UNITED STATES

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 29, 2007

 


BROADRIDGE FINANCIAL SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

 


 

Delaware   001-33220   33-1151291

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

 

2 Journal Square Plaza, Jersey City, NJ   07306
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (201) 714-3000

N/A

(Former name or former address, if changed since last report)

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 1.01. Entry into a Material Definitive Agreement

On March 30, 2007 (the “Distribution Date”), Automatic Data Processing Inc. (“ADP”) completed the distribution to its stockholders of all of the outstanding shares of common stock of Broadridge Financial Solutions, Inc. (“Broadridge”, the “Company”, “we” or “us”) in a tax free spin-off (the “Distribution”). The Distribution was paid in the amount of one share of our common stock for every four shares outstanding of ADP common stock.

A registration statement on Form 10 describing the spin-off was filed by us with the Securities and Exchange Commission and has been declared effective. An information statement (the “Information Statement”) regarding Broadridge and the spin-off was sent to all holders of record of ADP stock on March 23, 2007, the record date.

In connection with the Distribution, we entered into certain agreements with ADP as of March 29, 2007 to govern the terms of the spin-off and to define our ongoing relationship with ADP, including obligations with respect to liabilities relating to our business and to ADP’s business and obligations with respect to each company’s employees, certain transition services, intellectual property and taxes.

Tax Allocation Agreement

We entered into a tax allocation agreement with ADP which governs both our and ADP’s rights and obligations after the Distribution with respect to taxes for both pre- and post-Distribution periods. Under the tax allocation agreement, ADP generally is required to indemnify us for any income taxes attributable to its operations or our operations and for any non-income taxes attributable to its operations, in each case for all pre-Distribution periods as well as any taxes arising from transactions effected to consummate the spin-off, and we generally are required to indemnify ADP for any non-income taxes attributable to our operations for all pre-Distribution periods and for any taxes attributable to our operations for post-Distribution periods.

We are generally required to indemnify ADP against any tax resulting from the Distribution (and against any claims made against ADP in respect of any tax imposed on its stockholders), in each case if that tax results from (i) an issuance of a significant amount of our equity securities, a redemption of a significant amount of our equity securities or our involvement in other significant acquisitions of our equity securities (excluding the Distribution), (ii) other actions or failures to act by us (such as those described in the following paragraph) or (iii) any of our representations or undertakings referred to in the tax allocation agreement being incorrect or violated. ADP will generally be required to indemnify us for any tax resulting from the Distribution if that tax results from (iv) ADP’s issuance of its equity securities, redemption of its equity securities or involvement in other acquisitions of its equity securities, (v) other actions or failures to act by ADP or (vi) any of ADP’s representations or undertakings referred to in the tax allocation agreement being incorrect or violated.


In addition, to preserve the tax-free treatment to ADP of the Distribution, for specified periods of up to 30 months following the Distribution, we are generally prohibited, except in specified circumstances, from:

 

   

issuing, redeeming or being involved in other significant acquisitions of our equity securities (excluding the Distribution);

 

   

transferring significant amounts of our assets;

 

   

amending our certificate of incorporation or by-laws;

 

   

failing to comply with the Internal Revenue Service requirement for a spin-off that we engage in the active conduct of a trade or business after the spin-off; or

 

   

engaging in other actions or transactions that could jeopardize the tax-free status of the Distribution.

Though valid as between the parties, the tax allocation agreement is not binding on the Internal Revenue Service and does not affect the several liability of ADP and us for all U.S. federal taxes of the consolidated group relating to periods before the Distribution Date.

A copy of the tax allocation agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Transition Services Agreement

We entered into a transition services agreement with ADP under which ADP, its affiliates or third party service providers will provide us with certain specified services on an interim basis. The agreement will expire and services under it will cease no later than one year following the Distribution Date or sooner in the event we no longer require such services. Among the principal services to be provided are operational and administrative infrastructure-related services such as use of the e-mail domain “adp.com,” accounts payable processing, procurement support and human resources administrative services.

We will pay fees to ADP for any services provided, which fees are generally intended to be equal to the applicable allocable cost of ADP’s services to the Brokerage Services Business.

A copy of the transition services agreement is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

Data Center Outsourcing Services Agreement

We entered into a data center outsourcing services agreement with ADP under which ADP will provide us with data center services consistent with the services provided to us immediately prior to the Distribution, provided that the governance and control of the data center shall remain the sole responsibility of ADP. Among the principal services provided by the data center are information technology services and service delivery network services. The agreement with ADP provides for increasing volumes and the addition of new services over the term. Under the agreement, ADP is responsible for hosting the mainframe, midrange, open systems, and


networks. Additionally, systems engineering, network engineering, hardware engineering, network operations, data center operations, application change management, and data center disaster recovery services are managed by ADP. In addition, in the event of a change of control event resulting in the assets of ADP used for the operation of the Data Center and the provision of the services covered by the data center agreement coming under the control of certain third parties, we will have the ability to terminate the agreement. The term of the agreement will expire on June 30, 2012.

A copy of the data center outsourcing services agreement is attached hereto as Exhibit 10.3 and is incorporated herein by reference.

Intellectual Property Transfer Agreement

We entered into an intellectual property transfer agreement with ADP and certain of its subsidiaries under which ADP assigned to the Company a limited number of trademarks and other intellectual property: (i) developed by ADP and (ii) of which the Company is the primary or exclusive user today or the anticipated primary or exclusive user in the future. The parties have the option of acquiring from each other license rights to certain intellectual property at fair market value.

A copy of the intellectual property transfer agreement is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

Employee Matters Agreement

We entered into an agreement with ADP pursuant to which certain employee benefits matters are addressed, such as the treatment of ADP options held by our employees after the separation, and the treatment of supplemental officers retirement plan (“SORP”) benefits for our management employees who participate in and have accrued benefits under the ADP SORP. The agreement also, to the extent provided therein, delineates the benefit plans and programs in which our employees will participate following the separation. ADP shall remain responsible for the payment of all benefits under the ADP benefit plans.

A copy of the employee matters agreement is attached hereto as Exhibit 10.5 and is incorporated herein by reference.

New Credit Facilities

In connection with the Distribution, we entered into new senior, unsecured credit facilities consisting of a term loan facility and a revolving credit facility (the “New Credit Facility”) and an interim loan facility (the “Interim Credit Facility”). The New Credit Facility provides for aggregate maximum borrowings of $940.0 million and the Interim Credit Facility provides for aggregate maximum borrowings of $250.0 million.

 


The following sets forth a description of the material terms of the New Credit Facility and the Interim Credit Facility. Copies of the New Credit Facility and the Interim Credit Facility are attached hereto as Exhibits 10.12 and 10.13, respectively, and are incorporated herein by reference.

Structure. The New Credit Facility provides for aggregate commitments of $940.0 million, consisting of (i) a senior unsecured term loan facility in an aggregate principal amount of up to $440.0 million (the “Term Loan Facility”) and (ii) a senior unsecured revolving credit facility in an aggregate principal amount of up to $500.0 million (the “Revolving Credit Facility”). The Revolving Credit Facility includes a letter of credit facility, a swingline facility and a competitive bid advance facility. The Interim Credit Facility is a senior unsecured revolving credit facility in an aggregate principal amount of up to $250.0 million.

The proceeds of the New Credit Facility and the Interim Credit Facility will be used (i) to pay a dividend to ADP, (ii) to pay fees and expenses relating to the transactions, the New Credit Facility and the Interim Credit Facility and (iii) for working capital and other general corporate purposes, including the backstop of commercial paper and the payment of intercompany loans following the Distribution. The Revolving Credit Facility is intended to replace our reliance on ADP’s centralized cash management system. The full amount of the Term Loan Facility and the Interim Credit Facility must be drawn in a single drawing upon its closing; however, the Interim Credit Facility may be reborrowed and repaid during its term of 364 days.

Interest and Expenses. Borrowings under the Term Loan Facility, the Revolving Credit Facility (other than in respect of any competitive advance) and the Interim Credit Facility bear interest at our option at an adjusted LIBOR rate plus a margin or an alternate base rate. The LIBOR margin on the Revolving Credit Facility (other than in respect of any competitive advance) will be subject to adjustment based on our ratings. Borrowings under the competitive advance option under the Revolving Credit Facility bear interest at rates obtained from bids selected by us under a competitive auction procedure run by the facility’s administrative agent. Borrowings under the Interim Credit Facility bear interest at our option at an adjusted LIBOR rate plus a margin which is subject to adjustment based on our utilization under such Interim Credit Facility or an alternate base rate.

In connection with each of the New Credit Facility and the Interim Credit Facility, we are required to pay administrative fees, underwriting fees, arranger fees, commitment fees and certain expenses and to provide certain indemnities, all of which we believe are customary for financings of this type.

Maturity and Amortization. The Interim Credit Facility matures no later than 364 days after the closing date, at which time we expect to replace it with permanent financing if we have not previously done so. The Term Loan Facility and the Revolving Credit Facility will both mature five years after the closing date.


Prepayments. We may voluntarily prepay, in whole or in part and without premium or penalty, the Term Loan Facility, the Revolving Credit Facility and the Interim Credit Facility at any time. The Interim Credit Facility is subject to a mandatory prepayment and permanent commitment reduction upon the issuance by us or any of our subsidiaries of certain types of indebtedness or equity interests.

Covenants. The New Credit Facility and the Interim Credit Facility contain customary affirmative and negative covenants including covenants relating to limitations on, among other things:

 

   

liens,

 

   

sale-leaseback transactions,

 

   

incurrence of indebtedness,

 

   

transactions with affiliates,

 

   

changes in business activities conducted by us, and

 

   

mergers, consolidations and transfers of all or substantially all of our assets.

Financial Covenants. The New Credit Facility and the Interim Credit Facility contain covenants setting maximum ratios of total consolidated indebtedness to EBITDA (which is defined in the New Credit Facility and the Interim Credit Facility) and EBITDA to total consolidated interest expense.

Events of Default. The New Credit Facility and the Interim Credit Facility contain customary events of default, including but not limited to:

 

   

non-payment of principal, interest, fees or other amounts when due,

 

   

violation of covenants,

 

   

material inaccuracies of representations and warranties,

 

   

cross-default and cross-acceleration,

 

   

change of control,

 

   

material judgments, and

 

   

bankruptcy events.

Some of these events of default provide for grace periods and materiality qualifications.


Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

Item 3.02 Unregistered Sales of Equity Securities.

In connection with its separation from ADP, we issued approximately 138.5 million shares of common stock to ADP. The common stock was issued in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933 because the common stock was issued in a transaction not involving a public offering. The common stock has been registered under the Securities Exchange Act of 1934, as amended.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Prior to the Distribution, ADP, as sole stockholder of Broadridge, elected the persons set forth in the table below to the Company’s Board of Directors (the “Board”). On April 1, 2007, the Board appointed Mr. Haviland (Chair), Mr. Brun, Ms. Lebenthal and Mr. Weber as members of the Audit Committee; Mr. McInerney (Chair), Mr. Brun, Ms. Lebenthal and Mr. Levine as members of the Compensation Committee; and Mr. Levine (Chair), Mr. Haviland, Mr. McInerney and Mr. Weber as members of the Corporate Governance Committee. Each director will hold office until a successor is elected and qualified or until the director’s death, resignation or removal.

 

Name

   Age   

Committee Appointment

Arthur F. Weinbach

   63    N/A

Richard J. Daly

   53    N/A

Leslie A. Brun

   54    Audit; Compensation

Richard J. Haviland

   60    Audit (Chair); Corporate Governance

Alexandra Lebenthal

   43    Audit; Compensation

Stuart R. Levine

   59    Corporate Governance (Chair); Compensation

Thomas E. McInerney

   65    Compensation (Chair); Corporate Governance

Alan J. Weber

   58    Audit; Corporate Governance

Prior to the Distribution, the following persons were appointed to the offices of the Company set forth beside each person’s name:

 

Name

   Age   

Position(s)

Arthur F. Weinbach

   63    Executive Chairman

Richard J. Daly

   53    Chief Executive Officer

John Hogan

   58    Vice President, Chief Operating Officer

Adam D. Amsterdam

   46    Vice President, General Counsel and Secretary

Joseph Barra

   46    Vice President, Clearing and Outsourcing Solutions

J. Peter Benzie

   58    Vice President, Sales

Richard C. Berke

   61    Vice President, Human Resources

Douglas R. DeSchutter

   36    Vice President, Strategic Development


Name

   Age   

Position(s)

Robert F. Kalenka

   44    Vice President, Global Procurement and Facilities

Charles J. Marchesani

   47    Vice President, Securities Processing Solutions

Gerard F. Scavelli

   51    Vice President, Investor Communication Solutions

Robert Schifellite

   48    Vice President, Investor Communication Solutions

Dan Sheldon

   50    Vice President, Chief Financial Officer

Information regarding the background of our directors and executive officers and information regarding director and officer compensation arrangements, including the 2007 Omnibus Award Plan, is included in the Information Statement under the caption “Management.” Copies of the 2007 Omnibus Award Plan, the Broadridge Financial Solutions, Inc. Change in Control Severance Plan for Corporate Officers, the Supplemental Officers Retirement Plan, the Change in Control Enhancement Agreements for each of Richard J. Daly and John Hogan and the 2007 Deferred Compensation Plan are filed as Exhibits to this Current Report on Form 8-K and are incorporated herein by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year

In connection with the Distribution and its conversion from a limited liability company to a corporation, on March 29, 2007, the Company filed a Certificate of Incorporation with the Secretary of State of the State of Delaware. In connection with the Distribution, the Company also approved and adopted By-laws.

Copies of the Company’s Certificate of Incorporation and By-laws are filed hereto as Exhibits 3.1 and 3.2 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.

Item 5.05 Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics

In connection with the Distribution, the Board adopted Corporate Governance Principles and a Code of Business Conduct for employees and directors. A copy of the Company’s Corporate Governance Guidelines and Code of Conduct are available on the Company’s website, http://www.broadridge-ir.com/corpgov/index.htm .

Item 8.01 Other Events

On April 2, 2007, the Company issued a press release announcing the beginning of trading of the Company’s common stock on the New York Stock Exchange. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibits are included as part of this Report on Form 8-K:

 

Exhibit
Number
 

Description

3.1   Certificate of Incorporation of Broadridge Financial Solutions, Inc.

 


3.2   By-laws of Broadridge Financial Solutions, Inc.
10.1   Tax Allocation Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.2   Transition Services Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.3   Data Center Outsourcing Services Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.4   Intellectual Property Transfer Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.5   Employee Matters Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.6   Broadridge Financial Solutions, Inc. Change in Control Severance Plan for Corporate Officers.
10.7   Supplemental Officers Retirement Plan.
10.8   Change in Control Enhancement Agreement for Richard J. Daly.
10.9   Change in Control Enhancement Agreement for John Hogan.
10.10   2007 Deferred Compensation Plan.
10.11   Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan.
10.12   Five-Year Credit Agreement dated as of March 29, 2007 by and among Broadridge Financial Solutions, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, J.P. Morgan Europe Limited, as London Agent, Citibank, N.A., as Syndication Agent, and the Lenders party thereto.
10.13   Interim Credit Agreement dated as of March 29, 2007 by and among Broadridge Financial Solutions, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and the Lenders party thereto.
99.1   Press Release dated April 2, 2007, issued by Broadridge Financial Solutions, Inc.


SIGNATURE

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.

Date: April 2, 2007

 

BROADRIDGE FINANCIAL SOLUTIONS, INC.
By:  

/s/ Adam D. Amsterdam

Name:  

Adam D. Amsterdam

Title:   Vice President, General Counsel and Secretary


Exhibit Index

 

Exhibit

Number

 

Description

3.1   Certificate of Incorporation of Broadridge Financial Solutions, Inc.
3.2   By-laws of Broadridge Financial Solutions, Inc.
10.1   Tax Allocation Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.2   Transition Services Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.3   Data Center Outsourcing Services Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.4   Intellectual Property Transfer Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.5   Employee Matters Agreement, dated as of March 29, 2007, between Automatic Data Processing, Inc. and Broadridge Financial Solutions, LLC.
10.6   Broadridge Financial Solutions, Inc. Change in Control Severance Plan for Corporate Officers.
10.7   Supplemental Officers Retirement Plan.
10.8   Change in Control Enhancement Agreement for Richard J. Daly.
10.9   Change in Control Enhancement Agreement for John Hogan.
10.10   2007 Deferred Compensation Plan.
10.11   Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan.
10.12   Five-Year Credit Agreement dated as of March 29, 2007 by and among Broadridge Financial Solutions, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, J.P. Morgan Europe Limited, as London Agent, Citibank, N.A., as Syndication Agent, and the Lenders party thereto.
10.13   Interim Credit Agreement dated as of March 29, 2007 by and among Broadridge Financial Solutions, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and the Lenders party thereto.
99.1   Press Release dated April 2, 2007, issued by Broadridge Financial Solutions, Inc.

Exhibit 3.1

CERTIFICATE OF INCORPORATION

OF

BROADRIDGE FINANCIAL SOLUTIONS, INC.

The undersigned incorporator, in order to form a corporation under the General Corporation Law of the State of Delaware (the “ General Corporation Law ”), certifies as follows:

1. Name . The name of the corporation is Broadridge Financial Solutions, Inc. (the “ Corporation ”).

2. Address; Registered Office and Agent . The address of the Corporation’s registered office is Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801; and the name of its registered agent at such address is The Corporation Trust Company.

3. Purposes . The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

4. Capital Stock .

4.1 The total number of shares of stock that the Corporation shall have authority to issue is 675,000,000, consisting of 650,000,000 shares of Common Stock, having a par value of $0.01 per share (the “ Common Stock ”), and 25,000,000 shares of Preferred Stock, having a par value of $0.01 per share (the “ Preferred Stock ”).

4.2 The Board of Directors of the Corporation (the “ Board ”) is hereby expressly authorized, by resolution or resolutions thereof, to provide, out of the


unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the voting powers (if any) of the shares of such series, and the preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

4.3 Except as may otherwise be provided in this Certificate of Incorporation (including any certificate filed with the Secretary of State of the State of Delaware establishing the terms of a series of Preferred Stock in accordance with Section 4.2) or by applicable law, each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote, and no holder of any series of Preferred Stock, as such, shall be entitled to any voting powers in respect thereof.

4.4 Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock, dividends may be declared and paid on the Common Stock at such times and in such amounts as the Board in its discretion shall determine.

4.5 Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights, if any, of the holders of any outstanding series of Preferred Stock, the holders of the Common Stock shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them.

 

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5. Name and Mailing Address of Incorporator . The name and mailing address of the incorporator are: James B. Benson, c/o Automatic Data Processing, Inc., One ADP Boulevard, Roseland, New Jersey 07068.

6. Limitation of Liability . To the fullest extent permitted under the General Corporation Law, as amended from time to time, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Any amendment, repeal or modification of the foregoing provision shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, repeal or modification.

7. Indemnification .

7.1 Right to Indemnification . The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “ Covered Person ”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity (an “ Other Entity ”), including service with respect to employee benefit plans,

 

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against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 7.3, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized by the Board.

7.2 Prepayment of Expenses . The Corporation shall pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any Proceeding in advance of its final disposition, provided , however , that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article 7 or otherwise.

7.3 Claims . If a claim for indemnification or advancement of expenses under this Article 7 is not paid in full within 30 days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

7.4 Nonexclusivity of Rights . The rights conferred on any Covered Person by this Article 7 shall not be exclusive of any other rights that such

 

4


Covered Person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, the By-laws of the Corporation (the “ By-laws ”), agreement, vote of stockholders or disinterested directors or otherwise.

7.5 Other Sources . The Corporation’s obligation, if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of an Other Entity shall be reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such Other Entity.

7.6 Amendment or Repeal . Any repeal or modification of the foregoing provisions of this Article 7 shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification.

7.7 Other Indemnification and Prepayment of Expenses . This Article 7 shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.

8. Written Consent Prohibition . At any time Automatic Data Processing, Inc. ceases to own a majority of the issued and outstanding shares of Common Stock, no action that is required or permitted to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders may be effected by written consent of stockholders in lieu of a meeting of stockholders. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of at least 80% in voting power of the then outstanding voting stock of the Corporation, voting together as a single class, shall be required to amend, repeal or adopt any provision inconsistent with this Article 8.

 

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9. Adoption, Amendment and/or Repeal of By-laws . In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board is expressly authorized to make, alter and repeal the By-laws, subject to the power of the stockholders of the Corporation to alter or repeal any By-law whether adopted by them or otherwise.

10. Powers of Incorporators . The powers of the incorporators are to terminate upon the filing of this Certificate of Incorporation with the Secretary of State of the State of Delaware. The name and mailing address of the person who is to serve as the initial director of the Corporation, or until his successor is duly elected and qualified, is:

James B. Benson

One ADP Boulevard

Roseland, New Jersey 07068

11. Effective Time . This Certificate of Incorporation shall become effective on March 29, 2007 at 9:00 a.m. (Eastern time).

WITNESS the signature of this Certificate of Incorporation this 29th day of March 2007.

 

/s/ James B. Benson    

James B. Benson
Incorporator

 

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Exhibit 3.2

BY-LAWS

OF

BROADRIDGE FINANCIAL SOLUTIONS, INC.

(A Delaware Corporation)

ARTICLE I

DEFINITIONS

As used in these By-laws, unless the context otherwise requires, the term:

1.1. “Assistant Secretary” means an officer of the Corporation having the title of “Assistant Secretary.”

1.2. “Assistant Treasurer” means an officer of the Corporation having the title of “Assistant Treasurer.”

1.3. “Board” means the Board of Directors of the Corporation.

1.4. “By-laws” means these By-laws of the Corporation, as amended or restated from time to time.

1.5. “Certificate of Incorporation” means the Certificate of Incorporation of the Corporation, as amended or restated from time to time.

1.6. “Chairman” means the Chairman of the Board of Directors of the Corporation.

1.7. “CEO” means an officer of the Corporation having the title of “Chief Executive Officer.”


1.8. “Chief Financial Officer” means an officer of the Corporation having the title of “Chief Financial Officer.”

1.9. “Corporation” means Broadridge Financial Solutions, Inc.

1.10. “Directors” means the directors of the Corporation.

1.11. “Entire Board” means all directors of the Corporation in office, whether or not present at a meeting of the Board, but disregarding vacancies.

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

1.13. “General Corporation Law” means the General Corporation Law of the State of Delaware, as amended from time to time.

1.14. “Office of the Corporation” means the executive office of the Corporation, anything in Section 131 of the General Corporation Law to the contrary notwithstanding.

1.15. “President” means an officer of the Corporation having the title of “President.”

1.16. “Secretary” means an officer of the Corporation having the title of “Secretary.”

1.17. “Stockholders” means the stockholders of the Corporation.

1.18. “Treasurer” means an officer of the Corporation having the title of “Treasurer.”

 

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1.19. “Vice Chairman” means the Vice Chairman of the Board of Directors of the Corporation.

1.20. “Vice President” means an officer of the Corporation having the title of “Vice President.”

ARTICLE II

STOCKHOLDERS

2.1. Place of Meetings . Every meeting of Stockholders shall be held at the Office of the Corporation or at such other place within or without the State of Delaware as shall be specified or fixed in the notice of such meeting or in the waiver of notice thereof.

2.2. Annual Meeting . A meeting of Stockholders shall be held annually for the election of Directors and the transaction of other business at such hour and on such business day in each year as may be determined by the Board and designated in the notice of meeting.

2.3. Deferred Meeting for Election of Directors, Etc. If the annual meeting of Stockholders for the election of Directors and the transaction of other business is not held on the date designated therefor at any adjournment of a meeting convened on such date, the Board shall call a meeting of Stockholders for the election of Directors and the transaction of other business as soon thereafter as convenient.

2.4. Special Meetings . A special meeting of Stockholders may be called at any time by the Board, the Chairman or the CEO. Any such request shall state the purpose of the proposed meeting. At any special meeting of Stockholders only such business may be transacted as is related to the purpose or purposes of such meeting set forth in the notice thereof given pursuant to Section 2.6 hereof or in any waiver of notice thereof given pursuant to Section 2.7 hereof.

 

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2.5. Fixing Record Date . For the purpose of: (a) determining the Stockholders entitled (i) to notice of or to vote at any meeting of Stockholders or any adjournment thereof, (ii) unless otherwise provided in the Certificate of Incorporation to express consent to corporate action in writing without a meeting or (iii) to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock; or (b) any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date was adopted by the Board and which record date shall not be (x) in the case of clause (a)(i) above, more than sixty (60) nor less than ten (10) days before the date of such meeting, (y) in the case of clause (a)(ii) above, more than ten (10) days after the date upon which the resolution fixing the record date was adopted by the Board and (z) in the case of clause (a)(iii) or (b) above, more than sixty (60) days prior to such action. If no such record date is fixed:

2.5.1. the record date for determining Stockholders entitled to notice of or to vote at a meeting of Stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;

2.5.2. the record date for determining Stockholders entitled to express consent to corporate action in writing without a meeting (unless otherwise provided in the Certificate of Incorporation), when no prior action by the Board is required under the General Corporation Law, shall be the first day on which a signed written consent setting forth the action taken or proposed to be taken is

 

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delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of Stockholders are recorded; and when prior action by the Board is required under the General Corporation Law, the record date for determining Stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board adopts the resolution taking such prior action; and

2.5.3. the record date for determining Stockholders for any purpose other than those specified in Sections 2.5.1 and 2.52 hereof shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

When a determination of Stockholders entitled to notice of or to vote at any meeting of Stockholders has been made as provided in this Section 2.5, such determination shall apply to any adjournment thereof unless the Board fixes a new record date for the adjourned meeting. Delivery made to the Corporation’s registered office in accordance with Section 2.5.1 hereof shall be by hand or by certified or registered mail, return receipt requested.

2.6. Notice of Meetings of Stockholders . Except as otherwise provided in Sections 2.5 and 2.7 hereof, whenever under the provisions of any statute, the Certificate of Incorporation or these By-laws, Stockholders are required or permitted to take any action at a meeting, written notice shall be given stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by any statute, the Certificate of Incorporation or these By-laws, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten (10) nor more than sixty (60) days before the date

 

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of the meeting, to each Stockholder entitled to notice of or to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, with postage prepaid, directed to the Stockholder at such Stockholder’s address as it appears on the records of the Corporation. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice required by this Section 2.6 has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted at the meeting as originally called. If, however, the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Stockholder of record entitled to vote at the meeting.

2.7. Waivers of Notice . Whenever the giving of any notice is required by statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in writing, signed by the Stockholder or Stockholders entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance by a Stockholder at a meeting shall constitute a waiver of notice of such meeting except when the Stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of Stockholders need be specified in any written waiver of notice unless so required by statute, the Certificate of Incorporation or these By-laws.

2.8. List of Stockholders . The Secretary shall prepare and make, or cause to be prepared and made, at least ten (10) days before every meeting of

 

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Stockholders, a complete list of the Stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each Stockholder and the number of shares registered in the name of each Stockholder. Such list shall be open to the examination of any Stockholder, the Stockholder’s agent, or attorney, at the Stockholder’s expense, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Stockholder who is present. The Corporation shall maintain the Stockholder list in written form or in another form capable of conversion into written form within a reasonable time. The stock ledger shall be the only evidence as to who are the Stockholders entitled to examine the stock ledger, the list of Stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of Stockholders.

2.9. Quorum of Stockholders; Adjournment . Except as otherwise provided by any statute, the Certificate of Incorporation or these By-laws, the holders of a majority of all outstanding shares of stock entitled to vote at any meeting of Stockholders, present in person or represented by proxy, shall constitute a quorum for the transaction of any business at such meeting. When a quorum is once present to organize a meeting of Stockholders, it is not broken by the subsequent withdrawal of any Stockholders. The holders of a majority of the shares of stock present in person or represented by proxy at any meeting of Stockholders, including an adjourned meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other

 

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corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided , however , that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

2.10. Voting; Proxies . Unless otherwise provided in the Certificate of Incorporation, every Stockholder of record shall be entitled at every meeting of Stockholders to one vote for each share of capital stock standing in such Stockholder’s name on the record of Stockholders determined in accordance with Section 2.5 hereof. If the Certificate of Incorporation provides for more or less than one vote for any share on any matter, each reference in these By-laws or the General Corporation Law to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock. The provisions of Sections 212 and 217 of the General Corporation Law shall apply in determining whether any shares of capital stock may be voted and the persons, if any, entitled to vote such shares; but the Corporation shall be protected in assuming that the persons in whose names shares of capital stock stand on the stock ledger of the Corporation are entitled to vote such shares. Holders of redeemable shares of stock are not entitled to vote after the notice of redemption is mailed to such holders and a sum sufficient to redeem the stocks has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares of stock. At any meeting of Stockholders (at which a quorum was present to organize the meeting), all matters which may be properly considered at such meeting, except as otherwise provided by statute or by the Certificate of Incorporation or by these By-laws, shall be decided by a majority of the votes cast at such meeting by the holders of shares present in person or represented by proxy and entitled to vote thereon, whether or not a quorum is present when the vote is taken. All elections of Directors shall be by written ballot unless otherwise provided in the

 

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Certificate of Incorporation. In voting on any other question on which a vote by ballot is required by law or is demanded by any Stockholder entitled to vote, the voting shall be by ballot. Each ballot shall be signed by the Stockholder voting or the Stockholder’s proxy and shall state the number of shares voted. On all other questions, the voting may be by voice vote. Each Stockholder entitled to vote at a meeting of Stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such Stockholder by proxy. The validity and enforceability of any proxy shall be determined in accordance with Section 212 of the General Corporation Law. A Stockholder may revoke any proxy that is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary.

2.11. Voting Procedures and Inspectors of Election at Meetings of Stockholders . The Board, in advance of any meeting of Stockholders, may appoint one or more inspectors to act at the meeting and make a written report thereof. The Board may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed or is able to act at a meeting, the person presiding at the meeting may appoint, and on the request of any Stockholder entitled to vote thereat shall appoint, one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall (i) ascertain the number of shares outstanding and the voting power of each, (ii) determine the shares represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the

 

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number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of their duties. The date and time of the opening and the closing of the polls for each matter upon which the Stockholders will vote at a meeting shall be determined by the person presiding at the meeting and shall be announced at the meeting. No ballot, proxies or votes, or any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by a Stockholder shall determine otherwise.

2.12. Conduct of Meetings; Procedures .

(a) Unless otherwise determined by the Board, at each meeting of Stockholders, the Chairman, or in the absence of the Chairman, the Vice Chairman, or in the absence of the Vice Chairman, the CEO, or in the absence of the CEO, the President, or in the absence of the President, a Vice President, and in case more than one Vice President shall be present, that Vice President designated by the Board (or in the absence of any such designation, the most senior Vice President, based on time served in such office, present), shall act as chair of the meeting. The Secretary, or in his or her absence one of the Assistant Secretaries, shall act as secretary of the meeting. In case none of the officers above designated to act as chairman or secretary of the meeting, respectively, shall be present, a chair or a secretary of the meeting, as the case may be, shall be chosen by a majority of the votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting.

(b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors. Nominations of persons for election to the Board may be made at an annual meeting or special meeting of Stockholders only (i) by or at the direction of the Board, (ii) by any nominating

 

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committee designated by the Board or (iii) by any Stockholder of the Corporation who was a Stockholder of record of the Corporation at the time the notice provided for in this Section 2.12 is delivered to the Secretary, who is entitled to vote for the election of Directors at the meeting and who complies with the applicable provisions of Section 2.12(d) hereof (persons nominated in accordance with (iii) above are referred to herein as “ Stockholder nominees ”).

(c) At any annual meeting of Stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting of Stockholders, (i) business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (ii) otherwise properly brought before the meeting by or at the direction of the Board or (iii) otherwise properly brought before the meeting by a Stockholder who was a Stockholder of record of the Corporation at the time the notice provided for in this Section 2.12 is delivered to the Secretary, who is entitled to vote at the meeting and who complies with the applicable provisions of Section 2.12(d) hereof (business brought before the meeting in accordance with (iii) above is referred to as “ Stockholder business ”).

(d) In addition to any other applicable requirements, (i) all nominations of Stockholder nominees must be made by timely written notice given by or on behalf of a Stockholder of record of the Corporation (the “ Notice of Nomination ”) and (ii) all proposals of Stockholder business must be made by timely written notice given by or on behalf of a Stockholder of record of the Corporation (the “ Notice of Business ”). To be timely, the Notice of Nomination or the Notice of Business, as the case may be, must be delivered personally to, or mailed to, and received at the Office of the Corporation, addressed to the attention of the Secretary, (x) in the case of the nomination of a person for election to the Board, or business to be conducted, at an annual meeting of

 

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Stockholders, not less than sixty (60) days nor more than one hundred and thirty (130) days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the prior year’s annual meeting of Stockholders, or (y) in the case of the nomination of a person for election to the Board at a special meeting of Stockholders, not less than the later of (A) ninety (90) nor more than one hundred and thirty (130) days prior to such special meeting or (B) the tenth (10 th ) day following the day on which the notice of such special meeting was made by mail or Public Disclosure (as defined in Section 2.12(h)); provided , however , that in the event the annual meeting of Stockholders is advanced or delayed by more than thirty (30) days from the first anniversary of the prior year’s annual meeting of Stockholders or if no annual meeting was held during the prior year, notice by the Stockholder to be timely must be received (I) no earlier than one hundred and thirty (130) days prior to such annual meeting and no later than ninety (90) days prior to such annual meeting or (II) no later than ten (10) days following the day the notice of such annual meeting was made by mail or Public Disclosure. In no event shall the public disclosure of an adjournment or postponement of an annual or special meeting commence a new time period (or extend any time period) for the giving of the Notice of Nomination or Notice of Business, as applicable.

(e) The Notice of Nomination shall set forth (i) the name and record address of the Stockholder and/or beneficial owner proposing to make nominations, as they appear on the Corporation’s books, (ii) the class and number of shares of stock held of record and beneficially by such Stockholder and/or such beneficial owner, (iii) a representation that the Stockholder is a holder of record of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such nomination, (iv) all information regarding each Stockholder nominee that would be required to be set forth in a definitive proxy statement filed with the Securities and Exchange Commission pursuant to Section 14 of the Exchange Act,

 

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and the written consent of each such Stockholder nominee to being named in a proxy statement as a nominee and to serve if elected and (v) all other information that would be required to be filed with the Securities and Exchange Commission if the person proposing such nominations were a participant in a solicitation subject to Section 14 of the Exchange Act or any successor statute thereto. The Corporation may require any Stockholder nominee to furnish such other information as it may reasonably require to determine the eligibility of such Stockholder nominee to serve as a Director. The chair of the meeting shall, if the facts warrant, determine and declare to the meeting that any proposed nomination of a Stockholder nominee was not made in accordance with the foregoing procedures and, if such chair should so determine, such chair shall so declare to the meeting and the defective nomination shall be disregarded.

(f) The Notice of Business shall set forth (i) the name and record address of the Stockholder and/or beneficial owner proposing such Stockholder business, as they appear on the Corporation’s books, (ii) the class and number of shares of stock held of record and beneficially by such Stockholder and/or such beneficial owner, (iii) a representation that the Stockholder is a holder of record of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such business, (iv) a brief description of the Stockholder business desired to be brought before the annual meeting, the text of the proposal (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the By-laws, the language of the proposed amendment, and the reasons for conducting such Stockholder business at the annual meeting, (v) any material interest of the Stockholder and/or beneficial owner in such Stockholder business and (vi) all other information that would be required to be filed with the Securities and Exchange Commission if the person proposing such Stockholder business were a participant in a solicitation subject to Section 14 of the Exchange Act. Notwithstanding

 

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anything in these By-laws to the contrary, no business shall be conducted at the annual meeting of Stockholders except in accordance with the procedures set forth in this Section 2.12; provided , however , that nothing in this Section 2.12 shall be deemed to preclude discussion by any Stockholder of any business properly brought before the annual meeting in accordance with said procedure. Nevertheless, it is understood that Stockholder business may be excluded if the exclusion of such Stockholder business is permitted by the applicable regulations of the Securities and Exchange Commission. The chair of the meeting shall, if the facts warrant, determine and declare to the meeting, that business was not properly brought before the meeting in accordance with the foregoing procedures and, if such chair should so determine, such chair shall declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

(g) Notwithstanding the foregoing provisions of this Section 2.12, if the Stockholder (or a qualified representative of the Stockholder) does not appear at the annual or special meeting of Stockholders to present the Stockholder nomination or the Stockholder business, as applicable, such nomination shall be disregarded and such business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

(h) For purposes of this Section 2.12, “ Public Disclosure ” shall be deemed to be first made when disclosure of such date of the annual or special meeting of Stockholders, as the case may be, is first made in a press release reported by the Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act or any successor statute thereto.

 

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(i) Notwithstanding the foregoing, a Stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.12. Nothing in this Section 2.12 shall be deemed to affect any rights of the holders of any series of preferred stock of the Corporation pursuant to any applicable provision of the Certificate of Incorporation.

2.13. Order of Business . The order of business at all meetings of Stockholders shall be as determined by the chair of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority of the votes cast at such meeting by the holders of shares of capital stock present in person or represented by proxy and entitled to vote at the meeting.

ARTICLE III

Directors

3.1. General Powers . Except as otherwise provided in the Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board. The Board may adopt such rules and regulations, not inconsistent with the Certificate of Incorporation or these By-laws or applicable laws, as it may deem proper for the conduct of its meetings and the management of the Corporation. In addition to the powers expressly conferred by these By-laws, the Board may exercise all powers and perform all acts that are not required by these By-laws or the Certificate of Incorporation or by statute to be exercised and performed by the Stockholders.

3.2. Number; Qualification; Term of Office . The Board shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board. Directors need not be Stockholders. Each Director shall hold office until a successor is elected and qualified or until the Director’s death, resignation or removal.

 

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3.3. Election . Directors shall, except as otherwise required by statute or by the Certificate of Incorporation, be elected by a majority of the votes cast at a meeting of Stockholders by the holders of shares present in person or represented by proxy at the meeting and entitled to vote in the election, provided that if the number of nominees exceeds the number of Directors to be elected, the Directors shall be elected by a plurality of such votes.

3.4. Newly Created Directorships and Vacancies . Unless otherwise provided in the Certificate of Incorporation, newly created Directorships resulting from an increase in the number of Directors and vacancies occurring in the Board for any other reason, including the removal of Directors without cause, may be filled by the affirmative vote of a majority of the entire Board, although less than a quorum, or by a sole remaining Director, or may be elected by a majority of the votes cast by the holders of shares of capital stock entitled to vote in the election at a special meeting of Stockholders called for that purpose. If at such special meeting no person nominated to fill the vacancy receives a majority of such votes, then such vacancy shall be filled by the affirmative vote of a majority of the entire Board, although less than a quorum, or by the sole remaining Director. A Director elected to fill a vacancy shall be elected to hold office until a successor is elected and qualified, or until the Director’s earlier death, resignation or removal.

3.5. Resignation . Any Director may resign at any time upon notice in writing or by electronic transmission to the Corporation. Such resignation shall take effect at the time therein specified, and, unless otherwise specified in such resignation, the acceptance of such resignation shall not be necessary to make it effective.

 

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3.6. Removal . Subject to the provisions of Section 141(k) of the General Corporation Law, any or all of the Directors may be removed with or without cause by vote of the holders of a majority of the shares then entitled to vote at an election of Directors.

3.7. Compensation . Each Director, in consideration of his or her service as such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at Directors’ meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable out-of-pocket expenses, if any, incurred by such Director in connection with the performance of his or her duties. Each Director who shall serve as a member of any committee of Directors, in consideration of serving as such, shall be entitled to such additional amount per annum or such fees for attendance at committee meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable out-of-pocket expenses, if any, incurred by such Director in the performance of his or her duties. Nothing contained in this Section 3.7 shall preclude any Director from serving the Corporation or its subsidiaries in any other capacity and receiving proper compensation therefor.

3.8. Times and Places of Meetings . The Board may hold meetings, both regular and special, either within or without the State of Delaware. The times and places for holding meetings of the Board may be fixed from time to time by resolution of the Board or (unless contrary to a resolution of the Board) in the notice of the meeting.

3.9. Annual Meetings . On the day when and at the place where the annual meeting of Stockholders for the election of Directors is held, and as soon as practicable thereafter, the Board may hold its annual meeting, without notice of such meeting, for the purposes of organization, the election of officers and the transaction of other business. The annual meeting of the Board may be held at any other time and place specified in a notice given as provided in Section 3.11 hereof for special meetings of the Board or in a waiver of notice thereof.

 

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3.10. Regular Meetings . Regular meetings of the Board may be held without notice at such times and at such places as shall from time to time be determined by the Board.

3.11. Special Meetings . Special meetings of the Board may be called by the Chairman, the CEO, the President or the Secretary or by any two or more Directors then serving on at least twenty-four (24) hours’ notice to each Director given by one of the means specified in Section 3.14 hereof other than by mail, or on at least five (5) days’ notice if given by mail. Special meetings shall be called by the Chairman, CEO, President or Secretary in like manner and on like notice on the written request of any two or more of the Directors then serving.

3.12. Telephone Meetings . Directors or members of any committee designated by the Board may participate in a meeting of the Board or of such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.12 shall constitute presence in person at such meeting.

3.13. Adjourned Meetings . A majority of the Directors present at any meeting of the Board, including an adjourned meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. Any business may be transacted at an adjourned meeting that might have been transacted at the meeting as originally called.

3.14. Notice Procedure . Subject to Sections 3.11 and 3.17 hereof, whenever, under the provisions of any statute, the Certificate of Incorporation or these

 

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By-laws, notice is required to be given to any Director, such notice shall be deemed given effectively if given in person or by telephone, by mail addressed to such Director at such Director’s address as it appears on the records of the Corporation, with postage thereon prepaid, or by telecopy, electronic transmission or similar means addressed as aforesaid.

3.15. Waiver of Notice . Whenever the giving of any notice is required by statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in writing, signed by the person or persons entitled to said notice, or a waiver by electronic transmission, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance by a person at a meeting shall constitute a waiver of notice of such meeting except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Directors or a committee of Directors need be specified in any written waiver of notice or waiver by electronic transmission unless so required by statute, the Certificate of Incorporation or these By-laws.

3.16. Organization . The Board may select from among its members a Chairman and a Vice Chairman to preside at meetings of the Directors and who shall perform such other duties as the Board may from time to time determine. Unless otherwise determined by the Board, at each meeting of the Board, the Chairman, or in the absence of the Chairman, the Vice Chairman, or in the absence of the Vice Chairman, the CEO, or in the absence of the CEO, the President, or in the absence of the President, a chair chosen by a majority of the Directors present, shall preside. The Secretary shall act as secretary at each meeting of the Board. In case the Secretary shall be absent from any meeting of the Board, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all Assistant Secretaries, the person presiding at the meeting may appoint any person to act as secretary of the meeting.

 

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3.17. Quorum of Directors . The presence in person of at least one-third of the entire Board (but not less than two Directors) shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board, but a majority of a smaller number may adjourn any such meeting to a later date.

3.18. Action by Majority Vote . Except as otherwise expressly required by statute, the Certificate of Incorporation or these By-laws, the act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board.

3.19. Action Without Meeting . Unless otherwise restricted by the Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all Directors or members of such committee, as the case may be, consent thereto in writing, or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filings shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

ARTICLE IV

COMMITTEES OF THE BOARD

4.1. Committees . The Board shall establish an Audit Committee, a Compensation Committee and a Corporate Governance Committee (collectively, the “ Standing Committees ”), each such Standing Committee to consist of such number of Directors as from time to time may be fixed by the Board in accordance with this Section 4.1. The Standing Committees shall each consist of three or more outside Directors, each

 

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of whom shall satisfy the independence (and, in the case of the Audit Committee, the financial literacy and experience) requirements of Section 10A of the Exchange Act, the New York Stock Exchange and any other regulatory requirements. The Board may, by resolution passed by a vote of a majority of the entire Board, designate one or more other committees, each such other committee to consist of one or more of the Directors of the Corporation. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present and not disqualified from voting, whether or not such member or members constitute a quorum, may, by a unanimous vote, appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member (provided such other member meets the requirements described in the second sentence of this Section 4.1, if applicable).

4.2. Powers; Duties and Responsibilities .

(a) Audit Committee . The Audit Committee shall have the power and authority of the Board to fulfill the Board’s oversight responsibilities with respect to: (i) the Corporation’s systems of internal controls regarding finance, accounting, legal compliance and ethical behavior; (ii) the Corporation’s auditing, accounting and financial reporting processes generally; (iii) the Corporation’s financial statements and other financial information provided by the Corporation to Stockholders, the public and others; (iv) the Corporation’s compliance with legal and regulatory requirements; and (v) the performance of the Corporation’s internal auditors and independent auditors. The specific powers and responsibilities of the Audit Committee shall be set forth in its charter.

 

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(b) Compensation Committee . The Compensation Committee shall have the power and authority of the Board to fulfill the Board’s responsibilities in respect to compensation of the Corporation’s executives. The specific powers and responsibilities of the Compensation Committee shall be set forth in its charter.

(c) Corporate Governance Committee . The Corporate Governance Committee shall have the power and authority of the Board to ensure: (i) that the Board shall have the benefit of qualified and experienced Directors; (ii) that the Standing Committees of the Board shall have the benefit of qualified Directors, each of whom shall satisfy the independence (and, in the case of the Audit Committee, the financial literacy and experience) requirements of Section 10A of the Exchange Act, the New York Stock Exchange and any other regulatory requirements; and (iii) that the Corporation shall have in place effective corporate governance policies and procedures. The specific powers of the Corporate Governance Committee shall be set forth in its charter.

(d) Subject to this Section 4.2, any committee of the Board, to the extent provided in the resolution of the Board passed as aforesaid, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be impressed on all papers that may require it, but no such committee shall have the power or authority of the Board in reference to (i) amending the Certificate of Incorporation, (ii) adopting an agreement of merger or consolidation under section 251 or section 252 of the General Corporation Law, (iii) recommending to Stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, or a dissolution of the Corporation or a revocation of a dissolution, or (iv) amending the By-laws of the Corporation; and, unless the resolution designating it expressly so provides, no such committee shall have the power and authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law.

 

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4.3. Procedure . Unless otherwise specified in the resolution of the Board designating a committee, at all meetings of such committee a majority of the total number of members of the committee shall constitute a quorum for the transaction of business, and the vote of a majority of the members of the committee present at any meeting at which there is a quorum shall be the act of the committee. Unless the Board otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article 3 of these By-laws.

4.4. Committee Minutes . The committees shall keep regular minutes of their proceedings and report the same to the Board.

4.5. Removal . Any member (and any alternate member) of any committee of the Board may be removed from his or her position as a member (or alternate member, as the case may be) of such committee at any time, either for or without cause, by the Board.

4.6. Vacancies . If any vacancy shall occur in any committee of the Board, by reason of disqualification, death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board.

 

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ARTICLE V

OFFICERS

5.1. Positions . The officers of the Corporation shall be a CEO, a Secretary, a Treasurer or a Chief Financial Officer and such other officers as the Board may appoint, including a Chairman, a Vice Chairman, a President, a Chief Operating Officer, one or more Vice Presidents and one or more Assistant Secretaries and Assistant Treasurers, who shall exercise such powers and perform such duties as shall be determined from time to time by the Board. The Board may designate one or more Vice Presidents as Executive Vice Presidents and may use descriptive words or phrases to designate the standing, seniority or areas of special competence of the Vice Presidents elected or appointed by it. Any number of offices may be held by the same person unless the Certificate of Incorporation or these By-laws otherwise provide.

5.2. Appointment . The officers of the Corporation shall be chosen by the Board at its annual meeting or at such other time or times as the Board shall determine.

5.3. Compensation . The compensation of all officers of the Corporation shall be fixed by the Board or a committee thereof. No officer shall be prevented from receiving a salary or other compensation by reason of the fact that the officer is also a Director.

5.4. Term of Office . Each officer of the Corporation shall hold office for the term for which he or she is elected and until such officer’s successor is chosen and qualifies or until such officer’s earlier death, resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Such resignation shall take effect at the date of receipt of such notice or at such later time as is therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to

 

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make it effective. The resignation of an officer shall be without prejudice to the contract rights of the Corporation, if any. Any officer elected or appointed by the Board may be removed at any time, with or without cause, by vote of a majority of the entire Board. Any vacancy occurring in any office of the Corporation shall be filled by the Board or a committee thereof. The removal of an officer without cause shall be without prejudice to the officer’s contract rights, if any. The election or appointment of an officer shall not of itself create contract rights.

5.5. Fidelity Bonds . The Corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise.

5.6. Chairman . Unless otherwise determined by the Board, the Chairman, if one shall have been appointed, shall preside at all meetings of the Board and shall exercise such powers and perform such other duties as shall be determined from time to time by the Board, which duties may include, if so determined by the Board, duties generally performed by a chief executive officer of a corporation.

5.7. Vice Chairman . The Vice Chairman, if one shall have been appointed, shall, in the absence of the Chairman, preside at all meetings of the Board and shall exercise such powers and perform such other duties as shall be determined from time to time by the Board.

5.8. CEO . The CEO shall have general supervision over the business of the Corporation, subject, however, to the control of the Board or any duly authorized committee of Directors. Unless otherwise determined by the Board, the CEO shall preside at all meetings of the Stockholders and at all meetings of the Board at which the Chairman (if there be one) and Vice Chairman (if there be one) is not present. The CEO may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments except in cases in which the signing and execution thereof shall be

 

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expressly delegated by the Board or by these By-laws to some other officer or agent of the Corporation or shall be required by statute otherwise to be signed or executed and, in general, the CEO shall perform all duties incident to the office of a chief executive officer of a corporation and such other duties as may from time to time be assigned to the CEO by the Board.

5.9. President . The President, if one shall have been appointed, shall have general supervision over the business of the Corporation, subject, however, to the control of the Board or any duly authorized committee of Directors. The President may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments except in cases in which the signing and execution thereof shall be expressly delegated by the Board or by these By-laws to some other officer or agent of the Corporation or shall be required by statute otherwise to be signed or executed and, in general, the President shall perform all duties incident to the office of president of a corporation and such other duties as may from time to time be assigned to the President by the Board or the CEO.

5.10. Vice Presidents . At the request of the CEO or the President, or in the absence of such officers, at the request of the Board, the Vice Presidents shall (in such order as may be designated by the Board, or, in the absence of any such designation, in order of seniority based on age) perform all of the duties of the CEO or the President and, in so performing, shall have all the powers of, and be subject to all restrictions upon, the CEO and the President. Any Vice President may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments, except in cases in which the signing and execution thereof shall be expressly delegated by the Board or by these By-laws to some other officer or agent of the Corporation, or shall be required by statute otherwise to be signed or executed, and each Vice President shall perform such other duties as from time to time may be assigned to such Vice President by the Board, the CEO or the President.

 

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5.11. Secretary . The Secretary shall attend all meetings of the Board and of the Stockholders and shall record all the proceedings of the meetings of the Board and of the Stockholders in a book to be kept for that purpose, and shall perform like duties for committees of the Board, when required. The Secretary shall give, or cause to be given, notice of all special meetings of the Board and of the Stockholders and shall perform such other duties as may be prescribed by the Board, the CEO or the President, under whose supervision the Secretary shall be. The Secretary shall have custody of the corporate seal of the Corporation, and the Secretary, or an Assistant Secretary, shall have authority to impress the same on any instrument requiring it, and when so impressed the seal may be attested by the signature of the Secretary or by the signature of such Assistant Secretary. The Board may give general authority to any other officer to impress the seal of the Corporation and to attest the same by such officer’s signature. The Secretary or an Assistant Secretary may also attest all instruments signed by the CEO, the President or any Vice President. The Secretary shall have charge of all the books, records and papers of the Corporation relating to its organization and management, shall see that the reports, statements and other documents required by statute are properly kept and filed and, in general, shall perform all duties incident to the office of Secretary of a corporation and such other duties as may from time to time be assigned to the Secretary by the Board, the CEO or by the President.

5.12. Treasurer or Chief Financial Officer . The Treasurer or Chief Financial Officer shall have charge and custody of, and be responsible for, all funds, securities and notes of the Corporation; receive and give receipts for moneys due and payable to the Corporation from any sources whatsoever; deposit all such moneys and valuable effects in the name and to the credit of the Corporation in such depositories as

 

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may be designated by the Board; against proper vouchers, cause such funds to be disbursed by checks or drafts on the authorized depositories of the Corporation signed in such manner as shall be determined by the Board and be responsible for the accuracy of the amounts of all moneys so disbursed; regularly enter or cause to be entered in books or other records maintained for the purpose full and adequate account of all moneys received or paid for the account of the Corporation; have the right to require from time to time reports or statements giving such information as the Treasurer or Chief Financial Officer may desire with respect to any and all financial transactions of the Corporation from the officers or agents transacting the same; render to the CEO, the President or the Board, whenever the CEO, the President or the Board shall require the Treasurer or Chief Financial Officer so to do, an account of the financial condition of the Corporation and of all financial transactions of the Corporation; exhibit at all reasonable times the records and books of account to any of the Directors upon application at the office of the Corporation where such records and books are kept; disburse the funds of the Corporation as ordered by the Board; and, in general, perform all duties incident to the office of Treasurer or Chief Financial Officer of a corporation and such other duties as may from time to time be assigned to the Treasurer or Chief Financial Officer by the Board, the CEO or the President.

5.13. Assistant Secretaries and Assistant Treasurers . Assistant Secretaries and Assistant Treasurers shall perform such duties as shall be assigned to them by the Secretary or by the Treasurer, respectively, or by the Board or by the President.

 

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ARTICLE VI

CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.

6.1. Execution of Contracts . The Board, except as otherwise provided in these By-laws, may prospectively or retroactively authorize any officer or officers, employee or employees or agent or agents, in the name and on behalf of the Corporation, to enter into any contract or execute and deliver any instrument, and any such authority may be general or confined to specific instances, or otherwise limited.

6.2. Loans . The Board may prospectively or retroactively authorize the CEO, the President or any other officer, employee or agent of the Corporation to effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances the person so authorized may make, execute and deliver promissory notes, bonds or other certificates or evidences of indebtedness of the Corporation, and, when authorized by the Board so to do, may pledge and hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. Such authority conferred by the Board may be general or confined to specific instances, or otherwise limited.

6.3. Checks, Drafts, etc. All checks, drafts and other orders for the payment of money out of the funds of the Corporation and all evidences of indebtedness of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by resolution of the Board.

6.4. Deposits . The funds of the Corporation not otherwise employed shall be deposited from time to time to the order of the Corporation with such banks, trust companies, investment banking firms, financial institutions or other depositaries as the Board may select or as may be selected by an officer, employee or agent of the Corporation to whom such power to select may from time to time be delegated by the Board.

 

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ARTICLE VII

STOCK AND DIVIDENDS

7.1. Certificates Representing Shares . The Corporation may, but shall not be required to, issue certificates representing shares of its capital stock. If such capital stock is certificated, the certificates shall be in such form (consistent with the provisions of Section 158 of the General Corporation Law) as shall be approved by the Board, and shall be signed by the Chairman, the CEO, the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be impressed with the seal of the Corporation or a facsimile thereof. The signatures of the officers upon a certificate may be facsimiles, if the certificate is countersigned by a transfer agent or registrar other than the Corporation itself or its employee. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may, unless otherwise ordered by the Board, be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

7.2. Transfer of Shares . Transfers of shares of capital stock of the Corporation shall be made only on the books of the Corporation by the holder thereof or by the holder’s duly authorized attorney appointed by a power of attorney duly executed and filed with the Secretary or a transfer agent of the Corporation upon payment of all necessary transfer taxes. A person in whose name shares of capital stock shall stand on the books of the Corporation shall be deemed the owner thereof to receive dividends, to vote as such owner and for all other purposes as respects the Corporation. No transfer of

 

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shares of capital stock shall be valid as against the Corporation, its Stockholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until such transfer shall have been entered on the books of the Corporation by an entry showing from and to whom transferred.

7.3. Transfer and Registry Agents . The Corporation may from time to time maintain one or more transfer offices or agents and registry offices or agents at such place or places as may be determined from time to time by the Board.

7.4. Rules and Regulations . The Board may make such rules and regulations as it may deem expedient, not inconsistent with these By-laws or with the Certificate of Incorporation, concerning the issue, transfer and registration of shares of its capital stock.

7.5. Restriction on Transfer of Stock . A written restriction on the transfer or registration of transfer of capital stock of the Corporation, if permitted by Section 202 of the General Corporation Law and, if such stock has been certificated, noted conspicuously on the certificate representing such capital stock, may be enforced against the holder of the restricted capital stock or any successor or transferee of the holder, including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder. A restriction on the transfer or registration of transfer of capital stock of the Corporation may be imposed either by the Certificate of Incorporation or by an agreement among any number of Stockholders or among such Stockholders and the Corporation. No restriction so imposed shall be binding with respect to capital stock issued prior to the adoption of the restriction unless the holders of such capital stock are parties to an agreement or voted in favor of the restriction.

 

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7.6. Dividends, Surplus, Etc. Subject to the provisions of the Certificate of Incorporation and of law, the Board:

7.6.1. may declare and pay dividends or make other distributions on the outstanding shares of capital stock in such amounts and at such time or times as it, in its discretion, shall deem advisable giving due consideration to the condition of the affairs of the Corporation;

7.6.2. may use and apply, in its discretion, any of the surplus of the Corporation in purchasing or acquiring any shares of capital stock of the Corporation, or purchase warrants therefor, in accordance with law, or any of its bonds, debentures, notes, scrip or other securities or evidences of indebtedness; and

7.6.3. may set aside from time to time out of such surplus or net profits such sum or sums as, in its discretion, it may think proper, as a reserve fund to meet contingencies, or for equalizing dividends or for the purpose of maintaining or increasing the property or business of the Corporation, or for any purpose it may think conducive to the best interests of the Corporation.

ARTICLE VIII

INDEMNIFICATION

8.1. Right to Indemnification . The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “ Covered Person ”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a

 

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Director or officer of the Corporation or, while a Director or officer of the Corporation, is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity (an “ Other Entity ”), including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 8.3, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized by the Board.

8.2. Prepayment of Expenses . The Corporation shall pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any Proceeding in advance of its final disposition, provided , however , that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article 8 or otherwise.

8.3. Claims . If a claim for indemnification or advancement of expenses under this Article 8 is not paid in full within 30 days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

 

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8.4. Nonexclusivity of Rights . The rights conferred on any Covered Person by this Article 8 shall not be exclusive of any other rights that such Covered Person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-laws, agreement, vote of Stockholders or disinterested Directors or otherwise.

8.5. Other Sources . The Corporation’s obligation, if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a Director, officer, employee or agent of an Other Entity shall be reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such Other Entity.

8.6. Amendment or Repeal . Any repeal or modification of the foregoing provisions of this Article 8 shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification.

8.7. Other Indemnification and Prepayment of Expenses . This Article 8 shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.

ARTICLE IX

BOOKS AND RECORDS

9.1. Books and Records . There shall be kept at the principal office of the Corporation correct and complete records and books of account recording the financial transactions of the Corporation and minutes of the proceedings of the Stockholders, the Board and any committee of the Board. The Corporation shall keep at

 

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its principal office, or at the office of the transfer agent or registrar of the Corporation, a record containing the names and addresses of all Stockholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof.

9.2. Form of Records . Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, an electronic database, or any other information storage device, provided that the records so kept can be converted into clearly legible written form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.

9.3. Inspection of Books and Records . Except as otherwise provided by law, the Board shall determine from time to time whether, and, if allowed, when and under what conditions and regulations, the accounts, books, minutes and other records of the Corporation, or any of them, shall be open to the Stockholders for inspection.

ARTICLE X

SEAL

The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.

 

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ARTICLE XI

FISCAL YEAR

The fiscal year of the Corporation shall be fixed, and may be changed, by resolution of the Board.

ARTICLE XII

PROXIES AND CONSENTS

Unless otherwise directed by the Board, the Chairman, the CEO, the President, any Vice President, the Secretary or the Treasurer, or any one of them, may execute and deliver on behalf of the Corporation proxies respecting any and all shares or other ownership interests of any Other Entity owned by the Corporation appointing such person or persons as the officer executing the same shall deem proper to represent and vote the shares or other ownership interests so owned at any and all meetings of holders of shares or other ownership interests, whether general or special, and/or to execute and deliver consents respecting such shares or other ownership interests; or any of the aforesaid officers may attend any meeting of the holders of shares or other ownership interests of such Other Entity and thereat vote or exercise any or all other powers of the Corporation as the holder of such shares or other ownership interests.

ARTICLE XIII

EMERGENCY BY-LAWS

Unless the Certificate of Incorporation provides otherwise, the following provisions of this Article 13 shall be effective during an emergency, which is defined as when a quorum of the Corporation’s Directors cannot be readily assembled because of some catastrophic event. During such emergency:

13.1. Notice to Board Members . Any one member of the Board or any one of the following officers: Chairman, CEO, President, any Vice President, Secretary, or Treasurer, may call a meeting of the Board. Notice of such meeting need be given only to those Directors whom it is practicable to reach, and may be given in any practical manner, including by publication and radio. Such notice shall be given at least six hours prior to commencement of the meeting.

 

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13.2. Temporary Directors and Quorum . One or more officers of the Corporation present at the emergency Board meeting, as is necessary to achieve a quorum, shall be considered to be Directors for the meeting, and shall so serve in order of rank, and within the same rank, in order of seniority. In the event that less than a quorum of the Directors are present (including any officers who are to serve as Directors for the meeting), those Directors present (including the officers serving as Directors) shall constitute a quorum.

13.3. Actions Permitted To Be Taken . The Board as constituted in Section 13.2, and after notice as set forth in Section 13.1 may:

13.3.1. prescribe emergency powers to any officer of the Corporation;

13.3.2. delegate to any officer or Director, any of the powers of the Board;

13.3.3. designate lines of succession of officers and agents, in the event that any of them are unable to discharge their duties;

13.3.4. relocate the principal place of business, or designate successive or simultaneous principal places of business; and

 

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13.3.5. take any other convenient, helpful or necessary action to carry on the business of the Corporation.

ARTICLE XIV

AMENDMENTS

These By-laws may be amended or repealed and new By-laws may be adopted by a vote of the Stockholders holding shares entitled to vote in the election of Directors or by the Board. Any By-laws adopted or amended by the Board may be amended or repealed by the Stockholders entitled to vote thereon.

 

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Exhibit 10.1

Execution Copy

TAX ALLOCATION AGREEMENT

By and between

AUTOMATIC DATA PROCESSING, INC.

and

BROADRIDGE FINANCIAL SOLUTIONS, INC.

Dated as of March 29, 2007


TABLE OF CONTENTS

 

          Page(s)
ARTICLE I DEFINITIONS    1

Section 1.01

   Definition of Terms    1
ARTICLE II PAYMENT OF TAXES    8

Section 2.01

   Income Taxes    8

Section 2.02

   Transaction Taxes    9

Section 2.03

   Other Taxes    9

Section 2.04

   Other Income Taxes    10

Section 2.05

   Allocation of Certain Income Taxes and Income Tax Items    11

Section 2.06

   Refunds    12

Section 2.07

   Carrybacks    12

Section 2.08

   Treatment of Restricted Stock, Stock Options, and Deferred Compensation    13

Section 2.09

   Successor Employer Status    14

Section 2.10

   APA    14
ARTICLE III PREPARATION AND FILING OF TAX RETURNS    15

Section 3.01

   ADP Responsibility    15

Section 3.02

   Broadridge Responsibility    15

Section 3.03

   Tax Accounting Practices    16

Section 3.04

   Right to Review Tax Returns    16
ARTICLE IV TAX-FREE STATUS OF DISTRIBUTION    16

Section 4.01

   Representations    16

Section 4.02

   Covenants    16

Section 4.03

   Procedures Regarding Opinions and Rulings    19

Section 4.04

   Canadian Butterfly    19
ARTICLE V TAX CONTESTS; INDEMNIFICATION; COOPERATION    20

Section 5.01

   Notice    20

Section 5.02

   Control of Tax Contests    20

Section 5.03

   Indemnification Payments    21

Section 5.04

   Interest on Late Payments    22

Section 5.05

   Treatment of Payments    22

Section 5.06

   Expenses    23

Section 5.07

   Cooperation    23

Section 5.08

   Confidentiality    24

Section 5.09

   Retention of Tax Records    24
ARTICLE VI RESOLUTION OF DISPUTES    24

Section 6.01

   Tax Disputes    24
ARTICLE VII MISCELLANEOUS PROVISIONS    25

Section 7.01

   Disposition of Broadridge Subsidiaries    25

 

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          Page(s)

Section 7.02

   Complete Agreement; Representations    25

Section 7.03

   Costs and Expenses    25

Section 7.04

   Governing Law    26

Section 7.05

   Notices    26

Section 7.06

   Amendment, Modification or Waiver    26

Section 7.07

   No Assignment; Binding Effect    27

Section 7.08

   Counterparts    27

Section 7.09

   Specific Performance    27

Section 7.10

   New York Forum    27

Section 7.11

   WAIVER OF JURY TRIAL    28

Section 7.12

   Interpretation; Conflict With Ancillary Agreements    28

Section 7.13

   Severability    28

Section 7.14

   Survival    28

 

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TAX ALLOCATION AGREEMENT dated as of March 29, 2007 (this “ Agreement ”) between Automatic Data Processing, Inc., a Delaware corporation (“ ADP ”) and Broadridge Financial Solutions, Inc., a Delaware corporation whose sole shareholder is ADP (“ Broadridge ” and, together with ADP, each, a “ Party ” and collectively, the “ Parties ”).

WHEREAS, as of the date of this Agreement, the ADP affiliated group includes Broadridge and its subsidiaries;

WHEREAS, the Parties (or their predecessors-in-interest) have entered into the Separation and Distribution Agreement, pursuant to which ADP has contributed to Broadridge the stock and assets associated with the Broadridge Business (as defined herein) in exchange for shares of common stock of Broadridge, cash and the assumption by Broadridge of certain liabilities related to the Broadridge Business (the “ Contribution ”);

WHEREAS, ADP intends to distribute on a pro rata basis to its shareholders all of the shares of stock of Broadridge (the “ Distribution ”);

WHEREAS, the Parties believe the Distribution will provide greater flexibility for management, capital requirements and growth of the Broadridge Business while ensuring that ADP senior management can focus its time and resources on the development of the ADP retained businesses;

WHEREAS, the Parties intend that the Contribution and Distribution qualify as a “reorganization” under Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”), with respect to which no gain or loss is recognized under Code Sections 361 and 355;

WHEREAS, as a result of and upon the Distribution, Broadridge and its subsidiaries will cease to be members of the ADP Group; and

WHEREAS, the Parties desire to allocate the Tax responsibilities, liabilities and benefits of transactions that occur on or prior to, and that may occur after, the date on which the Distribution occurs (the “ Distribution Date ”) and to provide for and address certain other Tax matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties (each on behalf of itself and each of its Affiliates) hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definition of Terms . The following terms shall have the following meanings (such meanings to apply equally to both the singular and the plural forms of the terms defined). All Section and Exhibit references are to this Agreement unless otherwise stated.

 

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Action ” means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

Active Trade or Business ” means the active conduct by Broadridge of the businesses conducted by the members of the Broadridge Group as of the Distribution (determined in accordance with Code Section 355(b)).

Adjustment Request ” means any formal or informal claim or request filed with any governmental authority for any Refund, underpayment or overpayment of Tax or any change in available Tax Attributes.

ADP ” has the meaning set forth in the recitals.

ADP Consolidated Group ” means the affiliated group of corporations (within the meaning of Section 1504 of the Code) of which ADP is the common parent prior to the Distribution Date.

ADP Employee ” means an employee of ADP or any ADP Affiliate immediately after the Distribution.

ADP Group ” means ADP and each of its Affiliates and Subsidiaries, and any corporation or other entity that may become part of such Group from time to time. For the avoidance of doubt, the ADP Group excludes any entity that is a member of the Broadridge Group.

ADP Restricted Stock ” means ADP common stock received by an ADP or Broadridge Employee in connection with his or her employment, which stock has not yet been included in the income of such Employee as of the Distribution Date.

ADP Stock Option ” means an Option to acquire ADP common stock received by an ADP or Broadridge Employee in connection with his or her employment, which Option has not yet been exercised as of the Distribution Date.

Affiliate ” of any Person means any entity that, after the Distribution, is directly or indirectly “controlled” by any of (i) the Person in question, (ii) any Person of which the Person in question is an Affiliate under clause (i), or (iii) any Affiliate under clause (i) of a Person described in clause (ii). For purposes of this definition, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or other interests, by contract or otherwise.

Agreement ” has the meaning set forth in the recitals.

 

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Ancillary Agreement ” has the meaning set forth in the Separation and Distribution Agreement.

APA ” means the advance pricing agreement currently being negotiated, as such agreement is finally agreed, or any similar agreement (including any related competent authority agreement for pre-APA years) that is finally agreed, by ADP, ADP Canada, a Canadian corporation that is wholly owned by ADP, and ADP Investor Communications Corporation (“ ICC ”), a Canadian corporation that is directly and wholly owned by ADP Canada, with the Internal Revenue Service and the Canada Revenue Agency (including any competent authority for the United States or Canada) relating to the pricing of services and software that ADP and its U.S. subsidiaries (both in the Broadridge Business and in ADP’s other businesses) provide to ADP Canada and its subsidiaries.

Balance Sheet ” has the meaning set forth in Section 2.01(a).

Broadridge ” has the meaning set forth in the recitals.

Broadridge Business ” means all of the ADP Brokerage Services’ and Securities Clearing and Outsourcing Services’ business and operations, as more fully described in ADP’s Form 10-K for the fiscal year ended June 30, 2006.

Broadridge Capital Stock ” means (i) all classes or series of capital stock of Broadridge, including common stock and all other instruments treated as equity in Broadridge for U.S. federal Income Tax purposes and (ii) all options, warrants and other rights to acquire such capital stock.

Broadridge Cash ” means the cash amounts which are distributed to ADP in one or more transactions intended to qualify as tax-free pursuant to Section 361(b) of the Code.

Broadridge Employee ” means an employee of Broadridge or any Broadridge Affiliate immediately after the Distribution.

Broadridge Group ” means Broadridge and each of its Subsidiaries and Affiliates and any corporation or other entity that may become part of such Group from time to time.

Broadridge Restricted Stock ” means Broadridge common stock received by a Broadridge Employee or ADP Employee in connection with his or her employment, which stock has not yet been included in the income of such Employee as of the Distribution Date.

Broadridge Stock Option ” means an Option to acquire Broadridge common stock received by a Broadridge Employee or ADP Employee in connection with his or her employment, which Option has not yet been exercised as of the Distribution Date.

 

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Butterfly Transactions ” means each of the transactions involving ADP, Broadridge and the other applicable parties specifically set out in the Canadian Tax Ruling.

Canadian Tax Ruling ” means the advance income tax ruling issued by the CRA (whether granted prior to, on or after the date hereof) relating to the Butterfly Transactions and includes all supplemental rulings, requests for rulings, information and legal submissions and exhibits to the foregoing.

Canadian Tax-Free Status ” means the Canadian federal and provincial income tax position of the applicable parties relating to the Butterfly Transactions that would arise on the assumptions that (i) each of the rulings and opinions provided in the Canadian Tax Ruling applied to determine such income tax position of the applicable parties and (ii) the requisite conditions for such rulings and opinions as set out in the Canadian Tax Ruling were satisfied.

