicate portions of and grant nonexclusive sublicenses (of the same scope as the licenses granted to Lucent in Section 4.02(ii)) to such Assigned Technical Information and Derivative Works to customers, suppliers, sublicensees or other third parties as necessary with respect to supporting, repairing or offering for sale any products or services (other than billing and customer care products or services) which incorporate the functionality described in the Assigned Technical Information. 4.05 Retained Copies of Assigned Technical Information. To Lucent's knowledge, ------------------------------------------------- Lucent has attempted to retain adequate copies of the Assigned Technical Information. However, the Parties recognize that the best or only available copy of certain Assigned Technical Information may reside, prior to or after the Closing Date, within the Business or in the possession of Kenan, and that Lucent may require certain access to or copies of the Assigned Technical Information for procurement purposes or other purposes consistent with this Agreement or the Supply Agreement, which, because of inadvertence or oversight, a copy was not retained by or made available to Lucent prior to the Closing Date. To that end, the Relevant Buyer agrees, upon receiving a written request from Lucent, to make a good faith effort to locate and provide, to the extent such Assigned Technical Information is available, within a commercially reasonable amount of time after receipt of Lucent's written request, copies of all or any portion of the Assigned Technical Information deemed necessary by Lucent or one of its Related Companies to exercise the rights consistent with this Agreement. Any reasonable costs associated with the assembling, copying and delivering of such requested Assigned Technical Information shall be borne by Lucent. ARTICLE V LICENSES TO INFORMATION 5.01 Licensed Technical Information. Lucent grants to the Relevant Licensee a ------------------------------ fully paid-up, worldwide, irrevocable, non-transferable (except as provided in Article XII) and nonexclusive license to use Licensed Technical Information in connection with the manufacture, use, sale, offer for sale, lease, license and importation of Licensed Products under any and all copyright, trade secret and other intellectual property rights included in such Licensed Technical Information owned by Lucent and in which Lucent or its Related Companies have a right to license as of the Effective Date including, without limitation, the right for the Relevant Licensee and its Related Companies to modify and create Derivative Works from such Licensed Technical Information. Such license does not include a license under any patents; any such license under any such patents being specifically set forth in Article VII. 5.02 Delivery of Licensed Technical Information. Lucent agrees to cause the ------------------------------------------ Business Employees, at the Closing, to deliver to the Relevant Licensee copies of all documents of whatever kind in whatever medium that embody the Licensed Technical Information. To Lucent's knowledge, a copy of all of the Licensed Technical Information already is in possession of such Business Employees or is part of the Purchased Assets. However, Lucent agrees to take 5 all steps reasonably requested by the Relevant Licensee (in writing and for a period of one year after the Effective Date) in connection with delivering to the Relevant Licensee any missing parts of the Licensed Technical Information to the extent such Licensed Technical Information is available within Lucent at the time of such request. 5.03 Retained Copies of Licensed Technical Information. To Lucent's knowledge, ------------------------------------------------- Lucent has attempted to retain adequate copies of Licensed Technical Information. However, the Parties recognize that the best or only available copy of certain Licensed Technical Information may reside, prior to or after the Closing Date, within the Business or in the possession of Kenan, and Lucent may require certain access to or copies of the Licensed Technical Information for procurement purposes or other purposes consistent with this Agreement or the Supply Agreement, which because of inadvertence or oversight, a copy was not retained by or made available to Lucent prior to the Closing Date. To that end, the Relevant Licensee agrees, upon receiving a written request from Lucent, to make a good faith effort to locate and provide, to the extent such Licensed Technical Information is available, within a commercially reasonable amount of time after receipt of Lucent's written request, copies of all or any portion of the Licensed Technical Information deemed necessary by Lucent or one of its Related Companies to exercise rights consistent with this Agreement. Any reasonable costs associated with the assembling, copying and delivering of such requested Licensed Technical Information shall be borne by Lucent. ARTICLE VI ASSIGNED PATENT 6.01 Patent Assignment. In partial exchange for the consideration given to ----------------- Lucent as set forth hereunder and in the Purchase Agreement, the Parties agree to execute the Patent Assignment whereby Lucent agrees to transfer and assign to the Relevant Buyer all of Lucent's present worldwide right, title and interest in and to U.S. patent number 6,115,714 (the "714 patent") and all its foreign ---------- counterparts, continuations, continuations-in-part, and divisions, if any, in accordance with such Patent Assignment. The Parties agree that the Patent Assignment is subject to the rights and licenses exchanged hereunder as well as the Prior Lucent Agreements (in accordance with such Patent Assignment). 6.02 License to the '714 Patent. In partial consideration for the transfer and -------------------------- assignment of the Assigned Patents by Lucent to the Relevant Buyer pursuant to the Patent Assignment, the Relevant Buyer grants to Lucent and its Related Companies a personal, nonexclusive, non-transferable (except as provided in Article XII), irrevocable, worldwide, fully paid-up license under the '714 patent to make, have made, use, offer to sell, sell, lease, license and import any products or services (present or future) of the businesses in which Lucent or any of its Related Companies is now or hereafter engaged (hereinafter, "Lucent Products"). The licenses in this Section 6.02 include the right convey --------------- to any customer of Lucent or its Related Companies, with respect to any Lucent Product which is sold, licensed or leased by Lucent or its Related Companies to such customer, rights to use and resell such Lucent Products as sold, licensed or leased by Lucent or its Related Companies (whether or not as part of a larger combination); 6 provided, however, that no rights may be conveyed to customers with respect to any invention which is directed to (1) a combination of such Lucent Product (as sold, licensed or leased) with any other product regardless of whether such other product is hardware, software or another Lucent Product, (2) a method or process which is other than the inherent use of such Lucent Product itself (as sold, licensed or leased), or (3) a method or process involving the use of a Lucent Product to manufacture (including associated testing) any other product. Such license does not include a license under any patents other than the `714 patent. ARTICLE VII PATENT LICENSES 7.01 Licensed Patents. Subject to the receipt of the consideration recited in ---------------- the Purchase Agreement, Lucent hereby grant or hereby transfers (in the case of Lucent IST) to the Relevant Licensee a personal, fully paid-up, worldwide, non- transferable (except as provided in Article XII), irrevocable and nonexclusive license under the Licensed Patents to make, have made, use, sell, offer to sell, lease, license, import or otherwise similarly transfer Licensed Products. The licenses in this Section 7.01 include the right convey to any customer of the the Relevant Licensee, with respect to any Licensed Product which is sold, licensed or leased by the Relevant Licensee to such customer, rights to use and resell such Licensed Products as sold, licensed or leased by the Relevant Licensee (whether or not as part of a larger combination); provided, however, that no rights may be conveyed to customers with respect to any invention which is directed to (1) a combination of such Licensed Product (as sold, licensed or leased) with any other product regardless of whether such other product is hardware, software or another Licensed Product, (2) a method or process which is other than the inherent use of such Licensed Product itself (as sold, licensed or leased), or (3) a method or process involving the use of a Licensed Product to manufacture (including associated testing) any other product. 7.02 No Indirect Infringement License. Licenses granted in Section 7.01 to the -------------------------------- Relevant Licensee are not to be construed (i) as consent by grantor to any act which may be performed by the grantee, except to the extent licensed under a Lucent Patent according to the terms of this Agreement, or (ii) to include licenses to contributorily infringe or induce infringement under U.S. law or a foreign equivalent thereof. 7.03 Term. The patent licenses granted herein under any patent shall continue, ---- unless otherwise terminated in accordance with this Agreement, for the entire unexpired term of such patent, but if, upon commencement of the Effective Date, the grantor has no rights, or less than full rights, with respect to any of its patents included within the definitions hereunder, the license granted herein under such patent shall be for as much of such term as, and to the maximum extent that, the grantor has the right to grant. 7.04 Ability To Provide Licenses. A Party's failure to meet any obligation --------------------------- hereunder, due to the assignment of title to any invention or patent, or the granting of any licenses, to the United States Government or any agency or designee thereof pursuant to a statute or regulation of, or contract with, such Government or agency, shall not constitute a breach of this Agreement. 7 7.05 Sublicenses. Lucent-GRL and Lucent, Inc. grant to the Relevant Licensee a ----------- sublicense under any and all patent license rights, with respect to which Lucent-GRL or Lucent have received from any third party pursuant to any license agreement a right to sublicense (but only to the extent that Lucent-GRL or Lucent, Inc. has a right to grant such a sublicense and without payment of royalties, loss of rights or imposition of a penalty), to make, have made, use, lease, license, offer to sell, sell, and import Licensed Products. To the extent that Lucent GRL's or Lucent's right to grant sublicenses to divested entities under any license agreement is limited to a grant made within a specified time period with respect to divestiture, then the sublicenses granted to the divested Business under this Section 7.05 shall be deemed to have occurred at the earliest date permitted in such license agreement. 7.06 No Sham. The "have made" rights granted hereunder to a Party shall not be ------- exercised in a manner that the exercise of such have made rights is a sham to sublicense the other Party's patents licensed hereunder to a third party and not for bona fide business purposes of such Party. 7.07 Exercise of Spin-Off Provisions in Lucent Agreement with IBM. The ------------------------------------------------------------- Relevant Licensee shall have the option to cause Lucent to exercise its right, under commercially reasonable terms and conditions, in favor of the Relevant Licensee under its patent cross license agreement with International Business Machines dated January 1, 1995 to enable the Relevant Licensee to obtain a cross license for the Business. The inability to exercise this right or provide this sublicense shall not constitute a breach of this Agreement or shall not materially affect or diminish the rights granted by this Agreement. Lucent shall exercise such right only to the extent that Lucent-GRL or Lucent, Inc. can do so without payment of royalties, material loss of rights or imposition of a material penalty. Notwithstanding the foregoing, if Lucent fails to exercise such right solely to avoid payment of a royalty or imposition of a monetary penalty, Lucent shall permit the Relevant Licensee an opportunity to pay the amount of any such royalty or monetary penalty, and upon such payment, Lucent shall exercise such right. ARTICLE VIII ASSIGNMENT OF TRADEMARKS, TRADE DRESS and DOMAIN NAMES 8.01 Trademark Assignments, Trade Dress Assignments and Domain Name -------------------------------------------------------------- Assignments. In exchange for the consideration given to Lucent as set forth - ----------- hereunder and in the Purchase Agreement, the Parties agree to execute the Trademark Assignments, Trade Dress Assignments, and Domain Name Assignment whereby Lucent agrees to transfer and assign to the Relevant Buyer all of Lucent's present worldwide right, title and interest in and to the Assigned Trademarks (including any and all common law rights therein) in accordance with such Trademark Assignments, Trade Dress specific to Kenan Products in accordance with the Trade Dress Assignments, and Domain Names in accordance with such Domain Name Assignments. 8 ARTICLE IX ASSIGNMENT OF COPYRIGHTS 9.01 Copyright Assignments. In exchange for the consideration given to Lucent --------------------- as set forth hereunder and in the Purchase Agreement, the Parties agree to execute the Copyright Assignments whereby Lucent agrees to transfer and assign to the Relevant Buyer all of Lucent's present worldwide right, title and interest in and to the Assigned Copyrights (including any and all common law rights therein) in accordance with such Copyright Assignments. ARTICLE X FURNISHING OF SOFTWARE, TECHNICAL INFORMATION AND ASSIGNED TRADEMARK-RELATED INFORMATION 10.01 Subject to Sections 2.03, 3.02, 4.03 and 5.02, Lucent shall furnish the following to the Relevant Buyer or if applicable the Relevant Licensee: (i) the Software; and (ii) the Technical Information; and (iii) the Assigned Trademark-Related Information; and (iv) the Assigned Patent-Related Information. 10.02 Delivery of any materials pursuant to Section 10.01 shall be deemed completed on the date such materials are shipped by Lucent or one of its Related Companies. ARTICLE XI EXPORT CONTROL 11.01 The Parties acknowledge that any information and software (including, but not limited to, services and training) provided under this Agreement are subject to U.S. export laws and regulations and any use or transfer of such information and software must be authorized under those regulations. Each Party hereby assures the other that it will not without a license or license exception authorized by the Bureau of Export Administration of the U.S. Department of Commerce, Washington, D.C. 20230, United States of America, if required: (i) export or release the information or software (including source code) obtained pursuant to this Agreement to a national of Country Groups D:1 or E:2 (15 C.F.R. Part 740, Supp. 1), or to Afghanistan, Iran, Iraq, Sudan, or Syria; (ii) export to Country Groups D:1 or E:2, or to Iran, Iraq, Sudan, or Syria, the direct product (including processes and services) of the information or software; or 9 (iii) if the direct product of the information is a complete plant or any major component of a plant, export to Country Groups D:1 or E:2, or to Iran, Iraq, Sudan, or Syria, the direct product of the plant or major component. (b) This assurance will be honored even after any termination of this Agreement. ARTICLE XII TERM AND TERMINATION 12.01 Term. This Agreement shall be effective during the term commencing on ---- the Effective Date hereof and shall continue unless terminated by mutual agreement between the Parties. 12.02 Survival. The rights and obligations of the Parties which, by their -------- nature would continue beyond termination of this Agreement shall survive and continue after any termination of this Agreement. For example, the obligations of the Parties under Sections 11.01 and 15.03, licenses to customers with respect to products sold by a Party prior to any such termination. ARTICLE XIII ASSIGNABILITY 13.01 The Parties hereto have entered into this Agreement in contemplation of personal performance, each by the other, and intend that the licenses and rights granted hereunder to a Party not be extended to entities other than such Party's Related Companies without the other Party's express written consent. 13.02 Notwithstanding Section 13.01, each party's rights, title and interest in this Agreement and any licenses and rights granted to it hereunder may be assigned to any direct or indirect successor or surviving entity (collectively, "successor") to all or a portion of the business of such party, which successor --------- shall thereafter be deemed substituted for such party as the Party hereto, effective upon such assignment. 13.03 The grant of each license hereunder also includes the right of a Party to sublicense (but only within the scope of such Party's own licenses and only to the extent that the other Party has a right to authorize such Party to grant such a sublicense and provided that the other Party shall not be obligated to pay any consideration for such sublicense authorization) any business (that is, which is divested or substantially all of the assets of a business which is sold by that Party) or any of its Related Companies provided that (i) the sublicense is granted within sixty (60) days of divestiture and (ii) the business has tangible assets with a net fair market value of at least $10,000,000. Such sublicense shall extend only to the licensed products of the kind sold or furnished by the business prior to the divestiture or asset sale and only for the rights of the non-divesting Party licensed to the divesting Party in this Agreement as of the date of divestiture or asset sale. Furthermore, any sublicense shall not extend to the products sold or services furnished by a third party which acquires the business, even if they are of the same kind or 10 similar to those of the business and even if made, sold or provided by the business. This Section 13.03 shall apply regardless of whether the business is divested by a distribution to existing shareholders, a sale of assets or as a sale of a legal entity (e.g., sale of a Subsidiary). ARTICLE XIV LICENSES TO RELATED COMPANIES AND IMPROVEMENTS 14.01 Licenses to Related Companies. The grant of each license hereunder ----------------------------- includes the right to grant sublicenses within the scope of such license to a Party's Related Companies for so long as they remain its Related Companies. Any and all licenses or sublicenses granted to Related Companies pursuant to this Agreement may be made effective retroactively, but not prior to the Effective Date hereof, nor prior to the sublicensee's becoming a Related Company of such Party. 14.02 No Other Licenses. Unless otherwise specifically expressed in this ----------------- Agreement or the Supply Agreements, no license to, or right of a Party, under any of such Party's patent, copyright, trademark, trade secret, or any other intellectual property right, is either granted or implied by such Party's conveying any information to the other Party. 14.03 Improvements. Except as otherwise expressly provided for in this ------------ Agreement or the Supply Agreements, no rights are granted to a Party under any improvements or Derivative Works of the information disclosed in Software, the Technical Information, or the Patents to the extent made by the other Party after the Effective Date. ARTICLE XV DISCLAIMER AND COVENANTS 15.01 DISCLAIMER (a) NO PARTY TO THIS AGREEMENT MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. BY WAY OF EXAMPLE, BUT NOT OF LIMITATION, NO PARTY TO THIS AGREEMENT MAKES ANY REPRESENTATIONS OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR THAT THE USE OF THE TECHNICAL INFORMATION, SOFTWARE OR OTHER INFORMATION WILL NOT INFRINGE ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY AND IT SHALL BE THE SOLE RESPONSIBILITY OF THE ASSIGNEE AND LICENSEE, AS THE CASE MAY BE, TO MAKE SUCH DETERMINATION AS IS NECESSARY WITH RESPECT TO THE ACQUISITION OF LICENSES UNDER PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. (b) NO PARTY TO THIS AGREEMENT SHALL BE HELD TO ANY LIABILITY WITH RESPECT TO ANY PATENT INFRINGEMENT OR ANY OTHER CLAIM MADE BY ANY OTHER PARTY TO THIS AGREEMENT OR ANY THIRD 11 PARTY ON ACCOUNT OF, OR ARISING FROM THE USE OF, THE TECHNICAL INFORMATION, SOFTWARE OR OTHER INFORMATION ASSIGNED OR LICENSED HEREUNDER. 15.02 Use of Trademarks. ----------------- (a) The Relevant Buyer will not, without Lucent's express written permission or as provided herein or in the Purchase Agreement, or as otherwise agreed to in writing, (i) knowingly use in advertising, publicity, or otherwise any trade name, trademark, trade device, service mark, symbol or any other identification or any abbreviation, contraction or simulation thereof owned or used by Lucent or any of its Related Companies, or (ii) represent, directly or indirectly, that any product or service produced in whole or in part with the use of any of the Software, Technical Information or Patents is a product or service of Lucent or any of its Related Companies. (b) Lucent will not, without the Relevant Buyer's express written permission or as provided herein or in the Purchase Agreement, or as otherwise agreed to in writing, (i) knowingly use in advertising, publicity, or otherwise any trade name, trademark, trade device, service mark, symbol or any other identification or any abbreviation, contraction or simulation thereof owned or used by the Relevant Buyer or any of its Related Companies, or (ii) represent, directly or indirectly, that any product or service produced in whole or in part with the use of any of the Software, Technical Information or Patents is a product or service of the Relevant Buyer or any of its Related Companies. 15.03 Confidential Information. ------------------------ (a) Except as otherwise expressly provided for in this Agreement, Relevant Licensee and Relevant Buyer will hold in confidence for Lucent all parts of the Licensed Software, Licensed Technical Information and Lucent Confidential Information that Relevant Licensee's and Relevant Buyer's personnel may unavoidably receive or have access to during the performance of this Agreement. Relevant Licensee and Relevant Buyer further agree that all such information shall remain the property of Lucent and that Relevant Licensee and Relevant Buyer shall not make any disclosure of such information to anyone, except to employees, contractors and agents of Relevant Licensee and Relevant Buyer to whom such disclosure is necessary to the use for which rights are granted hereunder. Relevant Licensee and Relevant Buyer shall appropriately notify all such employees, contractors and agents to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by them and obtain their written agreement to so keep in confidence. (b) Except as otherwise expressly provided for in this Agreement, Lucent will hold in confidence for Buyer and its Related Companies, all parts of the Assigned Technical Information and Buyer Confidential Information that Lucent's personnel may unavoidably receive or have access to during the performance of this Agreement. Lucent further agrees that all such information shall remain the property of Buyer or, where applicable, the Relevant Buyer, and that Lucent shall not make any disclosure of such information to anyone, except to employees, contractors and agents of Lucent to whom such disclosure is necessary to the use for which rights are granted hereunder. Lucent shall appropriately notify all such employees, contractors and 12 agents to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by them and obtain their written agreement to so keep in confidence. (c) The restrictions under this Section 15.03 on the use or disclosure of such information shall not apply to such information: (i) which is independently developed by the receiving Party or is lawfully received free of restriction from another source having the right to so furnish such information; or (ii) after it has become generally available to the public by acts not attributable to the receiving party or its employees, agents or contractors; or (iii) which at the time of disclosure to the receiving party was known to receiving party free of restriction and evidenced by documentation in receiving party's possession; or (iv) which the disclosing party agrees in writing is free of such restrictions; or (v) which is inevitably disclosed by a sale of a product by a Party; or (vi) which is requested pursuant to a judicial or governmental request, requirement or order under law, provided that the receiving party provides the disclosing party with sufficient prior notice in order to contest such request, requirement or order or seek protective measures. 15.04 Limitation on Liability. Except for a Party's breach of Section 15.03, ------------------------ no Party or its Related Companies will under any circumstance, whether as a result of breach of contract, breach of warranty, delay, negligence, tort or otherwise, be liable to the other Party or to any third party for any consequential, incidental, special, punitive or exemplary damages and/or loss of profits, savings or revenues of the other Party or any third party arising out of this Agreement, whether or not the applicable Party or its Related Companies has been notified of the possibility or likelihood of such damages. ARTICLE XVI GENERAL PROVISIONS 16.01 Consideration. The consideration, the sufficiency of which is ------------- acknowledged by the Parties, for the transfers, assignments and grant of rights and licenses under this Agreement is provided hereunder and in the Purchase Agreement. 16.02 Agreement Prevails. This Agreement shall prevail in the event of any ------------------ conflicting terms or legends, which may appear on documents, the Software, the Documentation, the Patents or the Technical Information hereunder. 13 16.03 Relationship Between Parties. No Party to this Agreement shall have the ---------------------------- power to bind the other by any guarantee or representation that it may give, or to incur any debts or liabilities in the name of or on behalf of the other Party. The Parties acknowledge and agree that nothing contained in this Agreement shall be deemed or construed to constitute or create between the Parties hereto a partnership, association, joint venture or other agency. 16.04 Entire Agreement. This Agreement, the Purchase Agreement and Collateral ---------------- Agreements set forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions between them, and none of the Parties shall be bound by any conditions, definitions, warranties, modifications, understandings or representations with respect to such subject matter other than as expressly provided herein, or as duly set forth on or subsequent to the Effective Date hereof in writing and signed by a proper and duly authorized representative of the Party to be bound thereby. If any of the provisions set forth in this Agreement conflict with any provision of the Software License and Services Master Agreement, the provisions set forth herein shall control. 16.05 Agreement Confidentiality. The terms, but not the existence, of this ------------------------- Agreement shall be treated as confidential information by the Parties, and no Party shall disclose such terms to any third party without the prior written consent of the other Party; provided however, that each Party may (i) represent to third parties that such Party is licensed for the products and patents as provided by this Agreement; and (ii) disclose this Agreement and its terms to potential acquirers of, investors in or lenders to such Party (and the representatives of Parties in such transactions), or disclosures reasonably necessary in connection with the divestiture of all or any portion of a Party's respective businesses, provided such disclosure is made pursuant to a written confidentiality agreement binding upon such potential acquirer, investor or lender which contains confidentiality obligations which are no less protective than at least the same degree of care the disclosing Party normally exercises to protect its own proprietary information of a similar nature. In addition, this Section 16.05 shall not prevent a Party from making disclosures reasonably required by law or as required by a stock exchange. 16.06 Headings. Section and subsection headings contained in this Agreement -------- are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof. 16.07 Further Actions. Each Party agrees to execute, acknowledge and deliver --------------- such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. Each Relevant Buyer shall be responsible for perfecting at such Relevant Buyer's own expense such Relevant Buyer's rights in, to, or under any Assigned Software, Assigned Information, Assigned Patents, Assigned Copyrights, Assigned Domain Names and Assigned Trademarks. Lucent agrees to provide testimony, without charging a fee to the Relevant Buyer but at the Relevant Buyer's expense for any reasonable costs incurred, at any time in connection with any proceedings affecting the right, title, interest or benefit of a Relevant Buyer in, to or under the Assigned Software, Assigned Information, Assigned Patents, Assigned Copyrights, Assigned Domain Names and Assigned Trademarks and to execute and deliver upon request of a Relevant Buyer such additional 14 documents as are necessary or desirable to give full effect to and perfect the rights of the Relevant Buyer under the assignment agreements relating thereto. 16.08 Governing Law; Jurisdiction; Waiver of Jury Trial. (a) The Parties ------------------------------------------------- agree that this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York, USA excluding the choice of law rules thereof. (b) Except as otherwise expressly provided in this Agreement, the parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 18.01 shall be deemed effective service of process on such party. (c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 16.09 Force Majeure. A Party shall not lose any rights hereunder or be liable ------------- to the other Party for damages or losses on account of failure of performance by the defaulting Party if the failure is occasioned by government action, war, fire, explosion, flood, strike, lockout, embargo, act of God, or other cause beyond the reasonable control of the defaulting Party, provided that the Party claiming force majeure has exerted commercially reasonable efforts to avoid or remedy such force majeure. 16.10 Waiver. Except as specifically provided for herein, the waiver from time ------ to time by a Party of any of their rights or their failure to exercise any remedy shall not operate or be construed as a continuing waiver of the same or of any other of such Party's rights or remedies provided in this Agreement. 16.11 Severability. If any term, covenant or condition of this Agreement or ------------ the application thereof to any Party or circumstances shall, to any extent, be held to be invalid or unenforceable, then the remainder of this Agreement, or the application of such term, covenant or condition to parties or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 15 16.12 No Obligation. Except as otherwise agreed in this Agreement, in the ------------- Purchase Agreement, or in a Collateral Agreement, the Parties shall have no right or interest whatsoever in any product of the other Party whether such product is conceived or developed by the other Party, during or after the course of performance of this Agreement, the Purchase Agreement or any Collateral Agreement. Nothing in this Agreement shall be construed to obligate any Party to a specified level of effort in its promotion and marketing of any product. 16.13 Appendices. The Parties acknowledge that the Appendices hereto may ---------- require certain corrections or modifications solely direct to the correction of typographical errors or as necessary to comport with the Definitions herein and agree that any such changes may be made prior the Closing Date. 16.14 Execution in Counterparts. This Agreement may be executed in any number ------------------------- of counterparts, each of which shall be deemed an original (including facsimile copies), but all of which together shall constitute one and the same instrument. 16.15 Lucent agrees, at its option, to provide testimony, at Relevant Buyer's expense, at any time in connection with any proceedings affecting the right, title, interest or benefit of Buyer in, to or under the '714 patent, the Assigned Software, the Assigned Information, the Assigned Copyrights, the Assigned Domain Names and the Assigned Trademarks. In addition, upon Buyer's written request received by Lucent within two (2) years after the Effective Date, Lucent shall execute and deliver to the Relevant Buyer such additional documents as are necessary or desirable to give full effect to and perfect the rights of the Relevant Buyer under this Assignment. 16.16 The Parties hereby agree to the terms and conditions set forth in Attachment 6. ARTICLE XVII DISPUTE RESOLUTION 17.01 The Parties agree: (a) If a dispute arises out of or relates to this Agreement, or the breach, termination or validity thereof, the Parties agree to submit the dispute to a sole mediator selected by the Parties or, at any time at the option of a Party, to mediation by the American Arbitration Association ("AAA"). If not thus --- resolved, it shall be referred to a panel of 3 arbitrators (one arbitrator selected by each of Lucent and Buyer and the third arbitrator selected by the first two) selected by the Parties within thirty (30) days of the mediation, or in the absence of such selection, to AAA arbitration which shall be governed by the United States Arbitration Act. (b) Any award made (i) shall be a bare award limited to a holding for or against a Party and affording such remedy as is deemed equitable, just and within the scope of the Agreement; (ii) shall be without findings as to issues (including but not limited to patent validity and/or infringement) or a statement of the reasoning on which the award rests; (iii) may in appropriate circumstances (other than patent disputes) include injunctive relief; (iv) shall be 16 made within four (4) months of the appointment of the arbitrator; and (v) may be entered in any court. (c) The requirement for mediation and arbitration shall not be deemed a waiver of any right of termination under this Agreement and the arbitrators are not empowered to act or make any award other than based solely on the rights and obligations of the Parties prior to any such termination. (d) The arbitrators shall determine issues of arbitrability but may not limit, expand or otherwise modify the terms of the Agreement. (e) The place of mediation and arbitration shall be New York City. (f) Each Party shall bear its own expenses but those related to the compensation and expenses of the mediator and arbitrator shall be borne equally. (g) A request by a Party to a court for interim measures shall not be deemed a waiver of the obligation to mediate and arbitrate. (h) The arbitrators shall not have authority to award punitive, consequential, incidental, special, exemplary or other damages in excess of compensatory damages and each Party irrevocably waives any claim thereto. (i) The Parties, their representatives, other participants and the mediators and arbitrators shall hold the existence, content and result of mediation and arbitration in confidence. ARTICLE XVIII NOTICES AND STATEMENTS 18.01 Until further notice in writing, any notice or other communication hereunder shall be deemed to be sufficiently given to the addressee and any delivery hereunder deemed made when sent by certified mail to the addresses set out below. For Lucent: Contract Administrator Intellectual Property Business Lucent Technologies Inc. 2400 SW 145 Avenue Miramar, Florida 33027 With copy to: Lucent Technologies Inc. Attn: Assistant General Counsel - IP Law Intellectual Property Law Department 600-700 Mountain Avenue Murray Hill, New Jersey 07974-0636 USA 17 Vice President Corporate and Securities Law Lucent Technologies Inc. 600-700 Mountain Avenue Murray Hill, New Jersey 07974-0636 USA For Buyer: CSG Systems International, Inc. Attn: Vice President-Strategic Initiatives 7887 East Belleview Ave. Suite 1000 Englewood, Colorado 80111 With copy to: CSG Systems International, Inc. Attn: Senior Vice President-Corporate Development and General Counsel 7887 East Belleview Ave. Suite 1000 Englewood, Colorado 80111 For the Relevant Buyers: CSG Software, Inc. Attn: President 7887 East Belleview Ave. Suite 1000 Englewood, Colorado 80111 With copy to: CSG Software, Inc. Attn: Vice President 7887 East Belleview Ave. Suite 1000 Englewood, Colorado 80111 CSG Technology Limited Attn: President 7887 East Belleview Ave. Suite 1000 Englewood, Colorado 80111 With copy to: CSG Systems International, Inc. Attn: General Counsel 7887 East Belleview Ave. Suite 1000 Englewood, Colorado 80111 18 IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized representative on the respective dates entered below. LUCENT TECHNOLOGIES INC. By: /s/ D. L. Padilla --------------------------------------------- D. L. Padilla President - Intellectual Property Business Date: February 28, 2002 ------------------------------------------- LUCENT TECHNOLOGIES GRL CORPORATION By: /s/ D. L. Padilla --------------------------------------------- D. L. Padilla Chairman Date: February 28, 2002 ------------------------------------------- LUCENT TECHNOLOGIES IRELAND HOLDING LIMITED By: /s/ Jeffrey L. Kestler --------------------------------------------- Jeffrey L. Kestler Date: February 28, 2002 ------------------------------------------- CSG SYSTEMS INTERNATIONAL, INC. By: /s/ Joseph T. Ruble --------------------------------------------- Joseph T. Ruble 19 Date: February 28, 2002 ------------------------------------------- CSG SOFTWARE, INC. By: /s/ Joseph T. Ruble --------------------------------------------- Joseph T. Ruble Date: February 28, 2002 ------------------------------------------- CSG TECHNOLOGY LIMITED By: /s/ Mark Wagner --------------------------------------------- By: /s/ Joseph T. Ruble --------------------------------------------- Mark Wagner Joseph T. Ruble Date: February 28, 2002 ------------------------------------------- THIS AGREEMENT DOES NOT BIND OR OBLIGATE ANY PARTY IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED REPRESENTATIVES OF ALL PARTIES 20 APPENDIX A DEFINITIONS APPENDIX "Agere Systems" means Agere Systems Inc., a Delaware corporation having an ------------- office at 555 Union Boulevard, Allentown, Pennsylvania 18109, the legal entity formed by Lucent after announcing that Lucent is restructuring itself to conduct Lucent's business in the form of two separate independent legal entities. These two entities include a first new entity comprising Lucent's former microelectronics group, now Agere Systems Inc., and a second existing entity comprising the remaining Lucent businesses. "Assigned Copyrights" means the copyrights specifically set forth in the ------------------- Copyright Assignment. "Assigned Domain Names" means the domain names specifically set forth in the Domain Name Assignment. "Assigned Patents" means the patents specifically set forth in the Patent ---------------- Assignment. "Assigned Patent-Related Information" means (i) internal Lucent prosecution case ----------------------------------- files specific to the Assigned Patents; and (ii) any internal database docketing information (furnished in an electronic form to be mutually determined by the Parties) specific to the docketing and maintenance fee scheduling of the Assigned Patents generated by Lucent in accordance with its customary practices as such information exists as of the Closing Date. "Assigned Software" means the Code and associated Documentation specifically ----------------- identified in Appendix B to this Agreement. "Assigned Technical Information" means Information specifically identified in ------------------------------ Appendix D to this Agreement. "Assigned Trademarks" means the marks specifically set forth in the Trademark ------------------- Assignment. "Assigned Trademark-Related Information" means (i) internal Lucent prosecution -------------------------------------- case files specific to the Assigned Trademarks; and (ii) any internal database docketing information (furnished in an electronic form to be mutually determined by the Parties) specific to the docketing and maintenance fee scheduling of the Assigned Trademarks generated by Lucent in accordance with its customary practices as such information exists as of the Closing Date. "Business" has the meaning assigned in Recital B hereof. -------- "Business Employees" has the meaning assigned in the Purchase Agreement. ------------------ "Buyer Confidential Information" means information, but not Assigned Technical ------------------------------ Information, disclosed hereunder by Buyer or its Related Companies that is marked as "confidential" or "proprietary" at the time of disclosure to Lucent or, if disclosed orally, is identified at the time of 1 disclosure as "confidential" or "proprietary" and followed by a summary in writing provided by Buyer or its Related Companies to Lucent within thirty (30) days of the original disclosure. "Buyer Product" means any product that, as of the Effective Date, is sold or -------------- offered for sale directly by Buyer or its Related Companies and is set forth in Appendix G. "Closing Date" has the meaning assigned in the Purchase Agreement. ------------ "Code" shall mean Object Code and Source Code, collectively. ---- "Copyright Assignment" means the agreements as executed (on or about a date ---------------------- concurrent with this Agreement) by Lucent and the Relevant Buyers attached hereto as Attachment 1-A and 1-B, which Assignments may be recorded in the records of the U.S. Copyright Office and any foreign copyright office. "Derivative Work(s)" shall mean any work of authorship which: (i) is based, in ------------------ whole or in part, upon one or more pre-existing works, such as a revision, modification, translation, abridgment, condensation, expansion or any other form in which such pre-existing works may be recast, transformed or adapted as defined in 17 United States Code Section 101; and (ii) if prepared without authorization of the owner of the copyright in such pre-existing work, would constitute a copyright infringement. "Documentation" shall mean all information, whether in human and/or machine- ------------- readable form, relating to Code, including but not limited to user manuals and materials useful for design (for example, logic manuals, flow charts, and principles of operation). "Domain Name Assignment" means the agreement as executed (on or about a date ------------------------ concurrent with this Agreement) by Lucent and the Relevant Buyers attached hereto as Attachment 2 which Assignments may be recorded in any U.S. or foreign domain name registry. "Effective Date" has the meaning assigned in Recital A hereof. -------------- "Improvement(s)" means any modification or change (such modification or change -------------- made either before or after the Effective Date) to a Kenan Product made prior to the Effective Date which results in another product that is substantially similar to such Kenan Product. "Information" means all documented and undocumented information (excluding ----------- patents and patent applications), including without limitation Code, Documentation, technical information, technical memoranda, technical reports, data and drawings of whatever kind in whatever medium, specifications, tangible know-how, processes, manuals, instructions, directories, schematics, sketches, photographs, graphs, dies, molds, tools, tooling, samples, price lists, part lists and descriptions, and any and all notes, analysis, compilations, studies, summaries, and other material containing or based, in whole or in part, on any information included in the foregoing. "Kenan Products" means (i) any product (including but not limited to those --------------- products listed in Appendix F) that is, as of the Effective Date, in development or has been manufactured, sold or offered for sale directly by or on behalf of Kenan and (ii) any Improvements. 2 "Licensed Patents" means every patent (other than the '714 patent), filed or ---------------- issued as of the Effective Date which Lucent, Inc. or Lucent-GRL or their Related Companies has the right to grant any licenses of the type herein granted by Lucent, Inc. or Lucent-GRL under such patent, but only to the extent of such right, and (i) claims an invention disclosed in the Technical Information as furnished hereunder; or (ii) but for the licenses granted herein is unavoidably and necessarily infringed by the making, using, having made, importing, selling or offering for sale of Licensed Products; or (iii) but for the licenses granted herein is unavoidably and necessarily infringed by the making, using, having made, importing, selling or offering for sale of the Assigned Software and such modifications or derivative works based thereon as Buyer or its Related Companies is permitted to make pursuant to this Agreement and/or Licensed Software and such modifications or derivative works based thereon as Buyer or its Related Companies is permitted to make pursuant to this Agreement. Notwithstanding the preceding, no patents, applications or invention disclosures of Agere Systems are included in the definition of Licensed Patents. "Licensed Products" means Kenan Products and billing and customer care software ----------------- systems. "Licensed Software" means the Code and associated Documentation specifically ----------------- identified herein in Appendix C. "Licensed Technical Information" means Information specifically identified ------------------------------ herein in Appendix E. "Lucent Confidential Information" means information, but not Licensed Technical ------------------------------- Information, disclosed hereunder by Lucent that is marked as "confidential" or "proprietary" at the time of disclosure to Buyer or its Related Companies or, if disclosed orally, is identified at the time of disclosure as "confidential" or "proprietary" and followed by a summary in writing provided by Lucent to Buyer or its Related Companies within thirty (30) days of the original disclosure. "Object Code" shall mean code in machine-readable form generated by compilation, ----------- assembly or other translation of Source Code and contained in a medium which permits it to be loaded into and operated on by a processor. "Patents" means Licensed Patents. ------- "Patent Assignment" means the agreement(s) as executed (on or about a date ----------------- concurrent with this Agreement) by Lucent and the Relevant Buyers attached hereto as Attachment 3, which Assignments may be recorded in the records of the U.S. Patent and Trademark Office and any foreign patent office. "Prior Lucent Agreements" means all prior written agreements (or replacement ----------------------- agreements thereof) between (on the one hand) Lucent, its predecessors (including AT&T Corp. and AT&T's Subsidiaries) and/or Lucent's Related Companies, and (on the other hand) one or more third parties that have an effective date prior to the Effective Date of this Agreement. "Purchase Agreement" has the meaning assigned in Recital A hereof. ------------------ 3 "Purchased Assets" has the meaning assigned in the Purchase Agreement. ---------------- "Related Companies" means (i) with respect to Lucent-GRL, the following: ----------------- Lucent-GRL's Subsidiaries, its parent Lucent Technologies Inc., and its parent's Subsidiaries other than Lucent-GRL; (ii) with respect to Lucent, the following: Subsidiaries of Lucent; (iii) with respect to CSG Software or CSG Technology, the following: CSG Software's or CSG Technology's Subsidiaries respectively, their parent, CSG Systems International, Inc., and their parent's Subsidiaries; (iv) with respect to Buyer, the following: Subsidiaries of Buyer; and (v) any other entity so designated in a writing signed by Lucent and Buyer. "Software" means Assigned Software and Licensed Software, collectively. -------- "Source Code" shall mean code in any programming language contained in any ----------- format, including human and machine-readable formats, such code including all comments and procedural code plus all related development documents such as, but not limited to, flow charts, schematics, statements of principles of operations or any other specifications. "Subsidiary" of a company means a corporation or other legal entity (i) more ---------- than fifty percent (50%) of whose shares or other securities entitled to vote for election of directors (or other managing authority) is now or hereafter controlled by such company either directly or indirectly; or (ii) which does not have outstanding shares or securities but more than fifty percent (50%) of whose ownership interest representing the right to manage such corporation or other legal entity is now or hereafter owned and controlled by such company either directly or indirectly; but any such corporation or other legal entity shall be deemed to be an Subsidiary of such company only as long as such control or ownership and control exists. "Software License and Services Master Agreement" means the agreement set forth ---------------------------------------------- as Exhibit C of the Purchase Agreement related to the purchase of certain services by Lucent from Buyer or its Related Companies after the Effective Date, which such Parties expect to execute on or about a date concurrent with this Agreement. "Technical Information" means Assigned Technical Information and Licensed --------------------- Technical Information, collectively. "Trademark Assignment" means the agreements as executed (on or about a date -------------------- concurrent with this Agreement) by Lucent and the Relevant Buyers attached hereto as Attachments 5-A and 5-B, which Assignments may be recorded in the records of the U.S. Patent and Trademark Office and any foreign trademark office. "Trade Dress Assignment" means the agreements as executed (on or about a date ---------------------- concurrent with this Agreement) by Lucent and the Relevant Buyers attached hereto as Attachments 4-A and 4-B, which Assignments may be recorded in the records of the U.S. Patent and Trademark Office and any foreign trademark office. "Unassignable Contracts" has the meaning contained in the Software License and ---------------------- Services Master Agreement. 4 APPENDIX B ASSIGNED SOFTWARE 1. Code specific to the Arbor/BP billing and customer care platform including, for example, Bill Cycle Modules, Usage Processing Modules, Message Processing System (MPS) Modules, Graphical User Interface (GUI) Modules and Arbor/FM, Arbor/FX scheduling and visualization tools. 2. Code specific to the Arbor/OM service request and inventory management platform including, for example, Class Libraries and Pay Per View (PPV) interface. 3. Code specific to the BILLDATS data manager platform, including any interface software developed by Lucent and, including DGS (Data Generating System) and DCS (for messaging mediation). 4. Custom Code specific to the KABS platform for U.S. Postal Service including, for example, Accumate and Strategist software components. 5. Code specific to the Hourglass platform. 6. Code specific to the Fraud Manager platform. 7. Code currently under development by or on behalf of Kenan (including Code for Content Settlements, Arbor/Prepay, Next Generation Kenan Billing Platform and WAP graphical user interface). 8. Any development tools used in connection with any of the above-listed items. 1 APPENDIX C LICENSED SOFTWARE 1. Code associated with or used by the BILLDATS data manager platform including, for example, BaseWorX, CFront, Sablime and NMake. 2. Fraud Signature algorithm software. 3. Interprenet software. 4. One UI software components. 5. Managed Security Protocol. 6. Alarm Systems package. 7. Datablitz Binary. 8. Lucent Prepay component used in the Arbor/Prepay product. 1 APPENDIX D ASSIGNED TECHNICAL INFORMATION 1. Information specific to the development, design or use of Arbor/BP billing and customer care software platform including, for example, the Arbor/BP Data Model. 2. Information specific to the development, design or use of Arbor/OM service request and inventory management software platform. 3. Information specific to the development, design or use of BILLDATS data manager software platform but not including components of BILLDATS which are owned by Lucent or its Related Companies. 4. Information specific to the development, design or use of custom KABS software platform for U.S. Postal Service. 5. Information specific to the development, design or use of Hourglass software platform. 6. Information (including, for example, architecture and requirements documents) specific to the Content Settlements product under development by Business Employees as of the Closing Date. 7. Information specific to the development, design or use of Arbor/Prepay software platform developed by Business Employees as of the Closing Date. 8. Information specific to Next Generation Kenan Billing Platform (NGKBP) under development developed by Business Employees as of the Closing Date. 9. Information specific to WAP graphical user interface (GUI) product under development developed by Business Employees as of the Closing Date. 10. Information specific to the Fraud Manager platform. 1 APPENDIX E LICENSED TECHNICAL INFORMATION 1. Information (i) owned by, developed, assembled and in the possession of Lucent or its Related Companies as of the Effective Date, and (ii) that, in addition to currently being used in the operation of the Business or in Kenan Products as of the Effective Date, has application in other business units or areas within Lucent or its Related Companies, and/or applications external to Lucent or its Related Companies prior to the Effective Date. 2. Information specific to BaseWorX, CFront, Sablime, NMake and other components associated with BILLDATS data manager platform. 3. Information specific to Lucent-developed Fraud Signature algorithm software. 4. Information specific to Managed Security Protocol product. 5. Information specific to and including the OneUI Style Guide for standard web format. 6. Information specific to Interprenet product. 7. Lucent Prepay component used in the Arbor/Prepay product. 1 APPENDIX F KENAN PRODUCTS See attached Kenan Products brochures. 1 APPENDIX G BUYER PRODUCTS 1. CCS 2. Nextgen 1 APPENDIX H Assignments of Intellectual Property to the Relevant Buyer All intellectual property rights in the Assigned Software, Assigned Technical Information, the '714 patent, the Assigned Copyrights and the Assigned Trademarks held or registered in the U.S. or Canada shall be assigned to CSG Software. As to all such intellectual property rights, CSG Software shall be the "Relevant Buyer". All intellectual property rights in the Assigned Software, Assigned Technical Information, the '714 patent, the Assigned Copyrights and the Assigned Trademarks held or registered in any country other than the U.S. or Canada shall be assigned to CSG Technology. As to all such intellectual property rights, CSG Technology shall be the "Relevant Buyer". Relevant Licensee ----------------- Each of the licenses granted under Articles III, V and VII that relate to intellectual property rights held or registered in the U.S. or Canada shall be licensed to CSG Software. As to such licenses, CSG Software shall be the "Relevant Licensee." Each of the licenses granted under Articles III, V and VII that relate to intellectual property rights held or registered in any country other than the U.S. or Canada shall be licensed to CSG Technology. As to such licenses, CSG Technology shall be the "Relevant Licensee." 1 EX-2.30 5 dex230.txt SOFTWARE & SERVICES MASTER SUPPLY AGMT (N.A.) Agreement No._____________ Page 1 of 26 Exhibit 2.30 LUCENT TECHNOLOGIES INC. CSG SYSTEMS INTERNATIONAL, INC. 600 Mountain Avenue 7887 E. Belleview, Suite 1000 Murray Hill, NJ 07974 Englewood, CO 80111 CSG SOFTWARE, INC 7887 E. Belleview, Suite 1000 Englewood, CO 80111 SOFTWARE AND SERVICES MASTER SUPPLY AGREEMENT (NORTH AMERICA) Agreement No._____________ Page 2 of 26 TABLE OF CONTENTS 1.0 DEFINITIONS..................................................... 4 2.0 SCOPE OF AGREEMENT; ADDITIONAL CONTRACTS........................ 7 3.0 ORDERS.......................................................... 7 4.0 SOFTWARE LICENSE GRANT.......................................... 8 5.0 PERFORMANCE OF CONTINUING OBLIGATIONS........................... 8 6.0 LICENSE AND SERVICE FEES........................................ 9 7.0 EFFECTIVE DATE AND TERM......................................... 9 8.0 INTELLECTUAL PROPERTY RIGHTS.................................... 9 9.0 DELIVERABLES; LATE DELIVERIES................................... 10 10.0 INVOICING....................................................... 10 11.0 PAYMENT TERMS................................................... 10 12.0 ELECTRONIC DATA INTERCHANGE..................................... 10 13.0 MISCELLANEOUS EXPENSES.......................................... 11 14.0 TAXES........................................................... 11 15.0 TITLE TO AND RISK OF LOSS OF MEDIUM............................. 11 16.0 SOFTWARE ACCEPTANCE............................................. 11 17.0 COPYRIGHT NOTICE................................................ 11 18.0 CUSTOMER SUPPORT; UPDATES, UPGRADES AND PATCHES................. 11 19.0 QUALITY PROCESSES............................................... 11 20.0 NEW RELEASES OF SOFTWARE........................................ 12 21.0 PROTECTION OF CONFIDENTIAL SOFTWARE............................. 12 22.0 TRAINING SERVICES AND LICENSE................................... 13 23.0 WARRANTIES...................................................... 13 24.0 REPRESENTATIONS................................................. 14 25.0 ASSIGNMENT...................................................... 14 26.0 CHOICE OF LAW................................................... 14 27.0 COMPLIANCE WITH LAWS............................................ 15 28.0 DISPUTE RESOLUTION.............................................. 15 29.0 EXPORT.......................................................... 15 30.0 FORCE MAJEURE................................................... 15 31.0 IDENTIFICATION.................................................. 16 32.0 INDEMNITY....................................................... 16
Agreement No._____________ Page 3 of 26 33.0 INFRINGEMENT CLAIMS............................................. 17 34.0 INSURANCE REQUIREMENTS.......................................... 17 35.0 LIMITATION OF LIABILITY......................................... 17 36.0 NOTICES......................................................... 18 37.0 NOTICE OF UPDATES, UPGRADES AND PATCHES......................... 18 38.0 SOURCE CODE ESCROW.............................................. 19 39.0 USE OF COMPANY'S INFORMATION AND MEDIA.......................... 19 40.0 SUPPLIER DEFAULTS............................................... 19 41.0 COMPANY DEFAULTS................................................ 20 42.0 REMEDIES AND PERFORMANCE RIGHTS................................. 21 43.0 TERMINATION..................................................... 22 44.0 SURVIVAL OF OBLIGATIONS......................................... 23 45.0 SEVERABILITY.................................................... 23 46.0 WAIVER.......................................................... 23 47.0 ENTIRE AGREEMENT................................................ 24 48.0 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL................ 24 49.0 THIRD PARTY BENEFICIARIES....................................... 25 50.0 COUNTERPARTS.................................................... 25 51.0 ATTACHMENTS..................................................... 25 52.0 CSG GUARANTY.................................................... 25