Code ” has the meaning set forth in the recitals.

Contribution ” has the meaning set forth in the recitals.

CRA ” means the Canada Revenue Agency.

Distribution ” has the meaning set forth in the recitals.

Distribution Date ” has the meaning set forth in the recitals.

Employee Restricted Stock ” means either ADP Restricted Stock or Broadridge Restricted Stock.

Employee Stock Option ” means either an ADP Stock Option or a Broadridge Stock Option.

Final Determination ” means the final resolution of liability for any Tax for any taxable period by or as a result of (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Code Sections 7121 or 7122, or a comparable arrangement under the laws of another jurisdiction; (iii) any allowance of a Refund in respect of an overpayment of Tax, but only after the expiration of all periods during which such amount may be recovered by the Taxing Authority imposing the Tax; or (iv) any other final disposition, including by reason of the expiration of the applicable statute of limitations.

Gain Recognition Agreement ” means any agreement to recognize gain that is described in Treasury Regulation Section 1.367(a)-8 and entered into in connection with the Transactions and to which any member of the ADP Group or the Broadridge Group is a party.

 

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Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority, including the New York Stock Exchange, Inc.

Group ” means the ADP Group and/or the Broadridge Group, as the context requires.

Income Taxes ” means all federal, state, local, and foreign income or franchise Taxes or other Taxes based on income or net worth.

Indemnifying Party ” has the meaning set forth in Section 5.01.

Indemnitee ” has the meaning set forth in Section 5.01.

IRS ” means the U.S. Internal Revenue Service.

Joint Return ” means any Return that includes both a member of the ADP Group and a member of the Broadridge Group.

Law ” means any applicable foreign, federal, national, state, provincial or local law (including common law), statute, ordinance, rule, regulation, code or other requirement enacted, promulgated, issued or entered into, or act taken, by a Governmental Authority.

Option ” means an option to acquire common stock, or other equity-based incentives the economic value of which is designed to mirror that of an option, including non-qualified stock options, discounted non-qualified stock options, cliff options to the extent stock is issued or issuable (as opposed to cash compensation), and tandem stock options to the extent stock is issued or issuable (as opposed to cash compensation).

Other Taxes ” means all Taxes other than Income Taxes, including (but not limited to) transfer, sales, use, payroll, property, and unemployment Taxes.

Past Practices ” has the meaning set forth in Section 3.03(a).

Person ” means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

Post-Distribution Tax Period ” means any taxable period (or portion thereof) beginning after the Distribution Date.

Pre-Distribution Tax Period ” means any taxable period (or portion thereof) ending on or before the close of the Distribution Date.

 

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Proposed Acquisition Transaction ” has the meaning set forth in Section 4.02(b)(i).

Refund ” means any cash refund of Taxes or reduction of Taxes by means of credit, deduction, offset or otherwise.

Reportable Transaction ” means a reportable or listed transaction as defined in Section 6011 of the Code or the Treasury Regulations promulgated thereunder.

Restricted Period ” means the period beginning on the date of this Agreement and ending on, and including, the last day of the two-year period following the Distribution Date.

Restricted Stock ” means either ADP Restricted Stock or Broadridge Restricted Stock.

Ruling ” means all private letter rulings granted by the IRS, the CRA or any other taxing authority relating to the Transactions (whether granted prior to, on or after the date hereof), requests for such rulings, including all supplemental ruling requests and information submissions, and any exhibit to any of the foregoing.

Satisfactory Guidance ” means either a ruling from the IRS (or the CRA in respect of Section 4.04) or an Unqualified Tax Opinion, at the election of Broadridge, in either case reasonably satisfactory to ADP in both form and substance, including with respect to any underlying assumptions or representations. Satisfactory Guidance shall not include an Unqualified Tax Opinion with respect to which ADP’s counsel, of recognized national standing, provides an opinion to ADP that the conclusions in such Unqualified Tax Opinion are not free from doubt. For the avoidance of doubt, this definition is intended to allow ADP to prevent Broadridge from taking the action that is the subject of a ruling from the IRS or an Unqualified Tax Opinion, if ADP determines in good faith that there is any Tax risk to it from such action based upon either (1) any uncertainty concerning any underlying assumptions or representations in such ruling or opinion or (2) any legal uncertainty referred to in advice it receives from its counsel.

Separate Return ” means (i) in the case of the Broadridge Group, a Tax Return of any member of that Group (including any consolidated, combined, affiliated or unitary Return) that does not include, for all or any portion of the relevant taxable period, any member of the ADP Group and (ii) in the case of the ADP Group, a Tax Return of any member of that Group (including any consolidated, combined, affiliated or unitary Return) that does not include, for all or any portion of the relevant taxable period, any member of the Broadridge Group.

Separation and Distribution Agreement ” means the Separation and Distribution Agreement, as amended from time to time, by and between ADP and Broadridge (or its predecessor-in-interest) dated as of March 20, 2007.

 

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Straddle Period ” means any taxable period beginning on or before the Distribution Date and ending after the Distribution Date.

Tax Advisor ” means a U.S. Tax counsel or other Tax advisor of recognized national standing reasonably acceptable to both Parties.

Tax Attribute ” means a net operating loss, net capital loss, investment credit, foreign Tax credit, excess charitable contribution, general business credit or any other item of loss, deduction or credit that could reduce a Tax liability.

Tax Contest ” means an audit, review, examination or any other administrative or judicial proceeding with the purpose or effect of determining or redetermining Taxes (including any administrative or judicial review of any Adjustment Request).

Tax Dispute ” means any dispute arising in connection with this Agreement.

Tax-Free Status ” means the qualification of the Contribution and Distribution taken together as a transaction, (i) that is a “reorganization” described in Code Sections 355(a) and 368(a)(1)(D), (ii) in which the Broadridge stock distributed is “qualified property” for purposes of Code Sections 355(c) and 361(c), (iii) in which no gain or loss will be recognized by ADP upon the receipt of the Broadridge Cash from Broadridge, (iv) in which ADP, Broadridge and the shareholders of ADP recognize no income or gain for U.S. federal Income Tax purposes pursuant to Code Sections 355, 361 and 1032 and (v) that qualifies for tax-free treatment under comparable provisions of state, local and foreign law. For the avoidance of doubt, recognition of income or gain that relates to items described in Sections 2.03(c)(i)(A) or 2.04 or to intercompany items shall not cause the Distribution to fail to achieve Tax-Free Status.

Tax Item ” means any item of income, gain, loss, deduction, credit, recapture of credit, or any other item (including the basis or adjusted basis of property) which increases or decreases Income Taxes paid or payable in any taxable period.

Tax Opinions/Rulings ” means (i) any Ruling and (ii) the opinions of Tax Advisors relating to the Transactions including, without limitation, those issued either at the time of the Distribution or to allow a Party to take actions otherwise prohibited under this Agreement.

Tax Return ” or “ Return ” means any return, filing, report, questionnaire, information statement, claim for Refund, or other document required or permitted to be filed, including any amendments that may be filed, for any taxable period with any Taxing Authority.

Taxes ” means all forms of taxation or duties imposed, or required to be collected or withheld, including charges, together with any related interest, penalties or other additional amounts. For the avoidance of doubt, the term “Taxes” does not include amounts to be paid to any governmental authority pursuant to escheat law.

 

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Taxing Authority ” means any governmental authority imposing Taxes.

Transaction Taxes ” means all (i) Taxes of any member of the ADP Group or the Broadridge Group resulting from, or arising in connection with, the failure of the Contribution and the Distribution to have Tax-Free Status, (ii) Taxes of the type described in clause (i) of any third party for which any member of the ADP Group or the Broadridge Group is or becomes liable, and (iii) reasonable out of pocket legal, accounting and other advisory and court fees in connection with liability for Taxes described in clauses (i) or (ii).

Transactions ” means the Contribution, the Distribution, the transactions contemplated by the Separation and Distribution Agreement and any other transfer of assets (whether by contribution, sale or otherwise) between any member of the ADP Group and any member of the Broadridge Group in connection with the Contribution or the Distribution.

Unqualified Tax Opinion ” means an unqualified “will” opinion of a Tax Advisor that permits reliance by ADP. The Tax Advisor, in issuing its opinion, shall be permitted to rely on the validity and correctness, as of the date given, of any previously issued Tax Opinions/Rulings, unless such reliance would be unreasonable under the circumstances.

ARTICLE II

PAYMENT OF TAXES

Section 2.01 Income Taxes .

(a) Except as provided in sections 2.02 and 2.04, ADP shall be responsible for all Income Taxes (i) of Broadridge and its Affiliates for any Pre-Distribution Tax Period; (ii) of Broadridge and its Affiliates for any Straddle Period, but only to the extent allocated to ADP pursuant to Section 2.05; or (iii) imposed under Treasury Regulation Section 1.1502–6 or under any comparable or similar provision of state, local or foreign laws or regulations on Broadridge or an Affiliate solely as a result of such company being a member of a consolidated, combined, or unitary group with ADP or any ADP Affiliate during any Tax period, in each case to the extent in excess of amounts provided for in respect of such Income Taxes on the condensed combined balance sheet of Broadridge, including the notes thereto, as of March 30, 2007 (the “ Balance Sheet ”).

(b) Broadridge shall be responsible for all Income Taxes (i) of Broadridge and its Affiliates which are not the responsibility of ADP pursuant to Section 2.01(a) (including, without limitation, Income Taxes for Post–Distribution Tax Periods of Broadridge and its Affiliates); and (ii) of ADP and its Affiliates attributable to acts or

 

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omissions of Broadridge or its Affiliates taken after the Distribution (other than acts or omissions in the ordinary course of business or otherwise contemplated by the Separation and Distribution Agreement and Ancillary Agreements).

Section 2.02 Transaction Taxes .

(a) Broadridge shall be liable, and shall indemnify the ADP Group, for any Transaction Taxes that are attributable to (i) any inaccurate statement or representation of fact or intent (or omission to state a material fact) in Section 4.01 that relates to the Broadridge Group; (ii) any inaccurate statement or representation of fact or intent (or omission to state a material fact) in a letter or certificate that is provided by any member of the Broadridge Group after the date hereof, and that forms the basis for the Tax Opinions/Rulings; (iii) any act or omission by the Broadridge Group after the date of this Agreement inconsistent with the covenants set forth in this Agreement; or (iv) any other act or omission by the Broadridge Group after the date of this Agreement (except for acts disclosed in any Ruling request submitted to the IRS or the CRA prior to the date hereof), including any act or omission that would have resulted in Broadridge being in breach of Section 4.02(b) but for the receipt by Broadridge of a Ruling from the IRS or the CRA, an Unqualified Tax Opinion or a waiver.

(b) ADP shall be liable, and shall indemnify the Broadridge Group, for any Transaction Taxes attributable to: (i) any inaccurate statement or representation of fact or intent (or omission to state a material fact) made (x) in Section 4.01 that relates to the ADP Group or (y) before the date hereof and that formed the basis for any Tax Opinions/Rulings; (ii) any inaccurate statement or representation of fact or intent (or omission to state a material fact) in a letter or certificate that is provided by any member of the ADP Group after the date hereof and that forms the basis for the Tax Opinions/Rulings; (iii) any act or omission by the ADP Group after the date of this Agreement inconsistent with the covenants set forth in this Agreement; or (iv) any other act or omission (except for acts disclosed in any Ruling request submitted to the IRS prior to the date hereof) by the ADP Group.

(c) Liability for any Transaction Taxes described in both paragraphs (a) and (b) shall be shared by ADP and Broadridge according to relative fault.

Section 2.03 Other Taxes .

(a) ADP shall be responsible for all Other Taxes attributable to ADP and its Affiliates (other than Broadridge and its Affiliates) and to its business activities other than the Broadridge Business, or resulting from the Transactions for all Pre–Distribution Tax Periods, Straddle Periods, and Post–Distribution Tax Periods.

(b) Broadridge shall be responsible for all Other Taxes attributable to Broadridge and its Affiliates or to the Broadridge Business for all Pre–Distribution Tax Periods, Straddle Periods, and Post–Distribution Tax Periods.

(c) In each case the responsibilities of 2.03(a) and 2.03(b) shall be consistent with the principles described below:

 

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(i) Transfer Taxes .

(A) The ADP Group shall be liable, and shall indemnify the Broadridge Group, for any stamp, sales, use, gross receipts, value-added, real estate transfer or other transfer Taxes imposed in connection with the Transactions.

(B) If business operations of an ADP entity are transferred to a Broadridge entity as part of the Transactions, the transferee shall assume any and all liabilities for stamp, sales, use, gross receipts, value-added, real estate transfer and other transfer Taxes associated with such transferred operations and will have sole responsibility for satisfying such liabilities.

(C) With respect to Refund claims pending on the Distribution Date involving any sales, use, gross receipts or other similar Taxes, (x) in the case of a Refund received by ADP and payable to Broadridge pursuant to the terms hereof, the amount of such payment shall be net of all contingent fee expenses and Taxes paid by ADP and related to such Refund, or (y) in the event that Broadridge receives a Refund directly from the relevant Taxing Authority, it shall reimburse ADP for all contingent fee expenses and Taxes paid by ADP with respect to such Refund. For the avoidance of doubt, Broadridge shall not be liable for any contingent fee expenses or Taxes related to Refunds received prior to the Distribution Date.

(ii) Property Taxes . If property is transferred between legal entities, the transferee shall assume any and all liabilities for real and personal property Taxes associated with such transferred property and will have sole responsibility for satisfying such liabilities.

(iii) Payroll Taxes . If an employee moves from one employer to another, the “new” employer shall assume any and all employment related Taxes attributable to such transferred employee and will have sole responsibility for satisfying such liabilities.

Section 2.04 Other Income Taxes . Without regard to anything to the contrary in this Article II, ADP shall be liable, and shall indemnify the Broadridge Group, for all Taxes arising as a result of the Transactions from (i) excess loss accounts taken into account under Code Section 1502, (ii) Code Section 357(c) or (iii) Code Section 361(b), in each case, including under similar state and local law provisions. Any Taxes attributable to deferred intercompany gains that are triggered as a result of the Transactions shall be the responsibility of ADP and shall not be included in determining the Broadridge Group’s Income Tax liability. To the extent there are adjustments to the amount of any deferred intercompany gain triggered as a result of the Distribution, ADP shall be responsible for paying the additional Tax associated with any increase in the amount of gain and shall also be entitled to a Refund attributable to any reduction of gain.

 

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Section 2.05 Allocation of Certain Income Taxes and Income Tax Items .

(a) If ADP, Broadridge or any of their respective Affiliates is permitted but not required under applicable U.S. federal, state, local or foreign Tax laws to treat the Distribution Date as the last day of a taxable period, then the Parties shall treat such day as the last day of a taxable period under such applicable Tax law, and shall file any elections necessary or appropriate to such treatment; provided that this Section 2.05(a) shall not be construed to require ADP to change its taxable year.

(b) Transactions occurring, or actions taken, on the Distribution Date but after the Distribution outside the ordinary course of business by, or with respect to, Broadridge or any of its Affiliates shall be deemed subject to the “next day rule” of Treasury Regulation Section 1.1502–76(b)(1)(ii)(B) (and under any comparable or similar provision under state, local or foreign laws or regulations, provided that if there is no comparable or similar provision under state, local or foreign laws or regulations, then the transaction will be deemed subject to the “next day rule” of Treasury Regulation Section 1.1502–76(b)(1)(ii)(B)) and as such shall for purposes of this Agreement be treated (and consistently reported by the Parties) as occurring in a Post–Distribution Tax Period of Broadridge or an Broadridge Affiliate, as appropriate.

(c) Any Taxes for a Straddle Period with respect to Broadridge and/or its Affiliates (or entities in which Broadridge and/or one of its Affiliates has an ownership interest) shall, for purposes of this Agreement, be apportioned between ADP and Broadridge based on the portion of the period ending on and including the Distribution Date and the portion of the period beginning after the Distribution Date, and each such portion of such period shall be deemed to be a taxable period (whether or not it is in fact a taxable period). Any allocation of income or deductions required to determine any Income Taxes for a Straddle Period shall be made by means of a closing of the books and records of Broadridge and its Affiliates as of the close of business on the Distribution Date; provided that (i) ADP may elect to allocate Tax Items (other than any extraordinary Tax Items) ratably in the month in which the Distribution occurs (and if ADP so elects, Broadridge shall so elect) as described in Treasury Regulation Section 1.1502–76(b)(2)(iii) and corresponding provisions of state, local, and foreign Tax laws; and (ii) subject to (i), exemptions, allowances or deductions that are calculated on an annual basis, and not on a closing of the books method, (including, but not limited to, depreciation and amortization deductions) shall be allocated between the period ending on and including the Distribution Date and the period beginning after the Distribution Date based on the number of days for the portion of the Straddle Period ending on and including the Distribution Date, on the one hand, and the number of days for the portion of the Straddle Period beginning after the Distribution Date, on the other hand.

(d) Tax Attributes determined on a consolidated or combined basis for taxable periods ending before or including the Distribution Date shall be allocated to ADP and its Affiliates, and Broadridge and its Affiliates, in accordance with the Code and the Treasury Regulations (and any applicable state, local, or foreign law or regulation). ADP shall reasonably determine the amounts and proper allocation of such

 

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attributes, and the Tax basis of the assets and liabilities transferred to Broadridge in connection with the Transactions, as of the Distribution Date; provided that Broadridge shall be entitled to participate in such determination. ADP and Broadridge agree to compute their Tax liabilities for taxable periods after the Distribution Date consistent with that determination and allocation, and treat the Tax Attributes and Tax Items as reflected on any federal (or applicable state, local or foreign) Income Tax Return filed by the Parties as presumptively correct.

Section 2.06 Refunds . Except as provided in Section 2.07:

(a) ADP shall be entitled to all Refunds with respect to any Tax for which ADP is responsible under Sections 2.01, 2.02, 2.03, or 2.04. Broadridge shall be entitled to all Refunds with respect to any Tax for which Broadridge is responsible under Sections 2.01, 2.03, or 2.04.

(b) Broadridge and ADP shall each forward to the other Party, or reimburse such other Party for, any Refunds received by the first Party and due to such other Party pursuant to this Section (net of all contingent fees and Taxes payable by the first Party and related to such Refund). Where a Refund is received in the form of a deduction from, or credit or other offset against other or future Tax liabilities, reimbursement with respect to such Refund shall be due in each case on the due date for payment of the Tax from or against which such Refund has been deducted, credited or otherwise offset.

(c) If one Party reasonably so requests, the other Party (at the first Party’s expense) shall file for and pursue any Refund to which the first Party is entitled under this Section; provided that the other Party need not pursue any Refund on behalf of the first Party unless the first Party provides the other Party a certification by an appropriate officer of the first Party setting forth the first Party’s belief (together with supporting analysis) that the Tax treatment of the Tax Items on which the entitlement to such Refund is based is more likely than not correct, and is not a Tax Item arising from a Reportable Transaction.

(d) If the other Party pays any amount to the first Party under this Section 2.06 and, as a result of a subsequent Final Determination, the first Party is not entitled to some or all of such amount, the other Party shall notify the first Party of the amount to be repaid to the other Party, and the first Party shall then repay such amount to the other Party, together with any interest, fines, additions to Tax, penalties or any additional amounts imposed by a Taxing Authority relating thereto.

Section 2.07 Carrybacks .

(a) Notwithstanding anything in this Agreement, Broadridge shall file (or cause to be filed) on a timely basis any available election to waive the carryback of net operating losses, Tax credits or other Tax Items by Broadridge or any Affiliate from a Post–Distribution Tax Period to a Straddle Period or Pre–Distribution Tax Period. Such elections shall include, but not be limited to, the election described in

 

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Treasury Regulation Section 1.1502–21T(b)(3)(ii)(B), and any analogous election under state, local, or foreign Income Tax laws, to waive the carryback of net operating losses for U.S. federal Income Tax purposes.

(b) If, notwithstanding the provisions of Section 2.07(a), Broadridge is required to carryback losses or credits, Broadridge shall be entitled to any Refund of any Tax obtained by ADP or an ADP Affiliate as a result of the carryback of losses or credits of Broadridge or its Affiliate from any Post-Distribution Tax Period to any Pre-Distribution Tax Period. Such Refund is limited to the net amount received by ADP or an ADP Affiliate, net of any Tax cost incurred by ADP or such Affiliate resulting from such Refund. Upon request by Broadridge, ADP shall advise Broadridge of an estimate of any Tax cost ADP projects will be associated with any carryback of losses or credits of Broadridge or its Affiliates as provided in this Section 2.07(b).

(c) If Broadridge has a Tax Item that must be carried back to any Pre-Distribution Tax Period, Broadridge shall notify ADP in writing that such Tax Item must be carried back. Such notification shall include a description in reasonable detail of the grounds for the Refund and the amount thereof, and a certification by an appropriate officer of Broadridge setting forth Broadridge’s belief (together with supporting analysis) that the Tax treatment of such Tax Item is more likely than not correct, and is not a Tax Item arising from a Reportable Transaction.

(d) If ADP pays any amount to Broadridge under Section 2.07(b) and, as a result of a subsequent Final Determination, Broadridge is not entitled to some or all of such amount, ADP shall notify Broadridge of the amount to be repaid to ADP, and Broadridge shall then repay such amount to ADP, together with any interest, fines, additions to Tax, penalties or any additional amounts imposed by a Taxing Authority relating thereto.

Section 2.08 Treatment of Restricted Stock, Stock Options, and Deferred Compensation .

(a) To the extent permitted by law, ADP (or the appropriate ADP Affiliate) shall claim all Tax deductions arising by reason of the grant or vesting of Employee Restricted Stock, and by reason of exercises of Employee Stock Options, at the time such Tax deduction can be claimed, provided that such Employee Restricted Stock or Employee Stock Option is then held by an ADP Employee. To the extent permitted by law, Broadridge (or the appropriate Broadridge Affiliate) shall claim all Tax deductions arising by reason of the grant or vesting of Employee Restricted Stock, and by reason of exercises of Employee Stock Options, at the time such Tax deduction can be claimed, provided that such Employee Restricted Stock or Employee Stock Option is then held by a Broadridge Employee. To the extent permitted by law, Broadridge (or the appropriate Broadridge Affiliate) shall claim all Tax deductions arising by reason of the payment (or inclusion in income) of compensation the receipt of which was deferred by an Broadridge Employee prior to the Distribution Date, the payment of which will occur after the Distribution Date, and the obligation to make such payment is assumed by Broadridge in connection with the Contribution and Distribution.

 

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(b) If, pursuant to a Final Determination, all or any part of a Tax deduction claimed by a Party (or Affiliate thereof) pursuant to Section 2.08(a) is disallowed, then, to the extent permitted by law, the other Party (or Affiliate thereof) shall claim such Tax deduction. If such other Party (or Affiliate thereof) realizes a Tax benefit from the claiming of such Tax deduction, such other Party (or Affiliate) shall pay the amount of such Tax benefit (net of any Tax detriment suffered by the payor) to the Party who originally claimed the Tax deduction.

(c) The Party (or Affiliate thereof) initially claiming the Tax deduction described in Section 2.08(a) shall withhold applicable Taxes and satisfy applicable Tax reporting obligations with respect to the taxation of the Restricted Stock, Option, or deferred compensation with respect to which the Tax deduction is claimed. The Parties to this Agreement shall cooperate so as to permit the Party initially claiming such deduction to discharge any applicable Tax withholding and Tax reporting obligations.

Section 2.09 Successor Employer Status . ADP and Broadridge shall, to the extent permitted by law, (i) treat Broadridge and its Affiliates (as applicable) as a “successor employer” and ADP and its Affiliates (as applicable) as a “predecessor,” within the meaning of sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to employees of the Broadridge Business that were employed by Broadridge and its Affiliates starting on March 30, 2007 for purposes of Taxes imposed under the United States Federal Unemployment Tax Act or the United States Federal Insurance Contributions Act and (ii) cooperate with each other to avoid the filing of more than one IRS Form W–2 with respect to each such employee for the calendar year in which the Distribution occurs.

Section 2.10 APA .

(a) When the APA is finally determined, ICC and another Canadian Affiliate of Broadridge (“New CanCo 2”) shall pay the APA Amount to the Specified Affiliates. For the purposes of this provision, (A) “APA Amount” means an amount equal to the amount of the payables owing under the APA that were retained or assumed by ICC and New CanCo 2 pursuant to the Separation and Distribution Agreement (taking into account any adjustments provided for in the Separation and Distribution Agreement), and (B) “Specified Affiliates” means the U.S. Affiliates of Broadridge that retained or acquired receivables owing under the APA from one or more U.S. Affiliates of ADP pursuant to the Separation and Distribution Agreement.

(b) For the avoidance of doubt, and notwithstanding anything herein to the contrary, any tax owing as a result of the APA shall be treated as an Income Tax that is governed by Section 2.01 of this Agreement.

 

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ARTICLE III

PREPARATION AND FILING OF TAX RETURNS

Section 3.01 ADP Responsibility .

(a) Subject to paragraph (b) below, ADP shall make all determinations with respect to, have ultimate control over the preparation of and file all (i) Joint Returns and ADP Separate Returns, in each case as it determines to be mandatory or advisable for all taxable periods, (ii) Broadridge Separate Returns that are Income Tax Returns for all Pre-Distribution Tax Periods and (iii) at ADP’s election, Broadridge Separate Returns that are Income Tax Returns for all Straddle Periods provided that ADP provides written notice to Broadridge 45 days after the end of such Straddle Period that ADP is exercising its right to prepare such Tax Return.

(b) If, in connection with the preparation of any Return, ADP materially modifies any information relating to, or provided in, the pro forma federal and state Income Tax Returns or other information related to members of the Broadridge Group prepared by Broadridge and provided to ADP pursuant to Section 3.02 below, the portions of the Returns that include such information shall be submitted to Broadridge no later than 30 days prior to the due date (including extensions) for filing of such federal Returns and 20 days prior to the due date (including extensions) for filing of such state Returns (or if such due date is within 30 days following the Distribution Date, as promptly as practicable following the Distribution Date). Within 10 days after delivery of any such revised portions of any Return, Broadridge shall provide comments to ADP in writing to the extent Broadridge objects to any revisions that could reasonably be expected to adversely impact any member of the Broadridge Group. Such Broadridge comments shall be incorporated into the Return upon the consent of ADP, not to be unreasonably withheld. If Broadridge does not so notify ADP of any objection, Broadridge shall be considered to have consented to the filing of such Return. The dates for submissions to Broadridge required in this section may be modified by mutual agreement of ADP and Broadridge.

Section 3.02 Broadridge Responsibility .

(a) Broadridge shall make all determinations with respect to, have ultimate control over the preparation of and file all Tax Returns (other than those described in Section 3.01) for the Broadridge Group as it determines to be mandatory or advisable and for all taxable periods. Broadridge shall prepare and provide to ADP all pro forma federal and state Income Tax Returns and other information related to members of the Broadridge Group required to complete any Tax Return which is the responsibility of ADP pursuant to Section 3.01, in the format reasonably requested by ADP, and at least 110 days prior to the due date (including extensions) of the relevant federal Return and at least 100 days prior to the due date (including extensions) of the relevant state Return. The dates for submissions to ADP required in this section may be modified by mutual agreement of ADP and Broadridge.

 

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(b) In the case of any Tax Return that is the responsibility of ADP pursuant to Section 3.01(a) and that relates to an Income Tax that is provided for on the Balance Sheet, Broadridge shall pay to ADP the amount of the provision for such Income Tax no later than 10 days prior to the due date (including extensions) for the filing of such Tax Return.

Section 3.03 Tax Accounting Practices .

(a) Except as provided in Section 3.03(b), any Tax Return for any Pre-Distribution Tax Period, to the extent it relates to members of the Broadridge Group, shall be prepared in accordance with practices, accounting methods, elections, conventions and Tax positions used with respect to the Tax Return in question for periods prior to the Distribution (“ Past Practices ”), and, in the case of any item the treatment of which is not addressed by Past Practices, in accordance with generally acceptable Tax accounting practices. Notwithstanding the foregoing, for any Tax Return described in the preceding sentence, (i) a Party will not be required to follow Past Practices with either the written consent of the other Party (not to be unreasonably withheld) or a “should” level opinion from a Tax Advisor that the proposed method of reporting is correct and (ii) ADP shall have the right to determine which entities will be included in any consolidated, combined, affiliated or unitary Return that it is responsible for filing.

(b) The Parties shall report the Transactions for all Tax purposes in a manner consistent with the Tax Opinions/Rulings, unless, and only to the extent, an alternative position is required pursuant to a Final Determination. ADP shall determine the Tax treatment to be reported on any Tax Return of any Tax issue relating to the Transactions that is not covered by the Tax Opinions/Rulings.

Section 3.04 Right to Review Tax Returns . Upon request, each Party shall make available to the other Party the portion of Pre-Distribution Tax Period Tax Returns that relates to the Broadridge Group that the first Party is responsible for preparing under this Article III.

ARTICLE IV

TAX-FREE STATUS OF DISTRIBUTION

Section 4.01 Representations . Each of Broadridge and ADP represents that (i) it knows of no fact (other than the facts disclosed in any Ruling request submitted prior to the date hereof) that may cause the Contribution and the Distribution to fail to have Tax-Free Status and (ii) it has no plan or intention to take any action inconsistent with the Tax Opinions/Rulings or the covenants set forth in this Agreement.

Section 4.02 Covenants .

(a) Each of Broadridge and ADP will not take or fail to take, or permit its Affiliates to take or fail to take, any action (which includes the undertaking of any transaction) where that action or omission would (i) violate, be inconsistent with or

 

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cause to be untrue any covenant, representation or statement in any Tax Opinions/Rulings or a letter or certificate that forms the basis therefor, or (ii) prevent, or be reasonably likely to prevent, or be inconsistent with, the Tax-Free Status.

(b) During the Restricted Period, except as provided in paragraph (c), Broadridge shall not, and shall not permit its Affiliates to, in a single transaction or in a series of transactions:

(i) permit any transaction or series of transactions (or any agreement, understanding or arrangement to enter into a transaction or series of transactions) as determined for purposes of Code Section 355(e), in connection with which (A) any member of the Broadridge Group would merge or consolidate with any Person other than any other member of the Broadridge Group, (B) any member of the Broadridge Group would form one or more joint ventures with any Person other than any other member of the Broadridge Group in which, in the aggregate, more than 10% of the gross assets of the Broadridge Group are transferred to such joint ventures or (C) any Person would (directly or indirectly) acquire, or have the right to acquire, from any other Person or Persons, a more than 10% interest in Broadridge Capital Stock (a “ Proposed Acquisition Transaction ”). For these purposes, any recapitalization, repurchase or redemption of Broadridge Capital Stock shall be treated as an indirect acquisition of such stock by any non-exchanging shareholder to the extent such shareholder’s percentage interest in the issuer increases by vote or value. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (w) the adoption by Broadridge of a shareholder rights plan that meets the requirements of IRS Revenue Ruling 90-11, (x) issuances of Broadridge Capital Stock pursuant to an employee stock purchase agreement or equity compensation plan that ADP has notified Broadridge in writing is acceptable to ADP in its sole discretion (for the avoidance of doubt, (i) any modification or amendment to such agreement or plan is also subject to the prior written consent of ADP and (ii) ADP’s approval is required for the underlying purchase agreement or plan but not for each issuance of stock pursuant thereto), (y) transfers on an established market of Broadridge Capital Stock described in Safe Harbor VII of Treasury Regulation Section 1.355-7(d) or (z) issuances of Broadridge Capital Stock described in Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d).

(ii) liquidate or partially liquidate, including by way of merger or consolidation, any member of the Broadridge Group other than Broadridge;

(iii) liquidate or partially liquidate Broadridge;

(iv) cause or permit the Broadridge Group to cease to engage in the Active Trade or Business;

(v) sell or transfer assets, other than inventory sold or transferred in the ordinary course of business, constituting (A) 50% or more of the gross assets that are held by any member of the Broadridge Group and are used in the Active Trade or Business and are relied upon to satisfy the requirements of Code Section

 

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355(b), (B) 50% or more of the consolidated gross assets of the Broadridge Group that are used in an Active Trade or Business (such percentages to be measured based on fair market value as of the Distribution Date) or (C) any lesser amount if that sale or transfer could reasonably be expected to result in a significant and material change to, or termination of, the Active Trade or Business immediately after the Distribution Date; or

(vi) amend its certificate of incorporation (or other organizational documents), or take any other action, affecting the relative voting rights of the separate classes of Broadridge Capital Stock; provided , however , that this clause (vi) shall not be deemed to be violated upon Broadridge’s adoption of a shareholder rights plan that meets the requirements of IRS Revenue Ruling 90-11.

(c) Notwithstanding paragraph (b):

(i) clauses (i) through (vi) of paragraph (b) shall not apply upon the prior written consent of ADP, which consent may not be withheld if ADP determines in good faith that Broadridge has provided it with Satisfactory Guidance concluding that the proposed actions will not result in Transaction Taxes;

(ii) clause (v) of paragraph (b) shall not apply after the six month anniversary of the Distribution Date;

(iii) for purposes of clause (i), if Broadridge provides ADP an Unqualified Tax Opinion that is intended to be Satisfactory Guidance concerning a Proposed Acquisition Transaction, then such Opinion may be based on the assumption that ADP did not have any agreement, understanding, arrangement or substantial negotiations, within the meaning of Treasury Regulations Section 1.355-7(h), with the counterparty to the Proposed Acquisition Transaction within the two year period preceding the Distribution Date and such assumption shall not prevent such Unqualified Tax Opinion from being considered Satisfactory Guidance by the Parties, provided that (x) such assumption must be based on a certificate of such counterparty that such assumption is true to the best of its knowledge and belief, and (y) ADP may deem such Opinion not to be Satisfactory Guidance if, in its reasonable judgment, there is a risk that such assumption is not correct; and

(iv) In the event that Broadridge intends to consummate any Proposed Acquisition Transaction after the end of the Restricted Period but before the end of 30 months after the Distribution Date, then either (x) Broadridge shall be permitted to consummate such proposed Acquisition Transaction, provided that Broadridge shall provide ADP with an unconditional certification that it did not have any agreement, understanding, arrangement or substantial negotiations, within the meaning of Treasury Regulations Section 1.355-7(h), with the counterparty to such transaction within 12 months after the Distribution Date, and ADP after reasonable due investigation is satisfied with the correctness of such certification, or (y) such Proposed Acquisition Transaction shall be subject to the provisions under Sections 4.02(b) and (c).

 

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(d) Notwithstanding anything herein to the contrary, for purposes of paragraph (c), no Ruling shall be obtained from the IRS if ADP determines that there is a reasonable possibility that such an action could have a significant adverse impact on any member of the ADP Group.

(e) Broadridge will not take any action (including, but not limited to, the sale or disposition of any stock, securities or other assets), or permit its Affiliates to take any such action, and Broadridge will not fail to take any action or permit its Affiliates to fail to take any action that would cause ADP or any of its Affiliates or Broadridge or any of its Affiliates to recognize gain under any Gain Recognition Agreement.

Section 4.03 Procedures Regarding Opinions and Rulings .

(a) Subject to Section 4.02(d), if Broadridge may take certain actions conditioned upon the receipt of Satisfactory Guidance, ADP, at the request of Broadridge, shall use commercially reasonable efforts to expeditiously obtain, or assist Broadridge in obtaining, such Satisfactory Guidance. ADP shall not be required to take any action pursuant to this Section 4.03(a) if Broadridge fails to certify, upon request, that all information and representations relating to any member of the Broadridge Group in the relevant documents are true, correct and complete. Broadridge shall reimburse ADP for all reasonable out-of-pocket costs and expenses incurred by the ADP Group in obtaining Satisfactory Guidance.

(b) ADP shall have the right to obtain a Ruling from the IRS (or any other Taxing Authority) or an Unqualified Tax Opinion at any time in its sole discretion. ADP shall reimburse Broadridge for all reasonable out-of-pocket costs and expenses incurred by the Broadridge Group in obtaining such a Ruling or Unqualified Tax Opinion.

(c) ADP shall have exclusive control over the process of obtaining any Ruling relating to the Transactions and neither Broadridge nor any of its Affiliates shall independently seek any guidance concerning the Transactions from any Taxing Authority at any time. In connection with any Ruling relating to the Transactions that can reasonably be expected to affect Broadridge liabilities under this Agreement, ADP shall (i) keep Broadridge informed of all material actions taken or proposed to be taken by ADP, (ii) reasonably in advance of the submission of any Ruling request provide Broadridge with a draft thereof, consider Broadridge’s comments on such draft, and provide Broadridge with a final copy, and (iii) provide Broadridge with notice reasonably in advance of, and permit Broadridge to attend, any formally scheduled meetings with the IRS (subject to the approval of the IRS) that relate to such Ruling.

Section 4.04 Canadian Butterfly .

(a) Each of Broadridge and ADP represents that (i) it knows of no fact (other than the facts disclosed in any Ruling request submitted to the CRA prior to the date hereof) that may cause the Butterfly Transactions to fail to have Canadian Tax-Free

 

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Status and (ii) it has no plan or intention to take any action inconsistent with the request for the Canadian Tax Ruling or the Canadian Tax-Free Status or the covenants set forth in this Agreement.

(b) Each of Broadridge and ADP will not take or fail to take, or permit its Affiliates to take or fail to take, any action (which includes the undertaking of any transaction) where that action or omission would (i) violate, be inconsistent with or cause to be untrue any covenant, representation or statement in the Canadian Tax Ruling, or (ii) prevent, or be reasonably likely to prevent, or be inconsistent with, the Canadian Tax-Free Status, in each case without first obtaining Satisfactory Guidance concluding that the proposed action or omission will not have such effect.

ARTICLE V

TAX CONTESTS; INDEMNIFICATION; COOPERATION

Section 5.01 Notice .

(a) Within 15 days after a Party (the “ Indemnitee ”) becomes aware of the existence of a Tax Contest that may give rise to an indemnification claim under this Agreement by it against the other Party (the “ Indemnifying Party ”), the Indemnitee shall promptly notify the Indemnifying Party of the Tax Contest, and thereafter shall promptly forward or make available to the Indemnifying Party copies of notices and communications with a Taxing Authority relating to such Tax Contest.

(b) The Indemnifying Party shall not be responsible for any increase in amounts to which the Indemnitee is otherwise entitled to the extent that such increase results solely from the failure of the Indemnitee to provide timely notice as required pursuant to Section 5.01(a).

Section 5.02 Control of Tax Contests .

(a) Except as otherwise provided in paragraphs (b) and (c):

(i) ADP shall control, and have sole discretion in handling, settling or contesting, any Tax Contest relating to any Joint Returns, as well as any Separate Returns or other Return if any such Return is related to Taxes for which ADP is responsible pursuant to Article II, or the Tax treatment of the Transactions, provided that (x) ADP shall act in good faith in connection with its control of any such Tax Contests and (y) Broadridge shall have the right to participate in and advise on (including, without limitation, the opportunity to review and comment upon ADP’s communications with the Taxing Authority, which comments shall be incorporated upon the consent of ADP, not to be unreasonably withheld) such items for which Broadridge could be liable under Article II as a result of such Tax Contest; and

(ii) If Broadridge disagrees with ADP’s decision to settle a Tax Contest that may reasonably be expected materially to affect amounts for which Broadridge is liable under Article II, Broadridge shall have the right to contest its

 

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liability to ADP under Article II notwithstanding the settlement. Broadridge shall provide written notice to ADP of its intention to contest its liability as a result of any settlement (and its irrevocable election described below) prior to the time such settlement is entered into. Any such contest by Broadridge shall be made under the procedures set forth in Article VI. Under those procedures, Broadridge may irrevocably elect, in its sole discretion, to require the Tax Advisor or the arbitrator to determine either (x) the amount of a settlement with the relevant Taxing Authority that would most accurately reflect the litigation risk of the relevant issue, or (y) the most likely outcome of the issue if it were litigated without a settlement. In either such case, Broadridge shall be liable to ADP, or ADP shall be liable to Broadridge, based solely on the determination of the Tax Advisor or the arbitrator as if a settlement or litigation implementing such determination had actually occurred, without regard to the actual settlement. For the avoidance of doubt, this clause (ii) shall not limit ADP’s ability to settle a Tax Contest.

(b) Broadridge shall control and have sole discretion in handling, settling or contesting, any Tax Contest for a Pre-Distribution Tax Period to the extent such Tax Contest relates solely to Taxes that are the responsibility of Broadridge pursuant to Article II; provided that ADP shall have the right to participate in and advise on all aspects of such Tax Contests and may coordinate discussions with the relevant Taxing Authority with respect thereto.

(c) ADP and Broadridge shall jointly control Tax Contests relating to Tax liability arising from the failure of the Transactions to qualify for tax-free treatment under Code Sections 355 or 361, if there is a reasonable likelihood that Broadridge would be liable to ADP under Article II as a result of such Tax Contest. Neither Party shall have the right to settle any such Tax Contest without the consent of the other Party; provided that ADP may settle any such Tax Contest without the consent of Broadridge if ADP waives any claim for indemnification with respect thereto.

(d) Except as otherwise provided in paragraph (a), (b) or (c), Broadridge shall have sole control over any Tax Contest that relates to Broadridge Separate Returns for any Post-Distribution Tax Period.

(e) Any out-of-pocket costs incurred in handling, settling or contesting a Tax Contest shall be borne ratably by the Parties based on their ultimate liability under this Agreement for the Taxes to which the Tax Contest relates; provided , however , that if Broadridge contests a settlement made by ADP as provided in clause (ii) of paragraph (a), ADP shall bear the costs relating to Broadridge’s contest of such settlement unless ADP substantially prevails in such contest.

Section 5.03 Indemnification Payments .

(a) An Indemnitee shall be entitled to make a claim for payment pursuant to this Agreement when the Indemnitee determines that it is entitled to such payment and the amount of such payment (including, for the avoidance of doubt, the finalization of a Return before filing). The Indemnitee shall provide to the Indemnifying

 

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Party notice of such claim within 10 days of the date on which it first so becomes entitled to claim such payment, including a description of such claim and a detailed calculation of the amount of the indemnification payment that is claimed, provided , however, that no delay on the part of the Indemnitee in notifying the Indemnitor shall relieve the Indemnitor from any obligation hereunder unless (and then solely to the extent) the Indemnitor is actually and materially prejudiced thereby. Except as provided in paragraph (b), the Indemnifying Party shall make the claimed payment to the Indemnitee within 10 days after receiving such notice, unless the Indemnifying Party reasonably disputes its liability for, or the amount of, such payment.

(b) If the Indemnitee will be obligated to make the payment described in paragraph (a) to a Taxing Authority or other third Party (including expenses reimbursable under this Agreement), the Indemnifying Party shall not be obligated to pay the Indemnitee more than 5 days before the Indemnitee incurs such expense or makes such payment. If the Indemnitee’s claim for payment arises from a payment that the Indemnifying Party will receive from a third Party, such as a Refund, the Indemnifying Party shall not be obligated to pay the Indemnitee until 5 days after the Indemnifying Party receives such payment.

(c) In the case of a claim under Article II where no payment will be made to or received from a Taxing Authority, paragraph (b) shall be applied to the payments that would be made to or from a Taxing Authority if the Broadridge Group was treated as a standalone group for all taxable periods.

Section 5.04 Interest on Late Payments . Interest shall accrue with respect to any indemnification payment (including any disputed payment that is ultimately required to be made), not made within the period for payment, at 5.75 percent per annum compounded quarterly.

Section 5.05 Treatment of Payments .

(a) The amount of all indemnification obligations under this Agreement shall be decreased to take into account the Tax benefits to the Indemnitee of the deductibility of any indemnified item (whether or not any Tax benefit is actually received for a deductible item and assuming the highest applicable taxable rate) and shall be increased where necessary so that, after all the required deductions (whether or not any Tax benefit is actually received for a deductible item and assuming the highest applicable taxable rate) have been made and Taxes imposed, the Indemnitee receives the amount it would have been entitled to receive under this Agreement in the absence of such deductions and Taxes.

(b) Any payments made to one Party by another Party pursuant to (i) this Agreement or (ii) Sections 2.3(b), 2.3(c), 4.2, and 4.3 of the Separation and Distribution Agreement (or any other payment made pursuant to the Separation and Distribution Agreement that relates to taxable periods (or portions thereof) ending on or before the Distribution) shall be treated by the Parties for all Tax purposes as a distribution by, or capital contribution to, Broadridge, as the case may be, made immediately prior to the Distribution, except to the extent otherwise required by a Final Determination.

 

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Section 5.06 Expenses . Except as otherwise provided herein, each Party and its Affiliates shall bear their own expenses incurred in connection with preparation of Tax Returns, Tax Contests, and other matters under this Agreement.

Section 5.07 Cooperation . Each member of the ADP Group and the Broadridge Group shall cooperate fully with all reasonable requests from the other Party in connection with the preparation and filing of Tax Returns and Adjustment Requests, Tax Contests and other matters covered by this Agreement.

(a) Such cooperation shall include:

(i) the retention until the expiration of the applicable statute of limitations, and the provision upon request, of Tax Returns, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to the Tax Returns, including accompanying schedules, related workpapers, and documents relating to Rulings or other determinations by Taxing Authorities;

(ii) the execution of any document that may be necessary or reasonably helpful in connection with any Tax Contest, the filing of a Tax Return or Adjustment Request by a member of the ADP Group or the Broadridge Group, obtaining a Tax opinion or private letter ruling (except as otherwise provided in Section 4.02(d)), or other matters covered by this Agreement, including certification (provided in such form as may be required by applicable law or reasonably requested and made to the best of a Party’s knowledge) of the accuracy and completeness of the information it has supplied;

(iii) the use of the Parties’ reasonable best efforts to obtain any documentation that may be necessary or reasonably helpful in connection with any of the foregoing;

(iv) the use of the Parties’ reasonable best efforts to make the applicable Party’s current or former directors, officers, employees, agents and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters; and

(v) making determinations with respect to actions described in Section 4.02(c) as promptly as practicable including, without limitation, making determinations within 10 days with respect to modifications and amendments of employee stock purchase agreements or equity compensation plans under Section 4.02(b)(i)(x).

(b) If a Party fails to comply with any of its obligations set forth in this Section 5.07 upon reasonable request and notice by the other Party, and such failure results in the imposition of additional Taxes, the nonperforming Party shall be liable in full for such additional Taxes.

 

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Section 5.08 Confidentiality . Any information or documents provided under this Agreement shall be kept confidential by the recipient-Party, except as may otherwise be necessary in connection with the filing of Tax Returns or with any Tax Contest. In addition, if ADP or Broadridge determines that providing such information could be commercially detrimental, violate any law or agreement or waive any privilege, the Parties shall use reasonable best efforts to permit compliance with the obligations under this Agreement in a manner that avoids any such harm or consequence.

Section 5.09 Retention of Tax Records . Broadridge may request from ADP and retain copies of (i) with respect to any Joint Return, all pro forma federal and state Tax Returns, supporting schedules and workpapers related to members of the Broadridge Group, and (ii) any Separate Returns for any Broadridge Group members, including supporting schedules and workpapers. If either ADP or Broadridge intends to dispose of documentation with respect to any Pre-Distribution Tax Period, including books, records, Tax Returns and all supporting schedules and information relating thereto (after the expiration of the applicable statute of limitations), of any member of the other Group, or in the case of the Broadridge Group any member included in a Joint Return, they shall provide written notice to the other Party describing the documentation to be disposed of 30 days prior to taking such action. The other Party may arrange to take delivery of the documentation described in the notice at its own expense during the succeeding 30 day period.

ARTICLE VI

RESOLUTION OF DISPUTES

Section 6.01 Tax Disputes . The Parties will endeavor, and will cause their respective Affiliates to endeavor, to resolve in an amicable manner all disputes arising in connection with this Agreement. The Parties shall negotiate in good faith to resolve any Tax Dispute for not less than 45 days. Upon written notice of either Party after 45 days, the matter will be referred to a Tax Advisor acceptable to both Parties. The Tax Advisor may, in its discretion, obtain the services of any third-party necessary to assist it in resolving the dispute. The Tax Advisor shall furnish written notice to the Parties of its resolution of the dispute as soon as practicable, but in any event no later than 45 days after its acceptance of the matter for resolution. Any such resolution by the Tax Advisor will be binding on the Parties and the Parties shall take, or cause to be taken, any action necessary to implement the resolution. All fees and expenses of the Tax Advisor shall be shared equally by ADP, on the one hand, and Broadridge, on the other hand. If, having determined that the dispute must be referred to a Tax Advisor, after 45 days the Parties are unable to find a Tax Advisor willing to adjudicate the dispute in question and whom the Parties in good faith find acceptable, then the dispute will be submitted for arbitration to the American Arbitrators Association, provided , however , that only an arbitrator that qualifies as a Tax Advisor shall be selected.

 

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ARTICLE VII

MISCELLANEOUS PROVISIONS

Section 7.01 Disposition of Broadridge Subsidiaries . In the event that Broadridge disposes of the stock of a subsidiary that is not a Party to this Agreement (i) without receiving compensation equal to the fair market value of such subsidiary, prior to the disposition, such subsidiary shall deliver to ADP an executed agreement, in a form reasonably acceptable to ADP, agreeing to be bound by this Agreement as if it had been an original Party hereto or (ii) in an exchange intended to result in the receipt of compensation equal to the fair market value of such subsidiary, prior to the disposition, such subsidiary shall deliver to ADP an executed agreement, in a form reasonably acceptable to ADP, agreeing to be bound by Sections 5.07, 5.08, 5.09 and Article VII of this Agreement as if it had been an original Party hereto.

Section 7.02 Complete Agreement; Representations .

(a) Except as explicitly stated herein, this Agreement, together with the exhibits and schedules hereto constitutes the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

(b) ADP represents on behalf of itself and each other member of the ADP Group and Broadridge represents on behalf of itself and each other member of the Broadridge Group as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated by this Agreement; and

(ii) this Agreement has been duly executed and delivered by such Person (if such Person is a Party) and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof (assuming the due execution and delivery thereof by the other Party), except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to creditors’ rights generally and by general equitable principles.

Section 7.03 Costs and Expenses . All costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated hereby shall be borne as provided in the Separation and Distribution Agreement.

 

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Section 7.04 Governing Law . This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the conflicts of laws principles thereof.

Section 7.05 Notices . All notices, requests, claims, demands and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the Parties at the following addresses or facsimile numbers:

If to ADP or any member of the ADP Group, to:

Automatic Data Processing, Inc.

One ADP Boulevard

Roseland, New Jersey 07068

Attn: General Counsel

Fax: 973-974-3324

If to Broadridge or any member of the Broadridge Group, to:

Broadridge Financial Solutions, Inc.

2 Journal Square Plaza

Jersey City, New Jersey 07306

Attn: General Counsel

Fax: 201-714-3506

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this section, be deemed given upon receipt and (iii) if delivered by mail in the manner described above to the address as provided in this section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party.

Section 7.06 Amendment, Modification or Waiver .

(a) Prior to the Distribution, this Agreement may be amended, modified, waived, supplemented or superseded, in whole or in part, by ADP in its sole discretion by execution of a written amendment delivered to Broadridge. Subsequent to the Distribution, this Agreement may be amended, modified, supplemented or superseded only by an instrument signed by duly authorized signatories of both Parties.

 

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(b) Following the Distribution, any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.

Section 7.07 No Assignment; Binding Effect . Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the Parties without the prior written consent of the other Party; provided, however, that no such consent shall be required in the event of a merger, consolidation or sale of either ADP or Broadridge. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties hereto and their respective successors and assigns.

Section 7.08 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.

Section 7.09 Specific Performance . From and after the Distribution, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Parties agree that the Party or Parties to this Agreement who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that, from and after the Distribution, the remedies at law for any breach or threatened breach of this Agreement, including monetary damages, are inadequate compensation for any loss, that any defense in any action for specific performance that a remedy at law would be adequate is hereby waived, and that any requirements for the securing or posting of any bond with such remedy are hereby waived.

Section 7.10 New York Forum . Each of the Parties agrees that, except as otherwise provided in Section 6.01, all Actions arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment arising out of or in connection with this Agreement, shall be tried and determined exclusively in the state or federal courts in the State of New York, County of New York, and each of the Parties hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the Parties hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action or proceeding: (a) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (b) any claim

 

27


that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (c) any claim that (i) any of the aforesaid courts is an inconvenient or inappropriate forum for such action or proceeding, (ii) venue is not proper in any of the aforesaid courts and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by any of the aforesaid courts. Each of the Parties agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 7.05 or any other manner as may be permitted by Law shall be valid and sufficient service thereof.

Section 7.11 WAIVER OF JURY TRIAL . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN THIS SECTION, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS HEREIN.

Section 7.12 Interpretation; Conflict With Ancillary Agreements . The language of this Agreement shall be construed according to its fair meaning and shall not be strictly construed for or against any Party. Notwithstanding the foregoing, the purposes of Article IV are to ensure the Tax-Free Status and, accordingly, the Parties agree that the language thereof shall be interpreted in a manner that serves this purpose to the greatest extent possible. The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. If, and to the extent, the provisions of this Agreement conflict with the Separation and Distribution Agreement, or any Ancillary Agreement, the provisions of this Agreement shall control.

Section 7.13 Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.

Section 7.14 Survival . Except with respect to Sections 5.07, 5.08 and 5.09 which shall remain in effect without limitation as to time, the provisions in this Agreement shall be unconditional and absolute and shall remain in effect until the expiration of the statute of limitations for all taxable periods that end before or include June 30 of the calendar year in which the Distribution occurs and the resolution of all disputes under this Agreement that arose during such periods.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

AUTOMATIC DATA PROCESSING, INC.
By:  

/s/ James B. Benson

Name:   James B. Benson
Title:   Corporate Vice President

BROADRIDGE FINANCIAL

SOLUTIONS, INC.

By:  

/s/ James B. Benson

Name:   James B. Benson
Title:   President

Signature Page – Tax Allocation Agreement

Exhibit 10.2

TRANSITION SERVICES AGREEMENT

between

AUTOMATIC DATA PROCESSING, INC.

and

BROADRIDGE FINANCIAL SOLUTIONS, INC.

Dated as of March 29, 2007


Table of Contents

 

          Page
ARTICLE I DEFINITIONS   

1.1

     Certain Defined Terms    1

1.2

     General Interpretive Principles    5
ARTICLE II SERVICES    5

2.1

     ADP Services    5

2.2

     Terms of the Service Schedules; Fees & Costs    6

2.3

     Services Management    7
ARTICLE III TERM AND TERMINATION    7

3.1

     Term and Service Terms    7

3.2

     Termination by Broadridge or ADP    8

3.3

     Effect of Termination    8
ARTICLE IV CONFIDENTIALITY    9

4.1

     General    9

4.2

     No Disclosure, Compliance with Law, Return or Destruction    9

4.3

     Protective Arrangements    10

4.4

     Survival    10

4.5

     Ownership of Data    10
ARTICLE V INDEMNIFICATION    10

5.1

     Indemnification for Third Party Claims    10

5.2

     Procedures for Indemnification of Third Party Claims    11

5.3

     Limitation on Damages    12

5.4

     Disclaimer of Warranties    12
ARTICLE VI MISCELLANEOUS    13

6.1

     Cooperation    13

6.2

     Negotiation    13

6.3

     Consent to Jurisdiction; Service of Process; Waiver of Jury Trial    13

6.4

     Notices    14

6.5

     Entire Agreement    15

6.6

     Waivers and Amendments    15

6.7

     Governing Law    15

6.8

     Binding Effect; Assignment    16

6.9

     Usage    16

6.10

     Articles and Sections    16

6.11

     Interpretation    16

6.12

     Severability of Provisions    16

6.13

     Counterparts    16

6.14

     No Personal Liability    17

6.15

     No Third Party Beneficiaries    17

 

-i-


6.16

     Force Majeure    17

6.17

     Independent Contractors    17

6.18

     Employees    17

6.19

     Further Assurances    17

Service Schedules

 

1      Infrastructure
2      System Interfaces
3      Oracle Financials
4      Accounts Payable
5      Shared Services
6      India Services
7      Canada Services
8      Tax

 

-ii-


TRANSITION SERVICES AGREEMENT

TRANSITION SERVICES AGREEMENT (this “ Agreement ”), dated as of March 29, 2007, between Automatic Data Processing, Inc., a Delaware corporation (“ ADP ”), and Broadridge Financial Solutions, Inc., a Delaware corporation (“ Broadridge ”). ADP and Broadridge shall be separately referred to herein as a “ Party ” and together as the “ Parties .”

WHEREAS, the Board of Directors of ADP has determined that it is in the best interests of ADP to separate the “Broadridge Business” (as defined below) and the “ADP Business” (as defined below) into two independent public companies (the Separation ), in order to provide greater flexibility for the management, capital requirements and growth of the Broadridge Business and to allow ADP to focus its time and resources on the development and growth of the ADP Business;

WHEREAS, ADP and Broadridge have entered into a Separation and Distribution Agreement, dated as of March 20, 2007 (as the same may be amended, supplemented, restated and/or modified from time to time, the “ Separation Agreement ”), in order to carry out, effect and consummate the Separation (including the distribution, by dividend, to ADP stockholders of the capital stock of Broadridge, as more fully defined and described in the Separation Agreement (the Distribution )); and

WHEREAS, the Separation Agreement requires that Broadridge and ADP enter into this Agreement to properly document the transitional services to be provided by ADP and/or “Third Party Service Providers” (as defined below) to Broadridge (and the other “Service Recipients”, as defined below).

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements entered into herein and in the Separation Agreement, and intending to be legally bound hereby, ADP and Broadridge agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Defined Terms. For all purposes of this Agreement:

Action means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

ADP has the meaning assigned to such term in the Preamble hereto.

ADP Business means all businesses and operations of the ADP Group, other than the Broadridge Business.


ADP Group means ADP and each of its Affiliates and Subsidiaries, and any corporation or other entity that may become part of such Group from time to time, other than the Broadridge Group.

Affiliate ” means all entities that directly or indirectly control, are controlled by or are under common with a Party after giving effect to the Distribution. For this purpose, one entity “ controls ” another entity if it has the power to direct the management and policies of the other entity (for example, through the ownership of voting securities or other equity interest).

Agreement ” has the meaning assigned to such term in the Preamble hereto.

Ancillary Agreements means the Employee Matters Agreement, the Intellectual Property Transfer Agreement, the Data Center Outsourcing Services Agreement and the Tax Allocation Agreement.

Broadridge Business ” means all of the ADP Brokerage Services’ and Securities Clearing and Outsourcing Services’ businesses and operations as at the Distribution, as more fully described in ADP’s Form 10K for the fiscal year ended June 30, 2006.

Broadridge Group ” means Broadridge and each of its Subsidiaries and Affiliates and any corporation or other entity that may become part of such Group from time to time.

Business means the Broadridge Business and/or the ADP Business, as the context requires.

Business Day(s) means any day other than a Saturday, Sunday or national holiday.

Companies means all direct and indirect subsidiaries of ADP except for any such subsidiaries that are to be included within or owned by Broadridge as part of the Separation.

Data Center Outsourcing Services Agreement ” means the Data Center Outsourcing Services Agreement, to be entered into by and between ADP, Inc. and Broadridge, substantially in the form attached to the Separation Agreement, with such changes as may be agreed to by such parties and ADP.

Dispute Escalation Notice ” has the meaning assigned to such term in Section 6.2 .

Distribution ” has the meaning assigned to such term in the Recitals hereto.

 

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Distribution Date means the date on which the Distribution shall be effected, such date to be determined by, or under the authority of, the Board of Directors of ADP in its sole and absolute discretion.

Effective Time ” means the time at which the Distribution occurs on the Distribution Date.

Employee Matters Agreement ” means the employee matters agreement to be entered into by and between ADP and Broadridge, substantially in the form attached to the Separation Agreement, with such changes as may be agreed to by the Parties.

Fees “ has the meaning assigned to such term in Section 2.2(b) .

Force Majeure ” has the meaning assigned to such term in Section 6.16 .

Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority.

Group ” means the ADP Group and/or the Broadridge Group, as the context requires.

Indemnified Party ” has the meaning assigned to such term in Section 5.1 .

Indemnifying Party ” has the meaning assigned to such term in Section 5.1 .

Information ” means all information of either the ADP Group or the Broadridge Group, as the context requires, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including non-public financial information, studies, reports, records, books, accountants’ work papers, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer data, communications by or to attorneys, memos and other materials prepared by attorneys and accountants or under their direction (including attorney work product), and other technical, financial, legal, employee or business information or data.

Intellectual Property Transfer Agreement ” means the intellectual property transfer agreement to be entered into between ADP and Broadridge, substantially in the form attached to the Separation Agreement, with such changes as may be agreed to by the Parties.

 

3


Law ” means any applicable foreign, federal, national, state, provincial or local law (including common law), statute, ordinance, rule, regulation, code or other requirement enacted, promulgated, issued or entered into, or act taken, by a Governmental Authority.

Losses ” has the meaning assigned to such term in Section 5.1 .

Notice ” has the meaning assigned to such term in Section 6.2(c) .

Parties has the meaning assigned to such term in the Preamble hereto.

Person ” means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

Separation ” has the meaning assigned to such term in the Recitals hereto.

Separation Agreement ” has the meaning assigned to such term in the Recitals hereto.

Service Recipient means Broadridge, its Affiliates, permitted assignees under the Separation Agreement and all legal entities owned by Broadridge immediately after the Distribution.

Service Schedule ” has the meaning assigned to such term in Section 2.1(a) .

Services ” has the meaning assigned to such term in Section 2.1(a) .

Subsidiary ” means, with respect to any Person, any other Person of which a Person (either alone or through or together with any other Subsidiary of such Person) owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

Tax Allocation Agreement ” means the tax allocation agreement to be entered into by and between ADP and Broadridge, substantially in the form attached to the Separation Agreement, with such changes as may be agreed to by the Parties.

Term ” has the meaning assigned to such term in Section 3.1(a) .

Third Party Service Providers ” shall mean third parties which are or will be engaged by ADP or its Affiliates to assist in the delivery of its obligations under this Agreement.

 

4


Transition ” means the transition of the Services from ADP or a Third Party Service Provider to Broadridge and/or its Affiliates or Broadridge’s own third party service providers.

1.2 General Interpretive Principles . (i) Words in the singular shall include the plural and vice versa, and words of one gender shall include the other gender, in each case, as the context requires, (ii) the words “ hereof ,” “ herein ,” “ hereunder ,” and “ herewith ” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and references to Article, Section, paragraph and schedule are references to the Articles, Sections, paragraphs and schedules to this Agreement unless otherwise specified, (iii) the word “ including ” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified and (iv) any reference to any federal, state, local or non-U.S. statute or Law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.

ARTICLE II

SERVICES

2.1 ADP Services.

(a) The term “ Services ” shall mean and refer solely to those services listed on Schedules 1 through 8 hereto (each a “ Service Schedule ”), that are necessary (i) for the uninterrupted and continued operations of the Broadridge Business after the Distribution Date in substantially the same manner as the Broadridge Business was conducted and operated immediately prior to the Distribution Date or (ii) to aid Broadridge in the Transition.

(b) Commencing on the Distribution Date and continuing throughout the Term, ADP agrees to provide through the ADP Group and Third Party Service Providers, subject to changes in applicable Law, the Services in accordance with the Service Schedules, it being understood by the Parties that (except as otherwise set forth in the Service Schedules) the Services shall be provided: (i) only to the extent that services of similar kind were provided by the ADP Group or Third Party Service Providers to the Broadridge Business prior to the Distribution Date; and (ii) consistent with this Agreement and in substantially the same manner (including, without limitation, as to level, quality and timeliness) as they had been provided to the Broadridge Business by the ADP Group and Third Party Service Providers on or prior to the Distribution Date.

(c) To the extent that any of the assets required to provide any Services have become the property of Broadridge pursuant to the Separation, Broadridge hereby grants ADP a limited, non-exclusive license to use such assets, for a period not to exceed the Term, for the purpose of providing such Services and aiding the Transition on the terms and subject to the conditions set forth in this Agreement.

(d) Broadridge and ADP shall use their commercially reasonable efforts to complete the Transition (including without limitation, in the case of Broadridge, identifying and recruiting applicable new personnel) as soon as practicable and in no event later

 

5


then the expiration of the Term and shall commit and provide sufficient and appropriate resources to timely complete the Transition. ADP shall also use its best efforts to assist Broadridge in obtaining licenses and/or consents with or from any of ADP’s current vendors or service providers who are providing services, products or licenses to Broadridge or its Affiliates, or to ADP for the benefit of Broadridge or its Affiliates, prior to the Distribution Date; provided that in no event shall such assistance by ADP require or be deemed to require ADP to incur any additional costs or make any additional payments to any such vendors or service providers.

(e) Except with respect to ADP’s applicable efforts obligations under Section 2.1(d) above, Broadridge acknowledges and agrees that ADP has no obligation to obtain licenses or consents with any vendor or service provider in connection with the Services and that any failure by ADP to obtain any such license or consent will not constitute a breach of this Agreement or the negligence or willful misconduct of ADP; provided that failure to obtain any such license or consent shall not relieve ADP of its obligations to provide the Services set forth herein.

(f) Unless specifically set forth elsewhere herein to the contrary, this Agreement does not apply to the services to be provided by ADP (or any of its subsidiaries) to Broadridge (or any of its subsidiaries) pursuant to any Ancillary Agreements.

(g) If, after the execution of this Agreement, the Parties reasonably determine that a service (i) that was provided by the ADP Group or a Third Party Service Provider to the Broadridge Business prior to the Distribution Date and (ii) is reasonably necessary to the conduct of the Broadridge Business after the Distribution Date, was unintentionally omitted from the Service Schedules, then ADP shall provide such additional service to the Service Recipients (with such service becoming a Service for purposes of this Agreement) and a Service Schedule shall be created for such Service, it being agreed by the Parties that the charges for such additional Services shall be their actual cost to ADP (unless the exception contained in Section 2.2(b) , regarding countries other than the United States, applies).

(h) Broadridge and ADP hereby agree that ADP is under no obligation to enter into any engagements with new Third Party Service Providers in connection with this Agreement unless (i) ADP is entering into such new engagements with respect to its own internal business or in its ordinary course of business and (ii) Broadridge is not able to engage its own third party service providers with respect to the same subject matter within the applicable timing needs of Broadridge. The Parties shall use their commercially reasonable efforts to transition Broadridge from the ADP Group and the Third Party Service Providers to Broadridge or its own third party service providers.

2.2 Terms of the Service Schedules; Fees & Costs .

(a) ADP shall provide, and shall cause any Third Party Service Providers to provide, the Services with at least the same level of service and degree of quality as provided by ADP to the Broadridge Business prior to the Distribution Date.

(b) Each Service Schedule shall, in addition to the Services to be delivered by ADP, set forth the fees to be paid by Broadridge for such Services (collectively, the

 

6


Fees ”). If not set forth in any Service Schedule, the Parties agree that the Fees for each of the Services are intended to be equal to ADP’s applicable allocated costs to the Broadridge Business prior to the Distribution, except to the extent that legal counsel with respect to any applicable country other than the United States (including, without limitation, India) has advised that a different fee for the Services is required or is more appropriate under the applicable Law of such other country.

(c) Not more than thirty (30) days following the end of each calendar month during the Term, ADP (directly or through one or more of its Affiliates) shall issue a monthly invoice to Broadridge, setting forth the Fees (itemized by Service) and any applicable taxes payable by Broadridge for such calendar month.

(d) Except as otherwise provided herein or in the applicable Service Schedules, the aggregate Fees under the Service Schedules shall be paid in full by Broadridge within thirty (30) days following receipt of an invoice from ADP, unless Broadridge in good faith disputes the amount of Fees contained in any such invoice, as provided in Section 2.2(e) below.

(e) If Broadridge, in good faith, disputes any Fees, it shall promptly submit to ADP written notice of such dispute and may withhold from its payment of the relevant invoice only such disputed amounts (except for applicable taxes).

(f) Broadridge understands that prior to the date of this Agreement, ADP may have contracted with Affiliates or Third Party Service Providers to provide services in connection with all or any portion of the Services. ADP may subcontract with its present and future Affiliates or Third Party Service Providers to provide the Services (and may increase the scope of such engagement of Affiliates or Third Party Service Providers).

(g) ADP shall promptly correct any errors or omissions in any of the Services that it has provided to Broadridge hereunder.

2.3 Services Management .

(a) Broadridge and ADP have established transition teams to lead and coordinate the Transition.

(b) Broadridge and ADP shall support the activities of their respective transition teams with the intent of enabling the completion of the Transition as soon as practicable.

ARTICLE III

TERM AND TERMINATION

3.1 Term and Service Terms . (a) The term of this Agreement shall commence on the Distribution Date and end on the first (1 st ) anniversary thereof, unless earlier terminated in accordance with Section 3.2 below (the “ Term ”). If the Parties agree (or if required by applicable Law), the Service Schedules will set forth any shorter periods for which particular Services will be provided.

 

7


(b) During the Term, each of ADP and Broadridge shall continue to use their respective commercially reasonable efforts to timely complete the Transition.

3.2 Termination by Broadridge or ADP . This Agreement or any Service provided hereunder in accordance with a Service Schedule, as applicable, may be terminated as follows:

(a) except as otherwise provided by Law, by either Broadridge or ADP at any time upon written notice to the other Party, if (i) the other Party is adjudicated as bankrupt, (ii) any insolvency, bankruptcy or reorganization proceeding is commenced by the other Party under any insolvency, bankruptcy or reorganization act, (iii) any action is taken by others against the other Party under any insolvency, bankruptcy or reorganization act and such Party fails to have such proceeding stayed or vacated within ninety (90) days or (iv) if the other Party makes an assignment for the benefit of creditors, or a receiver is appointed for the other Party which is not discharged within thirty (30) days after the appointment of the receiver;

(b) by ADP at any time upon written notice to Broadridge, if Broadridge fails to pay the amount of any undisputed Fees in accordance with Section 2.2 hereof and such failure is not cured within fifteen (15) Business Days after written notice from ADP or its applicable Affiliate; or

(c) by Broadridge at the end of any calendar month, with respect to any or all of the Services hereunder; provided , that Broadridge shall give ADP not less than fifteen (15) days prior written notice specifying the date that such termination is to be effective (or such shorter notice as may be agreed upon by Broadridge and ADP); provided further that Broadridge will not delay termination of those particular Services for which the Transition has been completed.

3.3 Effect of Termination . In the event this Agreement is validly terminated as provided herein, each of the Parties shall be relieved of its duties and obligations arising hereunder after the date of such termination, provided , however , that (i) the provisions set forth in Articles IV, V and VI hereof shall survive any termination of this Agreement and (ii) such termination in and of itself shall not relieve a Party of liability for a breach prior to the date of such termination. For the avoidance of doubt, in the event of any termination of one or more Services, the Fees applicable to such Services, in accordance with Section 2.2 above, shall no longer be charged or due after the effective date of such termination and in the event of a material reduction by Broadridge of the amount of the Services it elects to continue to receive, the Fees applicable to such Services shall be appropriately reduced thereafter if costs to ADP are correspondingly reduced as a result of such reduction.