Agreement No._____________ Page 4 of 26 SOFTWARE AND SERVICES MASTER SUPPLY AGREEMENT ("Agreement"), dated as of --------- February 28, 2002 (the "Effective Date"), by and among LUCENT TECHNOLOGIES INC., -------------- a Delaware corporation ("Lucent"), and CSG SYSTEMS INTERNATIONAL, INC., a ------ Delaware corporation ("CSG"), and CSG SOFTWARE, INC. a Delaware corporation and --- a wholly owned subsidiary of CSG ("Supplier"). -------- WHEREAS Lucent and CSG have entered into an asset purchase agreement dated as of December 21, 2001 (the "Asset Purchase Agreement"), wherein Lucent has agreed to ------------------------ sell to CSG certain assets used in connection with the Lucent's billing and customer care products business, and CSG has agreed to purchase such assets and to assume certain liabilities relating to such acquired business all as more particularly described therein; WHEREAS, following the transactions contemplated by the Asset Purchase Agreement, Lucent and certain of its Affiliates will have Continuing Obligations (including making updates, upgrades, patches, on-going maintenance and end-user customer support available) to End User Customers pursuant to Contracts, and Supplier has agreed that with respect to such Contracts it will perform, on behalf of Lucent and such Affiliates, such Continuing Obligations and CSG has agreed to guarantee Supplier's performance (all capitalized terms being used as defined herein); WHEREAS it is a condition to the consummation of the transactions contemplated by the Asset Purchase Agreement that Lucent and Supplier enter into this Agreement pursuant to which Supplier will perform Services for, and to provide Software to, End User Customers so as to timely satisfy the Continuing Obligations; WHEREAS Supplier and Lucent desire that Supplier shall have, to the fullest extent possible, the benefits of and all the obligations and duties under the Contracts in respect of the Continuing Obligations and that Company be absolved of such obligations and duties; and WHEREAS, upon the terms and subject to the conditions herein, Supplier desires to perform Services for, and to provide Software to, End User Customers all in accordance with the terms and conditions of the Contracts and this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and in the Attachments (as defined herein), Supplier and Lucent agree as follows: 1.0 DEFINITIONS ----------- The following definitions set forth below apply to this Agreement: 1.1 "Additional Contracts" means any agreement, contract or other arrangement, -------------------- entered into by Company prior to the Effective Date but which Company, in good faith, did not include in Attachment A, that provides for any ------------ obligations of Company to customers with respect to Services and Software to be performed, supplied, delivered or installed in the United States and Canada, which agreement, contract or other arrangement cannot be assigned to Supplier pursuant to the Asset Purchase Agreement (or any collateral documents related thereto), as Agreement No._____________ Page 5 of 26 as such agreement, contract or other arrangement may from time to time be amended, supplemented or modified with the consent of Supplier pursuant to Article 2.0 hereof or renewed pursuant to Article 5.0(b) hereof. ----------- -------------- 1.2 "Affiliate" has the meaning specified in the Asset Purchase Agreement, --------- unless otherwise specified in this Agreement. 1.3 "Agreement" means this Software and Services Master Supply Agreement (North --------- America), as may from time to time be amended, supplemented or modified by mutual written agreement of the parties hereto, and including all Attachments hereto. 1.4 "Attachments" mean the attachments to this Agreement as may from time to ----------- time be amended, supplemented or modified by mutual written agreement of the parties hereto, including all exhibits and documents containing fees, rates, and any special terms and other conditions pertaining to the Software and Services to be provided hereunder. 1.5 "Company" means Lucent Technologies Inc. or any of its Affiliates that are ------- party to Contracts, and their respective successors and permitted assigns. Lucent shall cause its Affiliates that are parties to Contracts to comply with their respective obligations hereunder. 1.6 "Company Default" means a Company Contract Default or a Company Event of --------------- Default. 1.7 "Continuing Obligations" means any obligations of Company to End User ---------------------- Customers with respect to the Services and Software to be performed, supplied, delivered or installed in the United States and Canada, including obligations regarding pricing, Software license, warranty, maintenance, consulting, training, Support, Specifications, Documentation, escrow and release of source code of the Software, discontinued availability of Software, and continuing availability of Updates, Upgrades and Patches. 1.8 "Contracts" means, collectively, the Additional Contracts and the --------- Unassignable Contracts. 1.9 "Documentation" means users' manuals, programmers' guides and systems' ------------- guides that are provided for use with the Software. 1.10 "End User Customer" refers to Company's customers who have the right to ----------------- use Software or receive Services pursuant to any Contract, including the customers identified in Attachment A, and all successors and permitted ------------ assignees of such customers. 1.11 "including" shall mean "including without limitation" or "including but --------- not limited to". 1.12 "Information" means any idea, data, program, technical, business or other ----------- intangible information identified in writing as confidential by the conveying party, however conveyed. Agreement No._____________ Page 6 of 26 1.13 "Intellectual Property Agreement" means the Intellectual Property ------------------------------- Agreement dated the date hereof by and among Lucent, Lucent Technologies GRL Corporation, Lucent Technologies Ireland Holding Limited and Supplier. 1.14 "Medium" means any document, print, tape, disc, tool, semiconductor chip ------ or other tangible information-conveying article, and "Media" shall have a ----- corresponding meaning. 1.15 "Object Code" means machine-readable, compiled object code form. ----------- 1.16 "Order" means a purchase order used for the purpose of ordering Software ----- and Services. 1.17 "Services" means all maintenance, consulting, training, support and -------- professional services, including the provision of Support, Updates, Upgrades and Patches. 1.18 "Software" means Software (as defined in the Intellectual Property -------- Agreement), in Object Code, and all future enhancements and modifications, including Updates, Upgrades and Patches. 1.19 "Software Source Materials" means all source programs, technical ------------------------- documentation and other information necessary to produce, use, maintain, modify or correct all versions of the Software which are required to be supplied pursuant to this Agreement, and shall include source code, flow charts, logic diagrams and program language translators (assemblers, compilers, interpreters, etc.) except to the extent that any such translator is a proprietary software product of a third party vendor readily available to Company from such vendor. 1.20 "Specifications" means designs, plans and instructions for the development -------------- and operation of the Software, as mutually agreed upon by the parties hereto. 1.21 "Supplier" means CSG Software, Inc., the party to this Agreement that will -------- be performing the Continuing Obligations on behalf of Company, and its successors and permitted assigns. 1.22 "Supplier Default" means a Supplier Contract Default or a Supplier Event ---------------- of Default. 1.23 "Support" means customer support including (i) direct response to End User ------- Customer inquiries with respect to inquiries concerning performance, functionality or operation of the Software, (ii) direct response to End User Customers with respect to performance deficiencies, (iii) diagnosis of performance deficiencies, and (iv) problem resolution. 1.24 "Unassignable Contracts" means any agreement, contract or other ---------------------- arrangement entered into prior to the Effective Date between Company and any of its customers for the provision of Continuing Obligations, which agreement, contract or other arrangement is not assigned to Supplier pursuant to the Asset Purchase Agreement (or any collateral documents related thereto), as such agreement, contract or other arrangement may from time to time be amended, Agreement No._____________ Page 7 of 26 supplemented or modified with the consent of Supplier pursuant to Article ------- 2.0 hereof or renewed pursuant to Article 5.0(b) hereof. --- -------------- 1.25 "Use" means use by any individual having authorized access to the computer --- on which the Software is operated. 1.26 "Updates, Upgrades and Patches" means releases of or modifications to the ----------------------------- Software which contain (i) error corrections and other modifications or (ii) functionality enhancements. 2.0 SCOPE OF AGREEMENT; ADDITIONAL CONTRACTS ---------------------------------------- (a) This Agreement applies to Software and Services required to be provided to End User Customers under the terms of the Contracts. Correct and complete copies of all provisions of the Unassignable Contracts that are relevant to the performance of Supplier's obligations under this Agreement shall have been delivered to Supplier on or prior to the Effective Date. Correct and complete copies of all provisions of each Additional Contract that are relevant to the performance of Supplier's obligations under this Agreement shall be delivered to Supplier prior to Supplier becoming responsible for such obligations in respect of such Additional Contract and such Additional Contract becoming a "Contract" under this Agreement. Company shall not amend, supplement or otherwise modify, in any material respect, any terms of the Contracts relating to Software or Services supplied under this Agreement without Supplier's prior written consent (which consent shall not be unreasonably withheld). Upon reasonable written request by Supplier, Company shall use reasonable commercial efforts to assert on behalf of Supplier any rights that Company may have under any Contract for acts or omissions of any End User Customer in respect of Software or Services supplied under this Agreement. (b) If Company has obligations with respect to Services or Software under any Additional Contract, Supplier agrees that it shall provide Software and Services in accordance with the terms set forth in such Additional Contract (or such other terms and conditions as may be mutually agreed between Company and Supplier). If the material terms (including fees for licensing of Software and rates for Services) of any Additional Contract are materially less favorable in the aggregate to Supplier than the terms set forth in Attachment B, Supplier and Company shall negotiate ------------ in good faith mutually acceptable terms under which Supplier shall perform Company's obligations under such Additional Contract in accordance with its provisions; provided, that if fees for licensing of Software and rates for -------- Services under such Additional Contract are less favorable to Supplier than those set forth in Attachment B, fees for licensing of Software and rates ------------ for Services under such Additional Contract shall be as set forth in Attachment B. ------------ 3.0 ORDERS ------ (a) Orders shall be placed with Supplier (through its business contact person) using an order substantially in the form of Attachment C ------------ and shall include a reference to this Agreement No._____________ Page 8 of 26 Agreement, the applicable Contract and a description of the Software and Services ordered. Supplier shall acknowledge to Company receipt of each Order within three (3) business days. Supplier may reject an Order for cause only if it provides written notice of rejection within ten (10) days of receipt of such Order and concurrently terminates this Agreement in accordance with Article 43.0 hereof. ------------ (b) If Supplier rejects any Order pursuant to clause (a) above, Company agrees to comply with its obligations under the Contract to which such rejected Order relates (including avoiding any act or omission that would cause the source code of the Software to be released by Company pursuant to such Contract) provided that Supplier has complied with its obligations under Article 42.0(b)(ii) hereof. Supplier's rejection of an ------------------- Order does, in no way, authorize Company to take any action or make any commitment on Supplier's behalf. (c) Each Order that is not rejected by Supplier in accordance with the preceding sentence shall be deemed accepted by Supplier within ten (10) days after receipt thereof. Only Orders so deemed accepted shall be binding on Company and Supplier. If Company proposes to include in any Order terms and conditions other than, or in addition to, those contained in this Agreement or such Contract, Supplier and Company shall negotiate in good faith such terms and conditions. 4.0 SOFTWARE LICENSE GRANT ---------------------- In addition to license and other rights granted pursuant to the Intellectual Property Agreement, upon the terms and subject to the conditions of this Agreement, Supplier hereby grants to Company a perpetual, nonexclusive, irrevocable, worldwide, fully-paid, non- transferable (except pursuant to Article 25.0 hereof) right to sublicense ------------ to End User Customers such rights and benefits with respect to the Software and Documentation (the "Licensed Materials") as may be required to be ------------------ granted to End User Customers pursuant to the Contracts. 5.0 PERFORMANCE OF CONTINUING OBLIGATIONS ------------------------------------- (a) Supplier, as a subcontractor to Company, hereby agrees to assume and perform all Continuing Obligations upon the terms and subject to the conditions hereof. Supplier shall ensure that sufficient qualified and experienced personnel are made available to perform all of Supplier's obligations hereunder. Supplier shall be responsible to Company for all Continuing Obligations performed by Supplier's permitted assigns and permitted subcontractors. Notwithstanding the foregoing, Supplier shall not be required to supply Software or Services hereunder other than in respect of Continuing Obligations. (b) Company and Supplier shall, in good faith, use reasonable commercial efforts to assign or cause to be assigned to Supplier the Contracts to the extent such Contracts relate to Software and Services. Agreement No.____________ Page 9 of 26 (c) If any Contract is automatically renewable in accordance with its terms for a successive period unless either party to such Contract gives notice of its intention not to renew such Contract, Company may renew such Contract in accordance with its terms without Supplier's consent; provided, -------- that if fees for the licensing of Software and rates for the provision of Services during any renewal term are not specified in a Contract, the fees and rates applicable to such Contract during such renewal term shall be determined by Supplier so long as that Supplier notifies Lucent (or if requested by Company, End User Customers) in writing of any increase in such fees and rates applicable to such Contract for such renewal term (together with a price list showing such proposed new fees and rates) at least thirty (30) days in advance of the deadline specified in such Contract for notifying the applicable End User Customer of a price increase ("Renewal Price Deadline"). Company may renew only once each Contract that ---------------------- does not expressly provide that it is renewable, provided that (x) the renewal term for such Contract shall not exceed three (3) years and (y) the fees and rates applicable to such Contract during such renewal term shall be determined by Supplier (so long as such fees and rates shall not be in breach of any of Company's good faith and fair dealing obligations under such Contract). Attachment D sets forth for each Contract the Renewal Price ------------ Deadline. 6.0 LICENSE AND SERVICE FEES ------------------------ Fees for the licensing of Software and rates for all Services shall be as set forth in the applicable Contract (as such fees and rates may be increased pursuant to Article 2.0(b) hereof in respect of any Additional -------------- Contract). All other services shall be at rates mutually agreed in writing between the parties hereto prior to the initiation of such Services. 7.0 EFFECTIVE DATE AND TERM ----------------------- This Agreement shall become effective upon the Effective Date and shall continue to be effective for so long as may be necessary for Company to satisfy its Continuing Obligations to End User Customers, unless earlier terminated in accordance with Article 43.0 hereof; provided, that rights in ------------ -------- the Software granted to an End User Customer pursuant to a Contract shall remain in effect until the Use of the Software is discontinued by the applicable End User Customer or such rights are earlier terminated in accordance with the applicable Contract. 8.0 INTELLECTUAL PROPERTY RIGHTS ---------------------------- No interest in any software, products or materials developed by Company or any End User Customer shall pass to Supplier under this Agreement unless otherwise specified in the applicable Contract, even though such software, products or materials may interact with the Software or be embedded therein, or be functionally similar to the Software. Notwithstanding the foregoing, each End User Customer shall retain title and intellectual property rights to any derivative works it creates based on Supplier's source code to the extent that such right is granted in any Contract. No interest in any software, products or Agreement No._____________ Page 10 of 26 materials developed by Supplier shall pass to Company or any End User Customer under this Agreement unless otherwise specified in the applicable Contract, even though such software, products or materials may interact with the Software or be embedded therein, or be functionally similar to the Software. 9.0 DELIVERABLES; LATE DELIVERIES ----------------------------- On the applicable delivery date specified in an Order, Supplier shall furnish to Company (or to the End User Customer if so specified by Company) the Software and Services specified on such Order for the fees and rates specified in Article 6.0 hereof to be paid in accordance with Articles 10.0 ----------- ------------- and 11.0 hereof. Except as specified in Articles 13.0 and 14.0 hereof, no ---- ------------- ---- additional charges or fees shall be payable by Company or any End User Customer. Supplier shall be liable for all liquidated damages payable as a result of any late deliveries to End User Customers as set forth in the applicable Contract to the extent such liquidated damages accrued as a result of any act or omission of Supplier. 10.0 INVOICING --------- Supplier shall follow the procedures for invoicing and shipping, as set forth in Attachment E, as may be modified from time to time by mutual ------------ agreement of the parties hereto. 11.0 PAYMENT TERMS ------------- (a) During the term hereof, Company shall pay to Supplier (i) all amounts payable by End User Customers in respect of the provision of Software and the performance of Services (including service fees, maintenance fees, late fees, etc.) as may be set forth in the Contracts (the "Customer Payments"), and (ii) any additional fees and rates payable ----------------- by Company pursuant to Article 2.0(b) hereof in respect any Additional ------------- Contract. Supplier shall provide Company with invoices and all necessary supporting documentation required to support the delivery of such invoices to End User Customers. Payment shall be made no later than the 2nd business day of the 2nd calendar month following the date of a correct invoice. (b) Notwithstanding clause (a) above, to the extent an End User Customer disputes or otherwise fails to make any Customer Payment, then Company shall not be required to make such Customer Payment until resolution of such dispute or such payment is otherwise made by such End User Customer. Such dispute or other failure to make a Customer Payment shall not, however, relieve Company of its obligation to make any payment when due in respect of any Customer Payment that is undisputed or has been paid. 12.0 ELECTRONIC DATA INTERCHANGE --------------------------- Supplier shall, if requested by Company, use reasonable commercial efforts to implement the electronic data interchange system described in Attachment ---------- F as an electronic means of trading business documents. Supplier shall, at - its sole expense, obtain, make fully Agreement No._____________ Page 11 of 26 operational and maintain all equipment, software and other materials required by Supplier to implement and utilize such system. 13.0 MISCELLANEOUS EXPENSES ---------------------- Each party shall pay all travel expenses of its employees, except where travel is specifically requested by the other party. Reimbursement for reasonable expenses for transportation and living shall be as set forth in the applicable Contract or, if not set forth therein, in accordance with the guidelines set forth in Attachment G. ------------ 14.0 TAXES ----- Company shall reimburse Supplier only for state and local sales and use taxes, unless Company advises Supplier that an exemption applies (and if reasonably requested by Supplier, provides reasonably satisfactory evidence to that effect). Taxes payable by Company shall be billed as separate items on Supplier's invoices. 15.0 TITLE TO AND RISK OF LOSS OF MEDIUM ----------------------------------- Title to and risk of loss and damage to any Medium supplied under this Agreement shall vest when such Medium has been delivered to or accepted by, as applicable, the End User Customer in accordance with the applicable Contract. 16.0 SOFTWARE ACCEPTANCE ------------------- For Software identified in any Contract as subject to customer acceptance testing, the acceptance procedure set forth in the applicable Contract shall apply. 17.0 COPYRIGHT NOTICE ---------------- Company will not alter or delete any of Supplier copyright notices appearing on Supplier's containers (or any labels thereon) of Software. 18.0 CUSTOMER SUPPORT; UPDATES, UPGRADES AND PATCHES ----------------------------------------------- Supplier shall establish procedures and maintain the organization and processes to provide, and shall provide, Support to Company and End User Customers as provided in the Contracts. Supplier shall furnish all Updates, Patches and Upgrades to End User Customers, together with any associated Documentation, as required by the Contracts. 19.0 QUALITY PROCESSES ----------------- (a) Supplier agrees to meet with Company upon reasonable notice to discuss the quality of Software and Services being provided by Supplier pursuant to this Agreement. (b) Supplier shall keep Company notified of any presently occurring or potential Agreement No.______________ Page 12 of 26 material Software and Service problems or issues that occur or frequently re-occur and that Supplier in its reasonable judgment believes should be brought to the attention of Company so that Company may have an opportunity to provide corrective action for those matters for which Company continues to be responsible. (c) Supplier shall at all times designate one employee as the primary contact person for the referral of assistance requests by Company. Supplier shall establish tracking and reporting mechanisms for all assistance requests. Company shall promptly report to Supplier any and all End User Customer queries, complaints and claims relating to the performance by Supplier of its obligations hereunder. 20.0 NEW RELEASES OF SOFTWARE ------------------------ If, after the Effective Date, Supplier introduces a new release of Software which contains functionality enhancements, Company shall not distribute earlier releases of the Software to End User Customers, including releases discontinued by Supplier, unless required by End User Customers pursuant to the Contracts and Company shall provide written notice (which shall include the relevant provisions of the applicable Contract) to Supplier of such requirement at the time of such distribution. 21.0 PROTECTION OF CONFIDENTIAL SOFTWARE ----------------------------------- (a) Except as otherwise expressly provided for in this Agreement or the Intellectual Property Agreement, Company will hold in confidence for Supplier all parts of the Software, Documentation, and other Information that Company's personnel may unavoidably receive or have access to during the performance of this Agreement. Company further agrees that all such information shall remain the property of Supplier and that Company shall not make any disclosure of such information to anyone, except to employees, contractors and agents of Company and End User Customers to whom such disclosure is necessary to the use for which rights are granted under the Contracts. Company shall appropriately notify all such employees, contractors, agents and End User Customers to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by them and obtain their written agreement to so keep in confidence. Company shall treat the Software with the same degree of care against unauthorized disclosure as Company normally treats its own Information of like character. (b) The foregoing restrictions on the use or disclosure of such Software, Documentation and Information shall not apply to such Software, Documentation, and Information: (i) which is developed from normal use of the Software which is Object Code or is lawfully received free of restriction from another source having the right to so furnish such information; or (ii) after it has become generally available to the public by acts not Agreement No.______________ Page 13 of 26 attributable to Company or its employees, agents or contractors; or (iii) which at the time of disclosure to Company after the Effective Date was known to Company free of restriction and evidenced by documentation in Company's possession; or (iv) which Supplier agrees in writing is free of such restrictions; or (vi) which is requested pursuant to a judicial or governmental request, requirement or order under law, provided that Company provides Supplier with sufficient prior notice in order to contest such request, requirement or order or seek protective measures. (c) Supplier shall not provide under, or have provided in contemplation of, this Agreement any information, however conveyed, on any Medium, unless Supplier has the right to do so, and, except for Software and Information furnished or developed by Supplier hereunder and owned by Company, Supplier shall not view any of the foregoing as confidential or proprietary. If Supplier must furnish any Information to Company with restrictions, it shall only be furnished after negotiation and execution on behalf of Company of a separate written agreement specifically identifying the documents to be furnished and setting forth Company's rights and obligations with respect thereto. 22.0 TRAINING SERVICES AND LICENSE ----------------------------- Supplier shall make available to End User Customers such training services as may be required to be provided pursuant to the Contracts. Supplier shall also make available to Company, at mutually agreed upon rates, Supplier's standard training courses. 23.0 WARRANTIES ---------- (a) Supplier warrants to Company that the Software shall be in conformance with all applicable warranties of Company set forth in the Contracts. The initial warranty period shall be as stated in the applicable Contract. (b) Supplier warrants to Company that Supplier shall perform all Services pursuant to the terms of the Contracts in conformance with all applicable warranties of Company set forth in the Contracts. The initial warranty period shall be as stated in the applicable Contract. (c) All warranties shall survive to the extent provided in the Contracts. In the event of a breach of the foregoing warranties, Supplier shall, upon written notice from Company, provide on-site personnel and repair or replace the Software or re-perform or otherwise remedy any deficient Services as promptly as practicable in accordance with the provisions of the applicable Contract (or if Supplier is unable to timely repair or replace the Software in accordance with the provisions of the applicable Contract, then Supplier shall Agreement No._____________ Page 14 of 26 refund all fees received by Supplier for the Software, or Company may obtain Services from a third party to repair or replace the Software, at Supplier's expense). Repaired and replacement Software shall be warranted as set forth in this Article. (d) THE WARRANTIES SET FORTH IN THIS ARTICLE 23.0 ARE IN LIEU OF AND ------------ EXCLUDES ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OTHER THAN ANY WARRANTIES SET FORTH IN THE CONTRACTS. 24.0 REPRESENTATIONS --------------- Supplier hereby represents and warrants to Company that: (i) this Agreement has been duly executed and delivered by Supplier, and constitutes a valid, binding obligation enforceable against Supplier in accordance with its terms; (ii) Supplier has not taken any action that would prohibit or otherwise limit the ability of Supplier to fulfill its obligations hereunder; (iii) Company and End User Customers shall have quiet enjoyment of the Software in accordance with the terms of the Contracts; and (iv) to the best of Supplier's knowledge, the Software will contain no malicious code or computer viruses introduced in the Software after the Effective Date, and Supplier shall immediately notify Company if any such problem is suspected. 25.0 ASSIGNMENT ---------- Neither party shall assign any of its rights or delegate any of its obligations under this Agreement or any Order, except for money due, without the prior written consent of the other party; provided, that either -------- party may assign its rights and delegate its obligations under this Agreement or any Order to an Affiliate of such party without the consent of the other party. This Agreement shall be binding upon any successor-in- interest of each party (including by way of merger, reorganization, or transfer or sale of substantially all of the assets of such party). Notwithstanding the foregoing, each party shall remain responsible for any obligations under this Agreement that are assigned or delegated to any of its Affiliates. As used in this Article 25.0, "Affiliate" means, with ------------ --------- reference to a party hereto, any other person or entity who controls, is controlled by or is under control with such party (where, for the purposes of the foregoing definition, "control" means owning, directly or indirectly, stock or equity possessing 51% or more of the total combined voting power of all classes of voting stock or equity of, and 51% or more of the total number of shares of all other classes of stock or equity of, a person). 26.0 CHOICE OF LAW ------------- The parties hereto agree that this Agreement shall be governed by and interpreted and construed in accordance with the laws of the State of New York, USA, excluding any conflict of laws rule or principle that might refer the governance, interpretation or Agreement No.__________________ Page 15 of 26 construction of this Agreement to the laws of another jurisdiction. 27.0 COMPLIANCE WITH LAWS -------------------- The parties hereto shall comply at their own expense with all the applicable laws, ordinances, regulations and codes in performance of this Agreement. 28.0 DISPUTE RESOLUTION ------------------ (a) The parties hereto agree to address any controversy or dispute arising out of or relating to this Agreement, any Order or any breach hereof or thereof (a "Dispute") as set forth in this Article. At any time, ------- either party may give the other written notice of a Dispute, specifically identifying the nature of the Dispute, the acts or omissions giving rise to the Dispute, any claimed damages and the relief sought. The other party shall provide a written response within ten (10) days of the receipt of such notice. The senior management representatives designated below (the "Representatives") shall work together in a manner that meets the --------------- interests of the parties hereto, until either an agreement is reached or an impasse is declared by either party. Company's Representative Supplier's Representative ------------------------ ------------------------- Joe Carson, VP, SCN Mark R. Wagner (b) If the Representatives are unable to resolve the Dispute as set forth above, either party may elect by to submit the Dispute for hearing and non-binding resolution by a panel of two (2) senior executives of each party (and, if such executives agree, a mutually acceptable neutral advisor) upon no less than seven (7) and no more than fourteen (14) days' prior written notice to the other party. If any party elects to use the procedure set forth in this Article, the other party's executives must participate in the hearing. If the Dispute cannot be resolved by such senior executives, then the neutral advisor, if any, may be asked to assist such senior executives in evaluating the merits of each party's position so as to resolve the Dispute. Each party shall each bear its own costs with respect to such procedure and shall share equally the fees and expenses of the neutral advisor, if any, and the cost of the facility for the hearing. 29.0 EXPORT ------ Neither Company nor Supplier shall export the Software, or any other information under this Agreement, in contravention of the laws of the United States or any other applicable jurisdiction. 30.0 FORCE MAJEURE ------------- Neither party shall be held responsible for any delay or failure in performance of any part of this Agreement to the extent such delay or failure is caused by fire, flood, strike of a third party, civil, governmental or military authority, act of God, or other similar causes beyond Agreement No.__________________ Page 16 of 26 its control and without the fault or negligence of the delayed or non- performing party or its subcontractors. 31.0 IDENTIFICATION -------------- Except to the extent expressly permitted in the Asset Purchase Agreement, neither party shall, without the other party's prior written consent, make public use of any trade name, trademark, logo or any other designation or drawing of the other party or its affiliates ("Identification"). Supplier -------------- shall remove or obliterate any Identification of Company prior to any use or disposition of any material rejected or not purchased by Company. 32.0 INDEMNITY --------- (a) Lucent and Supplier (each an "Indemnifying Party") will each ------------------ indemnify, hold harmless and defend the other, its Affiliates, and each of their respective customers, officers, directors, employees, successors and permitted assigns (each an "Indemnified Person"), from any losses, damages, ------------------ claims, fines, penalties, expenses or other financial obligations, including reasonable attorney's fees and investigative costs ("Losses"), ------ claimed by or awarded to (whether such claim or award is based in contract, tort or otherwise) third parties against such Indemnified Person (except to the extent caused by negligence or willful misconduct of such Indemnified Person, including the use of Software in a manner materially inconsistent with the documentation provided with such Software) that arise out of or result from: (i) any act or omission by such Indemnifying Party or its Affiliates (or any of their permitted subcontractors) in connection with the performance of the Contracts; (ii) all assertions under Workers' Compensation or similar acts made by such Indemnifying Party or its Affiliates (or any of their permitted subcontractors); and (iii) all negligent or willful misconduct of such Indemnifying Party or its Affiliates (or any of their permitted subcontractors). (b) The Indemnified Person will notify the Indemnifying Party promptly after becoming aware of any claim that falls under the terms of this Article. The Indemnifying Party will have the right to assume the defense of any such claim. The Indemnified Person, at its expense and option, may participate in the defense of such claim. The Indemnifying Party will pay any final judgment, settlement, penalties, fines or other financial obligations imposed on the Indemnified Person resulting from such third party claim. The Indemnified Person must approve any settlement that involves terms other than solely the payment of money. The Indemnifying Party will also pay the reasonable expenses incurred by the Indemnified Person arising from any request by it that the Indemnified Person assist it in the defense of such claim or provide information regarding such claim. Agreement No.__________________ Page 17 of 26 33.0 INFRINGEMENT CLAIMS ------------------- (a) The indemnity for Losses pursuant to Article 32.0 hereof shall ------------ not apply to (i) any claims that are due solely to (x) any unauthorized modification of Software by any Indemnified Person, (y) any unauthorized use by any Indemnified Person of Software with products, materials or software of a third party, or (z) any continued use by any Indemnified Person of Software after the Indemnifying Party has notified such Indemnified Person of any Infringement Claim (as defined below) and provided such Indemnified Person with non-infringing software comparable in function as such infringing Software, (ii) in the case of Supplier's indemnity for Losses pursuant to Article 32.0 hereof in respect of ------------ Software, Losses to extent such Losses arise out of or result from use of any Assigned Software and Licensed Software (as each such term is defined in the Intellectual Property Agreement) in the form furnished (whether by license or transfer) by Company pursuant to the Intellectual Property Agreement, and (iii) in the case of Company's indemnity for Losses pursuant to Article 32.0 hereof, Losses that arise out of or result from ------------ patent infringement (indemnification for which shall be solely as provided in the Intellectual Property Agreement). (b) In addition to the indemnity for Losses pursuant to Article 32.0 ------------ hereof, Supplier shall take such action as may be required under the Contracts in respect of any known infringement of any patent, copyright, trademark or trade secret right, or other intellectual property right in respect of Software furnished under this Agreement (an "Infringement ------------ Claim"). ----- 34.0 INSURANCE REQUIREMENTS ---------------------- Supplier shall, prior to performance under this Agreement, provide certificates or proof of insurance which complies with Lucent's policy set forth in Attachment H. All such insurance must be primary and non- ------------ contributory and required to respond and pay prior to any other insurance or self-insurance available. Any other coverage available to Company shall apply on an excess basis. Supplier agrees that Supplier and anyone claiming under or in Supplier's behalf shall have no claim, right of action or right of subrogation against Company and its End User Customers based on any loss or liability insured against under the foregoing insurance. Company shall be notified in writing at least thirty (30) days prior to cancellation of or any change in the policy. 35.0 LIMITATION OF LIABILITY ----------------------- Notwithstanding anything contained in this Agreement to the contrary, neither party hereto shall be liable to the other party for any indirect, special, punitive, exemplary or consequential loss or damage arising out of this Agreement; provided, that the foregoing shall not be construed to -------- preclude recovery by any Indemnified Person in respect of Losses directly incurred from third party claims. These limitations of liability shall not apply to any liability of either party arising from or related to any personal injury (including death) or for Agreement No.__________________ Page 18 of 26 any claim of gross negligence or willful misconduct. Both parties shall use reasonable commercial efforts to mitigate their damages. 36.0 NOTICES ------- (a) Any notice or demand which under the terms of this Agreement or under any statute must or may be given or made by Supplier or Company shall be in writing and shall be given or made by confirmed facsimile, or similar communication or by certified or registered mail addressed to the respective parties as follows:
To Company: To CSG and Supplier: Lucent Technologies Inc. CSG Systems International, Inc. 600 Mountain Avenue CSG Software, Inc. Murray Hill, NJ 07974 7887 E. Belleview, Suite 1000 Attn: Antoinette Bennett, Englewood, CO 80111 Corporate Counsel - SCN Legal Telephone Number: (908) 582-7091 Attn: Joseph T. Ruble (for legal matters) Facsimile Number: (908) 582-6869 Senior Vice President and General Counsel, Corporate Development (and for Contracts matters, with a copy to: Telephone Number: (303) 796-3995 Lucent Technologies Inc. Facsimile Number: (303) 804-4012 283 King George Road Warren, NJ 07059 Attn: Mark R. Wagner (for business matters) Attn: Deborah Reding, SCN Software Vice President, Strategic Initiatives Contract Manager Telephone Number: (303) 796-2887 Telephone Number: (908) 559-6176 Facsimile Number: (303) 796-2870 Facsimile Number: (908) 559-1256)
(b) The effective dates of such notice shall be (i) upon evidence of successful facsimile transmission, or (ii) five (5) days following the date mailed for certified or registered letters and two days following the date mailed for overnight letters, or (iii) when delivered, if in person. The above addresses may be changed at any time by giving prior written notice as above provided. Notices shall be given in writing by confirmed facsimile, certified mail or registered mail addressed to the parties as shown on the first page of this Agreement. 37.0 NOTICE OF UPDATES, UPGRADES AND PATCHES --------------------------------------- If Supplier introduces any Updates, Upgrades or Patches, Supplier shall provide Company with reasonable advance notice of such Updates, Upgrades or Patches, together with any fact sheets, brochures and other promotional literature describing such Updates, Upgrades or Patches. Company may provide advance notice to End User Customers of such Updates, Agreement No.__________________ Page 19 of 26 Upgrades or Patches and distribute any such fact sheets, brochures and other promotional literature to End User Customers, in each case, if required pursuant to any Contract; provided, that Company shall not be -------- required to market, advertise, promote, support, or otherwise assist in further offerings of Software or Services. Purchases by Company under this Agreement shall neither restrict the right of Company to cease purchasing nor require Company to continue any level of such purchases. 38.0 SOURCE CODE ESCROW ------------------ (a) Certain Contracts require that any Software Source Materials be placed in an escrow account, and Company may require Supplier to deposit such Software Source Materials and Documentation with a mutually agreed upon third-party escrow agent. Supplier shall deposit with such escrow agent each major release of Software at the time of such release or as otherwise required under the applicable Contract. Software Source Materials shall be released from the escrow account as provided under or upon such conditions as set forth in the applicable Contract. To the extent that any Contract requires that Software Source Materials be delivered to the applicable End User Customer for any Software, Supplier shall be responsible for timely delivering such Software Source Materials to such End User Customer in accordance with the provisions thereof. (b) Concurrently with the execution of this Agreement, Supplier and Company shall enter into an escrow agreement, with a mutually acceptable escrow agent, in such form and containing such terms as are mutually acceptable to safeguard the Software Source Materials and to provide for the release of such Software Source Materials upon (i) the termination of this Agreement by Supplier following a Company Default or (ii) the occurrence of a Supplier Default. The annual fees of such escrow agent shall be paid by Company. 39.0 USE OF COMPANY'S INFORMATION AND MEDIA -------------------------------------- Supplier shall treat as Company's property (i) all Information of Company, however conveyed, and (ii) all Media owned or controlled by Company, and provided to, or acquired by, Supplier under or in connection with any Contract. Supplier, at no charge to Company, and as Company directs, shall destroy or surrender to Company promptly at its request any or all such Information and Media. Supplier shall keep such Information or Media confidential and use it only in performing under this Agreement and obligate its employees, subcontractors and others working for it to do so. This shall not apply to Information previously known to Supplier free of obligation, or made public through no fault of Supplier. 40.0 SUPPLIER DEFAULTS ----------------- (a) A "Supplier Contract Default" in respect of any Contract shall ------------------------- have occurred if Supplier shall be in material breach of any of its representations, warranties, agreements or Agreement No.__________________ Page 20 of 26 covenants contained in this Agreement in respect of such Contract, and such breach (i) shall continue beyond the earlier of thirty (30) days and the cure period set forth in such Contract after the giving of written notice thereof to Supplier and (ii) shall not be the result of any act or omission of Company. (b) A "Supplier Event of Default" shall have occurred if any of the ------------------------- following events shall have occurred: (i) Supplier shall be in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement, and such breach shall continue beyond thirty (30) days after the giving of written notice thereof to Supplier; (ii) (A) Supplier shall make an assignment for the benefit of creditors (other than solely an assignment of moneys due), (B) Supplier shall admit in writing that it is unable to pay debts as they mature or has ceased operating in the normal course of business, (C) a trustee or receiver of Supplier or of any substantial part of Supplier's assets has been appointed by any court, or (D) a proceeding shall be commenced under any provision of the United States Bankruptcy Code, voluntary or involuntary, by or against Supplier, which proceeding remains undismissed for sixty (60) days after the commencement thereof; or (iii) there shall have occurred and be continuing a "Supplier Event of Default (as defined in the Software and Services Master Supply Agreement (International) by and among Lucent and CSG and CSG International Limited and CSG Technology Limited (the "International Agreement")). 41.0 COMPANY DEFAULTS ---------------- (a) A "Company Contract Default" in respect of any Contract shall ------------------------ have occurred if Company shall be in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement in respect of such Contract, and such breach (i) shall continue beyond the earlier of thirty (30) days and the cure period set forth in such Contract after the giving of written notice thereof to Company and (ii) shall not be the result of any act or omission of Supplier. (b) A "Company Event of Default" shall have occurred if any of the ------------------------ following events shall have occurred: (i) Company shall be in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement, and such breach shall continue beyond thirty (30) days after the giving of written notice thereof to Company; (ii) (A) Company shall make an assignment for the benefit of creditors Agreement No.__________________ Page 21 of 26 (other than solely an assignment of moneys due), (B) Company shall admit in writing that it is unable to pay debts as they mature or has ceased operating in the normal course of business, (C) a trustee or receiver of Supplier or of any substantial part of Company's assets has been appointed by any court, or (D) a proceeding shall be commenced under any provision of the United States Bankruptcy Code, voluntary or involuntary, by or against Company, which proceeding remains undismissed for sixty (60) days after the commencement thereof; or (iii) there shall have occurred and be continuing a "Company Event of Default" (as defined in the International Agreement). 42.0 REMEDIES AND PERFORMANCE RIGHTS ------------------------------- (a) Upon the occurrence of any Supplier Default, (i) Company, at its option and in addition to all other rights and remedies which Company may have at law or equity or as otherwise provided for under the Asset Purchase Agreement, this Agreement (including the right to terminate this Agreement or any Order pursuant to Article 43.0 hereof), and any other ------------ agreement between the parties hereto, may do all such things and convey all such rights to End User Customers as may be necessary or reasonably advisable in order to fulfill all Continuing Obligations, and (ii) Supplier shall promptly (x) furnish, or shall cause to be furnished, all Software Source Materials necessary for Company to timely fulfill the Continuing Obligations, and (y) if requested by Company, use reasonable commercial efforts to provide all necessary personnel as consultants to Company to provide transitional support and guidance with respect to Software and Services until such time as Company has made other arrangements but in no event for more than one year (provided that Supplier may set-off for any claim by Company for damages against Supplier in respect of such default Supplier's reasonable fees and expenses in providing support and guidance). (b) Upon the termination of this Agreement by Supplier following any Company Default, (i) Company may do all such things and convey all such rights to the End User Customer as may be necessary or reasonably advisable in order to fulfill all Continuing Obligations, and (ii) Supplier shall promptly (x) furnish, or shall cause to be furnished, all Software Source Materials necessary for Company to timely fulfill the Continuing Obligations and (y) if requested by Company, use reasonable commercial efforts to provide, at Supplier's then current rates, all necessary personnel as consultants to Company to provide transitional support and guidance with respect to Software and Services until such time as Company has made other arrangements but in no event for more than one year. (c) In addition to license and other rights granted pursuant to the Intellectual Property Agreement, Supplier hereby grants to Company a nonexclusive, irrevocable, worldwide, fully-paid, non-transferable (except pursuant to Article 25.0 hereof) license solely for the purposes of ------------ fulfilling Continuing Obligations following the occurrence of any Supplier Default or the termination of this Agreement by Supplier following any Company Default in accordance with the terms of the Contracts to which the such Supplier Default or Agreement No.________________ Page 22 of 26 Company Default applies: (i) to create, use, copy, perform, display, support, repair, enhance, modify, supplement, offer and distribute (or have created, used, copied, performed, displayed, supported, repaired, enhanced, modified, supplemented, offered and distributed by any third party) the Licensed Materials; and (ii) to create, use, copy, perform, display, support, repair, enhance, modify and supplement (or have created, used, copied, performed, displayed, supported, repaired, enhanced, modified and supplemented by any third party) the Software Source Materials. The parties agree that Company, as licensee under the foregoing license, shall be entitled to the benefits of Section 365(n) of the United States Bankruptcy Code 11 U.S.C.(S) 101 et seq. if the Supplier is a ------- debtor in a case under Chapter 11 of such Bankruptcy Code. 43.0 TERMINATION ----------- (a) This Agreement or any Order issued pursuant to this Agreement may be terminated as follows: (i) by mutual written agreement of the parties hereto; or (ii) by Company with respect to any Contract (x) at any time that there shall no longer be outstanding any Continuing Obligations under such Contract or (y) if there shall have occurred and be continuing a Supplier Contract Default with respect to such Contract; or (iii) by Supplier with respect to any Contract (x) at any time that there shall no longer be outstanding any Continuing Obligations under such Contract or (y) if there shall have occurred and be continuing a Company Contract Default with respect to such Contract; or (iv) by Company (x) at any time that there shall no longer be outstanding any Continuing Obligations or (y) if there shall have occurred and be continuing a Supplier Event of Default; or (iv) by Supplier (x) at any time that there shall no longer be outstanding any Continuing Obligations or (y) if there shall have occurred and be continuing a Company Event of Default. (b) Upon the termination of this Agreement, (x) all rights and obligations of the parties shall terminate under this Agreement, except (i) as set forth in Article 44.0 hereof, (ii) Company may continue to ------------ utilize the licenses granted pursuant to Articles 4.0 and 42.0 to the ------------ ---- extent necessary to fulfill any Continuing Obligations, (iii) all rights granted by Company pursuant to the Contracts prior to such termination shall survive, and (iv) Company's payment obligations, if any, with respect to Services performed or Software ordered prior to such termination shall survive, and (y) Company shall have no monetary obligation under Article 6.0 hereof other than for amounts accrued under ----------- the Contracts in respect of Continuing Obligations prior to such termination and received from End User Agreement No.________________ Page 23 of 26 Customers. (c) Upon the termination of this Agreement or any Order with respect to any Contract, (x) all rights and obligations hereunder of the parties with respect to Continuing Obligations under such Contract shall terminate, except (i) as set forth in Article 44.0 hereof, (ii) Company ------------ may continue to utilize the licenses granted pursuant to Articles 4.0 and ------------ 42.0 to the extent necessary to fulfill Continuing Obligations under such ---- Contract, (iii) all rights granted by Company pursuant to such Contract prior to such termination shall survive, and (iv) Company's payment obligations, if any, with respect to Services performed or Software ordered under such Contract prior to such termination shall survive, and (y) Company shall have no monetary obligation under Article 6.0 hereof in respect of such Contract other than for amounts accrued under such Contract in respect of Continuing Obligations prior to such termination and received from End User Customers. (d) This Agreement or any Order issued pursuant to this Agreement shall automatically terminate with respect to any Contract that is terminated by Company in accordance with its terms; provided, that (i) -------- Company's liability in respect of such termination shall be limited to payment of the amounts accrued under such Contract in respect of Continuing Obligations prior to such termination, (ii) Supplier shall promptly deliver to Company all completed Services and Software (along with all related supporting Documentation), and no further Software or Services shall be provided by Supplier, in respect of such Contract, and (iii) such payment shall constitute a full and complete release and discharge of Company's monetary obligations under Article 6.0 hereof. ----------- 44.0 SURVIVAL OF OBLIGATIONS ----------------------- The obligations of the parties hereto under this Agreement and set forth in Articles 7.0, 8.0, 21.0, 26.0, 28.0, 32.0, 33.0, 35.0, 36.0, 38.0, ------------ --- ---- ---- ---- ---- ---- ---- ---- ---- 39.0, and 42.0 through 51.0 hereof shall survive termination, cancellation ---- ---- ---- or expiration of this Agreement. 45.0 SEVERABILITY ------------ If any of the provisions of this Agreement or any Order shall be invalid or unenforceable, the invalidity or unenforceability shall not invalidate or render unenforceable this entire Agreement or such Order, but rather this entire Agreement or Order shall be construed as if not containing the particular invalid or unenforceable provision or provisions, and the rights and obligations of the parties hereto shall be construed and enforced accordingly. 46.0 WAIVER ------ The failure of either party at any time to enforce any right or remedy available to under this Agreement or otherwise with respect to any breach or failure by the other party shall not be construed to be a waiver of such right or remedy with respect to any other breach or failure by the other party. Agreement No.________________ Page 24 of 26 47.0 ENTIRE AGREEMENT ---------------- This Agreement (together with the typed or written provisions on any Order issued pursuant to this Agreement), the Asset Purchase Agreement and the Intellectual Property Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter of this Agreement. This Agreement supersedes all prior and contemporaneous oral agreements and all prior oral and written communications and understandings of the parties hereto with respect to the subject matter of this Agreement, other than the Asset Purchase Agreement and the Intellectual Property Agreement. This Agreement shall not be amended, supplemented, modified or rescinded, except by a writing signed by the parties hereto. Provisions on the reverse side of Company's purchase orders and all provisions on Supplier's forms shall be deemed deleted. Estimates or forecasts furnished by Company shall not constitute commitments. 48.0 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL ------------------------------------------------ (a) Each of the parties hereto irrevocably submits, and agrees to cause its Affiliates to irrevocably submit, to the jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and each agrees that no such action, suit or proceeding relating to this Agreement or any transaction contemplated hereby shall be brought by it or any of its Affiliates except in such courts). Each of the parties hereto further agrees, and agrees to cause its Affiliates to agree, that service of any process, summons, notice or document by U.S. registered mail to such person's respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives (and agrees not to plead or claim), and agrees to cause its Affiliates to irrevocably and unconditionally waive (and not to plead or claim), to the fullest extent permitted by applicable law, any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Supreme Court of the State of New York, New York County, or (ii) the United States District Court for the Southern District of New York or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. (b) Each party hereby waives, and agrees to cause each of its Affiliates to waive, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement. Each party (i) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this clause (b). Agreement No.