 

8


ARTICLE IV

CONFIDENTIALITY

4.1 General . Each Party acknowledges (i) that such Party has in its possession and, in connection with this Agreement and the Ancillary Agreements such Party will receive, Information of the other Party that is not available to the general public, and (ii) that such Information may constitute, contain or include material non-public Information of the other Party. Subject to Section 4.3 below, as of the Distribution Date, ADP, on behalf of itself, the ADP Group and each of its Affiliates, and Broadridge, on behalf of itself and each of its Affiliates, agrees to hold, and to cause its and their respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that such Party applies to its own confidential and proprietary Information pursuant to its applicable policies and procedures in effect as of the Distribution Date, all Information concerning the other Party (or its Business) and such other Party’s Affiliates (or their respective businesses) that is either in its possession (including Information in its possession prior to the Distribution Date) or furnished by the other Party or the other Party’s Affiliates or their respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel and other advisors and representatives at any time pursuant to or in connection with this Agreement and the Ancillary Agreements, and will not use such Information other than for such purposes as may be expressly permitted hereunder, except, in each case, to the extent that such Information:

(A) is or becomes available to the general public, other than as a result of a disclosure by such Party or its Affiliates or any of their respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel and other advisors and representatives in breach of this Agreement;

(B) was available to such Party or its Affiliates, or becomes available to such Party or its Affiliates, on a non-confidential basis from a source other than the other Party, provided , that, the source of such Information was not bound by a confidentiality obligation with respect to such Information, or otherwise prohibited from transmitting the Information to such Party or its Affiliates by a contractual, legal or fiduciary obligation; or

(C) is independently generated by such Party without use of or reference to any proprietary or confidential Information of the other Party.

4.2 No Disclosure, Compliance with Law, Return or Destruction . Each Party agrees not to release or disclose, or permit to be released or disclosed, any Information with respect to the other Party to any other Person, except its and its Affiliates’ respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel, lenders and other advisors and representatives who need to know such Information in connection with this Agreement or the Ancillary Agreements or for valid business reasons relating thereto, and except in compliance with Section 4.3 below. Each Party shall advise its and its Affiliates’ respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel, lenders and other advisors and representatives who have been provided with such Information of such Party’s confidentiality obligations hereunder and that such Information may constitute,

 

9


contain or include material non-public Information of the other Party. Each Party shall, and shall cause its and its Affiliates’ respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel, lenders and other advisors and representatives who have been provided with such Information to use such Information only in accordance with (i) the terms of this Agreement or the Ancillary Agreements and (ii) applicable Law (including federal and state securities Laws). Each Party shall promptly, after receiving a written request of the other Party, return to the other Party all such Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon), as directed by the other Party; provided , however , that in no event shall either Party be required to destroy any hardware that includes Information if such Information is only accessible to highly skilled computer experts and cannot otherwise be deleted or destroyed without undue cost or effort (provided that such Information will remain subject to the confidentiality protection provisions herein).

4.3 Protective Arrangements . Notwithstanding anything herein to the contrary, in the event that either Party or any of its directors, officers, employees, agents, third party contractors, vendors, accountants, counsel, lenders and other advisors and representatives either determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable Law or the rules or regulations of a Governmental Authority or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of the other Party that is subject to the confidentiality provisions hereof, such Party shall, if possible, notify the other Party prior to disclosing or providing such Information and shall cooperate at the expense of the other Party in seeking any reasonable protective arrangements requested by such other Party. In the event that a protective arrangement is not obtained, the Party that received such request (i) may thereafter disclose or provide such Information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority, without liability therefor and (ii) shall exercise its commercially reasonable efforts to have confidential treatment accorded any such Information so furnished.

4.4 Survival . The obligations of confidentiality in this Article IV shall remain in effect during the Term and thereafter.

4.5 Ownership of Data . To the extent related to the Broadridge Business, Broadridge (or other applicable Service Recipient) shall own all right, title and interest in and to all data generated for Broadridge or such Service Recipient by ADP, its Affiliates and any Third Party Service Providers in providing the Services.

ARTICLE V

INDEMNIFICATION

5.1 Indemnification for Third Party Claims . From and after the Distribution Date, ADP, on the one hand, and Broadridge, on the other hand (as applicable, an “ Indemnifying Party ”), shall indemnify the other Party (an “ Indemnified Party ”), the Indemnified Party’s Affiliates and their respective officers, directors and employees against and hold them harmless

 

10


from any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties (including reasonable fees for outside counsel, accountants and other outside consultants) suffered or incurred (collectively, “ Losses ”) as a result of a third party claim against the Indemnified Party if and to the extent any such Loss is attributable to the Indemnifying Party. For avoidance of doubt, this Article V applies solely to the specific matters and activities covered by this Agreement (and not to matters specifically covered by the Separation Agreement and the Ancillary Agreements).

5.2 Procedures for Indemnification of Third Party Claims .

(a) If an Indemnified Party shall receive notice or otherwise learn of the assertion by any Person who is not a member of the ADP Group or the Broadridge Group of any claim, or of the commencement by any such Person of any Action, with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnified Party pursuant to Section 5.1 of this Agreement (collectively, a “ Third Party Claim ”), such Indemnified Party shall give such Indemnifying Party prompt written notice thereof and, in any event, within ten (10) days after such Indemnified Party received notice of such Third Party Claim. Any such notice shall describe the Third Party Claim in reasonable detail. Notwithstanding the foregoing, the failure of any Indemnified Party or other Person to give notice as provided in this Section 5.2(a) shall not relieve the related Indemnifying Party of its obligations under this Article V, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice.

(b) An Indemnifying Party may elect (but is not required) to assume the defense of and defend, at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel, any Third Party Claim. Within thirty (30) days after the receipt of notice from an Indemnified Party in accordance with Section 5.2(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnified Party of its election whether the Indemnifying Party will assume responsibility for defending such Third Party Claim, which election shall specify any reservations or exceptions. If, in such notice, the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense solely of such Indemnified Party.

(c) If, in such notice, an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnified Party of its election as provided in Section 5.2(b) , such Indemnified Party may defend such Third Party Claim at the cost and expense of the Indemnifying Party.

(d) The Indemnifying Party shall have the right to compromise or settle a Third Party Claim the defense of which it shall have assumed pursuant to Section 5.2(b) , and any such settlement or compromise made or caused to be made of a Third Party Claim in accordance with this Article V shall be binding on the Indemnified Party in the same manner as if a final judgment or decree had been entered by a court of competent jurisdiction in the amount of such settlement or compromise. Notwithstanding the foregoing sentence, without the express prior consent of the Indemnified Party, the Indemnifying Party shall not have the right to admit

 

11


culpability on behalf of the Indemnified Party and shall not compromise or settle a Third Party Claim unless the compromise or settlement includes, as a part thereof, an unconditional release of the Indemnified Party from liability with respect to such Third Party Claim and does not require the Indemnified Party to make any payment that is not fully indemnified under this Agreement or to be subject to any non-monetary remedy; provided, however, that if the Indemnified Party unreasonably withholds a consent required by this sentence to the terms of a compromise or settlement of a Third Party Claim proposed to the Indemnified Party by the Indemnifying Party, the Indemnifying Party’s obligation to indemnify the Indemnified Party for such Third Party Claim shall not exceed the total amount that had been proposed in such compromise or settlement offer plus the amount of all expenses incurred by the Indemnified Party with respect to such Third Party Claim through the date on which such consent was requested.

(e) In the event of payment by or on behalf of any Indemnifying Party to any Indemnified Party in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnified Party as to any events or circumstances in respect of which such Indemnified Party may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnified Party shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(f) All amounts required to be paid pursuant to this Article V shall be paid promptly in immediately available funds by wire transfer to a bank account designated by the Indemnified Party.

5.3 Limitation on Damages . IN NO EVENT SHALL EITHER PARTY AND/OR ITS AFFILIATES OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE REGARDLESS OF THE FORM OF ACTION OR LEGAL THEORY FOR INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND RELATED TO THE PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT, INCLUDING LOST PROFITS, LOSS OF DATA OR BUSINESS INTERRUPTION.

5.4 Disclaimer of Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY EXPRESSLY DISCLAIMS, ANY AND ALL REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE SERVICES TO BE PROVIDED UNDER THIS AGREEMENT, INCLUDING WARRANTIES WITH RESPECT TO MERCHANTABILITY, OR SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE OR TRADE USAGE. NOTHING IN THIS AGREEMENT IS INTENDED TO LIMIT ANY RIGHTS OR REMEDIES OF EITHER PARTY UNDER THE SEPARATION AGREEMENT OR ANY ANCILLARY AGREEMENT.

 

12


ARTICLE VI

MISCELLANEOUS

6.1 Cooperation .

Each Party shall, and shall cause its Affiliates to, use good faith efforts to cooperate with the other Party in all matters relating to the provision and receipt of Services, including providing information and documentation sufficient for the other Party to provide the Services and making available, as reasonably requested by the other Party, timely decisions, approvals and acceptances in order that the other Party and its Affiliates may perform their respective obligations under this Agreement in a timely manner.

6.2 Negotiation .

In the event that any dispute arises between the Parties that cannot be resolved, either Party shall have the right to refer the dispute for resolution to the executive in charge of the business area of the Party to which such dispute relates by delivering to the other Party a written notice of such referral (a “ Dispute Escalation Notice ”). Following receipt of a Dispute Escalation Notice, such executives of the Parties shall negotiate in good faith to resolve such dispute. In the event such executives of the Parties are unable to resolve such dispute within fifteen (15) business days after receipt of the Dispute Escalation Notice, either Party shall have the right to refer the dispute to the chief operating officers of the Parties, who shall negotiate in good faith to resolve such dispute. In the event that the chief operating officers of the Parties are unable to resolve such dispute within thirty (30) business days after the date of the Dispute Escalation Notice, either Party shall have the right to commence litigation in accordance with Section 6.3 . The Parties agree that all discussions, negotiations and other Information exchanged between the Parties during the foregoing escalation proceedings shall be without prejudice to the legal position of a Party in any subsequent Action.

6.3 Consent to Jurisdiction; Forum; Service of Process; Waiver of Jury Trial .

(a) Subject to the prior exhaustion of the procedures set forth in Section 6.2 , each of the Parties agrees that, notwithstanding anything herein, all Actions arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment arising out of or in connection with this Agreement, shall be tried and determined exclusively in the state or federal courts in the State of New York, County of New York, and each of the Parties hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the Parties hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action or proceeding: (i) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (iii) any claim that (A) any of the aforesaid courts is an inconvenient or inappropriate forum for such action or proceeding, (B) venue is not proper in any of the aforesaid courts and (C) this Agreement or the subject matter hereof may not be enforced in or by any of the aforesaid courts. Each of the Parties

 

13


agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 6.4 or any other manner as may be permitted by Law shall be valid and sufficient service thereof.

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN SECTION 6.3(b), (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS HEREIN.

(c) The covenant of ADP to provide the Services is independent of Broadridge’s covenants under this Agreement and the Separation Agreement, and ADP, during any dispute or otherwise, shall continue to provide the Services to Broadridge and the other applicable Service Recipients so long as Broadridge is not in (i) material and ongoing breach of its obligations under Section 4.1 hereof for which breach Broadridge, after becoming aware of or receiving notice of such breach, has not promptly commenced and continued commercially reasonable efforts to remedy, or (ii) material breach of its payment obligations under this Agreement.

6.4 Notices . All notices, requests, claims, demands and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the Parties at the following addresses or facsimile numbers:

if to Broadridge or any member of the Broadridge Group, to:

Broadridge Financial Solutions, Inc.

2 Journal Square Plaza

Jersey City, New Jersey 07306

Attention: President and Chief Operating Officer

Facsimile: (201) 714-3298

with a copy to:

Broadridge Financial Solutions, Inc.

2 Journal Square Plaza

Jersey City, New Jersey 07306

Attention: General Counsel

Facsimile: (201) 714-3506

 

14


if to ADP or any member of the ADP Group, to:

Automatic Data Processing, Inc.

One ADP Boulevard

Roseland, NJ 07068-1728

Attention: President and Chief Operating Officer

Facsimile: (973) 974-3371

with a copy to:

Automatic Data Processing, Inc.

One ADP Boulevard

Roseland, NJ 07068-1728

Attention: General Counsel

Facsimile: (973) 974-3324

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this section, be deemed given upon receipt and (iii) if delivered by mail in the manner described above to the address as provided in this section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party.

6.5 Entire Agreement . This Agreement, together with the Service Schedules hereto, the Separation Agreement and the Ancillary Agreements constitutes the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. This Agreement shall not apply to or supersede any of the terms of separate agreements relating to real property (including, without limitation, real property leases, subleases and facility sharing agreements) entered or being entered into between the Parties or their respective Affiliates in connection with the Distribution.

6.6 Waivers and Amendments . This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by Broadridge and ADP or, in the case of a waiver, by the Party waiving compliance. No delay on the part of either Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of either Party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

6.7 Governing Law . This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the conflicts of laws principles thereof.

 

15


6.8 Binding Effect; Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. This Agreement is not assignable by either Party without the prior written consent of the other Party; provided , that either Broadridge or ADP, as the case may be, may assign any of its rights under this Agreement to any of its respective Affiliates (it being understood that no such assignment shall effect a novation or otherwise relieve the assigning Party of any of its obligations hereunder nor in any way increase the obligations of the non-assigning Party under this Agreement); provided , further , that either Party may assign its rights and obligations under this Agreement in connection with a sale of all or substantially all of its business, whether by sale of assets, merger or otherwise.

6.9 Usage . All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. Unless otherwise expressly provided, monetary amounts are in U.S. dollars.

6.10 Articles and Sections . The Article and Section headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

6.11 Interpretation . The Parties acknowledge and agree that (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision, (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement and (iii) the terms and provisions of this Agreement shall be construed fairly as to each of the Parties, regardless of which Party was generally responsible for the preparation of this Agreement. Any statute, regulation, or other Law defined or referred to herein (or in any agreement or instrument that is referred to herein) means such statute, regulation or other Law as, from time to time, may be amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor statutes. References to a Person also refer to its predecessors and permitted successors and assigns.

6.12 Severability of Provisions . If any provision or any portion of any provision of this Agreement shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement shall not be affected thereby. If the application of any provision or any portion of any provision of this Agreement to any Person or circumstance shall be held invalid or unenforceable, the application of such provision or portion of such provision to Persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby.

6.13 Counterparts . This Agreement may be executed by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all, of the Parties.

 

16


6.14 No Personal Liability . This Agreement (and each agreement, certificate and instrument delivered pursuant hereto) shall not create or be deemed to create or permit any personal liability or obligation on the part of any officer, director, employee, agent, representative or investor of either Party.

6.15 No Third Party Beneficiaries . Except as otherwise provided in Article V, no provision of this Agreement is intended to, or shall, confer any third party beneficiary or other rights or remedies upon any Person other than the Parties.

6.16 Force Majeure . Neither Party shall be liable for any expense, loss or damage whatsoever arising out of any delay or failure in the performance of its obligations pursuant to this Agreement to the extent such delay or failure results from events beyond the reasonable control of that Party (“ Force Majeure ”), including acts of God, acts or regulations of any Governmental Body, war, riots, insurrection, terrorism or other hostilities, accident, fire, flood, strikes, lockouts, industrial disputes, pandemics or shortages of fuel; provided , that : (a) ADP gives Broadridge, as soon as reasonably practicable, written notice describing the occurrence, including, to the extent reasonably possible, a non-binding estimation of its expected duration and probable impact on the performance of its obligations hereunder, (b) the suspension of performance is of a scope and duration reasonably related to the Force Majeure and (c) ADP uses commercially reasonable efforts to mitigate the effects of the Force Majeure. Neither Party shall be entitled to terminate this Agreement due to a Force Majeure or any failure resulting from any such event.

6.17 Independent Contractors . Except as otherwise agreed in writing by the Parties, in the performance of the Services to be rendered hereunder, ADP and its Affiliates shall at all times act as independent contractors, and none is in any respect an agent, attorney, employee, representative, joint venturer or fiduciary of Broadridge, and Broadridge shall not declare or represent to any third party that ADP or any of its Affiliates is acting in any respect as agent, attorney, employee representative, joint venturer or fiduciary of the Service Recipients. Neither ADP or its Affiliates, on the one hand, nor Broadridge or its Affiliates, on the other, shall have any power or authority to negotiate or conclude any agreement, or to make any representation or to give any understanding on behalf of the other in any way whatsoever.

6.18 Employees . Individuals employed by ADP or its Affiliates who provide Services pursuant to this Agreement shall in no respect be considered employees of Broadridge or any other applicable Service Recipients. ADP or one of its Affiliates shall act as the sole employer of the individuals it employs and shall not delegate any employment functions to the Service Recipients.

6.19 Further Assurances . Subject to the terms and conditions herein provided, each of the Parties agrees to use its commercially reasonable efforts to take or cause to be taken all action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable Laws to carry out the intents and purposes of this Agreement.

 

17


IN WITNESS WHEREOF, the Parties have executed this Transition Services Agreement as of the date first above written.

 

AUTOMATIC DATA PROCESSING, INC.
By:  

/s/ James B. Benson

Name:   James B. Benson
Title:   Corporate Vice President
BROADRIDGE FINANCIAL SOLUTIONS, INC.
By:  

/s/ James B. Benson

Name:   James B. Benson
Title:   President

 

18

Exhibit 10.3

DATA CENTER OUTSOURCING SERVICES AGREEMENT

between

ADP, INC.

and

BROADRIDGE FINANCIAL SOLUTIONS, INC.

Dated as of March 29, 2007


TABLE OF CONTENTS

 

Section/Subsection

Number and Caption

   Page No.

1.

 

  Definitions

   1

2.

 

  Purpose and Guiding Principles

   5

3.

 

  Services

   6
 

  3.1 Service Description; Scope

   6
 

  3.2 Additional/New Services

   7
 

  3.3 Service Delivery

   8
 

  3.4 Service Levels

   8
 

  3.5 Transition Plan

   10
 

  3.6 Key Personnel

   10
 

  3.7 ADP Personnel

   10
 

  3.8 Disaster Recovery (Capacity on Demand)

   11
 

  3.9 Assistance with Financial Matters and Planning

   11
 

  3.10 Facilities

   12

4.

 

  Access to Other Party’s Facilities; Sublease

   12
 

  4.1 Compliance with Other Party’s Policies on Premises

   12
 

  4.2 Sublease; ADP Equipment at BFS

   12

5.

 

   Relationship Management

   13

6.

 

   Change Control Process/SOW Procedure

   13

7.

 

   Intellectual Property; Third Party Contracts

   14
 

  7.1 Proprietary Rights; Work Product and Third Party Intellectual Property

   14
 

  7.2 BFS Managed Agreements

   16
 

  7.3 Rights Upon Termination

   16

8.

 

   Data Protection & Security; Confidentiality

   17
 

  8.1 Data Protection and Security

   17
 

  8.2 Safeguarding BFS Data

   17
 

  8.3 Confidential Information

   18

9.

 

  Non-Solicitation of Persons

   20

10.

 

  Term; Early Termination; Termination for Cause

   20
 

  10.1 Term

   20
 

  10.2 No Obligation to Renew

   20
 

  10.3 Early Termination/Termination for Convenience

   21
 

  10.4 Termination for Cause

   21
 

  10.5 Obligations of Parties Upon Termination

   22
 

  10.6 Transition During Termination Notice Period

   22
 

  10.7 Termination for Change of Control to a Designated C of C Entity

   23

11.

 

   Fees; Financial Considerations

   23
 

  11.1 Fee Schedule

   23
 

  11.2 Invoicing and payment conditions

   24
 

  11.3 Taxes

   24

12.

 

   Audits Reports, Site Visits, Documentation

   25

 

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     12.1 SAS 70 Type II Reports    25
     12.2 Site Visits to Data Center    25
     12.3 Audit Rights    26
     12.4 Documentation    26
     12.5 Sarbanes-Oxley    26
13.       Indemnification    26
14.       Limitation of Liability    29
     14.1 Mitigation of Damages    29
     14.2 Limits on Monetary Damages    29
     14.3 No Consequential Damages    30
15.       Insurance    31
16.       Regulatory Compliance/Issues    32
17.       Communications    32
18.       Dispute Resolution    32
19.       Representations & Warranties    34
     19.1 By ADP    34
     19.2 By BFS    34
20.       Miscellaneous    34
     20.1 Binding Effect; Assignment    34
     20.2 Cooperation    35
     20.3 Forum for Disputes; Waiver of Jury Trial    35
     20.4 Notices    36
     20.5 Entire Agreement    36
     20.6 Waivers and Amendments    37
     20.7 Governing Law    37
     20.8 Usage    37
     20.9 Sections; Headings    37
     20.10 Interpretation    37
     20.11 Severability of Provisions    37
     20.12 Counterparts    38
     20.13 No Personal Liability    38
     20.14 No Third Party Beneficiaries    38
     20.15 Force Majeure    38
     20.16 Independent Contractor (Non-Agent) Status    39
     20.17 Employees    39
     20.18 Further Assurances    39

 

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SCHEDULES

 

Pricing Schedule      SCHEDULE A
Service Description      SCHEDULE B
Governance and Relationship Management Process      SCHEDULE C
Service Levels      SCHEDULE D
BFS Managed Agreements      SCHEDULE E
Early Termination Fee & Designated C of C Entity      SCHEDULE F
Key Personnel      SCHEDULE G

 

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THIS DATA CENTER OUTSOURCING SERVICES AGREEMENT (this “ Agreement ”) dated as of March 29, 2007 between ADP, Inc., a Delaware corporation (“ ADP ”), and Broadridge Financial Solutions, Inc., a Delaware corporation ( BFS ”) . Automatic Data Processing, Inc., a Delaware corporation (“ ADP Parent ”), is countersigning this Agreement to evidence its guaranty of the obligations of ADP hereunder, as provided on the signature page hereto.

WHEREAS, the Board of Directors of ADP Parent has determined that it is in the best interests of ADP Parent to separate the BFS Business (as defined below) and the ADP Business (as defined below) into two independent public companies (the “Separation” ) in order to provide greater flexibility for the management, capital requirements and growth of the BFS Business and to allow ADP to focus its time and resources on the development and growth of the ADP Business;

WHEREAS, ADP Parent and Broadridge Financial Solutions, LLC (a Delaware limited liability company, which was, prior to the Effective Date (as hereafter defined), converted from a limited liability company into a Delaware corporation, thereby becoming BFS) have entered into a Separation and Distribution Agreement dated as of March 20, 2007 (as the same may be amended, supplemented, restated and/or modified from time to time, the “Separation Agreement” ), in order to carry out, effect and consummate the Separation and the distribution, by dividend, to ADP stockholders of the capital stock of BFS, as more fully defined and described in the Separation Agreement (the “Distribution” ); and

WHEREAS, the Separation Agreement requires that BFS and ADP enter into this Agreement to properly document the data center outsourcing and related services to be provided by ADP to BFS and the other Service Recipients (as hereafter defined).

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements entered into herein and in the Separation Agreement, and intending to be legally bound hereby, ADP and BFS agree as follows:

 

1. DEFINITIONS

Action” means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

ADP ” has the meaning provided in the Preamble to this Agreement.

ADP Business ” means all businesses and operations of the ADP Group, other than the BFS Business.

ADP Change Request ” has the meaning provided in Section 6(b).

ADP Change Transaction ” has the meaning provided in Section 10.4(b).

ADP Convenience Termination Fee ” has the meaning provided in Section 10.3(b).

ADP Group ” means ADP Parent and each of its Affiliates and Subsidiaries, and any corporation or other entity that may become part of such Group from time to time, other than the BFS Group.

ADP Indemnified Claim ” has the meaning provided in Section 13(b).

 

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ADP Indemnified Person” has the meaning provided in Section 13(b).

ADP IP Indemnity ” has the meaning provided in Section 13(a)(ii).

ADP Parent ” has the meaning provided in the Preamble to this Agreement.

ADP Products ” has the meaning provided in Section 7.1(b).

ADP Utility ” means ADP’s IT, Engineering and Data Processing group that, among other things, supports the services and operations of the Facilities.

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person; provided , however , that for purposes of this Agreement, no member of either Group shall be deemed to be an Affiliate of any member of the other Group. As used herein, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.

Base Cap ” has the meaning provided in Section 14.2(a).

Base Fee Amount ” has the meaning provided in Schedule A.

BFS ” has the meaning provided in the Preamble to this Agreement.

BFS Business ” means all of the ADP and ADP Parent Brokerage Services’ and Securities Clearing and Outsourcing Services’ businesses and operations as at the Distribution, as more fully described in ADP’s Form 10K for the fiscal year ended June 30, 2006.

BFS Convenience Termination Fee ” has the meaning provided in Section 10.3.

BFS Group ” means BFS and each of its Subsidiaries and Affiliates and any corporation or other entity that may become part of such Group from time to time.

BFS Indemnified Claim ” has the meaning provided in Section 13(a).

BFS Indemnified Person ” has the meaning provided in Section 13(a).

BFS Information ” has the meaning provided in Section 7.1(a).

BFS IP Indemnity ” has the meaning provided in Section 13(b)(ii).

“BFS Managed Agreements” has the meaning provided in Section 7.2(a).

“BFS Products ” has the meaning provided in Section 7.1(a).

Change Request ” has the meaning provided in Section 6(a).

Claim Notification Period ” has the meaning provided in Section 13(c).

Confidential Information ” has the meaning provided in Section 8.3(a).

 

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Consequentials ” has the meaning provided in Section 14.3(a).

Consult ” (and its derivatives) shall mean an obligation by one Party to keep the other Party informed in reasonably prompt manner of the circumstance or issue in question or to engage in some level of discussion regarding a circumstance or issue raised by the other Party. In no event shall such term in and of itself mean that approval or consent of the Party being Consulted is required.

Contract Year ” means each consecutive 12 month period in the Term, commencing on the Effective Date. When applied to the period following the end of the fifth Contract Year and the end of the Initial Term (i.e., a period less than 12 months in duration), each reference to “Contract Year” herein shall be deemed to include the phrase “(or applicable portion thereof)” immediately following such reference.

Current Services ” shall have the meaning provided in Section 3.1(a).

Data Center ” shall mean the data center facilities owned and operated by ADP in Georgia, USA and shall include, when applicable, the back-up/disaster recovery data center facilities owned and operated by ADP in South Dakota, USA, including any new or replacement facilities established by ADP hereafter that serve similar purposes.

DC1 ” shall have the meaning provided in Section 12.1(a).

Designated C of C Entity ” has the meaning provided in Schedule F.

Disaster Recovery Plan ” has the meaning provided in Section 3.8(a).

Dispute ” has the meaning provided in Section 18(a)(i).

Distribution ” has the meaning provided in the Recitals hereto.

Effective Date ” has the meaning provided in Section 10.1.

Executive Steering Committee ” has the meaning provided in Schedule C.

Extreme/Radical Failure by ADP ” has the meaning provided in Section 3.4(d).

Facilities ” means the Data Center, the property covered by the JSQ Sublease and the other “in-scope” sites/locations identified in Schedule B or the exhibits thereto (including any new or replacement facilities established by the ADP Group hereafter that serve similar purposes).

Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority.

Group ” means the ADP Group and/or the BFS Group, as the context requires.

Indemnified Claim ” has the meaning provided in Section 13(b).

Indemnified Person ” has the meaning provided in Section 13(b).

Indemnifying Party ” has the meaning provided in Section 13(c).

 

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Initial Meeting Date ” has the meaning provided in Section 18(a)(iii).

Initial Term ” has the meaning provided in Section 10.1.

Intellectual Property Rights ” means: (a) all patents, trademarks, service marks, copyrights, trade secrets and other proprietary rights in intellectual property; (b) all licenses, sublicenses and other agreements or permissions related to the property or rights described in clause (a); and (c) all rights to sue at law or in equity for any infringement or other impairment of any of the property or rights described in clause (a), including the right to collect damages and proceeds therefrom.

“JSQ Sublease” means the subleases by ADP (or its applicable Affiliate) from BFS (or its applicable Affiliate) for portions of the building and parking areas located at 2 Journal Square Plaza, Jersey City, NJ 07306 that has been or is to be entered into on or about the time of the Distribution.

“Key Personnel ” has the meaning provided in Section 3.6(a).

Losses ” has the meaning provided in Section 13(a).

Managed Vendors ” has the meaning provided in Section 7.2(a).

Management Committee ” has the meaning provided in Schedule C.

New Services ” has the meaning provided in Section 3.2.

Non-Assigned BFS Managed Agreements ” has the meaning provided in Section 7.2(c).

Party ” means ADP or BFS, and “ Parties ” shall mean ADP and BFS.

Person ” means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

“Personnel” means a designated Party’s employees or independent contractors that are natural persons.

“Regulatory Changes” has the meaning provided in Section 16(a).

“Relevant Period ” has the meaning provided in Section 3.4(d).

Renewal Term ” has the meaning provided in Section 10.2.

Residual Knowledge ” has the meaning provided in Section 8.3(f).

Schedules ” means all of the schedules (and any attachments to such schedules) attached to this Agreement.

Second Tier Dispute Representative ” has the meaning provided in Section 18(a)(iii).

Separation ” has the meaning provided in the Recitals hereto.

 

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Separation Agreement ” has the meaning provided in the Recitals hereto.

Service Credit Cap ” has the meaning provided in Section 3.4(b).

Service Credits ” has the meaning provided in Section 3.4(a).

Service Delivery Committees ” has the meaning provided in Schedule C attached hereto.

Service Level Failures ” has the meaning provided in Section 3.4(a).

Service Recipients ” means all entities included within BFS as of the date of Distribution (including the entities that result from any strictly internal reorganization of such entities by BFS), any entities to be included as provided in this Agreement, including without limitation, in accordance with Sections 3.1(b) and 3.1(c), and any other entities mutually agreed upon in writing by the Parties hereafter.

Services ” are, collectively, the Current Services and the New Services.

SOW ” has the meaning provided in Section 6(a).

Subsidiary ” means, with respect to any Person, any other Person of which a Person (either alone or through or together with any other Subsidiary of such Person) owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

Term ” means the term of this Agreement, commencing on the date hereof and ending at the end of the Initial Term or any Renewal Term in the manner provided in this Agreement, unless earlier terminated in accordance with the terms of this Agreement.

Termination for Convenience ” has the meaning provided in Section 10.3(a).

Termination Notice Period ” has the meaning provided in Section 10.4.

Third Party IP ” has the meaning provided in Section 7.1.

TSA ” means the Transition Services Agreement dated the date hereof between ADP Parent and BFS.

Work Product ” has the meaning provided in Section 7.1(b).

 

2. PURPOSE AND GUIDING PRINCIPLES

(a) The purpose and objective of this Agreement is to set forth the terms and conditions under which ADP will: (i) continue to provide the Current Services to the BFS Business; and (ii), after the Distribution, add New Services and increase and/or decrease the volume of the Current Services and New Services. In addition to the principle set forth in Section 2(b) below, the two basic guiding principles of this Agreement are:

 

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(I) The Data Centers and other Facilities shall be under the singular control of and governance by ADP.

(II) The Current Services are, and certain New Services will be (if similar in nature to the Current Services), mission critical to the BFS Business and the proper performance thereof will be vital to the ongoing success of the BFS Business.

(b) It is the Parties’ intent for ADP to meet additional or new Service requirements of BFS without additional charge or entering into an SOW if they can be provided within the current capacity and with the resources available immediately prior to the Distribution (e.g. hardware, software and personnel available for the Base Fee Amount), as more fully described on Schedule A. If a change in requirements by BFS would require resources in addition to those available or would make it possible for ADP to reduce such resources and the Parties agree upon the terms thereof, an SOW will be used to set forth such terms for the increase or reduction of Services, as further provided in Section 6.

 

3. SERVICES

 

  3.1 Service Description; Scope

(a) Services/Current Services . “ Current Services ” are all those services that are being performed for the BFS Business by ADP from the Data Centers and the other Facilities (and any other ancillary ADP offices/locations or portions thereof) immediately prior to the Distribution (but specifically excludes any services performed by ADP that are to be provided pursuant to the TSA, regardless of the location from which such services are provided). The parties have made a good faith effort to identify all of the Current Services on Schedules A & B. However, in the event there are Current Services provided by ADP that are not listed on Schedule A or Schedule B, they shall nonetheless be included in Current Services and each Party shall promptly notify the other if it becomes aware of any such unlisted Current Services. Disaster recovery services shall also be deemed included in Current Services and not subject to separate charge unless set forth in an SOW regarding changes to disaster recovery services. Schedules A & C addresses, among other things, increases and decreases in volumes of Current Services, both with respect to any resulting fee adjustments as well as the amount of time which ADP may require in order to implement changes. It is anticipated that ADP will accommodate all increases in Current Services, subject to the procedures set forth in Section 6. In no event will any reduction in Current Services requested by BFS decrease the fees for the Current Services below the Base Fee Amount other than: (i) as specifically set forth in Schedule A; or (ii) as determined in ADP’s sole discretion, because ADP has business requirements unrelated to this Agreement that can be adequately and cost-effectively satisfied by redeployment of the assets that are no longer required under this Agreement as a result of such reduction in requested Current Services by BFS. Any new and/or additional Services will be requested through the change order process set forth in Section 6.

(b) Acquisitions by BFS . BFS will keep ADP promptly informed, on a confidential basis, of material potential/pending acquisitions of businesses or assets if BFS intends to request that such acquired businesses/assets be added as Service Recipients under this Agreement. The Parties will use commercially reasonable efforts to negotiate an SOW if the volume of Services will significantly increase as a result of including such acquired business/assets and/or if New Services will be requested in connection with such acquisitions, but with due regard to the guiding principles set forth in Section 2.

 

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(c) Divestitures by BFS . BFS will keep ADP promptly informed, on a confidential basis, of material potential/pending dispositions of businesses or assets if BFS intends to request that such divested businesses/assets continue to be Service Recipients under this Agreement after such dispositions. In no event shall any such post-divestment provision of Services to a third party go beyond twelve (12) months, unless otherwise agreed to by ADP (which agreement shall not be unreasonably withheld) and such Services shall be provided upon reasonable compensation to ADP from such non-BFS related Service Recipients or BFS. In no event shall ADP be required to incur any costs (including without limitation payment of any fees to obtain any consent or approvals from other third parties to make such post-disposition provision of Services possible) and, subject to the guiding principles set forth in Section 2, ADP shall be compensated on a time and materials basis by BFS (or the purchaser of the divested BFS assets or business) for its efforts in connection with attempting to enable such post-disposition Services. In no event shall ADP be responsible or liable for any failure by it to provide post-disposition Services to any such proposed additional Service Recipients due to matters outside of its control (including without limitation refusals by any other third parties to grant a necessary consent or approval) .

(d) BFS Client Terminations . Terminations by clients of BFS that benefit from the Services shall be subject to the change control process of Section 6.

(e) Nonexclusive Agreement . For avoidance of doubt, the Parties acknowledge and agree that this Agreement is non-exclusive. BFS shall not be prohibited by this Agreement from obtaining services during the Term that are identical or substantially similar to (or in lieu of) the Services from sources other than ADP; provided that BFS continues to pay the Base Fee Amount and any other on-going minimum payments (including without limitation any amounts that may be agreed by the Parties for any New Services implemented by ADP, or any recurring fees, or fees to be paid notwithstanding the fact that the associated Services are not used) that are required by the applicable schedules for the Services until termination or expiration of this Agreement in accordance with the terms hereof. Similarly, ADP shall not be prohibited from providing data center outsourcing services to other ADP clients or third parties from the Data Center, the other Facilities or otherwise; provided , that:

(i) no degradation in the quality of the Services or reduction in capacity of Services provided to BFS results from the provision of services to such other ADP clients or third parties; and

(ii) without the prior written consent of BFS, ADP may not provide services similar to the Services that it provides or has provided to BFS in support of the BFS Business under this Agreement to other ADP clients or third parties that are competitors of BFS if the provision of such services is in support of the aspects of the business of such other clients or third parties that are in direct competition with the BFS Business supported by the Services.

 

  3.2 Additional/New Services

The “ New Services ” are functions and services that BFS hereafter requests ADP to perform or provide from the Data Center and/or the other Facilities (or, if applicable, any associated ADP officess/locations or portions thereof) that are materially different from,

 

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and in addition to, the Current Services and which ADP has agreed to provide pursuant to an SOW entered into by the Parties in accordance with Section 6. Assuming relevant financial/business terms can be agreed upon, ADP will use commercially reasonable efforts to accommodate new business requirements or requests of BFS, and to do so in a reasonably prompt manner. ADP agrees to use commercially reasonable efforts to respond promptly if special needs arise from unanticipated, extraordinary events that have an impact on the BFS Business. It is understood and agreed that ADP shall not be obligated to incur any incremental costs with respect to New Services unless they are to be reimbursed in full by BFS. Section 2(b) will apply in determining whether additional fees shall apply to a New Service.

 

  3.3 Service Delivery

(a) ADP shall perform the Services: (i) at least at the same level and with at least the same degree of accuracy, quality, completeness, timeliness, responsiveness and professionalism as was provided prior to the Distribution (except to the extent otherwise provided in an SOW regarding New Services); and (ii) in accordance with Section 3.4 (including any attachments referred to therein). ADP agrees to use commercially reasonable efforts to: (x) maintain efficient and cost-effective operations; and (y) prevent software viruses and installation or activation of any disabling software.

(b) ADP commits to achieve or maintain ISO 9001 and/or comparable quality management certification and security programs with respect to the people, processes and locations included within the ADP Utility. ADP will reasonably assist BFS in its ISO 9001 and 27001 certification processes in accordance with past practice. ADP will also assist in other quality management certification and security programs of BFS but such assistance may be subject to a SOW or additional fees.

(c) All subcontractors of ADP with access to BFS Information must agree to be bound by a non-disclosure agreement with ADP that includes protection for BFS Information consistent with the obligations under this Agreement. ADP will be liable for actions/omissions of subcontractors to the same degree as it would have been under the Agreement if ADP itself had so acted or failed to act. Any subcontractors engaged by ADP in support of the Services shall be subject to the same level of due diligence and background inquiries as apply to subcontractors engaged by ADP for provisions of any other services or activities applicable to the Facilities, but in no event less than reasonable care and taking into account the type of responsibilities and access to be granted to such Persons.

 

  3.4 Service Levels

(a) The guiding principle in determining Service Levels and the associated Service Credits was based on the negative impact that failure to meet the Service Levels might have on BFS. Subject to the remainder of this Section 3.4, Service Credits shall be applied for failing to meet certain Service Levels, and Service Credits may be earned back for providing certain superior service, all as further set forth in Schedule D. The Parties may determine that a Service Credit will be allocated to a first time event of failure or triggered only after a repeated event of failure based on the related, actual impact to the BFS Business. Schedule D sets forth the Service Levels applicable to the Current Services which ADP agrees to adhere to and satisfy, as well as the specific formulas or metrics to determine dollar credits against ADP’s fees for ADP’s failure to satisfy Service Levels (“ Service Credits ”), and applicable escalation and remedial action procedures in the event of a material failure by ADP to satisfy such Service Levels. New

 

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or revised Service Levels for New Services or significant modifications to Current Services will be incorporated into this Agreement pursuant to SOWs in accordance with Section 6 below. ADP will report at least monthly on its performance relative to each Service Level and all instances of failure to satisfy Service Levels (“ Service Level Failures ”), provided it also notifies BFS of Service Level Failures promptly upon becoming aware of the same. ADP will perform a root-cause analysis, to include corrective and preventive actions, in the event of any Service Level Failure, and will Consult with BFS regarding the findings and intended corrective/preventive measures to be taken. ADP will also investigate and consider corrective action plans in the event of low or declining Service Level performance. In no event will Service Credits be assessed until the relevant matters are discussed at a meeting of the Executive Steering Committee and no Service Credits applicable to any Contract Year will be applied or payable until the end of such Contract Year, as further provided in Schedule D.

(b) Notwithstanding anything to the contrary contained in this Agreement (except the remainder of this Section 3.4), Schedule D sets forth the maximum aggregate Service Credits for which ADP may be responsible or liable in any Contract Year under this Agreement for Service Level Failures.

(c) With respect to Service Level Failures caused by the gross negligence of ADP or ADP Personnel, the Service Credit Cap shall be equal to the lesser of (i) the amount of direct damages shown to have been caused to BFS by the Service Level Failures and (ii) the applicable liability cap for gross negligence set forth in Section 14. With respect to Service Level Failures caused by the willful misconduct of ADP or ADP Personnel, the Service Credit Cap shall be the amount of direct damages shown to have been caused to BFS by the Service Level Failures.

(d) An Extreme/Radical Failure by ADP (as defined below), except if caused by Force Majeure, shall be deemed a breach of this Agreement for which BFS may terminate the Agreement for cause in accordance with Section 10.4(a). “ Extreme Radical Failure by ADP ” shall mean a significant Service Level Failure that satisfies (or a combination of Service Level Failures that, taken together, satisfies) all of the following criteria: (i) has a reasonable likelihood of materially impacting BFS’ business and harming BFS’ reputation in its industry; (ii) continues without material abatement for more than the Relevant Period; and (iii) is not caused by actions or directions from BFS, BFS Personnel or any third parties representing, or hired by, BFS. For purposes of the preceding sentence, “ Relevant Period ” shall mean (with certain examples thereof provided in Schedule C):

( x ) eight (8) hours, if the material impact and reputational harm to BFS referred to in clause (i) of the preceding sentence is reasonably likely to result from the Service Level Failure in question if it continues unabated for more than one (1) hour;

( y ) three (3) days, if the material impact and reputational harm to BFS referred to in clause (i) of the preceding sentence is reasonably likely to result from the Service Level Failure in question if it continues unabated for more than one (1) day; and

(z) five (5) weeks, if the material impact and reputational harm to BFS referred to in clause (i) of the preceding sentence is reasonably likely to result from the Service Level Failure in question if it continues unabated for more than one (1) week.

(e) ADP agrees to review with BFS the results of the relevant portions of client satisfaction surveys undertaken by BFS with respect to BFS’ clients and to work with

 

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BFS in defining action plans, changes and improvements to address issues or concerns detailed in the survey consistent with the practices in effect immediately prior to the Distribution.

(f) The remedy provided to BFS hereunder shall not be exclusive and shall not limit the rights and remedies otherwise available to BFS for failures in providing the Services, however, if any Service Credits have been provided with respect to any failure, such amount shall be deducted from any amounts otherwise recoverable from ADP in respect thereof.

 

  3.5 Transition Plan

The Parties agree to continue to use reasonable commercial efforts to complete any transition of Services to the Facilities that have not been fully completed prior to the Distribution, certain details for which are more fully described in Schedule B.

 

  3.6 Key Personnel

(a) With due regard to the guiding principles in Section 2, ADP will use commercially reasonable efforts to maintain throughout the Term a sufficient number of ADP Personnel supporting BFS matters that have such knowledge of the BFS Business and of the Services provided by ADP to BFS (“Key Personnel”) as reasonably necessary to continue to perform the Current Services and any New Services with the same level of expertise and responsiveness as have been provided by ADP prior to the Distribution. ADP will Consult with BFS regarding any changes to Key Personnel (to the extent practicable, prior to the date of such changes), but shall retain the rights, in its sole discretion, to terminate or reassign Key Personnel. ADP will use commercially reasonable efforts to arrange for appropriate training of, or knowledge transfer to, employees of the ADP Group that are identified as replacements for any Key Personnel. Attached hereto as Schedule G is a list of the positions/job titles of the Key Personnel as of the Effective Date.

(b) Throughout the Term, ADP will include reasonable incentives within the performance based aspects of the compensation arrangements of Key Personnel to help assure satisfactory performance of duties of such Key Personnel as relate to the Services provided to BFS hereunder; it being understood however that ADP shall have full authority over the compensation to be paid to its Key Personnel and the formulation of any such performance-based incentives and the specific weight to be applied thereto.

3.7 ADP Personnel

(a) All Personnel of ADP assigned to matters covered by this Agreement who will have access to BFS’ (including BFS’ clients’) data and/or systems shall be subject to background checks and drug testing in accordance with ADP’s policies in effect on the date hereof (and as may be changed hereafter by ADP in it is sole but reasonable discretion) regarding the positions held by such Personnel of ADP. Such procedures are intended to meet the standards of ADP’s security policies, as such standards may be modified from time to time to improve the security of data in the possession of ADP.

(b) In addition to Key Personnel, each of the ADP Personnel, a material portion of whose responsibilities include supporting the Services provided under this Agreement and who is eligible to receive a bonus, will have as a component of the objectives that he must achieve to receive his full bonus for the year the meeting of Service Levels

 

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hereunder; it being understood however that ADP shall have full authority over the compensation to be paid to its Personnel and the formulation of any such performance-based incentives and the specific weight to be applied thereto; provided that ADP agrees that the portion of the bonus impacted by the meeting of Service Levels will, in ADP’s reasonable judgment, provide reasonable and meaningful incentive for quality performance by the applicable ADP Personnel (subject to any additional detail in Schedule D).

 

  3.8 Disaster Recovery (Capacity on Demand)

(a) ADP will maintain a commercially reasonable ‘capacity on demand’ disaster recovery plan (“ Disaster Recovery Plan ”) further described in Schedule B. The process of declaring a disaster and activating the Disaster Recovery Plan is further set forth in Schedule B. As part of the Services, ADP will follow ADP’s Disaster Recovery Plan. ADP may amend its Disaster Recovery Plan at any time; provided that ADP shall not reduce its disaster recovery ability (including functionality, service levels, recovery times and schedules) to less than the disaster recovery ability in effect pursuant to the Disaster Recovery Plan in existence on the Effective Date. A summary of ADP’s current Disaster Recovery Plan has been provided to BFS and will be made available upon BFS’ written request for such plan in the event of any changes thereto. Changes to the Disaster Recovery Plan that would result in a material impact to the Services or result in additional cost to BFS shall be subject to the procedures of Section 6. Any aspects of the Disaster Recovery Plan that have no effect or bearing on the Services or BFS shall be subject to change in ADP’s sole discretion, but ADP will Consult with BFS regarding any such changes.

(b) ADP shall: (1) test the operability of its Disaster Recovery Plan at least five times per year, with dates to be determined and agreed upon with BFS at least twelve (12) months prior to any such tests; and (2) implement the Disaster Recovery Plan upon the occurrence of a Force Majeure event or other disaster or other circumstances necessitating such implementation. BFS, after consulting with ADP, shall have the right to declare a disaster and activate the Disaster Recovery Plan, as provided further in Schedule B. ADP shall notify BFS of any deficiencies identified by any test of the Disaster Recovery Plan and of the remediation efforts being implemented by ADP to correct such deficiencies. Testing dates must be agreed to in advance by BFS (not to be unreasonably withheld or delayed) with respect to testing that will require involvement by BFS or any of its Personnel or clients. ADP shall Consult with BFS with respect to the results of any such testing, provided (i) any information provided shall be deemed and treated as Confidential Information of ADP, and (ii) information of the type that is currently (i.e., prior to the Distribution) made available to clients or regulatory agencies from Disaster Recovery Plan tests will continue to be provided.

 

  3.9 Assistance with Financial Matters and Planning

ADP will provide: (i) assistance to BFS in connection with financial aspects of using the Services, including cost information for datacom billing for BFS’ clients; and (ii) budgeting/forecasting/strategy planning assistance as it pertains to the use of and available capacity in the Data Center (including utilization measurements annually used by BFS to determine proper cost allocations within and among BFS’ business units and providing estimated computer processing resource utilizations for large prospective clients).

 

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  3.10 Facilities

ADP will not provide the Services to BFS from any location other than the Facilities without reasonable prior written notice to BFS. ADP will not provide the Services to BFS from any location outside the U.S. without prior written consent of BFS. Any change in location within the U.S. that requires testing by BFS or its clients or material changes to BFS’ or BFS’ clients’ systems will require prior written consent of BFS, which consent will not be unreasonably withheld or delayed. If any such facility changes requires financial investment or additional expenditures by BFS or BFS’ clients, ADP will be responsible for these investments or expenditures.

 

4. ACCESS TO OTHER PARTY’S FACILITIES; SUBLEASE

 

  4.1 Compliance with Other Party’s Policies on Premises

Each Party’s Personnel, while present at the other Party’s locations, shall comply with the policies and security protocols as are generally applicable to other natural persons at such locations. For avoidance of doubt, any Personnel of one Party that will performing their duties in furtherance of or in connection with this Agreement and the Services at a location of the other Party shall be subject to the same policies and security protocols as the full-time Personnel of such other Party at such location. Each Party shall advise the other Party of any material changes to its policies and security protocols in a prompt manner and whether failure to take any particular further action is likely to cause any delays or interruptions in the provision of necessary access of one Party’s Personnel to relevant locations of the other Party, and neither Party shall be responsible for the consequences of any such delays or interruptions if the other Party failed to advise it of any such changes with reasonably sufficient lead-time.

 

  4.2 Sublease; ADP Equipment at BFS

(a) The JSQ Sublease of real property is being entered into on or about the date hereof so as to facilitate performance of certain portions or aspects of the Services. In the event of any conflict between the terms of (or any official policies issued under) the JSQ Sublease, on the one hand, and the terms of Section 4.1 above, on the other hand, the JSQ Sublease shall control and govern.

(b) With respect to any equipment or hardware owned or leased by ADP that is located at locations/facilities of BFS that ADP uses to provide the Services (including, without limitation, the ‘equipment closets’ in BFS locations in Canada), BFS shall provide ample security for such hardware and equipment in accordance with past practice (i.e., prior to the Distribution) and shall provide ADP Personnel access to such equipment and hardware as requested by ADP for maintenance, upgrade, replacements, etc. ADP will not be responsible for any interruption in the Services resulting from refused access to ADP Personnel thereto by BFS or resulting from issues arising within or relating to such BFS locations/facilities (unless such issues are caused by ADP or ADP Personnel).

 

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5. RELATIONSHIP MANAGEMENT

(a) Attached hereto as Schedule C is the Governance and Relationship Management Process that will apply to this Agreement, including a description of the Executive Steering Committee, Management Committee and Service Delivery Committees to be established and remain in place during the Term, their respective roles and responsibilities and the matters to be addressed by each and the approved processes for day-to-day issues that may arise. Notwithstanding anything which is or may be interpreted to be to the contrary contained in such Schedule, the Parties acknowledge and agree that: (i) ADP will continue to have full management control and final decision making authority over the Facilities; (ii) the Services are essential to the success of BFS day-to-day business; and (iii) it is of high importance for BFS to be kept fully and promptly informed of changed circumstances, and to be Consulted with regarding decisions, that might have a material effect on BFS or the Services.

(b) BFS will be included in the planning process with respect to proposed ADP changes that are reasonably likely to have a material adverse impact on the BFS Business during the implementation of same or thereafter.

 

6. CHANGE CONTROL PROCESS/SOW PROCEDURE

The governance procedures of Schedule C shall apply to all matters covered by this Section 6.

(a) By BFS . In the event BFS requests ADP (through the Management Committee) to provide New Services or, as addressed in more detail below, significant modifications to Current Services, which requests shall specify in reasonable detail the nature and scope of the change and the business reason therefor (each, a “ Change Request ”), and promptly provides ADP any additional information that ADP reasonably requires in order to respond to BFS Change Request, ADP will deliver to BFS within the applicable time periods provided in Schedule C, a response that sets forth:

(i) the description and related details of the requests;

(ii) an analysis of the impact that implementation of the Change Request is likely to have on the existing Services and on Service Levels, if and as applicable;

(iii) a statement of the proposed fees and aggregate costs required to undertake the Change Request, with due regard to the guiding principles set forth in Section 2; and

(iv) a reasonable estimate of the timeframe in which the Change Request would be implemented.

If the Parties mutually agree on the details of a Change Request, then (I) such New Services (or significant modification to Current Services, as the case may be), and all such details (including any applicable fees, costs and Service Levels related thereto) will be included in a Statement of Work or other addendum or amendment to this Agreement (each, an “ SOW ”) to be signed by both Parties and attached to and made a part of the Agreement, and (II) BFS will pay the fees, if any, and costs for those Services that are set forth in the signed SOW. BFS shall not request, and ADP shall not be obligated to provide, any such New Services or significant modifications to Current Services absent such fully executed SOW. Notwithstanding the foregoing sentence, the Parties agree to make and consider Change Requests in good faith, bearing in mind the guiding principles

 

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set forth in Section 2. ADP will advise BFS when it deems a BFS request for a change to the Current Services to be a “significant modification”, but the following items are understood to be so: (x) material increases or decreases in number of BFS’ clients to be covered by the Current Services to the extent such increases/decreases are not sufficiently anticipated/addressed in the current capacity; and (y) partial but material terminations of the Services to be received.

(b) By ADP . In the event of any intended ADP change to the Facilities, the operation thereof or otherwise which has a reasonable chance of (i) materially and adversely affecting the delivery of the Services to BFS or (ii) resulting in additional cost to BFS or BFS’ clients to accommodate the change, ADP will be required to submit a change request to BFS through the Management Committee which shall be in writing and shall specify in reasonable detail the nature and scope of the change, and the business reason therefor (an “ ADP Change Request ”). ADP will promptly provide BFS any additional information that BFS reasonably requires in order to respond to the ADP Change Request and BFS will promptly respond to such ADP Change Request taking into consideration the nature of the change and the impact to BFS’ clients (the extent of which may require BFS to require reasonable time to involve such clients). If the Parties mutually agree on the details of an ADP Change Request, then such details (including, if applicable, any changes to fees, costs or Service Levels) will be included in a SOW. BFS shall not be obligated to approve any ADP Change Request absent such fully executed SOW. Notwithstanding the foregoing sentence, the Parties agree to make and consider ADP Change Requests in good faith, bearing in mind the guiding principles set forth in Section 2.

 

7. INTELLECTUAL PROPERTY; THIRD PARTY CONTRACTS

 

  7.1 Proprietary Rights; Work Product and Third Party Intellectual Property

(a) All of BFS data, BFS software, proprietary code, scripts and related documentation used to provide the Services (including that which has been developed by the BFS Business and used prior to the Distribution in connection with the BFS Business and has been installed or implemented at the Data Center for ADP to operate on BFS’ behalf), BFS systems, BFS business methods, BFS names, BFS logos and Confidential Information of BFS, including as such data and information is manipulated or processed by ADP in connection with its performance of the Services, is and shall be the exclusive property of BFS (“ BFS Information ”). To the extent that ownership of any BFS Information does not by law automatically vest in BFS, ADP assigns to BFS, now or upon its creation, without further consideration, all rights, title and interest in such BFS Information, including any copyright, trademark, service mark, trade secret, and other proprietary right relating thereto. All deliverables provided under this Agreement that are modifications or enhancements or derivative works of BFS Information, including, but not limited to any software, error corrections, updates, modifications, configurations, reports, programming documentation, and/or specifications developed or provided by ADP hereunder, as well as any derivative works thereof provided or developed by ADP, as well as any documentation related thereto, and all copies of any of such materials (collectively “ BFS Products ”) are and shall be the sole and exclusive property of BFS unless specifically provided to the contrary in any SOW. BFS hereby grants to ADP a limited, nonexclusive, nontransferable right to use such BFS Information and BFS Products, but solely to provide the Services to BFS and to utilize in operating the Data Center provided that it is not used to provide services similar to the Services to a competitor of BFS if the provision of such services is in support of the aspects of the business of such competitors that are in direct competition with the BFS Business supported by the Services.

 

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(b) All deliverables provided under this Agreement other than the BFS Products, including, but not limited to any software, error corrections, updates, modifications, configurations, reports, programming documentation, and/or specifications developed or provided by ADP hereunder, as well as any derivative works thereof provided or developed by ADP, as well as any documentation related thereto, and all copies of any of such materials (collectively “ Work Product ”) are and shall be the sole and exclusive property of ADP unless specifically provided to the contrary in any SOW. All Intellectual Property of any third parties utilized by ADP in the Facilities or otherwise in the performance of the Services (the “ Third Party IP ”) shall remain the sole and exclusive property of such third parties or the Persons from whom such third parties obtained the right to license same. ADP hereby grants to BFS a limited, nonexclusive, nontransferable right to use such Work Product and to benefit from ADP’s use of the Third Party IP, but solely for the types of transactions and business contemplated by this Agreement, and with respect to Work Product, to continue to use the Work Product after any termination of this Agreement for its internal business purposes consistent herewith. To the extent that the ownership in any Work Product may not by law automatically vest in ADP, BFS assigns to ADP, now or upon its creation, without further consideration, the ownership of all such Work Product, except to the extent specifically provided to the contrary in any SOW. Notwithstanding any other provisions of this Agreement to the contrary, each Party may utilize freely any and all ideas, concepts, methods, know-how and techniques related to programming and processing of data discovered or developed by it during the Term. Except for the licenses granted to BFS in this Agreement, BFS will have no interest in any ADP products or services covered by this Agreement or used in the performance of the Services (“ ADP Products ”) or any Third Party IP. The ADP Products will at all times remain the exclusive, sole and absolute property of ADP or the third parties from whom ADP has obtained the right to use the ADP Products. All rights, title and interest in or to any copyright, trademark, service mark, trade secret and other proprietary right relating to the ADP Products and the related logos, product names, etc., are reserved, and all rights not expressly granted are reserved by ADP and such third parties. BFS may not obscure, alter or remove any copyright, trademark, service mark or proprietary rights notices on any ADP Products. For avoidance of doubt, ADP’s ownership of Work Product shall not transfer to ADP ownership of BFS Information or any right to use BFS Information for any purpose other than performance of the Services.

(c) Notwithstanding anything to the contrary contained herein, the Parties agree that upon termination of this Agreement, (i) ADP shall grant to the BFS Group a perpetual, nontransferable (except as provided below), royalty free world-wide license to use the Work Products (and to permit third parties to possess and use the Work Products for the benefit of the BFS Group) with respect to the BFS Business after the termination of this Agreement and (ii) BFS shall grant to the ADP Group a perpetual, nontransferable (except as provided below), royalty free world-wide license to use: (x) that subset of the BFS Information that consists of BFS software, proprietary code, scripts and related documentation and (y) the BFS Products that are modifications, enhancements or derivative works of such subset of BFS Information (and to permit third parties to possess and use such BFS Information and such BFS Products for the benefit of the ADP Group) with respect to the ADP Business after the termination of this Agreement. The foregoing licenses shall be transferable by each Party solely in connection with a sale of all or substantially all of the assets of the ADP Group or the BFS Group, as applicable. In connection with any termination of this Agreement, each Party shall deliver to the other Party all object code, source code and documentation that exists and is in its possession

 

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or control relating to the items that are the subject of the licenses described in this Section 7.1(c) that are to be granted by such Party to the other Party. Neither Party shall unreasonably delay performance of its obligations under this Section 7.1(c).

 

  7.2 BFS Managed Agreements

(a) Schedule E hereto identifies the existing agreements with third party vendors (the “ Managed Vendors ”) that (i) prior to the Distribution were executed by entities included within the BFS Business, (ii) prior to the Distribution have been managed and administered by ADP outside of the BFS Business and (iii) the Parties intend to continue to be managed and administered by, and assigned to, ADP for the duration of the Term the Term (the “ BFS Managed Agreements ”).

(b) The Parties shall use commercially reasonable efforts to obtain all required approvals and consents from the Managed Vendors (to the extent such approvals and consents have not been obtained prior to the Effective Date), to allow: (i) BFS (or other applicable member of the BFS Group) to assign the BFS Managed Agreements to ADP or ADP Parent (solely for the purpose of providing Services to BFS and the BFS Group during the Term); and (ii) ADP or ADP Parent to re-assign the BFS Managed Agreements back to BFS (or other applicable member of the BFS Group) upon the termination or expiration of this Agreement.

(c) With respect to any BFS Managed Agreements which cannot be assigned as described above (the “ Non-Assigned BFS Managed Agreements ”), BFS shall and hereby does designate ADP as BFS’ agent, and ADP hereby accepts such designation and agrees to act as agent of BFS, with respect to the management and administration of the Non-Assigned BFS Managed Agreements including, without limitation, payment of any amounts required by BFS under such agreements and day-to-day interactions with the applicable Managed Vendors. ADP acknowledges that it shall not enter into any amendments or other modifications to the Non-Assigned BFS Managed Agreements without the written approval BFS and that, with respect to all BFS Managed Agreements, it shall keep BFS advised and informed of any material issues arising under or changes contemplated under such agreements.

(d) ADP agrees to re-assign the applicable BFS Managed Agreements back to BFS (or other applicable member of the BFS Group) upon termination of this Agreement, and BFS agrees to assume (or cause the applicable member of the BFS Group to assume) the same; provided that BFS shall not be required to take a re-assignment of any BFS Managed Agreement if: (x) material changes have been made to such BFS Managed Agreements by ADP and the applicable Managed Vendors without first Consulting BFS; and (y) such changes will have a material and adverse effect upon BFS’ ability to utilize such BFS Managed Agreements.

(e) ADP’s indemnification obligations under Section 13(a)(v) below shall not apply to the extent that the matters in question relate to periods prior to ADP’s management and administration of the BFS Managed Agreements.

 

  7.3 Rights Upon Termination

During any eighteen (18) month termination notice period under this Agreement (as described in Section 10), the Parties will cooperate in good faith to identify the Third Party IP which BFS will require rights to in connection with establishment by BFS of its own data center facilities or a transfer of the Services to a third party (or any combination

 

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thereof). With respect to any such Third Party IP that is used during the Term solely for the delivery of Services to BFS, ADP will use reasonable commercial efforts to have the relevant third party agreements assigned to BFS (or BFS designee), but in no event shall ADP be responsible for any additional costs or fees in connection with such assignment. With respect to Third Party IP that is used during the Term both for the delivery of the Services as well as for any other purposes of ADP outside of this Agreement, ADP will use commercially reasonable efforts to assist BFS in its efforts to enter into similar agreements with the relevant third parties, it being understood however that ADP shall not be obligated to share any information with BFS regarding such third parties or such agreements if doing so (x) may reasonably be viewed as a violation of such agreements or (y) is likely, in ADP’s reasonable opinion, to affect adversely its relationship with such third parties. Section 2(b) shall apply to a determination of any additional fees or costs to be charged to BFS for such transition assistance.

 

8. DATA PROTECTION & SECURITY; CONFIDENTIALITY

 

  8.1 Data Protection and Security

(a) BFS Information shall be and remain, as between the Parties, the property of BFS. ADP shall not possess or assert any lien or other right against or to BFS Information. No BFS Information, or any part thereof, shall be sold, assigned, leased or otherwise disposed of to third parties by ADP or commercially exploited by or on behalf of ADP.

(b) Upon the termination or expiration of this Agreement for any reason (including termination for cause) or, with respect to any particular BFS Information, on such earlier date that such information shall no longer be required by ADP in order to render the Services hereunder, BFS Information (including copies thereof): (i) shall be promptly returned to BFS by ADP in a form reasonably requested by BFS, provided that BFS has given prior approval to any reasonable costs associated with the conversion of BFS Information from the form maintained by ADP; or (ii) if BFS so elects, shall be destroyed by ADP.

(c) Subject to Section 8.3(f), BFS Information shall not be utilized by ADP for any purpose other than that of rendering the Services under this Agreement.

 

  8.2 Safeguarding BFS Data

(a) ADP shall maintain safeguards against the destruction, loss or alteration of BFS Information in the possession or control of ADP which are no less rigorous than those maintained by ADP prior to the Distribution with respect to the BFS Business data, and are no less rigorous than those maintained by ADP for its own information of a similar nature, but in no event shall ADP use less than commercially reasonable efforts to safeguard BFS Information. Certain aspects of the security policies and practices of ADP as of the date hereof are included within Schedule B. ADP will promptly inform BFS of any material changes in the security methods employed by ADP to safeguard BFS Information, unless the change would have a material and adverse impact on BFS or BFS’ Clients, in which case the consent of BFS will be required. ADP will Consult with BFS regarding any changes in the security procedures reasonably requested by BFS. BFS shall have the option of requesting any changes to the security procedures used in connection with the Services being provided to BFS through the change order procedures described in Section 6.

 

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(b) ADP Personnel shall not attempt to access, or grant access to, any BFS Information which they are not permitted to access under this Agreement. If such access is attained (or is reasonably suspected): (i) ADP shall immediately report such incident to BFS, describe in detail the accessed BFS Information, and if applicable return to BFS any copied or removed BFS Information; and (ii) ADP shall utilize commercially reasonable efforts, including through systems security measures and reasonable electronic and physical safeguards, to guard against the unauthorized access, alteration or destruction of software and BFS Information, including the installation of applicable software which: (A) requires all users to enter a user identification and password prior to gaining access to information systems; (B) controls and tracks the addition and deletion of users; and (C) controls and tracks user access to areas and features of the information systems.

 

  8.3 Confidential Information

(a) Confidential Information . ADP and BFS each acknowledge that, in the course of carrying out the transactions contemplated by this Agreement, they will be furnished with, receive or otherwise have access to information of or concerning the other Party which such Party considers to be confidential. As used in this Agreement, “ Confidential Information ” means all information, in any form, furnished or made available directly or indirectly by one Party, or to which either Party gains access in the course of or incidental to the performance of this Agreement (or in the course of or incidental to the performance of similar services from the Facilities for the BFS Business prior to the Distribution), and that should reasonably have been understood by the recipient (because of legends or other markings, the circumstances of disclosure, or the nature of the information itself) to be confidential to the disclosing Party, an Affiliate of the disclosing Party, or a third party. The terms and conditions and pricing of the Schedules to this Agreement shall be deemed Confidential Information and treated as such. Confidential Information also shall include, whether or not designated as “confidential information,”: (i) BFS Information; (ii) the specifications, designs, documents, correspondence, software, documentation, data and other materials and work products produced by or for either Party under this Agreement; (iii) all information concerning the operations, affairs and businesses of the other Party, the financial affairs of the other Party, and the relations of the other Party with its customers, employees, providers, subscribers, business partners, vendors, regulatory agencies, financial, legal and other professional advisors, consultants, brokers and service providers (including customer lists, customer information (including the names of customers), account information and consumer markets); (iv) software provided to a Party by or through the other Party; (v) personally identifiable information; and (vi) other information or data stored on magnetic media or otherwise or communicated orally, and obtained, received, transmitted, processed, stored, archived or maintained by either Party under this Agreement.

(b) Obligations . BFS and ADP shall not disclose or provide access to unauthorized parties the Confidential Information of the other Party and shall limit access to Confidential Information to only those with a reasonable need to know such Information to carry out, or use, the Services or otherwise in furtherance of a Party’s obligations hereunder; provided that ADP may disclose such information (except for the terms and conditions and pricing of the Schedules to this Agreement) to properly authorized subcontractors as and to the extent necessary for performance of the Services, and BFS may disclose such information (except for the terms and conditions and pricing of the Schedules to this Agreement) to third parties as and to the extent necessary for the conduct of its business, where in each such case, the receiving entity first agrees in writing to obligations substantially similar in effect to those contained in this Section 8.3. Neither Party shall use the other Party’s Confidential Information except as specifically permitted herein.

 

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(c) Notice of Disclosure . In the event of any actual or suspected misuse, disclosure or loss of, or inability to account for, any Confidential Information of the furnishing Party, the receiving Party promptly shall: (i) notify the furnishing Party upon becoming aware thereof; (ii) promptly furnish to the other Party full details of the unauthorized possession, use, or knowledge, or attempt thereof, and use reasonable efforts to assist the other Party in investigating or preventing the reoccurrence of any unauthorized possession, use, or knowledge, or attempt thereof, of Confidential Information; (iii) take such actions as may be necessary or reasonably requested by the furnishing Party to minimize the violation; and (iv) cooperate in all reasonable respects with the furnishing Party to minimize the violation and any damage resulting therefrom.

(d) Return or Destruction . As requested by BFS during the Term, or upon expiration or any termination of this Agreement, ADP shall return or destroy, as BFS may direct, all material in any medium that contains, refers to, relates to, or is derived from Confidential Information of BFS, and retain no copies other than as required by ADP’s record retention policies.

(e) Exclusions . Section 8.3(b) shall not apply to any particular information which ADP or BFS can demonstrate: (i) was, at the time of disclosure to it, in the public domain; (ii) after disclosure to it, is published or otherwise becomes part of the public domain through no fault of the receiving Party; (iii) was in the possession of the receiving Party at the time of disclosure to it without obligation of confidentiality (excluding any such information obtained by a Party from the other Party prior to the Distribution); (iv) was received after disclosure to it from a third party who had a lawful right to disclose such information to it without any obligation to restrict its further use or disclosure; or (v) was independently developed by the receiving Party without reference to Confidential Information of the furnishing Party. In addition, a Party shall not be considered to have breached its obligations by disclosing Confidential Information of the other Party:

(I) as required by law (except with respect to those laws and regulations described in item (II) below), to satisfy any legal requirement of a competent government body; provided that, immediately upon receiving any such request and to the extent that it may legally do so, such Party advises the other Party of the request prior to making such disclosure in order that the other Party may interpose an objection to such disclosure, take action to help assure confidential handling of the Confidential Information, or take such other action as it deems appropriate to protect the Confidential Information; or

(II) as required pursuant to any listing agreement with or rules of any national securities exchange or interdealer quotation system or federal or state securities laws; provided that the Parties shall cooperate to minimize disclosure ( e.g. , redaction) consistent with such agreements, rules, laws, and regulations, including that the disclosing Party shall notify the other Party as soon as reasonably practicable before such disclosure.

Further, a Party shall not be considered to have breached its obligations under this Section 8.3 for disclosing Confidential Information to its attorneys, auditors and other professional advisors in connection with services rendered by such advisors, provided that such Party has confidentiality agreements with such professional advisors and/or such advisors owe professional confidentiality obligations to such Party.

 

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(f) Independent Development or Acquisition, and Residual Knowledge . The terms of confidentiality under this Agreement shall not be construed to limit either Party’s right to independently develop or acquire products without use of the other Party’s Confidential Information. Further, either Party shall be free to use for any purpose the residual knowledge resulting from access to or work with such Confidential Information, provided that such Party shall maintain the confidentiality of the Confidential Information as provided herein. The term “ Residual Knowledge ” means general knowledge, skills and experience in non-tangible form that relate to the business activities of the Party receiving Confidential Information hereunder, which may be retained in the minds of persons who have had access to the Confidential Information, provided that residual knowledge does not contain any information that is intentionally memorized and does not include Confidential Information of a third party.

 

9. NON-SOLICITATION OF PERSONS

Except as otherwise specifically contemplated under Section 10.6 (or elsewhere in this Agreement) in connection with a transition prior to termination or expiration of this Agreement and except as consented to in advance by the other Party, during the Term of this Agreement and for two (2) years thereafter, neither Party shall solicit the employment of any Personnel of the other Party who is or was materially involved in the transactions covered by this Agreement. The foregoing shall not apply to: (i) solicitations by other unrelated business units, areas or divisions of each Party, provided that such other units, areas or divisions did not receive information regarding any prospective employee from the business unit, area or division that is involved with the transactions contemplated by this Agreement; or (ii) situations in which it was clearly the Personnel of one Party (as opposed to the other Party) that first solicited the other Party and initiated conversations regarding his or her desire to be employed by the other Party.

 

10. TERM; EARLY TERMINATION; TERMINATION FOR CAUSE

 

  10.1 Term

This Agreement shall take effect on the date of the Distribution (the “ Effective Date ”), and shall have a firm initial term ending on June 30, 2012 (the “ Initial Term ”), unless terminated earlier in accordance with this Agreement.

 

  10.2 No Obligation to Renew

IN NO EVENT SHALL EITHER PARTY BE OBLIGATED TO ENTER INTO ANY RENEWAL OF THIS AGREEMENT BEYOND THE INITIAL TERM .