________________ Page 25 of 26 49.0 THIRD PARTY BENEFICIARIES ------------------------- No provision of this Agreement is intended to confer upon any person other than the parties hereto any rights or remedies hereunder. Each Affiliate of Lucent that wishes to become beneficiary of the provisions hereof shall deliver to Supplier a counterpart to this Agreement, duly executed by an authorized representative of such Affiliate, and upon such execution and delivery all references in this Agreement to "Company" shall be deemed to include such Affiliate. 50.0 COUNTERPARTS ------------ This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 51.0 ATTACHMENTS ----------- The following attachments are hereby incorporated by reference and made part of this Agreement: Attachment A - Unassignable Contracts Attachment B - Additional Contracts Attachment C - Form of Order Attachment D - Renewal Price Deadline Attachment E - Invoicing Guidelines Attachment F - Electronic Data Interchange Attachment G - Expense Reimbursement Guidelines Attachment H - Insurance Requirements 52.0 CSG GUARANTY ------------ CSG hereby guarantees the full and prompt performance and observance by Supplier of all of Supplier's obligations hereunder Agreement No.________________ Page 26 of 26 IN WITNESS WHEREOF, the authorized representatives of the parties hereto have executed this Agreement as of the date first written above. LUCENT TECHNOLOGIES INC. CSG SYSTEMS INTERNATIONAL, INC. By: /s/ W.T. O'Shea By: /s/ Joseph T. Ruble -------------------------------- ------------------------------- Name: William T. O'Shea Name: Joseph T. Ruble Title: Executive Vice President Title: Sr. Vice President and General Counsel CSG SOFTWARE, INC. By: /s/ Joseph T. Ruble ------------------------------- Name: Joseph T. Ruble Title: President and Secretary Agreement No.________________ Attachment A Unassignable Contracts ---------------------- See following pages. Agreement No.________________ Attachment B Additional Contracts -------------------- See following pages. Agreement No._________ Attachment C Form of Order ------------- See following page. Agreement No._________ Attachment D Renewal Deadlines ----------------- See Renewal Price Deadline and Company Notification Date set forth on Attachment A. Agreement No._________ Attachment E Invoicing Guidelines -------------------- 1. Supplier shall provide separate invoices for each End User Customer in respect of Software and Services provided under the Contracts and all necessary supporting documentation required to support the delivery of such invoice to the applicable End User Customer in accordance with the terms of the applicable Contract. 2. Invoices shall be in accordance with terms of the Contracts, in form for delivery to End User Customers. Unless otherwise provided in an Contract, all invoices shall include the following information for every item of Software and Services furnished: (a) this Agreement number, the applicable Contract number and the applicable order number; and (b) the description and prices of Sofware and Services furnished. 3. If prepayment of transportation charges is authorized, Supplier shall include the transportation charges from the FCA point to the destination as a separate item on the invoice stating the name of the carrier used. Agreement No._________ Attachment F EDI Guidelines -------------- Lucent Technologies has partnered with Sorvive Technologies to develop and certify a web-based facility that allows our current non-EDI suppliers to utilize a web-based service to electronically send and receive business documents. The process will include purchase orders, purchase order acknowledgments, shipment notifications, invoices, remittance advices (and EFT payment), simple forecasts, demand-pull and consignment planning schedules. After Company's requests that Supplier implement an EDI system, Company will arrange for Sorvive Technologies to contact you to begin the registration and setup process. Sorvive Technologies will then notify Company to setup your account to be routed to the WEB-EDI facilities. Sorvive will train your employee/s on the use of the WEB-EDI forms. Upon completion of setup you can begin using the WEB-EDI facilities; it is anticipated that all of the above tasks will be completed within 1-3 days elapsed time. There are no requirements to install special equipment or software. All you will need is a WEB Browser and access to the Internet. For more information on the Sorvive WEB-EDI offering, you can access their website at www.sorvive-plus.com. Agreement No._________ Attachment G Expense Reimbursement Guidelines -------------------------------- Travel and living expenses submitted must be business expenses authorized by Company and specifically related to the Services, and shall be defined as follows: BUSINESS EXPENSES ARE: . Expenses necessary to the performance of the Services. . Expenses that benefit or advance the interests of the Company. . Subject to the requirements of reasonableness. NON-BUSINESS EXPENSES ARE: . Expenses that do not benefit or advance the interest of the Company. . Expenses that are incurred for other than the performance of the Services. . Expenses that are personal in nature such as: . In-room movies. . Mini-bars. . Membership fees for Airline clubs. . Lunch on normal work days. . Laundry and valet services unless trip exceeds 5 business days or emergency situation. . Personal memberships in health clubs. . Refreshments not associated with a business meal or conference. . Telephone calls that are personal in nature. TELECONFERENCING: Teleconferencing should be used for meetings instead of travel whenever possible. TRAVEL TIME: Travel should occur on Supplier's own time, and Company shall not be billed an hourly rate or other fee for such time unless authorized by Company Representative prior to the trip. REIMBURSEMENTS: All authorized reimbursements to Supplier or Supplier's Employees shall be billed to Company by Supplier and paid directly to Supplier by Company. RECEIPTS: Original receipts are required for all reimbursable expenses over $25. AIR TRAVEL: Coach class must be used for all domestic and international flights. Authorization may be given, in certain situations, for use of business class on international flights but such authorization must be obtained from the Company Representative before the trip. First class and business class travel is prohibited except as stated above. Arrangements should be made as early as 7 days prior to travel to take advantage of reduced rates. GROUND TRANSPORTATION: Hotel courtesy vans, taxicabs, airport limousines and other inexpensive modes of transportation should be used whenever appropriate. Rental Car: Compact or sub-compact cars are authorized for individuals or groups of two, intermediate cars are authorized for three or more. Larger or specialized vehicles such as vans or mini-buses must be approved in advance by Company Representative. Rental cars must be refueled before returning or an explanation must be attached to the invoice. Personal Automobile: Reimbursed at the rate of 30 cents a mile unless otherwise provided for in the Agreement. Tolls and Parking fees are reimbursable. LODGING: Mid-range hotel accommodations not to exceed $65-$85 (domestic) depending on location are Agreement No._________ reimbursable for short-term trips of less than one week. Lodging at an international location should reflect comparable expense control. Company's Representative will determine appropriate level for specific location with the assistance of Company's Transportation Specialist or Travel Zone Coordinator. Efficiency apartments should be used for trips of one week or more duration when appropriate. MEALS: The cost of meals while on domestic trips should be kept at a reasonable level (not to exceed $25 a day). Meal expenses when visiting international locations should reflect comparable cost control. TELEPHONE: When traveling on Company business Supplier should use personal or Supplier's company calling card for all toll calls to minimize extra surcharges by hotels. Company shall not reimburse Supplier for any calls which are unrelated to the performance of the Services. Supplier shall reimburse Company for calls made from Company work stations by Supplier's employees which are unrelated to the performance of the Services for Company. The AT&T access code is 10 + ATT + 0 + AREA CODE + NUMBER. These guidelines attempt but do not guarantee to address all possible issues concerning travel and living for Suppliers performing Services for Company. For any issues not covered, contact Company. Agreement No._________ Attachment H Insurance Requirements ---------------------- Supplier shall maintain and cause Supplier's permitted subcontractors and suppliers to maintain: (i) Workers' Compensation insurance as prescribed by the law of the state or nation in which Services are performed; (ii) employer's liability insurance with limits of at least $500,000 for each occurrence; (iii) automobile liability insurance if the use of motor vehicles is required, with limits of at least $1,000,000 combined single limit for bodily injury and property damage per occurrence; (iv) Commercial General Liability ("CGL") --- insurance, ISO 1988 or later occurrence form of insurance, including Blanket Contractual Liability and Broad Form Property Damage, with limits of at least $1,000,000 combined single limit for bodily injury and property damage per occurrence; and (v) if Supplier is furnishing to Company (by sale or otherwise) material or construction services, CGL insurance endorsed to include products liability and completed operations coverage in the amount of $5,000,000 per occurrence. All CGL and automobile liability insurance shall designate Lucent Technologies Inc., its Affiliates, and its directors, officers and employees as additional insured. Insurance companies providing coverage under this Agreement must be rated by A-M Best with at least an A-rating. EX-2.31 6 dex231.txt SOFTWARE & SERVICES MAST SUPPLY AGMT (INT'L) Agreement No.________________ Page 1 of 27 Exhibit 2.31 LUCENT TECHNOLOGIES INC. CSG SYSTEMS INTERNATIONAL, INC. 600 Mountain Avenue 7887 E. Belleview, Suite 1000 Murray Hill, NJ 07974 Englewood, CO 80111 CSG INTERNATIONAL LIMITED Northgate House 1A Stoke Road Slough, Berkshire SL2 5AA United Kingdom CSG TECHNOLOGY LIMITED 7887 E. Belleview, Suite 1000 Englewood, CO 80111 SOFTWARE AND SERVICES MASTER SUPPLY AGREEMENT (INTERNATIONAL) Agreement No.________________ Page 2 of 27 TABLE OF CONTENTS 1.0 DEFINITIONS............................................................................... 4 2.0 SCOPE OF AGREEMENT; ADDITIONAL CONTRACTS.................................................. 7 3.0 ORDERS.................................................................................... 8 4.0 SOFTWARE LICENSE GRANT.................................................................... 8 5.0 PERFORMANCE OF CONTINUING OBLIGATIONS..................................................... 8 6.0 LICENSE AND SERVICE FEES.................................................................. 9 7.0 EFFECTIVE DATE AND TERM................................................................... 9 8.0 INTELLECTUAL PROPERTY RIGHTS.............................................................. 9 9.0 DELIVERABLES; LATE DELIVERIES............................................................. 10 10.0 INVOICING................................................................................. 10 11.0 PAYMENT TERMS............................................................................. 10 12.0 ELECTRONIC DATA INTERCHANGE............................................................... 11 13.0 MISCELLANEOUS EXPENSES.................................................................... 11 14.0 TAXES..................................................................................... 11 15.0 TITLE TO AND RISK OF LOSS OF MEDIUM....................................................... 11 16.0 SOFTWARE ACCEPTANCE....................................................................... 11 17.0 COPYRIGHT NOTICE.......................................................................... 11 18.0 CUSTOMER SUPPORT; UPDATES, UPGRADES AND PATCHES........................................... 11 19.0 QUALITY PROCESSES......................................................................... 12 20.0 NEW RELEASES OF SOFTWARE.................................................................. 12 21.0 PROTECTION OF CONFIDENTIAL SOFTWARE....................................................... 12 22.0 TRAINING SERVICES AND LICENSE............................................................. 13 23.0 WARRANTIES................................................................................ 13 24.0 REPRESENTATIONS........................................................................... 14 25.0 ASSIGNMENT................................................................................ 14 26.0 CHOICE OF LAW............................................................................. 15 27.0 COMPLIANCE WITH LAWS...................................................................... 15 28.0 DISPUTE RESOLUTION........................................................................ 15 29.0 EXPORT.................................................................................... 15 30.0 FORCE MAJEURE............................................................................. 16 31.0 IDENTIFICATION............................................................................ 16 32.0 INDEMNITY................................................................................. 16
Agreement No.________________ Page 3 of 27 33.0 INFRINGEMENT CLAIMS......................................................................... 17 34.0 INSURANCE REQUIREMENTS...................................................................... 17 35.0 LIMITATION OF LIABILITY..................................................................... 18 36.0 NOTICES..................................................................................... 18 37.0 NOTICE OF UPDATES, UPGRADES AND PATCHES..................................................... 19 38.0 SOURCE CODE ESCROW.......................................................................... 20 39.0 USE OF COMPANY'S INFORMATION AND MEDIA...................................................... 20 40.0 SUPPLIER DEFAULTS........................................................................... 20 41.0 COMPANY DEFAULTS............................................................................ 21 42.0 REMEDIES AND PERFORMANCE RIGHTS............................................................. 22 43.0 TERMINATION................................................................................. 23 44.0 SURVIVAL OF OBLIGATIONS..................................................................... 24 45.0 SEVERABILITY................................................................................ 24 46.0 WAIVER...................................................................................... 24 47.0 ENTIRE AGREEMENT............................................................................ 25 48.0 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIA............................................. 25 49.0 THIRD PARTY BENEFICIARIES................................................................... 26 50.0 COUNTERPARTS................................................................................ 26 51.0 ATTACHMENTS................................................................................. 26 52.0 CSG GUARANTY................................................................................ 26
Agreement No.________________ Page 4 of 27 SOFTWARE AND SERVICES MASTER SUPPLY AGREEMENT ("Agreement"), dated as of --------- February 28, 2001 (the "Effective Date"), by and among LUCENT TECHNOLOGIES INC., -------------- a Delaware corporation ("Lucent"), and CSG SYSTEMS INTERNATIONAL, INC., a ------ Delaware corporation ("CSG"), and CSG INTERNATIONAL LIMITED a United Kingdom corporation and a wholly owned subsidiary of CSG ("Supplier"), and CSG -------- TECHNOLOGY LIMITED a Bermuda corporation and a wholly owned subsidiary of CSG ("CSG Technology"). -------------- WHEREAS Lucent and CSG have entered into an asset purchase agreement dated as of December 21, 2001 (the "Asset Purchase Agreement"), wherein Lucent has agreed to ------------------------ sell to CSG, CSG International Limited and CSG Technology certain assets used in connection with the Lucent's billing and customer care products business, and CSG, CSG International Limited and CSG Technology have agreed to purchase such assets and to assume certain liabilities relating to such acquired business all as more particularly described therein; WHEREAS, following the transactions contemplated by the Asset Purchase Agreement, Lucent and certain of its Affiliates will have Continuing Obligations (including making updates, upgrades, patches, on-going maintenance and end-user customer support available) to End User Customers pursuant to Contracts, and Supplier has agreed that with respect to such Contracts it will perform, on behalf of Lucent and such Affiliates, such Continuing Obligations and CSG and CSG Technology have agreed to guarantee Supplier's performance (all capitalized terms being used as defined herein); WHEREAS it is a condition to the consummation of the transactions contemplated by the Asset Purchase Agreement that Lucent and Supplier enter into this Agreement pursuant to which Supplier will perform Services for, and to provide Software to, End User Customers so as to timely satisfy the Continuing Obligations; WHEREAS Supplier and Lucent desire that Supplier shall have, to the fullest extent possible, the benefits of and all the obligations and duties under the Contracts in respect of the Continuing Obligations and that Company be absolved of such obligations and duties; and WHEREAS, upon the terms and subject to the conditions herein, Supplier desires to perform Services for, and to provide Software to, End User Customers all in accordance with the terms and conditions of the Contracts and this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and in the Attachments (as defined herein), Supplier and Lucent agree as follows: 1.0 DEFINITIONS ----------- The following definitions set forth below apply to this Agreement: 1.1 "Additional Contracts" means any agreement, contract or other arrangement, -------------------- entered into by Company prior to the Effective Date but which Company, in good faith, did not include in Attachment A, that provides for any ------------ obligations of Company to customers with respect to Agreement No.________________ Page 5 of 27 Services and Software to be performed, supplied, delivered or installed outside the United States and Canada, which agreement, contract or other arrangement cannot be assigned to Supplier pursuant to the Asset Purchase Agreement (or any collateral documents related thereto), as such agreement, contract or other arrangement may from time to time be amended, supplemented or modified with the consent of Supplier pursuant to Article ------- 2.0 hereof or renewed pursuant to Article 5.0(b) hereof. --- -------------- 1.2 "Affiliate" has the meaning specified in the Asset Purchase Agreement, --------- unless otherwise specified in this Agreement. 1.3 "Agreement" means this Software and Services Master Supply Agreement --------- (International), as may from time to time be amended, supplemented or modified by mutual written agreement of the parties hereto, and including all Attachments hereto. 1.4 "Attachments" mean the attachments to this Agreement as may from time to ----------- time be amended, supplemented or modified by mutual written agreement of the parties hereto, including all exhibits and documents containing fees, rates, and any special terms and other conditions pertaining to the Software and Services to be provided hereunder. 1.5 "Company" means Lucent Technologies Inc. or any of its Affiliates that are ------- party to Contracts, and their respective successors and permitted assigns. Lucent shall cause its Affiliates that are parties to Contracts to comply with their respective obligations hereunder. 1.6 "Company Default" means a Company Contract Default or a Company Event of --------------- Default. 1.7 "Continuing Obligations" means any obligations of Company to End User ---------------------- Customers with respect to the Services and Software to be performed, supplied, delivered or installed outside the United States and Canada, including obligations regarding pricing, Software license, warranty, maintenance, consulting, training, Support, Specifications, Documentation, escrow and release of source code of the Software, discontinued availability of Software, and continuing availability of Updates, Upgrades and Patches. 1.8 "Contracts" means, collectively, the Additional Contracts and the --------- Unassignable Contracts. 1.9 "Documentation" means users' manuals, programmers' guides and systems' ------------- guides that are provided for use with the Software. 1.10 "End User Customer" refers to Company's customers who have the right to ----------------- use Software or receive Services pursuant to any Contract, including the customers identified in Attachment A, and all successors and permitted ------------ assignees of such customers. 1.11 "including" shall mean "including without limitation" or "including but --------- not limited to". Agreement No.________________ Page 6 of 27 1.12 "Information" means any idea, data, program, technical, business or other ----------- intangible information identified in writing as confidential by the conveying party, however conveyed. 1.13 "Intellectual Property Agreement" means the Intellectual Property ------------------------------- Agreement dated the date hereof by and among Lucent, Lucent Technologies GRL Corporation, Lucent Technologies Ireland Holding Limited and Supplier. 1.14 "Medium" means any document, print, tape, disc, tool, semiconductor chip ------ or other tangible information-conveying article, and "Media" shall have a ----- corresponding meaning. 1.15 "Object Code" means machine-readable, compiled object code form. ----------- 1.16 "Order" means a purchase order used for the purpose of ordering Software ----- and Services. 1.17 "Services" means all maintenance, consulting, training, support and -------- professional services, including the provision of Support, Updates, Upgrades and Patches. 1.18 "Software" means Software (as defined in the Intellectual Property -------- Agreement), in Object Code, and all future enhancements and modifications, including Updates, Upgrades and Patches. 1.19 "Software Source Materials" means all source programs, technical ------------------------- documentation and other information necessary to produce, use, maintain, modify or correct all versions of the Software which are required to be supplied pursuant to this Agreement, and shall include source code, flow charts, logic diagrams and program language translators (assemblers, compilers, interpreters, etc.) except to the extent that any such translator is a proprietary software product of a third party vendor readily available to Company from such vendor. 1.20 "Specifications" means designs, plans and instructions for the development -------------- and operation of the Software, as mutually agreed upon by the parties hereto. 1.21 "Supplier" means CSG International Limited the party to this Agreement -------- that will be performing the Continuing Obligations on behalf of Company, and its successors and permitted assigns. 1.22 "Supplier Default" means a Supplier Contract Default or a Supplier Event ---------------- of Default. 1.23 "Support" means customer support including (i) direct response to End User ------- Customer inquiries with respect to inquiries concerning performance, functionality or operation of the Software, (ii) direct response to End User Customers with respect to performance deficiencies, (iii) diagnosis of performance deficiencies, and (iv) problem resolution. 1.24 "Unassignable Contracts" means any agreement, contract or other ---------------------- arrangement entered into Agreement No.________________ Page 7 of 27 prior to the Effective Date between Company and any of its customers for the provision of Continuing Obligations, which agreement, contract or other arrangement is not assigned to Supplier pursuant to the Asset Purchase Agreement (or any collateral documents related thereto), as such agreement, contract or other arrangement may from time to time be amended, supplemented or modified with the consent of Supplier pursuant to Article ------- 2.0 hereof or renewed pursuant to Article 5.0(b) hereof. --- -------------- 1.25 "Use" means use by any individual having authorized access to the computer --- on which the Software is operated. 1.26 "Updates, Upgrades and Patches" means releases of or modifications to the ----------------------------- Software which contain (i) error corrections and other modifications or (ii) functionality enhancements. 2.0 SCOPE OF AGREEMENT; ADDITIONAL CONTRACTS ---------------------------------------- (a) This Agreement applies to Software and Services required to be provided to End User Customers under the terms of the Contracts. Correct and complete copies of all provisions of the Unassignable Contracts that are relevant to the performance of Supplier's obligations under this Agreement shall have been delivered to Supplier on or prior to the Effective Date. Correct and complete copies of all provisions of each Additional Contract that are relevant to the performance of Supplier's obligations under this Agreement shall be delivered to Supplier prior to Supplier becoming responsible for such obligations in respect of such Additional Contract and such Additional Contract becoming a "Contract" under this Agreement. Company shall not amend, supplement or otherwise modify, in any material respect, any terms of the Contracts relating to Software or Services supplied under this Agreement without Supplier's prior written consent (which consent shall not be unreasonably withheld). Upon reasonable written request by Supplier, Company shall use reasonable commercial efforts to assert on behalf of Supplier any rights that Company may have under any Contract for acts or omissions of any End User Customer in respect of Software or Services supplied under this Agreement. (b) If Company has obligations with respect to Services or Software under any Additional Contract, Supplier agrees that it shall provide Software and Services in accordance with the terms set forth in such Additional Contract (or such other terms and conditions as may be mutually agreed between Company and Supplier). If the material terms (including fees for licensing of Software and rates for Services) of any Additional Contract are materially less favorable in the aggregate to Supplier than the terms set forth in Attachment B, Supplier and Company shall negotiate ------------ in good faith mutually acceptable terms under which Supplier shall perform Company's obligations under such Additional Contract in accordance with its provisions; provided, that if fees for licensing of Software and rates for -------- Services under such Additional Contract are less favorable to Supplier than those set forth in Attachment B, fees for licensing of Software and rates ------------ for Services under such Additional Contract shall be as set forth in Attachment B. ------------ Agreement No.________________ Page 8 of 27 3.0 ORDERS ------ (a) Orders shall be placed with Supplier (through its business contact person) using an order substantially in the form of Attachment C ------------ and shall include a reference to this Agreement, the applicable Contract and a description of the Software and Services ordered. Supplier shall acknowledge to Company receipt of each Order within three (3) business days. Supplier may reject an Order for cause only if it provides written notice of rejection within ten (10) days of receipt of such Order and concurrently terminates this Agreement in accordance with Article 43.0 ------------ hereof. (b) If Supplier rejects any Order pursuant to clause (a) above, Company agrees to comply with its obligations under the Contract to which such rejected Order relates (including avoiding any act or omission that would cause the source code of the Software to be released by Company pursuant to such Contract) provided that Supplier has complied with its obligations under Article 42.0(b)(ii) hereof. Supplier's rejection of an ------------------- Order does, in no way, authorize Company to take any action or make any commitment on Supplier's behalf. (c) Each Order that is not rejected by Supplier in accordance with the preceding sentence shall be deemed accepted by Supplier within ten (10) days after receipt thereof. Only Orders so deemed accepted shall be binding on Company and Supplier. If Company proposes to include in any Order terms and conditions other than, or in addition to, those contained in this Agreement or such Contract, Supplier and Company shall negotiate in good faith such terms and conditions. 4.0 SOFTWARE LICENSE GRANT ---------------------- In addition to license and other rights granted pursuant to the Intellectual Property Agreement, upon the terms and subject to the conditions of this Agreement, Supplier hereby grants to Company a perpetual, nonexclusive, irrevocable, worldwide, fully-paid, non- transferable (except pursuant to Article 25.0 hereof) right to sublicense ------------ to End User Customers such rights and benefits with respect to the Software and Documentation (the "Licensed Materials") as may be required to be ------------------ granted to End User Customers pursuant to the Contracts. 5.0 PERFORMANCE OF CONTINUING OBLIGATIONS ------------------------------------- (a) Supplier, as a subcontractor to Company, hereby agrees to assume and perform all Continuing Obligations upon the terms and subject to the conditions hereof. Supplier shall ensure that sufficient qualified and experienced personnel are made available to perform all of Supplier's obligations hereunder. Supplier shall be responsible to Company for all Continuing Obligations performed by Supplier's permitted assigns and permitted subcontractors. Notwithstanding the foregoing, Supplier shall not be required to supply Software or Services hereunder other than in respect of Continuing Obligations. Agreement No.________________ Page 9 of 27 (b) Company and Supplier shall, in good faith, use reasonable commercial efforts to assign or cause to be assigned to Supplier the Contracts to the extent such Contracts relate to Software and Services. (c) If any Contract is automatically renewable in accordance with its terms for a successive period unless either party to such Contract gives notice of its intention not to renew such Contract, Company may renew such Contract in accordance with its terms without Supplier's consent; provided, -------- that if fees for the licensing of Software and rates for the provision of Services during any renewal term are not specified in a Contract, the fees and rates applicable to such Contract during such renewal term shall be determined by Supplier so long as that Supplier notifies Lucent (or if requested by Company, End User Customers) in writing of any increase in such fees and rates applicable to such Contract for such renewal term (together with a price list showing such proposed new fees and rates) at least thirty (30) days in advance of the deadline specified in such Contract for notifying the applicable End User Customer of a price increase ("Renewal Price Deadline"). Company may renew only once each Contract that ---------------------- does not expressly provide that it is renewable, provided that (x) the renewal term for such Contract shall not exceed three (3) years and (y) the fees and rates applicable to such Contract during such renewal term shall be determined by Supplier (so long as such fees and rates shall not be in breach of any of Company's good faith and fair dealing obligations under such Contract). Attachment D sets forth for each Contract the Renewal ------------ Price Deadline. 6.0 LICENSE AND SERVICE FEES ------------------------ Fees for the licensing of Software and rates for all Services shall be as set forth in the applicable Contract (as such fees and rates may be increased pursuant to Article 2.0(b) hereof in respect of any Additional -------------- Contract). All other services shall be at rates mutually agreed in writing between the parties hereto prior to the initiation of such Services. 7.0 EFFECTIVE DATE AND TERM ----------------------- This Agreement shall become effective upon the Effective Date and shall continue to be effective for so long as may be necessary for Company to satisfy its Continuing Obligations to End User Customers, unless earlier terminated in accordance with Article 43.0 hereof; provided, that rights in ------------ -------- the Software granted to an End User Customer pursuant to a Contract shall remain in effect until the Use of the Software is discontinued by the applicable End User Customer or such rights are earlier terminated in accordance with the applicable Contract. 8.0 INTELLECTUAL PROPERTY RIGHTS ---------------------------- No interest in any software, products or materials developed by Company or any End User Customer shall pass to Supplier under this Agreement unless otherwise specified in the applicable Contract, even though such software, products or materials may interact with the Agreement No._________ Page 10 of 27 Software or be embedded therein, or be functionally similar to the Software. Notwithstanding the foregoing, each End User Customer shall retain title and intellectual property rights to any derivative works it creates based on Supplier's source code to the extent that such right is granted in any Contract. No interest in any software, products or materials developed by Supplier shall pass to Company or any End User Customer under this Agreement unless otherwise specified in the applicable Contract, even though such software, products or materials may interact with the Software or be embedded therein, or be functionally similar to the Software. 9.0 DELIVERABLES; LATE DELIVERIES ----------------------------- On the applicable delivery date specified in an Order, Supplier shall furnish to Company (or to the End User Customer if so specified by Company) the Software and Services specified on such Order for the fees and rates specified in Article 6.0 hereof to be paid in accordance with ----------- Articles 10.0 and 11.0 hereof. Except as specified in Articles 13.0 and ------------- ---- ------------- 14.0 here of, no additional charges or fees shall be payable by Company or ---- any End User Customer. Supplier shall be liable for all liquidated damages payable as a result of any late deliveries to End User Customers as set forth in the applicable Contract to the extent such liquidated damages accrued as a result of any act or omission of Supplier. 10.0 INVOICING --------- Supplier shall follow the procedures for invoicing and shipping, as set forth in Attachment E, as may be modified from time to time by mutual ------------ agreement of the parties hereto. 11.0 PAYMENT TERMS ------------- (a) During the term hereof, Company shall pay to Supplier (i) all amounts payable by End User Customers in respect of the provision of Software and the performance of Services (including service fees, maintenance fees, late fees, etc.) as may be set forth in the Contracts (the "Customer Payments"), and (ii) any additional fees and rates payable ----------------- by Company pursuant to Article 2.0(b) hereof in respect any Additional -------------- Contract. Supplier shall provide Company with invoices and all necessary supporting documentation required to support the delivery of such invoices to End User Customers. Payment shall be made no later than the 2nd business day of the 2nd calendar month following the date of a correct invoice. (b) Notwithstanding clause (a) above, to the extent an End User Customer disputes or otherwise fails to make any Customer Payment, then Company shall not be required to make such Customer Payment until resolution of such dispute or such payment is otherwise made by such End User Customer. Such dispute or other failure to make a Customer Payment shall not, however, relieve Company of its obligation to make any payment when due in respect of any Customer Payment that is undisputed or has been paid. Agreement No._________ Page 11 of 27 12.0 ELECTRONIC DATA INTERCHANGE --------------------------- Supplier shall, if requested by Company, use reasonable commercial efforts to implement the electronic data interchange system described in Attachment F as an electronic means of trading business documents. ------------ Supplier shall, at its sole expense, obtain, make fully operational and maintain all equipment, software and other materials required by Supplier to implement and utilize such system. 13.0 MISCELLANEOUS EXPENSES ---------------------- Each party shall pay all travel expenses of its employees, except where travel is specifically requested by the other party. Reimbursement for reasonable expenses for transportation and living shall be as set forth in the applicable Contract or, if not set forth therein, in accordance with the guidelines set forth in Attachment G. ------------ 14.0 TAXES ----- Company shall reimburse Supplier only for state and local sales and use taxes, unless Company advises Supplier that an exemption applies (and if reasonably requested by Supplier, provides reasonably satisfactory evidence to that effect). Taxes payable by Company shall be billed as separate items on Supplier's invoices. 15.0 TITLE TO AND RISK OF LOSS OF MEDIUM ----------------------------------- Title to and risk of loss and damage to any Medium supplied under this Agreement shall vest when such Medium has been delivered to or accepted by, as applicable, the End User Customer in accordance with the applicable Contract. 16.0 SOFTWARE ACCEPTANCE ------------------- For Software identified in any Contract as subject to customer acceptance testing, the acceptance procedure set forth in the applicable Contract shall apply. 17.0 COPYRIGHT NOTICE ---------------- Company will not alter or delete any of Supplier copyright notices appearing on Supplier's containers (or any labels thereon) of Software. 18.0 CUSTOMER SUPPORT; UPDATES, UPGRADES AND PATCHES ----------------------------------------------- Supplier shall establish procedures and maintain the organization and processes to provide, and shall provide, Support to Company and End User Customers as provided in the Contracts. Supplier shall furnish all Updates, Patches and Upgrades to End User Customers, together with any associated Documentation, as required by the Contracts. Agreement No._______________ Page 12 of 27 19.0 QUALITY PROCESSES ----------------- (a) Supplier agrees to meet with Company upon reasonable notice to discuss the quality of Software and Services being provided by Supplier pursuant to this Agreement. (b) Supplier shall keep Company notified of any presently occurring or potential material Software and Service problems or issues that occur or frequently re-occur and that Supplier in its reasonable judgment believes should be brought to the attention of Company so that Company may have an opportunity to provide corrective action for those matters for which Company continues to be responsible. (c) Supplier shall at all times designate one employee as the primary contact person for the referral of assistance requests by Company. Supplier shall establish tracking and reporting mechanisms for all assistance requests. Company shall promptly report to Supplier any and all End User Customer queries, complaints and claims relating to the performance by Supplier of its obligations hereunder. 20.0 NEW RELEASES OF SOFTWARE ------------------------ If, after the Effective Date, Supplier introduces a new release of Software which contains functionality enhancements, Company shall not distribute earlier releases of the Software to End User Customers, including releases discontinued by Supplier, unless required by End User Customers pursuant to the Contracts and Company shall provide written notice (which shall include the relevant provisions of the applicable Contract) to Supplier of such requirement at the time of such distribution. 21.0 PROTECTION OF CONFIDENTIAL SOFTWARE ----------------------------------- (a) Except as otherwise expressly provided for in this Agreement or the Intellectual Property Agreement, Company will hold in confidence for Supplier all parts of the Software, Documentation, and other Information that Company's personnel may unavoidably receive or have access to during the performance of this Agreement. Company further agrees that all such information shall remain the property of Supplier and that Company shall not make any disclosure of such information to anyone, except to employees, contractors and agents of Company and End User Customers to whom such disclosure is necessary to the use for which rights are granted under the Contracts. Company shall appropriately notify all such employees, contractors, agents and End User Customers to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by them and obtain their written agreement to so keep in confidence. Company shall treat the Software with the same degree of care against unauthorized disclosure as Company normally treats its own Information of like character. (b) The foregoing restrictions on the use or disclosure of such Software, Documentation and Information shall not apply to such Software, Documentation, and Information: Agreement No._________ Page 13 of 27 (i) which is developed from normal use of the Software which is Object Code or is lawfully received free of restriction from another source having the right to so furnish such information; or (ii) after it has become generally available to the public by acts not attributable to Company or its employees, agents or contractors; or (iii) which at the time of disclosure to Company after the Effective Date was known to Company free of restriction and evidenced by documentation in Company's possession; or (iv) which Supplier agrees in writing is free of such restrictions; or (vi) which is requested pursuant to a judicial or governmental request, requirement or order under law, provided that Company provides Supplier with sufficient prior notice in order to contest such request, requirement or order or seek protective measures. (c) Supplier shall not provide under, or have provided in contemplation of, this Agreement any information, however conveyed, on any Medium, unless Supplier has the right to do so, and, except for Software and Information furnished or developed by Supplier hereunder and owned by Company, Supplier shall not view any of the foregoing as confidential or proprietary. If Supplier must furnish any Information to Company with restrictions, it shall only be furnished after negotiation and execution on behalf of Company of a separate written agreement specifically identifying the documents to be furnished and setting forth Company's rights and obligations with respect thereto. 22.0 TRAINING SERVICES AND LICENSE ----------------------------- Supplier shall make available to End User Customers such training services as may be required to be provided pursuant to the Contracts. Supplier shall also make available to Company, at mutually agreed upon rates, Supplier's standard training courses. 23.0 WARRANTIES ---------- (a) Supplier warrants to Company that the Software shall be in conformance with all applicable warranties of Company set forth in the Contracts. The initial warranty period shall be as stated in the applicable Contract. (b) Supplier warrants to Company that Supplier shall perform all Services pursuant to the terms of the Contracts in conformance with all applicable warranties of Company set forth in the Contracts. The initial warranty period shall be as stated in the applicable Contract. (c) All warranties shall survive to the extent provided in the Contracts. In the Agreement No._________ Page 14 of 27 event of a breach of the foregoing warranties, Supplier shall, upon written notice from Company, provide on-site personnel and repair or replace the Software or re-perform or otherwise remedy any deficient Services as promptly as practicable in accordance with the provisions of the applicable Contract (or if Supplier is unable to timely repair or replace the Software in accordance with the provisions of the applicable Contract, then Supplier shall refund all fees received by Supplier for the Software, or Company may obtain Services from a third party to repair or replace the Software, at Supplier's expense). Repaired and replacement Software shall be warranted as set forth in this Article. (d) THE WARRANTIES SET FORTH IN THIS ARTICLE 23.0 ARE IN LIEU OF AND ------------ EXCLUDES ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OTHER THAN ANY WARRANTIES SET FORTH IN THE CONTRACTS. 24.0 REPRESENTATIONS --------------- Supplier hereby represents and warrants to Company that: (i) this Agreement has been duly executed and delivered by Supplier, and constitutes a valid, binding obligation enforceable against Supplier in accordance with its terms; (ii) Supplier has not taken any action that would prohibit or otherwise limit the ability of Supplier to fulfill its obligations hereunder; (iii) Company and End User Customers shall have quiet enjoyment of the Software in accordance with the terms of the Contracts; and (iv) to the best of Supplier's knowledge, the Software will contain no malicious code or computer viruses introduced in the Software after the Effective Date, and Supplier shall immediately notify Company if any such problem is suspected. 25.0 ASSIGNMENT ---------- Neither party shall assign any of its rights or delegate any of its obligations under this Agreement or any Order, except for money due, without the prior written consent of the other party; provided, that -------- either party may assign its rights and delegate its obligations under this Agreement or any Order to an Affiliate of such party without the consent of the other party. This Agreement shall be binding upon any successor-in- interest of each party (including by way of merger, reorganization, or transfer or sale of substantially all of the assets of such party). Notwithstanding the foregoing, each party shall remain responsible for any obligations under this Agreement that are assigned or delegated to any of its Affiliates. As used in this Article 25.0, "Affiliate" means, with ------------ --------- reference to a party hereto, any other person or entity who controls, is controlled by or is under control with such party (where, for the purposes of the foregoing definition, "control" means owning, directly or indirectly, stock or equity possessing 51% or more of the total combined voting power of all classes of voting stock or equity of, and 51% or more of the total number of shares of all other classes of stock or equity of, a person). Agreement No.______________ Page 15 of 27 26.0 CHOICE OF LAW ------------- The parties hereto agree that this Agreement shall be governed by and interpreted and construed in accordance with the laws of the State of New York, USA, excluding any conflict of laws rule or principle that might refer the governance, interpretation or construction of this Agreement to the laws of another jurisdiction. 27.0 COMPLIANCE WITH LAWS -------------------- The parties hereto shall comply at their own expense with all the applicable laws, ordinances, regulations and codes in performance of this Agreement. 28.0 DISPUTE RESOLUTION ------------------ (a) The parties hereto agree to address any controversy or dispute arising out of or relating to this Agreement, any Order or any breach hereof or thereof (a "Dispute") as set forth in this Article. At any time, ------- either party may give the other written notice of a Dispute, specifically identifying the nature of the Dispute, the acts or omissions giving rise to the Dispute, any claimed damages and the relief sought. The other party shall provide a written response within ten (10) days of the receipt of such notice. The senior management representatives designated below (the "Representatives") shall work together in a manner that meets the --------------- interests of the parties hereto, until either an agreement is reached or an impasse is declared by either party. Company's Representative Supplier's Representative ------------------------ ------------------------- Joe Carson, VP, SCN Mark R. Wagner (b) If the Representatives are unable to resolve the Dispute as set forth above, either party may elect by to submit the Dispute for hearing and non-binding resolution by a panel of two (2) senior executives of each party (and, if such executives agree, a mutually acceptable neutral advisor) upon no less than seven (7) and no more than fourteen (14) days' prior written notice to the other party. If any party elects to use the procedure set forth in this Article, the other party's executives must participate in the hearing. If the Dispute cannot be resolved by such senior executives, then the neutral advisor, if any, may be asked to assist such senior executives in evaluating the merits of each party's position so as to resolve the Dispute. Each party shall each bear its own costs with respect to such procedure and shall share equally the fees and expenses of the neutral advisor, if any, and the cost of the facility for the hearing. 29.0 EXPORT ------ Neither Company nor Supplier shall export the Software, or any other information under this Agreement, in contravention of the laws of the United States or any other applicable jurisdiction. Agreement No._________ Page 16 of 27 30.0 FORCE MAJEURE ------------- Neither party shall be held responsible for any delay or failure in performance of any part of this Agreement to the extent such delay or failure is caused by fire, flood, strike of a third party, civil, governmental or military authority, act of God, or other similar causes beyond its control and without the fault or negligence of the delayed or non-performing party or its subcontractors. 31.0 IDENTIFICATION -------------- Except to the extent expressly permitted in the Asset Purchase Agreement, neither party shall, without the other party's prior written consent, make public use of any trade name, trademark, logo or any other designation or drawing of the other party or its affiliates ("Identification"). Supplier -------------- shall remove or obliterate any Identification of Company prior to any use or disposition of any material rejected or not purchased by Company. 32.0 INDEMNITY --------- (a) Lucent and Supplier (each an "Indemnifying Party") will each ------------------ indemnify, hold harmless and defend the other, its Affiliates, and each of their respective customers, officers, directors, employees, successors and permitted assigns (each an "Indemnified Person"), from any losses, ------------------ damages, claims, fines, penalties, expenses or other financial obligations, including reasonable attorney's fees and investigative costs ("Losses"), claimed by or awarded to (whether such claim or award is based ------ in contract, tort or otherwise) third parties against such Indemnified Person (except to the extent caused by negligence or willful misconduct of such Indemnified Person, including the use of Software in a manner materially inconsistent with the documentation provided with such Software) that arise out of or result from: (i) any act or omission by such Indemnifying Party or its Affiliates (or any of their permitted subcontractors) in connection with the performance of the Contracts; (ii) all assertions under Workers' Compensation or similar acts made by such Indemnifying Party or its Affiliates (or any of their permitted subcontractors); and (iii) all negligent or willful misconduct of such Indemnifying Party or its Affiliates (or any of their permitted subcontractors). (b) The Indemnified Person will notify the Indemnifying Party promptly after becoming aware of any claim that falls under the terms of this Article. The Indemnifying Party will have the right to assume the defense of any such claim. The Indemnified Person, at its expense and option, may participate in the defense of such claim. The Indemnifying Party will pay any final judgment, settlement, penalties, fines or other financial obligations Agreement No._________ Page 17 of 27 imposed on the Indemnified Person resulting from such third party claim. The Indemnified Person must approve any settlement that involves terms other than solely the payment of money. The Indemnifying Party will also pay the reasonable expenses incurred by the Indemnified Person arising from any request by it that the Indemnified Person assist it in the defense of such claim or provide information regarding such claim. 33.0 INFRINGEMENT CLAIMS ------------------- (a) The indemnity for Losses pursuant to Article 32.0 hereof shall ------------ not apply to (i) any claims that are due solely to (x) any unauthorized modification of Software by any Indemnified Person, (y) any unauthorized use by any Indemnified Person of Software with products, materials or software of a third party, or (z) any continued use by any Indemnified Person of Software after the Indemnifying Party has notified such Indemnified Person of any Infringement Claim (as defined below) and provided such Indemnified Person with non-infringing software comparable in function as such infringing Software, (ii) in the case of Supplier's indemnity for Losses pursuant to Article 32.0 hereof in respect of ------------ Software, Losses to extent such Losses arise out of or result from use of any Assigned Software and Licensed Software (as each such term is defined in the Intellectual Property Agreement) in the form furnished (whether by license or transfer) by Company pursuant to the Intellectual Property Agreement, and (iii) in the case of Company's indemnity for Losses pursuant to Article 32.0 hereof, Losses that arise out of or result from ------------ patent infringement (indemnification for which shall be solely as provided in the Intellectual Property Agreement). (b) In addition to the indemnity for Losses pursuant to Article 32.0 ------------ hereof, Supplier shall take such action as may be required under the Contracts in respect of any known infringement of any patent, copyright, trademark or trade secret right, or other intellectual property right in respect of Software furnished under this Agreement (an "Infringement ------------ Claim"). ----- 34.0 INSURANCE REQUIREMENTS ---------------------- Supplier shall, prior to performance under this Agreement, provide certificates or proof of insurance which complies with Lucent's policy set forth in Attachment H. All such insurance must be primary and non- ------------ contributory and required to respond and pay prior to any other insurance or self-insurance available. Any other coverage available to Company shall apply on an excess basis. Supplier agrees that Supplier and anyone claiming under or in Supplier's behalf shall have no claim, right of action or right of subrogation against Company and its End User Customers based on any loss or liability insured against under the foregoing insurance. Company shall be notified in writing at least thirty (30) days prior to cancellation of or any change in the policy. Agreement No._________ Page 18 of 27 35.0 LIMITATION OF LIABILITY ----------------------- Notwithstanding anything contained in this Agreement to the contrary, neither party hereto shall be liable to the other party for any indirect, special, punitive, exemplary or consequential loss or damage arising out of this Agreement; provided, that the foregoing shall not be construed to -------- preclude recovery by any Indemnified Person in respect of Losses directly incurred from third party claims. These limitations of liability shall not apply to any liability of either party arising from or related to any personal injury (including death) or for any claim of gross negligence or willful misconduct. Both parties shall use reasonable commercial efforts to mitigate their damages. 36.0 NOTICES ------- (a) Any notice or demand which under the terms of this Agreement or under any statute must or may be given or made by Supplier or Company shall be in writing and shall be given or made by confirmed facsimile, or similar communication or by certified or registered mail addressed to the respective parties as follows:
To Company: To Supplier: Lucent Technologies Inc. CSG Systems International, Inc. 600 Mountain Avenue CSG International Limited Murray Hill, NJ 07974 7887 E. Belleview, Suite 1000 Attn: Antoinette Bennett, Englewood, CO 80111 Corporate Counsel - SCN Legal Telephone Number: (908) 582-7091 Attn: Joseph T. Ruble (for legal matters) Facsimile Number: (908) 582-6869 Senior Vice President and General Counsel, Corporate Development (and for Contracts matters, with a copy to: Telephone Number: (303) 796-3995 Lucent Technologies Inc. Facsimile Number: (303) 804-4012 283 King George Road Warren, NJ 07059 Attn: Mark R. Wagner (for business matters) Attn: Deborah Reding, SCN Software Contract Vice President, Strategic Initiatives Manager Telephone Number: (303) 796-2887 Telephone Number: (908) 559-6176 Facsimile Number: (303) 796-2870 Facsimile Number: (908) 559-1256)