However, in light of the significant lead time that will be necessary for BFS to arrange for alternative sources for services similar to the Services, the Parties agree to the following procedures for determining whether a renewal of this Agreement will be entered into: No later than the third anniversary of the Effective Date, BFS shall indicate in a written notice to ADP if it has an interest in pursuing a renewal of this Agreement

 

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beyond the Initial Term. If BFS indicates such interest, ADP shall provide a written response to BFS within thirty (30) days of its receipt of the notice from BFS indicating whether ADP does or does not share such interest in a renewal. If both Parties have indicated an interest in a renewal, they shall attempt in good faith to negotiate any new or changed terms and conditions, if any, to apply to such renewal term during the sixty (60) day period after BFS has received ADP’s written response. If the Parties are unable to reach agreement during such sixty (60) day period (or any agreed upon extension thereof, if any), this Agreement will expire at the end of the Initial Term.

 

  10.3 Early Termination/Termination for Convenience

BFS may terminate this Agreement for convenience ( i.e. , a termination, other than for cause, whose effective date does not coincide with the end of the Initial Term (“ Termination for Convenience ”)) at any time upon no less than three (3) months prior written notice, subject to payment of the fee to ADP (the “ BFS Convenience Termination Fee ”) as provided in accordance with the provisions set forth in Schedule F; provided, however, that BFS must provide no less than eighteen (18) months prior notice if ADP is to have any responsibility to assist BFS in the resulting transition off of the Services to the extent that it is not commercially reasonable to provide such assistance with the resources then currently deployed.

 

  10.4 Termination for Cause

A Party may terminate this Agreement for cause without the payment of any fee or charge or other liability in respect of such termination upon the occurrence of any of the following events:

(i) BFS may elect to terminate in the event of an Extreme/Radical Failure by ADP;

(ii) a Force Majeure event that results in a termination right as set forth in Section 20.15;

(iii) the non-breaching Party may terminate in the event a Party breaches this Agreement, such breach results in a material adverse effect on the non-breaching Party, and the breaching Party fails to cure such material breach within thirty (30) days of its receipt of written notification thereof from the non-breaching Party (or within sixty (60) days of such receipt, if a reasonable plan for cure of such breach has been established by the breaching Party and substantial progress has been made in the implementation thereof by the end of such initial thirty (30) day period), or if once cured the same breach occurs again with a material adverse effect on the non-breaching Party; provided ; that, a termination for cause right by ADP under this Section 10.4(iii) shall be limited to breaches by BFS of its fee payment obligations under this Agreement; and

(iv) a Party may terminate if the other Party commits an act of bankruptcy or becomes the subject of any proceeding under the Bankruptcy Act or any state bankruptcy law that is not dismissed within sixty (60) days, or becomes insolvent, or has any substantial part of its property become subject to any levy, seizure, assignment, application or sale for or by any creditor or governmental agency.

 

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In any of the events described in clauses (i), (ii), (iii) and (iv) above occur, the Party with the resulting right to terminate may, upon written notice thereof provided to the other within ninety (90) days of the event giving rise to the termination event (or with respect to a breach with an associated cure period, the lapse of the cure period), terminate this Agreement. Each right to terminate for cause that is not exercised within such ninety (90) day period shall lapse and be of no further force or effect.

All terminations for cause (by either Party) will include eighteen (18) months of transition time prior to the effectiveness of the termination (the “ Termination Notice Period ”). If BFS falls behind in payment more than two (2) months of fees during a termination transition period, ADP can terminate on thirty (30) days’ prior written unless cured prior to end of such thirty (30) days (except for amounts that are subject to a good faith dispute for which BFS has provided notice to ADP in reasonable detail). If the initial basis for a termination for cause by ADP was non-payment of fees by BFS, ADP may require prepayment of charges for Services, monthly in advance, as a condition for such assistance and continued Services.

In the event that BFS terminates this Agreement as a result of an Extreme/Radical Failure by ADP, ADP shall be liable for the costs to BFS to convert off the Services to a new provider, including the reasonable cost of advisors involved in the negotiation of the replacement services, and the difference between the cost of the new services that will replace the Services from the point of conversion to such services, including any costs of conversion, through the end of the Term. BFS will be obligated to mitigate such costs as set forth in Section 14.1.

In the event that a Party elects to exercise its right of termination hereunder, such Party shall not be prohibited from exercising any and all other rights and remedies otherwise available to it at law or in equity.

 

  10.5 Obligations of Parties upon Termination

Neither ADP’s level of performance nor BFS’ cooperation and payment obligations will be reduced during any Termination Notice Period, unless otherwise agreed pursuant to the procedures contained or referred to in Section 6.

 

  10.6 Transition During Termination Notice Period

(a) During the Termination Notice Period, ADP will identify ADP Personnel that BFS will be permitted to approach to discuss BFS employment opportunities. ADP covenants that the group so identified will have the skills and experience reasonably necessary for BFS to establish its own data center or manage a relationship with a new third party provider (assuming all such identified Personnel accept employment offers from BFS).

(b) During the Termination Notice Period, ADP shall provide the assistance described in Section 7.3 regarding Third Party IP. In addition, both Parties shall use reasonable commercial efforts in planning BFS transition off of the Services.

(c) BFS will have the right to obtain the BFS Information and other intellectual property which it owns (or to which it has applicable license rights) in any reasonable form it specifies, including the BFS Products, provided that any material additional costs incurred by ADP in satisfying such request shall be reimbursed by BFS if the format requested results in material added cost to ADP.

 

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(d) In the event of an emergency in which BFS is unable to commence alternative services as of the end of the Termination Notice Period, ADP will reasonably accommodate BFS’ need to continue receiving the Services for a limited extension period (not to exceed twelve (12) months), subject to the Parties mutual agreement on the financial terms thereof (taking into account ADP’s resource requirements to do so and the costs thereof).

 

  10.7 Termination for Change of Control to a Designated C of C Entity

(a) BFS may terminate this Agreement, as provided below, without the payment of any fee or charge or other liability in respect of such termination, upon the occurrence of an event or combination of events under which the assets of ADP Parent and/or its Subsidiaries that are utilized for the operation of the Data Center and the provision of the Services covered by this Agreement come under the control of a “Designated C of C Entity” as defined in Schedule F (a “ Change of Control Event”) . For the purposes of this Section 10.7, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the entity or applicable business area, whether through ownership of voting securities or other interests, by contract or otherwise.

(b) ADP shall provide prompt written notice to BFS upon and with respect to the consummation of a Change of Control Event (the “ C of C Notice ”). BFS shall then have sixty (60) days after receipt of the C of C Notice to notify ADP in writing of the exercise by BFS of its right to terminate the Agreement for the Change of Control Event in question (a “ BFS Termination Notice ”). If no BFS Termination Notice is received by ADP within such sixty (60) day period, BFS’ termination right for such Change of Control Event shall expire and be of no further force or effect.

(c) The effective date of a termination by BFS for a Change of Control Event shall be specified in the BFS Termination Notice, but shall: (x) be no greater than eighteen (18) months after the consummation of the Change of Control Event and (y) not in any event be a date occurring after the end of the then current term of this Agreement, in each case, unless otherwise agreed to by ADP (or the applicable successor) in its sole discretion.

(d) Sections 10.5 and 10.6 above shall apply to terminations under this ADP Change of Control Provision, except that as applied here, the term “Termination Notice Period” used in such Sections shall be deemed to refer to period of time between the date of receipt by ADP of the BFS Termination Notice and the effective date of termination set forth in such notice.

 

11. FEES; FINANCIAL CONSIDERATIONS

 

  11.1 Fee Schedule

Schedule A sets forth the Base Fee Amount for the Current Services and agreed principles and methodologies for changes thereto. Fees, if any, for New Services or fees for expansions of the Current Services beyond the scope established in Section 2(b) shall be set forth in the applicable SOWs.

 

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  11.2 Invoicing and Payment Conditions

(a) Invoices for the Base Fee Amount (and for any additional fees which have previously been invoiced pursuant to Section 11.2(b)) shall be issued monthly and provided to BFS by the first day of the month following the month to which such fees relate. Such invoices shall be payable by wire transfer to ADP no later than 10 days from receipt of the invoice, absent good faith dispute for which written notice has been provided by BFS to ADP.

(b) The first time that ADP charges BFS for any particular additional fees, ADP shall issue an invoice therefor to be provided to BFS by the fifteenth day of the month following the month to which such additional fees relate. Such invoices shall be payable by wire transfer (or other method mutually agreed by the Parties) no later than 10 days from receipt of the invoice, absent good faith dispute for which written notice has been provided by BFS to ADP.

(c) At the end of each ADP fiscal year during the Term, the Base Fee Amount shall be revised to include all additional fees that came into effect during such fiscal year pursuant to the procedures in Section 6 and as otherwise may be agreed by the Parties. Additional necessary invoices and associated payment terms may be set forth in Schedule A.

(d) If BFS fails to pay any amount hereunder when due (assuming timely receipt of the applicable invoice and except with respect to amounts that are the subject of a good faith dispute for which written notice has been provided by BFS to ADP), BFS, on written demand, shall pay interest at the rate of .50% (fifty basis points) per month (or the maximum allowed by law if less) on such past due amount from the twentieth (20 th ) day after the due date thereof until the payment date. BFS shall reimburse ADP for any expenses incurred, including interest and reasonable attorney fees, in collecting amounts due ADP hereunder.

 

  11.3 Taxes

BFS shall pay all taxes and similar charges, however designated, which are imposed by any Governmental Authority by reason of BFS’ receipt of the Services hereunder except for income taxes payable by ADP on amounts earned by ADP or property taxes payable by ADP on property owned by ADP. Without limiting the foregoing, BFS shall promptly remit the sales taxes charged by ADP or, if applicable, issue to ADP a properly executed exemption certificate valid in the state or states at issue. ADP shall not charge BFS for sales taxes on any charges determined to be taxable by ADP without contacting BFS first and requesting a tax exemption certificate, claim letter or similar document. If ADP underpays or overpays such sales taxes, BFS shall be responsible for promptly paying any shortfalls for sales tax, interest and penalties and for collecting any refunds from the appropriate taxing authority; provided , however , if such underpayment is solely the result of the negligence of ADP, ADP shall be responsible for any penalties associated with such underpayment.

 

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12. AUDITS REPORTS, SITE VISITS, DOCUMENTATION

 

  12.1 SAS 70 Type II Reports

(a) ADP will provide its standard SAS 70 Type II reports for the Data Center in Georgia (“ DC1 ”) twice a year in electronic form directly to BFS. These reports will be dated March 31, 20xx (available on or about 5/15/20xx) and September 30, 20xx (available on or about 11/15/20xx) and they will be prepared by a nationally recognized public accounting firm which will be chosen by ADP. These standard SAS 70 Type II reports will be provided free of charge and copies thereof may be provided to BFS’ clients. In the event that the DC1 SAS 70 Type II report contains a qualified opinion, ADP will Consult with BFS to review the control deficiencies that gave rise to the qualified opinion and ADP, in its reasonable discretion and using commercially reasonable efforts, will implement appropriate actions to remedy any control deficiencies and related testing exceptions that gave rise to the qualified opinion. BFS will endeavor to aggregate specific issues and control objectives raised by its clients (rather than raising client-by-client issues on a piecemeal basis). If BFS wants to have ADP’s chosen SAS 70 public accounting provider perform additional procedures outside the scope of the standard DC1 SAS 70 Type II report provided by ADP then BFS has the right to cause ADP to retain ADP’s then current provider to perform an “agreed upon procedures review” to resolve any of their outstanding concerns with respect to the internal controls. Additionally, BFS may have ADP engage ADP’s chosen SAS 70 public accounting provider to perform an additional standard DC1 SAS 70 Type II report dated a different date than specified above. In the situations described in the two immediately preceding sentences, BFS will pay all costs associated with the agreed upon procedures review or additional standard SAS 70 Type II report, as applicable.

(b) ADP will provide support to BFS’ chosen public accounting firm for performance by such firm of not more than two SAS 70 Type II reports annually for BFS in the same manner as provided prior to the Distribution. This support will be provided solely for processes, controls and objectives outside of the scope of the ADP-provided SAS 70 Type II report covering DC1. For the purposes of controls at DC1, BFS and their chosen public accounting firm will be provided (without retesting of controls) with the ADP issued SAS 70 Type II report. BFS’ chosen public accounting firm will not be given access to, or the right to perform audit or other procedures in, any ADP data center (other than the premises covered by the JSQ Sublease for purposes of having access to ADP Personnel). BFS will be responsible for all costs related to their SAS 70 Type II reports which they will engage a public accounting firm to prepare. The support which ADP provides to BFS and its public accounting firm will be included in the Base Fee Amount to the extent that the support is: (i) for no more than two (2) BFS SAS 70 Type II reports per year; (ii) for processes, controls and objectives outside the scope of the standard DC1 SAS 70 Type II reports provided by ADP; and (iii) limited in scope and duration consistent with past practices and taking into account the guiding principles of Section 2.

 

  12.2 Site Visits to Data Center

BFS and BFS’ clients and potential clients that sign an ADP non-disclosure agreement and regulatory authorities will be given tours of the Data Center as reasonably required upon reasonable advance written notice by BFS and subject to reasonable rescheduling by ADP.

 

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  12.3 Audit rights

(a) ADP shall reasonably accommodate audits of any of ADP’s systems in the Facilities by any clients of BFS that possess such rights prior to the Distribution, as evidenced by documentation to be provided to ADP by BFS, and as required by BFS’ regulators, upon reasonable advance written notice by BFS and subject to reasonable rescheduling by ADP. Any additional systems audits for BFS’ clients will require a prior written request by BFS and prior approval by ADP, which approval shall not be unreasonably withheld if the scope and details regarding such request are substantially similar to the rights granted to the clients referred to in the immediately preceding sentence.

(b) In the event of a significant breach of ADP security or significant error in the Services, upon the request of BFS or BFS’ client(s), ADP shall engage a nationally recognized public auditing firm to conduct an appropriate investigation and analysis into such events and the root causes thereof. ADP shall use commercially reasonable efforts to implement such changes as may be recommended by such firm to help ensure that such error or breach is not repeated.

 

  12.4 Documentation

ADP will make available to BFS, upon request of BFS, supporting documentation and information regarding: (i) Services the fees for which vary based upon usage volumes/levels, if applicable, and (ii) any incremental fees that have been charged to BFS but that have not been approved pursuant to an SOW. Such documentation and information shall be available for review and inspection during normal business hours and upon reasonable advance notice by employees of BFS. ADP will not unreasonably refuse to make available: (A) such other information relating to BFS’ use of the Services provided under this Agreement as reasonably required by BFS or (B) any other information requested by any regulatory authority. Notwithstanding the foregoing, in no event shall ADP be required to share or disclose any information regarding its costs for the Data Center or the costs of any of assets, products or licenses utilized by ADP in the performance of the Services.

 

  12.5 Sarbanes Oxley

Consistent with current practices, ADP shall provide support to BFS for its procedures related to the Sarbanes-Oxley Act of 2002, as may be amended from time to time, on a quarterly basis.

 

13. INDEMNIFICATION

(a) Subject to Section 14, ADP will indemnify, defend and hold harmless BFS and its Affiliates and each of their officers, directors, employees, agents, successors and assigns (each, a “ BFS Indemnified Person ”) from any and all losses, liabilities, damages, costs and expenses, including reasonable legal fees and disbursements and costs of investigation, litigation, settlement, judgment, interest and penalties (collectively, “ Losses ”) due to, arising from or relating to third party claims, demands, actions or threat of action (whether in law, equity or in an alternative proceeding and whether groundless or otherwise) arising from or relating to: (i) ADP’s actual or alleged breach of any warranty set forth in this Agreement or any Schedule(s); (ii) any actual or alleged

 

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infringement, violation or misappropriation of the Intellectual Property Rights of any third person by ADP or ADP Personnel (“ ADP IP Indemnity ”); (iii) the negligent, willful or reckless acts or omissions of or by ADP or any ADP Personnel; (iv) death, personal injury, bodily injury or damage to tangible/physical property caused by ADP or any ADP Personnel; and (v) except as provided in Section 7.2, any non-compliance by ADP with the terms of the BFS Managed Agreements (collectively, “ BFS Indemnified Claim ”).

(b) Subject to Section 14, BFS will indemnify, defend and hold harmless ADP and its Affiliates and each of their officers, directors, employees, agents, successors and assigns (“ ADP Indemnified Person ”) from any and all Losses due to, arising from or relating to third party claims, demands, actions or threat of action (whether in law, equity or in an alternative proceeding and whether groundless or otherwise) arising from or relating to: (i) BFS actual or alleged breach of any warranty set forth in this Agreement or any Schedule(s); (ii) any actual or alleged infringement, violation or misappropriation of the Intellectual Property Rights of any third person by BFS or BFS Personnel (“ BFS IP Indemnity ”); (iii) the negligent, willful or reckless acts or omissions of or by BFS or any BFS Personnel; (iv) death, personal injury, bodily injury or damage to tangible/physical property caused by BFS or any BFS Personnel (collectively, “ ADP Indemnified Claim ”). A BFS Indemnified Claim and a ADP Indemnified Claim may be referred to herein as an “ Indemnified Claim ;” and a BFS Indemnified Person and an ADP Indemnified Person may be referred to herein as an “ Indemnified Person .”

(c) If any Claim is commenced against an Indemnified Person and the Party to this Agreement related to such Indemnified Person reasonably believes such Claim is an Indemnified Claim, written notice thereof shall be given to the other Party (“ Indemnifying Party ”) within a reasonable time appropriate to the substance of the Claim, not to exceed thirty (30) days of receipt of the Claim by the Indemnified Person (the “ Claim Notification Period ”). Failure to give such notification shall not affect the indemnification provided hereunder except to the extent that the Indemnifying Party has actually been prejudiced as a result of such failure. To the extent received, the Indemnified Person shall deliver copies of all notices and documents related to the Claim, including court papers, to the Indemnifying Person within seven (7) days of the Indemnified Person’s receipt thereof.

(d) After such notice, if the Indemnifying Party shall acknowledge in writing to such Indemnified Person that the claim is an Indemnified Claim, then the Indemnifying Party shall be entitled, if it so elects, in a notice delivered to the Indemnified Person not less than ten (10) days prior to the date on which a response to such Claim is due ( provided that the Indemnifying Party has received notice of the Claim more than ten days prior to the date on which a response to such Claim is due), to immediately take full control of the defense and investigation of such Indemnified Claim and to select and engage attorneys reasonably satisfactory to the Indemnified Person to handle and defend the same, at the Indemnifying Party’s sole cost and expense.

(e) The Indemnified Person shall cooperate in all reasonable respects with the Indemnifying Party and its attorneys in the investigation, trial and defense of such Indemnified Claim and any appeal arising therefrom; provided, however, that the Indemnified Person may, at its own cost and expense, participate, through the Indemnified Person’s own attorneys or otherwise, in such investigation, trial and defense of such Indemnified Claim; and any appeal arising therefrom. The Indemnifying Party will bear the costs of counsel engaged by the Indemnified Person by reimbursing the Indemnified Person, as such costs are incurred and upon request therefor, if: (i) the use of counsel chosen by the Indemnifying Party to represent the Indemnified Person would

 

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present such counsel with a conflict of interest that would preclude such counsel from representing the Indemnified Person; (ii) the Indemnifying Party has failed to engage counsel reasonably satisfactory to the Indemnified Person within thirty (30) days after the Indemnifying Party has received notice of an Indemnified Claim; or (iii) if BFS and ADP are parties to an action, proceeding or investigation and the Indemnified Party wishes to pursue additional or different claims and/or defenses unavailable to, or not pursued by, the Indemnifying Party.

(f) If the Indemnifying Party does not assume full control over the defense of an Indemnified Claim, the Indemnifying Party may participate in such defense, at its sole cost and expense, and the Indemnified Person shall have the right to defend the Indemnified Claim in such manner as it may deem appropriate, at the cost and expense of the Indemnifying Party, and the Indemnifying Party will bear the costs incurred by the Indemnified Person in connection therewith by reimbursing the Indemnified Person, as such costs are incurred and upon request therefor.

(g) The Indemnified Person shall not settle any claim, action or proceeding in respect of which indemnity may be sought hereunder, without the Indemnifying Party’s written consent, which consent shall not be unreasonably withheld, delayed, or conditioned. The Indemnifying Party shall not settle any claim, action or proceeding in respect of which indemnity may be sought hereunder, whether or not the Indemnified Person is an actual or potential party to such claim, action or proceeding without the Indemnified Person’s written consent, which consent shall not be unreasonably withheld, delayed, or conditioned provided , however , that the Indemnified Person may withhold, delay and/or condition its consent to any settlement of a Claim, in its sole and absolute discretion, if:

(i) such settlement (A) adversely affects any rights of the Indemnified Person, including any rights with respect to work product under this Agreement, (B) imposes any actual or potential liability upon the Indemnified Person, or (C) contains or implies a factual admission of wrongdoing by or with respect to the Indemnified Person or any adverse statement or implication with respect to the character, professionalism, due care, loyalty, expertise, or reputation of Indemnified Person; or

(ii) the Indemnifying Party and all plaintiffs or claimants do not affirmatively and unconditionally absolve and release the Indemnified Person from any responsibility or liability with respect thereto and the subject matter thereof;

provided, however, that if the Indemnified Person unreasonably withholds its consent to the settlement of an Indemnified Claim proposed to the Indemnified Person by the Indemnifying Party, the Indemnifying Party’s obligation to indemnify the Indemnified Person for such Indemnified Claim shall not exceed the total amount that had been proposed in such compromise or settlement offer plus the amount of all expenses incurred by the Indemnified Party with respect to such Indemnified Claim through the date on which such consent was requested.

(h) With respect to any indemnification contained in this Agreement (and any mitigation efforts that may be described therein), if mitigation requires the expenditure of out-of-pocket costs by the Indemnified Person, then the Indemnified Person shall first advise the Indemnifying Party of such costs in writing, and if the Indemnifying Party authorizes such expenditure, then the Indemnified Person shall proceed with such mitigation and the Indemnifying Party shall reimburse the Indemnified Person such expenditure, and if the Indemnifying Party does not authorize such expenditure, then the Indemnified Person shall not be required to proceed with such mitigation or such expenditure.

 

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14. LIMITATION OF LIABILITY

 

  14.1 Mitigation of Damages

Subject to the provisions of Section 13(h), ADP and BFS will each use reasonable efforts to mitigate any potential damages or other adverse consequences arising from or related to any breach of this Agreement or failure in providing the Services.

 

  14.2 Limits on Monetary Damages

(a) (i) Notwithstanding anything to the contrary contained in this Agreement, ADP’s liability to BFS under the Agreement for damages (monetary or otherwise) under any circumstances for claims of any type or character arising from or related to the Agreement or the Services will be limited in each instance to the amount of actual damages incurred by BFS; provided, however, that:

(A) the foregoing clause is not intended to relieve ADP of the obligation to issue Service Credits in accordance with Section 3.4 or the Schedules referred to in such Section, and if provided to BFS, shall be deducted from any amount available for actual damages;

(B) ADP’s aggregate liability hereunder with respect to any Contract Year (other than liability under or for (I) Section 13(a)(ii) (ADP IP Indemnity), (II) Section 13(a)(iv) (death, bodily injury and property damage indemnity), (III) Section 8.3 (Confidential Information) and (IV) ADP’s willful misconduct, termination of the Agreement other than as permitted herein (i.e., repudiation/wrongful termination of the Agreement by ADP) or gross negligence) will not exceed an amount equal to the aggregate fees paid by BFS under this Agreement during the prior Contract Year ( provided that in the first Contract Year, such amount shall be equal to the Base Fee Amount in effect on the Effective Date (each such Contract Year amount, the “ Base Cap ”)); and

(C) if BFS continues to receive Services, any such monetary damages may, at BFS option, be paid to BFS by way of a credit against future fees payable under this Agreement.

(ii) With respect to direct damages caused by ADP’s gross negligence (to the extent permitted by applicable law) and damages resulting from a breach by ADP of its confidentiality obligations under Section 8.3, ADP’s aggregate liability hereunder with respect to each Contract Year shall be an amount equal to three (3) times the applicable Base Cap.

(iii) No liability limitation will apply to: (A) ADP’s liability under Section 13(a)(ii) (ADP IP Indemnity) or (B) ADP’s liability for direct damages under or for: (x) Section 13(a)(iv) (death, bodily injury and property damage indemnity) or (y) ADP’s willful misconduct or termination of the Agreement other than as permitted herein (i.e., repudiation/wrongful termination of the Agreement by ADP).

 

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(b) BFS’ liability to ADP under the Agreement for damages (monetary or otherwise) under any circumstances for claims of any type or character arising from or related to the Agreement or the Services, will be limited in each instance to the amount of actual damages incurred by ADP, provided, however , that:

(i) BFS’ aggregate liability hereunder with respect to any Contract Year (other than BFS liability under or for: (A) payment of fees hereunder, (B) Section 13(b)(ii) (BFS IP Indemnity), (C) Section 13(b)(iv) (death, bodily injury and property damage indemnity) and (D) BFS willful misconduct or gross negligence) will not exceed an amount equal to the aggregate fees paid by BFS under this Agreement during the prior Contract Year, provided that in the first Contract Year, such amount shall be deemed to be equal to the initial Base Cap (as set forth in Section 14.2(a)(i)(C));

(ii) With respect to direct damages caused by BFS’ gross negligence (to the extent permitted by applicable law) and damages resulting from a breach by BFS of its confidentiality obligations under Section 8.3, BFS’ aggregate liability hereunder with respect to each Contract Year shall be an amount equal to three (3) times the applicable Base Cap; and

(iii) No liability limitation will apply to: (A) BFS’ liability to pay fees hereunder; (B) under Section 13(b)(ii) (BFS IP Indemnity); (C) BFS’ liability for direct damages under or for: (x) Section 13(b)(iv) (death, bodily injury and property damage indemnity) or (y) BFS’ willful misconduct.

 

  14.3 No Consequential Damages

(a) EXCEPT AS IS EXPLICITLY PROVIDED IN PARTICULAR PROVISIONS OF THIS AGREEMENT BY REFERENCE IN SUCH PROVISION TO THE TERM “CONSEQUENTIALS”, NEITHER ADP NOR BFS WILL BE RESPONSIBLE FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR OTHER SIMILAR DAMAGES (INCLUDING LOST PROFITS) (COLLECTIVELY, “ CONSEQUENTIALS ”) THAT THE OTHER PARTY MAY INCUR OR EXPERIENCE IN CONNECTION WITH THE AGREEMENT OR THE SERVICES, HOWEVER CAUSED AND UNDER WHATEVER THEORY OF LIABILITY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

(b) The Parties acknowledge that breach of Section 8.3 (Confidential Information) shall not be subject to this Section 14.3, provided that a Party’s liability for Consequentials for breach of such Section 8.3 shall be subject to the limitation on monetary damages set forth in Section 14.2. For the avoidance of confusion, the immediately preceding sentence in this Section 14.3(b) creates a limited exception to the no Consequentials rule set forth in Section 14.3(a), which exception is limited by the limitation on monetary damages contained in Section 14.2. Further, the Parties agree that payments required to be made by a Party hereunder to a third party for damages of a Consequential nature suffered by that third party shall be deemed direct damages to such Party to the extent caused by a breach of Section 8.3 by the other Party. The Parties agree that Section 14.3(a) shall not apply to the Parties’ respective obligations under the ADP IP Indemnity and the BFS IP Indemnity.

 

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15. INSURANCE

(a) During the term of this Agreement, ADP, directly or through the insurance programs of ADP Parent (and all references to “ADP” in this Section 15 shall be deemed a reference to “ADP or ADP Parent”, as the context so requires) shall maintain the following insurance coverage in at least the following amounts:

(i) Workers’ Compensation with statutory limits required by each state exercising jurisdiction over the ADP associates engaged in performing Services under this Agreement.

(ii) Employer’s Liability coverage with a minimum limit of $500,000 for bodily injury by accident or disease.

(iii) Commercial General Liability coverage (including products and completed operations, blanket or broad form contractual, personal injury liability and broad form property damage) with minimum limits of ten million dollars ($10,000,000) per occurrence for bodily injury/property damage and ten million dollars ($10,000,000) for personal injury and products/completed operations.

(iv) Business Automobile Liability coverage (covering the use of all owned, non owned and hired vehicles) with minimum limits (combined single limit) of one million dollars ($1,000,000) for bodily injury and property damage.

(v) Excess or Umbrella Liability coverage with a minimum limit of two million dollars ($2,000,000) coverage in excess of the coverage as set forth in items 2, 3, and 4 above.

(vi) Employee Dishonesty (Fidelity) and Computer Crime coverage (for losses arising out of or in connection with any fraudulent or dishonest acts committed by employees of ADP, acting alone or in collusion with others) with a minimum limit of twenty-five million dollars ($25,000,000).

(vii) Errors & Omissions coverage in the amount of ten million dollars ($10,000,000).

(b) Subject to ADP’s right to self-insure coverage as set forth below, the foregoing coverages shall be maintained with insurers which have an A.M. Best rating of A- or better and /or an equivalent rating from a recognized insurance company rating agency.

(c) ADP’s policies shall be primary, and any insurance maintained by BFS is excess and noncontributory. ADP will name BFS as an additional insured under the coverages described in Section 15(a)(iii) and Section 15(a)(iv). Promptly upon BFS written request for same, ADP shall cause its insurers or insurance brokers to issue certificates of insurance evidencing that the coverages required under this Agreement are maintained and in force. In addition, ADP will use reasonable efforts to give thirty days notice to BFS prior to cancellation or non-renewal of any of the policies providing such coverage; provided, however that ADP shall not be obligated to provide such notice if, concurrently with such cancellation or non-renewal, ADP provides self-insurance coverage as described in Section 15(d) or obtains coverage from another insurer meeting the requirements described above.

 

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(d) Notwithstanding the foregoing, ADP reserves the right to self-insure coverage, in whole or in part, in the amounts and categories designated above, in lieu of ADP’s obligations to maintain insurance as set forth above, at any time. Promptly upon BFS written request for same, ADP shall deliver certificates of insurance to confirm what coverage is in place.

(e) This Section does not replace or otherwise amend, in any respect, the limitations on ADP’s liability as set forth elsewhere in this Agreement. To the extent provided in Schedule B, ADP shall accommodate visits to the Facilities by insurance providers or potential insurance providers to the BFS Group.

 

16. REGULATORY COMPLIANCE/ISSUES

(a) ADP acknowledges that BFS’ clients (and, in some respects, BFS itself) are subject to regulatory/compliance regimes and that mandatory changes to the laws, regulations and rules of such regimes (“ Regulatory Changes ”) may require modifications to the Services or the way they are provided in order for BFS and/or its clients to remain in compliance with such regimes. ADP agrees to use commercially reasonable efforts to modify the Services or the way they are provided within a reasonable time frame, using previous history (i.e. period prior to the Distribution) as a reference, considering the requirements of, and the time needed to implement, a particular regulatory change in order to accommodate any such Regulatory Changes; it being understood, however, that ADP shall not be obligated to incur or suffer any additional cost or expense in so doing. BFS will notify ADP of any Regulatory Changes. Due regard to the guiding principals of Section 2 shall be given in determinations of any additional charges regarding such ADP efforts.

(b) Each Party will comply with all laws and regulations applicable to it, including regulations relating to data privacy and security.

 

17. COMMUNICATIONS

Except as required by applicable law, neither Party shall make any public statements or disclosures (including without limitation any press releases) without the prior written approval of the other Party. The Parties agree to work together to develop mutually agreeable public disclosures regarding the transactions covered by this Agreement, though neither is bound by this sentence to make or approve of any such disclosures.

 

18. DISPUTE RESOLUTION

Any dispute between the Parties arising out of or relating to this Agreement (including the interpretation of any provision of this Agreement and/or the performance by ADP or BFS of any of its duties and obligations hereunder), shall be resolved as provided in this Section 18.

(a) Subject to Section 18(b) below, the Parties initially shall attempt to resolve the dispute informally, in accordance with the following escalation procedures:

 

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(i) The Parties agree to use commercially reasonable efforts throughout the Term to attempt to resolve issues or disputes which arise between them (each, a “ Dispute ”) through the ordinary channels and contacts that apply to the day-to-day provision and management of the Services (including by means of addressing such matters at the Service Delivery Committee(s) and/or Management Committee, as applicable). If a Dispute cannot be resolved through such methods, it shall be escalated to the Executive Steering Committee which shall meet for the purpose of endeavoring to resolve such Dispute through good faith discussions.

(ii) The Executive Steering Committee shall meet as often as the Parties reasonably deem necessary in order for each Party to gather and furnish to the other all information with respect to the Dispute which such Party believes to be appropriate and germane in connection with its resolution.

(iii) If the Executive Steering Committee is unable to resolve the Dispute within 45 days after its first meeting regarding such Dispute (the “ Initial Meeting Date ”), each Party, through written notice to the other Party, shall promptly escalate the Dispute to the Chief Executive Officers of the Parties (the “ Second Tier Dispute Representatives ”) who shall meet (in person or by phone/video conference) to further endeavor to resolve such Dispute.

(iv) During the course of all discussions, all reasonable requests made by a Party to the other for non-privileged information, reasonably related to the Dispute, shall be honored in order that a Party may be fully advised of the other’s position.

(v) The specific format for the discussions shall be left to the discretion of the applicable designated representatives, and meetings may be conducted via teleconference or other electronic means where each participant can hear, and be heard by, the other participant.

(b) Litigation of a Dispute (consistent with the provisions of Section 20.3) may only be commenced by either Party upon the earlier to occur of any of the following:

(i) the Second Tier Dispute Representatives conclude in good faith that amicable resolution through continued negotiation of the matter does not appear likely; and

(ii) ninety (90) days have elapsed from the Initial Meeting Date.

 

  (c) Notwithstanding anything to the contrary contained in this Section 18, either Party may commence litigation (consistent with the provisions of Section 20.3) if doing so is reasonably deemed appropriate by the commencing Party to avoid the expiration of an applicable limitations period or to preserve a superior position with respect to other creditors, or such Party makes a good faith determination that a temporary restraining order or other injunctive relief is necessary in order to protect such Party against a material, irreparable harm.

 

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19. REPRESENTATIONS & WARRANTIES

 

  19.1 By ADP. ADP represents and warrants to BFS as follows:

(a) Organization, Standing and Authority of ADP . ADP is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. ADP has all requisite power and authority to execute, deliver and perform this Agreement in accordance with its terms.

(b) Authorization and Binding Obligation of ADP . This Agreement has been duly authorized by all necessary actions on the part of ADP. This Agreement has been duly executed and delivered by ADP and shall constitute the legal, valid and binding obligation of ADP, enforceable against ADP in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and the application of general principles of equity.

(c) Absence of Conflicting Agreements . The execution and delivery of this Agreement by ADP (with or without the giving of notice, the lapse of time, or both) and the performance by ADP of the transactions contemplated hereby: (a) do not require the consent of any other Person; (b) will not conflict with ADP’s organizational documents; and (c) will not conflict with, result in a breach of, or constitute a default under, any other agreements to which ADP is a party or by which it is bound.

 

  19.2 By BFS. BFS represents and warrants to ADP as follows:

(a) Organization, Standing and Authority of BFS . BFS is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. BFS has all requisite power and authority to execute, deliver and perform this Agreement in accordance with its terms.

(b) Authorization and Binding Obligation of BFS . This Agreement has been duly authorized by all necessary actions on the part of BFS. This Agreement has been duly executed and delivered by BFS and shall constitute the legal, valid and binding obligation of BFS, enforceable against BFS in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and the application of general principles of equity.

(c) Absence of Conflicting Agreements . The execution and delivery of this Agreement by BFS (with or without the giving of notice, the lapse of time, or both) and the performance by BFS of the transactions contemplated hereby: (a) do not require the consent of any other Person; (b) will not conflict with BFS organizational documents; and (c) will not conflict with, result in a breach of, or constitute a default under, any other agreements to which BFS is a party or by which it is bound.

 

20. MISCELLANEOUS

 

  20.1 Binding Effect; Assignment

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. This Agreement is not assignable by either Party without the prior written consent of the other Party; provided, however, that no

 

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consent is required in connection with (i) an acquisition of a Party by another party, whether by stock, assets, merger or other business combination , (ii) the disposition of all or substantially all of ADP’s assets or business used to provide the Services, (iii) the disposition of all or substantially all of BFS assets or business that utilize the Services or (iv) an internal assignment to an Affiliate. All third party assignees will be required to assume all obligations of the assigning Party, even if consent for the assignment was not required. In no event will ADP be bound to provide any material increase in Services due to an acquisition involving BFS, its assets or business (even in cases where consent of ADP for assignment was not required) unless applicable terms are mutually agreed to and memorialized in writing between ADP and the then applicable party.

 

  20.2 Cooperation

The Parties agree to use commercially reasonable and good faith efforts to cooperate with each other in all matters relating to the Services.

 

  20.3 Forum for Disputes; Waiver of Jury Trial

(a) Subject to the prior exhaustion of the procedures set forth in Section 18, each of the Parties agrees that, notwithstanding anything herein, all Actions arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment arising out of or in connection with this Agreement, shall be tried and determined exclusively in the state or federal courts in the State of New York, County of New York, and each of the Parties hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the Parties hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action or proceeding: (i) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (iii) any claim that (A) any of the aforesaid courts is an inconvenient or inappropriate forum for such action or proceeding, (B) venue is not proper in any of the aforesaid courts and (C) this Agreement or the subject matter hereof may not be enforced in or by any of the aforesaid courts. Each of the Parties agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 20.4 or any other manner as may be permitted by Law shall be valid and sufficient service thereof.

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN THIS SECTION 20.3(b), (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS HEREIN.

 

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  20.4 Notices

All notices, requests, claims, demands and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by nationally recognized overnight courier to the Parties at the following addresses:

if to Broadridge or any member of the Broadridge Group, to:

Broadridge Financial Solutions, Inc.

2 Journal Square Plaza

Jersey City, New Jersey 07306

Attention: President and Chief Operating Officer

with a copy to:

Broadridge Financial Solutions, Inc.

2 Journal Square Plaza

Jersey City, New Jersey 07306

Attention: General Counsel

if to ADP or any member of the ADP Group, to:

ADP, Inc.

One ADP Boulevard

Roseland, NJ 07068-1728

Attention: President and Chief Operating Officer

with a copy to:

Automatic Data Processing, Inc.

One ADP Boulevard

Roseland, NJ 07068-1728

Attention: General Counsel

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, and (ii) if delivered by nationally recognized overnight courier to the address as provided in this section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this section). Either Party from time to time may change its address, facsimile number or other information for the purpose of notices to that Party by giving notice specifying such change to the other Party.

 

  20.5 Entire Agreement

This Agreement (together with the Schedules), contains the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.

 

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20.6 Waivers and Amendments

This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by BFS and ADP or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

 

  20.7 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to any conflict of laws rules thereof that might indicate the application of the laws of any other jurisdiction.

 

  20.8 Usage

All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms have correlative meanings when used herein in their plural or singular forms, respectively. Unless otherwise expressly provided, the words “ include ,” “ includes ” and “ including ” do not limit the preceding words or terms and shall be deemed to be followed by the words “ without limitation .” Unless otherwise expressly provided, monetary amounts are in U.S. dollars.

 

  20.9 Sections; Headings

All references herein to Sections and Subsections shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. The Section and Subsection headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

  20.10   Interpretation

The Parties acknowledge and agree that: (a) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (b) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement; and (c) the terms and provisions of this Agreement shall be construed fairly as to both Parties, regardless of which Party was generally responsible for the preparation of this Agreement. Any statute, regulation, or other law defined or referred to herein (or in any agreement or instrument that is referred to herein) means such statute, regulation or other law as, from time to time, may be amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor statutes. References to a Person also refer to its predecessors and permitted successors and assigns.

 

  20.11   Severability of Provisions

If any provision or any portion of any provision of this Agreement shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement shall not be affected thereby. If the application of any provision or any portion of any provision of this Agreement to any Person or circumstance shall be held

 

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invalid or unenforceable, the application of such provision or portion of such provision to Persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby.

 

  20.12   Counterparts

This Agreement may be executed by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by one, but together signed by both, of the Parties.

 

  20.13   No Personal Liability

This Agreement (and each agreement, certificate and instrument delivered pursuant hereto) shall not create or be deemed to create or permit any personal liability or obligation on the part of any officer, director, employee, agent, representative or investor of either Party.

 

  20.14   No Third Party Beneficiaries

No provision of this Agreement is intended to, or shall, confer any third party beneficiary or other rights or remedies upon any Person other than the Parties.

 

  20.15   Force Majeure

(a) Neither Party shall be liable for any expense, loss or damage whatsoever arising out of any delay or failure in the performance of its obligations pursuant to this Agreement to the extent such delay or failure results from events beyond the reasonable control of that Party, the non-performing Party is without fault in causing the delay or failure and any such event could not have been prevented by reasonable precautions (“ Force Majeure ”), including acts of God, acts or regulations of any Governmental Body, war, riots, insurrection, terrorism or other hostilities, accident, fire, flood, strikes, lockouts, industrial disputes, pandemics or shortages of fuel; provided , that: (a) ADP gives BFS, as soon as reasonably practicable, written notice describing the occurrence, including, to the extent reasonably possible, a non-binding estimation of its expected duration and probable impact on the performance of its obligations hereunder; (b) the suspension of performance is of a scope and duration reasonably related to the Force Majeure; and (c) ADP uses commercially reasonable efforts to mitigate the effects of the Force Majeure. Neither Party shall be entitled to terminate this Agreement due to a Force Majeure or any failure resulting from any such event except, in the case of terminations by BFS, if such Force Majeure causes what would otherwise be an Extreme/Radical Failure by ADP under Section 3.4(d), provided that the “Relevant Periods” defined in such Section 3.4(d) are multiplied by three (3) for the purposes of this sentence (or, in the case of the third “Relevant Period” in such Section 3.4(d), multiplied by two (2) for the purposes of this sentence).

(b) In no event shall a Force Majeure event excuse ADP from implementing its Disaster Recovery Plan except to the extent the Force Majeure event also specifically affects the assets and facilities necessary to implement the Disaster Recovery Plan.

(c) Notwithstanding anything to the contrary contained herein: BFS shall not be obligated to pay any fees to ADP with respect to Services that have not been provided due to a Force Majeure event for so long as such situation continues. A Force Majeure

 

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event affecting BFS (but not suspending the Services) shall not excuse BFS from its payment obligations hereunder. Other than as set forth in the immediately preceding sentence, BFS shall be free to retain replacement services from another source during a Force Majeure event.

 

  20.16   Independent Contractor (Non-Agent) Status

Except as otherwise agreed in writing by the Parties (and as contemplated by Section 7.2 regarding the BFS Managed Agreements), in the performance of the Services to be rendered hereunder, ADP and its Affiliates shall at all times act as independent contractors, and none is in any respect an agent, attorney, employee, representative, joint venturer or fiduciary of the other Party, and neither Party shall declare or represent to any third party that ADP or any of its Affiliates is acting in any respect as agent, attorney, employee representative, joint venturer or fiduciary of the Service Recipients. Neither ADP or its Affiliates, on the one hand, nor BFS or its Affiliates, on the other, shall have any power or authority to negotiate or conclude any agreement, or to make any representation or to give any understanding on behalf of the other in any way whatsoever.

 

  20.17   Employees

Individuals employed by ADP or its Affiliates who provide Services pursuant to this Agreement shall in no respect be considered employees of BFS or any other applicable Service Recipients. ADP or one of its Affiliates shall act as the sole employer of the individuals it employs and shall not delegate any employment functions to the Service Recipients. Individuals employed by BFS or its Affiliates who are involved in the transactions contemplated by this Agreement shall in no respect be considered employees of ADP or any of ADP’s Affiliates. Each Party shall act as the sole employer (i.e. to the exclusion of the other Party) of the individuals it employs and shall not delegate any employment functions to the other Party or the other Party’s Affiliates.

 

  20.18   Further Assurances

Subject to the terms and conditions herein provided, each of the Parties agrees to use its commercially reasonable efforts to take or cause to be taken all action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable laws to carry out the intents and purposes of this Agreement.

 

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IN WITNESS WHEREOF, the Parties have executed this Data Center Outsourcing Services Agreement as of the Effective Date.

 

ADP , INC.   BROADRIDGE FINANCIAL SOLUTIONS, INC.
By:  

/s/  James B. Benson

  By:  

/s/  James B. Benson

Name:   James B. Benson   Name:   James B. Benson
Title:   President   Title:   President

Guaranty by ADP Parent:

ADP Parent hereby covenants and guaranties to BFS that it shall ensure at all times that ADP maintains the resources necessary to satisfy its obligations under this Agreement in accordance with its terms, including satisfaction of any financial liabilities of ADP to BFS and any BFS Indemnified Persons under this Agreement; and that if ADP fails to satisfy any such financial liabilities, ADP Parent shall be required to do so, subject only to the legitimate defenses which ADP has with respect to such matters.

IN WITNESS WHEREOF, ADP Parent has countersigned this Data Center Outsourcing Services Agreement as of the Effective Date.

AUTOMATIC DATA PROCESSING, INC.

 

By:  

/s/    James B. Benson

Name:   James B. Benson
Title:   Corporate Vice President

 

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Exhibit 10.4

INTELLECTUAL PROPERTY TRANSFER AGREEMENT

This Intellectual Property Transfer Agreement (the “ Agreement ”), dated as of March 29, 2007 is between Automatic Data Processing, Inc., a Delaware corporation (“ ADP ”), and Broadridge Financial Solutions, Inc., a Delaware corporation (each, a “ Party ” and collectively, the “ Parties ”).

WHEREAS, ADP and Broadridge (as defined below) desire to establish the rights each enjoys in certain Intellectual Property;

WHEREAS, ADP desires to assign and transfer to Broadridge all of its right, title and interest in and to only those certain items of Intellectual Property owned by ADP specifically identified in the Copyright Assignment, the Internet Asset Assignment, Patent Assignment and the Trademark and Service Mark Assignment, effective as of the Effective Time (as defined below); and

WHEREAS, the Parties desire to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

1. DEFINITIONS

1.1 Definitions . As used in the Agreement, the following terms shall have the meanings set forth below:

Action ” means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

ADP Business ” means all businesses and operations of the ADP Group, other than the Broadridge Business.

ADP Group ” means ADP and each of its Affiliates and Subsidiaries, and any corporation or other entity that may become part of such Group from time to time, other than the Broadridge Group.

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person; provided , however , that for purposes of this Agreement, no member of either Group shall be deemed to be an Affiliate of any member of the other Group. As used herein, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.


Assignment Agreements ” means the Copyright Assignment, the Internet Asset Assignment, the Patent Assignment and the Trademark and Service Mark Assignment.

Broadridge ” means Broadridge Financial Solutions, LLC, a Delaware limited liability company, prior to its conversion into a Delaware corporation as contemplated by the Separation and Distribution Agreement (“the LLC Conversion”) and, immediately after the LLC Conversion, Broadridge Financial Solutions, Inc., a Delaware corporation.

Broadridge Business ” means the business and operations conducted by the Broadridge Group from time to time, whether prior to, at or after the Effective Time, including, without duplication, (i) the Brokerage Services and Securities Clearing and Outsourcing Services Business conducted by ADP prior to the restructuring as contemplated by the Separation and Distribution Agreement and (ii) the business and operations conducted by the Broadridge Group.

Broadridge Group ” means Broadridge and each of its Subsidiaries and Affiliates and any corporation or other entity that may become part of such Group from time to time.

Brokerage Services and Securities Clearing and Outsourcing Services Business ” means all of the ADP Brokerage Services’ and Securities Clearing and Outsourcing Services’ business and operations, as more fully described in ADP’s Form 10-K for the fiscal year ended June 30, 2006.

Copyright Assignment ” means that certain Copyright Assignment contemporaneously executed by ADP and Broadridge in the form attached hereto as Exhibit B .

Distribution ” means the distribution on a pro rata basis of a dividend of the Broadridge common stock to ADP’s stockholders as contemplated by the Separation and Distribution Agreement.

Distribution Date ” means the date on which the Distribution shall be effected, such date to be determined by, or under the authority of, the Board of Directors of ADP in its sole and absolute discretion.

Internet Asset Assignment ” means that certain Internet Asset Assignment contemporaneously executed by ADP and Broadridge in the form attached hereto as Exhibit C .

Effective Time ” means the time at which the Distribution occurs on the Distribution Date.

Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority, including the New York Stock Exchange, Inc.

 

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Group ” means the ADP Group and/or the Broadridge Group, as the context requires.

Intellectual Property ” means all intellectual property and other similar proprietary rights in any jurisdiction, whether owned or held for use under license, whether registered or unregistered, including such rights in and to: (i) trademarks, trade dress, service marks, certification marks, logos, and trade names, and the goodwill associated with the foregoing (collectively, “ Trademarks ”); (ii) patents and patent applications, and any and all divisions, continuations, continuations-in-part, reissues, continuing patent applications, reexaminations, and extensions thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention, certificates of registration, design registrations or patents and like rights (collectively, “ Patents ”); inventions, invention disclosures, discoveries and improvements, whether or not patentable; (iii) writings and other works of authorship (“ Copyrights ”); (iv) trade secrets (including, those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory Law and common law), Information, business, technical and know-how information, business processes, non-public information, proprietary information and confidential information and rights to limit the use or disclosure thereof by any Person (collectively, “ Trade Secrets ”); (v) software, including data files, source code, object code, application programming interfaces, databases and other software-related specifications and documentation (collectively, “ Software ”); (vi) domain names, uniform resource locators, and Internet addresses; (vii) moral rights; (viii) privacy and publicity rights; (ix) any and all technical information, Software, specifications, drawings, records, documentation, works of authorship or other creative works, ideas, knowledge, invention disclosures or other data, not including works subject to Copyright, Patent or Trademark protection (“ Technology ”); (x) advertising and promotional materials, whether or not copyrightable; and (xi) claims, causes of action and defenses relating to the enforcement of any of the foregoing; in each case, including any registrations of, applications to register, and renewals and extensions of, any of the foregoing with or by any Governmental Authority in any jurisdiction.

Law ” means any applicable foreign, federal, national, state, provincial or local law (including common law), statute, ordinance, rule, regulation, code or other requirement enacted, promulgated, issued or entered into, or act taken, by a Governmental Authority.

Patent Assignment ” means that certain Patent Assignment contemporaneously executed by ADP and Broadridge in the form attached hereto as Exhibit D .

Person ” means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

 

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Separation ” means the separation of the Broadridge Business and the ADP Business into two independent companies.

Separation and Distribution Agreement ” means the Separation and Distribution Agreement, dated as of March 20, 2007, by and among ADP and Broadridge.

Subsidiary ” means, with respect to any Person, any other Person of which a Person (either alone or through or together with any other Subsidiary of such Person) owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

Trademark and Service Mark Assignment ” means that certain Trademark and Service Mark Assignment contemporaneously executed by ADP and Broadridge in the form attached hereto as Exhibit E .

1.2 General Interpretive Principles . (a) Words in the singular shall include the plural and vice versa, and words of one gender shall include the other gender, in each case, as the context requires, (b) the words “ hereof ,” “ herein ,” “ hereunder ,” and “ herewith ” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and references to Article, Section, paragraph, exhibit and schedule are references to the Articles, Sections, paragraphs, exhibits and schedules to this Agreement unless otherwise specified, (c) the word “ including ” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified and (d) any reference to any federal, state, local or non-U.S. statute or Law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.

2. DISTRIBUTION OF INTELLECTUAL PROPERTY

2.1 Ownership of Broadridge Intellectual Property . Pursuant to the Separation and Distribution Agreement, as of the Effective Time, Broadridge or one or more members of the Broadridge Group shall remain and be the sole owner of, and shall have exclusive right, title and interest in and to, the Intellectual Property owned by any member of the Broadridge Group as of the Effective Time, including the Intellectual Property set forth in Exhibit A .

2.2 Assignment Agreements . By the Copyright Assignment, Internet Asset Assignment, Patent Assignment and the Trademark and Service Mark Assignment entered into concurrently with this Agreement, to the extent the Parties have identified Intellectual Property requiring the execution of the appropriate Assignment Agreement, on or prior to the Effective Time, ADP shall, or shall cause the respective members of the ADP Group to, assign, transfer and convey to Broadridge any and all right, title and interest owned by ADP and each of its Affiliates and Subsidiaries in and to only those certain items of Intellectual Property specifically identified therein.

 

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2.3 Further Assurances . Each Party covenants to execute upon request any further documents reasonably necessary to effect the express terms and conditions of this Agreement, including such documents as are reasonably necessary to vest title in Intellectual Property rights as provided in this Agreement. All expenses incurred in connection with such actions shall be paid in accordance with Section 8.2.

2.4 No Rights in ADP Group Intellectual Property . For the avoidance of doubt, unless otherwise expressly provided in this Agreement, the Separation and Distribution Agreement, the Copyright Assignment, Internet Asset Assignment, Patent Assignment or the Trademark and Service Mark Assignment, ADP and its Subsidiaries expressly reserve all other rights with respect to Intellectual Property not expressly granted thereunder.

3. IPR FUTURES AND ISSUES OF OWNERSHIP

3.1 Ownership Unaffected by this Agreement . All Intellectual Property created, developed or made, or, other than by operation of this Agreement, otherwise acquired or controlled, by a member of a Group after the Effective Time (“ IPR Futures ”) shall be owned in accordance with applicable law or agreement and such ownership is not covered or in any way provided by this Agreement, the Separation and Distribution Agreement or any Assignment Agreement.

3.2 No Rights or Licenses Granted . Other than as may be expressly provided in the Copyright Assignment, Internet Asset Assignment, the Patent Assignment or the Trademark and Service Mark Assignment, no rights or licenses under any IPR Futures are granted pursuant to this Agreement, the Separation and Distribution Agreement or any agreement ancillary thereto.

4. IP CLAIMS

4.1 Intellectual Property Rights . Notwithstanding any provision in this Agreement, the Separation and Distribution Agreement or any Assignment Agreement, in no event shall any claims, disputes or controversies between the Parties which potentially concern the validity, enforceability, infringement or misappropriation of any intellectual property rights, including any rights protectable under Intellectual Property law anywhere throughout the world such as Patent, Copyright, trade secret and Trademark law, be subject to resolution by arbitration.

4.2 No Enforcement Against Third Party . Notwithstanding any provision of this Agreement or the Assignment Agreements, in no event shall any member of any Group be required to enforce or otherwise assert against any Person any Intellectual Property rights.

5. FURTHER DUE DILIGENCE

ADP and Broadridge acknowledge that following the execution of this Agreement, ADP and Broadridge will be conducting further due diligence into the Intellectual Property owned by the Groups. ADP and Broadridge agree to work in good faith to ensure that the Intellectual Property covered by this Agreement and the

 

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Assignment Agreements has been properly allocated and assigned to each Group according to principles set forth in this Agreement. To the extent that any assignment, transfer and conveyance of Intellectual Property pursuant to Section 2.2 is not consummated as of the Effective Time, or any assignment, transfer or conveyance of Intellectual Property is improperly consummated, the Parties shall, and shall cause the members of their respective Groups to, use commercially reasonable efforts and cooperate to effect or to correct such assignment, transfer or conveyance as promptly following the Effective Time as shall be practicable.

6. NO REPRESENTATIONS OR WARRANTIES

ALL INTELLECTUAL PROPERTY COVERED UNDER THIS AGREEMENT ARE FURNISHED “AS IS,” WITHOUT ANY SUPPORT, ASSISTANCE, MAINTENANCE OR WARRANTIES OF ANY KIND, WHATSOEVER.

EACH GROUP ASSUMES TOTAL RESPONSIBILITY AND RISK FOR ITS USE OF ANY INTELLECTUAL PROPERTY COVERED BY THIS AGREEMENT. NEITHER GROUP MAKES, AND EACH GROUP EXPRESSLY DISCLAIMS, ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WARRANTIES OF TITLE OR NON-INFRINGEMENT, OR ANY WARRANTY THAT SUCH INTELLECTUAL PROPERTY IS “ERROR FREE.”

7. TERMINATION

7.1 Termination . This Agreement may be terminated by ADP in its sole discretion at any time prior to the consummation of the Distribution.

7.2 Effect of Termination . In the event of any termination of this Agreement prior to consummation of the Distribution, neither Party (nor any of its directors or officers) shall have any liability or further obligation to the other Party.

8. MISCELLANEOUS

8.1 Complete Agreement; Representations .

8.1.1 The Separation and Distribution Agreement, together with the exhibits, schedules and the ancillary agreements thereto, including this Agreement and Assignment Agreements hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

8.1.2 ADP represents on behalf of itself and each other member of the ADP Group and Broadridge represents on behalf of itself and each other member of the Broadridge Group as follows:

 

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8.1.2.1 each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Assignment Agreement and to consummate the transactions contemplated thereby; and

8.1.2.2 this Agreement has been duly executed and delivered by such Person (if such Person is a Party) and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof (assuming the due execution and delivery thereof by the other Party), and each of the Assignment Agreements to which it is or will be a party is or will be duly executed and delivered by it and will constitute a valid and binding agreement of it enforceable in accordance with the terms thereof (assuming the due execution and delivery thereof by the other party or parties to such Assignment Agreements), except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to creditors’ rights generally and by general equitable principles.

 

  8.2 Costs and Expenses . All costs and expenses incurred by either of the Parties or its Affiliates shall be paid as set forth in the Separation and Distribution Agreement.

 

  8.3 Governing Law . This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the conflicts of laws principles thereof.

 

  8.4 Notices . All notices, requests, claims, demands and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the Parties at the following addresses or facsimile numbers:

If to ADP or any member of the ADP Group, to:

Automatic Data Processing, Inc.

One ADP Boulevard

Roseland, New Jersey 07068

Attn: General Counsel

Fax: 973-974-3324

If to Broadridge or any member of the Broadridge Group, to:

Broadridge Financial Solutions

2 Journal Square Plaza

 

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Jersey City, New Jersey 07306

Attn: General Counsel

Fax: 201-714-3506

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this section, be deemed given upon receipt and (iii) if delivered by mail in the manner described above to the address as provided in this section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party.

 

  8.5 Amendment, Modification or Waiver .

8.5.1 Prior to the Effective Time, this Agreement may be amended, modified, waived, supplemented or superseded, in whole or in part, by ADP in its sole discretion by execution of a written amendment delivered to Broadridge. Subsequent to the Effective Time, this Agreement may be amended, modified, supplemented or superseded only by an instrument signed by duly authorized signatories of both Parties.

8.5.2 Following the Effective Time, any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.

 

  8.6 No Assignment; Binding Effect; No Third-Party Beneficiaries .

8.6.1 Neither this Agreement nor any right, interest or obligation hereunder may be assigned by either Party hereto without the prior written consent of the other Party hereto and any attempt to do so will be void, except that following the Effective Time each Party hereto may assign any or all of its rights, interests and obligations hereunder to an Affiliate, provided that any such Affiliate agrees in writing to be bound by all of the terms, conditions and provisions contained herein. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties hereto and their respective successors and assigns.

8.6.2 The terms and provisions of this Agreement are intended solely for the benefit of each Party hereto and their respective Affiliates, successors or permitted assigns, and it is not the intention of the Parties to confer third party beneficiary rights upon any other Person.

 

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8.7 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.

8.8 Negotiation . In the event that any dispute arises between the Parties that cannot be resolved, either Party shall have the right to refer the dispute for resolution to the chief financial officers of the Parties by delivering to the other Party a written notice of such referral (a “ Dispute Escalation Notice ”). Following receipt of a Dispute Escalation Notice, the chief financial officers of the Parties shall negotiate in good faith to resolve such dispute. In the event that the chief financial officers of the Parties are unable to resolve such dispute within fifteen (15) business days after receipt of the Dispute Escalation Notice, either Party shall have the right to refer the dispute to the chief executive officers of the Parties, who shall negotiate in good faith to resolve such dispute. In the event that the chief executive officers of the Parties are unable to resolve such dispute within thirty (30) business days after the date of the Dispute Escalation Notice, either Party shall have the right to commence litigation in accordance with Section 8.10 hereof. The Parties agree that all discussions, negotiations and other Information exchanged between the Parties during the foregoing escalation proceedings shall be without prejudice to the legal position of a Party in any subsequent Action.

8.9 Specific Performance . From and after the Distribution, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Assignment Agreement, the Parties agree that the Party or Parties to this Agreement or such Assignment Agreement who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its or their rights under this Agreement or such Assignment Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that, from and after the Distribution, the remedies at law for any breach or threatened breach of this Agreement or any Assignment Agreement, including monetary damages, are inadequate compensation for any loss, that any defense in any action for specific performance that a remedy at law would be adequate is hereby waived, and that any requirements for the securing or posting of any bond with such remedy are hereby waived.

8.10 New York Forum . Subject to the prior exhaustion of the procedures set forth in Section 8.8, each of the Parties agrees that, notwithstanding anything herein, all Actions arising out of or in connection with this Agreement or any Assignment Agreement (except to the extent any such Assignment Agreement provides otherwise), or for recognition and enforcement of any judgment arising out of or in connection with the foregoing agreements, shall be tried and determined exclusively in the state or federal courts in the State of New York, County of New York, and each of the Parties hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the Parties hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action or proceeding: (a) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (b) any claim that it or its property is exempt or immune

 

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from jurisdiction of any such court or from any legal process commenced in such courts; and (c) any claim that (i) any of the aforesaid courts is an inconvenient or inappropriate forum for such action or proceeding, (ii) venue is not proper in any of the aforesaid courts and (iii) this Agreement or any such Assignment Agreement, or the subject matter hereof or thereof, may not be enforced in or by any of the aforesaid courts. Each of the Parties agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 8.4 or any other manner as may be permitted by Law shall be valid and sufficient service thereof.

8.11 Waiver of Jury Trial . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN THIS SECTION, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS HEREIN.

8.12 Interpretation; Conflict With Other Agreements . The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. The provisions of this Agreement shall govern in the event of any conflict between any provision of this Agreement and that of the Separation and Distribution Agreement. Except as set forth in each Assignment Agreement, the provisions of each Assignment Agreement shall govern in the event of any conflict between any provision of this Agreement and that of the relevant Assignment Agreement.

8.13 Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.

 

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed on its behalf by one of its duly authorized officers as of the date first written above.

 

AUTOMATIC DATA PROCESSING, INC.
By:  

/s/    James B. Benson

Name:   James B. Benson
Title:   Corporate Vice President

 

BROADRIDGE FINANCIAL SOLUTIONS, INC.
By:  

/s/    James B. Benson

Name:   James B. Benson
Title:   President

Exhibit 10.5

EMPLOYEE MATTERS AGREEMENT

between

AUTOMATIC DATA PROCESSING, INC.

and

BROADRIDGE FINANCIAL SOLUTIONS, INC.

Dated as of March 29, 2007


TABLE OF CONTENTS

 

             Page
ARTICLE I   DEFINITIONS    1
  Section 1.1   Definitions    1
  Section 1.2   General Interpretive Principles    8
ARTICLE II   GENERAL PRINCIPLES    8
  Section 2.1   Assumption and Retention of Liabilities; Related Assets    8
  Section 2.2   Cessation of Broadridge Participation in ADP Benefit Plans    9
  Section 2.3   Comparable Compensation and Benefits    10
  Section 2.4   Service Recognition    10
ARTICLE III   THE ADP PENSION PLAN    10
  Section 3.1   Status of Broadridge Employees    10
  Section 3.2   ADP Retention of Liabilities With Respect to Broadridge Employees    10
ARTICLE IV   TAX-QUALIFIED DEFINED CONTRIBUTION PLAN    11
  Section 4.1   The ADP Savings Plan    11
  Section 4.2   Contributions as of the Distribution Date    12
ARTICLE V   HEALTH, WELFARE AND SIMILAR PLANS    12
  Section 5.1   Plans Maintained by ADP Prior to the Distribution Date    12
  Section 5.2   ADP VEBA    14
  Section 5.3   Time-Off Benefits    14
ARTICLE VI   SUPPLEMENTAL OFFICERS RETIREMENT PLAN    14
  Section 6.1   Establishment of Broadridge Supplemental Officers Retirement Plan    14
  Section 6.2   ADP Plan    14
ARTICLE VII   DEFERRED COMPENSATION PLAN    14
  Section 7.1   Broadridge FY07 Deferred Compensation Plan    14
  Section 7.2   Continuation of Elections    15
ARTICLE VIII   EQUITY AWARDS    15
  Section 8.1   Treatment of Outstanding ADP Options Held by Broadridge Employees    15
  Section 8.2   Treatment of Outstanding Shares of ADP Restricted Stock Held by Broadridge Employees    15

 

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ARTICLE IX   ADDITIONAL COMPENSATION MATTERS; SEVERANCE    16
  Section 9.1   Broadridge Assumption of Annual Incentive and Bonus Liability    16
  Section 9.2   Severance Policies    16
  Section 9.3   Workers’ Compensation Liabilities    17
ARTICLE X   GENERAL AND ADMINISTRATIVE    17
  Section 10.1   Sharing of Information    17
  Section 10.2   Reasonable Efforts/Cooperation    17
  Section 10.3   Employer Rights    18
  Section 10.4   Non-Termination of Employment; No Third-Party Beneficiaries    18
  Section 10.5   Consent of Third Parties    18
  Section 10.6   Access to Employees    18
  Section 10.7   Beneficiary Designation/Release of Information/Right to Reimbursement    18
  Section 10.8   Not a Change in Control    19
ARTICLE XI   MISCELLANEOUS PROVISIONS    19
  Section 11.1   Complete Agreement; Representations    19
  Section 11.2   Costs and Expenses    19
  Section 11.3   Governing Law    19
  Section 11.4   Notices    20
  Section 11.5   Amendment, Modification or Waiver    20
  Section 11.6   No Assignment; Binding Effect    21
  Section 11.7   Counterparts    21
  Section 11.8   Negotiation    21
  Section 11.9   Specific Performance    21
  Section 11.10   New York Forum    22
  Section 11.11   Waiver of Jury Trial    22
  Section 11.12   Interpretation; Conflict With Ancillary Agreements    23
  Section 11.13   Severability    23
SCHEDULE A           ADP Health, Welfare and Similar Plans   

 

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EMPLOYEE MATTERS AGREEMENT dated as of March 29, 2007 (this “ Agreement ”) between Automatic Data Processing, Inc., a Delaware corporation (“ ADP ”), and Broadridge Financial Solutions, Inc., a Delaware corporation whose sole shareholder is ADP (“ Broadridge ” and, together with ADP, each, a “ Party ” and collectively, the “ Parties ”).

WHEREAS, as of the date of this Agreement, the ADP affiliated group includes Broadridge and its subsidiaries;

WHEREAS, the Parties (or their predecessors-in-interest) have entered into the Separation and Distribution Agreement (as defined below), pursuant to which ADP has contributed to Broadridge the stock and assets associated with the Broadridge Business (as defined below) in exchange for shares of common stock of Broadridge, cash and the assumption by Broadridge of certain liabilities related to the Broadridge Business;

WHEREAS, ADP intends to distribute on a pro rata basis to its shareholders all of the shares of stock of Broadridge (the “ Distribution ”);

WHEREAS, the Parties believe the Distribution will provide greater flexibility for management, capital requirements and growth of the Broadridge Business while ensuring that ADP senior management can focus its time and resources on the development of the ADP retained businesses; and

WHEREAS, in connection with effecting the Distribution, ADP and Broadridge have agreed to enter into this Agreement, for the purpose of allocating assets, liabilities and responsibilities with respect to certain employee benefit plans and programs between and among them.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties (each on behalf of itself and each of its Affiliates) hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth below:

Action ” means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

ADP Benefit Plan ” means any Benefit Plan sponsored, maintained or contributed to by ADP or any of its Affiliates.


ADP Common Stock ” means shares of common stock, par value $0.10 per share, of ADP.

ADP Employee ” means any individual who, immediately following the Distribution Date, will be employed by ADP or any member of the ADP Group in a capacity considered by ADP to be common law employment, including active employees and employees on vacation and approved leave of absence (including maternity, paternity, family, sick, short-term or long-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves).

ADP FY07 DCP ” means the Automatic Data Processing, Inc. FY07 Deferred Compensation Program.

ADP Group ” means ADP and each of its Affiliates and Subsidiaries, and any corporation or other entity that may become part of such Group from time to time, other than the Broadridge Group.

ADP Option ” means an option to purchase ADP Common Stock issued under the ADP Stock Option Plans.

ADP Pension Plan ” means the Automatic Data Processing, Inc. Pension Retirement Plan.

ADP Post-Distribution Stock Value ” means the official NYSE only “regular way” first trade price of ADP Common Stock on April 2, 2007 as reported by the NYSE.

ADP Pre-Distribution Stock Value ” means the official NYSE only “regular way” closing price of ADP Common Stock on March 30, 2007 as reported by the NYSE.

ADP Restricted Stock ” means restricted shares of ADP Common Stock outstanding under the Automatic Data Processing, Inc. Key Employees’ Restricted Stock Plan.

ADP Savings Plan ” means the Automatic Data Processing, Inc. Retirement and Savings Plan.

ADP Severance Policy ” means the Automatic Data Processing, Inc. Severance Pay Policy.

ADP SORP ” means the Automatic Data Processing, Inc. Supplemental Officers Retirement Plan.

ADP Stock Option Plans ” means, collectively, the Automatic Data Processing, Inc. 1990 Key Employees’ Stock Option Plan and the Automatic Data Processing, Inc. 2000 Stock Option Plan.

 

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ADP VEBA ” means the Automatic Data Processing Inc. and Subsidiaries Employee Welfare Benefit Trust.

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person; provided , however , that for purposes of this Agreement, no member of either Group shall be deemed to be an Affiliate of any member of the other Group. As used herein, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.

Benefit Plan ” means, with respect to an entity, each plan, program, arrangement, agreement or commitment that is an employment, consulting, non-competition or deferred compensation agreement, or an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation rights, restricted stock, other equity-based compensation, severance pay, salary continuation, life, health, hospitalization, sick leave, vacation pay, disability or accident insurance plan, corporate-owned or key-man life insurance or other employee benefit plan, program, arrangement, agreement or commitment, including any “employee benefit plan” (as defined in Section 3(3) of ERISA), sponsored or maintained by such entity (or to which such entity contributes or is required to contribute).

Broadridge Benefit Plan ” means any Benefit Plan sponsored, maintained or contributed to by any member of the Broadridge Group on or after the Distribution Date.

Broadridge Business ” means the business and operations conducted by the Broadridge Group from time to time, whether prior to, at or after the Effective Time, including, without duplication, (i) the Brokerage Services and Securities Clearing and Outsourcing Services Businesses conducted by ADP prior to the Restructuring and (ii) the business and operations conducted by the Broadridge Group, as more fully described in the Information Statement.

Broadridge Common Stock ” means common stock of Broadridge, par value $0.01 per share.

Broadridge Employee ” means any individual who, immediately following the Distribution Date, will be employed by Broadridge or any member of the Broadridge Group in a capacity considered by Broadridge to be common law employment, including active employees and employees on vacation and approved leave of absence (including maternity, paternity, family, sick, short-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves).

Broadridge Group ” means Broadridge and each of its Subsidiaries and Affiliates and any corporation or other entity that may become part of such Group from time to time.

 

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Broadridge Option ” means an option to purchase shares of Broadridge Common Stock.

Broadridge Option Price Ratio ” means the quotient obtained by dividing the Broadridge Stock Value by the ADP Pre-Distribution Stock Value.

Broadridge Option Share Ratio ” means the quotient obtained by dividing the ADP Pre-Distribution Stock Value by the Broadridge Stock Value.

Broadridge Participant ” means any individual who, immediately following the Distribution Date, is a Broadridge Employee, or a beneficiary, dependent or alternate payee thereof.