Agreement No.___________________ Page 19 of 27 To: CSG International Limited 7887 E. Belleview, Suite 1000 Englewood, CO 80111 Attn: Joseph T. Ruble (for legal matters) Senior Vice President and General Counsel, Corporate Development Telephone Number: (303) 796-3975 Facsimile Number: (303) 804-4012 Attn: Peter Kalan (for business matters) Senior Vice President and Chief Financial Officer Telephone Number: (303) 796-3973 Facsimile Number: (303) 796-2881 To: CSG Technology Limited 7887 E. Belleview, Suite 1000 Englewood, CO 80111 Attn: Matthew N. Cavarra (for legal matters) Vice President and General Counsel, Telephone Number: (303) 796-3975 Facsimile Number: (303) 804-4012 Attn: Mark R. Wagner (for business matters) President Telephone Number: (303) 796-2887 Facsimile Number: (303) 796-2870 (b) The effective dates of such notice shall be (i) upon evidence of successful facsimile transmission, or (ii) five (5) days following the date mailed for certified or registered letters and two days following the date mailed for overnight letters, or (iii) when delivered, if in person. The above addresses may be changed at any time by giving prior written notice as above provided. Notices shall be given in writing by confirmed facsimile, certified mail or registered mail addressed to the parties as shown on the first page of this Agreement. 37.0 NOTICE OF UPDATES, UPGRADES AND PATCHES --------------------------------------- If Supplier introduces any Updates, Upgrades or Patches, Supplier shall provide Company with reasonable advance notice of such Updates, Upgrades or Patches, together with any fact sheets, brochures and other promotional literature describing such Updates, Upgrades or Patches. Company may provide advance notice to End User Customers of such Updates, Agreement No.___________________ Page 20 of 27 Upgrades or Patches and distribute any such fact sheets, brochures and other promotional literature to End User Customers, in each case, if required pursuant to any Contract; provided, that Company shall not be -------- required to market, advertise, promote, support, or otherwise assist in further offerings of Software or Services. Purchases by Company under this Agreement shall neither restrict the right of Company to cease purchasing nor require Company to continue any level of such purchases. 38.0 SOURCE CODE ESCROW ------------------ (a) Certain Contracts require that any Software Source Materials be placed in an escrow account, and Company may require Supplier to deposit such Software Source Materials and Documentation with a mutually agreed upon third-party escrow agent. Supplier shall deposit with such escrow agent each major release of Software at the time of such release or as otherwise required under the applicable Contract. Software Source Materials shall be released from the escrow account as provided under or upon such conditions as set forth in the applicable Contract. To the extent that any Contract requires that Software Source Materials be delivered to the applicable End User Customer for any Software, Supplier shall be responsible for timely delivering such Software Source Materials to such End User Customer in accordance with the provisions thereof. (b) Concurrently with the execution of this Agreement, Supplier and Company shall enter into an escrow agreement, with a mutually acceptable escrow agent, in such form and containing such terms as are mutually acceptable to safeguard the Software Source Materials and to provide for the release of such Software Source Materials upon (i) the termination of this Agreement by Supplier following a Company Default or (ii) the occurrence of a Supplier Default. The annual fees of such escrow agent shall be paid by Company. 39.0 USE OF COMPANY'S INFORMATION AND MEDIA -------------------------------------- Supplier shall treat as Company's property (i) all Information of Company, however conveyed, and (ii) all Media owned or controlled by Company, and provided to, or acquired by, Supplier under or in connection with any Contract. Supplier, at no charge to Company, and as Company directs, shall destroy or surrender to Company promptly at its request any or all such Information and Media. Supplier shall keep such Information or Media confidential and use it only in performing under this Agreement and obligate its employees, subcontractors and others working for it to do so. This shall not apply to Information previously known to Supplier free of obligation, or made public through no fault of Supplier. 40.0 SUPPLIER DEFAULTS ----------------- (a) A "Supplier Contract Default" in respect of any Contract shall ------------------------- have occurred if Supplier shall be in material breach of any of its representations, warranties, agreements or Agreement No.__________________ Page 21 of 27 covenants contained in this Agreement in respect of such Contract, and such breach (i) shall continue beyond the earlier of thirty (30) days and the cure period set forth in such Contract after the giving of written notice thereof to Supplier and (ii) shall not be the result of any act or omission of Company. (b) A "Supplier Event of Default" shall have occurred if any of the ------------------------- following events shall have occurred: (i) Supplier shall be in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement, and such breach shall continue beyond thirty (30) days after the giving of written notice thereof to Supplier; (ii) (A) Supplier shall make an assignment for the benefit of creditors (other than solely an assignment of moneys due), (B) Supplier shall admit in writing that it is unable to pay debts as they mature or has ceased operating in the normal course of business, (C) a trustee or receiver of Supplier or of any substantial part of Supplier's assets has been appointed by any court, or (D) a proceeding shall be commenced under any provision of the United States Bankruptcy Code, voluntary or involuntary, by or against Supplier, which proceeding remains undismissed for sixty (60) days after the commencement thereof; or (iii) there shall have occurred and be continuing a "Supplier Event of Default" (as defined in the Software and Services Master Supply Agreement (North America) by and among Lucent and CSG and CSG Software, Inc. (the "North America Agreement" )). 41.0 COMPANY DEFAULTS ---------------- (a) A "Company Contract Default" in respect of any Contract shall ------------------------ have occurred if Company shall be in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement in respect of such Contract, and such breach (i) shall continue beyond the earlier of thirty (30) days and the cure period set forth in such Contract after the giving of written notice thereof to Company and (ii) shall not be the result of any act or omission of Supplier. (b) A "Company Event of Default" shall have occurred if any of the ------------------------ following events shall have occurred: (i) Company shall be in material breach of any of its representations, warranties, agreements or covenants contained in this Agreement, and such breach shall continue beyond thirty (30) days after the giving of written notice thereof to Company; (ii) (A) Company shall make an assignment for the benefit of creditors Agreement No.___________________ Page 22 of 27 (other than solely an assignment of moneys due), (B) Company shall admit in writing that it is unable to pay debts as they mature or has ceased operating in the normal course of business, (C) a trustee or receiver of Supplier or of any substantial part of Company's assets has been appointed by any court, or (D) a proceeding shall be commenced under any provision of the United States Bankruptcy Code, voluntary or involuntary, by or against Company, which proceeding remains undismissed for sixty (60) days after the commencement thereof; or (iii) there shall have occurred and be continuing a "Company Event of Default" (as defined in the North America Agreement). 42.0 REMEDIES AND PERFORMANCE RIGHTS ------------------------------- (a) Upon the occurrence of any Supplier Default, (i) Company, at its option and in addition to all other rights and remedies which Company may have at law or equity or as otherwise provided for under the Asset Purchase Agreement, this Agreement (including the right to terminate this Agreement or any Order pursuant to Article 43.0 hereof), and any other agreement ------------ between the parties hereto, may do all such things and convey all such rights to End User Customers as may be necessary or reasonably advisable in order to fulfill all Continuing Obligations, and (ii) Supplier shall promptly (x) furnish, or shall cause to be furnished, all Software Source Materials necessary for Company to timely fulfill the Continuing Obligations, and (y) if requested by Company, use reasonable commercial efforts to provide all necessary personnel as consultants to Company to provide transitional support and guidance with respect to Software and Services until such time as Company has made other arrangements but in no event for more than one year (provided that Supplier may set-off for any claim by Company for damages against Supplier in respect of such default Supplier's reasonable fees and expenses in providing support and guidance). (b) Upon the termination of this Agreement by Supplier following any Company Default, (i) Company may do all such things and convey all such rights to the End User Customer as may be necessary or reasonably advisable in order to fulfill all Continuing Obligations, and (ii) Supplier shall promptly (x) furnish, or shall cause to be furnished, all Software Source Materials necessary for Company to timely fulfill the Continuing Obligations and (y) if requested by Company, use reasonable commercial efforts to provide, at Supplier's then current rates, all necessary personnel as consultants to Company to provide transitional support and guidance with respect to Software and Services until such time as Company has made other arrangements but in no event for more than one year. (c) In addition to license and other rights granted pursuant to the Intellectual Property Agreement, Supplier hereby grants to Company a nonexclusive, irrevocable, worldwide, fully-paid, non-transferable (except pursuant to Article 25.0 hereof) license solely for the purposes of ------------ fulfilling Continuing Obligations following the occurrence of any Supplier Default or the termination of this Agreement by Supplier following any Company Default in accordance with the terms of the Contracts to which the such Supplier Default or Agreement No.___________________ Page 23 of 27 Company Default applies: (i) to create, use, copy, perform, display, support, repair, enhance, modify, supplement, offer and distribute (or have created, used, copied, performed, displayed, supported, repaired, enhanced, modified, supplemented, offered and distributed by any third party) the Licensed Materials; and (ii) to create, use, copy, perform, display, support, repair, enhance, modify and supplement (or have created, used, copied, performed, displayed, supported, repaired, enhanced, modified and supplemented by any third party) the Software Source Materials. The parties agree that Company, as licensee under the foregoing license, shall be entitled to the benefits of Section 365(n) of the United States Bankruptcy Code 11 U.S.C. (S) 101 et seq. if the Supplier is a debtor in a case under ------ Chapter 11 of such Bankruptcy Code. 43.0 TERMINATION ----------- (a) This Agreement or any Order issued pursuant to this Agreement may be terminated as follows: (i) by mutual written agreement of the parties hereto; or (ii) by Company with respect to any Contract (x) at any time that there shall no longer be outstanding any Continuing Obligations under such Contract or (y) if there shall have occurred and be continuing a Supplier Contract Default with respect to such Contract; or (iii) by Supplier with respect to any Contract (x) at any time that there shall no longer be outstanding any Continuing Obligations under such Contract or (y) if there shall have occurred and be continuing a Company Contract Default with respect to such Contract; or (iv) by Company (x) at any time that there shall no longer be outstanding any Continuing Obligations or (y) if there shall have occurred and be continuing a Supplier Event of Default; or (iv) by Supplier (x) at any time that there shall no longer be outstanding any Continuing Obligations or (y) if there shall have occurred and be continuing a Company Event of Default. (b) Upon the termination of this Agreement, (x) all rights and obligations of the parties shall terminate under this Agreement, except (i) as set forth in Article 44.0 hereof, (ii) Company may continue to utilize ------------ the licenses granted pursuant to Articles 4.0 and 42.0 to the extent ------------ ---- necessary to fulfill any Continuing Obligations, (iii) all rights granted by Company pursuant to the Contracts prior to such termination shall survive, and (iv) Company's payment obligations, if any, with respect to Services performed or Software ordered prior to such termination shall survive, and (y) Company shall have no monetary obligation under Article ------- 6.0 hereof other than for amounts accrued under the Contracts in respect of --- Continuing Obligations prior to such termination and received from End User Agreement No.___________________ Page 24 of 27 Customers. (c) Upon the termination of this Agreement or any Order with respect to any Contract, (x) all rights and obligations hereunder of the parties with respect to Continuing Obligations under such Contract shall terminate, except (i) as set forth in Article 44.0 hereof, (ii) Company may continue ------------ to utilize the licenses granted pursuant to Articles 4.0 and 42.0 to the ------------ ---- extent necessary to fulfill Continuing Obligations under such Contract, (iii) all rights granted by Company pursuant to such Contract prior to such termination shall survive, and (iv) Company's payment obligations, if any, with respect to Services performed or Software ordered under such Contract prior to such termination shall survive, and (y) Company shall have no monetary obligation under Article 6.0 hereof in respect of such Contract ----------- other than for amounts accrued under such Contract in respect of Continuing Obligations prior to such termination and received from End User Customers. (d) This Agreement or any Order issued pursuant to this Agreement shall automatically terminate with respect to any Contract that is terminated by Company in accordance with its terms; provided, that (i) -------- Company's liability in respect of such termination shall be limited to payment of the amounts accrued under such Contract in respect of Continuing Obligations prior to such termination, (ii) Supplier shall promptly deliver to Company all completed Services and Software (along with all related supporting Documentation), and no further Software or Services shall be provided by Supplier, in respect of such Contract, and (iii) such payment shall constitute a full and complete release and discharge of Company's monetary obligations under Article 6.0 hereof. ----------- 44.0 SURVIVAL OF OBLIGATIONS ----------------------- The obligations of the parties hereto under this Agreement and set forth in Articles 7.0, 8.0, 21.0, 26.0, 28.0, 32.0, 33.0, 35.0, 36.0, 38.0, 39.0, ------------ --------- ---- ---- ---- ---- ---- ---- ---- ---- and 42.0 through 51.0 hereof shall survive termination, cancellation or ---- ---- expiration of this Agreement. 45.0 SEVERABILITY ------------ If any of the provisions of this Agreement or any Order shall be invalid or unenforceable, the invalidity or unenforceability shall not invalidate or render unenforceable this entire Agreement or such Order, but rather this entire Agreement or Order shall be construed as if not containing the particular invalid or unenforceable provision or provisions, and the rights and obligations of the parties hereto shall be construed and enforced accordingly. 46.0 WAIVER ------ The failure of either party at any time to enforce any right or remedy available to under this Agreement or otherwise with respect to any breach or failure by the other party shall not be construed to be a waiver of such right or remedy with respect to any other breach or failure by the other party. Agreement No.___________________ Page 25 of 27 47.0 ENTIRE AGREEMENT ---------------- This Agreement (together with the typed or written provisions on any Order issued pursuant to this Agreement), the Asset Purchase Agreement and the Intellectual Property Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter of this Agreement. This Agreement supersedes all prior and contemporaneous oral agreements and all prior oral and written communications and understandings of the parties hereto with respect to the subject matter of this Agreement, other than the Asset Purchase Agreement and the Intellectual Property Agreement. This Agreement shall not be amended, supplemented, modified or rescinded, except by a writing signed by the parties hereto. Provisions on the reverse side of Company's purchase orders and all provisions on Supplier's forms shall be deemed deleted. Estimates or forecasts furnished by Company shall not constitute commitments. 48.0 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL ------------------------------------------------ (a) Each of the parties hereto irrevocably submits, and agrees to cause its Affiliates to irrevocably submit, to the jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and each agrees that no such action, suit or proceeding relating to this Agreement or any transaction contemplated hereby shall be brought by it or any of its Affiliates except in such courts). Each of the parties hereto further agrees, and agrees to cause its Affiliates to agree, that service of any process, summons, notice or document by U.S. registered mail to such person's respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives (and agrees not to plead or claim), and agrees to cause its Affiliates to irrevocably and unconditionally waive (and not to plead or claim), to the fullest extent permitted by applicable law, any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Supreme Court of the State of New York, New York County, or (ii) the United States District Court for the Southern District of New York or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. (b) Each party hereby waives, and agrees to cause each of its Affiliates to waive, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement. Each party (i) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this clause (b). Agreement No.___________________ Page 26 of 27 49.0 THIRD PARTY BENEFICIARIES ------------------------- No provision of this Agreement is intended to confer upon any person other than the parties hereto any rights or remedies hereunder. Each Affiliate of Lucent that wishes to become beneficiary of the provisions hereof shall deliver to Supplier a counterpart to this Agreement, duly executed by an authorized representative of such Affiliate, and upon such execution and delivery all references in this Agreement to "Company" shall be deemed to include such Affiliate. 50.0 COUNTERPARTS ------------ This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 51.0 ATTACHMENTS ----------- The following attachments are hereby incorporated by reference and made part of this Agreement: Attachment A - Unassignable Contracts Attachment B - Additional Contracts Attachment C - Form of Order Attachment D - Renewal Price Deadline Attachment E - Invoicing Guidelines Attachment F - Electronic Data Interchange Attachment G - Expense Reimbursement Guidelines Attachment H - Insurance Requirements 52.0 CSG GUARANTY ------------ CSG and CSG Technology hereby guarantees the full and prompt performance and observance by Supplier off all of Supplier's obligations hereunder. Agreement No.___________________ Page 27 of 27 IN WITNESS WHEREOF, the authorized representatives of the parties hereto have executed this Agreement as of the date first written above. LUCENT TECHNOLOGIES INC. CSG SYSTEMS INTERNATIONAL, INC. By: /s/ W.T. O'Shea By: /s/ Joseph T. Ruble ----------------------- --------------------------- Name: William T. O'Shea Name: Joseph T. Ruble Title: Executive Vice President Title: Sr. V.P. and General Counsel CSG INTERNATIONAL LIMITED By: /s/ Joseph T. Ruble --------------------------- Name: Joseph T. Ruble Title: Sr. V.P. and General Counsel CSG TECHNOLOGY LIMITED By: /s/ Mark Wagner --------------------------- Name: Mark Wagner Title: President By: /s/ Joseph T. Ruble --------------------------- Name: Joseph T. Ruble Title: Asst. Secretary Agreement No.___________ Attachment A Unassignable Contracts ---------------------- See following pages. Agreement No.___________ Attachment B Additional Contracts -------------------- See following pages. Agreement No.___________ Attachment C Form of Order ------------- See following page. Agreement No.___________ Attachment D Renewal Deadlines ----------------- See Renewal Price Deadline and Company Notification Date set forth on Attachment A. Agreement No.___________ Attachment E Invoicing Guidelines -------------------- 1. Supplier shall provide separate invoices for each End User Customer in respect of Software and Services provided under the Contracts and all necessary supporting documentation required to support the delivery of such invoice to the applicable End User Customer in accordance with the terms of the applicable Contract. 2. Invoices shall be in accordance with terms of the Contracts, in form for delivery to End User Customers. Unless otherwise provided in an Contract, all invoices shall include the following information for every item of Software and Services furnished: (a) this Agreement number, the applicable Contract number and the applicable order number; and (b) the description and prices of Sofware and Services furnished. 3. If prepayment of transportation charges is authorized, Supplier shall include the transportation charges from the FCA point to the destination as a separate item on the invoice stating the name of the carrier used. Agreement No.___________ Attachment F EDI Guidelines -------------- Lucent Technologies has partnered with Sorvive Technologies to develop and certify a web-based facility that allows our current non-EDI suppliers to utilize a web-based service to electronically send and receive business documents. The process will include purchase orders, purchase order acknowledgments, shipment notifications, invoices, remittance advices (and EFT payment), simple forecasts, demand-pull and consignment planning schedules. After Company's requests that Supplier implement an EDI system, Company will arrange for Sorvive Technologies to contact you to begin the registration and setup process. Sorvive Technologies will then notify Company to setup your account to be routed to the WEB-EDI facilities. Sorvive will train your employee/s on the use of the WEB-EDI forms. Upon completion of setup you can begin using the WEB-EDI facilities; it is anticipated that all of the above tasks will be completed within 1-3 days elapsed time. There are no requirements to install special equipment or software. All you will need is a WEB Browser and access to the Internet. For more information on the Sorvive WEB-EDI offering, you can access their website at www.sorvive-plus.com. Agreement No.___________ Attachment G Expense Reimbursement Guidelines -------------------------------- Travel and living expenses submitted must be business expenses authorized by Company and specifically related to the Services, and shall be defined as follows: BUSINESS EXPENSES ARE: . Expenses necessary to the performance of the Services. . Expenses that benefit or advance the interests of the Company. . Subject to the requirements of reasonableness. NON-BUSINESS EXPENSES ARE: . Expenses that do not benefit or advance the interest of the Company. . Expenses that are incurred for other than the performance of the Services. . Expenses that are personal in nature such as: . In-room movies. . Mini-bars. . Membership fees for Airline clubs. . Lunch on normal work days. . Laundry and valet services unless trip exceeds 5 business days or emergency situation. . Personal memberships in health clubs. . Refreshments not associated with a business meal or conference. . Telephone calls that are personal in nature. TELECONFERENCING: Teleconferencing should be used for meetings instead of travel whenever possible. TRAVEL TIME: Travel should occur on Supplier's own time, and Company shall not be billed an hourly rate or other fee for such time unless authorized by Company Representative prior to the trip. REIMBURSEMENTS: All authorized reimbursements to Supplier or Supplier's Employees shall be billed to Company by Supplier and paid directly to Supplier by Company. RECEIPTS: Original receipts are required for all reimbursable expenses over $25. AIR TRAVEL: Coach class must be used for all domestic and international flights. Authorization may be given, in certain situations, for use of business class on international flights but such authorization must be obtained from the Company Representative before the trip. First class and business class travel is prohibited except as stated above. Arrangements should be made as early as 7 days prior to travel to take advantage of reduced rates. GROUND TRANSPORTATION: Hotel courtesy vans, taxicabs, airport limousines and other inexpensive modes of transportation should be used whenever appropriate. Rental Car: Compact or sub-compact cars are authorized for individuals or groups of two, intermediate cars are authorized for three or more. Larger or specialized vehicles such as vans or mini-buses must be approved in advance by Company Representative. Rental cars must be refueled before returning or an explanation must be attached to the invoice. Personal Automobile: Reimbursed at the rate of 30 cents a mile unless otherwise provided for in the Agreement. Tolls and Parking fees are reimbursable. LODGING: Mid-range hotel accommodations not to exceed $65-$85 (domestic) depending on location are Agreement No.___________ reimbursable for short-term trips of less than one week. Lodging at an international location should reflect comparable expense control. Company's Representative will determine appropriate level for specific location with the assistance of Company's Transportation Specialist or Travel Zone Coordinator. Efficiency apartments should be used for trips of one week or more duration when appropriate. MEALS: The cost of meals while on domestic trips should be kept at a reasonable level (not to exceed $25 a day). Meal expenses when visiting international locations should reflect comparable cost control. TELEPHONE: When traveling on Company business Supplier should use personal or Supplier's company calling card for all toll calls to minimize extra surcharges by hotels. Company shall not reimburse Supplier for any calls which are unrelated to the performance of the Services. Supplier shall reimburse Company for calls made from Company work stations by Supplier's employees which are unrelated to the performance of the Services for Company. The AT&T access code is 10 + ATT + 0 + AREA CODE + NUMBER. These guidelines attempt but do not guarantee to address all possible issues concerning travel and living for Suppliers performing Services for Company. For any issues not covered, contact Company. Agreement No.___________ Attachment H Insurance Requirements ---------------------- Supplier shall maintain and cause Supplier's permitted subcontractors and suppliers to maintain: (i) Workers' Compensation insurance as prescribed by the law of the state or nation in which Services are performed; (ii) employer's liability insurance with limits of at least $500,000 for each occurrence; (iii) automobile liability insurance if the use of motor vehicles is required, with limits of at least $1,000,000 combined single limit for bodily injury and property damage per occurrence; (iv) Commercial General Liability ("CGL") --- insurance, ISO 1988 or later occurrence form of insurance, including Blanket Contractual Liability and Broad Form Property Damage, with limits of at least $1,000,000 combined single limit for bodily injury and property damage per occurrence; and (v) if Supplier is furnishing to Company (by sale or otherwise) material or construction services, CGL insurance endorsed to include products liability and completed operations coverage in the amount of $5,000,000 per occurrence. All CGL and automobile liability insurance shall designate Lucent Technologies Inc., its Affiliates, and its directors, officers and employees as additional insured. Insurance companies providing coverage under this Agreement must be rated by A-M Best with at least an A- rating. EX-2 7 dex2.txt AMENDED & RESTATED CREDIT AGMT Exhibit 2.32 EXECUTION COPY ================================================================================ $400,000,000 AMENDED AND RESTATED CREDIT AGREEMENT among CSG SYSTEMS INTERNATIONAL, INC., as Holdings, CSG SYSTEMS, INC., as Borrower, The Lenders from Time to Time Parties Hereto, BNP PARIBAS, as Administrative Agent, LEHMAN COMMERCIAL PAPER INC., as Syndication Agent, and CREDIT LYONNAIS NEW YORK BRANCH, THE BANK OF NOVA SCOTIA and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Documentation Agents Dated as of February 28, 2002 BNP PARIBAS and LEHMAN BROTHERS INC., as Joint Advisors, Joint Lead Arrangers and Joint Book Managers ================================================================================ TABLE OF CONTENTS
Page SECTION 1. DEFINITIONS....................................................................... 1 1.1 Defined Terms................................................................... 1 1.2 Other Definitional Provisions................................................... 29 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................................... 30 2.1 Term Loan Commitments........................................................... 30 2.2 Procedure for Term Loan Borrowing............................................... 30 2.3 Repayment of Term Loans......................................................... 30 2.4 Revolving Credit Commitments.................................................... 32 2.5 Procedure for Revolving Credit Borrowing........................................ 32 2.6 [Reserved]...................................................................... 33 2.7 [Reserved]...................................................................... 33 2.8 Repayment of Loans; Evidence of Debt............................................ 33 2.9 Commitment Fees, etc............................................................ 34 2.10 Termination or Reduction of Revolving Credit Commitments........................ 34 2.11 Optional Prepayments............................................................ 34 2.12 Mandatory Prepayments and Commitment Reductions................................. 35 2.13 Conversion and Continuation Options............................................. 36 2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches....................... 37 2.15 Interest Rates and Payment Dates................................................ 37 2.16 Computation of Interest and Fees................................................ 38 2.17 Inability to Determine Interest Rate............................................ 38 2.18 Pro Rata Treatment and Payments................................................. 39 2.19 Requirements of Law............................................................. 42 2.20 Taxes........................................................................... 43 2.21 Indemnity....................................................................... 45 2.22 Illegality...................................................................... 45 2.23 Change of Lending Office........................................................ 46 SECTION 3. LETTERS OF CREDIT................................................................. 46 3.1 L/C Commitment.................................................................. 46 3.2 Procedure for Issuance of Letter of Credit...................................... 47 3.3 Fees and Other Charges.......................................................... 47 3.4 L/C Participations.............................................................. 48 3.5 Reimbursement Obligation of the Borrower........................................ 49 3.6 Obligations Absolute............................................................ 49 3.7 Letter of Credit Payments....................................................... 50 3.8 Applications.................................................................... 50 SECTION 4. REPRESENTATIONS AND WARRANTIES................................................... 50 4.1 Financial Condition............................................................. 50 4.2 No Change....................................................................... 51 4.3 Corporate Existence; Compliance with Law........................................ 51 4.4 Corporate Power; Authorization; Enforceable Obligations......................... 52 4.5 No Legal Bar.................................................................... 52 4.6 No Material Litigation.......................................................... 52
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4.7 No Default...................................................................... 52 4.8 Ownership of Property; Liens.................................................... 53 4.9 Intellectual Property........................................................... 53 4.10 Taxes........................................................................... 53 4.11 Federal Regulations............................................................. 53 4.12 Labor Matters................................................................... 53 4.13 ERISA........................................................................... 54 4.14 Investment Company Act; Other Regulations....................................... 54 4.15 Subsidiaries.................................................................... 54 4.16 Use of Proceeds................................................................. 54 4.17 Environmental Matters........................................................... 55 4.18 Accuracy of Information, etc.................................................... 56 4.19 Security Documents.............................................................. 56 4.20 Solvency........................................................................ 57 4.21 AT&T Customer Services Agreement................................................ 57 4.22 Date of Representations and Warranties.......................................... 57 SECTION 5. CONDITIONS PRECEDENT.............................................................. 57 5.1 Conditions to Closing Date...................................................... 57 5.2 Conditions to Initial Funding Date.............................................. 59 5.3 Conditions to Each Extension of Credit.......................................... 60 SECTION 6. AFFIRMATIVE COVENANTS............................................................. 61 6.1 Financial Statements............................................................ 61 6.2 Certificates; Other Information................................................. 62 6.3 Payment of Obligations.......................................................... 63 6.4 Conduct of Business and Maintenance of Existence, etc........................... 63 6.5 Maintenance of Property; Insurance.............................................. 63 6.6 Inspection of Property; Books and Records; Discussions.......................... 64 6.7 Notices......................................................................... 64 6.8 Environmental Laws.............................................................. 65 6.9 Additional Collateral, etc...................................................... 65 6.10 Further Assurances.............................................................. 68 6.11 Maintenance of Separate Existence............................................... 68 SECTION 7. NEGATIVE COVENANTS................................................................ 69 7.1 Financial Condition Covenants................................................... 69 7.2 Limitation on Indebtedness...................................................... 69 7.3 Limitation on Liens............................................................. 70 7.4 Limitation on Fundamental Changes............................................... 72 7.5 Limitation on Disposition of Property........................................... 73 7.6 Limitation on Restricted Payments............................................... 74 7.7 Limitation on Capital Expenditures.............................................. 75 7.8 Limitation on Investments....................................................... 75 7.9 Limitation on Charter Amendments................................................ 78 7.10 Limitation on Transactions with Affiliates...................................... 78 7.11 Limitation on Sales and Leasebacks.............................................. 79 7.12 Limitation on Changes in Fiscal Periods......................................... 79 7.13 Limitation on Negative Pledge Clauses........................................... 79
ii 7.14 Limitation on Restrictions on Subsidiary Distributions.......................... 79 7.15 Limitation on Lines of Business................................................. 79 7.16 Limitation on Amendments to Acquisition Agreement............................... 80 7.17 Limitation on Amendments to Other Documents..................................... 80 7.18 Limitation on Activities of Holdings............................................ 80 7.19 Limitation on Hedge Agreements.................................................. 81 SECTION 8. EVENTS OF DEFAULT................................................................. 81 SECTION 9. THE AGENTS........................................................................ 84 9.1 Appointment..................................................................... 84 9.2 Delegation of Duties............................................................ 84 9.3 Exculpatory Provisions.......................................................... 84 9.4 Reliance by Agents.............................................................. 85 9.5 Notice of Default............................................................... 86 9.6 Non-Reliance on Agents and Other Lenders........................................ 86 9.7 Indemnification................................................................. 87 9.8 Agent in Its Individual Capacity................................................ 88 9.9 Successor Administrative Agent.................................................. 88 9.10 Collateral Matters; Authorization to Release Liens and Guarantees............... 88 9.11 The Arrangers; the Syndication Agent; the Co-Documentation Agents............... 89 SECTION 10. MISCELLANEOUS.................................................................... 89 10.1 Amendments and Waivers.......................................................... 89 10.2 Notices......................................................................... 90 10.3 No Waiver; Cumulative Remedies.................................................. 91 10.4 Survival of Representations and Warranties...................................... 92 10.5 Payment of Expenses............................................................. 92 10.6 Successors and Assigns; Participations and Assignments.......................... 93 10.7 Adjustments; Set-off............................................................ 96 10.8 Counterparts.................................................................... 97 10.9 Severability.................................................................... 97 10.10 Integration..................................................................... 97 10.11 GOVERNING LAW................................................................... 97 10.12 Submission To Jurisdiction; Waivers............................................. 97 10.13 Acknowledgments................................................................. 98 10.14 Confidentiality................................................................. 98 10.15 Release of Collateral and Guarantee Obligations................................. 99 10.16 Accounting Changes.............................................................. 99 10.17 Delivery of Lender Addenda...................................................... 100 10.18 Effect of Amendment and Restatement of the Existing Credit Agreement and Related Documents............................................................... 100 10.19 WAIVERS OF JURY TRIAL........................................................... 101
iii ANNEXES: A Pricing Grid SCHEDULES: 1.1A Permitted Investments 4.4 Consents, Authorizations, Filings and Notices 4.15 Subsidiaries 4.19(a)-1 UCC Filing Jurisdictions 4.19(a)-2 UCC Financing Statements to Remain on File 4.19(a)-3 UCC Financing Statements to be Terminated 7.2 Existing Indebtedness 7.3 Existing Liens EXHIBITS: A Form of Guarantee and Collateral Agreement B Form of Compliance Certificate C Form of Closing Certificate D Form of Borrowing Notice E Form of Assignment and Acceptance F-1 Form of Legal Opinion of Davis Polk & Wardwell F-2 Form of Legal Opinion of Joseph Ruble, Esq. G-1 Form of Term Note G-2 Form of Revolving Credit Note H Form of Prepayment Option Notice I Form of Exemption Certificate J Form of Lender Addendum K Form of Notice of Conversion/Continuation iv AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 28, 2002, among CSG SYSTEMS INTERNATIONAL, INC., a Delaware corporation ("Holdings"), CSG -------- SYSTEMS, INC., a Delaware corporation (the "Borrower"), the several banks and -------- other financial institutions or entities from time to time parties to this Agreement (the "Lenders"), BNP PARIBAS, as administrative agent (in such ------- capacity and as further defined below, the "Administrative Agent"), LEHMAN -------------------- COMMERCIAL PAPER INC., as syndication agent (in such capacity, the "Syndication ----------- Agent"), and CREDIT LYONNAIS NEW YORK BRANCH, THE BANK OF NOVA SCOTIA and WELLS - ----- FARGO BANK, NATIONAL ASSOCIATION, as co-documentation agents (in such capacities, the "Co-Documentation Agents"). ----------------------- W I T N E S S E T H: - - - - - - - - - - WHEREAS, Holdings intends to consummate a transaction in which Holdings would acquire (the "Acquisition"), through one or more newly formed ----------- direct or indirect subsidiaries of Holdings, certain assets of Lucent Technologies Inc. ("Lucent") and its subsidiaries comprising Lucent's Kenan ------ Systems business division (the "Acquired Assets"), as more particularly --------------- described in the Asset Purchase Agreement, dated as of December 21, 2001, between Holdings and Lucent (the "Acquisition Agreement"); --------------------- WHEREAS, Holdings and the Borrower are parties to the Loan Agreement, dated as of September 18, 1997 and as amended, supplemented or otherwise modified from time to time through the date hereof (the "Existing Credit --------------- Agreement"), among Holdings and the Borrower, as co-borrowers, the banks and - --------- other financial institutions from time to time parties thereto and BNP Paribas (formerly known as Banque Paribas), as agent; WHEREAS, Holdings and the Borrower have requested that the Existing Credit Agreement be amended and restated as provided herein; and WHEREAS, each of the Lenders and the other parties hereto are willing to amend and restate the Existing Credit Agreement as provided herein and to make available the credit facilities described herein; NOW, THEREFORE, in consideration of the premises and the agreements hereinafter set forth, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the terms listed in ------------- this Section 1.1 shall have the respective meanings set forth in this Section 1.1. "Acquired Assets": as defined in the recitals hereto. --------------- "Acquisition": as defined in the recitals hereto. ----------- "Acquisition Agreement": as defined in the recitals hereto. --------------------- 2 "Acquisition Corp.": each Wholly Owned Subsidiary of Holdings which, ----------------- together with its Subsidiaries, shall acquire some or all of the Acquired Assets in the Acquisition. "Acquisition Documentation": collectively, (a) the Acquisition ------------------------- Agreement, as amended, supplemented or otherwise modified from time to time in accordance with Section 7.16, and (b) all schedules, exhibits, annexes and amendments to the Acquisition Agreement and all side letters and agreements affecting the terms thereof or entered into in connection therewith, in each case as amended, supplemented or otherwise modified on the Closing Date. "Acquisition Funding Amount": at any time, the sum at such time of -------------------------- $330,000,000, plus, without duplication, the aggregate amount, if any, received by Holdings, the Borrower or the Borrower's Subsidiaries at or prior to such time pursuant to Section 2.3(c) of the Acquisition Agreement. "Adjusted LIBOR": for each Interest Period in respect of LIBOR Loans -------------- comprising part of the same borrowing, an interest rate per annum (rounded upward, if necessary, to the nearest 1/100th of one percent (0.01%)) determined pursuant to the following formula: Adjusted LIBOR = LIBOR -------------------------------------- 1.00 - Eurodollar Reserve Percentage "Adjustment Date": as defined in the Pricing Grid. --------------- "Administrative Agent": as defined in the preamble hereto; and shall -------------------- include any successor Administrative Agent appointed pursuant to Section 9.9. "Affiliate": as to any Person, any other Person that, directly or --------- indirectly, is in control of, is controlled by, or is under common control with, such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan or Multiemployer Plan). For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 20% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agents": the collective reference to the Syndication Agent, the Co- ------ Documentation Agents and the Administrative Agent. "Aggregate Exposure": with respect to any Lender at any time, an ------------------ amount equal to (a) until the Initial Funding Date, the aggregate amount of such Lender's Commitments at such time, and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the amount of such Lender's Revolving Credit Commitment then in effect or, if the Revolving Credit Commitments have been terminated, the amount of such Lender's Revolving Extensions of Credit then outstanding. "Aggregate Exposure Percentage": with respect to any Lender at any ----------------------------- time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure at such time to the sum of the Aggregate Exposures of all Lenders at such time. 3 "Agreement": this Credit Agreement, as amended, supplemented or --------- otherwise modified from time to time. "Applicable Margin": for each Type of Loan under each Facility, the ----------------- rate per annum set forth opposite such Facility under the relevant column heading below: Base Rate LIBOR Loans Loans ----------- --------- Revolving Credit Facility 1.25% 2.50% Tranche A Term Loan Facility 1.25% 2.50% Tranche B Term Loan Facility 1.50% 2.75% provided that on and after the first Adjustment Date occurring after the - -------- completion of two full fiscal quarters of the Borrower after the Closing Date, the Applicable Margins with respect to Revolving Credit Loans and Tranche A Term Loans will be determined pursuant to the Pricing Grid. "Application": an application, in such form as the relevant Issuing ----------- Lender may reasonably specify from time to time in accordance with its customary practice, requesting such Issuing Lender to issue a Letter of Credit. "Arrangers": the collective reference to BNP Paribas and Lehman --------- Brothers Inc., in their capacities as joint advisors, joint lead arrangers and joint book managers. "Asset Sale": any Disposition of Property or series of related ---------- Dispositions of Property (excluding any such Disposition permitted by clause (a), (b), (c), (d), (e) or (f) of Section 7.5) which yields gross proceeds to Holdings or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $5,000,000. "Assignee": as defined in Section 10.6(c). -------- "Assignment and Acceptance": an Assignment and Acceptance, ------------------------- substantially in the form of Exhibit E. "Assignor": as defined in Section 10.6(c). -------- "AT&T Customer Service Agreement": the Restated and Amended CSG ------------------------------- Master Subscriber Management System Agreement, dated August 10, 1997 and amended through the Closing Date, between the Borrower and AT&T Broadband Management Corporation (formerly known as TCI Cable Management Corporation), as the same may be further amended, supplemented or otherwise modified from time to time in accordance with Section 7.17. "Available Revolving Credit Commitment": with respect to any ------------------------------------- Revolving Credit Lender at any time, an amount equal to the excess, if any, of (a) such Lender's Revolving Credit 4 Commitment then in effect over (b) such Lender's Revolving Extensions of Credit ---- then outstanding. "Base Rate": for any day, the higher of (a) the per annum floating --------- rate established by BNP Paribas in New York as its "prime rate" for domestic (United States) commercial loans in effect on such day (the "Prime Rate") and ---------- (b) the per annum floating rate equal to one-half of one percent (0.50%) in excess of the Federal Funds Effective Rate in effect on such day. The Prime Rate is a rate set by BNP Paribas based upon various factors, including BNP Paribas' costs and desired return, general economic conditions and other factors, and is neither directly tied to an external rate of interest or index nor necessarily the lowest or best rate of interest actually charged by BNP Paribas at any given time to any customer or particular class of customers for any particular credit extension. BNP Paribas may make commercial or other loans at rates of interest at, above or below the Prime Rate. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Base Rate Loans": Loans for which the applicable rate of interest is --------------- based upon the Base Rate. "Benefited Lender": as defined in Section 10.7(a). ---------------- "Board": the Board of Governors of the Federal Reserve System of the ----- United States (or any successor). "Borrower": as defined in the preamble hereto. -------- "Borrowing Date": any Business Day specified by the Borrower as a -------------- date on which the Borrower requests the relevant Lenders to make Loans hereunder. "Borrowing Notice": with respect to any request for a borrowing of ---------------- Loans hereunder, a notice from the Borrower, substantially in the form of, and containing the information prescribed by, Exhibit D, delivered to the Administrative Agent. "Business Day": (a) for all purposes other than as covered by clause ------------ (b) below, a day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are authorized or required by law to close and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, LIBOR Loans, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market. "Capital Expenditures": for any period, with respect to any Person, -------------------- the aggregate of all expenditures by such Person for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a balance sheet of such Person. 5 "Capital Lease Obligations": with respect to any Person, the ------------------------- obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP; and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. "Capital Stock": any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Cash Equivalents": (a) marketable direct obligations issued by, or ---------------- unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of one year or less from the date of acquisition issued by (i) any commercial bank organized under the laws of the United States of America or any state thereof, or any branch or agency of a foreign bank licensed to conduct business in the United States of America, in each case having combined capital and surplus of not less than $500,000,000 or (ii) any Lender; (c) commercial paper of an issuer rated at least A-2 by S&P or P-2 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within 270 days from the date of acquisition; (d) repurchase obligations of (i) any Lender, (ii) any commercial bank satisfying the requirements of clause (b) of this definition or (iii) any other Person (x) whose commercial paper (or the commercial paper of whose direct or indirect parent) satisfies the ratings criteria set forth in clause (c) above or (y) whose long term unsecured senior debt (or the long term unsecured senior debt of whose direct or indirect parent) is rated at least A- by S&P or A3 by Moody's or if both S&P and Moody's cease publishing ratings of long term unsecured senior debt generally, carries an equivalent rating by another nationally recognized rating agency, having a term of not more than 90 days with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A- by S&P or A-2 by Moody's; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) shares of money market mutual or similar funds at least 95% of whose assets are invested in investments satisfying the requirements of clauses (a) through (f) of this definition, as applicable; (h) investments permitted under the guidelines attached hereto as Schedule 1.1A; and (i) in the case of any Subsidiary of Holdings organized or having a material place of business outside the United States, investments denominated in the currency of the jurisdiction in which such Subsidiary is organized or has a material place of business which are substantially similar to the items specified in clauses (a) through (h) above. ----------- --- 6 "Change of Control": the occurrence of any of the following events: ----------------- (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall ------------ acquire, or obtain rights (whether by means or warrants, options or otherwise) to acquire, beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of securities representing greater than 30% of the combined voting power of all securities of Holdings ordinarily entitled to vote in the election of directors; (b) a majority of the board of directors of Holdings shall cease to consist of Continuing Directors; (c) Holdings shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of the Borrower free and clear of all Liens (except Liens created by the Guarantee and Collateral Agreement); or (d) a Specified Change of Control. "Closing Date": the date on which the conditions precedent set forth ------------ in Section 5.1 shall have been satisfied, which date shall be not later than February 28, 2002. "Co-Documentation Agents": as defined in the preamble hereto. ----------------------- "Code": the Internal Revenue Code of 1986, as amended from time to ---- time. "Collateral": all Property of the Loan Parties, now owned or ---------- hereafter acquired, upon which a Lien is purported to be created by any Security Document. "Commitment": with respect to any Lender, each of the Tranche A Term ---------- Loan Commitment, the Tranche B Term Loan Commitment and the Revolving Credit Commitment of such Lender. "Commitment Fee Rate": 1/2 of 1% per annum; provided that on and ------------------- -------- after the first Adjustment Date occurring after the completion of two full fiscal quarters of the Borrower after the Closing Date, the Commitment Fee Rate will be determined pursuant to the Pricing Grid. "Commonly Controlled Entity": an entity, whether or not incorporated, -------------------------- that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code. "Compliance Certificate": a certificate duly executed by a ---------------------- Responsible Officer, substantially in the form of Exhibit B. "Confidential Information Memorandum": the Confidential Information ----------------------------------- Memorandum dated January 2002 and furnished to the initial Lenders in connection with the syndication of the Facilities. "Consolidated Current Assets": at any date, all amounts (other than --------------------------- cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date. 7 "Consolidated Current Liabilities": at any date, all amounts that -------------------------------- would, in conformity with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, but excluding (a) the current portion of any Indebtedness of the Borrower and its Subsidiaries and (b), without duplication, all Indebtedness consisting of Revolving Credit Loans, to the extent otherwise included therein. "Consolidated EBITDA": of any Person for any period, Consolidated Net ------------------- Income of such Person and its Subsidiaries for such period plus, without ---- duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) consolidated interest expense of such Person and its Subsidiaries, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) acquired research and development efforts that are expensed at the time of or immediately following their acquisition, (e) fees, expenses, financing costs, severance costs and management bonuses incurred or paid in connection with any acquisition (including the Acquisition), (f) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (g) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business) and (h) any other non-cash charges, and minus (x) without duplication and to the extent included in the ----- statement of such Consolidated Net Income for such period, the sum of (i) interest income (except to the extent deducted in determining the amount of consolidated interest expense added pursuant to clause (b) above in this definition), (ii) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (iii) any other non-cash income and (y) any cash payments made during such period in respect of items described in clause (g) above in this definition subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidated Net Income, all as determined on a consolidated basis. "Consolidated Fixed Charge Coverage Ratio": for any period, the ratio ---------------------------------------- of (a) Consolidated EBITDA of the Borrower and its Subsidiaries for such period minus the aggregate amount actually paid by the Borrower and its Subsidiaries in - ----- cash during such period on account of Capital Expenditures to (b) Consolidated Fixed Charges for such period. "Consolidated Fixed Charges": for any period, the sum (without -------------------------- duplication) of (a) Consolidated Interest Expense of the Borrower and its Subsidiaries for such period, (b) the aggregate amount paid, or required to be paid, in cash in respect of income taxes of the Borrower and its Subsidiaries for such fiscal period or (without duplication) paid by the Borrower and its Subsidiaries pursuant to the Tax Sharing Agreement and (c) scheduled payments made during such period on account of principal of Indebtedness of the Borrower or any of its Subsidiaries (including scheduled principal payments in respect of the Term Loans); provided that for any period of four fiscal quarters ending prior to the fourth full fiscal quarter ended after the Closing Date, scheduled payments on account of principal of Indebtedness for such period of four fiscal quarters shall be deemed to be (i) in the case of the period ended at the end of the first such fiscal quarter, such scheduled payments for such fiscal quarter multiplied by 4, (ii) in the case of the 8 period ended at the end of the second such fiscal quarter, such scheduled payments for the period of two fiscal quarters ended at the end of such fiscal quarter multiplied by 2 and (iii) in the case of the period ended at the end of the third such fiscal quarter, such scheduled payments for the period of three fiscal quarters ended at the end of such fiscal quarter multiplied by 4/3. "Consolidated Interest Coverage Ratio": for any period, the ratio of ------------------------------------ (a) Consolidated EBITDA of the Borrower and its Subsidiaries for such period to (b) Consolidated Interest Expense of the Borrower and its Subsidiaries for such period. "Consolidated Interest Expense": of any Person for any period, total ----------------------------- cash interest expense (including that attributable to Capital Lease Obligations) of such Person and its Subsidiaries for such period with respect to all outstanding Indebtedness of such Person and its Subsidiaries (including, without limitation, all commissions, discounts and other fees and charges owed by such Person with respect to letters of credit and bankers' acceptance financing and net costs of such Person under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP but excluding up-front fees and expenses); provided that for purposes of -------- calculating the Consolidated Fixed Charge Coverage Ratio and the Consolidated Interest Coverage Ratio for any period of four fiscal quarters ending prior to the end of the fourth full fiscal quarter ended after the Closing Date, Consolidated Interest Expense for such period of four fiscal quarters shall be deemed to be (i) in the case of the period ended at the end of the first such fiscal quarter, Consolidated Interest Expense for such fiscal quarter multiplied by 4, (ii) in the case of the period ended at the end of the second such fiscal quarter, Consolidated Interest Expense for the period of two fiscal quarters ended at the end of such fiscal quarter multiplied by 2 and (iii) in the case of the period ended at the end of the third such fiscal quarter, Consolidated Interest Expense for the period of three fiscal quarters ended at the end of such fiscal quarter multiplied by 4/3. "Consolidated Leverage Ratio": as at the last day of any period of --------------------------- four consecutive fiscal quarters of the Borrower, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA of the Borrower and its Subsidiaries for such period; provided that for purposes of calculating -------- Consolidated EBITDA of the Borrower and its Subsidiaries for any period, (i) the Consolidated EBITDA of any Person or business acquired by the Borrower or its Subsidiaries during such period shall be included on a pro forma basis for such --- ----- period (assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred on the first day of such period and including cost savings (to the extent including such cost savings would be permitted in accordance with Regulation S-X) that would have been realized had such acquisition occurred on such day, but excluding Capital Expenditures of such Person or business for the period prior to such acquisition) if the consolidated balance sheet of such acquired Person and its consolidated Subsidiaries as at the end of the period preceding the acquisition of such Person and the related consolidated statements of income and stockholders' equity and of cash flows for the period in respect of which Consolidated EBITDA is to be calculated (A) have been provided to the Administrative Agent and the Lenders prior to the date of such acquisition and (B) (1) (in the case of any Person or business acquired having Consolidated EBITDA to be included on a pro forma basis for such period in an amount equal to or greater than $10,000,000 or equal to or greater than a negative amount of $10,000,000 (for avoidance of doubt, a negative amount of $11,000,000 is greater than a negative amount of $10,000,000)) have been reported on without a qualification arising 9 out of the scope of the audit by independent certified public accountants of nationally recognized standing or (2) (in the case of any Person or business acquired having Consolidated EBITDA to be included on a pro forma basis for such period in an amount less than $10,000,000 or equal to or less than a negative amount of $10,000,000 (for avoidance of doubt, a negative amount of $9,000,000 is less than a negative amount of $10,000,000)) have either (A) been reviewed by independent certified public accountants of nationally recognized standing or (B) been found acceptable by the Administrative Agent, (ii) the Consolidated EBITDA of any Person Disposed of by the Borrower or its Subsidiaries, or attributable to the assets sold in any Asset Sale, during such period shall be excluded for such period (assuming the consummation of such Disposition and the repayment of any Indebtedness in connection therewith occurred on the first day of such period) and (iii) the Consolidated EBITDA attributable to any Customer Service Agreement for which CSA Payments have been made during such period shall be included, at the election of the Borrower, on a pro forma basis for such --- ----- period (assuming that such Customer Service Agreement had become effective on the first day of such period) if the Borrower's calculation of such additional Consolidated EBITDA (A) has been provided to the Administrative Agent and the Lenders and (B) either (1) (in the case of any Customer Service Agreement for which Consolidated EBITDA to be included on a pro forma basis for such period --- ----- equals or is greater than $10,000,000) has been reviewed by independent certified public accountants of nationally recognized standing or (2) (in the case of any Customer Service Agreement for which Consolidated EBITDA to be included on a pro forma basis for such period is less than $10,000,000) has been --- ----- found acceptable by the Administrative Agent. "Consolidated Net Income": of any Person for any period, the ----------------------- consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided -------- that in calculating Consolidated Net Income of the Borrower and its consolidated Subsidiaries for any period, there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries (except, in the case of the calculation of the Consolidated Leverage Ratio, to the extent otherwise provided in the definition of "Consolidated Leverage Ratio"), (b) the income (or deficit) of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary. "Consolidated Total Debt": at any date, the aggregate principal ----------------------- amount of all Funded Debt of the Borrower and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP. "Consolidated Working Capital": at any date, an amount equal to (a) ---------------------------- Consolidated Current Assets on such date minus (b) Consolidated Current ----- Liabilities on such date. 10 "Continuing Directors": the directors of Holdings on the Closing -------------------- Date, and each other director of Holdings, if, in each case, such other director's nomination for election to the board of directors of Holdings is recommended by at least 66-2/3% of the then Continuing Directors. "Contractual Obligation": as to any Person, any provision of any ---------------------- security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound. "Control Investment Affiliate": as to any Person, any other Person ---------------------------- that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, "control" of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "CSA Payments": signing bonuses paid by the Borrower and its ------------ Subsidiaries to any Customer Service Client in consideration of, and as an inducement to, such Customer Service Client's entering into a Customer Service Agreement and other investments by the Borrower and its Subsidiaries in Customer Service Agreements. "Customer Services Agreement": any contract or agreement (or series --------------------------- of related contracts or agreements) entered into by the Borrower or any of its Subsidiaries with any Person, pursuant to which the Borrower or any of its Subsidiaries renders services or sells, leases or licenses its products or property, in either case related to the business of providing subscriber or customer management services, billing and statement mailing services, management reporting, live-voice operator telemarketing services, Cableperks and billing statement inserts, refund check processing, pay-per-view itemization, insert printing, decision support services, VIP services and other similar services for businesses in various industries and developing and licensing related software to multiple cable system operators, direct broadcast satellite television operators, cable programming providers, video dial tone providers, telephony and telephone system operators, on-line service providers, utility providers, insurance companies, financial services providers and businesses in other industries. "Customer Services Client": any Person who has entered into a ------------------------ Customer Services Agreement. "Default": any of the events specified in Section 8, whether or not ------- any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Deposit Accounts": as defined in the Guarantee and Collateral ---------------- Agreement. "Derivatives Counterparty": as defined in Section 7.6. ------------------------ "Disposition": with respect to any Property, any sale, lease, sale ----------- and leaseback, assignment, conveyance, transfer or other disposition thereof (except for any license of Intellectual Property not described in clauses (b) or (c) below) and shall include, without limitation, (a) the issuance of Capital Stock by any Subsidiary of Holdings (other than any such 11 issuance by any such Person to Holdings or its Subsidiary, as the case may be, that is the holder of the remaining Capital Stock of such Person), (b) any exclusive license in the United States of Intellectual Property relating to the Communications Control System product ("CCS") and (c) any long-term exclusive --- license in the United States of Intellectual Property of the Borrower or any of its Subsidiaries (other than Intellectual Property relating to CCS); and the terms "Dispose" and "Disposed of" shall have correlative meanings. ------- ----------- "Dollars" and "$": lawful currency of the United States of America. ------- - "Domestic Subsidiary": any Subsidiary of Holdings organized under the ------------------- laws of any jurisdiction within the United States of America. "ECF Percentage": with respect to any fiscal year of the Borrower, -------------- 50%; provided that, with respect to any fiscal year of the Borrower ending on or -------- after December 31, 2002, the ECF Percentage shall be 0% if the Consolidated Leverage Ratio as of the last day of such fiscal year is not greater than 1.5 to 1.0. "Environmental Laws": any and all laws, rules, orders, regulations, ------------------ statutes, ordinances, guidelines, codes, decrees, or other legally enforceable requirements (including, without limitation, common law) of any international authority, foreign government, the United States, or any state, local, municipal or other governmental authority, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment, or protection of human health or employee health and safety (as affected by the environment or by any substance the exposure to which is reasonably suspected of causing harm to human health), as has been, is now, or may at any time hereafter be, in effect. "Environmental Permits": any and all permits, licenses, approvals, --------------------- registrations, notifications, exemptions and other authorizations required under any Environmental Law. "ERISA": the Employee Retirement Income Security Act of 1974, as ----- amended from time to time. "Eurodollar Reserve Percentage": the reserve percentage (expressed as ----------------------------- a decimal, rounded upward, if necessary, to the nearest 1/100th of one percent (0.01%)) in effect on the date LIBOR for such Interest Period is determined (whether or not applicable to any Lender) under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities") having a term comparable to such Interest Period. "Eurodollar Tranche": the collective reference to LIBOR Loans under ------------------ any Facility, the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). "Event of Default": any of the events specified in Section 8, ---------------- provided that any requirement for the giving of notice, the lapse of time, or - -------- both, has been satisfied. 12 "Excess Cash Flow": for any fiscal year of the Borrower, the ---------------- difference, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income of the Borrower and its Subsidiaries for such fiscal year, (ii) the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital between the first day and the last day of such fiscal year, (iv) the aggregate net amount of non-cash loss on the Disposition of Property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income and (v) the net increase during such fiscal year (if any) in deferred tax accounts of the Borrower minus (b) the sum, without duplication, of (i) the amount of all non- ----- cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such fiscal year on account of Capital Expenditures (minus the principal ----- amount of Indebtedness (other than Indebtedness incurred under the Revolving Credit Facility or any other revolving credit facility) incurred in connection with such expenditures and minus the amount of any such expenditures financed ----- with the proceeds of any Reinvestment Deferred Amount or with the proceeds of any equity investment in Holdings), (iii) the aggregate amount of all prepayments of Revolving Credit Loans during such fiscal year to the extent accompanying permanent optional reductions of the Revolving Credit Commitments and all optional prepayments of Funded Debt (other than the Term Loans) during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction of commitments thereunder), (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt (including, without limitation, the Term Loans) of the Borrower and its Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (v) the amount of the increase, if any, in Consolidated Working Capital between the first day and the last day of such fiscal year, (vi) the aggregate net amount of gain on the Disposition of Property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income, (vii) Specified Group Investments made in cash during such fiscal year and, without duplication, Restricted Payments made in cash by the Borrower to Holdings during such fiscal year pursuant to Section 7.6(g) (minus the principal amount of Indebtedness ----- (other than Indebtedness incurred under the Revolving Credit Facility or any other revolving credit facility) incurred in connection with such Specified Group Investments), (viii) Restricted Payments made by the Borrower in cash during such fiscal year that are permitted by clause (i) or (ii) of Section 7.6(f), (ix) to the extent not deducted in computing Consolidated Net Income, CSA Payments paid by the Borrower and its Subsidiaries during such fiscal year (minus the principal amount of Indebtedness (other than Indebtedness incurred - ------ under the Revolving Credit Facility or any other revolving credit facility) incurred in connection with such CSA Payments), (x) Investments made in cash by the Borrower and its Subsidiaries during such fiscal year that are permitted by Section 7.8(j), (q) or (u) (minus the principal amount of Indebtedness (other ----- than Indebtedness incurred under the Revolving Credit Facility or any other revolving credit facility) incurred in connection with such Investments) and (xi) the net decrease during such fiscal year (if any) in deferred tax accounts of the Borrower. "Excess Cash Flow Application Date": as defined in Section 2.12(e). --------------------------------- 13 "Excluded Collateral": any Deposit Account or Letter-of-Credit Right ------------------- with respect to which the Lien of the Administrative Agent, for the benefit of the Lenders, is not required to be subject to the "control" (within the meaning of the applicable Uniform Commercial Code) of the Administrative Agent pursuant to Section 6.9(e) or Section 5.4(b) of the Guarantee and Collateral Agreement. "Excluded Foreign Subsidiaries": any Foreign Subsidiary of Holdings ----------------------------- in respect of which no election has been made to treat such Foreign Subsidiary for United States federal income tax purposes as a branch of a Person formed or organized under the laws of the United States of America, or any State thereof or partnership the partners of which are Persons formed or organized under the laws of the United States of America, or any State thereof. "Existing Credit Agreement": as defined in the recitals hereto. ------------------------- "Facility": each of (a) the Tranche A Term Loan Commitments and the -------- Tranche A Term Loans made thereunder (the "Tranche A Term Loan Facility"), (b) ---------------------------- the Tranche B Term Loan Commitments and the Tranche B Term Loans made thereunder (the "Tranche B Term Loan Facility") and (c) the Revolving Credit Commitments ---------------------------- and the extensions of credit made thereunder (the "Revolving Credit Facility"). ------------------------- "Federal Funds Effective Rate": for any day, the rate set forth in ---------------------------- the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds --------- (Effective)" (or, if such day is not a Business Day, for the Business Day next preceding such day). If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. ------------------- Quotation") for such day under the caption "Federal Funds Effective Rate" (or, - --------- if such day is not a Business Day, for the Business Day next preceding such day). If on any relevant day the appropriate rate for such day is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m., New York City time, on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent. "Foreign Subsidiary": any Subsidiary of Holdings that is not a ------------------ Domestic Subsidiary. "FQ1", "FQ2 ", "FQ3", and "FQ4": when used with a numerical year --- ---- --- --- designation, means the first, second, third or fourth fiscal quarters, respectively, of such fiscal year of the Borrower. (e.g., FQ4 2002 means the fourth fiscal quarter of the Borrower's 2002 fiscal year, which ends December 31, 2002). "Funded Debt": with respect to any Person, all Indebtedness of such ----------- Person of the types described in clauses (a) through (e) and, to the extent that the Indebtedness guaranteed pursuant to such Guarantee Obligations is of the types described in such clauses (a) through (e), 14 (e), (h) of the definition of "Indebtedness" in this Section 1.1; provided, -------- however, that the Indebtedness of any Person whose earnings are excluded from - ------- the calculation of Consolidated Net Income for any period pursuant to clause (c) of the definition of "Consolidated Net Income" in this Section 1.1 shall not be included for purposes of calculating Funded Debt at any time during such period. "Funding Office": the office specified from time to time by the -------------- Administrative Agent as its funding office by notice to the Borrower and the Lenders. "GAAP": generally accepted accounting principles in the United States ---- of America as in effect from time to time. "Governmental Authority": any nation or government, any state or ---------------------- other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee and Collateral Agreement": the Amended and Restated ---------------------------------- Guarantee and Collateral Agreement to be executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to time. "Guarantee Obligation": as to any Person (the "guaranteeing person"), -------------------- ------------------- any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit), if to induce the creation of such obligation of such other Person the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the ------------------- "primary obligor") in any manner, whether directly or indirectly, including, - ---------------- without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include - -------- ------- endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. 15 "Guarantors": the collective reference to Holdings and the Subsidiary ---------- Guarantors. "Hedge Agreements": all interest rate or currency swaps, caps or ---------------- collar agreements, foreign exchange agreements, commodity contracts or similar arrangements entered into by Holdings or its Subsidiaries providing for protection against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies. "Immaterial Subsidiaries": any Subsidiaries of Holdings (a) the ----------------------- combined revenues of which constituted, for the period of four fiscal quarters ended on the last day of the most recent fiscal quarter or fiscal year in respect of which financial statements shall have been delivered pursuant to Section 6.1, less than, for all such Subsidiaries in the aggregate, 5% of the consolidated revenues of Holdings and its Subsidiaries for such period and (b) the consolidated assets of which constituted, as at such last day, less than, for all such Subsidiaries in the aggregate, 5% of the consolidated assets of Holdings and its Subsidiaries at such day. "Inactive Subsidiary": each Subsidiary of Holdings that has total net ------------------- assets of $10,000 or less. "Indebtedness": of any Person at any date, without duplication, (a) ------------ all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of Property or services (other than (i) trade or other accounts payable incurred in the ordinary course of such Person's business, (ii) deferred compensation arrangements with respect to officers, directors, employees or agents of such Person and (iii) client deposits, accrued employee compensation and other liabilities accrued, in each case in the ordinary course of business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit or similar facilities, (g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Capital Stock of such Person (other than any obligation to repurchase Capital Stock pursuant to the CSG Employee Stock Purchase Plan or to repurchase options or warrants (or Capital Stock issued upon the exercise of options or warrants) in connection with the "cashless exercise" of options or warrants), (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above; (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation and (j) for the purposes of Section 8(e) only, all obligations of such Person in respect of Hedge Agreements (provided that the principal amount of the Indebtedness of any Person in respect of any Hedge Agreement at any time shall be the amount, if any, that would, under the agreements and instruments governing such Hedge Agreement, be payable by such Person at such time if 16 such Hedge Agreement were terminated at such time by the other party thereto, in each case taking into account any netting or set-off arrangements or agreements applicable thereto). "Indemnified Liabilities": as defined in Section 10.5(d). ----------------------- "Indemnitee": as defined in Section 10.5(d). ---------- "Initial Funding Date": the date on which the conditions precedent -------------------- set forth in Section 5.2 shall have been satisfied and a Borrowing Notice shall have been delivered in accordance with Section 2.2, which date shall be not later than May 1, 2002. "Insolvency": with respect to any Multiemployer Plan, the condition ---------- that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. --------- "Intellectual Property": the collective reference to all rights, --------------------- priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Interest Payment Date": (a) as to any Base Rate Loan, the last day --------------------- of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any LIBOR Loan having an Interest Period of three months or shorter, the last day of such Interest Period, (c) as to any LIBOR Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan, the date of any repayment or prepayment made in respect thereof. "Interest Period": as to any LIBOR Loan, (a) initially, the period --------------- commencing on the borrowing or conversion date, as the case may be, with respect to such LIBOR Loan and ending one, two, three, six or, with the consent of all relevant Lenders, nine or twelve months thereafter, as selected by the Borrower in its Borrowing Notice or Notice of Conversion/Continuation, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such LIBOR Loan and ending one, two, three, six or, with the consent of all relevant Lenders, nine or twelve months thereafter, as selected by the Borrower by irrevocable Notice of Continuation/Conversion given to the Administrative Agent prior to 1:00 P.M., New York City time, at least three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that all -------- of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar 17 month in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period that would otherwise extend beyond the Revolving Credit Termination Date or beyond the date final payment is due on the Tranche A Term Loans or the Tranche B Term Loans, as the case may be, shall end on the Revolving Credit Termination Date or such due date, as applicable; (iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iv) notwithstanding the foregoing, with respect to the first Interest Period in respect of any Loan that commences on or after the Closing Date, the Borrower may elect an Interest Period that commences on the first day otherwise applicable thereto and, subject to clauses (i) and (iii) above, ends on the last day of the calendar month in which such Interest Period begins. "Interest Rate Determination Date": with respect to any Interest -------------------------------- Period, the date for calculating the applicable LIBOR for purposes of determining the interest rate for such Interest Period. The Interest Rate Determination Date for any LIBOR Loan shall be the second Business Day prior to the first day of the related Interest Period for such LIBOR Loan. "Investments": as defined in Section 7.8. ----------- "Issuing Lender": any Revolving Credit Lender from time to time -------------- designated by the Borrower as an Issuing Lender with the consent of such Revolving Credit Lender and the Administrative Agent (which consent, in the case of the Administrative Agent, will not be unreasonably withheld or delayed). "L/C Commitment": $40,000,000. -------------- "L/C Fee Payment Date": the last day of each March, June, September -------------------- and December and the Revolving Credit Termination Date. "L/C Obligations": at any time, an amount equal to the sum of (a) the --------------- aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5. "L/C Participants": with respect to any Letter of Credit, the ---------------- collective reference to all the Revolving Credit Lenders other than the Issuing Lender that issued such letter of Credit. "Lehman Entity": any of Lehman Commercial Paper Inc. or any of its ------------- affiliates (including Syndicated Loan Funding Trust). 18 "Lender Addendum": with respect to any initial Lender, a Lender --------------- Addendum, substantially in the form of Exhibit J, to be executed and delivered by such Lender on the Closing Date as provided in Section 10.17. "Lenders": as defined in the preamble hereto. ------- "Letter-of-Credit Rights": as defined in the Guarantee and Collateral ----------------------- Agreement. "Letters of Credit": as defined in Section 3.1(a). ----------------- "LIBOR": for any Interest Rate Determination Date with respect to an ----- Interest Period for any Loan to be made, continued as or converted into a LIBOR Loan, the London interbank offered rate, rounded upward, if necessary, to the nearest 1/100th of one percent (0.01%), equal to the offered rate for deposits in Dollars for a period equal to such Interest Period, commencing on the first day of such Interest Period, which appears on Page LIBOR01 of the Reuters screen (or such other page as may replace Page LIBOR01 on that service or any successor service for the purpose of displaying London interbank offered rates of major banks) as of 11:00 A.M., London time, on such Interest Rate Determination Date. If the LIBOR for an Interest Period cannot be determined pursuant to the preceding sentence, then the LIBOR for such Interest Period shall be determined on the basis of the rates at which deposits in Dollars are offered to the Reference Lender at approximately 11:00 A.M., London time, on such Interest Rate Determination Date on an amount approximately equal to the principal amount of the Reference Lender's LIBOR Loans to which such Interest Period is applicable. The Administrative Agent will request the principal London office of the Reference Lender to provide a quotation of its rate. "LIBOR Loans": Loans for which the applicable rate of interest is ----------- based upon Adjusted LIBOR. "Lien": any mortgage, pledge, hypothecation, assignment, deposit ---- arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing). "Loan": any loan made by any Lender pursuant to this Agreement. ---- "Loan Documents": this Agreement, the Security Documents, the -------------- Applications and the Notes. "Loan Parties": Holdings, the Borrower and each Subsidiary of ------------ Holdings that is a party to a Loan Document. "Lucent": as defined in the recitals hereto. ------ "Majority Facility Lenders": with respect to any Facility, the ------------------------- holders of more than 50% of the aggregate unpaid principal amount of the Term Loans or the Total Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or (a) in the case of 19 any Term Loan Facility, prior to the Initial Funding Date, the holders of more than 50% of the Commitments in respect of such Facility and (b) in the case of the Revolving Credit Facility, prior to any termination of the Revolving Credit Commitments, the holders of more than 50% of the Total Revolving Credit Commitments). "Majority Revolving Credit Facility Lenders": the Majority Facility ------------------------------------------ Lenders in respect of the Revolving Credit Facility. "Mandatory Prepayment Amount": as defined in Section 2.18(d). --------------------------- "Material Adverse Effect": a material adverse effect on (a) the ----------------------- business, property, financial condition or results of operations of the Borrower and its Subsidiaries (which are Subsidiary Guarantors), taken as a whole, or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder. "Material Customer Services Agreement": at any time, any Customer ------------------------------------ Service Agreement the processing revenues under which, during the period of four consecutive fiscal quarters of Holdings ended on the last day of the fiscal quarter most recently ended for which financial statements shall have been delivered pursuant to Section 5.1(b) or 6.1, shall exceed 10% of the consolidated processing revenues of Holdings and its Subsidiaries for such period (calculated, in the case of any such period of four fiscal quarters ending prior to June 30, 2003, on a pro forma basis as if the Acquisition had --- ----- occurred on the first day of such period). "Material Environmental Amount": an amount or amounts payable by ----------------------------- Holdings and/or any of its Subsidiaries, in the aggregate in excess of $10,000,000, for: costs to comply with any Environmental Law; costs of any investigation, and any remediation, of any Material of Environmental Concern; and compensatory damages (including, without limitation damages to natural resources), punitive damages, fines, and penalties pursuant to any Environmental Law. "Materials of Environmental Concern": any gasoline or petroleum ---------------------------------- (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity, and any other substances or forces of any kind, whether or not any such substance or force is defined as hazardous or toxic under any Environmental Law, that is regulated pursuant to or would reasonably be expected to give rise to liability under any Environmental Law. "Moody's": Moody's Investors Service, Inc. (or successors thereto). ------- "Mortgages": each of the mortgages and deeds of trust made by any --------- Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Secured Parties, in form and substance reasonably satisfactory to the Administrative Agent and the Syndication Agent, as the same may be amended, supplemented or otherwise modified from time to time. "Multiemployer Plan": a Plan that is a multiemployer plan as defined ------------------ in Section 4001(a)(3) of ERISA. 20 "Net Cash Proceeds": (a) in connection with any Asset Sale or any ----------------- Recovery Event, 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 otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of (i) attorneys' fees, accountants' fees, investment banking fees and other professional fees and expenses incurred in connection with such Asset Sale or Recovery Event, (ii) amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset which is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document), (iii) other customary fees and expenses actually incurred in connection with such Asset Sale or Recovery Event, (iv) taxes paid or reasonably estimated to be payable as a result of such Asset Sale or Recovery Event, including in the case of any such proceeds received by any Foreign Subsidiary, any taxes paid or payable in respect of the repatriation of such proceeds to the United States of America (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (v) reserves for purchase price adjustments and retained liabilities reasonably expected to be paid in cash in connection with such Asset Sale or Recovery Event (provided that such amounts shall be Net Cash Proceeds to the extent and at the time released or not required to be so used), (b) in connection with any issuance or sale of equity securities or debt securities or instruments or the incurrence of loans, the cash proceeds received from such issuance or incurrence, net of (i) attorneys' fees, investment banking fees, accountants' fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith and (ii) in the case of any such proceeds received by any Foreign Subsidiary, any taxes paid or payable in respect of the repatriation of such proceeds to the United States of America, and (c) in connection with any Termination Payment, the cash amount thereof, net of any fees and expenses actually incurred in connection therewith. "Non-Excluded Taxes": as defined in Section 2.20(a). ------------------ "Non-U.S. Lender": as defined in Section 2.20(d). --------------- "Note": any promissory note evidencing any Loan. ---- "Notice of Conversion/Continuation": with respect to any request for --------------------------------- conversion or continuation of Loans hereunder, a notice from the Borrower, substantially in the form of, and containing the information prescribed by, Exhibit K, delivered to the Administrative Agent. "Obligations": the unpaid principal of and interest on (including, ----------- without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations 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) the Loans, the Reimbursement Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender or any Qualified Counterparty, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement 21 obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided that (a) obligations of Holdings or any of its Subsidiaries -------- under any Specified Hedge Agreement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements. "Optional Prepayment Amount": as defined in Section 2.18(d). -------------------------- "Optional Specified Group Investment Amount": at any time, ------------------------------------------ $60,000,000 less an amount equal to twice the aggregate amount of Restricted Payments made pursuant to subclause (ii)(A)(2) of Section 7.6(e) at or prior to such time. "Other Taxes": any and all present or future stamp or documentary ----------- taxes and any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. "Paribas Entity": any of BNP Paribas or any of its affiliates. -------------- "Participant": as defined in Section 10.6(b). ----------- "Payment Amount": as defined in Section 3.5. -------------- "Payment Office": the office specified from time to time by the -------------- Administrative Agent as its payment office by notice to the Borrower and the Lenders. "PBGC": the Pension Benefit Guaranty Corporation established pursuant ---- to Subtitle A of Title IV of ERISA (or any successor). "Permitted Acquisition": any acquisition by Holdings or any of its --------------------- Subsidiaries of all or substantially all of the Capital Stock, or substantially all of the assets, of any Person, or of all or substantially all of the assets constituting a division or business line of any Person, if such acquisition complies with the following criteria: (a) no Default or Event of Default shall be in effect after giving effect to such acquisition, and Holdings shall have delivered to the Administrative Agent a certificate of a Responsible Officer of Holdings to such effect; (b) after giving effect to the consummation of such acquisition and to the incurrence of any Indebtedness associated therewith, the Consolidated Leverage Ratio (calculated as if such acquisition had occurred on the first day of the period of four consecutive fiscal quarters most recently ended for which financial statements have been delivered pursuant to Section 6.1) shall be not greater than 0.25 less than the highest Consolidated Leverage Ratio permitted at such time under Section 7.1(a) (e.g., if Section 7.1(a) ------ permits a Consolidated Leverage Ratio of 2.35 to 1.00 at the time of such 22 acquisition, this paragraph (b) requires that the Consolidated Leverage Ratio shall be not greater than 2.10 to 1.00), and the Borrower shall have delivered to the Administrative Agent such financial information as the Administrative Agent shall reasonably request to demonstrate such pro forma --- ----- compliance; (c) after giving effect to the consummation of such acquisition and to the incurrence of any Indebtedness associated therewith, the Borrower shall be in pro forma compliance with the covenants in Sections 7.1(b) and (c) --- ----- (calculated as if such acquisition had occurred on the first day of the period of four consecutive fiscal quarters most recently ended for which the relevant financial information is available), and the Borrower shall have delivered to the Administrative Agent such financial information as the Administrative Agent shall reasonably request to demonstrate such pro --- forma compliance; ----- (d) the acquisition of the Person, division or line of business acquired shall not be in violation of Section 7.15; (e) any Person whose Capital Stock is directly or indirectly acquired shall be, after giving effect to such acquisition, a direct or an indirect Wholly Owned Subsidiary of Holdings; and (f) the aggregate fair market value of the consideration paid by Holdings and its Subsidiaries in connection with all such acquisitions, when added to the aggregate amount of CSA Payments made, shall not exceed (i) $60,000,000, if the Consolidated Leverage Ratio, on a pro forma basis --- ----- after giving effect to such acquisition (with the reference period for Consolidated EBITDA being the most recent period of four consecutive fiscal quarters for which financial statements shall have been delivered pursuant to Section 6.1), is greater than or equal to 1.00 to 1.00 or (ii) $100,000,000, if the Consolidated Leverage Ratio (as so calculated) is less than 1.00 to 1.00. "Permitted CSA Payments": any CSA Payments made by the Borrower or ---------------------- any of its Subsidiaries, if such CSA Payments comply with the following criteria: (a) no Default or Event of Default shall be in effect after giving effect to the making of such CSA Payments, and the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower to such effect; and (b) the aggregate amount of all CSA Payments made, when added to the fair market value of the consideration paid by Holdings and its Subsidiaries in connection with all Permitted Acquisitions, shall not exceed (i) $60,000,000, if the Consolidated Leverage Ratio, on a pro forma --- ----- basis after giving effect to the making of such CSA Payments (with the reference period for Consolidated EBITDA being the most recent period of four consecutive fiscal quarters for which financial statements shall have been delivered pursuant to Section 6.1), is greater than or equal to 1.00 to 1.00 or (ii) $100,000,000, if the Consolidated Leverage Ratio (as so calculated) is less than 1.00 to 1.00. 23 "Person": an individual, partnership, corporation, limited liability ------ company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan that is ---- covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Prepayment Date": as defined in Section 2.18(d). --------------- "Prepayment Option Notice": as defined in Section 2.18(d). ------------------------ "Pricing Grid": the pricing grid attached hereto as Annex A. ------------ "Pro Forma Balance Sheets": as defined in Section 4.1(a). ------------------------ "Projections": as defined in Section 6.2(c). ----------- "Property": any right or interest in or to property of any kind -------- whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock. "Qualified Counterparty": with respect to any Specified Hedge ---------------------- Agreement, any counterparty thereto that, at the time such Specified Hedge Agreement was entered into, was a Lender or an affiliate of a Lender. "Recovery Event": any settlement of or payment in respect of any -------------- property or casualty insurance claim or any condemnation proceeding relating to any asset of Holdings or any of its Subsidiaries. "Reference Lender": BNP Paribas. ---------------- "Register": as defined in Section 10.6(d). -------- "Regulation U": Regulation U of the Board as in effect from time to ------------ time. "Reimbursement Obligation": the obligation of the Borrower to ------------------------ reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by such Issuing Lender. "Reinvestment Deferred Amount": with respect to any Reinvestment ---------------------------- Event, the aggregate Net Cash Proceeds received by Holdings or any of its Subsidiaries in connection therewith that are not applied to prepay the Term Loans pursuant to Section 2.12(d) as a result of the delivery of a Reinvestment Notice. "Reinvestment Event": any Asset Sale or Recovery Event in respect of ------------------ which the Borrower has delivered a Reinvestment Notice. 24 "Reinvestment Notice": a written notice executed by a Responsible ------------------- Officer stating that no Default or Event of Default has occurred and is continuing and that Holdings (directly or indirectly through a Subsidiary of Holdings) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire assets (other than inventory) useful in the business of Holdings and its Subsidiaries; provided, -------- however, that in the event that such Net Cash Proceeds are in respect of an - ------- Asset Sale or Recovery Event in respect of the Borrower or any of its Domestic Subsidiaries, any reinvestment of such Net Cash Proceeds in any Person other than the Borrower and its Domestic Subsidiaries must be permitted under Section 7.8(c). "Reinvestment Prepayment Amount": with respect to any Reinvestment ------------------------------ Event, the Reinvestment Deferred Amount relating thereto less any amount ---- expended prior to the relevant Reinvestment Prepayment Date to acquire assets (other than inventory) useful in the business of Holdings and its Subsidiaries. "Reinvestment Prepayment Date": with respect to any Reinvestment ---------------------------- Event, the earlier of (a) the date occurring one year after such Reinvestment Event and (b) the date on which Holdings or the Borrower shall have determined not to, or shall have otherwise ceased to, acquire assets (other than inventory) useful in the business of Holdings and its Subsidiaries. "Related Fund": with respect to any Lender, any fund that (a) invests ------------ in commercial loans and (b) is managed or advised by the same investment advisor as such Lender, by such Lender or an Affiliate of such Lender. "Reorganization": with respect to any Multiemployer Plan, the -------------- condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(c) of ---------------- ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. (S) 4043. "Required Lenders": at any time, the holders of more than 50% of (a) ---------------- until the Initial Funding Date, the Commitments and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding and (ii) the Total Revolving Credit Commitments then in effect or, if the Revolving Credit Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding. "Required Prepayment Lenders": the Majority Facility Lenders in --------------------------- respect of each Facility. "Requirement of Law": as to any Person, the Certificate of ------------------ Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject. "Responsible Officer": with respect to any Person, the chief ------------------- executive officer, president, chief financial officer or treasurer of such Person. Unless otherwise qualified, all 25 references to a "Responsible Officer" in this Agreement shall refer to a Responsible Officer of the Borrower. "Restricted Payments": as defined in Section 7.6. ------------------- "Revolving Credit Commitment": as to any Lender, the obligation of --------------------------- such Lender, if any, to make Revolving Credit Loans and participate in Letters of Credit, in an aggregate principal and/or face amount not to exceed the amount set forth under the heading "Revolving Credit Commitment" opposite such Lender's name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Total Revolving Credit Commitments is $100,000,000. "Revolving Credit Commitment Period": the period from and including ---------------------------------- the Initial Funding Date to the Revolving Credit Termination Date. "Revolving Credit Facility": as defined in the definition of ------------------------- "Facility" in this Section 1.1. "Revolving Credit Lender": each Lender that has a Revolving Credit ----------------------- Commitment or that is the holder of Revolving Extensions of Credit. "Revolving Credit Loans": as defined in Section 2.4(a). ---------------------- "Revolving Credit Note": as defined in Section 2.8(e). --------------------- "Revolving Credit Percentage": as to any Revolving Credit Lender at --------------------------- any time, the percentage which such Lender's Revolving Credit Commitment then constitutes of the Total Revolving Credit Commitments (or, at any time after the Revolving Credit Commitments shall have expired or terminated, the percentage which the aggregate amount of such Lender's Revolving Extensions of Credit then outstanding constitutes of the amount of the Total Revolving Extensions of Credit then outstanding). "Revolving Credit Termination Date": the date which is five years --------------------------------- after the Closing Date. "Revolving Extensions of Credit": as to any Revolving Credit Lender ------------------------------ at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding and (b) the aggregate amount of such Lender's participating interests in the L/C Obligations then outstanding (or, in the case of each Issuing Lender, such Issuing Lender's interest remaining in such L/C Obligations after giving effect to the grant of participating interests therein to the other Lenders pursuant to Section 3.4). "S&P": Standard & Poor's Ratings Services (or successors thereto). --- "SEC": the Securities and Exchange Commission (or successors thereto --- or an analogous Governmental Authority). 26 "Secured Parties": as defined in the Guarantee and Collateral --------------- Agreement. "Securities Accounts": as defined in the Guarantee and Collateral ------------------- Agreement. "Security Documents": the collective reference to the Guarantee and ------------------ Collateral Agreement, any Mortgages and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any Property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document. "Single Employer Plan": any Plan that is covered by Title IV of -------------------- ERISA, but which is not a Multiemployer Plan. "Solvent": with respect to any Person, as of any date of ------- determination, (a) the amount of the "present fair saleable value" of the assets of such Person, as of such date, exceeds the amount of all "liabilities of such Person, contingent or otherwise", as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) such Person does not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (c) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any (A) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured. "Specified Change of Control": a "Change of Control", or like event, --------------------------- as defined in any indenture pursuant to which Indebtedness of Holdings or the Borrower may be outstanding at any time. "Specified Group": collectively, all Subsidiaries of Holdings other --------------- than the Borrower and its Subsidiaries. "Specified Group Investments": for any period, the aggregate amount --------------------------- of Investments (other than Investments consisting of (i) Guarantee Obligations of Holdings permitted under Section 7.2(e) that do not constitute Indebtedness and (ii) Guarantee Obligations of the Borrower and its Subsidiaries permitted under Section 7.2(e) in respect of Hedge Agreements of members of the Specified Group) made by Loan Parties (other than Specified Subsidiary Guarantors) in any member of the Specified Group during such period pursuant to Section 7.8(c) or 7.8(r). "Specified Hedge Agreement": any Hedge Agreement entered into by (a) ------------------------- Holdings or any of its Subsidiaries, (b) any Lender or any affiliate thereof, as counterparty or (c) any Person that was a Lender or an affiliate of a Lender at the time such Hedge Agreement was entered into, as counterparty. 27 "Specified Subsidiary Guarantor": the collective reference to (a) any ------------------------------ Acquisition Corp. that is a Domestic Subsidiary of Holdings and (b) any Domestic Subsidiary of any Acquisition Corp. "Standby Letter of Credit": an irrevocable letter of credit (other ------------------------ than a Trade Letter of Credit) for the account of the Borrower and for the benefit of any holder of obligations of Holdings or any of its Subsidiaries, provided that any such letter of credit issued for the benefit of any holder of - -------- obligations owing by any member of the Specified Group shall be limited as provided in Section 7.8. "Subsidiary": as to any Person, a corporation, partnership, limited ---------- liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. "Subsidiary Guarantor": each Subsidiary of Holdings other than the -------------------- Borrower, any Excluded Foreign Subsidiary and any Inactive Subsidiary. "Supermajority Lenders": at any time, the holders of more than 66 --------------------- 2/3% of (a) until the Initial Funding Date, the Commitments and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding and (ii) the Total Revolving Credit Commitments then in effect or, if the Revolving Credit Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding. "Tax Sharing Agreement": the Tax Sharing Agreement among Holdings, --------------------- the Borrower and those other Subsidiaries of Holdings which are parties thereto, in form and substance reasonably satisfactory to the Administrative Agent and the Syndication Agent, to be entered into on or prior to the Closing Date, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 7.17. "Termination Payment": any contract termination payments or similar ------------------- damages payments received by Holdings or any of its Subsidiaries as a result of the termination of any Customer Services Agreement. "Term Loan Facilities": the collective reference to the Tranche A -------------------- Term Loan Facility and the Tranche B Term Loan Facility. "Term Loan Lenders": the collective reference to the Tranche A Term ----------------- Loan Lenders and the Tranche B Term Loan Lenders. "Term Loans": the collective reference to the Tranche A Term Loans ---------- and the Tranche B Term Loans. 28 "Term Note": as defined in Section 2.8(e). --------- "Total Revolving Credit Commitments": at any time, the aggregate ---------------------------------- amount of the Revolving Credit Commitments then in effect. "Total Revolving Extensions of Credit": at any time, the aggregate ------------------------------------ amount of the Revolving Extensions of Credit of the Revolving Credit Lenders outstanding at such time. "Trade Letter of Credit": a documentary, trade or commercial letter ---------------------- of credit in respect of the purchase of goods or services issued for the account of the Borrower and for the benefit of any holder of obligations of Holdings or any of its Subsidiaries incurred in the ordinary course of business, provided -------- that any such letter of credit issued for the benefit of any holder of obligations owing by any member of the Specified Group shall be limited as provided in Section 7.8. "Tranche A Maturity Date": the date which is five years after the ----------------------- Closing Date. "Tranche A Term Loan": as defined in Section 2.1(a). ------------------- "Tranche A Term Loan Commitment": as to any Lender, the obligation of ------------------------------ such Lender, if any, to make a Tranche A Term Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading "Tranche A Term Loan Commitment" opposite such Lender's name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Tranche A Term Loan Commitments is $125,000,000. "Tranche A Term Loan Facility": as defined in the definition of ---------------------------- "Facility" in this Section 1.1. "Tranche A Term Loan Lender": each Lender that has a Tranche A Term -------------------------- Loan Commitment or is the holder of a Tranche A Term Loan. "Tranche A Term Loan Percentage": as to any Tranche A Term Loan ------------------------------ Lender at any time, the percentage which such Lender's Tranche A Term Loan Commitment then constitutes of the aggregate Tranche A Term Loan Commitments (or, at any time after the Initial Funding Date, the percentage which the aggregate principal amount of such Lender's Tranche A Term Loan then outstanding constitutes of the aggregate principal amount of the Tranche A Term Loans then outstanding). "Tranche B Maturity Date": the date which is six years after the ----------------------- Closing Date. "Tranche B Term Loan": as defined in Section 2.1(b). ------------------- "Tranche B Term Loan Commitment": as to any Lender, the obligation of ------------------------------ such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading "Tranche B Term Loan Commitment" 29 opposite such Lender's name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Tranche B Term Loan Commitments is $175,000,000. "Tranche B Term Loan Facility": as defined in the definition of ---------------------------- "Facility" in this Section 1.1. "Tranche B Term Loan Lender": each Lender that has a Tranche B Term -------------------------- Loan Commitment or is the holder of a Tranche B Term Loan. "Tranche B Term Loan Percentage": as to any Tranche B Term Loan ------------------------------ Lender at any time, the percentage which such Lender's Tranche B Term Loan Commitment then constitutes of the aggregate Tranche B Term Loan Commitments (or, at any time after the Initial Funding Date, the percentage which the aggregate principal amount of such Lender's Tranche B Term Loan then outstanding constitutes of the aggregate principal amount of the Tranche B Term Loans then outstanding). "Transferee": as defined in Section 10.14(a). ---------- "Type": as to any Loan, its nature as a Base Rate Loan or a LIBOR ---- Loan. "Wholly Owned Subsidiary": as to any Person, any other Person all of ----------------------- the Capital Stock of which (other than directors' qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries. "Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is --------------------------------- a Wholly Owned Subsidiary of Holdings. 1.2 Other Definitional Provisions. (a) Unless otherwise specified ----------------------------- therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto. (b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 30 (e) All calculations of financial ratios set forth in Section 7.1, and the calculation of the Consolidated Leverage Ratio for purposes of determining the Applicable Margin, the Commitment Fee Rate and the ECF Percentage, shall be calculated to the same number of decimal places as the relevant ratios are expressed in and shall be rounded upward if the number in the decimal place immediately following the last calculated decimal place is five or greater. For example, if the relevant ratio is to be calculated to the hundredth decimal place and the calculation of the ratio is 5.125, the ratio will be rounded up to 5.13. SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 2.1 Term Loan Commitments. Subject to the terms and conditions --------------------- hereof, (a) the Tranche A Term Loan Lenders severally agree to make term loans (each, a "Tranche A Term Loan") to the Borrower on the Initial Funding Date in ------------------- an amount for each Tranche A Term Loan Lender not to exceed the amount of the Tranche A Term Loan Commitment of such Lender and (b) the Tranche B Term Loan Lenders severally agree to make term loans (each, a "Tranche B Term Loan") to ------------------- the Borrower on the Initial Funding Date in an amount for each Tranche B Term Loan Lender not to exceed the amount of the Tranche B Term Loan Commitment of such Lender. The Term Loans may from time to time be LIBOR Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.13. 2.2 Procedure for Term Loan Borrowing. The Borrower shall deliver to --------------------------------- the Administrative Agent a Borrowing Notice (which Borrowing Notice must be received by the Administrative Agent prior to 1:00 P.M., New York City time, one Business Day prior to the anticipated Initial Funding Date) requesting that the Term Loan Lenders make the Term Loans on the Initial Funding Date. The Term Loans made on the Initial Funding Date shall initially be Base Rate Loans and such Term Loans which are (a) Tranche A Term Loans may be converted to LIBOR Loans on or after the date which is three Business Days after the Initial Funding Date and (b) Tranche B Term Loans may be converted to LIBOR Loans on or after the date which is seven Business Days after the Initial Funding Date unless the Administrative Agent shall consent to such conversion on an earlier date. Upon receipt of such Borrowing Notice the Administrative Agent shall promptly notify each Term Loan Lender thereof. Not later than 2:00 P.M., New York City time, on the Initial Funding Date each Term Loan Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Term Loan or Term Loans to be made by such Lender. The Administrative Agent shall make available to the Borrower the aggregate of the amounts made available to the Administrative Agent by the Term Loan Lenders, in like funds as received by the Administrative Agent. 2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of each ----------------------- Tranche A Term Loan Lender shall mature and be due and payable in 19 consecutive quarterly installments, commencing on June 30, 2002, each of which shall be in an amount equal to such Lender's Tranche A Term Loan Percentage multiplied by the percentage set forth below opposite such installment of the aggregate principal amount of Tranche A Term Loans made on the Initial Funding Date, with the entire remaining outstanding and unpaid principal balance being due and payable on the Tranche A Maturity Date: 31
Quarterly Installment Percentage --------------------- ---------- June 30, 2002 3.75% September 30, 2002 3.75% December 31, 2002 3.75% March 31, 2003 3.75% June 30, 2003 3.75% September 30, 2003 3.75% December 31, 2003 3.75% March 31, 2004 3.75% June 30, 2004 5.00% September 30, 2004 5.00% December 31, 2004 5.00% March 31, 2005 5.00% June 30, 2005 6.25% September 30, 2005 6.25% December 31, 2005 6.25% March 31, 2006 6.25% June 30, 2006 6.25% September 30, 2006 6.25% December 31, 2006 6.25%
(b) The Tranche B Term Loan of each Tranche B Term Loan Lender shall mature and be due and payable in 23 consecutive quarterly installments, commencing on June 30, 2002, each of which shall be in an amount equal to such Lender's Tranche B Term Loan Percentage multiplied by the percentage set forth below opposite such installment of the aggregate principal amount of Tranche B Term Loans made on the Initial Funding Date, with the entire remaining outstanding and unpaid principal balance being due and payable on the Tranche B Maturity Date:
Quarterly Installment Percentage --------------------- ---------- June 30, 2002 0.25% September 30, 2002 0.25% December 31, 2002 0.25% March 31, 2003 0.25% June 30, 2003 0.25% September 30, 2003 0.25% December 31, 2003 0.25% March 31, 2004 0.25% June 30, 2004 0.25% September 30, 2004 0.25% December 31, 2004 0.25% March 31, 2005 0.25% June 30, 2005 0.25% September 30, 2005 0.25% December 31, 2005 0.25% March 31, 2006 0.25% June 30, 2006 0.25%