Broadridge Restricted Stock Share Ratio ” means the quotient obtained by dividing the ADP Post-Distribution Stock Value by the Broadridge Stock Value.

Broadridge Stock Plan ” means the Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan.

Broadridge Stock Value ” means the official NYSE only “regular way” first trading price of Broadridge Common Stock on April 2, 2007 as reported by the NYSE.

Brokerage Services and Securities Clearing and Outsourcing Services Businesses ” means all of the ADP Brokerage Services’ and Securities Clearing and Outsourcing Services’ business and operations, as more fully described in ADP’s Form 10-K for the fiscal year ended June 30, 2006.

Canadian Restructuring ” means the transfer of the Brokerage Services and Securities Clearing and Outsourcing Services Businesses conducted, directly or indirectly, by ADP Canada Co., a Canadian corporation, to a new Canadian company that will be transferred to Broadridge in a transaction intended to qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code.

COBRA ” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and Sections 601 through 608 of ERISA, and any similar state group health plan continuation Law, together with all regulations and proposed regulations promulgated thereunder.

Code ” means the U.S. Internal Revenue Code of 1986, as amended.

Distribution Date ” means the date on which the Distribution shall be effected.

 

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DOL ” means the Department of Labor.

Dutch Restructuring ” means the transfer of the Brokerage Services and Securities Clearing and Outsourcing Services Businesses conducted by the subsidiaries of ADP Nederland BV, a Dutch corporation, to a new Dutch company that will be transferred to a second Dutch company that will be a subsidiary of Broadridge in a transaction intended to qualify as a tax-free split-off pursuant to Sections 368(a)(1)(D) and 355 of the Code.

Effective time ” means the time at which the Distribution occurs on the Distribution Date.

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

Former ADP Employee ” means, as of the Distribution Date, any former employee of ADP or an Affiliate, including retired, deferred vested, non-vested and other inactive terminated individuals, whose most recent active employment with ADP or an Affiliate was with a member of the ADP Group, but in all events excluding any person who is a Broadridge Employee.

Former Broadridge Employee ” means, as of the Distribution Date:

(a) any former employee of ADP or an Affiliate, including retired, deferred vested, non-vested and other inactive terminated individuals, whose most recent active employment with ADP or an Affiliate was with a member of the Broadridge Group and such active employment has ended before the Distribution Date,

(b) any individual who, as of the Distribution Date, is on long-term disability leave and whose most recent active employment with ADP or an Affiliate prior to the Distribution Date was with a member of the Broadridge Group, and

(c) any former service provider (including any individual who was an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of ADP or an Affiliate) with respect to whom (x) such service provider’s employment, non-employment, retainer arrangement, or relationship with ADP or an Affiliate ended before the Distribution Date and (y) such service provider’s most recent employment, non-employment, retainer arrangement, or relationship prior to the Distribution Date was with a member of the Broadridge Group.

Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority, including the NYSE.

 

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Group ” means the ADP Group and/or the Broadridge Group, as the context requires.

HIPAA ” means the Health Insurance Portability and Accountability Act of 1996, as amended.

Information ” means all information of either the ADP Group or the Broadridge Group, as the context requires, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including non-public financial information, studies, reports, records, books, accountants’ work papers, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other Software (as defined in the definition of “Intellectual Property”), marketing plans, customer data, communications by or to attorneys, memos and other materials prepared by attorneys and accountants or under their direction (including attorney work product), and other technical, financial, legal, employee or business information or data.

Information Statement ” means the information statement and any related documentation to be distributed to holders of ADP Common Stock in connection with the Distribution, including any amendments or supplements thereto.

Intellectual Property ” means all intellectual property and other similar proprietary rights in any jurisdiction, whether owned or held for use under license, whether registered or unregistered, including such rights in and to: (i) trademarks, trade dress, service marks, certification marks, logos, and trade names, and the goodwill associated with the foregoing (collectively, “ Trademarks ”); (ii) patents and patent applications, and any and all divisions, continuations, continuations-in-part, reissues, continuing patent applications, reexaminations, and extensions thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention, certificates of registration, design registrations or patents and like rights (collectively, “ Patents ”); inventions, invention disclosures, discoveries and improvements, whether or not patentable; (iii) writings and other works of authorship (“ Copyrights ”); (iv) trade secrets (including, those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory Law and common law), Information, business, technical and know-how information, business processes, non-public information, proprietary information and confidential information and rights to limit the use or disclosure thereof by any Person (collectively, “ Trade Secrets ”); (v) software, including data files, source code, object code, application programming interfaces, databases and other software-related specifications and documentation (collectively, “ Software ”); (vi) domain names and uniform resource locators; (vii) moral rights; (viii) privacy and publicity rights; (ix) any and all technical information, Software, specifications, drawings, records, documentation, works of authorship or other creative works, ideas, knowledge, invention disclosures or other data, not including works subject to Copyright, Patent or Trademark protection (“ Technology ”); (x) advertising and promotional materials, whether or not copyrightable; and (xi) claims, causes of action and defenses relating to the enforcement of any of the foregoing; in each case, including any registrations of, applications to register, and renewals and extensions of, any of the foregoing with or by any Governmental Authority in any jurisdiction.

IRS ” means the Internal Revenue Service.

 

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Law ” means any applicable foreign, federal, national, state, provincial or local law (including common law), statute, ordinance, rule, regulation, code or other requirement enacted, promulgated, issued or entered into, or act taken, by a Governmental Authority.

Liabilities ” means all debts, liabilities, obligations, responsibilities, response actions, Losses, damages (whether compensatory, punitive, consequential, treble or other), fines, penalties and sanctions, absolute or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, on- or off-balance sheet, joint, several or individual, asserted or unasserted, accrued or unaccrued, known or unknown, whenever arising, including those arising under or in connection with any Law, or other pronouncements of Governmental Authorities constituting an Action, order or consent decree of any Governmental Authority or any award of any arbitration tribunal, and those arising under any contract, guarantee, commitment or undertaking, whether sought to be imposed by a Governmental Authority, private party, or a Party, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and including any costs, expenses, interest, attorneys’ fees, disbursements and expense of counsel, expert and consulting fees, fees of third party administrators, and costs related thereto or to the investigation or defense thereof.

NYSE ” means the New York Stock Exchange, Inc.

Participating Company ” means ADP and any Affiliate or any other entity (other than an individual) participating in an ADP Benefit Plan.

Person ” means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any governmental authority.

Restructuring ” means, collectively, the Dutch Restructuring, the U.S. Restructuring, the Canadian Restructuring, the Swiss Restructuring and the U.S. Contribution.

Separation and Distribution Agreement ” means the Separation and Distribution Agreement, as amended from time to time, by and between ADP and Broadridge (or their predecessors-in-interest) dated as of March 20, 2007.

Subsidiary ” means, with respect to any Person, any other Person of which a Person (either alone or through or together with any other Subsidiary of such Person) owns, directly or indirectly, a majority of the stock or other equity interests the

 

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holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

Swiss Restructuring ” means the transfer of the Brokerage Services and Securities Clearing and Outsourcing Services Businesses conducted by ADP Suisse S.A., a Swiss company, to a new Swiss company that will be transferred to Broadridge.

U.S. Contribution ” means the contribution by ADP to Broadridge of the U.S. Subsidiaries of ADP Atlantic, Inc., a Delaware corporation, that conduct the Brokerage Services and Securities Clearing and Outsourcing Services Businesses.

U.S. Restructuring ” means the transfer by ADP Atlantic, Inc., a Delaware corporation (“ ADP Atlantic ”), to ADP of the U.S. Subsidiaries of ADP Atlantic that conduct the Brokerage Services and Securities Clearing and Outsourcing Services Businesses, in a transaction intended to qualify as tax-free pursuant to Section 332 of the Code.

Section 1.2 General Interpretive Principles . (a) Words in the singular shall include the plural and vice versa, and words of one gender shall include the other gender, in each case, as the context requires, (b) the words “ hereof ,” “ herein ,” “ hereunder ,” and “ herewith ” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and references to Article, Section, paragraph, exhibit and schedule are references to the Articles, Sections, paragraphs, exhibits and schedules to this Agreement unless otherwise specified, (c) the word “ including ” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified and (d) any reference to any federal, state, local or non-U.S. statute or Law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.

ARTICLE II

GENERAL PRINCIPLES

Section 2.1 Assumption and Retention of Liabilities; Related Assets .

(a) As of the Effective Time, except as otherwise expressly provided for in this Agreement, ADP shall, or shall cause one or more members of the ADP Group to, assume or retain, as applicable, and ADP hereby agrees to pay, perform, fulfill and discharge, in due course in full (i) all Liabilities under all ADP Benefit Plans, (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all ADP Employees, Former ADP Employees, their dependents and beneficiaries, and other service providers (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of any member of the ADP Group or in any other employment, non-employment, retainer arrangement, or relationship with any member of the ADP Group),

 

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in each case to the extent arising in connection with or as a result of employment with or the performance of services for any member of the ADP Group, (iii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all Former Broadridge Employees, their dependents and beneficiaries and (iv) any other Liabilities or obligations expressly assigned to ADP or any of its Affiliates under this Agreement. For purposes of clarification, the Liabilities assumed or retained by the ADP Group as provided for in this Section 2.1(a) are intended to be ADP Liabilities as such term is defined in the Separation and Distribution Agreement.

(b) As of the Effective Time, except as otherwise expressly provided for in this Agreement, Broadridge shall, or shall cause one or more members of the Broadridge Group to, assume and Broadridge hereby agrees to pay, perform, fulfill and discharge, in due course in full (i) all Liabilities under all Broadridge Benefit Plans, (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all Broadridge Employees, their dependents and beneficiaries and other persons who provide services to the Broadridge Group (including any individual who is an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of any member of the Broadridge Group or in any other employment, non-employment, or retainer arrangement, or relationship with any member of the Broadridge Group), and (iii) any other Liabilities or obligations expressly assigned to Broadridge or any of its Affiliates under this Agreement. For purposes of clarification, the Liabilities assumed by the Broadridge Group as provided for in this Section 2.1(b) are intended to be Broadridge Liabilities as such term is defined in the Separation and Distribution Agreement.

(c) From time to time after the Distribution, Broadridge shall promptly reimburse ADP, upon ADP’s reasonable request and the presentation by ADP of such substantiating documentation as Broadridge shall reasonably request, for the cost of any obligations or Liabilities satisfied by ADP or its Affiliates that are, or that have been made pursuant to this Agreement, the responsibility of Broadridge or any of its Affiliates.

(d) From time to time after the Distribution, ADP shall promptly reimburse Broadridge, upon Broadridge’s reasonable request and the presentation by Broadridge of such substantiating documentation as ADP shall reasonably request, for the cost of any obligations or Liabilities satisfied by Broadridge or its affiliates that are, or that have been made pursuant to this Agreement, the responsibility of ADP or its Affiliates.

Section 2.2 Cessation of Broadridge Participation in ADP Benefit Plans . Except as otherwise expressly provided for in this Agreement or as otherwise expressly agreed to in writing between the Parties, (i) effective as of the Effective Time, Broadridge and each member of the Broadridge Group shall cease to be a Participating Company in any ADP Benefit Plan, and (ii) each Broadridge Participant and any other service providers who provide services to any member of the Broadridge Group on or after the Effective Time (including any individual who is an independent contractor,

 

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temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of any member of the Broadridge Group or in any other employment, non-employment, or retainer arrangement, or relationship with any member of the Broadridge Group), effective as of the Effective Time, shall cease to participate in, be covered by, accrue benefits under, be eligible to contribute to or have any rights under any ADP Benefit Plan, and ADP and Broadridge shall take all necessary action to effectuate each such cessation.

Section 2.3 Comparable Compensation and Benefits . Except as otherwise agreed to by ADP, with respect to a Broadridge Employee, for the period commencing on the Distribution Date and ending on the last day of the first calendar year beginning on or after the Distribution Date, Broadridge (acting directly or through its Affiliates) intends to provide such Broadridge Employees with compensation opportunities (including, without limitation, salary, wages, commissions and bonus opportunities) and employee benefits, but in all events excluding any equity or non-qualified deferred compensation plans or programs, that are substantially comparable, in the aggregate, to the compensation opportunities and employee benefits to which such Broadridge Employees were entitled to immediately prior to the Distribution Date; provided, however, that neither Broadridge nor any other member of the Broadridge Group shall be required to establish any tax-qualified defined benefit pension plan for Broadridge Employees.

Section 2.4 Service Recognition . Broadridge shall give each Broadridge Participant full credit for purposes of eligibility, vesting, and determination of level of benefits under any Broadridge Benefit Plan for such Broadridge Participant’s service with any member of the ADP Group prior to the Distribution Date to the same extent such service was recognized by the applicable ADP Benefit Plans immediately prior to the Distribution Date; provided, however, that such service shall not be recognized to the extent that such recognition would result in the duplication of benefits.

ARTICLE III

THE ADP PENSION PLAN

Section 3.1 Status of Broadridge Employees . Effective as of the Distribution Date, each Broadridge Employee and Former Broadridge Employee shall, for all purposes of the ADP Pension Plan, be treated as having terminated employment with ADP and with all of its Affiliates as of the Distribution Date (or, if earlier, as of the date of such person’s actual termination of employment with ADP and all Affiliates). Also Effective as of the Distribution Date, each Broadridge Employee shall become fully vested in such person’s entire accrued benefit under the ADP Pension Plan.

Section 3.2 ADP Retention of Liabilities With Respect to Broadridge Employees . Notwithstanding anything herein to the contrary, and subject to Section 3.3 of this Agreement, the legal responsibility and obligation to pay (or continue to pay, as the case may be) all benefits otherwise accrued under the ADP Pension Plan with respect to Broadridge Employees and Former Broadridge Employees shall at all times remain the

 

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legal responsibility and obligation of ADP and the ADP Pension Plan. In connection therewith, there shall be no transfer of Assets from the ADP Pension Plan to any Broadridge Benefit Plan.

ARTICLE IV

TAX-QUALIFIED DEFINED CONTRIBUTION PLAN

Section 4.1 The ADP Savings Plan .

(a) Establishment of the Broadridge Savings Plan . Effective as of the Distribution Date, Broadridge shall, or shall have caused one of its Affiliates to, establish a defined contribution plan and trust for the benefit of Broadridge Employees (the “ Broadridge Savings Plan ”). Broadridge shall be responsible for taking all necessary, reasonable and appropriate action to establish, maintain and administer the Broadridge Savings Plan so that it is qualified under Section 401(a) of the Code and that the related trust thereunder is exempt under Section 501(a) of the Code. Broadridge (acting directly or through its Affiliates) shall be responsible for any and all Liabilities (including Liability for funding) and other obligations with respect to the Broadridge Savings Plan.

(b) Full Vesting Under ADP Savings Plan . Effective as of the Distribution Date, each Broadridge Employee shall become fully vested in such person’s entire account balance under the ADP Savings Plan.

(c) Prorated Matching Contribution . As soon as practical on or after the Distribution Date, ADP shall contribute to the ADP Savings Plan on behalf of each Broadridge Employee a pro-rated portion of the employer matching contribution that would otherwise have been contributed on behalf of such person if no end-of-year employment requirement applied for purposes of receiving such matching contribution.

(d) Transfer of ADP Savings Plan Assets . On or as soon as reasonably practicable following the Distribution Date, ADP shall cause the account balances (including any outstanding loan balances) in the ADP Savings Plan attributable to Broadridge Employees, together with an amount of cash equal to the aggregate of such account balances to be transferred to the Broadridge Savings Plan, and Broadridge shall cause the Broadridge Savings Plan to accept such transfer of accounts and cash and, effective as of the date of such transfer, to assume and to fully perform, pay and discharge, all obligations of the ADP Savings Plan relating to the accounts of Broadridge Employees. Such transfer of cash shall be done in accordance with the requirements of Section 414(l) of the Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA.

(e) Form 5310-A . No later than thirty (30) days prior to the date of such aforementioned transfer from the ADP Savings Plan to the Broadridge Savings Plan, ADP and Broadridge (each acting directly or through their respective Affiliates) shall, to the extent necessary, each file an IRS Form 5310-A regarding such transfer.

 

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Section 4.2 Contributions as of the Distribution Date . All contributions payable to the ADP Savings Plan with respect to employee deferrals, matching contributions and any other required contributions for Broadridge Employees through the Distribution Date shall be paid by ADP to the ADP Savings Plan prior to the date of the cash transfer described in Section 4.1(b) above.

ARTICLE V

HEALTH, WELFARE AND SIMILAR PLANS

Section 5.1 Plans Maintained by ADP Prior to the Distribution Date .

(a) Establishment of the Broadridge Plans . ADP or one or more of its Affiliates maintain each of the health, welfare and similar plans set forth on Schedule A attached hereto (the “ ADP Welfare Plans ”) in part for the benefit of eligible individuals who, as of the Distribution Date, will be Broadridge Participants. Effective as of the Distribution Date, Broadridge shall, or shall cause a Broadridge Affiliate to, adopt, for the benefit of eligible Broadridge Participants, health, welfare and similar plans, the terms of which are substantially comparable, in the aggregate, to the terms of the ADP Welfare Plans as in effect immediately prior to the Distribution Date (collectively, the “ Broadridge Welfare Plans ”).

(b) Terms of Participation in Broadridge Welfare Plans . Broadridge (acting directly or through its Affiliates) shall cause all Broadridge Welfare Plans to (i) waive all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to Broadridge Participants, other than limitations that were in effect with respect to any such person as of the Distribution Date under the ADP Welfare Plans, (ii) honor any deductible, out-of-pocket maximum, and co-payment incurred by Broadridge Participants under the ADP Welfare Plans in which they participated immediately prior to the Distribution Date in satisfying any applicable deductible or out-of-pocket requirements under any Broadridge Welfare Plans during the same plan year in which such deductible, out-of-pocket maximums and co-payments were made, (iii) waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to a Broadridge Participant following the Distribution Date, to the extent such Broadridge Participant had satisfied any similar limitation under the analogous ADP Welfare Plan, and (iv) provide each Broadridge Participant with new annual and lifetime maximums.

(c) Reimbursement Account Plan . Effective as of the Distribution Date, Broadridge (acting directly or through its Affiliates) shall have established a health and dependent care reimbursement account plan (the “ Broadridge Reimbursement Account Plan ”) with features that are comparable to those contained in the Automatic Data Processing, Inc. Health Care and Dependent Care Flexible Spending Accounts Plan (the “ ADP Reimbursement Account Plan ”). With respect to Broadridge

 

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Participants, effective as of the Effective Time, Broadridge (acting directly or through its Affiliates) shall assume responsibility for administering all reimbursement claims of Broadridge Participants with respect to calendar year 2007, whether arising before, on, or after the Distribution Date, under the Broadridge Reimbursement Account Plan and, for the avoidance of doubt, on and after the Distribution Date, no additional claims shall be reimbursed with respect to Broadridge Participants under the ADP Reimbursement Account Plan. ADP shall, as soon as practicable following the Distribution Date, determine (i) the sum of all contributions to the ADP Reimbursement Account Plan made with respect to calendar year 2007 by or on behalf of all Broadridge Participants, as a whole, prior to the Distribution Date (the “ Aggregate Pre-Distribution Date Contributions ”) and (ii) the sum of all claims incurred in calendar year 2007 and paid by the ADP Reimbursement Account Plan with respect to such Broadridge Participants, as a whole, prior to the Distribution Date (the “ Aggregate Pre-Distribution Date Disbursements ”). If the Aggregate Pre-Distribution Date Contributions exceeds the Aggregate Pre-Distribution Date Disbursements, ADP shall, as soon as practicable following ADP’s determination of the Aggregate Pre-Distribution Date Contributions and Pre-Distribution Date Disbursements, transfer to Broadridge an amount in cash equal to such difference. If the Aggregate Pre-Distribution Date Disbursements exceeds the Aggregate Pre-Distribution Date Contributions, Broadridge shall, upon ADP’s reasonable request and the presentation of such substantiating documentation as Broadridge shall reasonably request, transfer to ADP an amount in cash equal to such difference.

(d) Continuation of Elections . With respect to Broadridge Participants, as of the Distribution Date, Broadridge (acting directly or through its Affiliates) shall cause the Broadridge Welfare Plans to recognize and maintain all elections and designations (including, without limitation, all coverage and contribution elections and beneficiary designations) made by Broadridge Participants under, or with respect to, the ADP Welfare Plans and apply such elections and designations under the Broadridge Welfare Plans for the remainder of the period or periods for which such elections or designations are by their original terms applicable, to the extent such election or designation is available under the corresponding Broadridge Welfare Plan.

(e) COBRA and HIPAA . ADP (acting directly or through its Affiliates) shall be responsible for administering compliance with the certificate of creditable coverage requirements of HIPAA applicable to the ADP Welfare Plans with respect to Broadridge Participants. The Parties hereto agree that the Distribution shall not constitute a COBRA qualifying event for any purposes of COBRA.

(f) Liabilities . Broadridge (acting directly or through its Affiliates) shall fully perform, pay and discharge, under the Broadridge Welfare Plans, all claims of Broadridge Participants from and after the Distribution Date that are incurred on or after the Distribution Date. ADP (acting directly or through its Affiliates) shall fully perform, pay and discharge, under the ADP Welfare Plans, all claims of Broadridge Participants that are incurred prior to the Distribution Date. For purposes of this Section 5.1(f), a claim is deemed to be incurred (A) with respect to medical, dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim; (B) with respect to life insurance, accidental death and dismemberment

 

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and business travel accident insurance, upon the occurrence of the event giving rise to such claim; (C) with respect to disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim; and (D) with respect to a period of continuous hospitalization, upon the date of admission to the hospital.

Section 5.2 ADP VEBA . In no event will any of the assets held under the ADP VEBA be transferred to Broadridge (or any of its Affiliates) or to any Broadridge Benefit Plan.

Section 5.3 Time-Off Benefits . Broadridge shall credit each Broadridge Participant with the amount of accrued but unused vacation time, sick time and other time-off benefits as such Broadridge Participant had with ADP (or with any Affiliate) as of the Distribution Date.

ARTICLE VI

SUPPLEMENTAL OFFICERS RETIREMENT PLAN

Section 6.1 Establishment of Broadridge Supplemental Officers Retirement Plan . Effective as of the Distribution Date, Broadridge shall, or shall cause one of its Affiliates to, establish a plan to be known as the “Broadridge Supplemental Officers Retirement Plan.”

Section 6.2 ADP Plan . ADP shall remain responsible for the payment of all benefits under the ADP SORP which are otherwise due and owing to all Broadridge Participants. Other than as specifically agreed to in writing by ADP, each Broadridge Employee shall, for all purposes of the ADP SORP, be treated as terminating employment with ADP and with all of its Affiliates at the Effective Time. For purposes of clarification, the amounts which ADP is so required to pay to Broadridge Participants are intended to be ADP Liabilities as such term is defined in the Separation and Distribution Agreement.

ARTICLE VII

DEFERRED COMPENSATION PLAN

Section 7.1 Broadridge FY07 Deferred Compensation Plan . Effective as of the Distribution Date, Broadridge shall, or shall cause one of its Affiliates to, establish a non-qualified deferred compensation plan to benefit Broadridge Participants who prior to the Distribution Date had deferred bonus amounts under the ADP FY07 DCP (the “ Broadridge FY07 DCP ”). Effective as of the Effective Time, Broadridge hereby agrees to cause the Broadridge FY07 DCP to assume responsibility for all Liabilities and fully perform, pay and discharge all obligations, when such obligations become due, of the ADP FY07 DCP with respect to all Broadridge Participants therein. Broadridge (acting directly or through its Affiliates) shall be responsible for any and all Liabilities and other obligations with respect to the Broadridge FY07 DCP.

 

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Notwithstanding the foregoing provisions of Section 2.3 of this Agreement to the contrary, the Broadridge FY07 DCP shall have the same terms and conditions as the ADP FY07 DCP.

Section 7.2 Continuation of Elections . As of the Distribution Date, Broadridge (acting directly or through an Affiliate) shall cause the Broadridge FY07 DCP to recognize and maintain all elections (including deferral, distribution and investment elections) and beneficiary designations with respect to Broadridge Participants under the ADP FY07 DCP.

ARTICLE VIII

EQUITY AWARDS

Section 8.1 Treatment of Outstanding ADP Options Held by Broadridge Employees . Each ADP Option held by a Broadridge Employee as of the Distribution Date shall be substituted with a Broadridge Option issued under the Broadridge Stock Plan and subject to terms and conditions after the Distribution that are substantially similar to the terms and conditions applicable to the corresponding ADP Option immediately prior to the Distribution; provided that (i) the number of shares of Broadridge Common Stock subject to each such Broadridge Option shall be equal to the product of (x) the number of shares of ADP Common Stock subject to the corresponding ADP Option immediately prior to the Distribution Date and (y) the Broadridge Option Share Ratio, with fractional shares rounded down to the nearest whole share and (ii) the per-share exercise price of each such Broadridge Option shall be equal to the product of (x) the per-share exercise price of the corresponding ADP Option immediately prior to the Distribution Date and (y) the Broadridge Option Price Ratio, rounded up to the nearest whole cent.

Section 8.2 Treatment of Outstanding Shares of ADP Restricted Stock Held by Broadridge Employees .

(a) Broadridge Stock Received by Broadridge Employees . Shares of Broadridge Common Stock distributed in connection with the payment of the Distribution in respect of shares of ADP Restricted Stock held by a Broadridge Employee shall not be subject to any forfeiture restriction, and shall be treated for all purposes the same as shares of Broadridge Common Stock distributed in connection with the payment of the Distribution to all other holders of ADP Common Stock.

(b) Substitution of ADP Restricted Stock . Each share of ADP Restricted Stock held by a Broadridge Employee as of the Distribution Date shall be surrendered on the Distribution Date to ADP and substituted with restricted shares of Broadridge Common Stock (“ Broadridge Restricted Stock ”) issued under the Broadridge Stock Plan and subject to terms and conditions after the Distribution that are substantially similar to the terms and conditions applicable to the corresponding shares of ADP Restricted Stock immediately prior to the Distribution. The number of shares of Broadridge Restricted Stock to which a Broadridge Employee is entitled pursuant to this

 

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Section 8.2 will equal the product of (x) the number of shares of corresponding ADP Restricted Stock held by such Broadridge Employee immediately prior to the Distribution Date and (y) the Broadridge Restricted Stock Share Ratio, with fractional shares rounded to the nearest whole share.

ARTICLE IX

ADDITIONAL COMPENSATION MATTERS; SEVERANCE

Section 9.1 Broadridge Assumption of Annual Incentive and Bonus Liability . Effective as of the Effective Time, Broadridge shall assume or retain, as applicable, responsibility for all Liabilities and fully perform, pay and discharge all obligations, when such obligations become due, relating to any annual incentive awards and bonuses that any Broadridge Employee is eligible to receive with respect to the fiscal year ending June 30, 2007 and, effective as of the Effective Time, ADP shall have no obligation with respect to any such annual incentive award.

Section 9.2 Severance Policies .

(a) Establishment of Broadridge Severance Plan . Effective as of the Distribution Date, Broadridge shall take all steps necessary to establish a severance plan for Broadridge Employees (the “ Broadridge Severance Policy ”).

(b) Assumption of Severance Liabilities . Effective as of the Effective Time, (i) Broadridge shall assume responsibility for all Liabilities and fully perform, pay and discharge all obligations, when such obligations become due, relating to any severance benefit to which any Broadridge Participant may otherwise be entitled and (ii) ADP shall have no Liability or responsibility to pay any benefits to any Broadridge Employee pursuant to the terms of the ADP Severance Policy.

(c) Severance Benefits . With respect to any Broadridge Employee who becomes eligible to receive severance benefits pursuant to the Broadridge Severance Policy during the period commencing on the Distribution Date and ending on the first anniversary of the Distribution Date, the Broadridge Severance Policy shall provide to such Broadridge Employee an amount of severance benefit that is not less than the number of weeks of pay that such Broadridge Employee would have received under the ADP Severance Policy as in effect immediately prior to the Distribution Date.

(d) Effect of the Separation on Severance . ADP and Broadridge acknowledge and agree that the transactions contemplated by the Separation and Distribution Agreement will not constitute a termination of employment of any Broadridge Employee for purposes of any policy, plan, program or agreement of ADP or Broadridge or any member of the ADP Group or the Broadridge Group that provides for the payment of severance, separation pay, salary continuation or similar benefits in the event of a termination of employment.

 

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Section 9.3 Workers’ Compensation Liabilities .

(a) Pre-Distribution Date Claims . Effective as of the Effective Time, all workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by a Broadridge Employee that results from an accident, incident or event occurring, or from an occupational disease which becomes manifest, before the Effective Time shall be the sole and exclusive liability of Broadridge.

(b) Post-Distribution Date Claims . All workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by a Broadridge Employee that results from an accident, incident or event occurring, or from an occupational disease which becomes manifest, on or after the Effective Time shall be the sole and exclusive Liability of Broadridge.

(c) General . ADP and Broadridge shall cooperate in good faith with respect to the notification to appropriate governmental agencies of the Distribution and the issuance of new, or the transfer of existing, workers’ compensation insurance policies and claims handling contracts.

ARTICLE X

GENERAL AND ADMINISTRATIVE

Section 10.1 Sharing of Information . ADP and Broadridge (acting directly or through their respective Affiliates) shall provide to the other and their respective agents and vendors all Information as the other may reasonably request to enable the requesting Party to administer efficiently and accurately each of its Benefit Plans and to determine the scope of, as well as fulfill, its obligations under this Agreement. Such Information shall, to the extent reasonably practicable, be provided in the format and at the times and places requested, but in no event shall the Party providing such Information be obligated to incur any out-of-pocket expenses not reimbursed by the Party making such request or make such Information available outside of its normal business hours and premises. Any Information shared or exchanged pursuant to this Agreement shall be subject to the same confidentiality requirements set forth in the Separation and Distribution Agreement. The Parties also hereby agree to enter into any business associate agreements that may be required for the sharing of any Information pursuant to this Agreement to comply with the requirements of HIPAA.

Section 10.2 Reasonable Efforts/Cooperation . Each of the Parties hereto will use its commercially reasonable efforts to promptly take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate the transactions contemplated by this Agreement, including, without limitation, adopting plans or plan amendments. Each of the Parties hereto shall cooperate fully on any issue relating to the transactions contemplated by this Agreement for which the other Party seeks a determination letter or private letter ruling from the IRS, an advisory opinion from the DOL or any other filing, consent or approval with respect to or by a Governmental Authority.

 

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Section 10.3 Employer Rights . Subject to Broadridge’s obligations under this Agreement, nothing in this Agreement shall prohibit Broadridge or any Broadridge Affiliate from amending, modifying or terminating any Broadridge Benefit Plan at any time within its sole discretion. In addition, subject to ADP’s obligations under this Agreement, nothing in this Agreement shall prohibit ADP or any ADP Affiliate from amending, modifying or terminating any ADP Benefit Plan at any time within its sole discretion.

Section 10.4 Non-Termination of Employment; No Third-Party Beneficiaries . Except as expressly provided for in this Agreement or the Separation and Distribution Agreement, no provision of this Agreement or the Separation and Distribution Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any ADP Employee or Broadridge Employee or other future, present, or former employee of any member of the ADP Group or the Broadridge Group under any ADP Benefit Plan or Broadridge Benefit Plan or otherwise. Without limiting the generality of the foregoing, except as expressly provided in this Agreement, the occurrence of the Distribution alone shall not cause any employee to be deemed to have incurred a termination of employment which entitles such individual to the commencement of benefits under any of the ADP Benefit Plans. Furthermore, this Agreement is solely for the benefit of the Parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or persons any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. Furthermore, nothing in this Agreement is intended to confer upon any employee or former employee of ADP, Broadridge or either of their respective Affiliates any right to continued employment, or any recall or similar rights to an individual on layoff or any type of approved leave.

Section 10.5 Consent of Third Parties . If any provision of this Agreement is dependent on the Consent of any third party and such consent is withheld, the Parties hereto shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the fullest extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision in a mutually satisfactory manner.

Section 10.6 Access to Employees . Following the Distribution Date, each Party shall, or shall cause its Affiliates to, make available to the other Party those of their employees who may reasonably be needed in order to defend or prosecute any legal or administrative action (other than a legal action between ADP and Broadridge) to which any employee, director or Benefit Plan of the ADP Group or the Broadridge Group is a party and which relates to the ADP Benefit Plans prior to the Distribution Date or the Broadridge Benefit Plans on or after the Distribution Date.

Section 10.7 Beneficiary Designation/Release of Information/Right to Reimbursement . To the extent permitted by applicable Law and except as otherwise

 

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provided for in this Agreement, all beneficiary designations, authorizations for the release of Information and rights to reimbursement made by or relating to Broadridge Participants under ADP Benefit Plans shall be transferred to and be in full force and effect under the corresponding Broadridge Benefit Plans until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply, to the relevant Broadridge Participant.

Section 10.8 Not a Change in Control . The Parties hereto acknowledge and agree that the transactions contemplated by the Separation and Distribution Agreement and this Agreement do not constitute a “change in control” for purposes of any ADP Benefit Plan or Broadridge Benefit Plan.

ARTICLE XI

MISCELLANEOUS PROVISIONS

Section 11.1 Complete Agreement; Representations . Except as explicitly stated herein, this Agreement, together with the exhibits and schedules hereto constitutes the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

(b) ADP represents on behalf of itself and each other member of the ADP Group and Broadridge represents on behalf of itself and each other member of the Broadridge Group as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated by this Agreement; and

(ii) this Agreement has been duly executed and delivered by such Person (if such Person is a Party) and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof (assuming the due execution and delivery thereof by the other Party), except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to creditors’ rights generally and by general equitable principles.

Section 11.2 Costs and Expenses . All costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated hereby shall be borne as provided in the Separation and Distribution Agreement.

Section 11.3 Governing Law . This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the conflicts of laws principles thereof.

 

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Section 11.4 Notices . All notices, requests, claims, demands and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the Parties at the following addresses or facsimile numbers:

If to ADP or any member of the ADP Group, to:

Automatic Data Processing, Inc.

One ADP Boulevard

Roseland, New Jersey 07068

Attn: General Counsel

Fax: 973-974-3324

If to Broadridge or any member of the Broadridge Group, to:

Broadridge Financial Solutions, Inc.

2 Journal Square Plaza

Jersey City, New Jersey 07306

Attn: General Counsel

Fax: 201-714-3506

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this section, be deemed given upon receipt and (iii) if delivered by mail in the manner described above to the address as provided in this section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party.

Section 11.5 Amendment, Modification or Waiver .

(a) Prior to the Distribution, this Agreement may be amended, modified, waived, supplemented or superseded, in whole or in part, by ADP in its sole discretion by execution of a written amendment delivered to Broadridge. Subsequent to the Distribution, this Agreement may be amended, modified, supplemented or superseded only by an instrument signed by duly authorized signatories of both Parties.

(b) Following the Distribution, any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any

 

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Party of any term or condition of this Agreement, in any one or more instances, shall be deemed or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.

Section 11.6 No Assignment; Binding Effect .

(a) Neither this Agreement nor any right, interest or obligation hereunder may be assigned by either Party hereto without the prior written consent of the other Party hereto and any attempt to do so will be void, except that following the Effective Time each Party hereto may assign any or all of its rights, interests and obligations hereunder to an Affiliate, provided that any such Affiliate agrees in writing to be bound by all of the terms, conditions and provisions contained herein. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties hereto and their respective successors and assigns.

(b) Except for the provisions of Article IV of the Separation and Distribution Agreement relating to indemnification, the terms and provisions of this Agreement are intended solely for the benefit of each Party hereto and their respective Affiliates, successors or permitted assigns, and it is not the intention of the Parties to confer third party beneficiary rights upon any other Person.

Section 11.7 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.

Section 11.8 Negotiation . Except as otherwise provided for herein, in the event that any dispute arises between the Parties that cannot be resolved, either Party shall have the right to refer the dispute for resolution to the chief financial officers of the Parties by delivering to the other Party a written notice of such referral (a “ Dispute Escalation Notice ”). Following receipt of a Dispute Escalation Notice, the chief financial officers of the Parties shall negotiate in good faith to resolve such dispute. In the event that the chief financial officers of the Parties are unable to resolve such dispute within fifteen (15) business days after receipt of the Dispute Escalation Notice, either Party shall have the right to refer the dispute to the chief executive officers of the Parties, who shall negotiate in good faith to resolve such dispute. In the event that the chief executive officers of the Parties are unable to resolve such dispute within thirty (30) business days after the date of the Dispute Escalation Notice, either Party shall have the right to commence litigation in accordance with Section 11.10. The Parties agree that all discussions, negotiations and other Information exchanged between the Parties during the foregoing escalation proceedings shall be without prejudice to the legal position of a Party in any subsequent Action.

Section 11.9 Specific Performance . From and after the Distribution, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Parties agree that the Party or Parties to this Agreement who are or are to be thereby aggrieved shall have the right to specific

 

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performance and injunctive or other equitable relief of its or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that, from and after the Distribution, the remedies at law for any breach or threatened breach of this Agreement, including monetary damages, are inadequate compensation for any loss, that any defense in any action for specific performance that a remedy at law would be adequate is hereby waived, and that any requirements for the securing or posting of any bond with such remedy are hereby waived.

Section 11.10 New York Forum . Subject to the prior exhaustion of the procedures set forth in Section 11.08, each of the Parties agrees that, except as otherwise provided herein, all Actions arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment arising out of or in connection with this Agreement, shall be tried and determined exclusively in the state or federal courts in the State of New York, County of New York, and each of the Parties hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the Parties hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action or proceeding: (a) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (c) any claim that (i) any of the aforesaid courts is an inconvenient or inappropriate forum for such action or proceeding, (ii) venue is not proper in any of the aforesaid courts and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by any of the aforesaid courts. Each of the Parties agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 11.04 or any other manner as may be permitted by Law shall be valid and sufficient service thereof.

Section 11.11 Waiver of Jury Trial . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN THIS SECTION, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS HEREIN.

 

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Section 11.12 Interpretation; Conflict With Ancillary Agreements . The language of this Agreement shall be construed according to its fair meaning and shall not be strictly construed for or against any Party. The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. If, and to the extent, the provisions of this Agreement conflict with the Separation and Distribution Agreement, or any Ancillary Agreement, the provisions of this Agreement shall control.

Section 11.13 Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

AUTOMATIC DATA PROCESSING, INC.
By:  

/s/    James B. Benson

Name:   James B. Benson
Title:   Corporate Vice President

 

BROADRIDGE FINANCIAL SOLUTIONS, INC.
By:  

/s/    James B. Benson

Name:   James B. Benson
Title:   President

Employee Matters Agreement – Signature Page


SCHEDULE A

ADP Health, Welfare and Similar Plans

Medical Plan.

Prescription Plan.

Dental Plan.

Life Insurance Plan.

Accident Death and Dismemberment Plan.

Long Term Disability Plan.

Automatic Data Processing, Inc. Executive Retiree Health Plan

Automatic Data Processing, Inc. Vision Care Plan.

Automatic Data Processing, Inc. Business Travel Accident Plan.

Automatic Data Processing, Inc. Short Term Disability Salary Continuation Policy

Automatic Data Processing, Inc. Personal Accident Insurance.

Automatic Data Processing, Inc. Employees’ Savings-Stock Purchase Plan.

Automatic Data Processing, Inc. Employee Assistance Program.

Automatic Data Processing, Inc. Tuition Reimbursement Program.

Voluntary Employee pay all non-ERISA Plans include:

Group Universal Life Insurance;

Long Term Care; and

Auto and Home Insurance.

Exhibit 10.6

BROADRIDGE FINANCIAL SOLUTIONS, INC.

CHANGE IN CONTROL SEVERANCE PLAN

FOR

CORPORATE OFFICERS

The purpose of this Change in Control Severance Plan for Corporate Officers (the “Plan”) is to enable Broadridge Financial Solutions, Inc., a Delaware corporation (the “Company”), to offer a form of income protection to “Participants” (as defined in Section 7.5 below) in the event their employment with the Company terminates under certain circumstances due to a “Change in Control” (as defined in Section 7.2 below).

ARTICLE I: BENEFITS

 

1.1 Eligibility for Benefits; Benefits; Payment; and Rights of Participants .

 

  (a) If a Change in Control occurs prior to the date a Participant’s employment with the Company terminates, then upon the termination of the Participant’s employment by the Company without “Cause” (as defined in Section 7.1 below) or by the Participant for “Good Reason” (as defined in Section 7.4 below) (individually, a “Qualifying Termination”), such Participant shall be paid the applicable “Severance Benefit” (as defined below) and shall receive the additional benefits described in this Article I. The term “Severance Benefit” shall mean:

 

  (i) if the Qualifying Termination occurs during the two year period following the Change in Control, an amount equal to 150% of the Participant’s “Current Total Annual Compensation” (as defined in Section 7.3 below); and

 

  (ii) if the Qualifying Termination occurs during the third year after the Change in Control, an amount equal to 100% of the Participant’s Current Total Annual Compensation.

 

  (b) Any Participant entitled to a Severance Benefit (in accordance with Section 1.1(a) above) shall receive his Severance Benefit in the form of a lump-sum payment within 30 business days, or at such earlier time as required by applicable law, after his employment with the Company terminates.

 

1.2 Additional Benefits . A Participant entitled to receive a Severance Benefit shall also receive the following additional benefits:

 

  (a) The Company shall cause options to purchase Company stock (“Stock Options”) held by a Participant that are not fully vested and exercisable on the date of the Qualifying Termination to:

 

  (i) where the Qualifying Termination occurs during the two year period following the Change in Control, become fully vested and exercisable as of the date of such Qualifying Termination; and


  (ii) where the Qualifying Termination occurs during the third year after the Change in Control, become fully vested and exercisable as of the date of such Qualifying Termination as to those Stock Options that would otherwise have vested within one year after the Qualifying Termination.

 

  (b) The Company shall cause unvested restricted shares of Company stock (the “Restricted Shares”) held by a Participant on the date of the Qualifying Termination to:

 

  (i) where the Qualifying Termination occurs during the two year period following the Change in Control, become fully vested as of the date of such Qualifying Termination as to those Restricted Shares for which the vesting restrictions would otherwise have lapsed within two years after the Qualifying Termination; and

 

  (ii) where the Qualifying Termination occurs during the third year after the Change in Control, become fully vested as of the date of such Qualifying Termination as to those Restricted Shares for which the vesting restrictions otherwise would have lapsed within one year after the Qualifying Termination.

 

  (c) Where the Qualifying Termination occurs during the two year period following the Change in Control, the number of shares of Restricted Stock a Participant would have been entitled to receive had the performance goals been achieved at the 100% target rate in each of the then ongoing performance-based restricted stock programs (“PBRS”) and any successor programs to the PBRS programs, shall be sold by the Company to such Participant on the date of the Qualifying Termination.

 

1.3 Reduction of Payments . If a Participant determines that his receipt of any payment and/or non-monetary benefit under this Plan (including, without limitation, the accelerated vesting of Stock Options and/or Restricted Shares) (collectively, the “Payments”) would cause him to become subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Company shall, as and only as instructed by such Participant in writing prior to the date of his Qualifying Termination, reduce his Payments in the manner and in the amounts determined by the Participant to be necessary to avoid the application of such excise tax. If requested by a Participant, the Company shall, at the Company’s expense, determine and advise the Participant prior to his Qualifying Termination of the amount by which the

 

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Company would report to the Internal Revenue Service that the Payments to the Participant constitute “excess parachute payments,” as defined in Section 280G of the Code if the Participant does not elect to reduce the Payments as described in this Section 1.3.

 

1.4 Rights of Participants . Nothing contained herein shall be held or construed to create any liability or obligation on the Company to retain any Participant in its service or in a corporate officer position. All Participants shall remain subject to discharge or discipline to the same extent as if the Plan did not exist.

ARTICLE II: FUNDING

 

2.1 Funding . The Plan shall be funded out of the general assets of the Company as and when benefits are payable under the Plan. All Participants shall be solely general creditors of the Company.

ARTICLE III: ADMINISTRATION OF THE PLAN

 

3.1 Plan Administrator . The general administration of the Plan shall be placed with the Compensation Committee of the Board or an administrative committee appointed by the Board (the “Committee”).

 

3.2 Reimbursement of Expenses of Committee . The Company shall pay or reimburse the members of the Committee for all reasonable expenses incurred in connection with their duties hereunder.

 

3.3 Action by the Plan Committee . Decisions of the Committee shall be made by a majority of its members attending a meeting at which a quorum is present (which meeting may be held telephonically), or by written action in accordance with applicable law. No member of the Committee may act with respect to a matter which involves only that member.

 

3.4 Delegation of Authority . The Committee may delegate any and all of its powers and responsibilities hereunder to other persons by formal resolution filed with and accepted by the Board. Any such delegation shall not be effective until it is accepted by the Board and the persons designated and may be rescinded at any time by written notice from the Committee to the person to whom the delegation is made.

 

3.5 Retention of Professional Assistance . The Committee may employ such legal counsel, accountants and other persons as may be required in carrying out its work in connection with the Plan, and the Company shall pay the fees and expenses of such persons.

 

3.6 Accounts and Records . The Committee shall maintain such accounts and records regarding the fiscal and other transactions of the Plan, and such other data as may be required to carry out its functions under the Plan and to comply with all applicable laws.

 

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3.7 Compliance with Applicable Law . The Company shall be deemed the administrator of the Plan for the purposes of any applicable law and shall be responsible for the preparation and filing of any required returns, reports, statements or other filings with appropriate governmental agencies. The Company shall also be responsible for the preparation and delivery of information to persons entitled to such information under any applicable law.

 

3.8 Reimbursement of Expenses . If any contest or dispute shall arise under this Plan involving termination of a Participant’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall, immediately after the date a court issues a final order from which no appeal can be taken, or with respect to which the time period to appeal has expired, reimburse such Participant for all reasonable legal fees and expenses, if any, paid by the Participant in connection with such contest or dispute (together with interest in an amount equal to the Chase Manhattan Bank prime rate from time to time in effect, such interest to begin to accrue on the dates Participant actually paid such fees and expenses through the date of payment thereof); provided, however, the Participant shall not be entitled to any reimbursement for his legal fees and expenses if a court has made a final determination that the Participant’s position was without merit.

ARTICLE IV: AMENDMENT AND TERMINATION

 

4.1 Amendment and Termination . The Company reserves the right to amend or terminate, in whole or in part, any or all of the provisions of this Plan by action of the Board at any time; provided, that, following a Change in Control, the Company shall no longer have the power to amend or terminate the Plan, except for amendments to comply with changes in applicable law which do not reduce the benefits and payments due hereunder in the event of a Qualifying Termination; provided, further, that, in no event shall any amendment reducing the benefits provided hereunder or any Plan termination be effective until at least six months after the date of the applicable action by the Board.

ARTICLE V: SUCCESSORS

 

5.1 Successors . The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. In such event, the term “Company”, as used in this Plan, shall mean the Company, as applicable, as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by the terms and provisions of this Plan.

 

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ARTICLE VI: MISCELLANEOUS

 

6.1 No Duty to Mitigate/Set-off . No Participant entitled to receive a Severance Benefit shall be required to seek other employment or to attempt in any way to reduce any amounts payable to him pursuant to this Plan. The Severance Benefit payable hereunder shall not be reduced by any compensation earned by the Participant as a result of employment by another employer or otherwise. The Company’s obligations to pay the Severance Benefits and to perform its obligations hereunder shall not be affected by any circumstances including without limitation, any set off, counterclaim, recoupment, defense or other right which the Company may have against the Participant.

 

6.2 Headings . The headings of the Plan are inserted for convenience of reference only and shall have no effect upon the meaning of the provisions hereof.

 

6.3 Use of Words . Whenever used in this instrument, a masculine pronoun shall be deemed to include the masculine and feminine gender, and a singular word shall be deemed to include the singular and plural, in all cases where the context so requires.

 

6.4 Controlling Law . The construction and administration of the Plan shall be governed the laws of the State of New York (without reference to rules relating to conflicts of law).

 

6.5 Withholding . The Company shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it reasonably believes it may have to withhold federal, state or local income or other taxes incurred by reason of payments pursuant to this Plan.

 

6.6 Severability . Should any provision of the Plan be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions of the Plan unless such determination shall render impossible or impracticable the functioning of the Plan, and in such case, an appropriate provision or provisions shall be adopted so that the Plan may continue to function properly.

 

6.7 Rights Under Other Plans, Policies, Practices and Agreements .

 

  (a) Other than as expressly provided herein, the Plan does not supersede any other plans, policies, and/or practices of the Company.

 

  (b) The Plan supersedes any other change in control severance plans, policies and/or practices of the Company as to the Participants; provided, that, the Plan shall not supersede any individual executed agreement or

 

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arrangement between a single Participant and the Company in effect on March 30, 2007 or thereafter, which agreement specifically addresses payments or benefits made or provided upon termination of employment or in connection with a Change in Control including, but not limited to, the agreements set out on Appendix “A” hereto (an “Additional Agreement”). If a Participant is due benefits or payments under both an Additional Agreement and the Plan and/or where the Plan and the applicable Additional Agreement have inconsistent or conflicting terms and conditions, the Participant shall receive the greater of the benefits and payments, and the more favorable terms and conditions to him, under the Additional Agreement and the Plan, determined on an item-by-item basis.

 

6.8 Insurance . The Company shall continue to cover the Participants, or cause the Participants to be covered, under any director and officer insurance maintained after a Change in Control for directors and officers of the Company or its successor (whether by the Company or another entity) at no less of a level as that maintained by the Company or its successor for its directors and officers. Such coverage shall continue for any period during which the Participant may have any liability for his actions or omissions. Following a Change in Control and in addition to any rights under any other indemnification agreement, the Company or its successor shall indemnify the Participant to the fullest extent permitted by law against any claims, suits, judgments, expenses arising from, out of, or in connection with the Participant’s services as an officer or director of the Company, or as a fiduciary of any benefit plan of the Company.

ARTICLE VII: DEFINITIONS

 

7.1 “Cause” shall mean: (A) gross negligence or willful misconduct by a Participant which is materially injurious to the Company, monetarily or otherwise; (B) misappropriation or fraud with regard to the Company or its assets; or (C) conviction of, or the pleading of guilty or nolo contendere to, a felony involving the assets or business of the Company. For purpose of the preceding sentence, no act or failure to act by a Participant shall be considered “willful” unless done or omitted to be done by such Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, or based upon the advice of counsel for the Company, shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company.

 

7.2 “Change in Control” shall mean the occurrence of any of the following: (A) any “Person” (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding the Company, any subsidiary of the Company, or any employee benefit plan sponsored or maintained by the Company (including any trustee of any such plan acting in his capacity as trustee), becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange

 

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     Act) of securities of the Company representing 35% or more of the total combined voting power of the Company’s then outstanding securities; (B) the merger, consolidation or other business combination of the Company (a “Transaction”), other than a Transaction immediately following which the stockholders of the Company immediately prior to the Transaction continue to be the beneficial owners of securities of the resulting entity representing more than 65% of the voting power in the resulting entity, in substantially the same proportions as their ownership of Company voting securities immediately prior to the Transaction; or (C) the sale of all or substantially all of the Company’s assets, other than a sale immediately following which the stockholders of the Company immediately prior to the sale are the beneficial owners of securities of the purchasing entity representing more than 65% of the voting power in the purchasing entity, in substantially the same proportions as their ownership of Company voting securities immediately prior to the Transaction.

 

7.3 “Current Total Annual Compensation” shall be the sum of the following amounts: (A) the greater of a Participant’s highest rate of annual salary during the calendar year in which his employment terminates or such Participant’s highest rate of annual salary during the calendar year immediately prior to the year of such termination; and (B) the average of a Participant’s annual bonus compensation (prior to any bonus deferral election) earned in respect of the two most recent calendar years immediately preceding the calendar year in which the Participant’s employment terminated.

 

7.4 “Good Reason” shall mean the occurrence of any of the following events after a Change in Control without the Participant’s express written consent: (A) material diminution in the value and importance of a Participant’s position, duties, responsibilities or authority as of the date immediately prior to the Change in Control; or (B) a reduction in a Participant’s aggregate compensation or benefits; or (C) a failure of any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) of the Company to assume in writing the obligations hereunder. A termination for Good Reason shall mean a termination by a Participant effected by written notice given by the Participant to the Company within 30 days after the occurrence of the Good Reason event, unless the Company shall, within 15 days after receiving such notice, take such action as is necessary to fully remedy such Good Reason event in which case the Good Reason event shall be deemed to have not occurred.

 

7.5 “Participant” shall mean an employee who is a corporate officer of the Company on the date of a Change in Control as a result of his election by the Board. Notwithstanding the foregoing, if an employee who is not a corporate officer on the date of a Change in Control reasonably demonstrates that, in contemplation of the Change in Control or at the request of a party which subsequently causes a Change in Control, the Company removed him from such office, such employee shall also be a Participant.

 

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Exhibit 10.7

BROADRIDGE FINANCIAL SOLUTIONS, INC.

SUPPLEMENTAL OFFICERS RETIREMENT PLAN

The purpose of this Supplemental Officers Retirement Plan (the “Plan”) is to provide an additional means by which BROADRIDGE FINANCIAL SOLUTIONS, INC. may attract, retain and encourage the productive efforts of a select group of corporate vice presidents or more senior corporate officers who provide valuable services to it and its subsidiaries . The Plan provides supplemental retirement benefits to qualifying participants.

The Plan reads as follows:

ARTICLE I

DEFINITIONS

The following terms when used in this Plan shall have the designated meaning, unless a different meaning is clearly required by the context.

1.1 Annual Benefit Multiplier. The Annual Benefit Multiplier shall be 2% for each of the first twenty years of a Participant’s full calendar years of Future Service and 1% for each calendar year thereafter.

1.2 Annual Plan Benefit. The Annual Plan Benefit shall be the annual amount of a Participant’s Plan benefit calculated in accordance with the provisions of Section 3.1 below.

1.3 Committee. Three board members or senior officers of the Company, appointed from time to time by the Company’s board of directors.

1.4 Board. The board of directors of the Company.

1.5 Code. The Internal Revenue Code of 1986, as amended.

1.6 Company. Broadridge Financial Solutions, Inc. and its subsidiaries, and successors.

1.7 Early Retirement Date. The date on which a Participant attains age sixty (60).


1.8 Effective Date. March 30, 2007.

1.9 Final Average Annual Pay. The average annual compensation of a Participant for the five full consecutive calendar years during his Future Service period during which he received the largest total amount of compensation. If a Participant does not have five full consecutive calendar years of continuous employment with the Company, the Participant’s Future Service period may at the discretion of the Committee be deemed to include (solely for purposes of determining Final Average Pay) the Participant’s service, if any, with an employer who employed the Participant immediately prior to the Effective Date. For this purpose, a Participant’s “compensation” shall mean the total base salary and bonus compensation actually paid or accrued by the Company to or for such Participant and shall specifically exclude any industry bonus and any compensation derived from grants of restricted stock (whether time-based or performance-based), stock options, stock appreciation rights or any similar equity awards, and relocation pay; provided that, notwithstanding anything to the contrary set forth herein, amounts deferred at such Participant’s election under a cash or deferred arrangement under section 401(k) of the Code shall be included in such Participant’s compensation.

1.10 Future Service. A Participant’s period of full calendar years of continuous employment with the Company after his Plan participation has begun. A Participant in the Plan on the Effective Date shall be credited with Future Service beginning on January 1, 2007. Leaves of absence of less than six months may be taken into account as Future Service, to the extent provided by the Committee. The Committee may, in an applicable Supplement, grant a Participant prior service credit for determining his Future Service period. Future Service shall include additional Future Service reflecting a Participant’s service with a prior employer as determined by the Committee in its sole discretion. Any such additional Future Service granted by the Committee shall be set forth on Supplement A to the Plan. In addition, at the discretion of the Chief Executive Officer of the Company, for the calendar year in which a Participant incurs either an involuntary severance or severance which entitles the Participant to severance pay under the Broadridge Financial Solutions, Inc. severance policy, the Participant shall be credited with one full calendar year of additional Future Service without regard to when such severance pay terminates. Such service shall in no event be duplicative of service otherwise credited under the Plan and shall not be extended under this provision beyond the calendar year in which the severance pay commences.

1.11 Normal Retirement Date. The date on which the Participant attains age sixty-five (65).

1.12 Participant. An individual who has been designated as a Participant by the Committee pursuant to Article II.

1.13 Supplement. A supplement attached to and made a part of this Plan, which shall set forth for each Participant any special conditions applicable to him.

 

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1.14 Termination of Employment. References hereunder to a Participant’s termination of employment, the date a Participant’s employment terminates and the like, shall refer to the ceasing of the Participant’s employment with the Company for any reason.

1.15 Vested Percentage. Except to the extent set forth in Sections 3.4 and 5.5, until a Participant completes 5 full calendar years of Future Service, such Participant’s Vested Percentage shall be 0% and he shall not be entitled to any Plan benefits hereunder. Upon completing 5, 6, 7, 8, 9, and 10-or-more full calendar years of Future Service, a Participant’s Vested Percentage shall be 50%, 60%, 70%, 80%, 90%, and 100%, respectively. The Committee may, in the applicable Supplement, grant a Participant prior service credit for determining his Vesting Percentage purposes.

ARTICLE II

ELIGIBILITY

2.1 Eligibility. The Committee may at any time and from time to time (but prospectively only) designate any corporate vice president or any more senior corporate officer of the Company as a Participant in the Plan. The Committee shall determine the participants in the plan. Such determination shall be set forth in writing in accordance with uniform procedures established by the Committee in its sole discretion.

2.2 Automatic Termination of Eligibility. A person shall automatically cease to be a Participant on the date on which such person is no longer a corporate vice president or a more senior corporate officer of the Company.

ARTICLE III

RETIREMENT BENEFITS

3.1 In General.

(a) A Participant’s Annual Plan Benefit is the product of (i) his Final Average Annual Pay, (ii) his Future Service period, (iii) the Annual Benefit Multiplier and (iv) his Vested Percentage.

(b) A Participant’s benefits under this Plan shall be expressed as an annual amount in the form of a straight life annuity or, at the Committee’s election, another actuarially equivalent series of substantially equal periodic payments, payable not less frequently than annually, for the life (or life expectancy) of the Participant, starting as at the date the payments to such Participant under this Article III begin. The Committee may establish special provisions for the determination of benefits hereunder applicable to one or more Participants. Such provisions shall be set forth in Supplement A attached hereto. Notwithstanding the foregoing, a Participant’s Annual Plan Benefits determined under this Section 3.1 shall be reduced by the amounts, if any, set forth next to the Participant’s Employee Identification Number on Item 2 of Supplement A.

 

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3.2 Normal Retirement Benefit. If payment of a Participant’s benefits have not commenced on his Early Retirement Date under Section 3.3 below, payment of Plan benefits to the Participant shall commence on the first day of the month next following the later of the Participant’s Normal Retirement Date and the Participant’s termination of employment with the Company, and payment of benefits shall cease with the payment for the month in which the Participant’s death occurs. The monthly Plan benefit shall be one-twelfth of such Participant’s Annual Plan Benefit determined in accordance with the provisions of Section 3.1 above. In the event payment of a Participant’s benefits hereunder commence after a Participant’s Normal Retirement Date, such monthly benefit shall be in an amount equal to the monthly benefit the Participant would have received hereunder if the Participant had commenced receipt of payments under the Plan on his Normal Retirement Date, actuarially increased to reflect the commencement of the payment of Plan benefits before his Normal Retirement Date.

3.3 Early Retirement Benefit. Payment of a Participant’s Plan benefits shall commence on the first day of the month next following the Participant’s termination of employment with the Company on or following his Early Retirement Date and prior to his Normal Retirement Date, and benefits shall cease with the payment for the month in which his death occurs. Such monthly benefit shall be in an amount equal to the monthly benefit the Participant would have received under Section 3.2 if the Participant had commenced receipt of payments under the Plan on his Normal Retirement Date, actuarially reduced to reflect the commencement of the payment of Plan benefits before his Normal Retirement Date. The Committee may, in its discretion, reduce a Participant’s Plan benefits by less than a straight actuarially reduced amount if Participant begins to receive Plan benefits after his Early Retirement Date and before his Normal Retirement Date.

3.4 Delayed Benefit. In the case of a Participant with a Vested Percentage greater than 0% who terminates employment with the Company prior to his Early Retirement Date, payment of his Plan benefits shall commence on his Early Retirement Date. Such monthly benefit shall be in an amount equal to the monthly benefit the Participant would have received under Section 3.2 if the Participant had commenced receipt of payments under the Plan on his Normal Retirement Date, actuarially reduced to reflect the commencement of the payment of Plan benefits before his Normal Retirement Date.

3.5 Disability Retirement Benefit. If a Participant shall incur a Disability while employed by the Company, the Company shall pay such Participant a monthly benefit starting on the first day of the calendar month immediately following the date his Disability begins, or, if later, the date of his termination of employment from the Company, and ending with the payment for the calendar month in which his death occurs or his Disability ends, whichever occurs first. Such monthly benefit (which shall not be reduced by, and shall not reduce, the benefits, if any, payable to a Participant under the Company’s long-term disability insurance program) shall be calculated in the same way as an early retirement benefit under Section 3.3, based on his Final Average Annual Pay when his Disability begins (which will, for purposes of this Section 3.5 only, be determined over less than five full consecutive calendar years to the extent that his Future Service period is less than five years), except that (i) the Vested Percentage shall always be

 

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100%, (ii) there shall not be any actuarial reduction to reflect the commencement of the payment of benefits before his Normal Retirement Date, and (iii) there shall not be any Future Service period accrual during his Disability. For purposes of this Section 3.5, “Disability” shall have the same meaning, and shall be determined in the same manner, as it is determined under the Company’s long-term disability insurance program as in effect on the date the Disability begins.

3.6 No Duplication. In no event shall benefits become payable to any Participant under more than one Section of this Article III.

3.7 Specified Employees. In the event the Committee determines that, at the time of a Participant’s termination of employment with the Company, such Participant is a “specified employee”, as defined in Section 409A(a)(2)(B)(i) of the Code, commencement of the Participant’s Plan benefits shall be delayed for six months following the Participant’s termination of employment with the Company.

ARTICLE IV

FORFEITURES

4.1 Forfeiture for Competitive Employment. If, after a Participant’s employment terminates, the Participant violates the non-competition provisions of any agreement he has entered into with the Company, or if his employment with the Company is terminated on account of his dishonesty or gross negligence, such Participant shall forever and irrevocably forfeit all benefits otherwise due him under the terms of the Plan.

4.2 Limitation. If any provision of this Article IV shall be unenforceable as a matter of law, it shall be construed to apply to the greatest extent permitted by law so as to give effect to its intended purposes.

ARTICLE V

CONDITIONS RELATED TO BENEFITS

5.1 Administration of Plan. The Committee shall administer the Plan and shall have the sole and exclusive authority to interpret, construe and apply its provisions. The Committee shall have the power to establish, adopt and revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan and the operation of the Committee’s activities in connection therewith. All decisions of the Committee shall be by vote or written consent of the majority of its members and shall be final and binding. Members of the Committee shall be eligible to participate in the Plan while serving as a member of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member in his capacity as a Participant.

5.2 Grantor Trust. The Committee may, at its discretion, have the Company create a grantor trust (within the meaning of section 671 of the Code) in connection with the adoption of this Plan

 

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to which it may from time to time contribute amounts to accumulate an appropriate reserve against its obligations hereunder. Notwithstanding the creation of such trust, the benefits hereunder shall be a general obligation of the Company.

5.3 No Right to Company Assets. Neither a Participant nor any other person shall acquire by reason of the Plan any right in or title to any assets, funds or property of the Company whatsoever including, without limiting the generality of the foregoing, any specific funds or assets which the Company may set aside in anticipation of a liability hereunder, nor in any policy or policies of insurance on the life of a Participant owned by the Company.

5.4 No Employment Rights. Nothing herein shall constitute a contract of continuing employment or in any manner obligate the Company to continue the service of a Participant, or obligate a Participant to continue in the service of the Company, and nothing herein shall be construed as fixing or regulating the compensation paid to a Participant.

5.5 Company’s Right to Terminate and Amend. The Company reserves the right in its sole discretion at any time to amend the Plan in any respect or terminate the Plan. Notwithstanding the foregoing, no such amendment or termination shall reduce the amount of the benefit theretofore vested in any Participant or change the conditions required to be satisfied to receive payment of such past accrued benefit based on the provisions of the Plan as theretofore in effect. For this purpose, the amount of a Participant’s accrued benefit as of the date of any plan amendment or termination shall be determined as if the Participant was then retiring in accordance with Section 3.3 with his actual Vested Percentage accrued as at such date; provided that if the Company is terminating the Plan and if a Participant has not completed at least 5 years of Future Service, Participant’s Vested Percentage shall be: (i) 40% if he has completed 4 years of Future Service; (ii) 30% if he has completed 3 years of Future Service; (iii) 20% if he has completed 2 years of Future Service; (iv) 10% if he has completed 1 year of Future Service; and (v) 0% if he has not completed 1 year of Future Service.

5.6 Protective Provisions. The Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder.

5.7 Right of Offset. If at the time any payment is to be made hereunder a Participant is indebted to the Company or otherwise subject to a monetary claim by the Company, the payments remaining to be paid to the Participant under the Plan may, at the Company’s discretion, be reduced by setoff against the amount of such indebtedness or claim.

5.8 No Third Party Rights. Nothing in this Plan or any trust established pursuant to Section 5.2 hereof shall be construed to create any rights hereunder in favor of any person (other than the Company and any Participant) or to limit the Company’s right to amend or terminate the Plan in any manner subject to Section 5.5 hereof.

 

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ARTICLE VI

MISCELLANEOUS

6.1 Non-assignability. No rights or payments to any Participant shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and no attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be valid, nor shall any such benefit or payment be in any way liable for or subject to the debts, contracts, liabilities, engagements or torts of any Participant or subject to levy, garnishment, attachment, execution or other legal or equitable process. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant, nor be transferable by operation of law in the event of a Participant’s bankruptcy or insolvency.

6.2 Withholding. To the extent required by law the Company shall be entitled to withhold from any payments due hereunder any federal, state and local taxes required to be withheld in connection with such payment.

6.3 Gender and Number. Wherever appropriate herein, the masculine shall mean the feminine and the singular shall mean the plural or vice versa.

6.4 Notice. Any notice required or permitted to be made under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to: (a) in the case of notice to the Company or the Committee, the principal office of the Company, directed to the attention of the Secretary of the Committee; and (b) in the case of a Participant, such Participant’s home or business address maintained in the Company’s personnel records. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or on the receipt for registration or certification.

6.5 Validity. In the event any provision of this Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan.

6.6 Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of New York, without regard to such state’s choice of law rules.

6.7 409A. The Committee shall have the power and discretion to modify the timing and/or form of the payment of benefits hereunder to the extent the Committee deems necessary or advisable to avoid the imposition of an accelerated or additional tax under Section 409A of the Code.

 

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ARTICLE VII

SPOUSAL BENEFITS

In the event of the death of a Participant who is at least 35 years of age at the time of his death and whose Vested Percentage is greater than 0%, the Participant’s surviving spouse, (if any) is entitled to receive 50% of the benefit which the Participant would have been entitled to receive at the time of his death. Payments under this Article VII shall commence on the first day of the calendar month next following the Participant’s death if the Participant has already attained age 60 by the time of his death, and shall otherwise commence on the first day of the calendar month next following the month in which the sixtieth anniversary of the Participant’s birth occurs. Benefits paid under this Article VII shall be payable monthly as a straight life annuity benefit and shall be calculated in accordance with the benefit to which the Participant would have been entitled at his Normal Retirement Date. In the case of payments hereunder which commence prior to the date on which the Participant would have attained age 65, the payments shall be actuarially reduced to reflect the commencement of the payment before the Participant’s attainment of age 65.

 

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Supplement A

Special Provisions Applicable to Certain Participants

 

1. With respect to the Participants whose identifying information is set forth in this Item 1 to Supplement A, the Annual Plan Benefit determined under the first sentence of Section 3.1 after the completion of any given calendar year before giving effect to any limitation under Item 2 of this Supplement A shall be no less than the Accrued Annual Minimum Benefit set forth in this Item 1 for such completed calendar year.

Employee Identification Number: 103621

 

Completed Full Calendar Year

   Accrued Annual Minimum Benefit
Payable at Age 65

2007

   $ 264,699

2008

   $ 309,348

2009

   $ 353,674

2010

   $ 400,184

2011 and later

   $ 435,526

Employee Identification Number: 103594

 

Completed Full Calendar Year

   Accrued Annual Minimum Benefit
Payable at Age 65

2007

   $ 245,589

2008

   $ 288,578

2009

   $ 331,920

2010

   $ 384,897

2011 and later

   $ 435,526

2. With respect to the Participants whose identifying information is set forth in this Item 2 to Supplement A, the Future Service credited under Section 1.10 shall include the Additional Future Service set forth in the second column of this Item 2, below, and the Annual Plan Benefits determined under Section 3.1 shall be reduced by the amounts set forth in the third column of this Item 2, below:

 

Employee Identification Number

   Additional Future Service    Amount by which Benefit
Determined Under Sentence 1
of Section 3.1 Shall Be
Reduced.

103621

   13    $ 223,770

103594

   12    $ 206,108

103724

   6    $ 25,916

124724

   3    $ 0

 

9

Exhibit 10.8

March 29, 2007

Richard J. Daly

214 Linden Lane

Upper Brookville, NY 11545

Dear Richard:

This letter outlines our understandings concerning the impact of a “Change in Control” on your new position as the Chief Executive Officer of Broadridge Financial Solutions, Inc. (“Broadridge”):

 

  1. Change in Control: If a Change in Control occurs and if your employment is terminated (other than for cause) or you resign for “Good Reason” within two years after such Change in Control event, you will receive a termination payment equal to 200% of your “Current Total Annual Compensation” (as defined in the CIC Agreement). This termination payment will be reduced to 150% of your Current Total Annual Compensation if such termination or resignation occurs during the third year after such Change in Control event.

 

  2. Tax Equalization Payment: Broadridge will also pay you a tax equalization payment in an amount which when added to the other amounts payable to you under Paragraph 4(e) will place you in the same after-tax position as if the excise tax penalty of Section 4999 of the Internal Revenue Code of 1986 or any successor statute of similar import did not apply.

 

  3. CIC Agreement: You are also entitled to receive, on an item-by-item basis, the greater of the benefits and payments and more favorable conditions provided under this letter agreement and/or the Broadridge Financial Solutions, Inc. Change in Control Severance Plan for Corporate Officers (the “CIC Agreement”).

This letter agreement may be executed simultaneously in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute but one and the same document.

If the foregoing correctly sets forth our understandings, please sign this letter agreement where indicated, whereupon it will become a binding agreement between us.

 

Very truly yours,
BROADRIDGE FINANCIAL SOLUTIONS, INC.
By:  

/s/    James B. Benson

Name:   James B. Benson
Title:   President

 

ACCEPTED AND AGREED:
/s/    Richard J. Daly
Richard J. Daly

Exhibit 10.9

March 29, 2007

John Hogan

36 Glenby Lane

Brookville, NY 11545

Dear John:

This letter outlines our understandings concerning the impact of a “Change in Control” on your new position as the Vice President and Chief Operating Officer of Broadridge Financial Solutions, Inc. (“Broadridge”):

 

  1. Change in Control: If a Change in Control occurs and if your employment is terminated (other than for cause) or you resign for “Good Reason” within two years after such Change in Control event, you will receive a termination payment equal to 200% of your “Current Total Annual Compensation” (as defined in the CIC Agreement). This termination payment will be reduced to 150% of your Current Total Annual Compensation if such termination or resignation occurs during the third year after such Change in Control event.