32 Quarterly Installment Percentage --------------------- ---------- September 30, 2006 0.25% December 31, 2006 0.25% March 31, 2007 0.25% June 30, 2007 23.75% September 30, 2007 23.75% December 31, 2007 23.75% 2.4 Revolving Credit Commitments. (a) Subject to the terms and ---------------------------- conditions hereof, the Revolving Credit Lenders severally agree to make revolving credit loans ("Revolving Credit Loans") to the Borrower from time to ---------------------- time during the Revolving Credit Commitment Period in an aggregate principal amount at any one time outstanding for each Revolving Credit Lender which, when added to such Lender's Revolving Credit Percentage of the L/C Obligations then outstanding, does not exceed the amount of such Lender's Revolving Credit Commitment; provided that the aggregate principal amount of Revolving Credit -------- Loans made by all of the Revolving Credit Lenders on the Initial Funding Date shall not exceed $5,000,000. During the Revolving Credit Commitment Period the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Credit Loans may from time to time be LIBOR Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.5 and 2.13, provided that no Revolving Credit Loan shall be made as a LIBOR Loan after the - -------- day that is one month prior to the Revolving Credit Termination Date. (b) The Borrower shall repay all outstanding Revolving Credit Loans on the Revolving Credit Termination Date. 2.5 Procedure for Revolving Credit Borrowing. The Borrower may ---------------------------------------- borrow under the Revolving Credit Commitments on Business Day during the Revolving Credit Commitment Period, provided that the Borrower shall deliver to -------- the Administrative Agent a Borrowing Notice (which Borrowing Notice must be received by the Administrative Agent prior to 1:00 P.M., New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of LIBOR Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans). The Revolving Credit Loans made on the Initial Funding Date shall initially be Base Rate Loans and such Revolving Credit Loans may be converted to LIBOR Loans on or after the date which is three Business Days after the Initial Funding Date. Each borrowing of Revolving Credit Loans under the Revolving Credit Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, (I) $1,000,000 or a multiple of $500,000 in excess thereof or (II) the then aggregate Available Revolving Credit Commitments; provided that a -------- borrowing of Base Rate Loans made pursuant to Section 3.5 shall be in the amount of the Payment Amount to be paid with the proceeds of such Base Rate Loans) and (y) in the case of LIBOR Loans, $2,500,000 or a whole multiple of $500,000 in excess thereof. Upon receipt of any such Borrowing Notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will make its Revolving Credit Percentage of the amount of each borrowing of Revolving Credit Loans available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 2:00 P.M., New York City time, on such requested Borrowing Date in funds immediately available to the 33 Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent in like funds as received by the Administrative Agent. 2.6 [Reserved]. ---------- 2.7 [Reserved]. ---------- 2.8 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby ------------------------------------ unconditionally promises to pay to the Administrative Agent for the account of the appropriate Revolving Credit Lender or Term Loan Lender, as the case may be, (i) the then unpaid principal amount of each Revolving Credit Loan of such Revolving Credit Lender on the Revolving Credit Termination Date (or on such earlier date on which the Revolving Credit Loans become due and payable pursuant to Section 8) and (ii) the principal amount of each Term Loan of such Term Loan Lender in installments according to the amortization schedules set forth in Section 2.3 (or on such earlier date on which the Term Loans become due and payable pursuant to Section 8). Amounts repaid on account of Term Loans may not be reborrowed. The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding from the Initial Funding Date until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.15. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (c) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 10.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender's share thereof. (d) The entries made in the Register and the accounts of each Lender maintained pursuant to Section 2.8(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the ----- ----- obligations of the Borrower therein recorded; provided, however, that the -------- ------- failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. (e) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will promptly execute and deliver to such Lender a promissory note of the Borrower evidencing any Term Loans or Revolving Credit Loans, as the case may be, of such Lender, substantially in the forms of Exhibit G-1 or G-2, respectively (a "Term Note" or --------- "Revolving Credit Note", respectively), with appropriate insertions as to date --------------------- and principal amount; provided that delivery of Notes shall not be a condition -------- precedent to the occurrence of 34 the Closing Date or the Initial Funding Date or the making of the Loans on the Initial Funding Date. 2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to the -------------------- Administrative Agent for the of each Revolving Credit Lender a commitment fee for each day during the from and including the Closing Date to but excluding the last day of the Revolving Credit Commitment Period, computed at the Commitment Fee Rate for such day on the Available Revolving Credit Commitment of such Lender as of the close of business on such day, payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Credit Termination Date, commencing on the first of such dates to occur after the date hereof. (b) The Borrower agrees to pay to the Agents the fees in the amounts and on the dates previously agreed to in writing by the Borrower, the Agents and the Arrangers. (c) The Borrower agrees to pay to the Administrative Agent the agency fees in the amounts and on the dates from time to time agreed to in writing by the Borrower and the Administrative Agent. 2.10 Termination or Reduction of Revolving Credit Commitments. The -------------------------------------------------------- Borrower shall have the right, upon not less than three Days' notice to the Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the aggregate amount of the Revolving Credit Commitments; provided that no such termination or reduction of Revolving Credit Commitments - -------- shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans or Reimbursement Obligations made, or terminations or expirations of Letters of Credit occurring, on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Credit Commitments. Any such reduction shall be in an amount equal to (i) $1,000,000 or a whole multiple of $500,000 in excess thereof or (ii) the then aggregate Available Revolving Credit Commitments, and shall reduce permanently the Revolving Credit Commitments then in effect. 2.11 Optional Prepayments. Subject to Section 2.18(d), the -------------------- Borrower may at any time and from to time prepay the Loans, in whole or in part, without premium or penalty as otherwise provided herein), upon irrevocable notice delivered to the Administrative Agent at least three Business Days prior thereto, which notice shall specify the date and amount of such prepayment, whether such prepayment is of Term Loans or Revolving Credit Loans, and whether such prepayment is of LIBOR Loans or Base Rate Loans; provided that if a LIBOR -------- Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of Term Loans and Revolving Credit Loans shall be in an aggregate principal amount of (i) $1,000,000 or a whole multiple of $500,000 in excess thereof or (ii) the aggregate principal amount of the Term Loans or the Revolving Credit Loans, as applicable, or the applicable Eurodollar Tranche thereof then outstanding. 35 2.12 Mandatory Prepayments and Commitment Reductions. (a) Unless ----------------------------------------------- (x) the Consolidated Leverage Ratio as of the last day the most recently ended fiscal quarter of Holdings for which financial shall have been delivered pursuant to Section 6.1 (the "Equity Proceeds Calculation Date") was less than -------------------------------- or equal to 1.00 to 1.00 or (y) the Required Prepayment Lenders, at the request of the Borrower, shall otherwise agree, if any Capital Stock shall be issued by Holdings (other than any issuance of Capital Stock of Holdings to officers, directors and employees of Holdings or any of its Subsidiaries, or pursuant to options, warrants or other rights to acquire such Capital Stock issued to any such officers, directors and employees, in each case in connection with their employment arrangements with, or directorship of, Holdings or any of its Subsidiaries), then on the date of such issuance of Capital Stock, the Term Loans shall be prepaid by an amount equal to the lesser of (i) 50% of the amount of the Net Cash Proceeds of such issuance of Capital Stock and (ii) the amount which, when applied to the prepayment of Term Loans, would, on a pro forma basis after giving effect to such prepayment, reduce the Consolidated Leverage Ratio as of the applicable Equity Proceeds Calculation Date to 1.00 to 1.00, as set forth in Section 2.12(f). (b) Unless the Required Prepayment Lenders, at the request of the Borrower, shall otherwise agree, if any Indebtedness shall be incurred by Holdings or any of its Subsidiaries (excluding any Indebtedness incurred in accordance with Section 7.2 as in effect on the date of this Agreement), then on the date of such incurrence of Indebtedness, the Term Loans shall be prepaid by an amount equal to 100% of the Net Cash Proceeds of such incurrence of Indebtedness, as set forth in Section 2.12(f). The provisions of this Section do not constitute a consent to the incurrence of any Indebtedness by Holdings or any of its Subsidiaries. (c) Unless the Required Prepayment Lenders, at the request of the Borrower, shall otherwise agree, if on any date Holdings or any of its Subsidiaries shall receive any Termination Payment in respect of any Material Customer Services Agreement, then on the date of such receipt of such Termination Payment, the Term Loans shall be prepaid, and/or the Revolving Credit Commitments shall be reduced, by an amount equal to 100% of the Net Cash Proceeds of such Termination Payment, as set forth in Section 2.12(f). (d) Unless the Required Prepayment Lenders, at the request of the Borrower, shall otherwise agree, if on any date Holdings or any of its Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof, on the date of receipt by Holdings or any of its Subsidiaries of such Net Cash Proceeds, the Term Loans shall be prepaid by an amount equal to the amount of such Net Cash Proceeds, as set forth in Section 2.12(f); provided that, -------- notwithstanding the foregoing, on each Reinvestment Prepayment Date the Term Loans shall be prepaid by an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event, as set forth in Section 2.12(f). The provisions of this Section do not constitute a consent to the consummation of any Disposition not permitted by Section 7.5. (e) Unless the Required Prepayment Lenders, at the request of the Borrower, shall otherwise agree, if, for any fiscal year of the Borrower commencing with the fiscal year ending December 31, 2002, there shall be Excess Cash Flow, then, on the relevant Excess Cash Flow Application Date, the Term Loans shall be prepaid by an amount equal to the ECF Percentage of such Excess Cash Flow less all voluntary prepayments of the Term Loans made 36 during such fiscal year, as set forth in Section 2.12(f). Each such prepayment and commitment reduction shall be made on a date (an "Excess Cash Flow ---------------- Application Date") no later than 15 days after the earlier of (i) the date on - ---------------- which the financial statements of Holdings referred to in Section 6.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders and (ii) the date such financial statements are actually delivered. (f) Unless the Required Prepayment Lenders shall otherwise agree, amounts to be applied in connection with prepayments and Commitment reductions made pursuant to this Section shall be applied, first, to the prepayment of the ----- Term Loans and, in the case of any prepayment pursuant to Section 2.12(c) only, second, to reduce permanently the Revolving Credit Commitments. Any such - ------ reduction of the Revolving Credit Commitments shall be accompanied by prepayment of the Revolving Credit Loans to the extent, if any, that the Total Revolving Extensions of Credit exceed the amount of the Total Revolving Credit Commitments as so reduced, provided that if the aggregate principal amount of Revolving -------- Credit Loans then outstanding is less than the amount of such excess (because L/C Obligations constitute a portion thereof), the Borrower shall, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the Lenders on terms and conditions satisfactory to the Administrative Agent. 2.13 Conversion and Continuation Options. (a) The Borrower may ----------------------------------- elect from time to time to convert LIBOR to Base Rate Loans by giving the Administrative Agent an irrevocable of Conversion/Continuation prior to 1:00 P.M., New York City time, at least three Business Days prior to such conversion, provided that any such conversion of LIBOR Loans may be made only on the last - -------- day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Base Rate Loans to LIBOR Loans by giving the Administrative Agent an irrevocable Notice of Conversion/Continuation prior to 1:00 P.M., New York City time, at least three Business Days prior to such conversion (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan under a particular Facility may be converted - -------- into a LIBOR Loan (i) when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Majority Facility Lenders in respect of such Facility have, determined in its or their sole discretion not to permit such conversions or (ii) after the date that is one month prior to the final scheduled termination or maturity date of such Facility. Upon receipt of any such Notice of Conversion/Continuation, the Administrative Agent shall promptly notify each relevant Lender thereof. (b) Subject to Section 2.17, the Borrower may elect to continue any LIBOR Loan as such upon the expiration of the then current Interest Period with respect thereto by giving the Administrative Agent an irrevocable Notice of Conversion/Continuation prior to 1:00 P.M., New York City time, at least three Business Days prior to such continuation in accordance with the applicable provisions of the term "Interest Period" set forth in Section 1.1, which notice shall specify the length of the next Interest Period to be applicable to such Loans, provided that no LIBOR Loan under a particular Facility may be continued -------- as such (i) when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Majority Facility Lenders in respect of such Facility have, determined in its or their sole discretion not to permit such continuations or (ii) after the date that is one month prior to the final scheduled termination or maturity date of such Facility, and provided, further, -------- ------- that (A) if the 37 Borrower shall fail to give any required Notice of Conversion/Continuation as described above in this paragraph with respect to any Revolving Credit Loans that are Eurodollar Loans or if such continuation with respect to any Eurodollar Loans is not permitted pursuant to the preceding proviso, such Loans shall be converted automatically to Base Rate Loans on the last day of such then expiring Interest Period and (B) if the Borrower shall fail to give any required Notice of Conversion/Continuation as described above in this paragraph or Section 2.13(a) with respect to any Term Loans that are Eurodollar Loans, such Loans shall be continued automatically on the last day of the then expiring Interest Period as Eurodollar Loans having an Interest Period of one month. Upon receipt of any such Notice of Conversion/Continuation, the Administrative Agent shall promptly notify each relevant Lender thereof. 2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches. --------------------------------------------------------- Notwithstanding anything to the contrary in this Agreement, all conversions, continuations and optional prepayments of LIBOR Loans all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the LIBOR Loans comprising each Eurodollar Tranche shall be equal to $2,500,000 or a whole multiple of $500,000 in excess thereof (provided that, notwithstanding the foregoing, the Borrower may elect to -------- continue Term Loans that are LIBOR Loans or convert Term Loans that are Base Rate Loans into LIBOR Loans such that the aggregate principal amount of the LIBOR Loans comprising a single Eurodollar Tranche of Tranche A Term Loans and/or a single Eurodollar Tranche of Tranche B Term Loans shall be equal to the aggregate principal amount of the next scheduled amortization installment required to be paid with respect to the Tranche A Term Loans or the Tranche B Term Loans, as the case may be, under Section 2.3) and (b) no more than fifteen Eurodollar Tranches shall be outstanding at any one time. 2.15 Interest Rates and Payment Dates. (a) Each LIBOR Loan shall -------------------------------- bear interest for each day during each Period with respect thereto at a rate per annum equal to Adjusted LIBOR for such day plus the Applicable Margin in effect for such day. (b) Each Base Rate Loan shall bear interest for each day on which it is outstanding at a rate per annum equal to the Base Rate in effect for such day plus the Applicable Margin in effect for such day. (c) (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum that is equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to Base Rate Loans under the Revolving Credit Facility plus 2%, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount (other than principal) payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to Base Rate Loans under the Revolving Credit Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from and including the 38 date such amount became due to but excluding the date such amount is paid in full (after as well as before judgment). (d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section -------- shall be payable from time to time on demand. 2.16 Computation of Interest and Fees. (a) Interest, fees and -------------------------------- commissions payable pursuant hereto shall calculated on the basis of a 360-day year for the actual days elapsed, except with respect to Base Rate Loans on which interest is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of an Adjusted LIBOR. Any change in the interest rate on a Loan resulting from a change in the Base Rate shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.15(a). 2.17 Inability to Determine Interest Rate. If prior to the first ------------------------------------ day of any Interest Period: (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR for such Interest Period, or (b) the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that the Adjusted LIBOR determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given, (x) unless the Borrower shall have elected (subject to the provisions of Section 2.21), by notice to the Administrative Agent not later than Noon, New York City time, on the scheduled Borrowing Date for such Loans, not to borrow such Loans, any LIBOR Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to LIBOR Loans shall be continued as Base Rate Loans and (z) any outstanding LIBOR Loans under the relevant Facility shall be converted, on the last day of the 39 then current Interest Period with respect thereto, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further LIBOR Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to LIBOR Loans. 2.18 Pro Rata Treatment and Payments. (a) Each borrowing by the ------------------------------- Borrower from the Lenders hereunder, payment by the Borrower on account of any commitment fee or Letter of fee, and any reduction of the Commitments of the Lenders, shall be made pro rata according to the respective Tranche A Term Loan --- ---- Percentages, Tranche B Term Loan Percentages or Revolving Credit Percentages, as the case may be, of the relevant Lenders. Each payment (other than prepayments) in respect of principal or interest in respect of the Term Loans and each payment in respect of fees payable hereunder shall be applied to the amounts of such obligations owing to the Lenders pro rata according to the respective --- ---- amounts then due and owing to the Lenders. (b) Subject to Section 2.18(d), each mandatory prepayment required by Section 2.12 to be applied to Term Loans shall be allocated among the Term Loan Facilities pro rata according to the respective outstanding principal --- ---- amounts of Term Loans under such Facilities. Each optional prepayment in respect of the Term Loans shall be allocated among the Term Loan Facilities pro rata --- ---- according to the respective outstanding principal amounts of Term Loans under such Facilities. Each payment (including each prepayment) of the Term Loans outstanding under any Term Loan Facility shall be allocated among the Term Loan Lenders holding such Term Loans pro rata based on the principal amount of such --- ---- Term Loans held by such Term Loan Lenders, and each prepayment of Term Loans of any Facility shall be applied (i) in the case of optional prepayments pursuant to Section 2.11, first, to the next four scheduled amortization installments for ----- such Term Loans in chronological order and, second, to the remaining scheduled ------ amortization installments for such Term Loans pro rata based on the remaining --- ---- outstanding principal amount of such installments and (ii) in the case of mandatory prepayments pursuant to Section 2.12, shall be applied to the scheduled amortization installments for such Term Loans pro rata based on the --- ---- remaining outstanding principal amount of such installments. Amounts prepaid on account of the Term Loans may not be reborrowed. (c) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal amounts of the - --- ---- Revolving Credit Loans then held by the Revolving Credit Lenders. Each payment in respect of Reimbursement Obligations in respect of any Letter of Credit shall be made to the Issuing Lender that issued such Letter of Credit. (d) Notwithstanding anything to the contrary in Sections 2.11, 2.12 or 2.18(b), so long as any Tranche A Term Loans are outstanding, each Tranche B Term Loan Lender may, at its option, decline up to 100% of the portion of any optional prepayment or mandatory payment applicable to the Tranche B Term Loans of such Lender; accordingly, with respect to the amount of any optional prepayment described in Section 2.11 or any mandatory prepayment described in Section 2.12 that is allocated to Tranche B Term Loans (such amounts, respectively, the "Optional Prepayment Amount" and the "Mandatory Prepayment -------------------------- -------------------- Amount"), at any time when Tranche A Term Loans remain outstanding, the Borrower - ------ will: 40 (i) in the case of any optional prepayment of the Tranche B Term Loans which the Borrower wishes to make, not later than 10 Business Days prior to the date on which the Borrower wishes to make such optional prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Tranche B Term Loan Lender a notice (each, a "Prepayment ---------- Option Notice") as described below; and ------------- (ii) in the case of any mandatory prepayment required to be made pursuant to Section 2.12, on the date specified in Section 2.12 for such prepayment, (A) give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Tranche B Term Loan Lender a Prepayment Option Notice as described below and (B) deposit with the Administrative Agent the Mandatory Prepayment Amount. As promptly as practicable after receiving such notice from the Borrower, the Administrative Agent will send to each Tranche B Term Loan Lender a Prepayment Option Notice, which shall be substantially in the form of Exhibit H, and shall include an offer by the Borrower to prepay on the Prepayment Date the Tranche B Term Loans of such Lender by an amount equal to the portion of the Optional Prepayment Amount or Mandatory Prepayment Amount, as the case may be, indicated in such Lender's Prepayment Option Notice as being applicable to such Lender's Tranche B Term Loans. The "Prepayment Date" in respect of any --------------- Prepayment Option Notice shall be the date which is (i) in the case of a Prepayment Option Notice relating to an optional prepayment, the date on which the Borrower has advised the Administrative Agent that it wishes to make such optional prepayment and (ii) in the case of a Prepayment Option Notice relating to a mandatory prepayment, the date which is three Business Days after the date of such Prepayment Option Notice. On the Prepayment Date: (i) in the case of any optional prepayment, the Borrower shall pay to the Administrative Agent the Optional Prepayment Amount, and the Administrative Agent shall (A) apply the Optional Prepayment toward prepayment of the outstanding Tranche B Term Loans in respect of which Lenders have accepted optional prepayment as described above and (B) apply the remaining portion of the Optional Prepayment Amount not accepted by the Tranche B Term Loan Lenders toward prepayment of the Tranche A Term Loans; and (ii) in the case of any mandatory prepayment, the Administrative Agent shall (A) apply the Mandatory Prepayment Amount toward prepayment of the outstanding Tranche B Term Loans in respect of which Lenders have accepted mandatory prepayment as described above and (B) apply the remaining portion of the Mandatory Prepayment Amount not accepted by the Tranche B Term Loan Lenders toward prepayment of the Tranche A Term Loans. The procedures described above in this paragraph shall not be applicable in the case of a prepayment in full of all Term Loans. 41 (e) The application of any payment of Loans under any Facility (including optional and mandatory prepayments) shall be made, first, to Base ----- Rate Loans under such Facility and, second, to LIBOR Loans under such Facility. ------ Each payment of the Loans shall be accompanied by accrued interest to the date of such payment on the amount paid. (f) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the relevant Lenders, at the Payment Office, in Dollars and in immediately available funds. Any payment made by the Borrower after 1:00 P.M., New York City time, on any Business Day may, at the option of the Administrative Agent, be deemed to have been made on the next following Business Day. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the LIBOR Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a LIBOR Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension. (g) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender's share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans under the relevant Facility, on demand, from the Borrower. (h) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount. If such payment is not --- ---- made to the Administrative Agent by the Borrower within three Business Days after such due date, the 42 Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower. 2.19 Requirements of Law. (a) If the adoption of or any change in ------------------- any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made (x) in the case of any Lender party hereto on the date hereof, subsequent to the date hereof, and (y) in the case of any other Lender, subsequent to the date such Lender became a Lender: (i) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Adjusted LIBOR hereunder; or (ii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining LIBOR Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made (i) in the case of any Lender party hereto on the date hereof, subsequent to the date hereof, and (ii) in the case of any other Lender, subsequent to the date such Lender became a Lender, shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction. 43 (c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (d) Anything in this Section 2.19 to the contrary notwithstanding, the Borrower shall not be obligated to make any payment to any Lender under this Section 2.19 on account of any period or portion thereof prior to the date that is 180 days prior to the date upon which such Lender shall have notified the Borrower in writing of the adoption or change giving rise to such Lender's request for the payment of additional amounts under this Section 2.19. 2.20 Taxes. (a) All payments made by, or on account of any ----- obligation of, the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes, branch profits taxes, franchise taxes and similar taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender by a jurisdiction under the laws of which such Agent or Lender is organized or in which its principal executive office or applicable lending office is located, or as a result of a present or former connection between such Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent's or such Lender's having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non- ---- Excluded Taxes") or any Other Taxes are required by law to be withheld from any - -------------- amounts payable to any Agent or any Lender hereunder, the amounts so payable to such Agent or such Lender shall be increased to the extent necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 2.20(a)) such Agent or Lender receives an amount equal to the sum it would have received had no such deductions or withholdings been made; provided, however, that the -------- ------- Borrower shall not be required to increase any such amounts payable to any Agent or any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender's failure to comply with the requirements of paragraph (d) or (e) of this Section 2.20, (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph (a) or (iii) that relate to any period or portion thereof prior to the date that is 180 days prior to the date upon which such Lender or Agent shall have notified the Borrower in writing of its entitlement under this paragraph (a) to receive additional amounts. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. 44 (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the as promptly as possible thereafter the Borrower shall send to the Administrative Agent for the account of the relevant Agent or Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agents and the Lenders for any incremental taxes, interest or penalties that may become payable by any Agent or any Lender directly as a result of any such failure. The agreements in this Section 2.20 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (d) Each Lender (or Transferee) that is not a corporation, partnership or other entity created or organized in or under the laws of the United States of America (or any jurisdiction thereof) (a "Non-U.S. Lender") --------------- shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, as appropriate, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest" a statement substantially in the form of Exhibit I and a Form W-8BEN, or any subsequent versions thereof or successors thereto properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the expiration, obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver. (e) The Borrower shall indemnify the Administrative Agent and each Lender for the full amount of any Non-Excluded Taxes or Other Taxes paid by the Administrative Agent or such Lender on or with respect to any payment by or on account of any obligation of the Borrower hereunder or under any other Loan Document (including Non-Excluded Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.20) and any penalties, interest and reasonable expenses arising therefrom; provided, however, that the -------- Borrower shall not be obligated to make payment to such Agent or Lender pursuant to this Section in respect of such Non-Excluded Taxes, Other Taxes, interest, penalties or other liabilities (i) if such Non-Excluded Taxes, Other Taxes, interest, penalties or other liabilities are attributable to such Lender's failure to comply with the requirements of paragraph (d) or (e) of this Section, (ii) if such interest or penalties are attributable to the gross negligence or willful misconduct of such Agent or such Lender, (iii) if such taxes are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this 45 Agreement, except to the extent that such Lender's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such United States withholding taxes pursuant to Section 2.20(a), (iv) with respect to a period or portion thereof prior to the date that is 180 days prior to the date upon which such Lender or Agent shall have notified the Borrower in writing of its entitlement to such payment under this paragraph (e) or (v) if, with respect to interest or penalties, such interest or penalties have accrued after the Borrower has indemnified or paid the additional amount in respect of the Non-Excluded Taxes or Other Taxes from which the interest or penalties arose. After an Agent or Lender learns of the imposition of Non-Excluded Taxes or Other Taxes, such Agent or such Lender will act in good faith to promptly notify the Borrower of its obligations hereunder. (f) If any Lender or any Agent receives a refund in respect of any amounts paid by the Borrower pursuant to this Section 2.20, which refund in the good faith judgment of such Lender or Agent is allocable to such payment, it shall promptly notify the Borrower of such refund and shall, within 15 days after receipt, repay such refund (including any interest paid or credited by the relevant taxing or governmental authority with respect to such refund) to the Borrower net of all out-of-pocket expenses of such Lender or such Agent; provided, however, that the Borrower, upon the request of such Lender or such - -------- ------- Agent, agrees to repay the amount paid over to the Borrower to such Lender or such Agent in the event such Lender or such Agent is required to repay such refund. 2.21 Indemnity. The Borrower agrees to indemnify each Lender for, --------- and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of LIBOR Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement, (c) the making of a prepayment or conversion of LIBOR Loans on a day that is not the last day of an Interest Period with respect thereto or (d) any election of the Borrower pursuant to Section 2.17 not to borrow LIBOR Loans. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that - ---- would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.22 Illegality. Notwithstanding any other provision herein, if ---------- the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain LIBOR Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make LIBOR Loans, continue 46 LIBOR Loans as such and convert Base Rate Loans to LIBOR Loans shall forthwith be canceled and (b) such Lender's Loans then outstanding as LIBOR Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a LIBOR Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.21. 2.23 Change of Lending Office. Each Lender agrees that, upon the ------------------------ occurrence of any event giving rise to the operation of Section 2.19 or 2.22, or requiring the Borrower to pay additional amounts pursuant to Section 2.20(a), with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such -------- designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect -------- ------- or postpone any of the obligations of any Borrower or the rights of any Lender pursuant to Section 2.19, 2.20(a) or 2.22. The mere existence of fees, charges, costs or expenses that the Borrower has offered and agreed to pay on behalf of a Lender shall not be deemed to cause a material disadvantage to such Lender. 2.24 Replacement of Lenders under Certain Circumstances. The -------------------------------------------------- Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 2.19 or 2.20 or gives a notice of illegality pursuant to Section 2.22 or (b) defaults in its obligation to make Loans hereunder, with a replacement financial institution; provided that -------- (i) such replacement does not conflict with any Requirement of Law, (ii) prior to any such replacement, such Lender shall have taken no action under Section 2.23 so as to eliminate the continued need for payment of amounts owing pursuant to Section 2.19 or 2.20 or to eliminate the illegality referred to in such notice of illegality given pursuant to Section 2.22, (iii) the replacement financial institution shall purchase, at par, all Loans, interest, fees and other amounts owing to such replaced Lender on or prior to the date of replacement, (iv) the Borrower shall be liable to such replaced Lender under Section 2.21 (as though Section 2.21 were applicable) if any LIBOR Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (v) the replacement financial institution, if not already a Lender, shall be reasonably satisfactory to the Administrative Agent, (vi) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 10.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (vii) the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.19 or 2.20, as the case may be, in respect of any period prior to the date on which such replacement shall be consummated, (viii) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, any Agent or any other Lender shall have against the replaced Lender and (ix) the replaced Lender shall cease to be a Lender hereunder. SECTION 3. LETTERS OF CREDIT 3.1 L/C Commitment. (a) Subject to the terms and conditions -------------- hereof, each Issuing Lender, in reliance on the agreements of the other Revolving Credit Lenders set forth in 47 Section 3.4(a), agrees to issue Trade Letters of Credit or Standby Letters of Credit (the "Letters of Credit") for the joint and several account of the ----------------- Borrower and Holdings or any other of its Subsidiaries on any Business Day during the Revolving Credit Commitment Period in such form as the Borrower shall request that shall be reasonably acceptable to such Issuing Lender; provided -------- that no Issuing Lender shall issue any Letter of Credit if (i) after giving effect to such issuance, (A) the L/C Obligations would exceed the L/C Commitment or (B) the aggregate amount of the Available Revolving Credit Commitments would be less than zero, or (ii) in the case of any Letter of Credit issued for the benefit of any holder of any obligation owing by any member of the Specified Group, the issuance of such Letter of Credit is not permitted under Section 7.8. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) (I) the date which is seven Business Days prior to the Revolving Credit Termination Date, in the case of Standby Letters of Credit or (II) the date which is 30 Business Days prior to the Revolving Credit Termination Date, in the case of Trade Letters of Credit; provided that any Letter of Credit with a one- -------- year term may provide for the automatic renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above). (b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law. 3.2 Procedure for Issuance of Letter of Credit. The Borrower may ------------------------------------------ from time to time request that an Issuing Lender issue a Letter of Credit by delivering to such Issuing Lender at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of such Issuing Lender, and such other customary certificates, documents and other papers and information as such Issuing Lender may reasonably request. Upon receipt of any Application, an Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower (but in no event shall any Issuing Lender be required without its consent to issue any Letter of Credit earlier than three Business Days (or, in the case of any Trade Letter of Credit, five Business Days) after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto). Promptly after issuance by an Issuing Lender of a Letter of Credit, such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower. Each Issuing Lender shall promptly give notice to the Administrative Agent of the issuance of each Letter of Credit issued by such Issuing Lender (including the amount thereof). 3.3 Fees and Other Charges. (a) The Borrower will pay a fee, for ---------------------- each day on which there shall be any Letters of Credit outstanding, on the aggregate drawable amount on such day of all outstanding Letters of Credit at a per annum rate equal to (i) in the case of Standby Letters of Credit, the Applicable Margin then in effect with respect to LIBOR Loans under the Revolving Credit Facility and (ii) in the case of Trade Letters of Credit, 50% of the Applicable Margin then in effect with respect to LIBOR Loans under the Revolving Credit Facility, such fee in each case to be shared ratably among the Revolving Credit Lenders in accordance with their respective Revolving Credit Percentages and payable quarterly in arrears 48 on each L/C Fee Payment Date. In addition, the Borrower shall pay to the relevant Issuing Lender for its own account, for each day on which there shall be any Letters of Credit issued by such Issuing Lender outstanding, a fronting fee on the aggregate drawable amount on such day of all outstanding Letters of Credit issued by it at the percentage per annum rate agreed upon from time to time by the Borrower and such Issuing Lender, payable quarterly in arrears on each L/C Fee Payment Date. (b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit. 3.4 L/C Participations. (a) Each Issuing Lender irrevocably ------------------ agrees to grant and hereby grants to each L/C Participant, and, to induce each Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from each Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk, an undivided interest equal to such L/C Participant's Revolving Credit Percentage in each Issuing Lender's obligations and rights under each Letter of Credit issued by such Issuing Lender hereunder and the amount of each draft paid by such Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with each Issuing Lender that, if a draft is paid under any Letter of Credit issued by such Issuing Lender for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to such Issuing Lender upon demand at such Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's Revolving Credit Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. Each L/C Participant acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit, any failure to satisfy the conditions to making any Revolving Extension of Credit (including those set forth in Section 5), the occurrence and continuance of a Default or an Event of Default or the reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (b) If any amount required to be paid by any L/C Participant to an Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is not paid to such Issuing Lender on the date such payment is due, such L/C Participant shall pay to such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to such Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans under the Revolving Credit Facility. A 49 certificate of such Issuing Lender submitted to any L/C Participant with respect to any such amounts owing under this Section shall be conclusive in the absence of manifest error. (c) Whenever, at any time after an Issuing Lender has made payment of a drawing under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), such --- ---- Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender will distribute to such L/C Participant its pro --- rata share thereof; provided, however, that in the event that any such payment - ---- -------- ------- received by such Issuing Lender shall be required to be returned by such Issuing Lender, such L/C Participant shall return to such Issuing Lender the portion thereof previously distributed by such Issuing Lender to it. 3.5 Reimbursement Obligation of the Borrower. The Borrower agrees ---------------------------------------- to reimburse each Issuing Lender for the amount of (a) any draft paid by such Issuing Lender under a Letter of Credit issued by such Issuing Lender and (b) any taxes, fees, charges or other costs or expenses incurred by such Issuing Lender in connection with such payment (the amounts described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the "Payment ------- Amount"); each such reimbursement shall be made on the later of (i) the Business - ------ Day following the date of such notice and (ii) the date upon which such payment is made by such Issuing Lender. Each such payment shall be made to such Issuing Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds. Interest shall be payable on each Payment Amount from the date of the applicable drawing until payment is made in full (x) until the second Business Day following the date of the applicable notice by the Issuing Lender, at the rate set forth in Section 2.15(b) in respect of Revolving Credit Loans that are Base Rate Loans and (y) thereafter, at the rate set forth in Section 2.15(c). Each drawing under any Letter of Credit shall (unless (I) an event of the type described in clause (i) or (ii) of Section 8(f) shall have occurred and be continuing with respect to the Borrower, in which case the procedures specified in Section 3.4 for funding by L/C Participants shall apply or (II) the Borrower shall have notified the Administrative Agent prior to Noon, New York City time, on the date upon which such borrowing of Base Rate Loans would otherwise be made that it does not wish to make such a borrowing of Base Rate Loans) constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to Section 2.5 of Base Rate Loans in the Payment Amount in respect of such drawing. The Borrowing Date with respect to such borrowing shall be the date on which the Borrower is required to pay such Payment Amount pursuant to this Section 3.5. Each Revolving Credit Lender acknowledges and agrees that its obligation to make Base Rate Loans in respect of unreimbursed drawings under Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit, any failure to satisfy the conditions to making any Revolving Extension of Credit (including those set forth in Section 5), the occurrence and continuance of a Default or an Event of Default (other than the occurrence and continuance of an event of the type described in clause (i) or (ii) of Section 8(f) with respect to the Borrower) or the reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. 3.6 Obligations Absolute. The Borrower's obligations under this -------------------- Section 3 shall, to the fullest extent permitted under applicable law, be absolute and unconditional under 50 any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower's Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Issuing Lender. The Borrower agrees that any action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit issued by it or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards or care specified in the Uniform Commercial Code of the State of California and the "Uniform Customs and Practices for Documentary Credit (1993 Revision), International Chamber of Commerce, Publication No. 500," or by later Uniform Customs and Practices fixed by later Congresses of the International Chamber of Commerce as in effect on the date the Letter of Credit is issued (provided, -------- however, that to the extent any conflict exists between such Uniform Commercial - ------- Code and such Uniform Customs and Practices then in effect, Division 5 of such Uniform Commercial Code shall govern), shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower. 3.7 Letter of Credit Payments. If any draft shall be presented for ------------------------- payment under any Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the relevant Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit, in addition to any payment obligation expressly provided for in such Letter of Credit issued by such Issuing Lender, shall be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment appear on their face to be in conformity with such Letter of Credit. 3.8 Applications. To the extent that any provision of any Application ------------ related to any Letter of Credit is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall apply. SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, Holdings and the Borrower hereby jointly and severally represent and warrant to each Agent and each Lender that: 4.1 Financial Condition. (a) The unaudited pro forma consolidated and ------------------- --- ----- consolidating balance sheets of Holdings and its consolidated Subsidiaries as at September 30, 51 2001 (including the notes thereto) (collectively, the "pro forma balance ----------------- sheets"), copies of which have heretofore been furnished to each lender, have - ------ been prepared giving effect (as if such events had occurred on such date) to (i) the consummation of the acquisition, (ii) the loans to be made on the initial funding date and the use of proceeds thereof and (iii) the payment of fees and expenses in connection with the foregoing. the pro forma balance sheets have been prepared based on the best information available to holdings as of the date of delivery thereof, and present fairly the pro forma consolidated and --- ----- consolidating financial position of holdings and its consolidated subsidiaries as at september 30, 2001, as if the events specified in the preceding sentence had actually occurred at such date. (b) The audited consolidated balance sheets of Holdings and its consolidated Subsidiaries as at December 31, 1999 and December 31, 2000, and the consolidated statements of income and cash flows for the fiscal years ended on December 31, 1998, December 31, 1999 and December 31, 2000, included in Holdings' annual report on Form 10-K for the fiscal year ended December 31, 2000 as filed with the SEC, present fairly the consolidated financial condition of Holdings and its consolidated Subsidiaries as at December 31, 1999 and December 31, 2000, and the consolidated results of their operations and their consolidated cash flows for the fiscal years ended December 31, 1998, December 31, 1999 and December 31, 2000. The unaudited consolidated and consolidating balance sheets of Holdings and its consolidated Subsidiaries as at September 30, 2001, and the related unaudited consolidated and consolidating statements of income and cash flows for the nine-month period ended on such date, present fairly the consolidated and consolidating financial condition of Holdings and its consolidated Subsidiaries as at such date, and the consolidated and consolidating results of their operations and their consolidated cash flows for the nine-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by Holdings' independent certified public accountants and disclosed therein). Holdings and its Subsidiaries do not have any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph. During the period from December 31, 2000 to and including the date hereof there has been no Disposition by Holdings or any of its Subsidiaries of any material part of its business or Property. (c) During the period from September 30, 2001 to and including the date hereof there has been no Disposition by Lucent of any material portion of the Acquired Assets, except as permitted hereunder or contemplated by the Acquisition Documentation. 4.2 No Change. Since December 31, 2000 there has been no development --------- or event that has had or could reasonably be expected to have a Material Adverse Effect. 4.3 Corporate Existence; Compliance with Law. Each of Holdings and ---------------------------------------- its Subsidiaries (other than the Inactive Subsidiaries) (a) is duly organized, validly existing and, to the extent applicable, in good standing under the laws of the jurisdiction of its organization, (b) has the corporate power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the business in which it is currently 52 engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its business requires such qualification and (d) is in compliance with all Requirements of Law except to the extent that the failure to be in good standing, to have any such corporate power or legal right, to be so qualified or to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 4.4 Corporate Power; Authorization; Enforceable Obligations. Each ------------------------------------------------------- Loan Party has the corporate power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary corporate action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 4.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect and (ii) the filings referred to in Section 4.19. Each Loan Document has been duly executed and delivered on behalf of each Loan Party that is a party thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto, enforceable against each such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer or similar laws affecting creditors' rights generally and to general equitable principles (whether enforcement is sought by proceedings in equity or at law). 4.5 No Legal Bar. The execution, delivery and performance of this ------------ Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of Holdings or any of its Subsidiaries that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents). No Requirement of Law or Contractual Obligation applicable to Holdings or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect. 4.6 No Material Litigation. No litigation, investigation or ---------------------- proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Holdings or the Borrower, threatened by or against Holdings or any of its Subsidiaries or against any of their respective properties or revenues that could reasonably be expected to have a Material Adverse Effect. 4.7 No Default. Neither Holdings nor any of its Subsidiaries is in ---------- default under or with respect to any of its Contractual Obligations (including under any Customer Service Agreement) in any respect that could reasonably be expected to have a Material Adverse Effect. To Holdings' or the Borrower's knowledge, no customer or other Person party thereto is 53 in default under or with respect to any of its Contractual Obligations under any Customer Service Agreement in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 4.8 Ownership of Property; Liens. Each of Holdings and its ---------------------------- Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other Property, except to the extent that the failure to have any such title or leasehold interests would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and none of such Property is subject to any Lien except as permitted by Section 7.3. 4.9 Intellectual Property. Other than any exception to the following --------------------- that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) Holdings and each of its Subsidiaries owns, or is licensed to use, all Intellectual Property used in the conduct of its business as currently conducted, (ii) no claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property used in the conduct of the business of Holdings or such Subsidiary or the validity, effectiveness or ownership of any such Intellectual Property, nor does Holdings or the Borrower know of any valid basis for any such claim and (iii) the use of such Intellectual Property by Holdings and its Subsidiaries does not infringe on the rights of any Person. There is no infringement or, to Holdings' or the Borrower's knowledge, claim of infringement by any Person of any Intellectual Property owned, licensed or sublicensed by Holdings or any of its Subsidiaries, except for such claims or infringements that could not reasonably be expected to have or result in a Material Adverse Effect. 4.10 Taxes. Each of Holdings and each of its Subsidiaries has filed ----- or caused to be filed all United States Federal income tax returns and other material state and other material tax returns that are required to be filed by it and has paid all material taxes shown to be due and payable on such returns or on any assessments made against it (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Holdings or its Subsidiaries, as the case may be); and no state or other material tax Lien has been filed, and, to the knowledge of Holdings and the Borrower, no claim is being asserted, with respect to any tax, fee or other charge, except any such claim which the Borrower, in consultation with its legal counsel and independent accountants, has determined in good faith would not reasonably be expected to have a Material Adverse Effect. 4.11 Federal Regulations. No part of the proceeds of any Loans will be ------------------- used in violation of Regulation U as now and from time to time hereafter in effect. 4.12 Labor Matters. There are no strikes or other labor disputes ------------- against Holdings or any of its Subsidiaries pending or, to the knowledge of Holdings or the Borrower, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of Holdings and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. All payments due from Holdings or 54 any of its Subsidiaries on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of Holdings or the relevant Subsidiary. 4.13 ERISA. Other than exceptions to any of the following that would ----- not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code, (b) no termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period, (c) the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a material amount, (d) neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability under ERISA, (e) neither the Borrower nor any Commonly Controlled Entity would become subject to any material liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made and (f) no such Multiemployer Plan is in Reorganization or Insolvent. 4.14 Investment Company Act; Other Regulations. No Loan Party is an ----------------------------------------- "investment company" within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) which limits its ability to incur Indebtedness under this Agreement and the other Loan Documents. 4.15 Subsidiaries. (a) The Subsidiaries listed on Schedule 4.15 ------------ constitute all the Subsidiaries of Holdings at the date hereof. Schedule 4.15 sets forth as of the Closing Date the name and jurisdiction of incorporation of each Subsidiary of Holdings and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by each Loan Party. (b) As of the Closing Date, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors' qualifying shares) of any nature relating to any Capital Stock of any Subsidiary of Holdings, except as disclosed on Schedule 4.15. 4.16 Use of Proceeds. The proceeds of the Term Loans shall be used to --------------- finance a portion of the cost of the Acquisition, to pay related fees and expenses, to refinance certain existing Indebtedness of Holdings and its Subsidiaries and to finance the general corporate purposes of Holdings and its Subsidiaries. The proceeds of the Revolving Credit Loans and the Letters of Credit shall be used to refinance certain existing Indebtedness of the Borrower and its Subsidiaries, to pay fees and expenses related to the Acquisition and for general corporate purposes of Holdings and its Subsidiaries. 55 4.17 Environmental Matters. Other than exceptions to any of the --------------------- following that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (a) Holdings and its Subsidiaries: (i) are, and within the period of all applicable statutes of limitation have been, in compliance with all applicable Environmental Laws; (ii) hold all Environmental Permits (each of which is in full force and effect) required for any of their current or intended operations or for any property owned, leased, or otherwise operated by any of them; (iii) are, and within the period of all applicable statutes of limitation have been, in compliance with all of their Environmental Permits; and (iv) reasonably believe that: each of their Environmental Permits will be timely renewed and complied with, without material expense; any additional Environmental Permits that may be required of any of them will be timely obtained and complied with, without material expense; and compliance with any Environmental Law that is or is expected to become applicable to any of them will be timely attained and maintained, without material expense. (b) To the knowledge of Holdings and its Subsidiaries, no Materials of Environmental Concern (i) are present at, on, under, in, or about any real property now owned, leased or operated by Holdings or any of its Subsidiaries, or (ii) were present at any formerly owned, leased or operated property during the period of such ownership, lease or operation by Holdings or its Subsidiaries or (iii) are present at any other location (including, without limitation, any location to which Materials of Environmental Concern have been sent for re-use or recycling or for treatment, storage, or disposal) which, in the case of any clause (i), (ii) or (iii), would reasonably be expected to (A) give rise to liability of Holdings or any of its Subsidiaries under any applicable Environmental Law or otherwise result in costs to Holdings or any of its Subsidiaries, (B) interfere with the continued operations of Holdings or any of its Subsidiaries, or (C) impair the fair saleable value of any real property owned or leased by Holdings or any of its Subsidiaries. For purposes of Section 8 of this Agreement (Events of Default), each of the foregoing representations and warranties in this Section 4.17(b) that are qualified by the knowledge of Holdings and its Subsidiaries shall be deemed not to be so qualified. (c) There is no judicial, administrative, or arbitral proceeding (including any notice of violation or alleged violation) under or relating to any Environmental Law to which Holdings or any of its Subsidiaries is, or to the knowledge of Holdings or any of its Subsidiaries will be, named as a party that is pending or, to the knowledge of Holdings or any of its Subsidiaries, threatened. (d) Neither Holdings nor any of its Subsidiaries has received any written request for information, or been notified that it is a potentially responsible party under or relating to the federal Comprehensive Environmental Response, Compensation, and Liability Act or any similar Environmental Law, or with respect to any Materials of Environmental Concern. (e) Neither Holdings nor any of its Subsidiaries has entered into or agreed to any consent decree, order, or settlement or other agreement, or is subject to any judgment, decree, or order or other agreement, in any judicial, administrative, arbitral, or other forum for dispute resolution, relating to compliance with or liability under any Environmental Law. 56 (f) Neither Holdings nor any of its Subsidiaries has assumed or retained, by contract or operation of law, any liabilities of any kind, fixed or contingent, known or unknown, under any Environmental Law or with respect to any Material of Environmental Concern. 4.18 Accuracy of Information, etc. The statements and information ---------------------------- contained in this Agreement, the other Loan Documents, the Confidential Information Memorandum (subject, in the case of Appendix D thereto, to the limitations and disclaimers set forth in such Appendix D) and the other documents, certificates and statements furnished in writing to the Agents or the Lenders or any of them, by or on behalf of any Loan Party for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, taken as a whole, did not contain as of the date any such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained in the materials --- ----- referenced above are based upon good faith estimates and assumptions believed by management of Holdings and the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. 4.19 Security Documents. The Guarantee and Collateral Agreement is ------------------ effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid security interest in the Collateral described therein and proceeds thereof. In the case of the Pledged Stock described in the Guarantee and Collateral Agreement, when any stock certificates representing such Pledged Stock are delivered to the Administrative Agent, duly indorsed to the Administrative Agent in blank, and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when financing statements in appropriate form are filed in the offices specified on Schedule 4.19(a)-1 and such other filings and other actions as are specified on Schedule 3 to the Guarantee and Collateral Agreement have been completed (the instruments required for all of which filings and other actions have been, or within 30 days after the Initial Funding Date will be, duly completed and delivered to the Administrative Agent), the security interest created under the Guarantee and Collateral Agreement in the Collateral described therein (other than the Excluded Collateral) shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case prior and superior in right to any other Person (except, in the case of Collateral other than Pledged Stock, Liens permitted by Section 7.3). Schedule 4.19(a)-2 lists, as of the Closing Date, each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will remain on file after the Initial Funding Date. Schedule 4.19(a)-3 lists, as of the Closing Date, each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will be terminated on or prior to the Initial Funding Date; and on or prior to the Initial Funding Date, the Borrower will have delivered to the Administrative Agent, or caused to be filed, duly completed UCC termination statements, signed by the relevant secured party, in respect of each UCC Financing Statement listed in Schedule 4.19(a)-3. 57 4.20 Solvency. On the Closing Date, (i) Holdings and its -------- Subsidiaries, on a consolidated basis, are Solvent and (ii) after giving pro --- forma effect to the Acquisition and the incurrence of all Indebtedness and - ----- obligations being incurred in connection herewith and therewith as if such Acquisition had been consummated and such Indebtedness and obligations had been incurred on the Closing Date, Holdings and its Subsidiaries, on a consolidated basis, would be Solvent. 4.21 AT&T Customer Services Agreement. The financial minimum revenues -------------------------------- receivable by the Borrower and its Subsidiaries pursuant to Section 30 of the AT&T Customer Services Agreement, as in effect on the Closing Date, are not less than $116,800,000 for any full calendar year prior to the termination date of the AT&T Customer Services Agreement as in effect on the Closing Date. 4.22 Date of Representations and Warranties. The representations and -------------------------------------- warranties set forth in this Section 4 shall be deemed made as of the Closing Date (provided that the representation and warranty set forth in Section 4.2 -------- will be deemed made as of December 21, 2001 and not as of the Closing Date) and as of the date of each Revolving Extension of Credit hereunder (except for any such representations and warranties that are stated to relate to a particular date or dates, in which case such representations and warranties shall be deemed made as of such particular date or dates). The representations and warranties referred to in Section 5.3(b)(i) shall be deemed made as of the Initial Funding Date (except for any such representations and warranties that are stated to relate to a particular date or dates, in which case such representations and warranties shall be deemed made as of such particular date or dates). SECTION 5. CONDITIONS PRECEDENT 5.1 Conditions to Closing Date. Subject to Section 10.18, this -------------------------- Agreement shall become binding upon the parties hereto upon the satisfaction of the following conditions precedent: (a) Loan Documents. The Administrative Agent shall have received (i) -------------- this Agreement, executed and delivered by a duly authorized officer of Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement, executed and delivered by a duly authorized officer of Holdings, the Borrower and each Subsidiary Guarantor and (iii) a Lender Addendum, executed and delivered by each Lender and accepted by the Borrower. (b) Pro Forma Balance Sheets; Financial Statements. The Lenders ---------------------------------------------- shall have received (i) the Pro Forma Balance Sheets, (ii) the financial statements of Holdings and its consolidated Subsidiaries referred to in Section 4.1(b) and (iii) unaudited interim consolidated financial statements of Holdings and its consolidated Subsidiaries for each quarterly period ended subsequent to the date of the latest applicable financial statements delivered pursuant to clause (ii) of this paragraph as to which such financial statements are available. (c) Acquired Assets Audit. The Administrative Agent shall have --------------------- received from a Responsible Officer of Holdings a certificate, dated the Closing Date, as to the matters set forth in Section 4.1(c). 58 (d) Related Agreements. The Administrative Agent shall have ------------------ received true and correct copies, certified as to authenticity by Holdings, of (i) the then existing Acquisition Documentation (any material modifications to which made after December 21, 2001 to be reasonably satisfactory to the Administrative Agent and the Syndication Agent), (ii) the Existing Credit Agreement and (iii) such other material documents or instruments as may be reasonably requested by any Agent at least two Business Days prior to the Closing Date. (e) Lien Searches. The Administrative Agent shall have received ------------- the results of a recent lien search in each of the jurisdictions in which Uniform Commercial Code financing statement or other filings or recordations should be made to evidence or perfect security interests in all material personal property assets of the Loan Parties (other than motor vehicles, aircraft and non-U.S. Intellectual Property), and such search shall reveal no material liens on any of the assets of the Loan Parties, except for Liens securing obligations under the Existing Credit Agreement and Liens permitted by Section 7.3. (f) Filings, Registrations and Recordings. Each document (including, ------------------------------------- without limitation, any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 7.3), shall have been delivered to the Administrative Agent in proper form for filing, registration or recordation (it being understood and agreed that the Administrative Agent will not file, register or record any such document prior to the Initial Funding Date). (g) Pledged Stock; Stock Powers; Acknowledgment and Consent; Pledged ---------------------------------------------------------------- Notes. The Administrative Agent shall have received (i) the certificates - ----- representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note pledged pursuant to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank satisfactory to the Administrative Agent) by the pledgor thereof (it being understood that, prior to the Initial Funding Date, the Administrative Agent shall hold all such Collateral in its capacity as administrative agent under the Existing Credit Agreement). (h) Corporate Structure. The Administrative Agent and the ------------------- Syndication Agent shall have completed a satisfactory review of the corporate legal structure of Holdings and its Subsidiaries to confirm that Holdings and its Subsidiaries are, and upon consummation of the Acquisition will continue to be, in compliance with the requirements of Section 6.11. (i) Tax Sharing Agreement. Holdings and the Borrower shall have --------------------- entered into, and the Administrative Agent and the Syndication Agent shall have received a copy of, the Tax Sharing Agreement. (j) Absence of Litigation. There shall exist no pending or, to the --------------------- knowledge of Holdings or the Borrower, overtly threatened litigation, investigation or proceeding of or before any arbitrator or Governmental Authority that purports to directly affect the Facilities or 59 any of the Loan Documents, and the Administrative Agent shall have received a certificate, dated the Closing Date, of a Responsible Officer of Holdings to such effect. (k) Fees. (i) The Lenders, the Agents and the Arrangers shall have ---- received all fees required to be paid on or before the Closing Date and (ii) the Administrative Agent shall have received reimbursement of all out-of-pocket expenses (including reasonable fees, disbursements and other charges of counsel to the Administrative Agent and the Syndication Agent) of the Administrative Agent, the Syndication Agent and the Arrangers payable by the Borrower in connection with the Facilities for which invoices have been presented at least one Business Day before the Closing Date. (l) Closing Certificate. The Administrative Agent shall have ------------------- received a certificate of each Loan Party, dated the Closing Date, substantially in the form of Exhibit C, with appropriate insertions and attachments. (m) Legal Opinions. The Administrative Agent shall have received -------------- the following executed legal opinions: (i) the legal opinion of Davis Polk & Wardwell, counsel to Holdings and its Subsidiaries, substantially in the form of Exhibit F-1; (ii) the legal opinion of Joseph Ruble, Esq., general counsel of Holdings and the Borrower, substantially in the form of Exhibit F-2; and (iii) the legal opinion of local counsel of such special and local counsel as may be required by the Administrative Agent. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require. 5.2 Conditions to Initial Funding Date. The agreement of each ---------------------------------- Lender to make the initial extension of credit requested to be made by it hereunder is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Initial Funding Date, of the following conditions precedent: (a) Acquisition. The Acquisition shall have been consummated ----------- pursuant to the Acquisition Documentation, the Administrative Agent shall have received true and correct copies, certified as to authenticity by Holdings, of any Acquisition Documentation not previously furnished to the Administrative Agent, and no material provision or condition of the Acquisition Documentation shall have been waived, amended, supplemented or otherwise modified unless consented to by the Required Lenders. (b) Payment of Amounts Under Existing Credit Agreement; Other --------------------------------------------------------- Indebtedness. The Administrative Agent shall have received evidence - ------------ satisfactory to it that (i) all amounts owing under the Existing Credit Agreement (other than amounts that are deemed to be Loans made under this Agreement pursuant to Section 10.18) shall have been, or shall substantially simultaneously be, paid in full and (ii) Holdings and its Subsidiaries have no other outstanding Indebtedness, other than Indebtedness permitted by Section 7.2. 60 (c) Fees. (i) The Lenders, the Agents and the Arrangers shall have ---- received all fees required to be paid on or before the Initial Funding Date and (ii) the Administrative Agent shall have received reimbursement of all out-of- pocket expenses (including reasonable fees, disbursements and other charges of counsel to the Administrative Agent and the Syndication Agent) of the Administrative Agent, the Syndication Agent and the Arrangers payable by the Borrower in connection with the Facilities for which invoices have been presented at least one Business Day before the Initial Funding Date. (d) Approvals. All governmental and material third party approvals --------- necessary or advisable in connection with the Acquisition, the continuing operations of Holdings and its Subsidiaries and the transactions contemplated hereby shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose materially adverse conditions on the Acquisition or the financing contemplated hereby, and the Administrative Agent shall have received a certificate of a Responsible Officer of Holdings to the foregoing effect. 5.3 Conditions to Each Extension of Credit. (a) The agreement of each -------------------------------------- Revolving Credit Lender to make any Revolving Extension of Credit requested to be made by it hereunder, and the agreement of each Issuing Lender to issue any Letter of Credit requested to be issued by it hereunder, on any date (including, without limitation, its initial Revolving Extension of Credit) is subject to the prior or simultaneous satisfaction of the conditions precedent set forth in Sections 5.1 and 5.2 and the satisfaction of the following additional conditions precedent: (i) Representations and Warranties. Each of the representations and ------------------------------ warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date after giving effect to the extensions of credit requested to be made on such date (except for any such representations and warranties that are stated to relate to a particular date or dates, in which case such representations and warranties shall be true and correct as of such particular date or dates). (ii) No Default. No Default or Event of Default shall have occurred ---------- and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date. (b) The agreement of each Term Loan Lender to make Term Loans on the Initial Funding Date is subject to the prior or simultaneous satisfaction of the conditions precedent set forth in Sections 5.1 and 5.2 and the satisfaction of the following conditions precedent: (i) Representations and Warranties. Each of the representations and ------------------------------ made by Holdings and the Borrower pursuant to Sections 4.3, 4.4, 4.5, 4.11, 4.14, 4.16, 4.18 and 4.19 shall be true and correct in all material respects on and as of such date as if made on and as of such date after giving effect to the making of the Term Loans on such date (except for any such representations and warranties that are stated to 61 relate to a particular date or dates, in which case such representations and warranties shall be true and correct as of such particular date or dates). (ii) No Default. No Event of Default shall have occurred and be ---------- continuing under Section 8(a), 8(e), 8(f), or 8(l), or under Section 8(c) arising out of a volitional violation by Holdings or any of its Subsidiaries of any covenant in Section 7, on the Initial Funding Date, after giving effect to the making of the Term Loans on such date (it being understood and agreed that, for purposes of this Section 5.3(b)(ii), the provisions of Section 7 shall be deemed to be effective immediately prior to the making of the Term Loans but after giving pro forma effect to the making of the Term Loans, the application of the proceeds thereof and the consummation of the Acquisition). (c) Each borrowing by an d issuance of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the applicable conditions contained in this Section 5.3 have been satisfied. SECTION 6. AFFIRMATIVE COVENANTS Holdings and the Borrower hereby jointly and severally agree that, from and after the Initial Funding Date and so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or any Agent hereunder, each of Holdings and the Borrower shall and shall cause each of its Subsidiaries to: 6.1 Financial Statements. Furnish to the Administrative Agent for -------------------- delivery to each Lender (and the Administrative Agent agrees to make such delivery): (a) as soon as available, but in any event within 90 days after the end of each fiscal year of Holdings, a copy of the audited consolidated balance sheets of (i) Holdings and its consolidated Subsidiaries and (ii) the Borrower and its consolidated Subsidiaries and unaudited consolidating balance sheets of Holdings and its consolidated Subsidiaries as at the end of such year and the related audited consolidated and unaudited consolidating statements of income and cash flows for such year, setting forth in the case of such consolidated statements in comparative form the figures as of the end of and for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing; and (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of Holdings beginning with the fiscal quarter of Holdings ending on June 30, 2002, the unaudited consolidated balance sheets of (i) Holdings and its consolidated Subsidiaries and (ii) the Borrower and its consolidated Subsidiaries and consolidating balance sheets of Holdings and its consolidated Subsidiaries as at the end of such quarter, the related unaudited consolidated and consolidating statements of income for such quarter and the related unaudited consolidated and consolidating statements of income and cash flows for the portion of the fiscal year through the end of such quarter, setting forth in the case of such consolidated statements in comparative form the figures as of the end of and for the corresponding period in the previous year, certified by a Responsible Officer of 62 Holdings as being fairly stated in all material respects (subject to the absence of certain footnote information and normal year-end audit adjustments); all such financial statements to be complete and correct in all material respects and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 6.2 Certificates; Other Information. Furnish to the Administrative ------------------------------- Agent for delivery to each Lender (and the Administrative Agent agrees to make such delivery), or, in the case of clause (g), furnish to the relevant Lender: (a) concurrently with the delivery of the financial statements referred to in Section 6.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate (it being understood that such certificate shall be limited to the items that independent certified public accountants are permitted to cover in such certificates pursuant to their professional standards and customs of the profession); (b) concurrently with the delivery of any financial statements pursuant to Section 6.1, (i) a certificate of a Responsible Officer of Holdings stating that such Responsible Officer has obtained no knowledge of any Default or Event of Default that has occurred and is continuing except as specified in such certificate, (ii) a Compliance Certificate containing (A) all information and calculations necessary for determining compliance by Holdings, the Borrower and their respective Subsidiaries with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of Holdings, as the case may be, and (B) to the extent not previously disclosed to the Administrative Agent, a listing of any Intellectual Property acquired, and any Subsidiary formed or acquired, by any Loan Party since the date of the most recent list delivered pursuant to this clause (B) (or, in the case of the first such list so delivered, since the Closing Date), (iii) to the extent not previously delivered to the Administrative Agent other filings or documents required by Section 6.9 in respect of any newly-acquired Intellectual Property or newly-acquired or formed Subsidiary specified in such Compliance Certificate and (iv) a report setting forth for such period the beginning total subscribers serviced by the Borrower and its Subsidiaries, new subscribers (detailed by major Customer Services Client) added by the Borrower and its Subsidiaries during such period, and deconverted subscribers (detailed by major Customer Services Client) whose servicing by the Borrower and its Subsidiaries was terminated during such period; (c) as soon as available, and in any event no later than 45 days after the beginning each fiscal year of Holdings, a detailed consolidated budget for such fiscal year (including projected consolidated and consolidating balance sheets of Holdings and its Subsidiaries as of the end of such fiscal year, and the related consolidated and consolidating statements of projected income and cash flows, in each case set forth on a quarterly basis) and a forecasted statement of operations through the earlier of the end of the fourth full fiscal year after such fiscal year or the maturity date of the Tranche B Loans set forth on an annual basis, and including a substantive description of each of the material underlying assumptions used in 63 preparing such budget, projections and forecast, and, as soon as available, significant revisions, if any, of such budget, projections and forecast with respect to such fiscal year and five-year period (collectively, the "Projections"), which Projections shall in each case be accompanied by a ----------- certificate of a Responsible Officer of Holdings stating that such Projections are based on reasonable estimates, information and assumptions; (d) no later than two Business Days prior to the effectiveness thereof, copies of substantially final drafts of any proposed amendment, supplement, waiver or other modification with respect to the Acquisition Agreement; (e) within five days after the same are sent, copies of all financial statements and reports that Holdings or any of its Subsidiaries sends to the holders of any class of its public debt securities or equity securities and, within five days after the same are filed, copies of all financial statements and reports that Holdings or any of its Subsidiaries may make to, or file with, the SEC; (f) as soon as possible and in any event within 30 days of obtaining knowledge thereof, notice of any litigation, proceeding, complaint, written request for information or other notification that would reasonably be expected to result in the payment by Holdings and its Subsidiaries of a Material Environmental Amount; and (g) promptly, such additional financial and other information as any Lender may from time to time reasonably request through the Administrative Agent. 6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or ---------------------- before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where (i) the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of Holdings or its Subsidiaries, as the case may be, or (ii) such failures to pay, discharge or otherwise satisfy would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. 6.4 Conduct of Business and Maintenance of Existence, etc. (a) (i) ----------------------------------------------------- Preserve, renew and keep in full force and effect its corporate existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 7.4 and except, in the case of clause (ii) above, to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law, except to the extent that failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 6.5 Maintenance of Property; Insurance. (a) Except to the extent that ---------------------------------- failure to do so would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, keep all Property and systems useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and (b) maintain with financially sound and reputable insurance companies insurance on all its Property in at least such amounts and against at least such risks (but including in any event public liability, product 64 liability and business interruption), and with no more than such risk retentions, as are usually insured against in the same general area by companies of similar size engaged in the same or a similar business. 6.6 Inspection of Property; Books and Records; Discussions. (a) Keep ------------------------------------------------------ proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) (i) unless an Event of Default shall have occurred and be continuing, no more frequently than once in each calendar year or (ii) if an Event of Default shall have occurred and be continuing, as often as may reasonably be desired, and in any case upon notice to Holdings or its applicable Subsidiary, during normal business hours permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and to discuss the business, operations, properties and financial and other condition of Holdings and its Subsidiaries with officers and employees of Holdings and its Subsidiaries, so long as the applicable Lender shall have given Holdings reasonable notice thereof and a reasonable opportunity to participate therein, and with its independent certified public accountants. 6.7 Notices. Promptly, but in any event within five (or, in the case ------- of clause (c) or (d) below, 30) days after a Responsible Officer of Holdings or the Borrower shall have become aware thereof, give notice to the Administrative Agent (and the Administrative Agent agrees to deliver such notice to the Lenders) of: (a) the occurrence of any Default or Event of Default that shall then be continuing; (b) any termination (including any optional termination) of any Material Customer Services Agreement; (c) any (i) default or event of default under any Contractual Obligation of Holdings or any of its Subsidiaries, (ii) assertion or receipt of notice of a claim of infringement of Intellectual Property rights, whether or not a Dollar amount is associated with such assertion or claim or (iii) litigation, investigation or proceeding which may exist at any time between Holdings or any of its Subsidiaries and any Governmental Authority, that in any such case, if not cured or in which there is a reasonable possibility of an adverse determination that, as the case may be, would reasonably be expected to have a Material Adverse Effect; (d) any litigation or proceeding affecting Holdings or any of its Subsidiaries in which the amount involved is $15,000,000 or more (whether or not covered by insurance) or in which injunctive or similar relief is sought, except any such litigation which the Borrower, in consultation with its counsel, has determined in good faith would not reasonably be expected to have a Material Adverse Effect; (e) (i) the occurrence of any Reportable Event with respect to any Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity 65 or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan that in any such case would reasonably be expected to have a Material Adverse Effect; and (f) any development or event that has had or would reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Holdings or the Borrower setting forth details of the occurrence referred to therein and stating what action, if any, Holdings or the relevant Subsidiary proposes to take with respect thereto. 6.8 Environmental Laws. Comply with, and use reasonable efforts to ------------------ ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply with and maintain, and ensure, through the use of reasonable efforts, that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, except, in each case, where the failure to do so would not reasonably be expected to have a Material Adverse Effect. 6.9 Additional Collateral, etc. (a) With respect to any Property -------------------------- acquired after the Closing Date by Holdings or any of its Domestic Subsidiaries (other than (w) any Property described in paragraph (b), (c) or (e) of this Section, (x) any Property subject to a Lien expressly permitted by Section 7.3(g), (y) any leasehold interests, motor vehicles, aircraft or non-U.S. Intellectual Property and (z) any Excluded Collateral) as to which the Administrative Agent, for the benefit of the Secured Parties, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in such Property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected security interest in such Property, subject to no Liens other than, in the case of Collateral (other than Pledged Stock), Liens permitted under Section 7.3, including without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent; provided that (A) with respect to U.S. Intellectual Property acquired by -------- Holdings or any of its Domestic Subsidiaries in the ordinary course of business during any fiscal quarter, this Section 6.9(a) shall be deemed satisfied if Holdings and its Subsidiaries take the actions required by clauses (i) and (ii) above with respect to such U.S. Intellectual Property within five Business Days following the date of delivery of the officer's certificate with respect to such fiscal quarter or the fiscal year ended at the end of such fiscal quarter required to be delivered pursuant to Section 6.2(b), (B) with respect to any such Property acquired pursuant to the Acquisition the actions described in clauses (i) and (ii) above shall be taken within 10 days of consummation of the Acquisition and (C) Liens shall not be required to be granted hereunder on more than 65% of the total outstanding Capital Stock of any Foreign Subsidiary. 66 (b) With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $10,000,000 acquired after the Closing Date by Holdings or any of its Domestic Subsidiaries (other than any such real property subject to a Lien expressly permitted by Section 7.3(g)), promptly, but in any event within 45 days after the acquisition thereof, (i) execute and deliver a first priority Mortgage in favor of the Administrative Agent, for the benefit of the Secured Parties, covering such real property, (ii) if requested by the Administrative Agent, (A) provide the Lenders with, to the extent available on commercially reasonable terms, title and extended coverage insurance covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Administrative Agent) and (B) use its commercially reasonable efforts to provide the Lenders with any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent, and (iii) if requested by the Administrative Agent, unless mortgage title insurance with respect to such real property shall have been provided as contemplated in clause (ii)(A) above, deliver to the Administrative Agent customary legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (c) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary or any Subsidiary the Capital Stock of which is held by a Foreign Subsidiary) created or acquired after the Closing Date (which, for the purposes of this paragraph, shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary, a Foreign Subsidiary or an Inactive Subsidiary, as the case may be), by Holdings or any of its Subsidiaries, promptly, and in any event within 10 days after the creation or acquisition of such Subsidiary, (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected security interest in the Capital Stock of such new Subsidiary that is owned by Holdings or any of its Domestic Subsidiaries, subject to no Liens, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of Holdings or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and (B) (in the case of any Domestic Subsidiary only) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Secured Parties a perfected (except in the case of Excluded Collateral) security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary, subject to no Liens other than, in the case of Collateral (other than Pledged Stock), Liens permitted under Section 7.3, including, without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent customary legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent; provided that (x) in no -------- event shall more than 65% of the total outstanding Capital Stock of any Excluded Foreign Subsidiary be required to be pledged hereunder and (y) unless the fair market value of the Capital Stock of any Foreign Subsidiary required to be pledged pursuant to this paragraph (c) exceeds $50,000,000, no actions shall be 67 required to be taken to create or perfect any such pledge, and no legal opinions shall be required to be delivered with respect thereto, in each case under the laws of the jurisdiction of organization of such Foreign Subsidiary. (d) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing Date by Holdings or any of its Domestic Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems necessary or advisable in order to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected security interest in the Capital Stock of such new Subsidiary that is owned by Holdings or any of its Domestic Subsidiaries, subject to no Liens, provided that -------- in no event shall more than 65% of the total outstanding Capital Stock of any such new Excluded Foreign Subsidiary be required to be so pledged, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of Holdings or such Subsidiary, as the case may be, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Lien of the Administrative Agent thereon, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent customary legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent; provided that, unless the fair market -------- value of the Capital Stock of any such Excluded Foreign Subsidiary exceeds $50,000,000, no actions shall be required to be taken to create or perfect any such pledge, and no legal opinions shall be required to be delivered with respect thereto, in each case under the laws of the jurisdiction of organization of such Foreign Subsidiary. (e) If at any time after the Closing Date, any Loan Party establishes, or any new Subsidiary (other than an Excluded Foreign Subsidiary or Foreign Subsidiary) created or acquired after the Closing Date holds, a Deposit Account or Securities Account (other than (x) any Deposit Accounts or Securities Accounts constituting ordinary course operating accounts, including without limitation, to the extent that funds on deposit therein are invested for periods of up to thirty days and (y) any Securities Account containing Investment Property (as defined in the Guarantee and Collateral Agreement) the fair market value of which does not exceed $5,000,000) or obtains, or holds, Letter-of- Credit Rights which do not constitute Supporting Obligations (as defined in the Guarantee and Collateral Agreement) (other than any such Letter of Credit Rights the value of which does not exceed $5,000,000 in the aggregate), promptly but in any event within 45 days after the establishment or obtaining of such Deposit Account, Securities Account or Letter-of-Credit Right, or the creation or acquisition of such Subsidiary, (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in such Deposit Account, Securities Account or Letter-of-Credit Rights and (ii) take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest in such Deposit Account, Securities Account or Letter-of-Credit Rights, including actions to cause the Administrative Agent to obtain "control" (within the meaning of the applicable Uniform Commercial Code) thereof. 68 6.10 Further Assurances. From time to time execute and deliver, or ------------------ cause to be executed and delivered, such additional instruments, certificates or documents, and take such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Lenders with respect to the Collateral (other than the Excluded Collateral) (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by Holdings or any Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, Holdings and the Borrower will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lender may be required to obtain from Holdings or any of its Subsidiaries for such governmental consent, approval, recording, qualification or authorization. 6.11 Maintenance of Separate Existence. With respect to Holdings and --------------------------------- the Borrower, include in all consolidated financial statements of Holdings or the Borrower filed with the SEC or generally distributed to their creditors or vendors a statement to the effect that the assets and liabilities of the Specified Group are separate from the assets and liabilities of Holdings, the Borrower and the Subsidiaries of the Borrower. In addition, Holdings will cause each member of the Specified Group to: (a) practice and adhere to organizational formalities, such as maintaining appropriate books and records including without limitation, financial records; (b) observe all organizational formalities in connection with all dealings between any member of the Specified Group, on the one hand, and Holdings, the Borrower and the Subsidiaries of the Borrower, on the other hand; (c) observe all procedures required by its organizational documents and the laws of its state of organization; (d) enter into contracts or other agreements solely in its name and through its duly authorized officers or agents in the conduct of its business; (e) maintain its deposit and other bank accounts separate from those of Holdings, the Borrower and the Subsidiaries of the Borrower; (f) ensure that the responsible officers of such member of the Specified Group duly authorized in accordance with its organizational documents, duly authorize all of its actions; and (g) refrain from filing or otherwise initiating or supporting the filing of a motion in any bankruptcy or other insolvency proceeding involving Holdings, the Borrower or any Subsidiary of the Borrower to substantively consolidate Holdings, the Borrower or any Subsidiary of the Borrower with such Specified Subsidiary Guarantor (to the extent the 69 agreements by Holdings and its Subsidiaries under this paragraph (g) are permissible under applicable law). SECTION 7. NEGATIVE COVENANTS Holdings and the Borrower hereby jointly and severally agree that, from and after the Initial Funding Date and so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or any Agent hereunder, each of Holdings and the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly: 7.1 Financial Condition Covenants. ----------------------------- (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at the last day of any period of four consecutive fiscal quarters of the Borrower ending with any fiscal quarter set forth below to exceed the ratio set forth below opposite such fiscal quarter: Consolidated Fiscal Quarter Leverage Ratio -------------- -------------- FQ2 2002 2.35 to 1.00 FQ3 2002 2.35 to 1.00 FQ4 2002 2.35 to 1.00 FQ1 2003 2.10 to 1.00 FQ2 2003 2.10 to 1.00 FQ3 2003 2.10 to 1.00 FQ4 2003 2.10 to 1.00 FQ1 2004 1.85 to 1.00 FQ2 2004 1.85 to 1.00 FQ3 2004 1.85 to 1.00 FQ4 2004 1.85 to 1.00 FQ1 2005 and thereafter 1.50 to 1.00 (b) Consolidated Interest Coverage Ratio. Permit the Consolidated ------------------------------------ Interest Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower ending on or after the last day of FQ2 2002 to be less than 4.00 to 1.00. (c) Consolidated Fixed Charge Coverage Ratio. Permit the ---------------------------------------- Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower ending on or after the last day of FQ2 2002 to be less than 1.50 to 1.00. 7.2 Limitation on Indebtedness. Create, incur, assume or suffer to -------------------------- exist any Indebtedness, except: (a) Indebtedness of any Loan Party pursuant to any Loan Document; 70 (b) Indebtedness of (i) the Borrower to any Subsidiary, (ii) any Subsidiary Guarantor (other than any Specified Subsidiary Guarantor) to the Borrower or any other Subsidiary, (iii) any Foreign Subsidiary to any other Foreign Subsidiary, (iv) Holdings to any Subsidiary of Holdings (other than the Borrower and its Subsidiaries), (v) any member of the Specified Group to any other member of the Specified Group, (vi) Holdings to the Borrower, provided that the proceeds of such Indebtedness are used to make Investments in members of the Specified Group permitted under Sections 7.8(c), (e) or (r), (vii) any member of the Specified Group to Holdings, provided that such Indebtedness was funded with the proceeds of Indebtedness of Holdings to a member of the Specified Group permitted under clause (iv) of this Section 7.2(b) or the proceeds of Restricted Payments received by Holdings from any member of the Specified Group, (viii) any member of the Specified Group to Holdings, the Borrower or any Subsidiary of the Borrower and (ix) any Foreign Subsidiary of Holdings to Holdings, the Borrower or any Domestic Subsidiary of the Borrower; provided that, in the case of clauses (viii) and (ix), the amount of such - -------- Indebtedness shall be subject to Sections 7.8(c) and 7.8(e); (c) Indebtedness (including, without limitation, Capital Lease Obligations) of Holdings or any of its Subsidiaries, the proceeds of which are used to finance the acquisition, expansion, refurbishment or improvement of fixed or capital assets, in an aggregate principal amount not to exceed $20,000,000 at any one time outstanding; (d) Indebtedness outstanding on the date hereof and listed on Schedule 7.2 and any refinancings, refundings, renewals or extensions thereof (without any increase in the principal amount thereof); (e) Guarantee Obligations by Holdings or any of its Subsidiaries of obligations of Holdings or any of its Subsidiaries; provided that Guarantee -------- Obligations of Holdings, the Borrower or any Subsidiary (other than any member of the Specified Group) in respect of Indebtedness of any member of the Specified Group shall be limited as provided in Section 7.8(c); (f) Indebtedness of members of the Specified Group to Holdings in an aggregate principal amount not to exceed at any time, when added to the aggregate amount of equity Investments made in accordance with Section 7.8(e), the Acquisition Funding Amount at such time; and (g) additional Indebtedness of Holdings or any of its Subsidiaries in an aggregate principal amount (for Holdings and all such Subsidiaries) not to exceed $40,000,000 at any one time outstanding. 7.3 Limitation on Liens. Create, incur, assume or suffer to exist ------------------- any Lien upon any of its Property, whether now owned or hereafter acquired, except for: (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect -------- thereto are maintained on the books of Holdings or its Subsidiaries, as the case may be, in conformity with GAAP; 71 (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, and letters of credit issued in lieu of or in support of any of the foregoing, in each case incurred in the ordinary course of business; (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business of Holdings or any of its Subsidiaries; (f) Liens in existence on the date hereof listed on Schedule 7.3, securing Indebtedness permitted by Section 7.2(d) and Liens securing refinancings of such Indebtedness permitted by Section 7.2(d), provided that no -------- such Lien is spread to cover any additional Property after the Closing Date and that the amount of Indebtedness secured thereby is not increased; (g) Liens securing Indebtedness of Holdings or any of its Subsidiaries incurred pursuant to Section 7.2(c) to finance the acquisition, expansion, refurbishment or improvement of fixed or capital assets, provided -------- that (i) such Liens shall be created within 180 days after the acquisition, expansion, refurbishment or improvement of such fixed or capital assets, (ii) such Liens do not at any time encumber any Property other than the Property acquired, expanded, refurbished or improved by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the amount of Indebtedness initially secured thereby is not more than 100% of the price of such acquisition, expansion, refurbishment or improvement financed thereby; (h) Liens created pursuant to the Security Documents; (i) any interest or title of a lessor under any lease entered into by Holdings or any of its Subsidiaries in the ordinary course of its business and covering only the assets so leased; (j) any interest of any licensor of Intellectual Property; (k) Liens arising as a matter of law to secure the purchase of goods purchased by Holdings or any of its Subsidiaries, provided that the only -------- obligations secured thereby are trade accounts payable with respect to the purchase of such goods arising in the ordinary course of business and the only Property to which such Liens attached are the goods so purchased and any title document in respect thereof; 72 (l) Liens securing reimbursement obligations and related interest, fees and expenses with respect to trade letters of credit permitted hereunder, provided that such Liens do not extend to any Property other than the goods - -------- financed by, or purchased by means of, such letters of credit and documents of title in respect thereof; (m) Liens on any assets of a Person which becomes a Subsidiary of Holdings after the Closing Date in a transaction permitted by this Agreement, and Liens on assets acquired by Holdings or any of its Subsidiaries after the Closing Date or pursuant to the Acquisition, provided that (i) such Liens -------- existed at the time such Person became a Subsidiary of Holdings or such assets were acquired, as the case may be, and were not created in anticipation of such acquisition, (ii) any such Lien does not by its terms cover any property or assets after the time such Person becomes a Subsidiary or such assets were acquired, as the case may be, which were not covered immediately prior thereto, (iii) any such Lien does not by its terms secure any Indebtedness or other obligation other than Indebtedness or other obligation existing immediately prior to the time such Person becomes a Subsidiary or such assets are acquired, as the case may be, and refinancings thereof permitted hereunder and (iv) any Indebtedness secured by such Liens shall be permitted under Section 7.2; (n) Liens in respect of judgments that do not constitute an Event of Default under clause (h) of Section 8; and (o) Liens not otherwise permitted by this Section 7.3 securing Indebtedness or other obligations of Holdings or any of its Subsidiaries so long as the aggregate outstanding principal amount of the obligations secured thereby does not exceed (as to Holdings and all of such Subsidiaries) $20,000,000 at any one time. 7.4 Limitation on Fundamental Changes. Enter into any merger, --------------------------------- consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its Property or business, except that: (a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower, provided that the Borrower shall be the continuing or -------- surviving corporation; (b) any Subsidiary of the Borrower may be merged or consolidated with or into any other Subsidiary of the Borrower, provided that, if any of the -------- parties to such merger or consolidation is a Subsidiary Guarantor, (i) the continuing or surviving corporation shall be a Subsidiary Guarantor, (ii) simultaneously with such transaction, the continuing or surviving corporation shall become a Subsidiary Guarantor, and the Borrower shall, and shall cause its Subsidiaries to, comply with Section 6.9 in connection therewith and (iii) if Holdings is a party to such merger or consolidation, Holdings shall be the continuing or surviving corporation; (c) any member of the Specified Group may be merged or consolidated with or into Holdings or any other member of the Specified Group, provided that, -------- if any of the parties to such merger or consolidation is a Subsidiary Guarantor, (i) the continuing or surviving corporation shall be a Subsidiary Guarantor or (ii) simultaneously with such transaction, the continuing or surviving corporation shall become a Subsidiary Guarantor, and Holdings shall, and shall cause its Subsidiaries to, comply with Section 6.9 in connection therewith; 73 (d) any Subsidiary of Holdings may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to any Subsidiary of Holdings; provided that any Disposition by any Subsidiary of Holdings (other than any - -------- member of the Specified Group) to any member of the Specified Group shall be limited as provided in Section 7.8(c); (e) any member of the Specified Group may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to Holdings or any other member of the Specified Group; (f) any Foreign Subsidiary of Holdings may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to any other Foreign Subsidiary of Holdings; (g) any Restricted Payments permitted under Section 7.6; and (h) Holdings may Dispose of any of its assets to any member of the Specified Group but only to the extent Holdings shall have received such assets from a member of the Specified Group. 7.5 Limitation on Disposition of Property. Dispose of any of its ------------------------------------- Property (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person, except: (a) the Disposition of obsolete or worn out property in the ordinary course of business; (b) the sale of inventory in the ordinary course of business; (c) Dispositions permitted by Section 7.4(d), 7.4(e), 7.4(f) or 7.4(h); (d) Restricted Payments permitted under Section 7.6; (e) Investments permitted by Section 7.8; (f) the sale or issuance of the Capital Stock of any Subsidiary of Holdings (other than the Borrower) to Holdings or any other Subsidiary of Holdings; provided that (i) any such sale or issuance by any Subsidiary of -------- Holdings (other than a member of the Specified Group) to any member of the Specified Group shall be limited as provided in Section 7.8(c) and (ii) no Domestic Subsidiary of Holdings shall sell or issue any of its Capital Stock to any Foreign Subsidiary of Holdings; (g) the Disposition of other assets having a fair market value not to exceed $25,000,000 in the aggregate for any fiscal year of the Borrower, provided that the requirements of Section 2.12(d) are complied with in - -------- connection therewith; and (h) any Recovery Event, provided that the requirements of Section -------- 2.12(d) are complied with in connection therewith. 74 7.6 Limitation on Restricted Payments. Declare or pay any dividend --------------------------------- on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Holdings or any of its Subsidiaries, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Holdings or any of its Subsidiaries, or enter into any derivatives or other transaction with any financial institution, commodities or stock exchange or clearinghouse (a "Derivatives Counterparty") obligating ------------------------ Holdings or any of its Subsidiaries to make payments to such Derivatives Counterparty as a result of any change in market value of any such Capital Stock (collectively, "Restricted Payments"), except that: ------------------- (a) (i) any Subsidiary of Holdings may make Restricted Payments to the Borrower or any Subsidiary Guarantor that is a Subsidiary of the Borrower, (ii) any Subsidiary of Holdings that is not a Subsidiary of the Borrower may make Restricted Payments to Holdings or any Subsidiary Guarantor and (iii) any Foreign Subsidiary may make Restricted Payments to Holdings or any of its Subsidiaries; (b) Holdings may make Restricted Payments in the form of common stock of Holdings; (c) so long as no Default or Event of Default shall have occurred and be continuing, any Subsidiary of Holdings may pay dividends to Holdings to permit Holdings to make stock purchases permitted by paragraph (d) or (e) of this Section; (d) Holdings may (i) repurchase shares of "Restricted Stock" and "Performance Stock" sold pursuant to the CSG Employee Stock Purchase Plan from a holder of such Capital Stock whose employment with Holdings and its Subsidiaries has terminated, provided that the repurchase price paid for any such Restricted -------- Stock or Performance Stock shall not exceed, in the case of Performance Stock, the purchase price initially paid by such Person for such Performance Stock or, in the case of Restricted Stock, the higher of the purchase price initially paid by such Person for such Restricted Stock or the Book Value (as defined in the applicable purchase agreement) of such Restricted Stock and (ii) repurchase options and warrants (or Capital Stock issued upon the exercise of options or warrants) in connection with the "cashless exercise" of options or warrants; (e) so long as no Default or Event of Default shall have occurred and be continuing, Holdings may repurchase its Capital Stock from the public at fair market value in an aggregate amount (i) for the fiscal year of Holdings ending December 31, 2002, not to exceed the lesser of (A) an amount equal to $70,000,000 less the Specified Group Investments for the fiscal year of Holdings ending on December 31, 2002 and (B) $50,000,000, and (ii) for each fiscal year of Holdings ending after December 31, 2002, not to exceed (A) if the Consolidated Leverage Ratio as at the last day of the most recently ended fiscal quarter of Holdings is less than 1.50 to 1.00 the sum of (1) $50,000,000, less the aggregate fair market value of all repurchases of Capital Stock consummated pursuant to this Section 7.6(e) in any prior fiscal year ended after the Closing Date and (2) the lesser of (x) $15,000,000 and (y) the amount equal to $30,000,000 less the Specified Group Investments for such fiscal year and (B) if the Consolidated Leverage Ratio as at the last day of the most recently ended fiscal quarter of Holdings is greater than or equal to 75 1.50 to 1.00, $50,000,000, less the aggregate fair market value of all repurchases of Capital Stock consummated pursuant to this Section 7.6(e) in any prior fiscal year ended after the Closing Date; provided, however, that at any -------- ------- time after (x) the Consolidated Leverage Ratio is less than 1.00 to 1.00 as at the last day of each of four consecutive fiscal quarters of Holdings or (y) the senior secured long-term debt of the Borrower is rated at least BBB- by S&P and at least Baa3 by Moody's, Holdings may repurchase Capital Stock from the public at fair market value in an unlimited amount, so long as (I) no Default or Event of Default shall have occurred and be continuing at such time or shall result therefrom and (II) after giving effect to such repurchase, the Consolidated Leverage Ratio (calculated as if such repurchase had occurred on the last day of the period of four consecutive fiscal quarters of Holdings most recently ended for which financial statements have been delivered pursuant to Section 6.1) shall not be greater than 0.50 less than the Consolidated Leverage Ratio applicable at such time pursuant to Section 7.1(a); (f) Subsidiaries of Holdings may pay dividends to Holdings to permit Holdings to (i) pay corporate overhead expenses incurred in the ordinary course of business not to exceed $5,000,000 in any fiscal year, (ii) pay (without duplication) any taxes which are due and payable in respect of income tax liabilities of such Subsidiary and its consolidated Subsidiaries in accordance with the Tax Sharing Agreement and (iii) make Investments permitted under Section 7.8; (g) the Borrower may make Restricted Payments to Holdings, the proceeds of which are used to make Investments in members of the Specified Group permitted under Sections 7.8(c), 7.8(e) and 7.8(r); and (h) any Subsidiary of Holdings (other than the Borrower) may make Restricted Payments to the holders of any class of such Subsidiary's equity securities in proportion to their respective holdings of such class. 