 

  2. Tax Equalization Payment: Broadridge will also pay you a tax equalization payment in an amount which when added to the other amounts payable to you under Paragraph 4(e) will place you in the same after-tax position as if the excise tax penalty of Section 4999 of the Internal Revenue Code of 1986 or any successor statute of similar import did not apply.

 

  3. CIC Agreement: You are also entitled to receive, on an item-by-item basis, the greater of the benefits and payments and more favorable conditions provided under this letter agreement and/or the Broadridge Financial Solutions, Inc. Change in Control Severance Plan for Corporate Officers (the “CIC Agreement”).

This letter agreement may be executed simultaneously in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute but one and the same document.

If the foregoing correctly sets forth our understandings, please sign this letter agreement where indicated, whereupon it will become a binding agreement between us.

 

Very truly yours,
BROADRIDGE FINANCIAL SOLUTIONS, INC.
By:  

/s/    James B. Benson

Name:   James B. Benson
Title:   President

 

ACCEPTED AND AGREED:
/s/    John Hogan
John Hogan

Exhibit 10.10

 

LOGO    

Executive Deferred

Compensation

Fiscal Year 2007

Deferred

Compensation

Program


Deferred Compensation Program

Broadridge Financial Solutions, Inc. (Broadridge) (“the Corporation”), has adopted the Deferred Compensation Program (“the Program”) to provide a tax-deferred savings opportunity to eligible associates. The Program allows certain individuals the opportunity to defer a portion of their annual bonus on a before-tax basis.

This brochure describes the bonus deferral opportunity for amounts earned in Fiscal Year 2007. Before enrolling, we encourage you to review this material to familiarize yourself with the options and choices available under the Program. For more detailed information, please contact Broadridge Executive Deferred Compensation at (866) 266-4881.

Who is Eligible?

U.S.-based associates in Executive Grade F or above who are eligible to receive a bonus payment on an annual basis are eligible to join the Deferred Compensation Program. In its sole discretion, the Deferred Compensation Program Committee (“the Committee”) may expand the Program to cover associates in different grade levels. In addition, a participant in another Broadridge non-qualified deferral program, or a participant in another unfunded bonus deferral program that is sponsored by an employer acquired in whole, or in part, by Broadridge, and which was maintained for a select group of management or highly compensated associates, may, in the sole discretion of the Committee, be allowed to transfer the participant’s notional account balances under such Program and be a participant in the Program, even though the participant may not be eligible to defer any additional bonus under the Program.

Each year you must complete a new enrollment for the Deferred Compensation Program.

Associates who become eligible during the year, or who were previously eligible, can enroll in the Program each year. Enrollment takes place each year in September. The election you make applies to the bonus earned during the current fiscal year. Each year a new enrollment for the Program must be completed.

New hires who are otherwise eligible for the program have 30 days after the date of hire to enroll for the current fiscal year.

How the Program Works

You can elect to defer the receipt and taxation of up to 100% of your bonus earned each year under the Program. Based on a current understanding of IRS rulings, generally if you are a U.S. resident, no income taxes are due on your compensation deferrals or any investment experience credited to your account in the Program until they are actually paid to you.

Broadridge will match 50% of all deferrals up to a maximum employer contribution of $10,000 per year. Generally, this employer contribution is also exempt from income taxes until it is paid except for Social Security and Medicare taxes which are due upon vesting. Employer matching contributions will be made only on those amounts that are deferred to retirement.

Deferrals and employer matching contributions will be credited to a phantom account (established in your name). The return on your account is recorded monthly and is based on the performance of the model investment funds you select. The value of your account will fluctuate based on the market results for these funds.

 

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Deferred Compensation Program

Significant Considerations

The Deferred Compensation Program, unlike the 401(k) Plan, is not a “qualified” retirement plan. The following summarizes these significant differences:

 

 

The Corporation is fully committed to paying your deferred amounts plus accumulated earnings and employer matching contributions. However, due to the non-qualified nature of the Program, your benefits are not guaranteed and you are considered an unsecured creditor of the Corporation.

 

 

Upon retirement from the Corporation, your distributions begin according to the distribution alternative you have selected. You cannot further defer the receipt of distributions.

 

 

Distributions are not eligible for rollover into an IRA or other qualified savings or retirement plan.

The Corporation does not intend to seek a ruling from the IRS regarding the income tax consequences of the Program. However, the Corporation believes that there is substantial reason for excluding the deferred amounts from taxable income until they are actually paid to you. The Corporation does not guarantee the federal or state income tax treatment of the deferred amounts.

How you benefit by participating (Example)

 

     INSIDE PROGRAM    OUTSIDE PROGRAM

GROSS BONUS

   $ 50,000    $ 50,000

VOLUNTARY DEFERRAL IN PROGRAM

   $ 50,000    $ 0

EMPLOYER MATCH IN PROGRAM

   $ 10,000    $ 0

ESTIMATED CURRENT TAX (at 40%)

   $ 0    $ 20,000

INVESTMENT OUTSIDE PROGRAM

   $ 0    $ 30,000

INVESTMENT VALUE AFTER 10 YEARS

   $ 155,625    $ 53,725
    
 
(10.0% Before Tax
Rate of Return)
    
 
(6.0% After Tax
Rate of Return)

ESTIMATED FUTURE TAX (at 40%)

   $ 62,250    $ 0

MONEY IN YOUR POCKET

   $ 93,375    $ 53,725

Rates of return are estimated for illustrative purposes only, and assume investment in the same S&P index fund. The program valuation assumes that the participant has selected to receive distributions upon retirement.

 

3


Deferred Compensation Program

Employer Contributions

Broadridge will match 50% of all deferrals up to a maximum employer contribution of $10,000 per year. In order to be eligible for these contributions, three criteria must be met:

 

 

You must contribute the maximum flat dollar limit imposed by the IRS to the Broadridge 401(k) plan. The maximum must be met in the same calendar year (2006) in which the deferral election occurs. In calendar year 2006, the maximum amount is $15,000. Catch-up contributions for associates over age 50 are not considered part of the maximum limit for this purpose.

 

 

Only funds that are elected to be deferred until retirement will be counted toward the employer match.

 

 

Participants who were ADP Corporate Officers at the time when the deferral election was made are not eligible to receive the employer matching contribution.

Investment Selection

The funds listed below have been designated to serve as “investments” for your contributions. You may select one or both of these funds for the investment experience of your account (voluntary deferral and employer matching contribution).

 

 

Fixed Interest Fund : Credited interest, compounded quarterly, based on the communicated interest rate for the fiscal year.

 

 

Standard & Poors 500 Stock Index Fund : Credited dividends and capital appreciation, if any, as earned. The investments are made in the Scudder Equity 500 Index Fund (Premier Class).

Changes to your most recent fiscal year investment selections are permitted prior to the actual bonus payment / deferral date. At the time of the annual deferral enrollment process, you can review and re-affirm those investment election choices that were made at the beginning of the fiscal year for bonuses that will be paid after the end of the fiscal year. Specific instructions regarding this provision are included in the annual enrollment materials.

Changes to investment selections in existing accounts (i.e., previous years’ deferrals) are not permitted.

Changing your Deferral Election

The percentage of bonus you elect to defer to the Program is irrevocable and cannot be amended.

Vesting

Voluntary participant contributions are fully vested from the date of deferral, and payable based upon the distribution election of the participant (see Timing of Payments , below). Employer matching contributions, if eligible, vest at the earlier of age 55 with ten years of service with Broadridge, or age 65. However, regardless of service, employer contributions will not vest if a participant terminates employment prior to retirement age or retires from Broadridge prior to September 1, 2008.

Employer matching contributions also vest at 100% upon death or permanent disability. These circumstances are not subject to the September 2008 vesting rule.

Benefit Payments

You must elect the timing and form of payment each year when you enroll in the Program. Each

 

4


year your election will affect that year’s deferral and the earnings associated with it. However, you are entitled to a one-time second election. This second election can be used to extend the timing and/or change the number of installment payments for the receipt of the deferred amounts. The one-time second election must follow these guidelines:

 

  1. The election must be made in writing, at least 12 months prior to the first distribution date.

 

  2. You cannot shorten the deferral period to receive any percentage of the scheduled payment earlier than originally elected.

 

  3. Later elections to change the timing or form of payment must not be given effect until at least 12 months after the original deferral.

 

 

4.

The new payment date must be at least five years after the date the payment otherwise would have been made. 1

All distributions must be triggered by either a set future date or a separation from service.

Timing of payments:

 

 

Retirement : Defined as a voluntary termination of employment with the Corporation that occurs at age 65 or older, or after you attain age 55 and complete ten years of service for the Corporation. Distributions will begin as soon as administratively possible following six months after the effective retirement date.

 

 

Death: In the event of your death, your designated beneficiary will receive your outstanding account balances in a lump sum within ninety days of your death. Your beneficiary may petition the Committee to receive the payments in installments, provided that the requested schedule complies with the election rules defined above.

 

 

Permanent Disability: In the event you become disabled, as defined in Section 409(a) of the Internal Revenue Code (including satisfaction of all applicable waiting periods to receive benefits), your benefit will automatically be paid to you in a lump sum. You may petition the Committee to receive the payments in installments.

 

 

Termination: In the event you terminate employment with the Corporation prior to retirement, your vested benefit will automatically be paid to you in a lump sum no earlier than six months after termination, and as soon as legally and administratively possible following that date. No employer matching contributions and no investment gains on employer contributions will be paid in the result of a pre-retirement termination.

 

 

In-Service: September of any year at least five years after your original deferral. If you leave the Corporation prior to your in-service date you will begin receiving your payment(s) as described in the Termination section above. You cannot select to receive in-service distributions of employer matching contributions, which are only payable upon retirement, death or permanent disability. In addition, employee contributions that are selected for in-service distribution will not be eligible for matching employer contributions.

You can divide your distribution election as you wish between in-service and retirement. For example, you can select to receive 50% of your deferral five years after the date of the deferral, and 50% upon retirement. However, only the portion that is deferred until retirement will be eligible for the employer matching contribution.

 


1

By law, this modified deferral selection can be overridden only for distributions due to death or permanent disability.


Forms of payment are as follows:

 

 

Lump Sum: A lump-sum payment will be made as soon as legally and administratively possible as defined above in the case of retirement, death, disability, or in-service payment.

 

     A lump sum payment is mandatory if you terminate your employment with the Corporation for any reason other than retirement, death, or disability.

 

 

Installments: If distribution via installments is selected, annual installment payments not to exceed fifteen years in length will be made to you starting as soon as legally and administratively possible. The first installment will be made in accordance with the six-month waiting period and thereafter in the September of each subsequent tax year. Installment selections will not be honored in the case of termination of employment for any reason other than retirement, death, or disability.

Associate Statements

Each quarter, you will receive a statement of your Deferred Compensation Program account. Your statement will show the amount of your deferrals, employer matching contributions, and the investment experience recorded to your account for the period.

Choosing a Beneficiary

We strongly suggest that you designate your beneficiary when you enroll in the Program. To change your beneficiary, please contact Broadridge Executive Deferred Compensation at (866) 266-4881 or visit www.WorldClassExec.com .

Tax Issues

If you are subject to Social Security and Medicare taxes, your entire voluntary deferral will be subject to these taxes at the time of deferral. These taxes will be deducted from your next regular paycheck. The employer matching contributions will be subject to Social Security and Medicare taxes at the time of vesting.

Income tax at the time of deferral:

 

 

Bonuses that are deferred are exempt from federal income tax at the time of the deferral. However, some states do not exempt deferred compensation programs from state income taxes. Please consult with an accountant or tax advisor.

Income tax at the time payments begin:

 

 

At the time of payment of a deferral award, the Corporation is required by law to withhold federal, state, and local income tax on both the principal amount and the investment earnings. It is the Corporation’s understanding that under the current provisions of the Internal Revenue code, installments of a deferred payment, including interest, will be taxable to the participant as ordinary income in the year or years in which such payments are paid. Tax is withheld from the deferred amount paid and from any other payments and/or account balances.

 

 

Should you elect installment payments that are less than ten years, you may be required to pay state income tax at the time of payment to the state where the income was earned, regardless of the state of residence at the time of payment. Please consult with an accountant or tax advisor.

Exhibit 10.11

BROADRIDGE FINANCIAL SOLUTIONS, INC.

2007 OMNIBUS AWARD PLAN

1. Purpose

The purpose of the Plan is to provide a means through which the Company and its Affiliates may attract able persons to enter and remain in the employ of the Company and its Affiliates and to provide a means whereby employees, directors and consultants of the Company and its Affiliates can acquire and maintain Common Stock ownership, or be paid incentive compensation measured by reference to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company and its Affiliates and promoting an identity of interest between stockholders and these persons.

So that the appropriate incentive can be provided, the Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Phantom Stock Awards, Stock Bonuses and Performance Compensation Awards, or any combination or variation of the foregoing.

2. Definitions

The following definitions shall be applicable throughout the Plan.

(a) “ Affiliate ” means (i) any entity that directly or indirectly is controlled by, controls or is under common control with the Company and (ii) to the extent provided by the Committee, any entity in which the Company has a significant equity interest.

(b) “ Award ” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Phantom Stock Award, Stock Bonus or Performance Compensation Award granted under the Plan.

(c) “ Award Agreement ” means an agreement pursuant to which an Award is granted.

(d) “ Board ” means the Board of Directors of the Company.

(e) “ Cause ” shall mean, unless in the case of a particular Award the applicable Award agreement states otherwise, the Company or an Affiliate having “cause” to terminate a Participant’s employment or service, as defined in any existing employment, consulting or any other agreement between the Participant and the Company or an Affiliate in effect at the time of such termination or, in the absence of such an employment, consulting or other agreement, upon (i) the good faith determination by the Committee that the Participant has ceased to perform his duties to the Company or an Affiliate (other than as a result of his incapacity due to physical or


mental illness or injury), which failure amounts to an intentional and extended neglect of his duties to such party, provided that no such failure shall constitute Cause unless the Participant has been given notice of such failure (if cure is reasonably possible) and has not cured such act or omission within 15 days following receipt of such notice, (ii) the Committee’s good faith determination that the Participant has engaged or is about to engage in conduct materially injurious to the Company or an Affiliate, (iii) the Participant having been convicted of, or plead guilty or no contest to, a felony or any crime involving as a material element fraud or dishonesty, (iv) the consistent failure of the Participant to follow the lawful instructions of the Board or his direct superiors, which failure amounts to an intentional and extended neglect of his duties to such party, or (v) in the case of a Participant who is a non-employee director, the Participant ceasing to be a member of the Board in connection with the Participant engaging in any of the activities described in clauses (i) through (iv) above.

(f) “ Change in Control ” shall mean the occurrence of any of the following: (A) any “ Person ” (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), excluding the Company, any subsidiary of the Company, or any employee benefit plan sponsored or maintained by the Company (including any trustee of any such plan acting in his capacity as trustee), becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Company representing 35% or more of the total combined voting power of the Company’s then outstanding securities; (B) the merger, consolidation or other business combination of the Company (a “ Transaction ”), other than a Transaction immediately following which the stockholders of the Company immediately prior to the Transaction continue to be the beneficial owners of securities of the resulting entity representing more than 65% of the voting power in the resulting entity, in substantially the same proportions as their ownership of Company voting securities immediately prior to the Transaction; or (C) the sale of all or substantially all of the Company’s assets, other than a sale immediately following which the stockholders of the Company immediately prior to the sale are the beneficial owners of securities of the purchasing entity representing more than 65% of the voting power in the purchasing entity, in substantially the same proportions as their ownership of Company voting securities immediately prior to the Transaction.

(g) “ Code ” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

(h) “ Committee ” means a committee of at least two people as the Board may appoint to administer the Plan or, if no such committee has been appointed by the Board, the Board. Unless the Board is acting as the Committee or the Board specifically determines otherwise, each member of the Committee shall, at the time he takes any action with respect to an Award under the Plan, be an Eligible Director. However, the fact that a Committee member shall fail to qualify as an Eligible Director shall not invalidate any Award granted by the Committee which Award is otherwise validly granted under the Plan.

 

2


(i) “ Common Stock ” means the common stock of the Company, par value $0.01 per share, and any stock into which such common stock may be converted or into which it may be exchanged.

(j) “ Company ” means Broadridge Financial Solutions, Inc. and any successor thereto.

(k) “ Date of Grant ” means the date on which the granting of an Award is authorized, or such other date as may be specified in such authorization or, if there is no such date, the date indicated on the applicable Award Agreement.

(l) “ Effective Date ” means March 29, 2007.

(m) “ Eligible Director ” means a person who is (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, or a person meeting any similar requirement under any successor rule or regulation and (ii) an “outside director” within the meaning of Section 162(m) of the Code, and the Treasury Regulations promulgated thereunder, and (iii) an “independent director” under the rules of any stock exchange on which the Stock is listed; provided, however , that (A) clause (i) shall apply only with respect to grants of Awards to which Section 16(b) of the Exchange Act otherwise would be applicable and (B) clause (ii) shall apply only with respect to grants of Awards with respect to which the Company’s tax deduction could be limited by Section 162(m) of the Code if such clause did not apply.

(n) “ Eligible Person ” means any (i) individual regularly employed by the Company or Affiliate who satisfies all of the requirements of Section 6; provided , however , that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating thereto; (ii) director of the Company or an Affiliate or (iii) consultant or advisor to the Company or an Affiliate who may be offered securities pursuant to Form S-8.

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

(p) “ Fair Market Value ”, on a given date, means (i) if the Stock is listed on a national securities exchange, the closing price reported on the primary exchange with which the Stock is listed and traded on such date, or, if there is no such sale on that date, then the closing price on the last preceding date on which such a sale was reported; or (ii) if the Stock is not listed on a national securities exchange, the amount determined by the Committee to be the fair market value based upon a good faith attempt to value the Stock accurately and computed in accordance with applicable regulations of the Internal Revenue Service.

(q) “ Incentive Stock Option ” means an Option granted by the Committee to a Participant under the Plan which is designated by the Committee as an incentive stock option as described in Section 422 of the Code and otherwise meets the requirements set forth herein.

 

3


(r) “ Negative Discretion ” shall mean the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size of a Performance Compensation Award in accordance with Section 11(d)(iv) of the Plan; provided , that the exercise of such discretion would not cause the Performance Compensation Award to fail to qualify as “performance-based compensation” under Section 162(m) of the Code.

(s) “ Nonqualified Stock Option ” means an Option granted by the Committee to a Participant under the Plan which is not designated by the Committee as an Incentive Stock Option.

(t) “ Option ” means an Award granted under Section 7 of the Plan.

(u) “ Option Period ” means the period described in Section 7(c) of the Plan.

(v) “ Option Price ” means the exercise price for an Option as described in Section 7(a) of the Plan.

(w) “ Participant ” means an Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award pursuant to Section 6 of the Plan.

(x) “ Parent ” means any parent of the Company, as defined in Section 424(e) of the Code.

(y) “ Performance Compensation Award ” shall mean any Award designated by the Committee as a Performance Compensation Award pursuant to Section 11 of the Plan.

(z) “ Performance Criteria ” shall be measured in terms of one or more of the following objectives, described as they relate to Company-wide objectives or of a subsidiary, division, department or function of the Company:

(i) Earnings per share;

(ii) Stock price;

(iii) Shareholder return;

(iv) Return on investment;

(v) Return on capital;

(vi) Earnings before interest, taxes, depreciation and amortization;

 

4


(vii) Gross or net profits;

(viii) Gross or net revenues;

(ix) Net earnings or net income (before or after taxes);

(x) Net operating profit (before or after taxes);

(xi) Return measures (including, but not limited to, return on assets, capital, invested capital, equity, or sales);

(xii) Cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital);

(xiii) Gross or operating margins;

(xiv) Productivity ratios;

(xv) Expense targets;

(xvi) Margins;

(xvii) Operating efficiency;

(xviii) Objective measures of customer satisfaction;

(xix) Working capital targets;

(xx) Measures of economic value added;

(xxi) Sales;

(xxii) Enterprise value;

(xxiii) Client retention;

(xxiv) Competitive market metrics;

(xxv) Employee retention;

(xxvi) Timely completion of new product rollouts; or

(xxvii) Any combination of the foregoing.

(aa) “ Performance Formula ” shall mean, for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

 

5


(bb) “ Performance Goals ” shall mean, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. The Committee is authorized at any time during the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), or at any time thereafter (but only to the extent the exercise of such authority after such period would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “performance-based compensation” under Section 162(m) of the Code), in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code in order to prevent the dilution or enlargement of the rights of Participants based on the following events:

 

  (i) asset write-downs,

 

  (ii) litigation or claim judgments or settlements,

 

  (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results,

 

  (iv) any reorganization and restructuring programs,

 

  (v) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year,

 

  (vi) acquisitions or divestitures,

 

  (vii) any other specific unusual or nonrecurring events, or objectively determinable category thereof;

 

  (viii) foreign exchange gains and losses, and

 

  (ix) a change in the Company’s fiscal year.

(cc) “ Performance Period ” shall mean the one or more periods of time, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.

(dd) “ Phantom Stock Award ” shall mean a cash award whose value is determined based on the change in the value of the Company Common Stock from the Date of Grant.

 

6


(ee) “ Plan ” means this Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan.

(ff) “ Restricted Period ” means, with respect to any Award of Restricted Stock or any Restricted Stock Unit, the period of time determined by the Committee during which such Award is subject to the restrictions set forth in Section 9 or, as applicable, the period of time within which performance is measured for purposes of determining whether an Award has been earned.

(gg) “ Restricted Stock ” means shares of Stock issued or transferred to a Participant subject to forfeiture and the other restrictions set forth in Section 9 of the Plan.

(hh) “ Restricted Stock Unit ” means a hypothetical investment equivalent to one share of Stock granted in connection with an Award made under Section 9.

(ii) “ Securities Act ” means the Securities Act of 1933, as amended.

(jj) “ Stock ” means the Common Stock or such other authorized shares of stock of the Company as the Committee may from time to time authorize for use under the Plan.

(kk) “ Stock Appreciation Right ” or “SAR” means an Award granted under Section 8 of the Plan.

(ll) “ Stock Bonus ” means an Award granted under Section 10 of the Plan.

(mm) “ Stock Option Agreement ” means any agreement between the Company and a Participant who has been granted an Option pursuant to Section 7 which defines the rights and obligations of the parties thereto.

(nn) “ Strike Price ” means, (i) in the case of a SAR granted in tandem with an Option, the Option Price of the related Option, or (ii) in the case of a SAR granted independent of an Option, the Fair Market Value on the Date of Grant.

(oo) “ Subsidiary ” means any subsidiary of the Company, as defined in Section 424(f) of the Code.

(pp) “ Substitution Award ” means an Award that is intended to replace any existing incentive award held by an employee or director of, or consultant or advisor to, an entity acquired by the Company or an Affiliate of the Company. The terms and conditions of any Substitution Award shall be set forth in an Award Agreement and shall, except as may be inconsistent with any provision of the Plan, to the extent practicable provide the recipient with benefits (including economic value) substantially similar to those provided to the recipient under the existing Award which such Substitution Award is intended to replace.

 

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(qq) “ Vested Unit ” shall have the meaning ascribed thereto in Section 9(d).

3. Effective Date, Duration and Shareholder Approval

The Plan is effective as of the Effective Date. No Option shall be treated as an Incentive Stock Option unless the Plan has been approved by the shareholders of the Company in a manner intended to comply with the shareholder approval requirements of Section 422(b)(i) of the Code; provided , that any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained.

The expiration date of the Plan, on and after which no Awards may be granted hereunder, shall be the tenth anniversary of the Effective Date; provided , however , that the administration of the Plan shall continue in effect until all matters relating to Awards previously granted have been settled.

4. Administration

(a) The Committee shall administer the Plan. The majority of the members of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present or acts approved in writing by a majority of the Committee shall be deemed the acts of the Committee.

(b) Subject to the provisions of the Plan and applicable law, the Committee shall have the power, and in addition to other express powers and authorizations conferred on the Committee by the Plan, to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of shares of Stock to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, shares of Stock, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash, Stock, other securities, other Options, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; (viii) establish, amend, suspend, or waive any rules and regulations under the Plan; (ix) appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

 

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(c) Notwithstanding the foregoing, the Committee may delegate to any officer or officers of the Company or any Affiliate the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Committee herein, and which may be so delegated as a matter of law, except for grants of Awards to (i) “covered employees” under Code Section 162(m) (other than Awards exempt from the application of Code Section 162(m)) and (ii) persons subject to Section 16 of the Exchange Act.

(d) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award or any documents evidencing Awards granted pursuant to the Plan shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all parties, including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any shareholder.

(e) No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award hereunder.

5. Grant of Awards; Shares Subject to the Plan

The Committee may, from time to time, grant Awards of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Phantom Stock Awards, Stock Bonuses and/or Performance Compensation Awards to one or more Eligible Persons; provided , however , that:

(a) Subject to Section 13, the aggregate number of shares of Stock in respect of which Awards may be granted under the Plan is 24,000,000 shares;

(b) Shares of Stock shall be deemed to have been used in settlement of Awards whether or not they are actually delivered or the Fair Market Value equivalent of such shares is paid in cash; provided , however , that shares of Stock delivered (either directly or by means of attestation) in full or partial payment of the Option Price in accordance with Section 7(b) shall be deducted from the number of shares of Stock delivered to the Participant pursuant to such Option for purposes of determining the number of shares of Stock acquired pursuant to the Plan. In accordance with (and without limitation upon) the preceding sentence, if and to the extent an Award under the Plan expires, terminates or is canceled for any reason whatsoever without the Participant having received any benefit therefrom, the shares covered by such Award shall again become available for future Awards under the Plan. For purposes of the foregoing sentence, a Participant shall not be deemed to have received any “benefit” (i) in the case of forfeited Restricted Stock Awards by reason of having enjoyed voting rights and dividend rights prior to the date of forfeiture or (ii) in the case of an Award cancelled pursuant to Section 5(e) by reason of a new Substitution Award being granted in substitution therefor;

 

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(c) Stock delivered by the Company in settlement of Awards may be authorized and unissued Stock, Stock held in the treasury of the Company, Stock purchased on the open market or by private purchase, or a combination of the foregoing;

(d) Subject to Section 13, no person may be granted Options or SARs under the Plan during any calendar year with respect to more than 200,000 shares of Stock; and

(e) Without limiting the generality of the preceding provisions of this Section 5, the Committee may, but solely with the Participant’s consent, agree to cancel any Award under the Plan and issue a new Award in substitution therefor upon such terms as the Committee may in its sole discretion determine, provided that the substituted Award satisfies all applicable Plan requirements as of the date such new Award is granted.

6. Eligibility

Participation shall be limited to Eligible Persons who have entered into an Award Agreement or who have received written notification from the Committee, or from a person designated by the Committee, that they have been selected to participate in the Plan.

7. Options

The Committee is authorized to grant one or more Incentive Stock Options or Nonqualified Stock Options to any Eligible Person; provided , however , that no Incentive Stock Option shall be granted to any Eligible Person who is not an employee of the Company or a Parent or Subsidiary. Each Option so granted shall be subject to the conditions set forth in this Section 7, or to such other conditions as may be reflected in the applicable Stock Option Agreement.

(a) Option Price . The exercise price (“Option Price”) per share of Stock for each Option shall be set by the Committee at the time of grant but shall not be less than the Fair Market Value of a share of Stock on the Date of Grant.

(b) Manner of Exercise and Form of Payment . No shares of Stock shall be delivered pursuant to any exercise of an Option until payment in full of the Option Price therefor is received by the Company. Options which have become exercisable may be exercised by delivery of written notice of exercise to the Committee accompanied by payment of the Option Price. The Option Price shall be payable (i) in cash, check, cash equivalent and/or shares of Stock valued at the Fair Market Value at the time the Option is exercised (including by means of attestation of ownership of a sufficient number of shares of Stock in lieu of actual delivery of such shares to the Company), (ii) in the discretion of the Committee, either (A) in other property having a

 

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fair market value on the date of exercise equal to the Option Price, (B) by means of a “net exercise” whereby the number of shares of Stock received by Participant shall equal the excess, if any, of (x) the number of shares of Stock that would have been received by Participant upon such exercise had Participant paid the Option Price in cash over (y) a number of shares of Stock, the aggregate Fair Market Value of which is equal to the aggregate Option Price that would have been paid as determined pursuant to the immediately preceding clause (x), or (C) by delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly to the Company an amount of loan proceeds, or proceeds from the sale of the Stock subject to the Option, sufficient to pay the Option Price or (iii) by such other method as the Committee may allow. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in the manner which the Committee determines would violate the Sarbanes-Oxley Act of 2002, any other applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter dealer quotation system on which the securities of the Company or any Affiliates are listed or traded.

(c) Vesting, Option Period and Expiration . Options shall vest and become exercisable in such manner and on such date or dates determined by the Committee and shall expire after such period, not to exceed ten years, as may be determined by the Committee (the “Option Period”); provided , however , that notwithstanding any vesting dates set by the Committee, the Committee may, in its sole discretion, accelerate the exercisability of any Option, which acceleration shall not affect the terms and conditions of such Option other than with respect to exercisability. If an Option is exercisable in installments, such installments or portions thereof which become exercisable shall remain exercisable until the Option expires.

(d) Stock Option Agreement - Other Terms and Conditions . Each Option granted under the Plan shall be evidenced by a Stock Option Agreement. Except as specifically provided otherwise in such Stock Option Agreement, each Option granted under the Plan shall be subject to the following terms and conditions:

(i) Each Option or portion thereof that is exercisable shall be exercisable for the full amount or for any part thereof.

(ii) Each share of Stock purchased through the exercise of an Option shall be paid for in full at the time of the exercise. Each Option shall cease to be exercisable, as to any share of Stock, when the Participant purchases the share or exercises a related SAR or when the Option expires.

(iii) Subject to Section 12(k), Options shall not be transferable by the Participant except by will or the laws of descent and distribution and shall be exercisable during the Participant’s lifetime only by him.

 

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(iv) Each Option shall vest and become exercisable by the Participant in accordance with the vesting schedule established by the Committee and set forth in the Stock Option Agreement.

(v) At the time of any exercise of an Option, the Committee may, in its sole discretion, require a Participant to deliver to the Committee a written representation that the shares of Stock to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to the distribution thereof and any other representation deemed necessary by the Committee to ensure compliance with all applicable federal and state securities laws. Upon such a request by the Committee, delivery of such representation prior to the delivery of any shares issued upon exercise of an Option shall be a condition precedent to the right of the Participant or such other person to purchase any shares. In the event certificates for Stock are delivered under the Plan with respect to which such investment representation has been obtained, the Committee may cause a legend or legends to be placed on such certificates to make appropriate reference to such representation and to restrict transfer in the absence of compliance with applicable federal or state securities laws.

(vi) Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date he or she makes a disqualifying disposition of any Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including any sale) of such Stock before the later of (A) two years after the Date of Grant of the Incentive Stock Option or (B) one year after the date the Participant acquired the Stock by exercising the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by it, retain possession of any Stock acquired pursuant to the exercise of an Incentive Stock Option as agent for the applicable Participant until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Stock.

(vii) A Stock Option Agreement may, but need not, include a provision whereby a Participant may elect, at any time before the termination of the Participant’s employment with the Company, to exercise the Option as to any part or all of the shares of Stock subject to the Option prior to the full vesting of the Option. Any unvested shares of Stock so purchased may be subject to a share repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate. The Company shall not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following the exercise of the Option unless the Committee otherwise specifically provides in an Stock Option Agreement.

(e) Incentive Stock Option Grants to 10% Stockholders . Notwithstanding anything to the contrary in this Section 7, if an Incentive Stock Option is

 

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granted to a Participant who owns stock representing more than ten percent of the voting power of all classes of stock of the Company or of a Subsidiary or Parent, the Option Period shall not exceed five years from the Date of Grant of such Option and the Option Price shall be at least 110 percent of the Fair Market Value (on the Date of Grant) of the Stock subject to the Option.

(f) $100,000 Per Year Limitation for Incentive Stock Options . To the extent the aggregate Fair Market Value (determined as of the Date of Grant) of Stock for which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) exceeds $100,000, such excess Incentive Stock Options shall be treated as Nonqualified Stock Options.

(g) Voluntary Surrender . The Committee may permit the voluntary surrender of all or any portion of any Nonqualified Stock Option and its corresponding SAR, if any, granted under the Plan to be conditioned upon the granting to the Participant of a new option for the same or a different number of shares as the option surrendered or require such voluntary surrender as a condition precedent to a grant of a new Option to such Participant. Such new Option shall be exercisable at an Option Price, during an Option Period, and in accordance with any other terms or conditions specified by the Committee at the time the new Option is granted, all determined in accordance with the provisions of the Plan without regard to the Option Price, Option Period, or any other terms and conditions of the Nonqualified Stock Option surrendered.

8. Stock Appreciation Rights

Any Option granted under the Plan may include SARs, either at the Date of Grant or, except in the case of an Incentive Stock Option, by subsequent amendment. The Committee also may award SARs to Eligible Persons independent of any Option. A SAR shall be subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose, including, but not limited to, the following:

(a) Vesting, Transferability and Expiration . A SAR granted in connection with an Option shall become exercisable, be transferable and shall expire according to the same vesting schedule, transferability rules and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall become exercisable, be transferable and shall expire in accordance with a vesting schedule, transferability rules and expiration provisions as established by the Committee and reflected in an Award Agreement.

(b) Automatic Exercise . If on the last day of the Option Period (or in the case of a SAR independent of an option, the period established by the Committee after which the SAR shall expire), the Fair Market Value exceeds the Strike Price, the Participant has not exercised the SAR or the corresponding Option, and neither the SAR nor the corresponding Option has expired, such SAR shall be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate payment therefor.

 

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(c) Payment . Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of shares subject to the SAR multiplied by the excess, if any, of the Fair Market Value of one share of Stock on the exercise date over the Strike Price. The Company shall pay such excess in cash, in shares of Stock valued at Fair Market Value, or any combination thereof, as determined by the Committee. Fractional shares shall be settled in cash.

(d) Method of Exercise . A Participant may exercise a SAR at such time or times as may be determined by the Committee at the time of grant by filing an irrevocable written notice with the Committee or its designee, specifying the number of SARs to be exercised, and the date on which such SARs were awarded.

(e) Expiration . Except as otherwise provided in the case of SARs granted in connection with Options, a SAR shall expire on a date designated by the Committee which is not later than ten years after the Date of Grant of the SAR.

9. Restricted Stock and Restricted Stock Units

(a) Award of Restricted Stock and Restricted Stock Units.

(i) The Committee shall have the authority (A) to grant Restricted Stock and Restricted Stock Units to Eligible Persons, (B) to issue or transfer Restricted Stock to Participants, and (C) to establish terms, conditions and restrictions applicable to such Restricted Stock and Restricted Stock Units, including the Restricted Period, as applicable, which may differ with respect to each grantee, the time or times at which Restricted Stock or Restricted Stock Units shall be granted or become vested and the number of shares or units to be covered by each grant.

(ii) Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory to the Committee, if applicable, and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement. If a Participant shall fail to execute an Award Agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power, the Award shall be null and void. Subject to the restrictions set forth in Section 9(b), the Participant generally shall have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock. At the discretion of the Committee, cash dividends and stock dividends with respect to the Restricted Stock may be either currently paid to the Participant or withheld by the Company for the Participant’s account, and interest may be credited on the amount of cash dividends withheld at a rate and subject to

 

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such terms as determined by the Committee. The cash dividends or stock dividends so withheld by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the Participant in cash or, at the discretion of the Committee, in shares of Stock having a Fair Market Value equal to the amount of such dividends and earnings, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall have no right to such cash dividends, stock dividends or earnings.

(iii) Upon the grant of Restricted Stock, the Committee shall cause a stock certificate registered in the name of the Participant to be issued and, if it so determines, deposited together with the stock powers with an escrow agent designated by the Committee. If an escrow arrangement is used, the Committee may cause the escrow agent to issue to the Participant a receipt evidencing any stock certificate held by it, registered in the name of the Participant.

(iv) The terms and conditions of a grant of Restricted Stock Units shall be reflected in a written Award Agreement. No shares of Stock shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment of any such Award. At the discretion of the Committee, each Restricted Stock Unit (representing one share of Stock) may be credited with cash and stock dividends paid by the Company in respect of one share of Stock (“ Dividend Equivalents ”). At the discretion of the Committee, Dividend Equivalents may be either currently paid to the Participant or withheld by the Company for the Participant’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Committee, in shares of Stock having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit and, if such Restricted Stock Unit is forfeited, the Participant shall have no right to such Dividends Equivalents.

(b) Restrictions .

(i) Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in Section 9(d) and the applicable Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Participant to such shares and as a shareholder with respect to such shares shall terminate without further obligation on the part of the Company.

 

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(ii) Restricted Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Stock Units are forfeited, all rights of the Participant to such Restricted Stock Units shall terminate without further obligation on the part of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.

(iii) The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock and Restricted Stock Units whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Restricted Stock or Restricted Stock Units are granted, such action is appropriate.

(c) Restricted Period . With respect to Restricted Stock and Restricted Stock Units, the Restricted Period shall commence on the Date of Grant and end at the time or times set forth on a schedule established by the Committee in the applicable Award Agreement.

(d) Delivery of Restricted Stock and Settlement of Restricted Stock Units . Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in Section 9(b) and the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the Participant’s account with respect to such Restricted Stock and the interest thereon, if any.

Upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his beneficiary, without charge, one share of Stock for each such outstanding Restricted Stock Unit (“ Vested Unit ”) and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 9(a)(iv) hereof and the interest thereon or, at the discretion of the Committee, in shares of Stock having a Fair Market Value equal to such Dividend Equivalents and interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion, elect to (i) pay cash or part cash and part Stock in lieu of delivering only shares of Stock for Vested Units or (ii) delay the delivery of Stock (or cash or part Stock and part cash, as the case may be) beyond the expiration of the Restricted Period. If a cash payment is made in lieu of delivering shares of Stock, the amount of such payment shall be equal to the Fair Market Value of the Stock as of the date on which the Restricted Period lapsed with respect to such Vested Unit.

 

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(e) Stock Restrictions . Each certificate representing Restricted Stock awarded under the Plan shall bear a legend substantially in the form of the following until the lapse of all restrictions with respect to such Stock as well as any other information the Company deems appropriate:

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THE BROADRIDGE FINANCIAL SOLUTIONS, INC. 2007 OMNIBUS AWARD PLAN AND A CERTAIN RESTRICTED STOCK AWARD AGREEMENT BETWEEN BROADRIDGE FINANCIAL SOLUTIONS, INC. AND THE REGISTERED OWNER OF THIS CERTIFICATE (OR HIS PREDECESSOR IN INTEREST). SAID PLAN IS AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE PRINCIPAL OFFICE OF BROADRIDGE FINANCIAL SOLUTIONS, INC. AND COPIES THEREOF WILL BE FURNISHED WITHOUT CHARGE TO ANY OWNER OF SAID SHARES UPON REQUEST.

Stop transfer orders shall be entered with the Company’s transfer agent and registrar against the transfer of legended securities.

10. Stock Bonus Awards

The Committee may issue unrestricted Stock, or other Awards denominated in Stock, under the Plan to Eligible Persons, alone or in tandem with other Awards, in such amounts and subject to such terms and conditions as the Committee shall from time to time in its sole discretion determine. A Stock Bonus Award under the Plan shall be granted as, or in payment of, a bonus, or to provide incentives or recognize special achievements or contributions.

11. Performance Compensation Awards

(a) General . The Committee shall have the authority, at the time of grant of any Award described in Sections 7 through 10 (other than Options and Stock Appreciation Rights granted with an exercise price or grant price, as the case may be, equal to or greater than the Fair Market Value per share of Stock on the date of grant), to designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Section 162(m) of the Code. The Committee shall have the authority to grant cash bonuses under the Plan with the intent that such bonuses shall qualify for the exemption from Section 162(m) of the Code provided pursuant to Treasury Regulation Section 1.162-27(f)(1), for the reliance period

 

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described in Treasury Regulation Section 1.162-27(f)(4)(iii). In addition, the Committee shall have the authority to make an award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Section 162(m).

(b) Eligibility . The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 11. Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.

(c) Discretion of Committee with Respect to Performance Compensation Awards . With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) that is(are) to apply to the Company and the Performance Formula. Within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence of this Section 11(c) and record the same in writing.

(d) Payment of Performance Compensation Awards

(i) Condition to Receipt of Payment . Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.

(ii) Limitation . A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (A) the Performance Goals for such period are achieved; and (B) the Performance Formula as applied against such Performance Goals determines that all or some portion of such Participant’s Performance Award has been earned for the Performance Period.

 

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(iii) Certification . Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply Negative Discretion in accordance with Section 11(d)(iv) hereof, if and when it deems appropriate.

(iv) Use of Discretion . In determining the actual size of an individual Performance Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate. The Committee shall not have the discretion to (a) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained; or (b) increase a Performance Compensation Award above the maximum amount payable under Sections 5(d) or 11(d)(vi) of the Plan.

(v) Timing of Award Payments . Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively practicable following completion of the certifications required by this Section 11.

(vi) Maximum Award Payable . Notwithstanding any provision contained in this Plan to the contrary, the maximum Performance Compensation Award payable to any one Participant under the Plan for a Performance Period is 100,000 shares of Stock or, in the event such Performance Compensation Award is paid in cash, the equivalent cash value thereof on the first or last day of the Performance Period to which such Award relates, as determined by the Committee. The maximum amount that can be paid in any calendar year to any Participant pursuant to a cash bonus Award described in the last sentence of Section 11(a) shall be $3,000,000. Furthermore, any Performance Compensation Award that has been deferred shall not (between the date as of which the Award is deferred and the payment date) increase (A) with respect to Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Committee or (B) with respect to a Performance Compensation Award that is payable in shares of Stock, by an amount greater than the appreciation of a share of Stock from the date such Award is deferred to the payment date.

12. General

(a) Additional Provisions of an Award . Awards to a Participant under the Plan also may be subject to such other provisions (whether or not

 

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applicable to Awards granted to any other Participant) as the Committee determines appropriate, including, without limitation, provisions to assist the Participant in financing the purchase of Stock upon the exercise of Options (provided, that the Committee determines that providing such financing does not violate the Sarbanes-Oxley Act of 2002), adding dividend equivalent rights or other protections to Participants in respect of dividends paid on Stock underlying any Award (in addition to those provisions of Section 9 providing for the payment of dividends with respect to Restricted Stock and Dividend Equivalents with respect to Restricted Stock Units), provisions for the forfeiture of or restrictions on resale or other disposition of shares of Stock acquired under any Award, provisions giving the Company the right to repurchase shares of Stock acquired under any Award in the event the Participant elects to dispose of such shares, provisions allowing the Participant to elect to defer the receipt of payment in respect of Awards for a specified period or until a specified event, and provisions to comply with Federal and state securities laws and Federal and state tax withholding requirements; provided , however , that any such deferral does not result in acceleration of taxability of an Award prior to receipt, or tax penalties, under Section 409A of the Code. Any such provisions shall be reflected in the applicable Award Agreement.

(b) Privileges of Stock Ownership . Except as otherwise specifically provided in the Plan, no person shall be entitled to the privileges of ownership in respect of shares of Stock which are subject to Awards hereunder until such shares have been issued to that person.

(c) Government and Other Regulations . The obligation of the Company to settle Awards in Stock shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any shares of Stock pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the shares of Stock to be offered or sold under the Plan. If the shares of Stock offered for sale or sold under the Plan are offered or sold pursuant to an exemption from registration under the Securities Act, the Company may restrict the transfer of such shares and may legend the Stock certificates representing such shares in such manner as it deems advisable to ensure the availability of any such exemption.

(d) Tax Withholding.

(i) A Participant may be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any shares of Stock or other property deliverable under any Award or from any compensation or other amounts owing

 

20


to a Participant, the amount (in cash, Stock or other property) of any required income tax withholding and payroll taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such withholding and taxes.

(ii) Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole or in part, the foregoing withholding liability (but no more than the minimum required withholding liability) by having the Company withhold from the number of shares of Stock otherwise issuable pursuant to the exercise or settlement of the Award a number of shares with a Fair Market Value equal to such withholding liability (but no more than the minimum required withholding liability).

(e) Claim to Awards and Employment Rights . No employee of the Company or an Affiliate, or other person, shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the employ or service of the Company or an Affiliate.

(f) Designation and Change of Beneficiary . Each Participant may file with the Committee a written designation of one or more persons as the beneficiary who shall be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan upon his death. A Participant may, from time to time, revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided , however , that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate.

(g) Payments to Persons Other Than Participants . If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.

(h) No Liability of Committee Members . No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Committee

 

21


nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or willful bad faith; provided , however , that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

(i) Governing Law . The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware.

(j) Funding . No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.

(k) Nontransferability.

(i) Each Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

(ii) Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards other than Incentive Stock Options to be transferred by a Participant, without consideration, subject to such rules as the Committee may adopt consistent with any applicable Award Agreement to preserve the purposes of the Plan, to:

 

22


(A) any person who is a “family member” of the Participant, as such term is used in the instructions to Form S-8 (collectively, the “Immediate Family Members”);

(B) a trust solely for the benefit of the Participant and his or her Immediate Family Members;

(C) a partnership or limited liability company whose only partners or shareholders are the Participant and his or her Immediate Family Members; or

(D) any other transferee as may be approved either (a) by the Board or the Committee in its sole discretion, or (b) as provided in the applicable Award Agreement;

(each transferee described in clauses (A), (B), (C) and (D) above is hereinafter referred to as a “Permitted Transferee”); provided that the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that such a transfer would comply with the requirements of the Plan.

(iii) The terms of any Award transferred in accordance with the immediately preceding sentence shall apply to the Permitted Transferee and any reference in the Plan, or in any applicable Award Agreement, to a Participant shall be deemed to refer to the Permitted Transferee, except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration statement on an appropriate form covering the shares of Stock to be acquired pursuant to the exercise of such Option if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or appropriate, (C) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise, and (D) the consequences of the termination of the Participant’s employment by, or services to, the Company or an Affiliate under the terms of the Plan and the applicable Award Agreement shall continue to be applied with respect to the Participant, including, without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement.

(l) Reliance on Reports . Each member of the Committee and each member of the Board shall be fully justified in acting or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance upon any report made by the independent public accountant of the Company and its Affiliates and/or any other information furnished in connection with the Plan by any person or persons other than himself.

 

23


(m) Relationship to Other Benefits . No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan.

(n) Expenses. The expenses of administering the Plan shall be borne by the Company and Affiliates.

(o) Pronouns . Masculine pronouns and other words of masculine gender shall refer to both men and women.

(p) Titles and Headings . The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control.

(q) Termination of Employment . Unless an applicable Award Agreement provides otherwise, for purposes of the Plan, a person who transfers from employment or service with the Company to employment or service with an Affiliate or vice versa shall not be deemed to have terminated employment or service with the Company or an Affiliate.

(r) Severability . If any provision of the Plan or any Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

(s) Compliance with Applicable Law . Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to any Award granted under the Plan that it in its sole discretion deems necessary or advisable in order that such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.

13. Changes in Capital Structure

Awards granted under the Plan and any agreements evidencing such Awards, the maximum number of shares of Stock subject to all Awards stated in Section 5(a) and the maximum number of shares of Stock with respect to which any one person may be granted Awards during any period stated in Sections 5(d) or 11(d)(vi) shall be subject to adjustment or substitution, in the manner determined by the Committee in its sole discretion, as to the number, price or kind of a share of Stock or

 

24


other consideration subject to such Awards or as otherwise determined by the Committee to be equitable (i) in the event of changes in the outstanding Stock or in the capital structure of the Company by reason of stock or extraordinary cash dividends, stock splits, reverse stock splits, recapitalization, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the Date of Grant of any such Award or (ii) in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, Participants, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan. Notwithstanding the preceding sentence, in the case of any event which affects the Stock and is considered an “equity restructuring” for purposes of the applicable accounting rules, the Committee shall make an adjustment to outstanding Awards in the manner described in the preceding sentence, and such adjustment shall be such that the benefits conferred upon Participant by outstanding are intended to be neither increased nor decreased. Any adjustment in Incentive Stock Options under this Section 13 shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code, and any adjustments under this Section 13 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code, such adjustments or substitutions shall be made only to the extent that the Committee determines that such adjustments or substitutions may be made without causing the Company to be denied a tax deduction on account of Section 162(m) of the Code. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

Notwithstanding the above, in the event of any of the following:

A. The Company is merged or consolidated with another corporation or entity and, in connection therewith, consideration is received by shareholders of the Company in a form other than stock or other equity interests of the surviving entity;

B. All or substantially all of the assets of the Company are acquired by another person;

C. The reorganization or liquidation of the Company; or

D. The Company shall enter into a written agreement to undergo an event described in clauses A, B or C above,

then the Committee may, in its discretion and upon at least 10 days advance notice to the affected persons, cancel any outstanding Awards and cause the holders thereof to be paid, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share of Stock received or to be received by other shareholders of the Company in the event. The terms of this Section 13 may be varied by the Committee in any particular Award Agreement.

 

25


14. Effect of Change in Control

(a) The Committee may, but is not required to, provide in any particular Award Agreement:

(i) In the event of a Change in Control, notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, and either in or not in combination with another event such as a termination of the applicable Participant by the Company without Cause, all Options and SARs subject to such Award shall become immediately exercisable with respect to 100 percent of the shares subject to such Option or SAR, and/or that the Restricted Period shall expire immediately with respect to 100 percent of such shares of Restricted Stock or Restricted Stock Units subject to such Award (including a waiver of any applicable Performance Goals) and, to the extent practicable, such acceleration of exercisability and expiration of the Restricted Period (as applicable) shall occur in a manner and at a time which allows affected Participants the ability to participate in the Change in Control transaction with respect to the Stock subject to their Awards.

(ii) In the event of a Change in Control, all incomplete Performance Periods in respect of such Award in effect on the date the Change in Control occurs shall end on the date of such change, and the Committee shall (A) determine the extent to which Performance Goals with respect to each such Award Period have been met based upon such audited or unaudited financial information then available as it deems relevant, (B) cause to be paid to the applicable Participant partial or full Awards with respect to Performance Goals for each such Award Period based upon the Committee’s determination of the degree of attainment of Performance Goals, and (C) cause the Award, if previously deferred, to be settled in full as soon as possible.

(b) In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days’ advance notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share of Stock received or to be received by other shareholders of the Company in the event.

(c) The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. The Company agrees that it will make appropriate provisions for the preservation of Participants’ rights under the Plan in any agreement or plan which it may enter into or adopt to effect any such merger, consolidation, reorganization or transfer of assets.

 

26


15. Nonexclusivity of the Plan

Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.

16. Amendments and Termination

(a) Amendment and Termination of the Plan . The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided, that no such amendment, alteration, suspension, discontinuation or termination shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Plan (including as necessary to comply with any applicable stock exchange listing requirement or to prevent the Company from being denied a tax deduction on account of Section 162(m) of the Code); and provided , further that any such amendment, alteration, suspension, discontinuance or termination that would impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary. The termination date of the Plan, following which no Awards may be granted hereunder, is the tenth anniversary of the Effective Date, provided , that such termination shall not affect Awards then outstanding, and the terms and conditions of the Plan shall continue to apply to such Awards.

(b) Amendment of Award Agreements . The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award Agreement, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary; and provided further that, without stockholder approval, (i) no amendment or modification may reduce the Option Price of any Option or the Strike Price of any SAR, (ii) the Committee may not cancel any outstanding Option or SAR and replace it with a new Option or SAR (with a lower Option Price or Strike Price, as the case may be) in a manner which would either (A) (if the Company is subject to the reporting requirement of the Exchange Act) be reportable on the Company’s proxy statement as Options which have been “repriced” (as such term is used in Item 402 of Regulation S-K promulgated under the Exchange Act), or (B) result in any Option being accounted for under the “variable” method for financial statement reporting purposes and (iii) the Committee may not take any other action which is considered a “repricing” for purposes of the shareholder approval rules of the applicable stock exchange on which the Stock is listed, if any.

 

27


(c) Section 162(m) Reapproval . If so determined by the Committee, (i) the Plan shall be approved by the stockholders of the Company no later than the first regularly scheduled meeting of stockholders that occurs more than 12 months after the date the Company becomes a separate publicly held corporation, and (ii) the provisions of the Plan regarding Performance Compensation Awards shall be disclosed and reapproved by stockholders of the Company no later than the first stockholder meeting that occurs in the fifth year following the year that stockholders previously approved such provisions following the date the Company became a separate publicly held corporation, in each case in order for Performance Compensation Awards granted after such time to be exempt from the deduction limitations of Section 162(m) of the Code. Nothing in this Section 16(c), however, shall affect the validity of Awards granted after such time if such stockholder approval has not been obtained.

* * *

As adopted by the Board of Directors of

BROADRIDGE FINANCIAL SOLUTIONS, INC.

at a meeting held on March 29, 2007.

 

28

Exhibit 10.12

EXECUTION COPY


LOGO

FIVE-YEAR CREDIT AGREEMENT

dated as of

March 29, 2007,

among

BROADRIDGE FINANCIAL SOLUTIONS, INC.,

The LENDERS Party Hereto,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

J. P. MORGAN EUROPE LIMITED,

as London Agent

and

CITIBANK, N.A.,

as Syndication Agent

 


J.P. MORGAN SECURITIES INC.

and

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arrangers and Joint Bookrunners

 



TABLE OF CONTENTS

 

          Page
ARTICLE I   
Definitions   

SECTION 1.01.

   Defined Terms    2

SECTION 1.02.

   Classification of Loans and Borrowings    21

SECTION 1.03.

   Terms Generally    21

SECTION 1.04.

   Accounting Terms; GAAP    22

SECTION 1.05.

   Currency Translation    22
ARTICLE II   
The Credits   

SECTION 2.01.

   Commitments    22

SECTION 2.02.

   Loans and Borrowings    23

SECTION 2.03.

   Requests for Revolving Borrowings or Term Borrowings    24

SECTION 2.04.

   Competitive Bid Procedure    24

SECTION 2.05.

   Swingline Loans    27

SECTION 2.06.

   Letters of Credit    28

SECTION 2.07.

   Funding of Borrowings    34

SECTION 2.08.

   Interest Elections for Revolving Borrowings and Term Borrowings    34

SECTION 2.09.

   Termination or Reduction of Commitments    36

SECTION 2.10.

   Increase of Revolving Commitments; Extension of Revolving Maturity Date    36

SECTION 2.11.

   Repayment of Loans; Evidence of Debt    38

SECTION 2.12.

   Prepayment of Loans    39

SECTION 2.13.

   Fees    40

SECTION 2.14.

   Interest    41

SECTION 2.15.

   Alternate Rate of Interest    42

SECTION 2.16.

   Increased Costs    43

SECTION 2.17.

   Break Funding Payments    44

SECTION 2.18.

   Taxes    45

SECTION 2.19.

   Payments Generally; Pro Rata Treatment; Sharing of Set-offs    47

SECTION 2.20.

   Mitigation Obligations; Replacement of Lenders    48

SECTION 2.21.

   Additional Reserve Costs    49


ARTICLE III   
Representations and Warranties   

SECTION 3.01.

   Organization; Powers    50

SECTION 3.02.

   Authorization; Enforceability    50

SECTION 3.03.

   Governmental Approvals; No Conflicts    50

SECTION 3.04.

   Financial Condition; No Material Adverse Change    50

SECTION 3.05.

   Properties    51

SECTION 3.06.

   Litigation and Environmental Matters    51

SECTION 3.07.

   Compliance with Laws and Agreements    52

SECTION 3.08.

   Federal Reserve Regulations    52

SECTION 3.09.

   Investment Company Status    52

SECTION 3.10.

   Taxes    52

SECTION 3.11.

   ERISA    53

SECTION 3.12.

   Disclosure    53
ARTICLE IV   
Conditions   

SECTION 4.01.

   Effective Date    53

SECTION 4.02.

   Each Credit Event    55
ARTICLE V   
Affirmative Covenants   

SECTION 5.01.

   Financial Statements and Other Information    56

SECTION 5.02.

   Notices of Material Events    57

SECTION 5.03.

   Existence; Conduct of Business    58

SECTION 5.04.

   Payment of Taxes    58

SECTION 5.05.

   Maintenance of Properties    58

SECTION 5.06.

   Books and Records; Inspection Rights    58

SECTION 5.07.

   Compliance with Laws    58

SECTION 5.08.

   Use of Proceeds    59

SECTION 5.09.

   Margin Stock    59

SECTION 5.10.

   Consummation of the Remaining Transactions    59
ARTICLE VI   
Negative Covenants   

SECTION 6.01.

   Liens    59

SECTION 6.02.

   Subsidiary Indebtedness    61

 

ii


SECTION 6.03.

   Sale and Leaseback Transactions    62

SECTION 6.04.

   Fundamental Changes    62

SECTION 6.05.

   Restrictive Agreements    63

SECTION 6.06.

   Transactions with Affiliates    63

SECTION 6.07.

   Leverage Ratio    64

SECTION 6.08.

   Ratio of EBITDA to Consolidated Interest Expense    64
ARTICLE VII   
Events of Default   
ARTICLE VIII   
The Agents   
ARTICLE IX   
Miscellaneous   

SECTION 9.01.

   Notices    69

SECTION 9.02.

   Waivers; Amendments    69

SECTION 9.03.

   Expenses; Indemnity; Damage Waiver    71

SECTION 9.04.

   Successors and Assigns    72

SECTION 9.05.

   Survival    75

SECTION 9.06.

   Counterparts; Integration; Effectiveness    75

SECTION 9.07.

   Severability    75

SECTION 9.08.

   Right of Setoff    75

SECTION 9.09.

   Governing Law; Jurisdiction; Consent to Service of Process    76

SECTION 9.10.

   WAIVER OF JURY TRIAL    76

SECTION 9.11.

   Headings    77

SECTION 9.12.

   Confidentiality    77

SECTION 9.13.

   Interest Rate Limitation    78

SECTION 9.14.

   Conversion of Currencies    78

SECTION 9.15.

   Patriot Act    78

SECTION 9.16.

   No Fiduciary Relationship    79

SECTION 9.17.

   Amendment and Restatement Upon Syndication    79

SCHEDULES:

Schedule 2.01 — Commitments

Schedule 6.01 — Existing Liens

Schedule 6.02 — Existing Indebtedness

Schedule 6.05 — Restrictive Agreements

 

iii


Schedule 6.06 — Transactions with Affiliates

EXHIBITS:

Exhibit A-1 — Form of Competitive Bid Request

Exhibit A-2 — Form of Notice of Competitive Bid Request

Exhibit A-3 — Form of Competitive Bid

Exhibit A-4 — Form of Competitive Bid Accept/Reject Letter

Exhibit B — Form of Assignment and Assumption

Exhibit C — Form of Issuing Bank Agreement

Exhibit D — Mandatory Costs Rate

Exhibit E — Form of Note

 

iv


FIVE-YEAR CREDIT AGREEMENT dated as of March 29, 2007, among BROADRIDGE FINANCIAL SOLUTIONS, INC., a Delaware corporation; the LENDERS party hereto; JPMORGAN CHASE BANK, N.A., as Administrative Agent; J. P. MORGAN EUROPE LIMITED, as London Agent; and CITIBANK, N.A., as Syndication Agent.

As of the date of this Agreement, the Borrower (such term and each other capitalized term used and not otherwise defined herein having the meaning assigned to it in Article I) is a direct wholly owned subsidiary of ADP. As set forth in the amended registration statement on Form 10 filed by the Borrower with the SEC on March 16, 2007 (the “ Form 10 ”), ADP will distribute all the issued and outstanding common stock of the Borrower on a pro rata basis to its shareholders in a tax-free transaction (the “ Spin-Off ”) on the date immediately following the date of this Agreement (or, if the Spin-Off is not consummated on such date, as soon as practicable thereafter). The Borrower holds ADP’s brokerage services group business, consisting of its investor communication solutions, securities processing solutions and clearing and outsourcing solutions business units.

In connection with the Spin-Off, (a) the Borrower is entering into this Agreement and obtaining the senior credit facilities established hereby, (b) the Borrower is simultaneously entering into the Interim Credit Agreement and obtaining the interim credit facilities established thereby, (c) the Borrower will pay a cash dividend to ADP immediately prior to the Spin-Off in the amount of $690,000,000 (the “ Dividend ”), (d) all indebtedness of the Borrower and the Subsidiaries payable to ADP or Affiliates of ADP (other than intercompany indebtedness payable to the Borrower or any Subsidiary) will be canceled and discharged and (f) fees and expenses incurred in connection with the Transactions will be paid (the “ Transaction Costs ”).

The Borrower has requested the Lenders to extend credit to enable it to (a) borrow Term Loans on the Effective Date in an aggregate principal amount of US$440,000,000, (b) borrow on a revolving credit basis on and after the Effective Date and at any time and from time to time prior to the Revolving Maturity Date an aggregate principal amount not in excess of US$500,000,000 at any time outstanding (which principal amount may be increased by an amount not in excess of US$500,000,000 as provided in Section 2.10), (c) obtain Letters of Credit and (d) provide a procedure under which Lenders may bid on an uncommitted basis on short-term borrowings by the Borrower maturing on or prior to the Revolving Maturity Date. The proceeds of such borrowings will be used (a) to pay the Dividend, (b) to pay certain Transaction Costs and (c) for general corporate purposes of the Borrower and the Subsidiaries, including to support the issuance of commercial paper and the payment of intercompany loans among the Borrower and the Subsidiaries. Letters of Credit will be used for general corporate purposes of the Borrower and the Subsidiaries. The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions herein set forth.

Accordingly, the parties hereto agree as follows:


ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

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

Accession Agreement ” has the meaning assigned to such term in Section 2.10.

Adjusted LIBO Rate ” means, with respect to any LIBO Rate Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the LIBO Rate for such Interest Period multiplied, in the case of a LIBO Rate Borrowing denominated in US Dollars, by the Statutory Reserve Rate.

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

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

ADP ” means Automatic Data Processing, Inc., a Delaware corporation.

Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided that two or more Persons shall not be deemed Affiliates solely because an individual is a director of each such Person.

Agents ” means, collectively, the Administrative Agent and the London Agent.

Agreement ” means this Credit Agreement, as modified, amended or restated from time to time.

Agreement Currency ” has the meaning assigned to such term in Section 9.14.

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

Alternative Currency ” means Australian Dollars, Canadian Dollars, Euro, Sterling and Yen.

 

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Applicable Agent ” means (a) with respect to a Loan or Borrowing denominated in US Dollars or any Letter of Credit, and with respect to any payment hereunder that does not relate to a particular Loan or Borrowing, the Administrative Agent and (b) with respect to a Loan or Borrowing denominated in any Alternative Currency, the London Agent.

Applicable Creditor ” has the meaning assigned to such term in Section 9.14.

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

Applicable Rate ” means, for any day, with respect to any LIBO Rate Revolving Loan or LIBO Rate Term Loan or with respect to the facility fees or participation fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Revolving Facility – Facility Fee Rate”, “Revolving Facility – LIBO Rate Spread and Participation Fee”, or “Term Facility – LIBO Rate Spread”, as applicable, based upon (a) the ratings by S&P and Moody’s, respectively, applicable on such date to the Index Debt and (b) in the case of the LIBO Rate Spread and participation fees applicable to Revolving Loans, the Utilization on such date:

 

     Revolving Facility     Term Facility  

Ratings

   Facility Fee Rate    

LIBO Rate Spread

and

Participation Fee

( £ 50% Utilization)

   

LIBO Rate Spread

and

Participation Fee

(>50% Utilization)

    LIBO Rate Spread  

category 1

³ Baa1 or BBB+

   0.080 %   0.270 %   0.370 %   0.400 %

category 2

Baa2 or BBB

   0.100 %   0.350 %   0.450 %   0.500 %

category 3

Baa3 or BBB-

   0.125 %   0.425 %   0.525 %   0.600 %

category 4

Ba1 or BB+

   0.150 %   0.500 %   0.600 %   0.700 %

category 5

< Ba1 or BB+, or unrated

   0.200 %   0.650 %   0.750 %   0.900 %

For purposes of the foregoing, (i) if the ratings assigned by S&P and Moody’s shall fall within different categories, the applicable category shall be the category in which the higher of the Ratings shall fall unless the Ratings differ by two or more categories, in which case the applicable category shall be the Category one level below that corresponding to the higher Rating, (ii) if any Rating Agency shall not have a Rating in effect (other than by reason of the circumstances referred to in the last sentence of this definition), such Rating Agency shall be deemed to have a Rating in category 5, and (iii) if any Rating shall be changed (other than as a result of a change in the rating system of the applicable Rating Agency), such change shall be effective as of the date on which it is first announced by the Rating Agency making such change.

 

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Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody’s or S&P shall change, or if either such Rating Agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Required Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation.

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

Attributable Debt ” means, with respect to any Sale and Leaseback Transaction, the present value (discounted at the rate set forth or implicit in the terms of the lease included in such Sale and Leaseback Transaction) of the total obligations of the lessee for rental payments (other than amounts required to be paid on account of taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items that do not constitute payments for property rights) during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). In the case of any lease which is terminable by the lessee upon payment of a penalty, the Attributable Debt shall be the lesser of the Attributable Debt determined assuming termination upon the first date such lease may be terminated (in which case the Attributable Debt shall also include the amount of the penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) or the Attributable Debt determined assuming no such termination.

Australian Dollars ” or “ AUS$ ” means the lawful currency of the Commonwealth of Australia.

Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments.

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

Borrower ” means Broadridge Financial Solutions, Inc., a Delaware corporation.

Borrowing ” means (a) Revolving Loans of the same Type and currency, made, converted or continued on the same date and, in the case of LIBO Rate Loans, as to which a single Interest Period is in effect, (b) Term Loans of the same Type, made, converted or continued on the same date and, in the case of LIBO Rate Loans, as to which a single Interest Period is in effect, (c) a Competitive Loan or group of Competitive Loans of the same Type and currency made on the same date and as to which a single Interest Period is in effect or (d) a Swingline Loan.

 

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Borrowing Minimum ” means (a) in the case of a Borrowing denominated in US Dollars, US$5,000,000 and (b) in the case of a Borrowing denominated in any Alternative Currency, the smallest amount of such Alternative Currency that is a multiple of 1,000,000 units of such currency that has a US Dollar Equivalent of US$5,000,000 or more.

Borrowing Multiple ” means (a) in the case of a Borrowing denominated in US Dollars, US$1,000,000 and (b) in the case of a Borrowing denominated in any Alternative Currency, 1,000,000 units of such currency.

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

Broker Dealer Subsidiary ” means any Subsidiary registered or regulated as a broker or dealer with or by the SEC, the NASD or any other applicable Governmental Authority, whether domestic or foreign.

Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided, that (a) when used in connection with a LIBO Rate Loan denominated in any currency, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits denominated in such currency in the London interbank market, (b) when used in connection with a Loan denominated in Australian Dollars, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in the Sydney interbank market, (c) when used in connection with a Loan denominated in Canadian Dollars, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in Toronto, (d) when used in connection with a Loan denominated in Euro, the term “Business Day” shall also exclude any day on which the TARGET payment system is not open for the settlement of payments in Euro and (e) when used in connection with a Loan denominated in Yen, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in Yen in Tokyo.

Calculation Date ” means the Effective Date and the last Business Day of each calendar quarter thereafter.

Canadian Dollars ” or “ CAN$ ” means the lawful currency of Canada.

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

Cash Collateralize ” has the meaning set forth in Section 2.06.

Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of

 

5


Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower, or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were not (i) directors of the Borrower on the Effective Date, (ii) nominated by the board of directors of the Borrower or (iii) appointed by directors so nominated.

Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.16(b), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

Charges ” has the meaning set forth in Section 9.13.

Class ” means (a) when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans, Competitive Loans or Swingline Loans and (b) when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment or a Term Commitment.

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

Collateralized Letter of Credit ” means a Letter of Credit that has been irrevocably cash collateralized by the Borrower pursuant to arrangements reasonably satisfactory to the Issuing Bank that issued such Letter of Credit.

Commitment ” means a Revolving Commitment, Term Commitment or any combination thereof, as the context requires.

Commitment Increase ” has the meaning set forth in Section 2.10.

Competitive Bid ” means an offer by a Lender to make a Competitive Loan in accordance with Section 2.04 in the form of Exhibit A-3 .

Competitive Bid Accept/Reject Letter ” means an acceptance or rejection of a Competitive Bid in accordance with Section 2.04 in the form of Exhibit A-4 .

Competitive Bid Rate ” means, with respect to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid.

Competitive Bid Request ” means a request by the Borrower for Competitive Bids in accordance with Section 2.04 in the form of Exhibit A-1 .

Competitive Loan ” means a Loan made pursuant to Section 2.04.

 

6


Competitive Loan Exposure ” means, with respect to any Lender at any time, the sum at such time, without duplication, of the US Dollar Equivalents of the principal amounts of such Lender’s outstanding Competitive Loans.

Consenting Lender ” has the meaning set forth in Section 2.10.

Consolidated EBITDA ” means, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) consolidated interest expense for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period (other than amounts reflected as “amortization of other assets” on the Borrower’s financial statements), (iv) all non-recurring or extraordinary non-cash charges for such period, (v) all non-cash charges associated with employee compensation for such period, (vi) all losses associated with asset sales during such period and (vi) all Transaction Costs paid by the Borrower or any Subsidiary during such period, minus (b) without duplication and to the extent included in determining such Consolidated Net Income, (i) all extraordinary gains for such period and (ii) all gains associated with asset sales during such period, all determined on a consolidated basis in accordance with GAAP; provided , however , that Consolidated EBITDA for the Borrower’s fiscal quarter ended June 30, 2006 shall be $190,000,000, Consolidated EBITDA for the Borrower’s fiscal quarter ended September 30, 2006 shall be $62,400,000 and Consolidated EBITDA for the Borrower’s fiscal quarter ended December 31, 2006 shall be $63,100,000.

Consolidated Interest Expense ” means, for any period, the excess of (a) the sum of (i) the interest expense (including imputed interest expense in respect of Capital Lease Obligations) of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, (ii) any interest accrued during such period in respect of Indebtedness of the Borrower or any Subsidiary that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP, and (iii) any cash payments made during such period in respect of obligations referred to in clause (b)(ii) below that were amortized or accrued in a previous period, minus (b) the sum of (i) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to amortization of financing costs paid in a previous period, and (ii) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to amortization of debt discounts or accrued interest payable in kind for such period.

Consolidated Net Income ” means, for any period, the net income or loss of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income of any Person (other than the Borrower) in which any other Person (other than the Borrower or any Subsidiary or any director holding qualifying shares in compliance with applicable law) owns an Equity Interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of the Subsidiaries during such period, and (b) the income or loss of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary or the date that such Person’s assets are acquired by the Borrower or any Subsidiary.

 

7


Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

Declining Lender ” has the meaning set forth in Section 2.10.

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

Dividend ” has the meaning assigned to such term in the introduction to this Agreement.

Effective Date ” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

Effectiveness Anniversary ” has the meaning assigned to such term in Section 2.10.

EMU Legislation ” means the legislative measures of the European Union for the introduction of, changeover to or operation of the Euro in one or more member states.