7.7 Limitation on Capital Expenditures. Make or commit to make any ---------------------------------- Capital Expenditure, except (a) Capital Expenditures of Holdings and its Subsidiaries in the ordinary course of business not exceeding $50,000,000 in any fiscal year of Holdings; provided that (i) up to $25,000,000 of any such amount -------- referred to above, if not so expended in the fiscal year for which it is permitted, may be carried over for expenditure in the next succeeding fiscal year and (ii) Capital Expenditures made pursuant to this clause (a) during any fiscal year shall be deemed made, first, in respect of amounts carried over from ----- the prior fiscal year pursuant to subclause (i) above and, second, in respect of ------ amounts permitted for such fiscal year as provided above, (b) Capital Expenditures made with the proceeds of any Reinvestment Deferred Amount and (c) Capital Expenditures made with the proceeds of equity securities issued by Holdings after the Closing Date. 7.8 Limitation on Investments. Make any advance, loan, extension of ------------------------- credit (by way of guaranty or otherwise), CSA Payments, or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting an ongoing business from, or make any other investment in, any other Person (all of the foregoing, "Investments"), ----------- except: (a) extensions of trade credit in the ordinary course of business; 76 (b) investments in Cash Equivalents; (c) Investments arising in connection with (i) the incurrence of Indebtedness and other obligations permitted by Section 7.2(b) and (e), (ii) any Disposition permitted by Section 7.4(d), 7.4(e), 7.4(f) or 7.5(f) (valuing each Investment arising from any such Disposition at the excess, if any, of the fair market value of the assets Disposed of in such Disposition over the fair market value of the consideration received in connection with such Disposition) or (iii) any reinvestment, pursuant to a Reinvestment Notice, by Holdings or any Subsidiary (other than a Specified Group Member) in any Specified Group Member of the Reinvestment Deferred Amount in respect of a Reinvestment Event relating to Holdings or any Subsidiary (other than a Specified Group Member); provided -------- that, after giving effect to any such Investment described in clauses (i), (ii) and (iii) of this paragraph (c) made on a particular date, the Specified Group Investments from the date hereof through and including such date, together, without duplication, with any equity Investments outstanding under Section 7.8(r), but excluding any Investments arising in connection with the incurrence of Indebtedness permitted under clause (vii) of Section 7.2(b), in each case net of any repayments of any such Investments, shall not exceed (A) with respect to the fiscal year of Holdings ending December 31, 2002, $45,000,000 in the aggregate and (B) with respect to any fiscal year of Holdings ending after December 31, 2002, $30,000,000 in the aggregate (provided, that (x) the -------- aggregate amount of Investments permitted under this clause (B) and under clause (B) of Section 7.8(r) for all such fiscal years shall not exceed the Optional Specified Group Investment Amount, and (y) no such Investment (other than any Investment permitted by the foregoing clause (A)) shall be permitted unless, after giving effect to such Investment, the Consolidated Leverage Ratio is less than 1.5 to 1.0); (d) loans and advances to employees of Holdings or any of its Subsidiaries in the ordinary course of business (including, without limitation, for travel, entertainment and relocation expenses) in an aggregate amount for Holdings and its Subsidiaries not to exceed $10,000,000 at any one time outstanding; (e) the Acquisition and, in connection therewith, loans by Holdings, the Borrower and its Subsidiaries made to, and equity Investments by Holdings made in, one or more members of the Specified Group (including without limitation, loans and equity investments made with the proceeds of payments made to Holdings, the Borrower or any of the Borrower's Subsidiaries pursuant to Section 2.3(c) of the Acquisition Agreement) in an aggregate amount not to exceed the Acquisition Funding Amount, provided that any such loan held by a -------- Loan Party shall be evidenced by an intercompany note that is pledged to the Administrative Agent, for the benefit of the Secured Parties, pursuant to the Guarantee and Collateral Agreement; (f) (i) Investments in assets (other than inventory) useful in the business of Holdings and its Subsidiaries (other than members of the Specified Group) made by Holdings or any of its Subsidiaries with the proceeds of any Reinvestment Deferred Amount and (ii) Investments in assets (other than inventory) useful in the business of any member of the Specified Group, made by any member of the Specified Group with the proceeds of any Reinvestment Deferred Amount received from a Reinvestment Event in respect of any member of the Specified Group; 77 (g) Investments (other than those relating to the incurrence of Indebtedness permitted by Section 7.8(c)) by Holdings, the Borrower or any of its Subsidiaries in the Borrower or any Person that, prior to such Investment, is a Subsidiary Guarantor (other than a Specified Subsidiary Guarantor); (h) Investments by any Foreign Subsidiary of Holdings in any other Foreign Subsidiary of Holdings; (i) Investments by any member of the Specified Group in any member of the Specified Group; (j) Permitted Acquisitions; (k) Investments in Hedging Agreements permitted hereunder; (l) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (m) Investments consisting of consideration received in connection with Dispositions permitted under Section 7.5(g); (n) Investments in an aggregate amount not to exceed $200,000,000 made by Holdings or any of its Subsidiaries to the extent that the consideration therefor consists of equity securities of, or proceeds of the issuance by Holdings after the Closing Date of equity securities of, Holdings; (o) loans and advances to officers, directors and employees of Holdings and its Subsidiaries for the sole purpose of purchasing Capital Stock of Holdings or of refinancing any such loans made by others (or purchase of such loans made by others), provided that if any such loans and advances are made in -------- cash, the Person making such loans or advances shall, substantially contemporaneously with the making of any such loans or advances, receive cash in the amount of such loans and advances; (p) Investments by Holdings, the Borrower or any Subsidiary Guarantor in a Foreign Subsidiary of the Borrower, provided that such Investment consists -------- solely of the transfer to such Foreign Subsidiary of Capital Stock of one or more other Foreign Subsidiaries; (q) Investments by any Subsidiary of Holdings in any joint venture, provided that the aggregate consideration (other than any such consideration consisting of licenses of Intellectual Property that do not constitute Dispositions) paid by such Subsidiary in respect of such Investments shall not exceed $25,000,000 in the aggregate for all such joint ventures; (r) equity Investments by Holding in members of the Specified Group, provided that, after giving effect to any such Investment made on a particular date, the aggregate amount of such Investments from the date hereof through and including such date, together, without duplication, with the aggregate amount of the Investments permitted under Section 78 7.8(c) and subjected to the limitations set forth in the proviso thereto, in each case net of any repayments of such Investments, shall not exceed (A) with respect to Holdings' fiscal year ended December 31, 2002, $45,000,000 and (B) with respect to any fiscal year of Holdings ending after December 31, 2002, $30,000,000 in the aggregate, (provided that (x) the aggregate amount of -------- Investments permitted under this clause (B) and clause (B) of the proviso to Section 7.8(c) for all such fiscal years shall not exceed the Optional Specified Group Investment Amount, and (y) no such equity Investment (other than any Investment permitted by the foregoing clause (A)) shall be permitted unless, after giving effect to such Investment, the Consolidated Leverage Ratio is less than 1.50 to 1.00); (s) equity investments by Holding in members of the Specified Group that are funded with the proceeds of Restricted Payments received by Holdings from members of the Specified Group or Indebtedness of Holdings permitted under Section 7.2(b)(iv); (t) Permitted CSA Payments; and (u) in addition to Investments otherwise expressly permitted by this Section, Investments by Holdings or any of its Subsidiaries (other than Investments in members of the Specified Group) in an aggregate amount (valued at cost) not to exceed $20,000,000 during the term of this Agreement. Notwithstanding anything to the contrary contained in this Section 7.8, the Borrower, its Subsidiaries and Holdings may only make Investments in members of the Specified Group pursuant to paragraphs (a), (c), (e), (n), (r) and (s) of this Section 7.8. 7.9 Limitation on Charter Amendments. Amend the certificate of -------------------------------- incorporation of Holdings, the Borrower or any Subsidiary Guarantor in any manner that would be materially adverse to the Lenders. 7.10 Limitation on Transactions with Affiliates. Enter into any ------------------------------------------ transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than (x) in the case of Holdings, the Borrower and its Subsidiaries, Holdings, the Borrower and its Subsidiaries and (y) in the case of any member of the Specified Group, any member of the Specified Group) unless such transaction is (a) otherwise permitted under this Agreement and (b) upon fair and reasonable terms no less favorable to Holdings, the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm's length transaction with a Person that is not an Affiliate; provided that each of Holdings and its Subsidiaries -------- shall be permitted to (i) enter into and perform its obligations under the Tax Sharing Agreement, (ii) enter into and perform its obligations under, and take any actions contemplated by, the Acquisition Documentation, any agreement entered into in connection with the Acquisition and any other agreement to which it is a party on the Closing Date or to which it becomes a party pursuant to the Acquisition, (iii) make any Dispositions permitted to be made by it under Section 7.5, (iv) make any Restricted Payments permitted to be made by it under Section 7.6 and (v) make any Investments permitted to be made by it pursuant to Section 7.8, (vi) pay customary fees to, and the reasonable out-of-pocket expenses of, its Board of Directors and provide customary indemnities for the benefit of members of its Board of Directors and 79 (vii) enter into and perform its obligations under employment agreements and other compensation arrangements with its officers, directors and employees in the ordinary course of business. 7.11 Limitation on Sales and Leasebacks. Enter into any arrangement ---------------------------------- with any Person providing for the leasing by Holdings or any of its Subsidiaries of real or personal property which has been or is to be sold or transferred by Holdings or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of Holdings or such Subsidiary if the aggregate consideration received by Holdings and its Subsidiaries in connection with all such transactions exceeds $10,000,000. 7.12 Limitation on Changes in Fiscal Periods. Permit the fiscal year --------------------------------------- of Holdings or the Borrower to end on a day other than December 31 or change Holdings' or the Borrower's method of determining fiscal quarters. 7.13 Limitation on Negative Pledge Clauses. Enter into or suffer to ------------------------------------- exist or become effective any agreement that prohibits or limits the ability of Holdings or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or hereafter acquired, to secure the Obligations or, in the case of any Guarantor, its obligations under the Guarantee and Collateral Agreement, other than (a) this Agreement and the other Loan Documents, (b) any agreements governing any purchase money Indebtedness or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (c) any agreements governing Indebtedness of any Foreign Subsidiary permitted hereunder (in which case, any prohibition or limitation shall only be effective against the assets of such Foreign Subsidiary and its Foreign Subsidiaries). 7.14 Limitation on Restrictions on Subsidiary Distributions. Enter ------------------------------------------------------ into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of Holdings to (a) make Restricted Payments in respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary, (b) make Investments in the Borrower or any Subsidiary or (c) transfer any of its assets to the Borrower or any Subsidiary, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, (iii) any restrictions in any agreements governing any purchase money Indebtedness or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (iv) any restrictions in any agreements governing Indebtedness of Foreign Subsidiaries otherwise permitted hereby (in which case, any restrictions shall only be effective against such Foreign Subsidiary and its Foreign Subsidiaries). 7.15 Limitation on Lines of Business. Enter into any business, either ------------------------------- directly or through any Subsidiary of Holdings, except for those businesses in which Holdings and its 80 Subsidiaries are engaged on the date of this Agreement (after giving effect to the Acquisition) or that are reasonably related thereto. 7.16 Limitation on Amendments to Acquisition Agreement. (a) Amend, ------------------------------------------------- supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of the Acquisition Agreement in any manner that would increase, in any material respect, the amounts payable by Holdings or any of its Subsidiaries thereunder, (b) amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of the indemnities and any material licenses furnished to Holdings or any of its Subsidiaries pursuant to the Acquisition Agreement such that after giving effect thereto such indemnities or licenses shall be materially less favorable to the interests of the Loan Parties or the Lenders with respect thereto or (c) otherwise amend, supplement or otherwise modify the material terms and conditions of the Acquisition Agreement except to the extent that any such amendment, supplement or modification could not reasonably be expected to have a Material Adverse Effect. 7.17 Limitation on Amendments to Other Documents. (a) Amend, ------------------------------------------- supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of the Tax Sharing Agreement in any manner that would increase, in any material respect, the amounts payable by the Borrower or any of its Subsidiaries thereunder, (b) otherwise amend, supplement or otherwise modify the terms and conditions of the Tax Sharing Agreement except to the extent that any such amendment, supplement or modification could not reasonably be expected to have a Material Adverse Effect or (c) amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of the AT&T Customer Services Agreement, if such amendment, supplement or modification would (i) reduce the amount of financial minimum revenues receivable by the Borrower thereunder from the amount thereof contemplated by the AT&T Customer Services Agreement in effect on the Closing Date, (ii) reduce the aggregate amount of projected processing revenues receivable by the Borrower thereunder in any fiscal year of Holdings, as projected by the Borrower in good faith at the time of such amendment, supplement or modification, to less than 121% of the product of (x) the monthly minimum subscriber processing fees for wireline video and high speed data for the 2002 fiscal year of Holdings receivable by the Borrower pursuant to the AT&T Customer Services Agreement in effect on the Closing Date multiplied by (y) twelve, (iii) reduce the term thereof, (iv) adversely affect the exclusivity provisions contained in the AT&T Customer Services Agreement in effect on the Closing Date or (v) reasonably be expected to have a Material Adverse Effect. 7.18 Limitation on Activities of Holdings. In the case of Holdings, ------------------------------------ notwithstanding anything to the contrary in this Agreement or any other Loan Document, (a) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to its ownership of the Capital Stock of its Subsidiaries, (b) incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial obligations, except (i) nonconsensual obligations imposed by operation of law, (ii) pursuant to the Loan Documents to which it is a party, (iii) obligations with respect to its Capital Stock, (iv) obligations under the Acquisition Documentation, (v) obligations as assignee obligor or guarantor with respect to contracts or other arrangements acquired or assumed as part of, or in connection with, the Acquisition, and extensions, renewals and replacements thereof, and other similar contracts and arrangements entered into with customers, suppliers and vendors after the Closing Date and (vi) Indebtedness permitted to be incurred by it and Hedge 81 Agreements permitted to be entered into by it under Sections 7.2 and 7.19, respectively, or (c) own, lease, manage or otherwise operate any properties or assets (including cash (other than cash received in connection with (i) dividends made by its Subsidiaries in accordance with Section 7.6 pending application in the manner contemplated by said Section or (ii) the issuance by Holdings of its equity securities) and cash equivalents) other than (A) the ownership of shares of Capital Stock of its Subsidiaries and other Investments permitted under Section 7.8 and (B) the temporary ownership of assets acquired in connection with a merger, consolidation or Disposition permitted under Section 7.4 or a Restricted Payment permitted under Section 7.6 pending the contribution or transfer thereof permitted under Section 7.4, 7.5 or 7.8. 7.19 Limitation on Hedge Agreements. Enter into any Hedge Agreement ------------------------------ other than Hedge Agreements entered into in the ordinary course of business, and not for speculative purposes, to protect against changes in interest rates, foreign exchange rates or commodity prices. SECTION 8. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan Document, within five days after any such interest or other amount becomes due in accordance with the terms hereof or thereof; or (b) Any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other written statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made or furnished; or (c) Any Loan Party shall default in the observance or performance of any agreement contained in clause (i) of Section 6.4(a) (with respect to Holdings and the Borrower only), Section 6.7(a), 6.11 or Section 7; or (d) Any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days; or (e) Holdings or any of its Subsidiaries (other than any member of the Specified Group) shall (i) default in making any payment of any principal of any Indebtedness (including, without limitation, any Guarantee Obligation, but excluding the Loans and Reimbursement Obligations) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, 82 securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or to become subject to a mandatory offer to purchase by the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided that a default, event or condition described in clause (i) or -------- (ii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i) or (ii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness, individually or in the aggregate, the outstanding principal amount of which exceeds in the aggregate $15,000,000; or (f) (i) Holdings or any of its Subsidiaries (other than any Immaterial Subsidiary or any member of the Specified Group) shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Holdings or any of its Subsidiaries (other than any Immaterial Subsidiary or any member of the Specified Group) shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Holdings or any of its Subsidiaries (other than any Immaterial Subsidiary or any member of the Specified Group) any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 90 days; or (iii) there shall be commenced against Holdings or any of its Subsidiaries (other than any Immaterial Subsidiary or any member of the Specified Group) any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 90 days from the entry thereof; or (iv) Holdings or any of its Subsidiaries (other than any Immaterial Subsidiary or any member of the Specified Group) shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) Holdings or any of its Subsidiaries (other than any Immaterial Subsidiary or any member of the Specified Group) shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall be commenced by the PBGC to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for 83 purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders shall be likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or (h) One or more judgments or decrees shall be entered against Holdings or any of its Subsidiaries (other than any Immaterial Subsidiary or any member of the Specified Group) involving for Holdings and such Subsidiaries taken as a whole a liability (to the extent not paid or covered by insurance as to which the relevant insurance company has not contested coverage) of $15,000,000 or more, and such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or (i) Any of the Security Documents shall cease, for any reason (other than by reason of the express release thereof pursuant to Section 10.15), to be in full force and effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby as to Collateral having an aggregate value in excess of $10,000,000, except to the extent that any of the foregoing (i) results from the failure of the Administrative Agent to maintain possession of certificates evidencing securities or instruments pledged under the Security Documents, (ii) results from the failure of the Administrative Agent to file financing statements or continuation statements in any jurisdiction in which any Loan Party has represented to the Administrative Agent that it is located within the meaning of the UCC or (iii) is covered by a lender's title insurance policy; or (j) The guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason (other than by reason of the express release thereof pursuant to Section 10.15), to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert in writing; or (k) Any development or event shall occur on or prior to the Initial Funding Date that has had a Material Adverse Effect; or (l) Any Change of Control shall occur; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Credit Commitments to be 84 terminated forthwith, whereupon the Revolving Credit Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. In the case of all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other Obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). SECTION 9. THE AGENTS 9.1 Appointment. Each Lender hereby irrevocably designates and ----------- appoints the Agents as the agents of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent. 9.2 Delegation of Duties. Each Agent may execute any of its duties -------------------- under this Agreement and the other Loan Documents by or through agents, employees 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. 9.3 Exculpatory Provisions. Neither any Agent nor any of its ---------------------- officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of 85 the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any Affiliate of any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value of any Collateral or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof. 9.4 Reliance by Agents. (a) Each Agent shall be entitled to rely, and ------------------ shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telecopy, telex or teletype message, telephone message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Loan Parties), independent accountants and other experts selected by such Agent. The Agents may deem and treat the Person whose name is recorded on the Register as the owner of any Note as the owner thereof for all purposes, unless such Note shall have been transferred in accordance with Section 10.6 and all actions required by such Section in connection with such transfer shall have been taken. No Agent shall incur any liability to any Lender for conditioning its willingness to take any action under this Agreement or any other Loan Document upon the receipt by such Agent of such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement or any other Loan Document, all Lenders or any other instructing group of Lenders specified by this Agreement or such other Loan Document), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. (b) For purposes of determining compliance with the conditions precedent specified in Section 5 as to any extension of credit, each Lender that has executed a Lender Addendum or shall hereafter execute and deliver an Assignment and Acceptance in accordance with Section 10.6(c) shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter either sent by any Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender, unless an officer of any Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender prior to such extension of credit specifying its objection thereto and either such objection shall not have been withdrawn by notice to an Agent to that effect or such Lender shall not have made available to any Agent the Lender's ratable portion of such extension of credit. 86 9.5 Notice of Default. No Agent shall be deemed to have knowledge or ----------------- notice of the occurrence of any Default or Event of Default hereunder unless such Agent shall have received notice from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent shall receive such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement or any other Loan Document, all Lenders or any other instructing group of Lenders specified by this Agreement or such other Loan Document); provided that unless -------- and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly ---------------------------------------- acknowledges that no Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender confirms to the Agents that it has not relied, and will not rely hereafter, on any Agent to check or inquire on such Lender's behalf into the adequacy, accuracy or completeness or any information provided by any of the Loan Parties or any other Person under or in connection with the Loan Documents or the transactions herein contemplated (whether or not the information has been or is hereafter distributed to such Lender by any Agent). Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates, and all applicable bank regulatory laws relating to the transactions contemplated thereby and by the other Loan Documents, and made its own decision to make its Loans and other extensions of credit hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, condition (financial or otherwise) or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any other Loan Document or for any representations or warranties, recitals or statements made herein or therein or made in any written or oral statements, or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made 87 by any Agent to the Lenders or by or on behalf of any Loan Party to any Agent or any Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Loan Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Default or Event of Default. 9.7 Indemnification. Whether or not the transactions contemplated hereby --------------- shall be consummated, the Lenders agree to indemnify each Agent in its capacity as such and their respective officers, directors, employees, agents, attorneys- in-fact and affiliates (to the extent not reimbursed by or on behalf of the Borrower and without limiting any obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), for, and to save each Agent and other Person harmless from and against, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (including, without limitation, at any time following the payment of the Loans and the termination or resignation of such Agent) be imposed on, incurred by or asserted against such Agent or other Person in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent or other Person under or in connection with any of the foregoing; provided that no -------- Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent's or other Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse each Agent upon demand for its ratable share of any costs or other out-of-pocket expenses (including all fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel (collectively, "Attorney Costs")) incurred by such Agent in connection with the preparation, -------------- execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein to the extent that such Agent is not reimbursed for such expenses by or on behalf of the Borrower. Without limiting the generality of the foregoing, if the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason), such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section 9.7, 88 together with all costs and expenses (including Attorney Costs). The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder. 9.8 Agent in Its Individual Capacity. Each Agent and its affiliates may -------------------------------- make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory or other business with any Loan Party and their Affiliates as though such Agent were not an Agent and without notice to or consent of the Lenders. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent in its individual capacity. 9.9 Successor Administrative Agent. The Administrative Agent may resign ------------------------------ as Administrative Agent upon 30 days' notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall, with, unless an Event of Default shall have occurred and be continuing, the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), appoint from among the Lenders a successor agent for the Lenders, whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. The Syndication Agent may, at any time, by notice to the Lenders and the Administrative Agent, resign as Syndication Agent hereunder, whereupon the duties, rights, obligations and responsibilities of the Syndication Agent hereunder shall automatically be assumed by, and inure to the benefit of, the Administrative Agent, without any further act by the Syndication Agent, the Administrative Agent or any Lender. After any retiring Agent's resignation as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents. 9.10 Collateral Matters; Authorization to Release Liens and Guarantees. ----------------------------------------------------------------- (a) The Administrative Agent is authorized on behalf of all the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time to take any action with respect to any Collateral and any Security Document which may be necessary to perfect and maintain perfected the security interest in and Liens upon the Collateral granted pursuant to the Security Documents. (b) The Administrative Agent is hereby irrevocably authorized by each of the Lenders to effect any release of Liens or guarantee obligations contemplated by Section 10.15. 89 Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent's authority to release Liens and guarantee obligations pursuant to this Section 9.10 and Section 10.15. 9.11 The Arrangers; the Syndication Agent; the Co-Documentation ---------------------------------------------------------- Agents. None of the Arrangers, the Syndication Agent or the Co-Documentation - ------ Agents, in their respective capacities as such, shall have any duties or responsibilities, and none of them shall incur any liability, under this Agreement and the other Loan Documents. SECTION 10. MISCELLANEOUS 10.1 Amendments and Waivers. Neither this Agreement or any other Loan ---------------------- Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or (with the written consent of the Required Lenders) the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents (including amendments and restatements hereof or thereof) for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as may be specified in the instrument of waiver, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, -------- ------- supplement or modification shall: (i) forgive all or any portion of the principal amount or extend the final scheduled date of maturity of any Loan or Reimbursement Obligation, reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Commitment of any Lender, in each case without the consent of each Lender directly affected thereby; (ii) extend the scheduled date of any amortization payment in respect of any Term Loan or change the amount of any such scheduled amortization payment, in each case without the consent of the holders of more than 75% of the aggregate principal amount of the outstanding Term Loans directly affected thereby (or, prior to the Initial Funding Date, the holders of more than 75% of the Commitments in respect of the Term Loan Facilities directly affected thereby); (iii) amend, modify or waive any provision of this Section or reduce any percentage specified in the definition of Required Lenders or Required Prepayment Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release all or substantially all of the Guarantors from their guarantee obligations under the Guarantee and Collateral Agreement, in each case without the consent of all Lenders; 90 (iv) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility; (v) amend, modify or waive any provision of Section 9 or any other provision of this Agreement that affects the rights and obligations of any Agent without the consent of any Agent directly affected thereby; (vi) amend, modify or waive any provision of Sections 7.6(e), 7.8(c) or 7.8(r) without the consent of the Supermajority Lenders; (vii) amend, modify or waive any provision of Section 2.18 or 3.4(c) without the consent of each Lender directly affected thereby; or (viii) amend, modify or waive any provision of Section 3 without the consent of the Issuing Lender. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future holders of the Loans and issuers of, and participants in, the Letters of Credit. In the case of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Any such waiver, amendment, supplement or modification shall be effected by a written instrument signed by the parties required to sign pursuant to the foregoing provisions of this Section; provided -------- that delivery of an executed signature page of any such instrument by facsimile transmission shall be effective as delivery of a manually executed counterpart thereof. For the avoidance of doubt, this Agreement and any other Loan Document may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and each Loan Party to each relevant Loan Document (x) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof (collectively, the "Additional Extensions of Credit") to share ratably in the benefits of this ------------------------------- Agreement and the other Loan Documents with the Term Loans and Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders, Required Prepayment Lenders and Majority Revolving Facility Lenders; provided, however, that no such amendment shall -------- ------- permit the Additional Extensions of Credit to share with preference to the Loans in the application of mandatory prepayments without the consent of the Required Prepayment Lenders. 10.2 Notices. All notices, requests and demands to or upon the ------- respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or five Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed (a) in the case of Holdings, the Borrower and the Agents, as follows and (b) in the case of the Lenders, as set forth in an administrative questionnaire delivered to the Administrative Agent or on Schedule I to the Lender Addendum to which such Lender is a party or, in the case of a Lender which becomes a party to this Agreement pursuant to an Assignment and Acceptance, in such Assignment and Acceptance or (c) in the case of any party, to such other address as such party may hereafter notify to the other parties hereto: Holdings: CSG Systems International, Inc. 7887 East Belleview Avenue, Suite 1000 Englewood, Colorado 80111 Attention: Chief Financial Officer Telecopy: (303) 796-2881 Telephone: (303) 796-2856 The Borrower: CSG Systems, Inc. 2525 North 117/th/ Avenue P.O. Box 34965 Omaha, Nebraska 68134 Attention: Controller/Principal Accounting Officer Telecopy: (402) 431-7254 Telephone: (402) 431-7574 The Administrative Agent: BNP Paribas Merchant Banking Group 180 Montgomery Street San Francisco, California 94104 Attention: Susan M. Bowes Telecopy: (415) 398-4240 Telephone: (415) 398-6811 The Syndication Agent: Lehman Commercial Paper Inc. 745 Seventh Avenue, 8/th/ Floor New York, New York 10019 Attention: Andrew Keith Telecopy: (646) 758-4656 Telephone (until April 4, 2002): (212) 455-7569 Telephone (after April 5, 2002): (212) 526-4059 Issuing Lender: As notified by such Issuing Lender to the Administrative Agent and the Borrower provided that any notice, request or demand to or upon the any Agent, the - -------- Issuing Lender or any Lender shall not be effective until received. 10.3 No Waiver; Cumulative Remedies. No failure to exercise and no ------------------------------ delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege 92 hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.4 Survival of Representations and Warranties. All representations ------------------------------------------ and warranties made herein, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder. 10.5 Payment of Expenses. The Borrower agrees (a) to pay or reimburse ------------------- the Agents for all their reasonable out-of-pocket costs and expenses incurred in connection with the syndication of the Facilities (other than fees payable to syndicate members) and the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements and other charges of, a single firm of outside counsel to the Administrative Agent (and required local counsel) and the charges of Intralinks, (b) to pay or reimburse each Lender and the Agents for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any other documents prepared in connection herewith or therewith, including, without limitation, the fees and disbursements of counsel to each Lender and of counsel to the Agents, (c) to pay, indemnify, or reimburse each Lender and the Agents for, and hold each Lender and the Agents harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify or reimburse each Lender, each Agent, their respective affiliates, and their respective officers, directors, trustees, employees, advisors, agents and controlling persons (each, an "Indemnitee") for, ---------- and hold each Indemnitee harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever arising from or in connection with any investigation, action, litigation or proceeding (whether or not such Indemnitee is a party thereto) relating to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including, without limitation, any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of Holdings or any of its Subsidiaries or any of the Properties and the fees and disbursements and other charges of legal counsel in connection with claims, actions or proceedings by any Indemnitee against the Borrower hereunder (all the foregoing in this clause (d), collectively, the "Indemnified Liabilities"), provided that the Borrower shall have no obligation ----------------------- -------- hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful 93 misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by unauthorized persons of Information or other materials sent through electronic, telecommunications or other information transmission systems that are intercepted by such persons or for any special, indirect, consequential or punitive damages in connection with the Facilities. Without limiting the foregoing, and to the extent permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries so to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee pursuant to such Indemnitee's role in or status under this Agreement or the other Loan Documents or its enforcement of its rights hereunder or thereunder. All amounts due under this Section shall be payable not later than 30 days after written demand therefor. Statements for amounts payable by the Borrower pursuant to this Section shall be submitted to Controller/Principal Accounting Officer (Telephone No. (402) 431-7574) (Fax No. (402) 431-7254), at the address of the Borrower set forth in Section 10.2, or to such other Person or address as may be hereafter designated by the Borrower in a notice to the Administrative Agent. The agreements in this Section shall survive repayment of the Loans and all other amounts payable hereunder. 10.6 Successors and Assigns; Participations and Assignments. (a) This ------------------------------------------------------ Agreement shall be binding upon and inure to the benefit of Holdings, the Borrower, the Lenders, the Agents, all future holders of the Loans and issuers of, and participants in, Letters of Credit and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent, the Syndication Agent and each Lender. (b) Any Lender may, without notice to or the consent of the Borrower or the Agents, in accordance with applicable law, at any time sell to one or more banks, financial institutions or other entities (each, a "Participant") ----------- participating interests in any Loan owing to such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan, Commitment or other interest for all purposes under this Agreement and the other Loan Documents, and the Loan Parties, the Administrative Agent and the Syndication Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. In no event shall any Participant under any such participation have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would require the consent of all Lenders pursuant to Section 10.1. The Borrower agrees that if amounts outstanding under this Agreement and the Loans are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender 94 under this Agreement, provided that, in purchasing such participating interest, -------- such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if such Participant were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21 with respect to its participation in the Commitments and the Loans outstanding from time to time as if such Participant were a Lender; provided that, in the case of Section 2.20, -------- such Participant shall have complied with the requirements of said Section, and provided, further, that no Participant shall be entitled to receive any greater - -------- ------- amount pursuant to any such Section than the Lender that sold the participating interest to such Participant would have been entitled to receive in respect of the amount of the participation sold by such Lender to such Participant had no such sale occurred. (c) Any Lender (an "Assignor") may, in accordance with applicable law -------- and upon written notice to the Administrative Agent and the Syndication Agent, at any time and from time to time assign to any Lender or any affiliate, Related Fund or Control Investment Affiliate of any Lender or, with the consent of the Borrower, the Administrative Agent and the Syndication Agent and, in the case of any assignment of Revolving Credit Commitments, the Issuing Lender (which, in each case, shall not be unreasonably withheld or delayed) (provided that (x) no -------- such consent of any Agent need be obtained by any Lehman Entity or by any Paribas Entity and (y) no such consent need be obtained with respect to any assignment of Tranche B Term Loans), to an additional bank, or financial institution or other entity (an "Assignee") all or any part of its rights and -------- obligations under this Agreement pursuant to an Assignment and Acceptance executed by such Assignee and such Assignor (and, where the consent of the Borrower, the Administrative Agent, the Syndication Agent or the Issuing Lender is required pursuant to the foregoing provisions, by the Borrower and such other Persons) and delivered to the Administrative Agent for its acceptance and recording in the Register; provided that, unless otherwise agreed by the -------- Borrower and the Administrative Agent, (A) no such assignment to an Assignee (other than any Lender, any affiliate thereof or Related Fund of any Lender) shall be in an aggregate principal amount of less than, and the aggregate principal amount retained by the assigning Lender shall not (unless such assigning Lender is thereby assigning all of its interest under this Agreement) be less than $2,500,000 (or, in the case of the Tranche B Term Loan Facility, $1,000,000) unless otherwise agreed to by the Borrower, the Administrative Agent and the Syndication Agent, in each case other than in the case of an assignment of all of a Lender's interests under this Agreement. Any such assignment need not be ratable as among the Facilities. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with Commitments and/or Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of an Assignor's rights and obligations under this Agreement, such Assignor shall cease to be a party hereto, except as to Section 2.19, 2.20 and 10.5 in respect of the period prior to such effective date). Notwithstanding any provision of this Section, the consent of the Borrower shall not be required for any assignment that occurs at any time when any Event of Default shall have occurred and be continuing. For purposes of the minimum assignment amounts set forth in this paragraph, multiple assignments by two or more Related Funds shall be aggregated. 95 (d) The Administrative Agent shall, on behalf of the Borrower, maintain at its address referred to in Section 10.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the -------- recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, each Agent and the Lenders shall treat each Person whose name is recorded in the Register as the owner of the Loans and any Notes evidencing such Loans recorded therein for all purposes of this Agreement. Any assignment of any Loan, whether or not evidenced by a Note, shall be effective only upon appropriate entries with respect thereto being made in the Register (and each Note shall expressly so provide). Any assignment or transfer of all or part of a Loan evidenced by a Note shall be registered on the Register only upon surrender for registration of assignment or transfer of the Note evidencing such Loan, accompanied by a duly executed Assignment and Acceptance; thereupon one or more new Notes in the same aggregate principal amount shall be issued to the designated Assignee, and the old Notes shall be returned by the Administrative Agent to the Borrower marked "canceled". The Register shall be available for inspection by the Borrower or any Agent, or by any Lender (with respect to any entry relating to such Lender's Loans), at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an Assignor and an Assignee (and, in any case where the consent of any other Person is required by Section 10.6(c), by each such other Person) together with payment to the Administrative Agent of a registration and processing fee of $3,500 (treating multiple, simultaneous assignments by or to two or more Related Funds as a single assignment) (except that no such registration and processing fee shall be payable in the case of an Assignee which is already a Lender or is an affiliate or Related Fund of a Lender or a Person under common management with a Lender), the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Borrower. On or prior to such effective date, the Borrower, at its own expense, upon request, shall execute and deliver to the Administrative Agent (in exchange for the Revolving Credit Note and/or applicable Term Notes, as the case may be, of the assigning Lender) a new Revolving Credit Note and/or applicable Term Notes, as the case may be, to the order of such Assignee in an amount equal to the Revolving Credit Commitment and/or applicable Term Loans, as the case may be, assumed or acquired by it pursuant to such Assignment and Acceptance and, if the Assignor has retained a Revolving Credit Commitment and/or Term Loans, as the case may be, upon request, a new Revolving Credit Note and/or applicable Term Notes, as the case may be, to the order of the Assignor in an amount equal to the Revolving Credit Commitment and/or applicable Term Loans, as the case may be, retained by it hereunder. Such new Note or Notes shall be dated the Closing Date and shall otherwise be in the form of the Note or Notes replaced thereby. (f) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this Section concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests in Loans and Notes, including, without limitation, (x) any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law and (y) any pledge or assignment by a Lender that is a fund that invests in bank loans to any holder of, trustee for, or 96 any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities; provided that any -------- foreclosure or similar action by any such holder, trustee or representative shall be subject to the provisions of Section 10.6(c) concerning assignments. (g) Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an --------------- "SPC"), identified as such in writing from time to time by the Granting Lender --- to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that -------- (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any state thereof. In addition, notwithstanding anything to the contrary in this Section 10.6(g), any SPC may (A) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender, or with the prior written consent of the Borrower and the Administrative Agent (which consent shall not be unreasonably withheld) to any financial institutions providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans, and (B) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC; provided that non-public information with -------- respect to the Borrower may be disclosed only with the Borrower's consent which will not be unreasonably withheld. This paragraph (g) may not be amended without the written consent of any SPC with Loans outstanding at the time of such proposed amendment. 10.7 Adjustments; Set-off. (a) Except to the extent that this -------------------- Agreement provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a "Benefited Lender") shall ---------------- at any time receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Obligations, such Benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Obligations, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any -------- ------- 97 portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, upon prior written notice to the Administrative Agent and without prior notice to Holdings or the Borrower, any such notice being expressly waived by Holdings and the Borrower, to the extent permitted by applicable law, upon any amount becoming due and payable by Holdings or the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of Holdings or the Borrower, as the case may be. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of - -------- such setoff and application. 10.8 Counterparts. This Agreement may be executed by one or more of ------------ the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement or of a Lender Addendum by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 10.9 Severability. Any provision of this Agreement that is prohibited ------------ or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10.10 Integration. This Agreement and the other Loan Documents ----------- represent the entire agreement of Holdings, the Borrower, the Agents, the Arrangers and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Arranger, any Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 10.11 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. 10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the ----------------------------------- Borrower hereby irrevocably and unconditionally: 98 (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 non-exclusive general jurisdiction of the courts of the State of New York, located in Manhattan, New York City, the courts of the United States of America 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, to the fullest extent permitted under applicable law, 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 forum 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 Holdings or the Borrower, as the case may be, at the address set forth for it in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (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; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. 10.13 Acknowledgments. Each of Holdings and the Borrower hereby --------------- acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (b) neither any Arranger, any Agent nor any Lender has any fiduciary relationship with or duty to Holdings or the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Arrangers, the Agents and the Lenders, on one hand, and Holdings and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Arrangers, the Agents and the Lenders or among Holdings, the Borrower and the Lenders. 10.14 Confidentiality. Each of the Agents and the Lenders agrees to --------------- keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement; provided that nothing herein shall prevent any Agent -------- or any Lender from disclosing any such information (a) to any Arranger, any Agent, any other Lender or any affiliate of any thereof, (b) to any Participant or Assignee (each, a "Transferee") or prospective Transferee that agrees in ---------- writing to comply with the provisions of this Section or provisions substantially similar thereto, (c) to any of its employees, directors, agents, attorneys, accountants and other 99 professional advisors, (d) to any financial institution that is a direct or indirect contractual counterparty in swap agreements or such contractual counterparty's professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section), (e) upon the request or demand of any Governmental Authority having jurisdiction over it, (f) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (g) in connection with any litigation or similar proceeding, (h) that has been publicly disclosed other than in breach of this Section, (i) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender's investment portfolio in connection with ratings issued with respect to such Lender or (j) in connection with the exercise of any remedy hereunder or under any other Loan Document. 10.15 Release of Collateral and Guarantee Obligations. ----------------------------------------------- (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of the Borrower in connection with any Disposition of Property permitted by the Loan Documents, the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement) take such actions as shall be required to release its security interest in any Collateral being Disposed of in such Disposition, and to release any guarantee obligations under any Loan Document of any Person being Disposed of in such Disposition, to the extent necessary to permit consummation of such Disposition in accordance with the Loan Documents. (b) Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations (other than obligations in respect of any Specified Hedge Agreement) have been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be outstanding, upon request of the Borrower, the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement) take such actions as shall be required to release its security interest in all Collateral, and to release all guarantee obligations under any Loan Document, whether or not on the date of such release there may be outstanding Obligations in respect of Specified Hedge Agreements. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made. 10.16 Accounting Changes. In the event that any "Accounting Change" ------------------ (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree that, upon the written request of the Borrower or the Administrative Agent, they will enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Change with the desired result that the criteria for 100 evaluating the Borrower's financial condition shall be the same after such Accounting Change as if such Accounting Change had not been made. If the Borrower shall have so notified the Administrative Agent or the Administrative Agent (at the request of the Required Lenders) shall have so notified the Borrower, until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Change had not occurred. "Accounting Change" refers to any change in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC. 10.17 Delivery of Lender Addenda. Each initial Lender shall become a -------------------------- party to this Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender, the Borrower and the Administrative Agent. 10.18 Effect of Amendment and Restatement of the Existing Credit ---------------------------------------------------------- Agreement and Related Documents. (a) On the Initial Funding Date, the Existing - ------------------------------- Credit Agreement shall be amended, restated and superseded in its entirety by this Agreement. The parties hereto acknowledge and agree that (i) during the period from the Closing Date until the Initial Funding Date, the Existing Credit Agreement shall be effective in accordance with its terms and shall be deemed not to have been amended and restated by this Agreement, (ii) on the Initial Funding Date, loans owing under the Existing Credit Agreement to any lender thereunder that is a Lender hereunder shall be deemed to be outstanding as Loans of such Lender hereunder (to the extent of such Lender's ratable share (determined in accordance with this Agreement) of the aggregate principal amount of Loans requested to be made hereunder on the Initial Funding Date), provided -------- that, notwithstanding the foregoing, if required by the Administrative Agent, for administrative convenience, (A) on the Initial Funding Date, such Lender will make available to the Administrative Agent funds in the amount of such Lender's ratable share (determined in accordance with this Agreement) of Loans requested to be made hereunder on the Initial Funding Date, (B) the Borrower will repay all Loans outstanding under the Existing Credit Agreement and (C) the Administrative Agent (in its capacity as administrative agent under the Existing Credit Agreement) will make available to such Lender such Lender's ratable share (determined in accordance with the Existing Credit Agreement) of such amount repaid by the Borrower under the Existing Credit Agreement and (iii) this Agreement and the other Loan Documents, whether executed and delivered in connection herewith or otherwise, do not constitute a novation, payment and reborrowing, or termination of the Loans and other Obligations (in each case, as defined in the Existing Credit Agreement) under the Existing Credit Agreement as in effect prior to the Initial Funding Date. (b) On the Initial Funding Date, the Existing Security Documents (as defined in the Guarantee and Collateral Agreement) shall be deemed amended and restated in their entirety by the Guarantee and Collateral Agreement. Accordingly, (i) to the extent that the Existing Security Documents grant security interests in any property constituting Collateral to secure any Existing Secured Obligations (as defined in the Guarantee and Collateral Agreement) that are amended and restated by this Agreement, such property shall, from and after the Initial Funding Date, constitute Collateral under the Guarantee and Collateral Agreement securing the Obligations, including such Existing Secured Obligations as so amended and restated and (ii) to 101 the extent that the Existing Security Documents grant security interests in any property that does not constitute Collateral, such security interests are hereby released and the Administrative Agent is hereby authorized by the Lenders and, at the request and expense of the applicable Loan Party, shall execute and deliver to such Loan Party such documents as such Loan Party shall reasonably request to evidence such release. 10.19 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, 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. 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. CSG SYSTEMS INTERNATIONAL, INC. By: /s/ Peter E. Kalan ----------------------------------- Name: Peter E. Kalan Title: Chief Financial Officer CSG SYSTEMS, INC. By: /s/ Peter E. Kalan ----------------------------------- Name: Peter E. Kalan Title: Chief Financial Officer BNP PARIBAS, as Administrative Agent By: /s/ Eric Toizer ---------------------------------- Name: Eric Toizer Title: Director By: /s/ Susan M. Bowes --------------------------------- Name: Susan M. Bowes Title: Director LEHMAN COMMERCIAL PAPER INC., as Syndication Agent By: /s/ G. Andrew Keith ---------------------------------- Name: G. Andrew Keith Title: Authorized Signatory 2 CREDIT LYONNAIS NEW YORK BRANCH, as Co- Documentation Agent By: /s/ Attila Koc ------------------------------------- Name: Attila Koc Title: Senior Vice President THE BANK OF NOVA SCOTIA, as Co-Documentation Agent By: /s/ Chris Johnson ----------------------------------- Name: Chris Johnson Title: Managing Director WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent By: /s/ John R. Hall ----------------------------------- Name: John R. Hall Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----