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

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

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

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

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

 

8


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

Euro ” or “ ” means the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation.

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

Exchange Rate ” means, on any date, for purposes of determining the US Dollar Equivalent of any other currency, the rate at which such other currency may be exchanged into US Dollars at the time of determination on such date as shown on the Reuters WRLD Page for such currency. In the event that such rate does not appear on the applicable Reuters WRLD Page, (a) the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Applicable Agent and the Borrower, or (b) in the absence of such an agreement, such Exchange Rate shall be the arithmetic average of the spot rates of exchange available to the Applicable Agent on such date in the market where its foreign currency exchange operations in respect of such currency are then being conducted for the purchase of US Dollars for delivery two Business Days later, at a time the Applicable Agent shall elect after determining that such spot rates shall be the basis for determining the Exchange Rate, provided that if at the time of such determination, no such spot rates are being quoted for any reason, the Applicable Agent, after consultation with the Borrower, may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.

Excluded Taxes ” means, with respect to either Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income, or backup withholding taxes (as defined in Section 3406 of the Code) imposed by the United States of America, or any similar tax imposed by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, the

 

9


jurisdiction in which its applicable lending office is located, (b) any branch profit taxes imposed by the United States of America or any similar tax imposed by any other applicable jurisdiction referred to in the preceding clause (a) and (c) in the case of a Foreign Lender, any withholding tax that is imposed by the United States of America on payments by the Borrower to such Foreign Lender from locations in the United States of America to the extent such tax is in effect at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.18(e) or (f), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.18(a).

Existing Maturity Date ” has the meaning set forth in Section 2.10.

Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

Financial Officer ” means, with respect to any Person, the chief financial officer, principal accounting officer, treasurer, controller or any assistant treasurer (or the functional equivalent) of such Person.

Fixed Rate ” means, with respect to any Competitive Loan bearing interest at a fixed rate, the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid.

Fixed Rate Loan ” means a Competitive Loan bearing interest at a Fixed Rate.

Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

Form 10 ” has the meaning assigned to such term in the introduction to this Agreement.

GAAP ” means United States generally accepted accounting principles, applied on a consistent basis.

Governmental Authority ” means (a) the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government and (b) with regard to any Broker Dealer Subsidiary, any self regulatory organization or body with supervisory, regulatory or other authority over such Broker Dealer Subsidiary.

 

10


Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided , that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

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

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

Increase Effective Date ” has the meaning set forth in Section 2.10.

Increasing Lender ” has the meaning set forth in Section 2.10.

Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

11


Indemnitee ” has the meaning set forth in Section 9.03.

Indemnified Taxes ” means Taxes other than Excluded Taxes.

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

Information Memorandum ” means the Confidential Information Memorandum dated March 2007 relating to the Borrower and the Transactions.

Initial Loans ” has the meaning set forth in Section 2.10.

Interest Election Request ” means a request by the Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.08.

Interest Payment Date ” means (a) with respect to any ABR Loan (including any Swingline Loan), the last day of each March, June, September and December, (b) with respect to any LIBO Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a LIBO Rate Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days’ duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days’ duration after the first day of such Interest Period, and any other dates that are specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing.

Interest Period ” means (a) with respect to any LIBO Rate Borrowing (other than any LIBO Rate Competitive Borrowing), the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter (or, if agreed upon by all of the Lenders, seven or 14 days or any other period), as the Borrower may elect, (b) with respect to any LIBO Rate Competitive Borrowing, the period commencing on the date such Borrowing is made and ending on the numerically corresponding day in the calendar month that is one to twelve months thereafter, as the Borrower may elect, and (c) with respect to any Fixed Rate Borrowing, the period (which shall not be less than 7 days or more than 365 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a LIBO Rate Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a LIBO Rate Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such

 

12


Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing or Term Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

Interim Credit Agreement ” means the Interim Credit Agreement dated as of March 29, 2007, among the Borrower, the lenders party thereto, JPMCB, as administrative agent and Citibank, N.A. as syndication agent.

Issuing Bank ” means JPMCB, in its capacity as the issuer of Letters of Credit hereunder, and any other Lender that may become an Issuing Bank pursuant to Section 2.06(i) or 2.06(j). Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

Issuing Bank Agreement ” shall mean an agreement in substantially the form of Exhibit C .

JPMCB ” means JPMorgan Chase Bank, N.A. and its successors.

Judgment Currency ” has the meaning assigned to such term in Section 9.14(b).

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

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

Lenders ” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term “Lenders” includes each Swingline Lender.

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

Leverage Ratio ” means, as of the last day of any period of four consecutive quarters, the ratio of (a) Total Indebtedness as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on such date.

LIBO Rate ” means, with respect to any LIBO Rate Borrowing denominated in any currency for any Interest Period, the rate appearing on the applicable page of the Telerate Service for such currency (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Applicable Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in the

 

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London interbank market) at approximately 11:00 a.m., London time, on the Quotation Date for such Interest Period, as the rate for deposits in such currency with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “ LIBO Rate ” with respect to such LIBO Rate Borrowing for such Interest Period shall be the rate at which deposits in the lowest multiple of 1,000,000 units of such currency the US Dollar Equivalent of which is at least US$5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time on the Quotation Date for such Interest Period. LIBO Rate, when used in reference to any Loan or Borrowing, indicates that such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate (or, in the case of a Competitive Loan, the LIBO Rate).

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

Loan Documents ” means this Agreement, any amendment hereto or waiver hereunder and each promissory note delivered pursuant to this Agreement, as such documents may be amended, modified, supplemented or restated from time to time.

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

Local Time ” means (a) with respect to a Loan or Borrowing denominated in US Dollars or any Letter of Credit, New York City time, and (b) with respect to a Loan or Borrowing denominated in any other currency, London time.

London Agent ” means J. P. Morgan Europe Limited.

Mandatory Costs Rate ” has the meaning set forth in Exhibit D .

Margin ” means, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the rate of interest, if any, to be added to or subtracted from the LIBO Rate to determine the rate of interest applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid.

Material Adverse Effect ” means a material adverse effect on (a) the business, assets, operations or financial condition of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its obligations under this Agreement or any other Loan Document or (c) the rights of or benefits available to the Lenders under this Agreement or any other Loan Document.

 

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Material Indebtedness ” means Indebtedness (other than the Loans), or obligations in respect of one or more Hedging Agreements, of the Borrower and the Subsidiaries in an aggregate principal amount exceeding US$75,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

Material Subsidiary ” means (a) any Subsidiary that directly or indirectly owns any Equity Interest in or Controls any Material Subsidiary, (b) any Material Broker Dealer Subsidiary (as defined below) and (c) any other Subsidiary (i) the revenues of which for the most recent period of four fiscal quarters of the Borrower for which audited financial statements have been delivered pursuant to Section 5.01 were greater than 5.0% of the Borrower’s total consolidated revenues for such period or (ii) the assets of which as of the end of such period were greater than 5.0% of the Borrower’s total consolidated assets as of such date; provided that if at any time the aggregate amount of the revenues or assets of all Subsidiaries that are not Material Subsidiaries for or at the end of any period of four fiscal quarters for which audited financial statements have been delivered pursuant to Section 5.01 exceeds 10% of the Borrower’s consolidated total revenues for such period or 10% of the Borrower’s consolidated total assets as of the end of such period, the Borrower shall (or, in the event the Borrower has failed to do so within 10 days, the Administrative Agent may) designate additional Subsidiaries as “Material Subsidiaries” to eliminate such excess, and such designated Subsidiaries shall for all purposes of this Agreement constitute Material Subsidiaries. For the purposes of this definition, (a) “ Material Broker Dealer Subsidiary ” means any Broker Dealer Subsidiary (i) the revenues of which for the most recent period of four fiscal quarters of the Borrower for which audited financial statements have been delivered pursuant to Section 5.01 were greater than 1.0% of the Borrower’s total consolidated revenues for such period or (ii) the assets of which as of the end of such period were greater than 1.0% of the Borrower’s total consolidated assets as of such date, and (b) revenues and assets of any Subsidiary of the Borrower which are recorded in a foreign currency in the Borrower’s financial statements shall be converted into U.S. Dollars using the exchange rates used in preparation of the Borrower’s most recent audited financial statements delivered pursuant to Section 5.01 or, if no applicable exchange rate was used in such audited financial statements, at a rate determined in accordance with GAAP.

Maximum Rate ” has the meaning set forth in Section 9.13.

Moody’s ” means Moody’s Investors Service, Inc. and its successors.

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

NASD ” means the National Association of Securities Dealers, Inc., and any successor or other authority which succeeds to the function of such corporation.

Non-Consenting Lender ” means any Lender that withholds its consent to any proposed amendment, modification or waiver that cannot become effective without the consent of such Lender under Section 9.02, and that has been consented to by the Required Lenders.

 

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Notice of Competitive Bid Request ” means a request by the Borrower for Competitive Bids in accordance with Section 2.04 in the form of Exhibit A-2 .

Other Taxes ” means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

Participant ” has the meaning set forth in Section 9.04.

Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

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

Permitted Encumbrances ” means:

(a) Liens imposed by law for Taxes, assessments or other governmental charges or levies (other than any lien arising under ERISA or other laws to secure retirement or other benefits) that are not yet due or are being contested in compliance with Section 5.04;

(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in good faith;

(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

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

(e) judgment liens; and

(f) easements, zoning restrictions, rights-of-way, minor defects or other irregularities in title and other similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure obligations that are substantial in amount and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness or any Lien in favor of the PBGC.

 

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

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

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

Quotation Date ” means, with respect to any LIBO Rate Borrowing and any Interest Period, the day on which it is market practice in the relevant interbank market for prime banks to give quotations for deposits in the currency of such Borrowing for delivery on the first day of such Interest Period. If such quotations would normally be given by prime banks on more than one day, the Quotation Day will be the last of such days.

Rating Agencies ” shall mean Moody’s and S&P.

Ratings ” shall mean the ratings from time to time established by the Rating Agencies for the Index Debt.

Register ” has the meaning set forth in Section 9.04.

Regulation D ” means Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation T ” means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation U ” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation X ” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

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

Required Lenders ” means, at any time, Lenders having Revolving Exposures, an aggregate principal amount of outstanding Term Loans and unused Commitments representing at least 50% of the sum of the total Revolving Exposures of all Lenders, the aggregate principal amount of Term Loans then outstanding and unused Commitments at such time; provided that, for purposes of declaring the Loans to be due and payable pursuant to Article VII, and for all

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purposes after the Loans become due and payable pursuant to Article VII or the Revolving Commitments expire or terminate, the outstanding Competitive Loans of the Lenders shall be included in their respective Revolving Exposures in determining the Required Lenders.

Required Revolving Lenders ” means, at any time, Lenders having Revolving Exposures and unused Revolving Commitments representing at least 50% of the sum of the Revolving Exposures of all Lenders and unused Revolving Commitments at such time.

Reset Date ” shall have the meaning specified in Section 1.05.

Responsible Officer ” means any of the chief executive officer, chief operating officer, chief financial officer or the treasurer or controller (or any equivalent of the foregoing officers) of the Borrower.

Revolving Commitment ” means, with respect to each Revolving Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate permitted amount of such Lender’s Revolving Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to Section 2.09 or 2.10 or pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable. The initial aggregate amount of the Revolving Commitments is US$500,000,000.

Revolving Exposure ” means, with respect to any Revolving Lender at any time, the sum at such time, without duplication, of (a) the US Dollar Equivalents of the principal amounts of such Lender’s outstanding Revolving Loans, (b) the aggregate amount of such Lender’s LC Exposure and (c) the aggregate amount of such Lender’s Swingline Exposure.

Revolving Lender ” means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure.

Revolving Loan ” means a Loan made pursuant to Section 2.01(b).

Revolving Maturity Date ” means March 29, 2012, or any later date to which the Revolving Maturity Date may be extended pursuant to Section 2.10; provided , however , that if the Spin-Off shall not have been consummated by 5:00 p.m. New York time on the fifth Business Day following the Effective Date, the Revolving Maturity Date shall be the next following Business Day.

S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Sale and Leaseback Transaction ” means any arrangement whereby the Borrower or a Subsidiary, directly or indirectly, shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred.

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SEC ” means the Securities and Exchange Commission.

SIPC ” means the Securities Investor Protection Corporation and any regulatory authority which succeeds to the functions of such corporation.

Spin-Off ” has the meaning assigned to such term in the introduction to this Agreement.

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

Sterling ” or “ £ ”means the lawful currency of the United Kingdom.

Subsequent Borrowings ” has the meaning set forth in Section 2.10.

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

Subsidiary ” means any subsidiary of the Borrower.

Swingline Commitment ” means, with respect to each Swingline Lender, the commitment of such Swingline Lender to make Swingline Loans pursuant to Section 2.05, expressed as an amount representing the maximum principal amount of the Swingline Loans to be made by such Lender hereunder, as such commitment may be reduced from time to time pursuant to Section 2.09. The initial amount of each Swingline Lender’s Swingline Commitment is set forth on Schedule 2.01 or in the agreement pursuant to which it became a Swingline Lender hereunder. The aggregate amount of the Swingline Commitments on the date hereof is US$100,000,000.

 

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Swingline Exposure ” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

Swingline Lender ” means JPMCB, Citibank, N.A. and any other Revolving Lender designated as a Swingline Lender pursuant to Section 2.05, in each case in its capacity as lender of Swingline Loans hereunder.

Swingline Loan ” means a Loan made by a Swingline Lender under its Swingline Commitment pursuant to Section 2.05.

TARGET ” means the Trans-European Automated Real Time Gross Settlement Express Transfer (TARGET) payment system.

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

Term Commitment ” means, with respect to each Lender, the commitment, if any, of such Lender to make a Term Loan hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loan to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Term Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Term Commitment, as applicable. The initial aggregate amount of the Term Commitments is $440,000,000.

Term Loan ” means a Loan made pursuant to Section 2.01(a).

Term Maturity Date ” means March 29, 2012; provided , however , that if the Spin-Off shall not have been consummated by 5:00 p.m. New York time on the fifth Business Day following the Effective Date, the Term Maturity Date shall be the next following Business Day.

Total Indebtedness ” means, at any date, the sum of the aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries (other than any Broker Dealer Subsidiary) outstanding as of such date that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP.

Transaction Costs ” has the meaning assigned to such term in the introduction to this Agreement.

Transactions ” means (a) the execution, delivery and performance by the Borrower of the Loan Documents, the borrowing of Loans and the issuance of Letters of Credit hereunder, (b) the execution, delivery and performance by the Borrower of the Interim Credit Agreement and the borrowing of loans thereunder, (c) the payment by the Borrower of the Dividend, (d) the cancelation and discharge of all Indebtedness of the Borrower and the Subsidiaries payable to ADP or Affiliates of ADP, (e) the consummation of the Spin-Off and (f) the payment of the Transaction Costs.

 

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

Unreimbursed Amount ” has the meaning set forth in Section 2.06.

US Dollar Equivalent ” means, on any date of determination, (a) with respect to any amount in US Dollars, such amount, and (b) with respect to any amount in any Alternative Currency, the equivalent in US Dollars of such amount, determined by the Administrative Agent pursuant to Section 1.05 using the Exchange Rate with respect to such Alternative Currency at the time in effect under the provisions of such Section.

US Dollars ” or “ US$ ” means the lawful currency of the United States of America.

Utilization ” means, on any date, the sum of the aggregate Revolving Exposures and the aggregate Competitive Loan Exposures on such date, expressed as a percentage of the total Revolving Commitments.

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

Yen ” or “ ¥ ”means the lawful currency of Japan.

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , a “Revolving Loan”) or by Type ( e.g. , a “LIBO Rate Loan”) or by Class and Type ( e.g. , a “LIBO Rate Revolving Loan”). Borrowings also may be classified and referred to by Class ( e.g. , a “Revolving Borrowing”) or by Type ( e.g. , a “LIBO Rate Borrowing”) or by Class and Type ( e.g. , a “LIBO Rate Revolving Borrowing”).

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not

 

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to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision, or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose, regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision shall have been amended in accordance herewith. Following the delivery of any such notice, the Borrower, the Administrative Agent and the Lenders will negotiate in good faith to amend this Agreement to eliminate the effect of any such change.

SECTION 1.05. Currency Translation. Not later than 1:00 p.m., London time, on each Calculation Date, the Administrative Agent shall (i) determine the Exchange Rate as of such Calculation Date with respect to each Alternative Currency and (ii) give notice thereof to the Revolving Lenders and the Borrower. The Exchange Rates so determined shall become effective (A) in the case of the initial Calculation Date, on the Effective Date and (B) in the case of each subsequent Calculation Date, on the first Business Day immediately following such Calculation Date (a “ Reset Date ”), shall remain effective until the next succeeding Reset Date, and shall for all purposes of this Agreement (other than Article VI and the definitions employed therein, Section 9.14 or any other provision expressly requiring the use of a current exchange rate) be the Exchange Rates employed in converting any amounts between US Dollars and Alternative Currencies. For purposes of Article VI and the definitions employed therein, amounts in currencies other than US Dollars shall be translated into US Dollars at the currency exchange rates used in preparing the Borrower’s annual and quarterly financial statements.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees (a) to make a Term Loan to the Borrower on the Effective Date in a principal amount not exceeding its Term Commitment and (b) to make Revolving Loans to the Borrower, denominated in US Dollars or Alternative Currencies, from time to time during the Availability Period in amounts that will not at any time result in (i) such Lender’s Revolving Exposure exceeding its Revolving Commitment, (ii) the sum of the total Revolving Exposures plus the total Competitive Loan Exposures exceeding the total Revolving Commitments, (iii) the

 

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sum of the total Revolving Loans denominated in Australian Dollars exceeding AUS$61,000,000, (iv) the sum of the total Revolving Loans denominated in Canadian Dollars exceeding CAN$57,000,000, (iv) the sum of the total Revolving Loans denominated in Euro exceeding €37,000,000, (v) the sum of the total Revolving Loans denominated in Sterling exceeding £25,000,000 or (vi) the sum of the total Revolving Loans denominated in Yen exceeding ¥5,892,000,000. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts repaid in respect of Term Loans may not be reborrowed.

SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a Competitive Loan or Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class, Type and currency made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. Each Swingline Loan shall be made in accordance with the procedures set forth in Section 2.05. Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.04. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments and Competitive Bids of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Subject to Section 2.15, (i) each Revolving Borrowing denominated in US Dollars and each Term Borrowing shall be comprised entirely of ABR Loans or LIBO Rate Loans as the Borrower may request in accordance herewith, (ii) each Revolving Borrowing denominated in an Alternative Currency shall be comprised entirely of LIBO Rate Loans, (iii) each Competitive Borrowing shall be comprised entirely of LIBO Rate Loans or Fixed Rate Loans as the Borrower may request in accordance herewith and (iv) each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any LIBO Rate Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any LIBO Rate Revolving Borrowing or LIBO Rate Term Borrowing, and at the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Revolving Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Each Swingline Loan shall be in an amount that is an integral multiple of US$1,000,000 and not less than US$5,000,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 15 LIBO Rate Borrowings outstanding.

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

 

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SECTION 2.03. Requests for Revolving Borrowings or Term Borrowings. To request a Revolving Borrowing or Term Borrowing, the Borrower shall notify the Applicable Agent of such request by telephone (a) in the case of a LIBO Rate Borrowing denominated in US Dollars, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing, (b) in the case of a Borrowing denominated in an Alternative Currency, not later than 11:00 a.m., London time, three Business Days before the date of the proposed Borrowing or (c) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a written Borrowing Request in a form approved by the Applicable Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(a) the currency (which shall be U.S. Dollars or an Alternative Currency) and the aggregate amount of the requested Borrowing;

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

(c) in the case of a Borrowing to be made on the Effective Date, whether such Borrowing is to be a Revolving Borrowing or Term Borrowing;

(d) whether such Borrowing is to be an ABR Borrowing or a LIBO Rate Borrowing;

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

(f) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.

If no currency is specified with respect to any requested LIBO Rate Borrowing, then the Borrower shall be deemed to have selected US Dollars. If no election as to the Type of Borrowing is specified, then the requested Revolving Borrowing shall be (A) in the case of a Borrowing denominated in US Dollars, an ABR Borrowing and (B) in the case of a Borrowing denominated in any other currency, a LIBO Rate Borrowing. If no Interest Period is specified with respect to any requested LIBO Rate Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Applicable Agent shall advise each applicable Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04. Competitive Bid Procedure . (a) Subject to the terms and conditions set forth herein, from time to time during the Availability Period the Borrower may request Competitive Bids and may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans denominated in US Dollars or Alternative Currencies in an aggregate principal amount that will not result in the sum of the total Revolving Exposures plus the total Competitive Loan Exposures exceeding the total Revolving Commitments.

 

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(b) In order to request Competitive Bids, the Borrower shall hand deliver or telecopy to the Administrative Agent a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be received by the Administrative Agent (i) in the case of a LIBO Rate Competitive Loan, not later than 10:00 a.m., New York City time, (A) four Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in US Dollars and (B) five Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in an Alternative Currency and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, (A) one Business Day before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in US Dollars and (B) two Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in an Alternative Currency. No ABR Loan shall be requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid Request that does not conform substantially to the format of Exhibit A-1 may be rejected in the Administrative Agent’s sole discretion, and the Administrative Agent shall promptly notify the Borrower of such rejection by telecopy. Each Competitive Bid Request shall refer to this Agreement and specify (i) whether the Borrowing then being requested is to be a LIBO Rate Borrowing or a Fixed Rate Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), (iii) the currency of the requested Borrowing (which shall be US Dollars or an Alternative Currency), (iv) the aggregate principal amount of the requested Borrowing (which shall be an integral multiple of US$1,000,000 or 1,000,000 units of the applicable Alternative Currency with a US Dollar Equivalent on the date of the applicable Competitive Bid Request of at least US$25,000,000), and (v) the Interest Period with respect thereto (which may not end after the Revolving Maturity Date). Promptly after its receipt of a Competitive Bid Request that is not rejected as aforesaid, the Administrative Agent shall telecopy to the Revolving Lenders a Notice of Competitive Bid Request inviting the Revolving Lenders to bid, on the terms and conditions of this Agreement, to make Competitive Loans.

(c) Each Revolving Lender invited to bid may, in its sole discretion, make one or more Competitive Bids to the Borrower responsive to the Borrower’s Competitive Bid Request. Each Competitive Bid by a Revolving Lender must be received by the Administrative Agent by telecopy, in the form of Exhibit A-3 hereto, (i) in the case of a LIBO Rate Competitive Loan, not later than 9:30 a.m., New York City time, (A) three Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in US Dollars and (B) four Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in an Alternative Currency and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, (A) on the day of a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in US Dollars and (B) one Business Day before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in an Alternative Currency. A Revolving Lender may submit multiple bids to the Administrative Agent. Competitive Bids that do not conform substantially to the format of Exhibit A-3 may be rejected by the Administrative Agent, and the Administrative Agent shall notify the Revolving Lender making such nonconforming bid of such rejection as soon as practicable. Each Competitive Bid shall refer to this Agreement and specify (A) the principal amount (which shall be an integral multiple of US$1,000,000 or 1,000,000 units of the applicable Alternative Currency the U.S. Dollar Equivalent of which is equal to or greater than $1,000,000 and which may equal the entire principal amount of the Competitive Borrowing requested) of the Competitive Loan or Loans that the Revolving Lender is willing to make,

 

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(B) the Competitive Bid Rate or Rates at which the Revolving Lender is prepared to make the Competitive Loan or Loans and (C) the Interest Period applicable to each such Loan and the last day thereof. If any Revolving Lender invited to bid shall elect not to make a Competitive Bid, such Revolving Lender shall so notify the Administrative Agent by telecopy (I) in the case of a LIBO Rate Competitive Loan, not later than 9:30 a.m., New York City time, (A) three Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in US Dollars and (B) four Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in an Alternative Currency and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, (A) on the day of a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in US Dollars and (B) one Business Day before a proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in an Alternative Currency; provided , however , that failure by any Revolving Lender to give such notice shall not cause such Revolving Lender to be obligated to make any Competitive Loan as part of such Competitive Borrowing. A Competitive Bid submitted by a Revolving Lender shall be irrevocable.

(d) The Administrative Agent shall as promptly as practicable notify the Borrower by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the Revolving Lender that made such bid.

(e) The Borrower may in its discretion, subject only to the provisions of this paragraph, accept or reject any Competitive Bid. The Borrower shall notify the Administrative Agent by telephone, confirmed by telecopy in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has decided to accept or reject any of or all the bids notified to it not more than one hour after it shall have been so notified; provided , however , that (i) the failure of the Borrower to give such notice shall be deemed to be a rejection of any such bid, (ii) the Borrower shall not accept a bid made at a particular Competitive Bid Rate if it has decided to reject a bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by the Borrower shall not exceed the principal amount specified in the applicable Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, the Borrower may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid; provided further that in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to this clause, the amounts shall be rounded to integral multiples of the Borrowing Multiple in a manner determined by the Borrower. A notice given by the Borrower pursuant to this paragraph shall be irrevocable.

(f) The Administrative Agent shall promptly notify each bidding Revolving Lender whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate) by telecopy, and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Loan in respect of which its bid has been accepted.

(g) No Competitive Borrowing shall be requested or made if after giving effect thereto (i) the total Revolving Exposures plus the total Competitive Loan Exposures would exceed the total Revolving Commitments or (ii) in the event the Revolving Maturity Date shall

 

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have been extended as provided in Section 2.10, the total Revolving Exposures existing after any Existing Maturity Date plus the total Competitive Loan Exposures attributable to Competitive Loans maturing after such Existing Maturity Date would exceed the total Revolving Commitments existing after such Existing Maturity Date.

(h) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Revolving Lender, it shall submit such bid directly to the Borrower one quarter of an hour earlier than the latest time at which the other Revolving Lenders are required to submit their bids to the Administrative Agent pursuant to paragraph (e) above.

SECTION 2.05. Swingline Loans. (a) Subject to the terms and conditions set forth herein, each Swingline Lender agrees to make Swingline Loans denominated in US Dollars to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in the sum of the total Revolving Exposures plus the total Competitive Loan Exposures exceeding the total Revolving Commitments; provided that no Swingline Lender shall make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans. The Borrower may request any Swingline Loan from one or more of the Swingline Lenders, subject only to the limitation that the outstanding Swingline Loans of any Swingline Lender shall at no time exceed its Swingline Commitment.

(b) To request a Swingline Loan, the Borrower shall notify the Administrative Agent and the applicable Swingline Lender of such request by telephone (confirmed by telecopy), not later than 4:00 p.m., New York City time, in the case of a Swingline Loan to be made by JPMCB, and not later than 3:00 p.m., New York City time, in the case of a Swingline Loan to be made by any other Swingline Lender, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and the amount of the Swingline Loan to be made by the applicable Swingline Lender. The Administrative Agent will promptly advise the applicable Swingline Lender of any such notice received from the Borrower. The applicable Swingline Lender shall make its Swingline Loan available to the Borrower by means of funds transfer to the general deposit account of the Borrower with the Administrative Agent (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the applicable Issuing Bank) by 5:00 p.m., New York City time, on the requested date of such Swingline Loan.

(c) Each Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of its Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which the Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Revolving Lender’s Applicable Percentage of each such Swingline Loan. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of such Swingline Lender, such Revolving Lender’s Applicable Percentage of each such Swingline Loan. Each Revolving

 

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Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.07 with respect to Loans made by such Revolving Lender (and Section 2.07 shall apply, mutatis mutandis , to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the applicable Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender that made such Swingline Loan. Any amounts received by a Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by such Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; and any such amounts received by the Administrative Agent shall be promptly remitted to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the applicable Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the applicable Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

(d) The Borrower may, at any time and from time to time, designate one or more additional Revolving Lenders to act as a Swingline Lender under the terms of this Agreement with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and such Revolving Lender. Any Revolving Lender designated as a swingline lender pursuant to this paragraph shall, upon entering into a joinder agreement with the Borrower in form reasonably satisfactory to the Administrative Agent, be deemed to be a “Swingline Lender” (in addition to being a Revolving Lender) hereunder.

SECTION 2.06. Letters of Credit. (a)  General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit denominated in US Dollars for its own account (or, so long as the Borrower is a joint and several co-applicant with respect thereto, for the account of any of the Subsidiaries), in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. All Letters of Credit shall be denominated in US Dollars. The Borrower unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the account of any Subsidiary as provided in the first sentence of this paragraph, it will be fully responsible for the reimbursement of LC Disbursements, the payment of interest thereon and the payment of fees due hereunder to the same extent as if it were the sole account party in respect of such Letter of Credit (the Borrower hereby irrevocably waiving any defenses that might otherwise be available to it as a guarantor of the obligations of any Subsidiary that shall be an account party in respect of any such Letter of Credit).

 

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(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to the Issuing Bank and the Administrative Agent reasonably in advance of the requested date of issuance, amendment, renewal or extension a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit, the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed US$100,000,000, (ii) the sum of the total Revolving Exposures and the total Competitive Loan Exposures shall not exceed the total Revolving Commitments and (iii) in the event the Revolving Maturity Date shall have been extended as provided in Section 2.10, the sum of the LC Exposures attributable to Letters of Credit expiring after any Existing Maturity Date and the Competitive Loan Exposures attributable to Competitive Loans maturing after such Existing Maturity Date shall not exceed the total Revolving Commitments that have been extended to a date after the expiration date of the last of such Letters of Credit and the maturity of the last of such Competitive Loans.

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) except as set forth below with respect to Collateralized Letters of Credit, the date that is five Business Days prior to the Revolving Maturity Date (the “ LC Expiration Date ”); provided that at the request of the Borrower any Letter of Credit may contain customary “evergreen” provisions pursuant to which such Letter of Credit will be renewed for successive one-year periods (but, in no event, beyond the LC Expiration Date). Notwithstanding clause (ii) of the preceding sentence, (A) any Collateralized Letter of Credit may, with the consent of the Issuing Bank that issued such Collateralized Letter of Credit, expire on any date following the LC Expiration Date and (B) any Letter of Credit that contains an “evergreen” provision may renew pursuant to such evergreen provision to an expiration date following the LC Expiration Date if such Letter of Credit becomes a Collateralized Letter of Credit at least 15 Business Days prior to the latest date upon which the Issuing Bank thereof would be entitled to terminate such Letter of Credit prior to its automatic renewal pursuant to such evergreen provision.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants to each Revolving

 

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

(e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 p.m., New York City time, on the Business Day immediately following the day that the Borrower receives notice of such LC Disbursement, if the Borrower shall have received notice of such LC Disbursement prior to 5:00 p.m., New York City time, on such date, or, if such notice is not received by the Borrower prior to such time on the day of receipt, then not later than 12:00 p.m., New York City time, on the Business Day immediately following the day that the Borrower receives such notice; provided that, if the Revolving Maturity Date shall not have occurred, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.05 that such payment be financed with an ABR Revolving Borrowing (if such LC Disbursement is not less than US$5,000,000) or Swingline Loan (if such LC Disbursement is not less than US$1,000,000) in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof (the “ Unreimbursed Amount ”) and such Revolving Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the Unreimbursed Amount, in the same manner as provided in Section 2.07 with respect to Loans made by such Revolving Lender (and Section 2.07 shall apply, mutatis mutandis , to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

 

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(f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision thereof, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. None of the Agents, the Lenders or the Issuing Bank, or any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction in a non-appealable judgment), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank’s only obligation to the Borrower in respect of any drawing made on any Letter of Credit is to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and appear to substantially comply on their face with the requirements of such Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

 

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(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.14(d) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Revolving Lender to the extent of such payment.

(i) Replacement of an Issuing Bank. Any Issuing Bank may resign at any time by giving 180 days’ prior written notice to the Administrative Agent, the Revolving Lenders and the Borrower and may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Revolving Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.13(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “ Issuing Bank ” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or replacement of an Issuing Bank hereunder, such Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replacement (including the right to receive fees under Section 2.13(b)), but shall not be required to issue additional Letters of Credit.

(j) Additional Issuing Banks . The Borrower may, at any time and from time to time, designate one or more additional Revolving Lenders to act as an Issuing Bank under the terms of this Agreement with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and such Revolving Lender. Any Revolving Lender designated as an issuing bank pursuant to this paragraph shall, upon entering into an Issuing Bank Agreement with the Borrower, be deemed to be an “Issuing Bank” (in addition to being a Revolving Lender) hereunder.

(k) Issuing Bank Reports . Unless otherwise agreed by the Administrative Agent, each Issuing Bank shall report in writing to the Administrative Agent (i) on or prior to each Business Day on which such Issuing Bank issues, amends, renews or extends any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the aggregate face amount of the Letters of Credit issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amount thereof shall have changed), it being understood that such Issuing Bank shall not effect any issuance, renewal, extension or amendment resulting in an increase in the aggregate amount of the Letters of Credit issued by it without first obtaining written confirmation from the Administrative Agent that such increase is then permitted under this Agreement, (ii) on each

 

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Business Day on which such Issuing Bank makes any LC Disbursement, the date and amount of such LC Disbursement, (iii) on any Business Day on which the Borrower fails to reimburse an LC Disbursement required to be reimbursed to such Issuing Bank on such day, the date of such failure and the amount of such LC Disbursement and (iv) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such Issuing Bank.

(l) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit (“ Cash Collateralize ”) in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders and the Issuing Bank, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to Cash Collateralize shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.

(m) Collateralized Letters of Credit. Notwithstanding anything to the contrary in this Section, the obligations of the Revolving Lenders to acquire participations in Letters of Credit and to reimburse an Issuing Bank for Unreimbursed Amounts shall terminate with respect to any Collateralized Letter of Credit upon the Revolving Maturity Date. Any participation held by any Revolving Lender in a Collateralized Letter of Credit on the Revolving Maturity Date shall be deemed to have been assigned to the Issuing Bank that issued such Collateralized Letter of Credit on such Revolving Maturity Date.

SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in the applicable currency (a) in the case of an ABR Borrowing, by 1:00 p.m., New York City time and (b) in all other cases, by 12:00 noon, Local Time, to the account of the

 

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Applicable Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.05. The Applicable Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to such accounts as shall be designated in a written notice signed by a Financial Officer of the Borrower and delivered to the Applicable Agent; provided that ABR Revolving Loans or Swingline Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank.

(b) Unless the Applicable Agent shall have received notice from a Lender prior to the proposed time of any Borrowing that such Lender will not make available to the Applicable Agent such Lender’s share of such Borrowing, the Applicable Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Applicable Agent, then the applicable Lender and the Borrower severally agree to pay to the Applicable Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Applicable Agent, at (i) in the case of such Lender, the greater of (A) the Federal Funds Effective Rate, in the case of Loans denominated in US Dollars, and the rate reasonably determined by the London Agent to be the cost to it of funding such amount (including with respect to any overdraft related costs incurred by the London Agent), in the case of Loans denominated in a Alternative Currency, and (B) a rate determined by the Applicable Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, in the case of Loans denominated in US Dollars, the interest rate applicable to such Loans, and in the case of Loans denominated in a Alternative Currency, the interest rate applicable to such Loans.

SECTION 2.08. Interest Elections for Revolving Borrowings and Term Borrowings. (a) Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a LIBO Rate Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a LIBO Rate Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Competitive Borrowings or Swingline Borrowings, which may not be converted or continued.

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

 

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Notwithstanding any other provision of this Section, the Borrower shall not be permitted to (i) change the currency of any Borrowing or (ii) elect an Interest Period for LIBO Rate Loans that does not comply with Section 2.02(d).

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (e) of this Section:

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

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

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

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

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

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a LIBO Rate Revolving Borrowing or LIBO Rate Term Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall (i) in the case of a Borrowing denominated in US Dollars, be converted to an ABR Borrowing and (ii) in the case of any other LIBO Rate Borrowing, become due and payable on the last day of such Interest Period. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing or Term Borrowing denominated in US Dollars may be converted to or continued as a LIBO Rate Borrowing and (ii) unless repaid, (A) each LIBO Rate Revolving Borrowing and LIBO Rate Term Borrowing denominated in US Dollars shall, at the end of the Interest Period applicable thereto, be converted to an ABR Borrowing and (B) each LIBO Rate Revolving Borrowing denominated in an Alternate Currency shall, at the end of the Interest Period applicable thereto, be continued as a LIBO Rate Revolving Borrowing with an Interest Period of one month.

 

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SECTION 2.09. Termination or Reduction of Commitments . (a) Unless previously terminated, (i) the Term Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date and (ii) the Revolving Commitments shall terminate on the Revolving Maturity Date.

(b) The Borrower may at any time terminate or, from time to time, reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of US$1,000,000 and not less than US$5,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.12, the sum of the total Revolving Exposures and the total Competitive Loan Exposures would exceed the total Revolving Commitments.

(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments of any Class under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of such a notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the applicable Lenders in accordance with their respective Commitments of such Class.

SECTION 2.10. Increase of Revolving Commitments; Extension of Revolving Maturity Date. (a) The Borrower may on one or more occasions, by written notice to the Administrative Agent, executed by the Borrower and one or more financial institutions (any such financial institution referred to in this Section being called an “ Increasing Lender ”), which may include any Lender, cause new Revolving Commitments to be extended by the Increasing Lenders or cause the existing Revolving Commitments of the Increasing Lenders to be increased, as the case may be (any such extension or increase, a “ Commitment Increase ”), in an amount for each Increasing Lender set forth in such notice; provided , that (i) at no time shall the aggregate amount of Revolving Commitments, including Commitment Increases effected pursuant to this paragraph, exceed US$1,000,000,000, (ii) each Increasing Lender, if not already a Lender hereunder, shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld or delayed) and (iii) each Increasing Lender, if not already a Lender hereunder, shall become a party to this Agreement by completing and delivering to the Administrative Agent a duly executed accession agreement in a form reasonably satisfactory to the Administrative Agent and the Borrower (an “ Accession Agreement ”). New Revolving Commitments and increases in Revolving Commitments shall become effective on the date specified in the applicable notices delivered pursuant to this paragraph. Upon the effectiveness of any Accession Agreement to which any Increasing Lender is a party, (i) such Increasing Lender shall thereafter be deemed to be a party to this Agreement and shall be entitled to all rights, benefits and privileges accorded a Revolving Lender hereunder and subject to all

 

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obligations of a Revolving Lender hereunder and (ii)  Schedule 2.01 shall be deemed to have been amended to reflect the Revolving Commitment of such Increasing Lender as provided in such Accession Agreement. Upon the effectiveness of any increase pursuant to this Section in the Revolving Commitment of a Lender already a party hereto, Schedule 2.01 shall be deemed to have been amended to reflect the increased Revolving Commitment of such Lender.

(b) On the effective date of any Commitment Increase pursuant to this Section (the “ Increase Effective Date ”), (i) the aggregate principal amount of the Revolving Loans outstanding (the “ Initial Loans ”) immediately prior to giving effect to the applicable Commitment Increase on the Increase Effective Date shall be deemed to be repaid, (ii) after the effectiveness of the Commitment Increase, the Borrower shall be deemed to have made new Borrowings (the “ Subsequent Borrowings ”) in an aggregate principal amount equal to the aggregate principal amount of the Initial Loans and of the Types and for the Interest Periods specified in a Borrowing Request delivered to the Administrative Agent in accordance with Section 2.03, (iii) each Revolving Lender shall pay to the Administrative Agent in same day funds an amount equal to the difference, if positive, between (A) such Lender’s Applicable Percentage (calculated after giving effect to the Commitment Increase) of the Subsequent Borrowings and (B) such Lender’s Applicable Percentage (calculated without giving effect to the Commitment Increase) of the Initial Loans, (iv) after the Administrative Agent receives the funds specified in clause (iii) above, the Administrative Agent shall pay to each Revolving Lender the portion of such funds that is equal to the difference, if positive, between (A) such Lender’s Applicable Percentage (calculated without giving effect to the Commitment Increase) of the Initial Loans and (B) such Lender’s Applicable Percentage (calculated after giving effect to the Commitment Increase) of the amount of the Subsequent Borrowings, (v) each Increasing Lender and each other Revolving Lender shall be deemed to hold its Applicable Percentage of each Subsequent Borrowing (each calculated after giving effect to the Commitment Increase) and (vi) the Borrower shall pay each Revolving Lender any and all accrued but unpaid interest on the Initial Loans. The deemed payments made pursuant to clause (i) above in respect of each LIBO Rate Loan shall be subject to indemnification by the Borrower pursuant to the provisions of Section 2.17 if the Increase Effective Date occurs other than on the last day of the Interest Period relating thereto and breakage costs result.

(c) Notwithstanding the foregoing, no increase in the Revolving Commitments (or in any Revolving Commitment of any Lender) shall become effective under this Section unless, on the date of such increase, the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied (with all references in such paragraphs to a Borrowing being deemed to be references to such increase and without giving effect to the parenthetical in Section 4.02(a)) and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Borrower.

(d) The Borrower may, by written notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders) not less than 30 days and not more than 90 days prior to any anniversary of the Effective Date (an “ Effectiveness Anniversary ”), request that the Revolving Lenders extend the Revolving Maturity Date and the Revolving Commitments for an additional period of one year. The Borrower may deliver such a notice to the Administrative Agent no more than twice during the Availability Period. Each Revolving Lender shall, by notice to the Borrower and the Administrative Agent given not later than the

 

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20th day after the date of the Administrative Agent’s receipt of the Borrower’s extension request, advise the Borrower whether or not it agrees to the requested extension (each Revolving Lender agreeing to a requested extension being called a “ Consenting Lender ” and each Lender declining to agree to a requested extension being called a “ Declining Lender ”). Any Revolving Lender that has not so advised the Borrower and the Administrative Agent by such day shall be deemed to have declined to agree to such extension and shall be a Declining Lender. If Revolving Lenders constituting the Required Revolving Lenders shall have agreed to an extension request, then the Revolving Maturity Date shall, as to the Consenting Lenders, be extended to the first anniversary of the Revolving Maturity Date theretofore in effect. The decision to agree or withhold agreement to any Revolving Maturity Date extension shall be at the sole discretion of each Revolving Lender. The Revolving Commitment of any Declining Lender shall terminate on the Revolving Maturity Date in effect as to such Revolving Lender prior to giving effect to any such extension (such Revolving Maturity Date being called the “ Existing Maturity Date ”). The principal amount of any outstanding Revolving Loans made by Declining Lenders, together with any accrued interest thereon and any accrued fees and other amounts payable to or for the accounts of such Declining Lenders hereunder, shall be due and payable on the applicable Existing Maturity Date, and on such Existing Maturity Date the Borrower shall also make such other prepayments of its Loans as shall be required in order that, after giving effect to the termination of the Revolving Commitments of, and all payments to, Declining Lenders pursuant to this sentence, the sum of the total Revolving Exposures and the total Competitive Loan Exposures shall not exceed the total Revolving Commitments then in effect. Notwithstanding the foregoing provisions of this paragraph, the Borrower shall have the right, pursuant to Section 9.04, at any time prior to any Existing Maturity Date, to replace a Declining Lender with a Lender or other financial institution that will agree to a request for the extension of the Revolving Maturity Date, and any such replacement Lender shall for all purposes constitute a Consenting Lender. Notwithstanding the foregoing, no extension of the Revolving Maturity Date pursuant to this paragraph shall become effective unless (i) the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied (with all references in such paragraphs to a Borrowing being deemed to be references to such extension and without giving effect to the parenthetical in Section 4.02(a)) on and as of the first Effectiveness Anniversary to occur following the Borrower’s delivery of the applicable request for extension of the Revolving Maturity Date and (ii) the Administrative Agent shall have received a certificate to that effect dated such Effectiveness Anniversary and executed by a Financial Officer of the Borrower.

SECTION 2.11. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Applicable Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender on the Term Maturity Date, (iii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Competitive Loan made by such Lender on the last day of the Interest Period applicable to such Loan and (iv) to the applicable Swingline Lenders the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the first date at least five Business Days after such Swingline Loan is made that is the 15th or last day of a calendar month; provided that on each date that a Revolving Borrowing denominated in US Dollars (including any ABR Borrowing) or Competitive Borrowing is made, the Borrower shall repay all outstanding Swingline Loans.

 

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

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

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

(e) Any Lender may request that the Term Loans or Revolving Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender such a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in substantially the form attached hereto as Exhibit E . Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.12. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section; provided that the Borrower shall not have the right to prepay any Competitive Loan without the prior consent of the Lender thereof.

(b) If the sum of the total Revolving Exposures and the total Competitive Loan Exposures shall at any time exceed the aggregate Revolving Commitments, then (i) on the last day of any Interest Period applicable to any LIBO Rate Revolving Borrowing and (ii) on any other date in the event any ABR Revolving Borrowing shall be outstanding, the Borrower shall prepay Revolving Loans in an amount equal to the lesser of (A) the amount necessary to eliminate such excess (after giving effect to any other prepayment of Loans on such day) and (B) the amount of the applicable Borrowings referred to in clause (i) or (ii), as applicable. If, on any date, the sum of the total Revolving Exposures and the total Competitive Loan Exposures shall exceed 105% of the aggregate Revolving Commitments, then the Borrower shall, not later than the third Business Day following the date notice of such excess is received from the Administrative Agent, prepay one or more Borrowings in an aggregate principal amount sufficient to eliminate such excess.

 

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(c) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (d) of this Section.

(d) The Borrower shall notify the Applicable Agent (and, in the case of prepayment of a Swingline Loan, the applicable Swingline Lender) by telephone (confirmed by telecopy) or by telecopy of any prepayment hereunder (i) in the case of a LIBO Rate Borrowing denominated in US Dollars, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of a Borrowing denominated in a Alternative Currency, not later than 11:00 a.m., London time, four Business Days before the date of prepayment, (iii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of prepayment or (iv) in the case of prepayment of a Swingline Loan made by JPMCB, not later than 4:00 p.m., New York City time, on the date of prepayment or, in the case of prepayment of a Swingline Loan made by any other Swingline Lender, not later than 3:00 p.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of optional prepayment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Class and Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.14.

SECTION 2.13. Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a facility fee, which shall accrue at the Applicable Rate set forth under the caption “Facility Fee Rate” in the definition of such term on the daily amount of the Revolving Commitment of such Lender (whether used or unused) during the period from and including the Effective Date to but excluding the Revolving Maturity Date; provided that, if such Lender continues to have any Revolving Exposure after the Revolving Maturity Date, then such facility fee shall continue to accrue on the daily amount of such Lender’s Revolving Exposure from and including the Revolving Maturity Date to but excluding the date on which such Lender ceases to have any Revolving Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year, commencing June 30, 2007 (or, if any such day shall not be a Business Day, the first Business Day thereafter), on any date prior to the Revolving Maturity Date on which all the Revolving Commitments shall have terminated and on the Revolving Maturity Date; provided that any facility fees accruing after the Revolving Maturity Date shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the Applicable Rate set forth under the caption “Participation Fee” in the

 

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definition of such term on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate per annum of 0.125% on the average daily amount of the LC Exposure attributable to Letters of Credit issued by such Issuing Bank (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued or becoming payable in respect of Letters of Credit through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the third Business Day following June 30, 2007; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) The Borrower agrees to pay to the Agents, for their own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Agents.

(d) All fees payable hereunder shall be paid in US Dollars on the dates due, in immediately available funds, to the Administrative Agent (or to each Issuing Bank, in the case of fees payable to it) for distribution, in the case of facility fees and participation fees, to the Revolving Lenders. Fees paid shall not be refundable under any circumstances.

SECTION 2.14. Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate.

(b) The Loans comprising each LIBO Rate Borrowing shall bear interest (i) in the case of a LIBO Rate Revolving Loan, at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate set forth under the caption “Revolving Facility – LIBO Rate Spread and Participation Fee ( £ 50% Utilization)” or “Revolving Facility – LIBO Rate Spread and Participation Fee (>50% Utilization)”, as the case may be, in the definition of Applicable Rate, (ii) in the case of a LIBO Rate Term Loan, at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate set forth under the caption “Term Facility – LIBO Rate Spread” in the definition of Applicable Rate, and (iii) in the case of a LIBO Rate Competitive Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the Margin applicable to such Loan.

(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan.

 

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(d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2.00% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans and Swingline Loans, upon the termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan or a Swingline Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any LIBO Rate Revolving Loan or LIBO Rate Term Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. All interest shall be payable in the currency in which the applicable Loan is denominated.

(f) All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest on Borrowings denominated in Sterling and (ii) interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or, except in the case of Borrowings denominated in Sterling, 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Applicable Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.15. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a LIBO Rate Borrowing denominated in any currency:

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

(b) the Administrative Agent is advised by the Required Lenders (or, in the case of a LIBO Rate Competitive Loan, the Lender that is required to make such Loan) that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining the Loans (or Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a LIBO Rate Borrowing in such currency shall be ineffective,

 

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and, unless repaid, such Borrowing shall be converted to, or continued as, on the last day of the Interest Period applicable thereto (A) if such Borrowing is denominated in US Dollars, an ABR Borrowing, or (B) if such Borrowing is denominated in any Alternative Currency, a Borrowing bearing interest at such rate as Administrative Agent shall determine adequately and fairly reflects the cost to the affected Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period plus the Applicable Rate, (ii) if any Borrowing Request requests a LIBO Rate Revolving Borrowing in such currency, such Borrowing shall be made (A) if such Borrowing is denominated in US Dollars, as an ABR Borrowing, or (B) if such Borrowing is denominated in any Alternative Currency, as a Borrowing bearing interest at such rate as the Administrative Agent shall determine adequately and fairly reflects the cost to the affected Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period plus the Applicable Rate and (iii) any request by the Borrower for a LIBO Rate Competitive Borrowing shall be ineffective, provided that if the circumstances giving rise to such notice do not affect all the Lenders, then requests by the Borrower for LIBO Rate Competitive Borrowings may be made to Lenders that are not affected thereby.

SECTION 2.16. Increased Costs. (a) Except with regard to Taxes, which are dealt with in Section 2.18, if any Change in Law shall:

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

(ii) impose on any Lender or Issuing Bank or any applicable interbank market any other condition affecting this Agreement or LIBO Rate Loans or Fixed Rate Loans made by any Lender or any Letter of Credit or participation therein;

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

(b) If any Lender or Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding

 

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company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction suffered.

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

(d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

(e) Notwithstanding the foregoing provisions of this Section, a Lender shall not be entitled to compensation pursuant to this Section in respect of any Competitive Loan if the Change in Law that would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Competitive Bid pursuant to which such Loan was made.

(f) Notwithstanding the foregoing provisions of this Section, no Lender or Issuing Bank shall demand compensation for any increased cost or reduction in rate of return if it shall not be the general policy or practice of such Lender or such Issuing Bank to demand such compensation in similar circumstances under comparable provisions of other credit agreements (it being understood that this sentence shall not in any way limit the discretion of any Lender or any Issuing Bank to waive the right to demand such compensation under this Agreement or any other credit agreement in any given case).

SECTION 2.17. Break Funding Payments. In the event of (a) the payment of any principal of any LIBO Rate Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or an optional prepayment of Loans), (b) the conversion of any LIBO Rate Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any LIBO Rate Loan or Fixed Rate Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is revoked under Section 2.09(c)), (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Loan, or (e) the assignment of any LIBO Rate Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.20, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event,

 

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including, to the extent that any of the foregoing Loans are denominated in any Alternative Currency, the reasonable and documented costs and expenses of such Lender attributable to the premature unwinding of any hedging agreement entered into by such Lender in respect to the foreign currency exposure attributable to such Loan. In the case of a LIBO Rate Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in the applicable currency of a comparable amount and period from other banks in the LIBO Rate market. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 30 days after receipt thereof.

SECTION 2.18. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Applicable Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received pursuant to this Agreement had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

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

(c) The Borrower shall indemnify each Agent, each Lender and each Issuing Bank, within 15 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by such Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower and setting forth in reasonable detail the circumstances giving rise thereto and the calculations used by such Agent, Lender or Issuing Bank to determine the amount to be paid by the Borrower to such Agent, Lender or Issuing Bank shall be conclusive absent manifest error.

 

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(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.

(f) Each Foreign 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 the appropriate U.S. Internal Revenue Service Form W-8 properly completed and duly executed by such Foreign 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 Foreign Lender on or before the date that 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 Foreign Lender shall deliver such forms promptly upon the obsolescence, expiration or invalidity of any form previously delivered by such Foreign Lender. Each Foreign 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 provisions of this paragraph (f), a Foreign Lender shall not be required to deliver any form pursuant to this paragraph (f) that such Foreign Lender is not legally able to deliver.

(g) If a Lender, the Administrative Agent or an Issuing Bank determines, in its sole discretion, that it has received a refund in respect of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall timely pay over the amount of such refund to the Borrower, net of all reasonable out-of-pocket expenses of such Lender, the Administrative Agent or Issuing Bank and without interest (other than interest paid by the relevant taxation authority with respect to such refund); provided , that the Borrower, upon the request of such Lender, the Administrative Agent or the Issuing Bank, agrees to repay the amount paid over to the Borrower (plus penalties, interest or other reasonable charges) to such Lender, the Administrative Agent or Issuing Bank in the event such Lender, the Administrative Agent or Issuing Bank is required to repay such refund to such taxation authority. This paragraph (g) shall not be construed to require any Lender, the Administrative Agent or any Issuing Bank to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

SECTION 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) The Borrower shall make each payment required to be made by it hereunder or under any

 

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other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.16, 2.17, 2.18 or 2.21, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment or, if no such time is expressly required, prior to 12:00 noon, Local Time, on the date when due, in immediately available funds, without set–off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Applicable Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Applicable Agent to the applicable account specified by it for the account of the Lenders or, in any such case, to such other account as the Applicable Agent shall from time to time specify in a notice delivered to the Borrower, except payments to be made directly to an Issuing Bank or a Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.16, 2.17, 2.18, 2.21 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Applicable Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder of principal or interest in respect of any Loan shall, except as otherwise expressly provided herein, be made in the currency of such Loan; all other payments hereunder and under each other Loan Document shall be made in US Dollars. Any payment required to be made by either Agent hereunder shall be deemed to have been made by the time required if such Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by such Agent to make such payment.

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

(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans or funded participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion

 

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of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set–off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

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

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b) or 2.19(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by either Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.20. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.16, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, or if the Borrower is required to pay any additional interest or other amount to any Lender pursuant to Section 2.21, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.16, 2.18 or 2.21, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

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(b) If (i) any Lender requests compensation under Section 2.16, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, (iii) the Borrower is required to pay any additional interest or other amount to any Lender pursuant to Section 2.21, (iv) any Lender defaults in its obligation to fund Loans hereunder or (v) any Lender becomes a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement (other than any outstanding Competitive Loans held by it) to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (A) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, each Issuing Bank), which consent, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans (other than Competitive Loans) and funded participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal, funded participations and accrued interest and fees) or the Borrower (in the case of all other amounts), (C) in the case of any such assignment resulting from a claim for compensation under Section 2.16 or payments required to be made pursuant to Section 2.18 or additional interest or other amounts required pursuant to Section 2.21, such assignment will result (or is reasonably expected to result) in a material reduction in such compensation or payments and (D) in the case of any such assignment resulting from the status of such Lender as a Non-Consenting Lender, such assignment, together with any assignments by other Non-Consenting Lenders, will enable the Borrower to obtain sufficient consents to cause the applicable amendment, modification or waiver to become effective. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.21. Additional Reserve Costs. (a) If and so long as any Lender is required by the Bank of England or any other monetary or other authority of the United Kingdom to make special deposits, to maintain reserve asset ratios or to pay fees, in each case in respect of such Lender’s LIBO Rate Loans, such Lender may require the Borrower to pay, contemporaneously with each payment of interest on each of such Loans, additional interest on such Loan at a rate per annum equal to the Mandatory Costs Rate calculated in accordance with the formula and in the manner set forth in Exhibit D hereto.

(b) If and so long as any Lender is required to comply with reserve assets, liquidity, cash margin or other requirements of any monetary or other authority (including any such requirement imposed by the European Central Bank or the European System of Central Banks, but excluding requirements reflected in the Statutory Reserve Rate or the Mandatory Costs Rate) in respect of any of such Lender’s LIBO Rate Loans, such Lender may require the Borrower to pay, contemporaneously with each payment of interest on each of such Lender’s LIBO Rate Loans subject to such requirements, additional interest on such Loan at a rate per annum specified by such Lender to be the cost to such Lender of complying with such requirements in relation to such Loan.

 

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(c) Any additional interest owed pursuant to paragraph (a) or (b) above shall be determined by the relevant Lender, which determination shall be conclusive absent manifest error, and notified to the Borrower (with a copy to the Agents) at least five Business Days before each date on which interest is payable for the relevant Loan, and such additional interest so notified to the Borrower by such Lender shall be payable to the London Agent for the account of such Lender on each date on which interest is payable for such Loan.

(d) A reference to a Lender in this Section includes any domestic or foreign branch or Affiliate of such Lender making a Loan as contemplated by Section 2.02(b).

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

SECTION 3.01. Organization; Powers. The Borrower and each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

SECTION 3.02. Authorization; Enforceability. The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and, stockholder action of the Borrower. This Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any material consent or approval of, registration or filing with, or any other material action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or any order of any Governmental Authority in any material respect, (c) will not violate the charter, by-laws or other organizational documents of the Borrower, (d) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Subsidiary or their assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any Subsidiary, and (e) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary, except, in the case of clause (d) or (e), where such violation, default, rise of a right, creation or imposition, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lenders (by inclusion in the Form 10) its combined

 

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balance sheet and combined statements of earnings, group equity and cash flows as of and for its fiscal year ended June 30, 2006 and the related notes (the “ Annual Financial Statements ”), reported on by Deloitte & Touche LLP, independent registered public accountants, and its condensed combined balance sheets and condensed combined statements of earnings and cash flows as of and for the fiscal quarters ended September 30, 2006 and December 31, 2006 and related notes (collectively, the “ Quarterly Financial Statements ”). The Annual Financial Statements and the Quarterly Financial Statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and the consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to, in the case of the Quarterly Financial Statements, normal year-end adjustments and the absence of certain year-end footnotes.

(b) Since the later of June 30, 2006 and the date of the most recent audited financial statements of the Borrower delivered to the Administrative Agent pursuant to Section 5.01(a), there has been no material adverse change, or event or condition that could reasonably be expected to result in a material adverse change, in the business, assets, operations or financial condition of the Borrower and the Subsidiaries, taken as a whole.

SECTION 3.05. Properties. (a) The Borrower and each Subsidiary has (or will have on the Effective Date and thereafter) good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes and except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(b) Each of the Borrower and the Subsidiaries owns (or will own on the Effective Date and thereafter) or is licensed to use (or has entered into license agreements with ADP that will become effective upon consummation of the Spin-Off that will license it to use) all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and such Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.06. Litigation and Environmental Matters. (a) As of the Effective Date, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower and the Subsidiaries that involve the Transactions. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower and the Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement.

(b) Except with respect to any matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of the Borrower and the Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law,

 

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(ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

SECTION 3.07. Compliance with Laws and Agreements. (a) The Borrower and each Subsidiary is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property (including, with regard to any Broker Dealer Subsidiary, all rules and regulations of the SEC, NASD and SIPC applicable to it or its property) and all indentures, agreements and other instruments binding upon it or its property, except where the failure to be in compliance, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

(b) Each Broker Dealer Subsidiary is (i) duly registered as a broker or dealer with the SEC, (ii) a member in good standing of the NASD and the securities exchanges and securities clearing corporations in which its membership is required for the conduct of its business and (iii) duly registered, licensed or qualified as a broker or dealer under the applicable laws and regulations of each jurisdiction in which such registration, license or qualification is required for the conduct of its business, except, in the case of this clause (iii), where the failure to be so registered, licensed or qualified could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.08. Federal Reserve Regulations. (a) Neither the Borrower nor any Subsidiary (other than any Broker Dealer Subsidiary) is engaged principally, or as a substantial part of its activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock (within the meaning of Regulation U).

(b) No part of the proceeds of any Loan has been or will be used by the Borrower or any Subsidiary (other than any Broker Dealer Subsidiary), whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry Margin Stock (within the meaning of Regulation U) or to refinance Indebtedness originally incurred for such purpose. No part of the proceeds of any Loan has been or will be used by the Borrower or any Subsidiary in any manner or for any purpose that has resulted or will result in a violation of Regulation T, Regulation U or Regulation X.

(c) Each Broker Dealer Subsidiary is an “exempted borrower” within the meaning of Regulation U.

SECTION 3.09. Investment Company Status. Neither the Borrower nor any of the Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.10. Taxes. The Borrower and the Subsidiaries have timely filed or caused to be filed all Tax returns and reports required to have been filed and have paid or caused to be paid all Taxes required to have been paid by them, except (a) any Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 3.11. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than US$50,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than US$75,000,000 the fair market value of the assets of all such Plans.

SECTION 3.12. Disclosure. Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information (excluding any projections and other forward-looking information and information of a general economic or industry nature) furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented from time to time by other information so furnished) contained, at the time when furnished, any material misstatement of fact or omitted, at the time when furnished, to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. All projections and other forward looking information contained in the Information Memorandum and any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented from time to time by other information so furnished) have been prepared by the Borrower in good faith based upon assumptions that were reasonable at the time made and at the time such projections and other information were furnished.

ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or other electronic image scan transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received favorable written opinions (each addressed to the Administrative Agent and the Lenders and dated the Effective

 

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Date) of Paul, Weiss, Rifkind, Wharton & Garrison LLP and Milbank, Tweed, Hadley & McCloy LLP, each counsel for the Borrower, each in form and substance reasonably satisfactory to the Administrative Agent. The Borrower hereby requests such counsel to deliver such opinion.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02 and paragraphs (e) and (g) and the first sentence of paragraph (h) of this Section.

(e) All material consents and approvals required to be obtained from any Governmental Authority or other Person in connection with the Transactions shall have been obtained.

(f) The Administrative Agent shall have received a certificate from a Financial Officer of the Borrower, confirming the solvency of the Borrower and the Subsidiaries on a consolidated basis after giving effect to the Transactions.

(g) After giving effect to the Transactions, neither the Borrower nor any of its Subsidiaries shall have outstanding any shares of preferred stock or any Indebtedness for borrowed money, other than (i) Indebtedness incurred under the Loan Documents, (ii) Indebtedness listed on Schedule 6.02 or incurred pursuant to Section 6.02(l), (iii) Indebtedness of the Borrower incurred under the Interim Credit Agreement (iv) intercompany Indebtedness between the Borrower and its wholly owned Subsidiaries or between any such wholly owned Subsidiary and any other wholly owned Subsidiary and (v) Indebtedness of the Borrower or any Subsidiary incurred in the ordinary course under any overdraft facilities.

(h) All transactions to occur in connection with the Spin-Off (including the transfer by ADP to the Borrower of all assets and rights to be held by it following the Spin-Off), other than (i) the funding of Loans hereunder and under the Interim Credit Agreement, (ii) the payment of the Dividend, and (iii) the distribution of shares of the Borrower to the shareholders of ADP, shall have been completed on terms and with results relating to the Borrower and the Subsidiaries consistent in all material respects with the information contained in the Form 10 and the pro forma financial statements and projections of the Borrower heretofore delivered by ADP and the Borrower to the Lenders. The Borrower shall have a reasonable good faith belief that the payment of the Dividend and the distribution of shares of the Borrower to the shareholders of ADP will occur before the end of the Business Day immediately following the Effective Date, and

 

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the Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, to such effect.

(i) The obligations of the lenders under the Interim Credit Agreement to make loans thereunder shall have become effective and the loans under the Interim Credit Agreement shall have been made or shall be made substantially simultaneously with the initial funding of Loans on the Effective Date.

(j) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date pursuant to this Agreement or the commitment letter or fee letters entered into by the Borrower in connection herewith, including, to the extent invoiced, reimbursement or payment of all reasonable and documented out-of-pocket expenses required to be reimbursed or paid by the Borrower in connection with this Agreement and the Transactions.

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on May 31, 2007 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing (including each Borrowing made on the Effective Date), and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(a) The representations and warranties of the Borrower set forth in this Agreement (other than, with respect to any Borrowing occurring after the Effective Date, the representations set forth in Sections 3.04(b) and 3.06(a)) shall be true and correct in all material respects, in each case on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable.

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

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

 

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ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than any indemnification or other contingent obligations that are not yet due or payable) have been paid in full and all Letters of Credit (other than Collateralized Letters of Credit) have been terminated or expired, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01. Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent:

(a) within 90 days after the end of each fiscal year of the Borrower, its audited combined balance sheet and related combined statements of earnings, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte & Touche LLP or other independent registered public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such combined financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b) within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its condensed combined balance sheet and related statements of earnings, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto;

(d) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any of the Subsidiaries with the SEC, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be (other than (i) registration statements on Form S-8; (ii) filings under Sections 16(a) or 13(d) of the Securities

 

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Exchange Act of 1934; (iii) routine filings related to employee benefit plans; (iv) filings made by any Broker Dealer Subsidiary in the ordinary course of business and (v) any other reports, statements or filings made by any Broker Dealer Subsidiary that are not, individually or in the aggregate, material to the Borrower and its Subsidiaries taken as a whole);

(e) promptly, but not later than five Business Days after the publication of any change by Moody’s or S&P in its Rating, notice of such change; and

(f) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any of the Subsidiaries, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request (it being understand that the Borrower and such Subsidiaries shall not be required to provide any information or documents that are subject to confidentiality provisions prohibiting such disclosure).

Reports required to be delivered pursuant to subsections (a), (b) and (d) of this Section shall be deemed to have been delivered on the date on which the Borrower posts such reports on the Borrower’s website on the Internet at www.broadridge.com or when such report is posted on the SEC’s website at www.sec.gov . Notices required to be delivered pursuant to subsection (e) of this Section shall be deemed to have been delivered on the date on which the Borrower posts such information on the Internet at the website www.broadridge.com or when the publication is first made available by means of Moody’s or S&P’s (as the case may be) Internet subscription service. The Administrative Agent shall promptly make available to each Lender a copy of the certificate to be delivered pursuant to subsection (c) of this Section by posting such certificate on IntraLinks or by other similar means.

SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent (which will post such notice to IntraLinks or any similar electronic site used for distribution of documentation in connection with this Agreement) prompt written notice (in any case within five Business Days) of the following upon any such event becoming known to any Responsible Officer of the Borrower:

(a) the occurrence of any Default;

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

(c) (i) the involuntary revocation, suspension or other termination of any license, permit or registration of any Broker Dealer Subsidiary by the SEC or NASD, (ii) the involuntary revocation, suspension or other termination of any license, permit or registration of any Broker Dealer Subsidiary by any Governmental Authority other than the SEC or NASD, if such revocation, suspension or termination results in, or could reasonably be expected to result in, a Material Adverse Effect, or (iii) the application or receipt by the SIPC for a protective decree or other restrictive order regarding any Broker Dealer Subsidiary; and

 

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

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or Responsible Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause each Material Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and (except with regard to any Broker Dealer Subsidiary) the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.04.

SECTION 5.04. Payment of Taxes. The Borrower will, and will cause each Subsidiary to, pay its Tax liabilities, to the extent the failure to pay such liabilities could reasonably be expected to result in a Material Adverse Effect, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05. Maintenance of Properties. The Borrower will, and will cause each Material Subsidiary to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will cause each Material Subsidiary (other than any Broker Dealer Subsidiary) to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent, or by any Lender through the Administrative Agent, at mutually agreeable times (no more than once per fiscal year of the Borrower, unless an Event of Default has occurred and is continuing) and upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from those portions of its books and records relating to financial condition, and to discuss its affairs, finances and condition with its officers and, so long as a representative of the Borrower is present, independent accountants (in each case subject to the Borrower’s or such Material Subsidiary’s obligations under applicable law or confidentiality arrangements).

SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each Material Subsidiary (other than any Broker Dealer Subsidiary) to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including

 

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ERISA and Environmental Laws applicable to it or its property), except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.08. Use of Proceeds. The Borrower will cause the proceeds of the Loans to be used only (a) to pay the Dividend, (b) to pay certain Transaction Costs and (c) for working capital and other general corporate purposes of the Borrower and the Subsidiaries, including to support the issuance of commercial paper and the payment of intercompany loans between the Borrower and the Subsidiaries. Notwithstanding the foregoing, no part of the proceeds of any Loan will be used, whether directly or indirectly, by the Borrower or any Subsidiary (other than any Broker Dealer Subsidiary) (a) to purchase or carry Margin Stock (as defined in Regulation U of the Board) or to refinance Indebtedness originally incurred for such purpose or (b) in any manner or for any purpose that will result in a violation of Regulation U, Regulation X or Regulation T.

SECTION 5.09. Margin Stock. The Borrower will ensure that at the time each Loan is made and after giving effect to the use of proceeds thereof, and at the time each Letter of Credit is issued, renewed or extended, no more than 25% of the value of the assets of either the Borrower or the Borrower and the Subsidiaries taken as a whole subject to the restrictions of Section 6.01 or 6.04 shall be represented by Margin Stock (within the meaning of Regulation U).

SECTION 5.10. Consummation of the Remaining Transactions. The Borrower will cause the payment of the Dividend and the consummation of the Spin-Off, when they occur, to be on terms and with results relating to the Borrower and the Subsidiaries consistent in all material respects with the information contained in the Form 10 and the pro forma financial statements and projections of the Borrower heretofore delivered by the Borrower and ADP to the Lenders.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than any indemnification or other contingent obligations that are not yet due or payable) have been paid in full and all Letters of Credit (other than Collateralized Letters of Credit) have been terminated or expired, the Borrower covenants and agrees with the Lenders as follows:

SECTION 6.01. Liens . The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights therein, except:

(a) Permitted Encumbrances;

 

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(b) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 6.01 ; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary and (ii) such Lien shall secure only the obligations it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

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

(d) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (i) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (ii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and (iii) such security interests shall not apply to any other property or assets of the Borrower or any Subsidiary;

(e) Liens on securities deemed to exist under repurchase agreements and reverse repurchase agreements entered into by the Borrower and the Subsidiaries in the ordinary course of business;

(f) Liens arising from any interest or title of a lessor or sublessor under any lease or sublease not prohibited by Section 6.03 entered into by the Borrower or any Subsidiary as lessee;

(g) Liens arising from precautionary UCC financing statements filed in connection with leases;

(h) Liens in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off);

(i) Liens on cash earnest money deposits made in connection with letters of intent or purchase agreements;

(j) Liens arising on intellectual property in connection with the grant by the owner of such intellectual property of non-exclusive licenses in the ordinary course;

(k) Liens of any securities intermediary arising as a matter of law on securities or other assets held by such securities intermediary;

 

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(l) Liens on assets of any Broker Dealer Subsidiary created or otherwise arising in the ordinary course of its business; and

(m) other Liens not expressly permitted by clauses (a) through (l) above; provided that the sum of (i) the aggregate amount of the outstanding obligations secured by Liens permitted under this clause (m), (ii) the aggregate amount of Indebtedness of Subsidiaries permitted by Section 6.02(m) and (iii) the aggregate amount of Attributable Debt in respect of Sale and Leaseback Transactions permitted by Section 6.03 shall not at any time exceed $100,000,000.

Notwithstanding the foregoing of this Section, to the extent that more than 25% of the value of the assets of the Borrower, or of the Borrower and the Subsidiaries taken as a whole, that are subject to the restrictions of this Section is at any time represented by Margin Stock (within the meaning of Regulation U), the Borrower shall be free to sell, pledge or otherwise dispose of such excess Margin Stock (it being understood that Margin Stock not in excess of 25% of the value of such assets will be subject to the restrictions of this Section).

SECTION 6.02. Subsidiary Indebtedness. The Borrower will not permit any Subsidiary to incur any Indebtedness or to issue any preferred stock or other preferred equity securities except:

(a) Indebtedness, preferred stock or other preferred equity securities existing on the date hereof and set forth on Schedule 6.02 , and any extensions, renewals or replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof;

(b) Indebtedness, preferred stock or preferred equity securities of Persons existing at the time they become Subsidiaries; provided that such Indebtedness, preferred stock or preferred equity securities is not incurred or issued, as applicable, in contemplation of or in connection with such Person becoming a Subsidiary;

(c) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) such Indebtedness does not exceed the cost of acquiring, constructing or improving such fixed or capital assets;

(d) Indebtedness of any Subsidiary to the Borrower or any other Subsidiary;

(e) Guarantees by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided , such Indebtedness of any other Subsidiary so guaranteed is permitted under paragraphs (c), (d) or (m) of this Section;

 

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(f) Indebtedness of foreign Subsidiaries in an aggregate principal amount outstanding at any one time not to exceed $75,000,000 (or with respect to any other currency, the U.S. Dollar equivalent thereof);

(g) Indebtedness deemed to arise from the payment of insurance premiums on an installment basis in the ordinary course of business;

(h) Indebtedness incurred in connection with Hedging Agreements entered into for non-speculative purposes;

(i) Indebtedness under any overdraft facilities entered into in the ordinary course of business;

(j) Indebtedness in respect of workers’ compensation claims, and bid, performance or surety bonds;

(k) Indebtedness arising in connection with the endorsement of instruments for deposit in the ordinary course;

(l) Indebtedness incurred by any Broker Dealer Subsidiary in the ordinary course of its business; and

(m) other Indebtedness not expressly permitted by clauses (a) through (l) above; provided that the sum of (i) the aggregate principal amount of outstanding obligations secured by Liens permitted under Section 6.01(m), (ii) the aggregate amount of Indebtedness permitted under this clause (m) and (iii) the aggregate amount of Attributable Debt in respect of Sale and Leaseback Transactions permitted by Section 6.03 shall not at any time exceed $100,000,000.

SECTION 6.03. Sale and Leaseback Transactions . The Borrower will not, and will not permit any of the Subsidiaries to, enter into or be a party to any Sale and Leaseback Transaction except:

(a) Sale and Leaseback Transactions to which the Borrower or any Subsidiary is a party as of the date hereof; and

(b) other Sale and Leaseback Transactions not expressly permitted by clause (a) above; provided that the sum of (i) the aggregate principal amount of outstanding obligations secured by Liens permitted under Section 6.01(m), (ii) the aggregate principal amount of Indebtedness of Subsidiaries permitted by Section 6.02(m) and (iii) the aggregate amount of Attributable Debt in respect of Sale and Leaseback Transactions permitted by this Section shall not at any time exceed $100,000,000.

SECTION 6.04. Fundamental Changes. (a) The Borrower will not, and will not permit any Subsidiary to, (i) merge into or consolidate with any other Person, (ii) permit any other Person to merge into or consolidate with it, (iii) liquidate or dissolve, or (iv) sell, transfer, lease or otherwise dispose of, directly or through any merger or consolidation and whether in one transaction or in a series of transactions, assets (including Equity Interests in Subsidiaries)

 

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representing all or substantially all of the assets of the Borrower and the Subsidiaries (whether now owned or hereafter acquired), taken as a whole, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (A) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving Person, (B) any Subsidiary may merge with or consolidate into any Person (or permit any other Person to merge with or consolidate into it) in a transaction in which the surviving entity is a Subsidiary, (C) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another Subsidiary and (D) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders. Notwithstanding the foregoing of this paragraph (a), to the extent that more than 25% of the value of the assets of the Borrower, or of the Borrower and the Subsidiaries taken as a whole, that are subject to the restrictions of this paragraph is at any time represented by Margin Stock (within the meaning of Regulation U), the Borrower shall be free to sell, transfer, lease or otherwise dispose of such excess Margin Stock (it being understood that Margin Stock not in excess of 25% of the value of such assets will be subject to the restrictions of this paragraph).

(b) The Borrower will not, and will not permit any Subsidiary to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and the Subsidiaries on the date of execution of this Agreement and businesses reasonably related or ancillary thereto.

SECTION 6.05. Restrictive Agreements. The Borrower will not, and will not permit any Material Subsidiary to, enter into any agreement that restricts the ability of any Material Subsidiary to pay dividends or other distributions to the Borrower or other Subsidiaries or to make or repay loans or advances to the Borrower or other Subsidiaries; provided that the foregoing shall not apply to (a) restrictions and conditions imposed by law or by this Agreement, or, with respect to any Broker Dealer Subsidiary, otherwise required or requested by any Governmental Authority, (b) restrictions and conditions existing on the date hereof identified on Schedule 6.05 (or to any extension, amendment, modification, renewal or replacement thereof not expanding the scope of any such restriction or condition), (c) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale to the extent that such restrictions and conditions apply only to the Subsidiary or assets to be sold and such sale is permitted hereunder or (d) any agreements governing purchase money Indebtedness or Capital Lease Obligations, provided that such restrictions relate to only the assets financed with such Indebtedness.

SECTION 6.06. Transactions with Affiliates. The Borrower will not, and will not permit any of the Subsidiaries to, sell, lease or otherwise transfer any material property or assets to, or purchase, lease or otherwise acquire any material property or assets from, or otherwise engage in any other material transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and its Subsidiaries, or between or among Subsidiaries, in each case not involving any other Affiliate, (c) the declaration and payment of dividends with respect to its Equity Interests, (d) the making of grants or payments pursuant to and in accordance with equity award, bonus or incentive plans or other benefit plans

 

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for management, directors or employees of the Borrower and the Subsidiaries, (e) the payment of the Dividend and the entry into or the effectiveness of, and the performance under, any contractual arrangement with ADP or any Affiliates of ADP in connection with the Spin-Off to the extent such arrangements are consistent in all material respects with the information contained in the Form 10, (f) the transactions set forth on Schedule 6.06 and (g) employment agreements, officer and director indemnification agreements, confidentiality agreements, non-compete agreements and similar arrangements entered into by the Borrower or any of its Subsidiaries with its officers, directors and employees.

SECTION 6.07. Leverage Ratio. The Borrower will not permit the Leverage Ratio as of the last day of any period of four consecutive fiscal quarters of the Borrower, commencing with the period of four consecutive fiscal quarters ending on March 31, 2007, to exceed 3.50 to 1.00.

SECTION 6.08. Ratio of EBITDA to Consolidated Interest Expense. The Borrower will not permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense for any period of four consecutive fiscal quarters of the Borrower, commencing with the period of four consecutive fiscal quarters ending on March 31, 2007, to be less than 3.00 to 1.00.

ARTICLE VII

Events of Default

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

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

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

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

(d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.03 (with respect to the Borrower’s existence) or 5.08 or in Article VI;

 

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(e) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent (which may be given at the request of any Lender) to the Borrower;

(f) the Borrower or any Subsidiary shall default in the payment (whether of principal or interest and regardless of amount) of any Material Indebtedness when and as the same shall become due and payable after giving effect to any applicable grace periods;

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that (i) this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

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

(i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(j) the Borrower or any Material Subsidiary shall become unable, admit in writing its inability, or fail generally, to pay its debts as they become due;

(k) one or more judgments for the payment of money in an aggregate amount in excess of $75,000,000 ( provided , that such amount shall be calculated after deducting

 

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therefrom any amount of such judgment that is covered by a valid and binding policy of insurance from a third party insurer that is rated at least “A-” by A.M. Best Company, which insurer has been notified of such judgment and has not disputed the claim made for payment) shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged and not vacated or paid in full for a period of 30 consecutive days during which execution shall not be effectively stayed (which stay shall include the posting of a bond pending appeal that has the effect of staying execution of such judgment), or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

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

(m) (i) any license, permit or registration of any Broker Dealer Subsidiary shall be revoked, suspended or otherwise terminated by the SEC, the NASD or any other applicable Governmental Authority, except where such revocation, suspension or termination could not reasonably be expected to result in a Material Adverse Effect, (ii) the SIPC shall apply for or obtain a protective decree or other restrictive order with regard to any Broker Dealer Subsidiary, (iii) any Broker Dealer Subsidiary shall be found by a Governmental Authority to have violated any law or regulation, or be the subject of any judgment or arbitration award, and such violation or award has resulted or would reasonably be expected to result in a Material Adverse Effect, or (iv) any action or proceeding by or before any Governmental Authority involving any Broker Dealer Subsidiary shall be pending as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, would reasonably be expected to result in a Material Adverse Effect; or

(n) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal or other amount not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

 

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ARTICLE VIII

The Agents

Each of the Lenders and Issuing Banks hereby irrevocably appoints the Agents as its agents and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to the Agents by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.

The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Agents shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Agents are required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Agents shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by them or any of their Affiliates in any capacity. The Agents shall not be liable for any action taken or not taken by them with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of their own gross negligence or wilful misconduct. Each Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender, and the Agents shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent.

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

Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through its respective

 

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Related Parties. The exculpatory provisions of the preceding paragraphs and the provisions of Section 9.03 shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

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

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

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

The parties agree that none of the Joint Lead Arrangers and Joint Bookrunners or the Syndication Agent referred to on the cover page of this Agreement shall, in its capacity as such, have any powers, duties or responsibilities under this Agreement or any other Loan Document.

 

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ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Borrower, to it at Broadridge Financial Solutions Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, Attention of Chief Financial Officer (Telecopy No. 201-714-3758);

(ii) if to the Administrative Agent, JPMCB in its capacity as an Issuing Bank or a Swingline Lender, to JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, Texas 77002, Attention of Toyin Ojeahere (Telecopy No. 713-750-2938), with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, NY 10017, Attention of Stella Millas (Telecopy No. 212-270-4164);

(iii) if to the London Agent, to J. P. Morgan Europe Limited, 125 London Wall, London EC2Y 5AJ, Attention of Loans Agency Department (Telecopy No. 44 (0) 207 777 2360), with a copy to the Administrative Agent as provided under clause (ii) above; and

(iv) if to any other Lender, Swingline Lender or Issuing Bank, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. Each Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures must be in writing and may be limited to particular notices or communications.

(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Borrower, either Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the

 

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exercise of any other right or power. The rights and remedies of the Agents, the Issuing Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether either Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.

(b) None of this Agreement, any other Loan Document or any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower, the Administrative Agent and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Borrower, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.19(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender (it being understood that the addition of new loans or commitments that may be extended under this Agreement pursuant to Section 2.10 shall not be deemed to alter such pro rata sharing of payments), (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be) or (vi) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights of Lenders holding Loans or Commitments of any Class differently than those holding Loans or Commitments of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and Commitments of the adversely affected Class; provided further that (i) no such agreement shall amend, modify or otherwise affect the rights or duties of either Agent, any Issuing Bank or any Swingline Lender hereunder without the prior written consent of such Agent, such Issuing Bank or such Swingline Lender, as the case may be, and (ii) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Term Lenders (but not the Revolving Lenders), or the Revolving Lenders (but not the Term Lenders), may be effected by an agreement or agreements in writing entered into by the Borrower and requisite percentage in interest of the affected Class of Lenders. Notwithstanding anything else in this Section to the contrary, any amendment of the definition of “Applicable Rate” pursuant to the last sentence of that definition shall require only the written consent of the Borrower and the Required Lenders.

 

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SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Agents, the Joint Lead Arrangers and Joint Bookrunners named on the cover page of this Agreement and their respective Affiliates, including the reasonable and documented fees, charges and disbursements of counsel, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by each Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender, including the reasonable and documented fees, charges and disbursements of any counsel for any Agent, Issuing Bank or Lender and all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Loans or Letters of Credit, in connection with the enforcement or protection of its rights under any Loan Document, including its rights under this Section or in connection with the Loans made or Letters of Credit issued hereunder.

(b) The Borrower shall indemnify each Agent, each Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”), against, and hold each Indemnitee harmless from, any and all losses, liabilities and out-of-pocket costs or expenses, including the reasonable and documented fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee (whether by a third party or by the Borrower or any of its Affiliates) arising out of, in connection with, or as a result of (i) the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by any Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit) or (iii) the execution, delivery or performance by the Borrower and the Subsidiaries of the Loan Documents, or any actions or omissions of the Borrower or any of the Subsidiaries in connection therewith; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, liabilities, costs or expenses shall have resulted from the gross negligence or wilful misconduct of such Indemnitee.

(c) To the extent that the Borrower fails to pay any amount required to be paid by it to any Agent, any Issuing Bank or any Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to such Agent, Issuing Bank or Swingline Lender such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed loss, liability, cost or expense, as the case may be, was incurred by or asserted against such Agent, Issuing Bank or Swingline Lender in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at the time.

(d) To the extent permitted by applicable law, the Borrower shall not assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages)

 

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arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable within 15 Business Days after receipt by the Borrower of a reasonably detailed invoice therefor.

SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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

(i) the Borrower; provided that no consent of the Borrower shall be required for an assignment (A) to a Lender, an Affiliate of a Lender or a Related Fund (as defined below), or, if an Event of Default has occurred and is continuing, to any other assignee, or (B) made by JPMorgan Chase Bank, N.A. or Citibank, N.A. to any assignee in connection with the syndication of the credit facilities established by this Agreement as contemplated by the Commitment Letter and Fee Letter related hereto and dated March 9, 2007; and

(ii) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of any Term Loan to a Lender, an Affiliate of a Lender or a Related Fund; and

(iii) in the case of any assignment of all or a portion of a Revolving Commitment or any Lender’s obligations in respect of its LC Exposure or Swingline Exposure, each Issuing Bank.

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

(i) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Related Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment of any Class, the amount of the Commitment of

 

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any Class of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than US$5,000,000 unless each of the Borrower and the Administrative Agent otherwise consents; provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement as such rights and obligations relate to the Class of Loans or Commitments being assigned; provided that this clause shall not apply to rights in respect of outstanding Competitive Loans;

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

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

(v) “ Related Fund ” means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

(d) Subject to acceptance and recording thereof pursuant to paragraph (e) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18, 2.21 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (g) of this Section.

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

 

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

(g) Any Lender may, without the consent of, or notice to, the Borrower, the Administrative Agent, any Issuing Bank or any Swingline Lender, sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Agents, each Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under the Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (i), (ii) or (iii) of the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (d) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 2.21 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided such Participant agrees to be subject to Section 2.19(c) as though it were a Lender.

(h) A Participant shall not be entitled to receive any greater payment under Section 2.16 or 2.18 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.18 unless such Participant agrees, for the benefit of the Borrower, to comply with Section 2.18(e) and (f) as though it were a Lender.

(i) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

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SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Borrower herein, in the other Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.16, 2.17, 2.18, 2.21 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the Transactions or the other transaction contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Agents or the Issuing Banks constitute the entire agreement among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic image scan transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.07. Severability. Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions of such Loan Document; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to and shall not limit other rights and remedies (including other rights of setoff) which such Lender may have.

 

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SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

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

(c) Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document or the Transactions in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

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

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS OR THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

76


SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality. (a) Each Agent, Issuing Bank and Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors, to Related Funds’ directors and officers and to any direct or indirect contractual counterparty in swap agreements (it being understood that each Person to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any Governmental Authority, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; provided that in connection with any such requirement by a subpoena or similar legal process, the Borrower is given prior notice to the extent such prior notice is permissible under the circumstances and an opportunity to object to such disclosure, (iv) to any other party to this Agreement, (v) to the extent required or advisable in the judgment of counsel in connection with any suit, action or proceeding relating to the enforcement of rights of the Agents, Issuing Banks or the Lenders against the Borrower under this Agreement or any other Loan Document, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower or (viii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section of which such Agent or Lender is aware or (B) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower other than as a result of a breach of this Section of which such Agent or Lender is aware. For the purposes of this Section, “ Information ” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to any Agent, Issuing Bank or Lender on a non-confidential basis prior to disclosure by the Borrower other than as a result of a breach of this Section of which such Agent, Issuing Bank or Lender is aware. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

(b) Each Lender acknowledges that Information furnished to it pursuant to this Agreement may include material non–public information concerning the Borrower and its Related Parties or the Borrower’s securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

 

77


(c) All information, including requests for waivers and amendments, furnished by the Borrower or either Agent pursuant to, or in the course of administering, this Agreement will be syndicate-level information, which may contain material non-public information about the Borrower and its Related Parties or the Borrower’s securities. Accordingly, each Lender represents to the Borrower and the Agents that it has identified in its Administrative Questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.

SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.14. Conversion of Currencies. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given.

(b) The obligations of the Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the “ Applicable Creditor ”) shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than the currency in which such sum is stated to be due hereunder (the “ Agreement Currency ”), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrower contained in this Section 9.14 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder.

SECTION 9.15. Patriot Act. Each Lender, each Issuing Bank and each Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that

 

78


identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender, Issuing Bank or Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

SECTION 9.16. No Fiduciary Relationship. The Borrower, on behalf of itself and the Subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower, the Subsidiaries and their Affiliates, on the one hand, and the Agents, the Lenders, the Issuing Banks and their Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of any Agent, any Lender, any Issuing Banks or any of their Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications.

SECTION 9.17. Amendment and Restatement Upon Syndication. Notwithstanding anything to the contrary in this Agreement, the Borrower agrees that it shall, at the request of J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. (the “ Arrangers ”), enter into one or more amendments to this Agreement for the purpose of effecting the syndication of the credit facilities established hereby as contemplated by the Commitment Letter and Fee Letter related hereto and dated March 9, 2007; provided , that any such amendment shall modify the terms of this Agreement only to the extent that such modifications are (a) permitted by such Fee Letter to be made without the consent of the Borrower or (b) otherwise agreed to among the Borrower and the Arrangers.

[remainder of page intentionally blank; signature page is the next page]

 

79


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

 

BROADRIDGE FINANCIAL SOLUTIONS, INC.,

as the Borrower,

by  

/s/ Dan Sheldon

Name:   Dan Sheldon
Title:   Vice President, Chief Financial Officer

[S IGNATURE P AGE TO B ROADRIDGE F IVE Y EAR C REDIT A GREEMENT ]


JPMORGAN CHASE BANK, N.A., as Administrative Agent, an Issuing Bank, a Lender and a Swingline Lender,
by  

/s/ Tracey Navin Ewing

Name:   Tracey Navin Ewing
Title:   Vice President
J. P. MORGAN EUROPE LIMITED, as London Agent,
by  

/s/ Maxine Graves

Name:   Maxine Graves
Title:   Associate
CITIBANK, N.A., as a Lender and Swingline Lender,
by  

/s/ Shannon A. Sweeney

Name:   Shannon A. Sweeney
Title:   Vice President

[S IGNATURE P AGE TO B ROADRIDGE F IVE Y EAR C REDIT A GREEMENT ]

Exhibit 10.13

EXECUTION COPY

 


LOGO

INTERIM CREDIT AGREEMENT

dated as of

March 29, 2007,

among

BROADRIDGE FINANCIAL SOLUTIONS, INC.,

The LENDERS Party Hereto,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

and

CITIBANK, N.A.,

as Syndication Agent

 


J.P. MORGAN SECURITIES INC.

and

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arrangers and Joint Bookrunners

 



TABLE OF CONTENTS

 

          Page
   ARTICLE I   
   Definitions   

SECTION 1.01.

   Defined Terms    1

SECTION 1.02.

   Classification of Loans and Borrowings    16

SECTION 1.03.

   Terms Generally    16

SECTION 1.04.

   Accounting Terms; GAAP    16
   ARTICLE II   
   The Credits   

SECTION 2.01.

   Commitments    17

SECTION 2.02.

   Loans and Borrowings    17

SECTION 2.03.

   Requests for Revolving Borrowings    18

SECTION 2.04.

   Intentionally Omitted.    18

SECTION 2.05.

   Intentionally Omitted.    18

SECTION 2.06.

   Intentionally Omitted.    18

SECTION 2.07.

   Funding of Borrowings    18

SECTION 2.08.

   Interest Elections for Revolving Borrowings    19

SECTION 2.09.

   Termination or Reduction of Commitments    20

SECTION 2.10.

   Intentionally Omitted.    21

SECTION 2.11.

   Repayment of Loans; Evidence of Debt    21

SECTION 2.12.

   Prepayment of Loans    21

SECTION 2.13.

   Fees    22

SECTION 2.14.

   Interest    23

SECTION 2.15.

   Alternate Rate of Interest    23

SECTION 2.16.

   Increased Costs    24

SECTION 2.17.

   Break Funding Payments    25

SECTION 2.18.

   Taxes    25

SECTION 2.19.

   Payments Generally; Pro Rata Treatment; Sharing of Set-offs    27

SECTION 2.20.

   Mitigation Obligations; Replacement of Lenders    28

SECTION 2.21.

   Intentionally Omitted.    29
   ARTICLE III   
   Representations and Warranties   

SECTION 3.01.

   Organization; Powers    29

 


SECTION 3.02.

   Authorization; Enforceability    29

SECTION 3.03.

   Governmental Approvals; No Conflicts    30

SECTION 3.04.

   Financial Condition; No Material Adverse Change    30

SECTION 3.05.

   Properties    30

SECTION 3.06.

   Litigation and Environmental Matters    31

SECTION 3.07.

   Compliance with Laws and Agreements    31

SECTION 3.08.

   Federal Reserve Regulations    31

SECTION 3.09.

   Investment Company Status    32

SECTION 3.10.

   Taxes    32

SECTION 3.11.

   ERISA    32

SECTION 3.12.

   Disclosure    32
   ARTICLE IV   
   Conditions   

SECTION 4.01.

   Effective Date    33

SECTION 4.02.

   Each Credit Event    34
   ARTICLE V   
   Affirmative Covenants   

SECTION 5.01.

   Financial Statements and Other Information    35

SECTION 5.02.

   Notices of Material Events    36

SECTION 5.03.

   Existence; Conduct of Business    37

SECTION 5.04.

   Payment of Taxes    37

SECTION 5.05.

   Maintenance of Properties    37

SECTION 5.06.

   Books and Records; Inspection Rights    37

SECTION 5.07.

   Compliance with Laws    37

SECTION 5.08.

   Use of Proceeds    38

SECTION 5.09.

   Margin Stock    38

SECTION 5.10.

   Consummation of the Remaining Transactions    38
   ARTICLE VI   
   Negative Covenants   

SECTION 6.01.

   Liens    38

SECTION 6.02.

   Subsidiary Indebtedness    40

SECTION 6.03.

   Sale and Leaseback Transactions    41

SECTION 6.04.

   Fundamental Changes    41

SECTION 6.05.

   Restrictive Agreements    42

SECTION 6.06.

   Transactions with Affiliates    42

SECTION 6.07.

   Leverage Ratio    43

 

ii


SECTION 6.08.

   Ratio of EBITDA to Consolidated Interest Expense    43
   ARTICLE VII   
   Events of Default   
   ARTICLE VIII   
   The Agent   
   ARTICLE IX   
   Miscellaneous   

SECTION 9.01.

   Notices    48

SECTION 9.02.

   Waivers; Amendments    48

SECTION 9.03.

   Expenses; Indemnity; Damage Waiver    49

SECTION 9.04.

   Successors and Assigns    50

SECTION 9.05.

   Survival    53

SECTION 9.06.

   Counterparts; Integration; Effectiveness    53

SECTION 9.07.

   Severability    53

SECTION 9.08.

   Right of Setoff    53

SECTION 9.09.

   Governing Law; Jurisdiction; Consent to Service of Process    54

SECTION 9.10.

   WAIVER OF JURY TRIAL    54

SECTION 9.11.

   Headings    55

SECTION 9.12.

   Confidentiality    55

SECTION 9.13.

   Interest Rate Limitation    56

SECTION 9.14.

   Conversion of Currencies    56

SECTION 9.15.

   Patriot Act    57

SECTION 9.16.

   No Fiduciary Relationship    57

SCHEDULES:

     

Schedule 2.01 — Commitments

  

Schedule 6.01 — Existing Liens

  

Schedule 6.02 — Existing Indebtedness

  

Schedule 6.05 — Restrictive Agreements

  

Schedule 6.06 — Transactions with Affiliates

  

 

iii


EXHIBITS:

Exhibit A — Form of Assignment and Assumption

Exhibit B — Form of Note

 

iv


INTERIM CREDIT AGREEMENT dated as of March 29, 2007, among BROADRIDGE FINANCIAL SOLUTIONS, INC., a Delaware corporation; the LENDERS party hereto; JPMORGAN CHASE BANK, N.A., as Administrative Agent; and CITIBANK, N.A., as Syndication Agent.

As of the date of this Agreement, the Borrower (such term and each other capitalized term used and not otherwise defined herein having the meaning assigned to it in Article I) is a direct wholly owned subsidiary of ADP. As set forth in the amended registration statement on Form 10 filed by the Borrower with the SEC on March 16, 2007 (the “ Form 10 ”), ADP will distribute all the issued and outstanding common stock of the Borrower on a pro rata basis to its shareholders in a tax-free transaction (the “ Spin-Off ”) on the date immediately following the date of this Agreement (or, if the Spin-Off is not consummated on such date, as soon as practicable thereafter). The Borrower holds ADP’s brokerage services group business, consisting of its investor communication solutions, securities processing solutions and clearing and outsourcing solutions business units.

In connection with the Spin-Off, (a) the Borrower is entering into this Agreement and obtaining the senior credit facilities established hereby, (b) the Borrower is simultaneously entering into the Five-Year Credit Agreement and obtaining the credit facilities established thereby, (c) the Borrower will pay a cash dividend to ADP immediately prior to the Spin-Off in the amount of $690,000,000 (the “ Dividend ”), (d) all indebtedness of the Borrower and the Subsidiaries payable to ADP or Affiliates of ADP (other than intercompany indebtedness payable to the Borrower or any Subsidiary) will be canceled and discharged and (e) fees and expenses incurred in connection with the Transactions will be paid (the “ Transaction Costs ”).

The Borrower has requested the Lenders to extend credit to enable it to borrow on a revolving credit basis on and after the Effective Date and at any time and from time to time prior to the Revolving Maturity Date an aggregate principal amount not in excess of US$250,000,000 at any time outstanding. The proceeds of such borrowings will be used (a) to pay the Dividend, (b) to pay certain Transaction Costs and (c) for general corporate purposes of the Borrower and the Subsidiaries, including to support the issuance of commercial paper and the payment of intercompany loans among the Borrower and the Subsidiaries. The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions herein set forth.

Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

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


Adjusted LIBO Rate ” means, with respect to any LIBO Rate Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the LIBO Rate for such Interest Period multiplied, in the case of a LIBO Rate Borrowing denominated in US Dollars, by the Statutory Reserve Rate.

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

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

ADP ” means Automatic Data Processing, Inc., a Delaware corporation.

Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided that two or more Persons shall not be deemed Affiliates solely because an individual is a director of each such Person.

Agent ” means the Administrative Agent.

Agreement ” means this Credit Agreement, as modified, amended or restated from time to time.

Agreement Currency ” has the meaning assigned to such term in Section 9.14.

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

Applicable Creditor ” has the meaning assigned to such term in Section 9.14.

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

Applicable Rate ” means, for any day, with respect to any LIBO Rate Revolving Loan or with respect to the facility fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Revolving Facility – Facility Fee Rate” or “Revolving Facility – LIBO Rate Spread”, as applicable, based upon, in the case of the LIBO Rate Spread applicable to Revolving Loans, the Utilization on such date:

 

2


Revolving Facility

 

Facility Fee Rate

 

LIBO Rate Spread

( £ 50% Utilization)

 

LIBO Rate Spread

(>50% Utilization)

0.080%

  0.370%   0.470%

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

Attributable Debt ” means, with respect to any Sale and Leaseback Transaction, the present value (discounted at the rate set forth or implicit in the terms of the lease included in such Sale and Leaseback Transaction) of the total obligations of the lessee for rental payments (other than amounts required to be paid on account of taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items that do not constitute payments for property rights) during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). In the case of any lease which is terminable by the lessee upon payment of a penalty, the Attributable Debt shall be the lesser of the Attributable Debt determined assuming termination upon the first date such lease may be terminated (in which case the Attributable Debt shall also include the amount of the penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) or the Attributable Debt determined assuming no such termination.

Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments.

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

Borrower ” means Broadridge Financial Solutions, Inc., a Delaware corporation.

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

Borrowing Minimum ” means US$5,000,000.

Borrowing Multiple ” means US$1,000,000.

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

Broker Dealer Subsidiary ” means any Subsidiary registered or regulated as a broker or dealer with or by the SEC, the NASD or any other applicable Governmental Authority, whether domestic or foreign.

 

3


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

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

Capital Markets Transaction ” means (a) the issuance or sale by the Borrower or any Subsidiary of any of their Equity Interests, or the receipt by the Borrower or any Subsidiary of any capital contribution, other than (i) any such issuance of Equity Interests to, or receipt of any such capital contribution from, the Borrower or a Subsidiary or (ii) pursuant to and in accordance with any plans, programs, arrangements or agreements providing for the issuance or sale of Equity Interests to current, former or prospective employees, directors, officers or consultants of the Borrower or any Subsidiary and (b) the issuance or sale by the Borrower or any Subsidiary to any Person other than the Borrower or any Subsidiary of any bonds, debentures, notes, hybrid or equity-linked securities or other similar instruments in a public or private offering involving underwriters, placement agents or initial purchasers.

Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower, or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were not (i) directors of the Borrower on the Effective Date, (ii) nominated by the board of directors of the Borrower or (iii) appointed by directors so nominated.

Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.16(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

Charges ” has the meaning set forth in Section 9.13.

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

Commitment ” means a Revolving Commitment.

 

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Consolidated EBITDA ” means, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) consolidated interest expense for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period (other than amounts reflected as “amortization of other assets” on the Borrower’s financial statements), (iv) all non-recurring or extraordinary non-cash charges for such period, (v) all non-cash charges associated with employee compensation for such period, (vi) all losses associated with asset sales during such period and (vi) all Transaction Costs paid by the Borrower or any Subsidiary during such period, minus (b) without duplication and to the extent included in determining such Consolidated Net Income, (i) all extraordinary gains for such period and (ii) all gains associated with asset sales during such period, all determined on a consolidated basis in accordance with GAAP; provided , however , that Consolidated EBITDA for the Borrower’s fiscal quarter ended June 30, 2006 shall be $190,000,000, Consolidated EBITDA for the Borrower’s fiscal quarter ended September 30, 2006 shall be $62,400,000 and Consolidated EBITDA for the Borrower’s fiscal quarter ended December 31, 2006 shall be $63,100,000.

Consolidated Interest Expense ” means, for any period, the excess of (a) the sum of (i) the interest expense (including imputed interest expense in respect of Capital Lease Obligations) of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, (ii) any interest accrued during such period in respect of Indebtedness of the Borrower or any Subsidiary that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP, and (iii) any cash payments made during such period in respect of obligations referred to in clause (b)(ii) below that were amortized or accrued in a previous period, minus (b) the sum of (i) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to amortization of financing costs paid in a previous period, and (ii) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to amortization of debt discounts or accrued interest payable in kind for such period.

Consolidated Net Income ” means, for any period, the net income or loss of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income of any Person (other than the Borrower) in which any other Person (other than the Borrower or any Subsidiary or any director holding qualifying shares in compliance with applicable law) owns an Equity Interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of the Subsidiaries during such period, and (b) the income or loss of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary or the date that such Person’s assets are acquired by the Borrower or any Subsidiary.

Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

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

 

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Dividend ” has the meaning assigned to such term in the introduction to this Agreement.

Effective Date ” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

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

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

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

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

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

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

 

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Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

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

Excluded Taxes ” means, with respect to the Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income, or backup withholding taxes (as defined in Section 3406 of the Code) imposed by the United States of America, or any similar tax imposed by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, the jurisdiction in which its applicable lending office is located, (b) any branch profit taxes imposed by the United States of America or any similar tax imposed by any other applicable jurisdiction referred to in the preceding clause (a) and (c) in the case of a Foreign Lender, any withholding tax that is imposed by the United States of America on payments by the Borrower to such Foreign Lender from locations in the United States of America to the extent such tax is in effect at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.18(e) or (f), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.18(a).

Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

Financial Officer ” means, with respect to any Person, the chief financial officer, principal accounting officer, treasurer, controller or any assistant treasurer (or the functional equivalent) of such Person.

Five-Year Credit Agreement ” means the Five-Year Credit Agreement dated as of March 29, 2007, among the Borrower, the lenders party thereto, JPMCB, as administrative agent and Citibank, N.A. as syndication agent.

Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

Form 10 ” has the meaning assigned to such term in the introduction to this Agreement.

 

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GAAP ” means United States generally accepted accounting principles, applied on a consistent basis.

Governmental Authority ” means (a) the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government and (b) with regard to any Broker Dealer Subsidiary, any self regulatory organization or body with supervisory, regulatory or other authority over such Broker Dealer Subsidiary.

Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided , that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

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

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

Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in

 

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respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

Indemnitee ” has the meaning set forth in Section 9.03.

Indemnified Taxes ” means Taxes other than Excluded Taxes.

Information Memorandum ” means the Confidential Information Memorandum dated March 2007 relating to the Borrower and the Transactions.

Interest Election Request ” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.08.

Interest Payment Date ” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and (b) with respect to any LIBO Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a LIBO Rate Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.

Interest Period ” means, with respect to any LIBO Rate Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter (or, if agreed upon by all of the Lenders, seven or 14 days or any other period), as the Borrower may elect; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

JPMCB ” means JPMorgan Chase Bank, N.A. and its successors.

Judgment Currency ” has the meaning assigned to such term in Section 9.14(b).

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

Leverage Ratio ” means, as of the last day of any period of four consecutive quarters, the ratio of (a) Total Indebtedness as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on such date.

 

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LIBO Rate ” means, with respect to any LIBO Rate Borrowing for any Interest Period, the rate appearing on the applicable page of the Telerate Service for U.S. Dollars (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in the London interbank market) at approximately 11:00 a.m., London time, on the Quotation Date for such Interest Period, as the rate for deposits in U.S. Dollars with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “ LIBO Rate ” with respect to such LIBO Rate Borrowing for such Interest Period shall be the rate at which deposits of US$5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time on the Quotation Date for such Interest Period. LIBO Rate, when used in reference to any Loan or Borrowing, indicates that such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

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

Loan Documents ” means this Agreement, any amendment hereto or waiver hereunder and each promissory note delivered pursuant to this Agreement, as such documents may be amended, modified, supplemented or restated from time to time.

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

Local Time ” means New York City time.

Material Adverse Effect ” means a material adverse effect on (a) the business, assets, operations or financial condition of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its obligations under this Agreement or any other Loan Document or (c) the rights of or benefits available to the Lenders under this Agreement or any other Loan Document.

Material Indebtedness ” means Indebtedness (other than the Loans), or obligations in respect of one or more Hedging Agreements, of the Borrower and the Subsidiaries in an aggregate principal amount exceeding US$75,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

 

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Material Subsidiary ” means (a) any Subsidiary that directly or indirectly owns any Equity Interest in or Controls any Material Subsidiary, (b) any Material Broker Dealer Subsidiary (as defined below) and (c) any other Subsidiary (i) the revenues of which for the most recent period of four fiscal quarters of the Borrower for which audited financial statements have been delivered pursuant to Section 5.01 were greater than 5.0% of the Borrower’s total consolidated revenues for such period or (ii) the assets of which as of the end of such period were greater than 5.0% of the Borrower’s total consolidated assets as of such date; provided that if at any time the aggregate amount of the revenues or assets of all Subsidiaries that are not Material Subsidiaries for or at the end of any period of four fiscal quarters for which audited financial statements have been delivered pursuant to Section 5.01 exceeds 10% of the Borrower’s consolidated total revenues for such period or 10% of the Borrower’s consolidated total assets as of the end of such period, the Borrower shall (or, in the event the Borrower has failed to do so within 10 days, the Administrative Agent may) designate additional Subsidiaries as “Material Subsidiaries” to eliminate such excess, and such designated Subsidiaries shall for all purposes of this Agreement constitute Material Subsidiaries. For the purposes of this definition, (a) “ Material Broker Dealer Subsidiary ” means any Broker Dealer Subsidiary (i) the revenues of which for the most recent period of four fiscal quarters of the Borrower for which audited financial statements have been delivered pursuant to Section 5.01 were greater than 1.0% of the Borrower’s total consolidated revenues for such period or (ii) the assets of which as of the end of such period were greater than 1.0% of the Borrower’s total consolidated assets as of such date, and (b) revenues and assets of any Subsidiary of the Borrower which are recorded in a foreign currency in the Borrower’s financial statements shall be converted into U.S. Dollars using the exchange rates used in preparation of the Borrower’s most recent audited financial statements delivered pursuant to Section 5.01 or, if no applicable exchange rate was used in such audited financial statements, at a rate determined in accordance with GAAP.

Maximum Rate ” has the meaning set forth in Section 9.13.

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

NASD ” means the National Association of Securities Dealers, Inc., and any successor or other authority which succeeds to the function of such corporation.

Net Proceeds ” means, with respect to any event, (a) the cash proceeds received in respect of such event, including any cash subsequently received in respect of any non-cash proceeds, but only as and when received, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses (including attorneys’ fees, consultants’ fees and underwriting discounts and commissions) paid by the Borrower and the Subsidiaries to third parties (other than Affiliates) in connection with such event and (ii) the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower and the Subsidiaries and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer of the Borrower). When used with respect to any loan transaction or other credit facility, “ Net Proceeds ” shall also include (and the Borrower or any Subsidiary shall be deemed to have received in cash the amount of) the availability to the Borrower or any Subsidiary of any effective commitments of lenders that at the time of determination are available to be drawn by the Borrower or such Subsidiary under such loan transaction or credit facility, irrespective of whether the Borrower or any such Subsidiary shall have then drawn on such commitments.

 

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Non-Consenting Lender ” means any Lender that withholds its consent to any proposed amendment, modification or waiver that cannot become effective without the consent of such Lender under Section 9.02, and that has been consented to by the Required Lenders.

Other Taxes ” means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

Participant ” has the meaning set forth in Section 9.04.

Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

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

Permitted Encumbrances ” means:

(a) Liens imposed by law for Taxes, assessments or other governmental charges or levies (other than any lien arising under ERISA or other laws to secure retirement or other benefits) that are not yet due or are being contested in compliance with Section 5.04;

(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in good faith;

(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

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

(e) judgment liens; and

(f) easements, zoning restrictions, rights-of-way, minor defects or other irregularities in title and other similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure obligations that are substantial in amount and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Borrower or any Subsidiary; provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness or any Lien in favor of the PBGC.

 

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

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

Prepayment Event ” means:

(a) the consummation by the Borrower or any Subsidiary of any Capital Markets Transaction, other than the issuance or sale of commercial paper;

(b) other than with respect to any Capital Markets Transaction, the receipt by the Borrower or any Subsidiary of (i) any cash proceeds in connection with the incurrence of Indebtedness for borrowed money or (ii) any valid and enforceable commitments of lenders under any credit facility or other loan transaction that would constitute Indebtedness for borrowed money when such commitments were drawn, other than, in each case, (A) Indebtedness among the Borrower and any Subsidiary or among Subsidiaries, (B) Purchase Money Indebtedness (as defined below) and (C) Indebtedness of Subsidiaries referred to in and permitted by Section 6.02(a) through (m).

For the purposes of this definition, “ Purchase Money Indebtedness ” means Indebtedness of the Borrower incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) such Indebtedness does not exceed the cost of acquiring, constructing or improving such fixed or capital assets.

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

Quotation Date ” means, with respect to any LIBO Rate Borrowing and any Interest Period, the day on which it is market practice in the relevant interbank market for prime banks to give quotations for deposits in U.S. Dollars for delivery on the first day of such Interest Period. If such quotations would normally be given by prime banks on more than one day, the Quotation Day will be the last of such days.

Register ” has the meaning set forth in Section 9.04.

 

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Regulation D ” means Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation T ” means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation U ” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation X ” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

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

Required Lenders ” means, at any time, Lenders having Revolving Exposures and unused Commitments representing at least 50% of the sum of the total Revolving Exposures of all Lenders and unused Commitments at such time.

Responsible Officer ” means any of the chief executive officer, chief operating officer, chief financial officer or the treasurer or controller (or any equivalent of the foregoing officers) of the Borrower.

Revolving Commitment ” means, with respect to each Revolving Lender, the commitment of such Lender to make Revolving Loans hereunder, expressed as an amount representing the maximum aggregate permitted amount of such Lender’s Revolving Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to Section 2.09 or pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable. The initial aggregate amount of the Revolving Commitments is US$250,000,000.

Revolving Exposure ” means, with respect to any Revolving Lender at any time, the sum at such time of the principal amounts of such Lender’s outstanding Revolving Loans.

Revolving Lender ” means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure.

Revolving Loan ” means a Loan made pursuant to Section 2.01(b).

Revolving Maturity Date ” means March 27, 2008; provided , however , that if the Spin-Off shall not have been consummated by 5:00 p.m. New York time on the fifth Business Day following the Effective Date, the Revolving Maturity Date shall be the next following Business Day.

Sale and Leaseback Transaction ” means any arrangement whereby the Borrower or a Subsidiary, directly or indirectly, shall sell or transfer any property, real or personal, used or

 

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useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred.

SEC ” means the Securities and Exchange Commission.

SIPC ” means the Securities Investor Protection Corporation and any regulatory authority which succeeds to the functions of such corporation.

Spin-Off ” has the meaning assigned to such term in the introduction to this Agreement.

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

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

Subsidiary ” means any subsidiary of the Borrower.

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

Total Indebtedness ” means, at any date, the sum of the aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries (other than any Broker Dealer Subsidiary) outstanding as of such date that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP.

Transaction Costs ” has the meaning assigned to such term in the introduction to this Agreement.

 

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Transactions ” means (a) the execution, delivery and performance by the Borrower of the Loan Documents and the borrowing of Loans hereunder, (b) the execution, delivery and performance by the Borrower of the Five-Year Credit Agreement and the borrowing of loans thereunder, (c) the payment by the Borrower of the Dividend, (d) the cancelation and discharge of all Indebtedness of the Borrower and the Subsidiaries payable to ADP or Affiliates of ADP, (e) the consummation of the Spin-Off and (f) the payment of the Transaction Costs.

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

US Dollars ” or “ US$ ” means the lawful currency of the United States of America.

Utilization ” means, on any date, the sum of the aggregate Revolving Exposures on such date, expressed as a percentage of the total Revolving Commitments.

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

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

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to

 

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eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision, or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose, regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision shall have been amended in accordance herewith. Following the delivery of any such notice, the Borrower, the Administrative Agent and the Lenders will negotiate in good faith to amend this Agreement to eliminate the effect of any such change.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower, denominated in US Dollars, from time to time during the Availability Period in amounts that will not at any time result in (i) such Lender’s Revolving Exposure exceeding its Revolving Commitment or (ii) the sum of the total Revolving Exposures exceeding the total Revolving Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Subject to Section 2.15, each Revolving Borrowing shall be comprised entirely of ABR Loans or LIBO Rate Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any LIBO Rate Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any LIBO Rate Revolving Borrowing, and at the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Revolving Commitments. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of 5 LIBO Rate Borrowings outstanding.

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

 

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SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving Borrowing, the Borrower shall notify the Agent of such request by telephone (a) in the case of a LIBO Rate Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Agent of a written Borrowing Request in a form approved by the Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(a) the aggregate amount of the requested Borrowing;

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

(c) whether such Borrowing is to be an ABR Borrowing or a LIBO Rate Borrowing;

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

(e) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.

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

SECTION 2.04. Intentionally Omitted.

SECTION 2.05. Intentionally Omitted.

SECTION 2.06. Intentionally Omitted.

SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds (a) in the case of an ABR Borrowing, by 1:00 p.m., New York City time and (b) in all other cases, by 12:00 noon, Local Time, to the account of the Agent most recently designated by it for such purpose by notice to the Lenders. The Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to such accounts as shall be designated in a written notice signed by a Financial Officer of the Borrower and delivered to the Agent.

 

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(b) Unless the Agent shall have received notice from a Lender prior to the proposed time of any Borrowing that such Lender will not make available to the Agent such Lender’s share of such Borrowing, the Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Agent, then the applicable Lender and the Borrower severally agree to pay to the Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Agent, at (i) in the case of such Lender, the greater of (A) the Federal Funds Effective Rate and (B) a rate determined by the Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower the interest rate applicable to such Loans.

SECTION 2.08. Interest Elections for Revolving Borrowings. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a LIBO Rate Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a LIBO Rate Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone or by telecopy by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable and, if telephonic, shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower. Notwithstanding any other provision of this Section, the Borrower shall not be permitted to elect an Interest Period for LIBO Rate Loans that does not comply with Section 2.02(d).

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (e) of this Section:

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

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

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

 

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

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

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a LIBO Rate Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a LIBO Rate Borrowing and (ii) unless repaid, each LIBO Rate Revolving Borrowing shall, at the end of the Interest Period applicable thereto, be converted to an ABR Borrowing.

SECTION 2.09. Termination or Reduction of Commitments . (a) Unless previously terminated, the Revolving Commitments shall terminate on the Revolving Maturity Date.

(b) The Borrower may at any time terminate or, from time to time, reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of US$1,000,000 and not less than US$5,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.12, the sum of the total Revolving Exposures would exceed the total Revolving Commitments.

(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event, (i) the Borrower shall, within three Business Days after such Net Proceeds are received, deliver to the Administrative Agent a certificate of a Financial Officer of the Borrower setting forth in reasonable detail the amount of the Net Proceeds received from such event and (ii) the Commitments of the Lenders shall be permanently reduced in an aggregate amount equal to such Net Proceeds.

(d) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of such a notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant

 

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to this Section shall be irrevocable; provided that a notice of termination delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the applicable Lenders in accordance with their respective Commitments.

SECTION 2.10. Intentionally Omitted.

SECTION 2.11. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay to the Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date.

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

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

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

(e) Any Lender may request that the Revolving Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender such a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in substantially the form attached hereto as Exhibit B . Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.12. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section.

(b) On the date of any reduction or termination of the Commitments pursuant to Section 2.09, the Borrower shall prepay Borrowings to the extent necessary so that the aggregate outstanding principal amount of all Borrowings will not exceed the aggregate Commitments after giving effect to such reduction or termination.

 

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(c) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (d) of this Section.

(d) The Borrower shall notify the Agent by telephone (confirmed by telecopy) or by telecopy of any prepayment hereunder (i) in the case of a LIBO Rate Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of optional prepayment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.14.

SECTION 2.13. Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a facility fee, which shall accrue at the Applicable Rate set forth under the caption “Facility Fee Rate” in the definition of such term on the daily amount of the Revolving Commitment of such Lender (whether used or unused) during the period from and including the Effective Date to but excluding the Revolving Maturity Date; provided that, if such Lender continues to have any Revolving Exposure after the Revolving Maturity Date, then such facility fee shall continue to accrue on the daily amount of such Lender’s Revolving Exposure from and including the Revolving Maturity Date to but excluding the date on which such Lender ceases to have any Revolving Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year, commencing June 30, 2007 (or, if any such day shall not be a Business Day, the first Business Day thereafter), on any date prior to the Revolving Maturity Date on which all the Revolving Commitments shall have terminated and on the Revolving Maturity Date; provided that any facility fees accruing after the Revolving Maturity Date shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) The Borrower agrees to pay to the Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Agent.

(c) All fees payable hereunder shall be paid in US Dollars on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of facility fees, to the Revolving Lenders. Fees paid shall not be refundable under any circumstances.

 

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SECTION 2.14. Interest. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate.

(b) The Loans comprising each LIBO Rate Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate set forth under the caption “Revolving Facility – LIBO Rate Spread ( £ 50% Utilization)” or “Revolving Facility – LIBO Rate Spread (>50% Utilization)”, as the case may be, in the definition of Applicable Rate.

(c) Intentionally omitted.

(d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2.00% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon the termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any LIBO Rate Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. All interest shall be payable in the US Dollars.

(f) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.15. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a LIBO Rate Borrowing:

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

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

 

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then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a LIBO Rate Borrowing shall be ineffective, and, unless repaid, such Borrowing shall be converted to, or continued as, on the last day of the Interest Period applicable thereto an ABR Borrowing, (ii) if any Borrowing Request requests a LIBO Rate Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.16. Increased Costs. (a) Except with regard to Taxes, which are dealt with in Section 2.18, if any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

(ii) impose on any Lender or any applicable interbank market any other condition affecting this Agreement or LIBO Rate Loans made by any Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any LIBO Rate Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs actually incurred or reduction actually suffered.

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

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

(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such

 

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Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

(e) Notwithstanding the foregoing provisions of this Section, no Lender shall demand compensation for any increased cost or reduction in rate of return if it shall not be the general policy or practice of such Lender to demand such compensation in similar circumstances under comparable provisions of other credit agreements (it being understood that this sentence shall not in any way limit the discretion of any Lender to waive the right to demand such compensation under this Agreement or any other credit agreement in any given case).

SECTION 2.17. Break Funding Payments. In the event of (a) the payment of any principal of any LIBO Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or an optional or mandatory prepayment of Loans), (b) the conversion of any LIBO Rate Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any LIBO Rate Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is revoked under Section 2.09(d)) or (d) the assignment of any LIBO Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.20, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a LIBO Rate Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in US Dollars of a comparable amount and period from other banks in the LIBO Rate market. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 30 days after receipt thereof.

SECTION 2.18. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent or Lender (as the case may be) receives an amount equal to the sum it would have received pursuant to this Agreement had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

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

(c) The Borrower shall indemnify the Agent and each Lender within 15 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Agent or such Lender, as the case may be, 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 Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower and setting forth in reasonable detail the circumstances giving rise thereto and the calculations used by the Agent or such Lender to determine the amount to be paid by the Borrower to the Agent or such Lender shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.

(f) Each Foreign 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 the appropriate U.S. Internal Revenue Service Form W-8 properly completed and duly executed by such Foreign 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 Foreign Lender on or before the date that 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 Foreign Lender shall deliver such forms promptly upon the obsolescence, expiration or invalidity of any form previously delivered by such Foreign Lender. Each Foreign 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 provisions of this paragraph (f), a Foreign Lender shall not be required to deliver any form pursuant to this paragraph (f) that such Foreign Lender is not legally able to deliver.

(g) If a Lender or the Administrative Agent determines, in its sole discretion, that

 

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it has received a refund in respect of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall timely pay over the amount of such refund to the Borrower, net of all reasonable out-of-pocket expenses of such Lender or the Administrative Agent and without interest (other than interest paid by the relevant taxation authority with respect to such refund); provided , that the Borrower, upon the request of such Lender or the Administrative Agent, agrees to repay the amount paid over to the Borrower (plus penalties, interest or other reasonable charges) to such Lender or the Administrative Agent in the event such Lender or the Administrative Agent is required to repay such refund to such taxation authority. This paragraph (g) shall not be construed to require any Lender or the Administrative Agent to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

SECTION 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest or fees, or of amounts payable under Section 2.16, 2.17 or 2.18, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment or, if no such time is expressly required, prior to 12:00 noon, Local Time, on the date when due, in immediately available funds, without set–off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Agent to the applicable account specified by it for the account of the Lenders or, in any such case, to such other account as the Agent shall from time to time specify in a notice delivered to the Borrower, except that payments pursuant to Sections 2.16, 2.17, 2.18 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder of principal or interest in respect of any Loan shall be made in US Dollars; all other payments hereunder and under each other Loan Document shall be made in US Dollars. Any payment required to be made by the Agent hereunder shall be deemed to have been made by the time required if the Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by the Agent to make such payment.

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

(c) If any Lender shall, by exercising any right of set-off or counterclaim or

 

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

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

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.07(b) or 2.19(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.20. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.16, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.16 or 2.18, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

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(b) If (i) any Lender requests compensation under Section 2.16, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, (iii) any Lender defaults in its obligation to fund Loans hereunder or (iv) any Lender becomes a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (A) the Borrower shall have received the prior written consent of the Administrative Agent, which consent, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), (C) in the case of any such assignment resulting from a claim for compensation under Section 2.16 or payments required to be made pursuant to Section 2.18, such assignment will result (or is reasonably expected to result) in a material reduction in such compensation or payments and (D) in the case of any such assignment resulting from the status of such Lender as a Non-Consenting Lender, such assignment, together with any assignments by other Non-Consenting Lenders, will enable the Borrower to obtain sufficient consents to cause the applicable amendment, modification or waiver to become effective. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.21. Intentionally Omitted.

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

SECTION 3.01. Organization; Powers. The Borrower and each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

SECTION 3.02. Authorization; Enforceability. The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and, stockholder action of the Borrower. This Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable

 

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in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any material consent or approval of, registration or filing with, or any other material action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or any order of any Governmental Authority in any material respect, (c) will not violate the charter, by-laws or other organizational documents of the Borrower, (d) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Subsidiary or their assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any Subsidiary, and (e) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary, except, in the case of clause (d) or (e), where such violation, default, rise of a right, creation or imposition, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lenders (by inclusion in the Form 10) its combined balance sheet and combined statements of earnings, group equity and cash flows as of and for its fiscal year ended June 30, 2006 and the related notes (the “ Annual Financial Statements ”), reported on by Deloitte & Touche LLP, independent registered public accountants, and its condensed combined balance sheets and condensed combined statements of earnings and cash flows as of and for the fiscal quarters ended September 30, 2006 and December 31, 2006 and related notes (collectively, the “ Quarterly Financial Statements ”). The Annual Financial Statements and the Quarterly Financial Statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and the consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to, in the case of the Quarterly Financial Statements, normal year-end adjustments and the absence of certain year-end footnotes.

(b) Since the later of June 30, 2006 and the date of the most recent audited financial statements of the Borrower delivered to the Administrative Agent pursuant to Section 5.01(a), there has been no material adverse change, or event or condition that could reasonably be expected to result in a material adverse change, in the business, assets, operations or financial condition of the Borrower and the Subsidiaries, taken as a whole.

SECTION 3.05. Properties. (a) The Borrower and each Subsidiary has (or will have on the Effective Date and thereafter) good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes and except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(b) Each of the Borrower and the Subsidiaries owns (or will own on the Effective Date and thereafter) or is licensed to use (or has entered into license agreements with ADP that will become effective upon consummation of the Spin-Off that will license it to use) all

 

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trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and such Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.06. Litigation and Environmental Matters. (a) As of the Effective Date, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower and the Subsidiaries that involve the Transactions. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower and the Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement.

(b) Except with respect to any matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of the Borrower and the Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

SECTION 3.07. Compliance with Laws and Agreements. (a) The Borrower and each Subsidiary is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property (including, with regard to any Broker Dealer Subsidiary, all rules and regulations of the SEC, NASD and SIPC applicable to it or its property) and all indentures, agreements and other instruments binding upon it or its property, except where the failure to be in compliance, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

(b) Each Broker Dealer Subsidiary is (i) duly registered as a broker or dealer with the SEC, (ii) a member in good standing of the NASD and the securities exchanges and securities clearing corporations in which its membership is required for the conduct of its business and (iii) duly registered, licensed or qualified as a broker or dealer under the applicable laws and regulations of each jurisdiction in which such registration, license or qualification is required for the conduct of its business, except, in the case of this clause (iii), where the failure to be so registered, licensed or qualified could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.08. Federal Reserve Regulations. (a) Neither the Borrower nor any Subsidiary (other than any Broker Dealer Subsidiary) is engaged principally, or as a substantial part of its activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock (within the meaning of Regulation U).

(b) No part of the proceeds of any Loan has been or will be used by the Borrower or any Subsidiary (other than any Broker Dealer Subsidiary), whether directly or indirectly, and

 

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whether immediately, incidentally or ultimately, to purchase or carry Margin Stock (within the meaning of Regulation U) or to refinance Indebtedness originally incurred for such purpose. No part of the proceeds of any Loan has been or will be used by the Borrower or any Subsidiary in any manner or for any purpose that has resulted or will result in a violation of Regulation T, Regulation U or Regulation X.

(c) Each Broker Dealer Subsidiary is an “exempted borrower” within the meaning of Regulation U.

SECTION 3.09. Investment Company Status. Neither the Borrower nor any of the Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.10. Taxes. The Borrower and the Subsidiaries have timely filed or caused to be filed all Tax returns and reports required to have been filed and have paid or caused to be paid all Taxes required to have been paid by them, except (a) any Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than US$50,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than US$75,000,000 the fair market value of the assets of all such Plans.

SECTION 3.12. Disclosure. Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information (excluding any projections and other forward-looking information and information of a general economic or industry nature) furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented from time to time by other information so furnished) contained, at the time when furnished, any material misstatement of fact or omitted, at the time when furnished, to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. All projections and other forward looking information contained in the Information Memorandum and any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented from time to time by other information so furnished) have been prepared by the Borrower in good faith based upon assumptions that were reasonable at the time made and at the time such projections and other information were furnished.

 

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ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or other electronic image scan transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received favorable written opinions (each addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Paul, Weiss, Rifkind, Wharton & Garrison LLP and Milbank, Tweed, Hadley & McCloy LLP, each counsel for the Borrower, each in form and substance reasonably satisfactory to the Administrative Agent. The Borrower hereby requests such counsel to deliver such opinion.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02 and paragraphs (e) and (g) and the first sentence of paragraph (h) of this Section.

(e) All material consents and approvals required to be obtained from any Governmental Authority or other Person in connection with the Transactions shall have been obtained.

(f) The Administrative Agent shall have received a certificate from a Financial Officer of the Borrower, confirming the solvency of the Borrower and the Subsidiaries on a consolidated basis after giving effect to the Transactions.

(g) After giving effect to the Transactions, neither the Borrower nor any of its Subsidiaries shall have outstanding any shares of preferred stock or any Indebtedness for

 

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borrowed money, other than (i) Indebtedness incurred under the Loan Documents, (ii) Indebtedness listed on Schedule 6.02 or incurred pursuant to Section 6.02(l), (iii) Indebtedness of the Borrower incurred under the Five-Year Credit Agreement, (iv) intercompany Indebtedness between the Borrower and its wholly owned Subsidiaries or between any such wholly owned Subsidiary and any other wholly owned Subsidiary and (v) Indebtedness of the Borrower or any Subsidiary incurred in the ordinary course under any overdraft facilities.

(h) All transactions to occur in connection with the Spin-Off (including the transfer by ADP to the Borrower of all assets and rights to be held by it following the Spin-Off), other than (i) the funding of Loans hereunder and under the Five-Year Credit Agreement, (ii) the payment of the Dividend, and (iii) the distribution of shares of the Borrower to the shareholders of ADP, shall have been completed on terms and with results relating to the Borrower and the Subsidiaries consistent in all material respects with the information contained in the Form 10 and the pro forma financial statements and projections of the Borrower heretofore delivered by ADP and the Borrower to the Lenders. The Borrower shall have a reasonable good faith belief that the payment of the Dividend and the distribution of shares of the Borrower to the shareholders of ADP will occur before the end of the Business Day immediately following the Effective Date, and the Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, to such effect.

(i) The obligations of the lenders under the Five-Year Credit Agreement to make loans thereunder shall have become effective and the loans under the Five-Year Credit Agreement shall have been made or shall be made substantially simultaneously with the initial funding of Loans on the Effective Date.

(j) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date pursuant to this Agreement or the commitment letter or fee letters entered into by the Borrower in connection herewith, including, to the extent invoiced, reimbursement or payment of all reasonable and documented out-of-pocket expenses required to be reimbursed or paid by the Borrower in connection with this Agreement and the Transactions.

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on May 31, 2007 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing (including each Borrowing made on the Effective Date), is subject to the satisfaction of the following conditions:

(a) The representations and warranties of the Borrower set forth in this

 

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Agreement (other than, with respect to any Borrowing occurring after the Effective Date, the representations set forth in Sections 3.04(b) and 3.06(a)) shall be true and correct in all material respects, in each case on and as of the date of such Borrowing.

(b) At the time of and immediately after giving effect to such Borrowing, no Default shall have occurred and be continuing.

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than any indemnification or other contingent obligations that are not yet due or payable) have been paid in full, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01. Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent:

(a) within 90 days after the end of each fiscal year of the Borrower, its audited combined balance sheet and related combined statements of earnings, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte & Touche LLP or other independent registered public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such combined financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b) within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its condensed combined balance sheet and related statements of earnings, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto;

 

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(d) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any of the Subsidiaries with the SEC, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be (other than (i) registration statements on Form S-8; (ii) filings under Sections 16(a) or 13(d) of the Securities Exchange Act of 1934; (iii) routine filings related to employee benefit plans; (iv) filings made by any Broker Dealer Subsidiary in the ordinary course of business and (v) any other reports, statements or filings made by any Broker Dealer Subsidiary that are not, individually or in the aggregate, material to the Borrower and its Subsidiaries taken as a whole);

(e) intentionally omitted; and

(f) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any of the Subsidiaries, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request (it being understand that the Borrower and such Subsidiaries shall not be required to provide any information or documents that are subject to confidentiality provisions prohibiting such disclosure).

Reports required to be delivered pursuant to subsections (a), (b) and (d) of this Section shall be deemed to have been delivered on the date on which the Borrower posts such reports on the Borrower’s website on the Internet at www.broadridge.com or when such report is posted on the SEC’s website at www.sec.gov . The Administrative Agent shall promptly make available to each Lender a copy of the certificate to be delivered pursuant to subsection (c) of this Section by posting such certificate on IntraLinks or by other similar means.

SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent (which will post such notice to IntraLinks or any similar electronic site used for distribution of documentation in connection with this Agreement) prompt written notice (in any case within five Business Days) of the following upon any such event becoming known to any Responsible Officer of the Borrower:

(a) the occurrence of any Default;

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

(c) (i) the involuntary revocation, suspension or other termination of any license, permit or registration of any Broker Dealer Subsidiary by the SEC or NASD, (ii) the involuntary revocation, suspension or other termination of any license, permit or registration of any Broker Dealer Subsidiary by any Governmental Authority other than

 

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the SEC or NASD, if such revocation, suspension or termination results in, or could reasonably be expected to result in, a Material Adverse Effect, or (iii) the application or receipt by the SIPC for a protective decree or other restrictive order regarding any Broker Dealer Subsidiary; and

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

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or Responsible Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause each Material Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and (except with regard to any Broker Dealer Subsidiary) the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.04.

SECTION 5.04. Payment of Taxes. The Borrower will, and will cause each Subsidiary to, pay its Tax liabilities, to the extent the failure to pay such liabilities could reasonably be expected to result in a Material Adverse Effect, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05. Maintenance of Properties. The Borrower will, and will cause each Material Subsidiary to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will cause each Material Subsidiary (other than any Broker Dealer Subsidiary) to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent, or by any Lender through the Administrative Agent, at mutually agreeable times (no more than once per fiscal year of the Borrower, unless an Event of Default has occurred and is continuing) and upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from those portions of its books and records relating to financial condition, and to discuss its affairs, finances and condition with its officers and, so long as a representative of the Borrower is present, independent accountants (in each case subject to the Borrower’s or such Material Subsidiary’s obligations under applicable law or confidentiality arrangements).

SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each

 

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Material Subsidiary (other than any Broker Dealer Subsidiary) to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including ERISA and Environmental Laws applicable to it or its property), except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.08. Use of Proceeds. The Borrower will cause the proceeds of the Loans to be used only (a) to pay the Dividend, (b) to pay certain Transaction Costs and (c) for working capital and other general corporate purposes of the Borrower and the Subsidiaries, including to support the issuance of commercial paper and the payment of intercompany loans between the Borrower and the Subsidiaries. Notwithstanding the foregoing, no part of the proceeds of any Loan will be used, whether directly or indirectly, by the Borrower or any Subsidiary (other than any Broker Dealer Subsidiary) (a) to purchase or carry Margin Stock (as defined in Regulation U of the Board) or to refinance Indebtedness originally incurred for such purpose or (b) in any manner or for any purpose that will result in a violation of Regulation U, Regulation X or Regulation T.

SECTION 5.09. Margin Stock. The Borrower will ensure that at the time each Loan is made and after giving effect to the use of proceeds thereof, no more than 25% of the value of the assets of either the Borrower or the Borrower and the Subsidiaries taken as a whole subject to the restrictions of Section 6.01 or 6.04 shall be represented by Margin Stock (within the meaning of Regulation U).

SECTION 5.10. Consummation of the Remaining Transactions. The Borrower will cause the payment of the Dividend and the consummation of the Spin-Off, when they occur, to be on terms and with results relating to the Borrower and the Subsidiaries consistent in all material respects with the information contained in the Form 10 and the pro forma financial statements and projections of the Borrower heretofore delivered by the Borrower and ADP to the Lenders.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than any indemnification or other contingent obligations that are not yet due or payable) have been paid in full, the Borrower covenants and agrees with the Lenders as follows:

SECTION 6.01. Liens . The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights therein, except:

(a) Permitted Encumbrances;

 

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(b) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 6.01 ; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary and (ii) such Lien shall secure only the obligations it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

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

(d) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (i) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (ii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and (iii) such security interests shall not apply to any other property or assets of the Borrower or any Subsidiary;

(e) Liens on securities deemed to exist under repurchase agreements and reverse repurchase agreements entered into by the Borrower and the Subsidiaries in the ordinary course of business;

(f) Liens arising from any interest or title of a lessor or sublessor under any lease or sublease not prohibited by Section 6.03 entered into by the Borrower or any Subsidiary as lessee;

(g) Liens arising from precautionary UCC financing statements filed in connection with leases;

(h) Liens in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off);

(i) Liens on cash earnest money deposits made in connection with letters of intent or purchase agreements;

(j) Liens arising on intellectual property in connection with the grant by the owner of such intellectual property of non-exclusive licenses in the ordinary course;

(k) Liens of any securities intermediary arising as a matter of law on securities or other assets held by such securities intermediary;

 

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(l) Liens on assets of any Broker Dealer Subsidiary created or otherwise arising in the ordinary course of its business; and

(m) other Liens not expressly permitted by clauses (a) through (l) above; provided that the sum of (i) the aggregate amount of the outstanding obligations secured by Liens permitted under this clause (m), (ii) the aggregate amount of Indebtedness of Subsidiaries permitted by Section 6.02(m) and (iii) the aggregate amount of Attributable Debt in respect of Sale and Leaseback Transactions permitted by Section 6.03 shall not at any time exceed $100,000,000.

Notwithstanding the foregoing of this Section, to the extent that more than 25% of the value of the assets of the Borrower, or of the Borrower and the Subsidiaries taken as a whole, that are subject to the restrictions of this Section is at any time represented by Margin Stock (within the meaning of Regulation U), the Borrower shall be free to sell, pledge or otherwise dispose of such excess Margin Stock (it being understood that Margin Stock not in excess of 25% of the value of such assets will be subject to the restrictions of this Section).

SECTION 6.02. Subsidiary Indebtedness. The Borrower will not permit any Subsidiary to incur any Indebtedness or to issue any preferred stock or other preferred equity securities except:

(a) Indebtedness, preferred stock or other preferred equity securities existing on the date hereof and set forth on Schedule 6.02 , and any extensions, renewals or replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof;

(b) Indebtedness, preferred stock or preferred equity securities of Persons existing at the time they become Subsidiaries; provided that such Indebtedness, preferred stock or preferred equity securities is not incurred or issued, as applicable, in contemplation of or in connection with such Person becoming a Subsidiary;

(c) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) such Indebtedness does not exceed the cost of acquiring, constructing or improving such fixed or capital assets;

(d) Indebtedness of any Subsidiary to the Borrower or any other Subsidiary;

(e) Guarantees by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided , such Indebtedness of any other Subsidiary so guaranteed is permitted under paragraphs (c), (d) or (m) of this Section;

 

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(f) Indebtedness of foreign Subsidiaries in an aggregate principal amount outstanding at any one time not to exceed $75,000,000 (or with respect to any other currency, the U.S. Dollar equivalent thereof);

(g) Indebtedness deemed to arise from the payment of insurance premiums on an installment basis in the ordinary course of business;

(h) Indebtedness incurred in connection with Hedging Agreements entered into for non-speculative purposes;

(i) Indebtedness under any overdraft facilities entered into in the ordinary course of business;

(j) Indebtedness in respect of workers’ compensation claims, and bid, performance or surety bonds;

(k) Indebtedness arising in connection with the endorsement of instruments for deposit in the ordinary course;

(l) Indebtedness incurred by any Broker Dealer Subsidiary in the ordinary course of its business; and

(m) other Indebtedness not expressly permitted by clauses (a) through (l) above; provided that the sum of (i) the aggregate principal amount of outstanding obligations secured by Liens permitted under Section 6.01(m), (ii) the aggregate amount of Indebtedness permitted under this clause (m) and (iii) the aggregate amount of Attributable Debt in respect of Sale and Leaseback Transactions permitted by Section 6.03 shall not at any time exceed $100,000,000.

SECTION 6.03. Sale and Leaseback Transactions. The Borrower will not, and will not permit any of the Subsidiaries to, enter into or be a party to any Sale and Leaseback Transaction except:

(a) Sale and Leaseback Transactions to which the Borrower or any Subsidiary is a party as of the date hereof; and

(b) other Sale and Leaseback Transactions not expressly permitted by clause (a) above; provided that the sum of (i) the aggregate principal amount of outstanding obligations secured by Liens permitted under Section 6.01(m), (ii) the aggregate principal amount of Indebtedness of Subsidiaries permitted by Section 6.02(m) and (iii) the aggregate amount of Attributable Debt in respect of Sale and Leaseback Transactions permitted by this Section shall not at any time exceed $100,000,000.

SECTION 6.04. Fundamental Changes. (a) The Borrower will not, and will not permit any Subsidiary to, (i) merge into or consolidate with any other Person, (ii) permit any other Person to merge into or consolidate with it, (iii) liquidate or dissolve, or (iv) sell, transfer, lease or otherwise dispose of, directly or through any merger or consolidation and whether in one transaction or in a series of transactions, assets (including Equity Interests in Subsidiaries)

 

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representing all or substantially all of the assets of the Borrower and the Subsidiaries (whether now owned or hereafter acquired), taken as a whole, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (A) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving Person, (B) any Subsidiary may merge with or consolidate into any Person (or permit any other Person to merge with or consolidate into it) in a transaction in which the surviving entity is a Subsidiary, (C) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another Subsidiary and (D) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders. Notwithstanding the foregoing of this paragraph (a), to the extent that more than 25% of the value of the assets of the Borrower, or of the Borrower and the Subsidiaries taken as a whole, that are subject to the restrictions of this paragraph is at any time represented by Margin Stock (within the meaning of Regulation U), the Borrower shall be free to sell, transfer, lease or otherwise dispose of such excess Margin Stock (it being understood that Margin Stock not in excess of 25% of the value of such assets will be subject to the restrictions of this paragraph).

(b) The Borrower will not, and will not permit any Subsidiary to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and the Subsidiaries on the date of execution of this Agreement and businesses reasonably related or ancillary thereto.

SECTION 6.05. Restrictive Agreements. The Borrower will not, and will not permit any Material Subsidiary to, enter into any agreement that restricts the ability of any Material Subsidiary to pay dividends or other distributions to the Borrower or other Subsidiaries or to make or repay loans or advances to the Borrower or other Subsidiaries; provided that the foregoing shall not apply to (a) restrictions and conditions imposed by law or by this Agreement, or, with respect to any Broker Dealer Subsidiary, otherwise required or requested by any Governmental Authority, (b) restrictions and conditions existing on the date hereof identified on Schedule 6.05 (or to any extension, amendment, modification, renewal or replacement thereof not expanding the scope of any such restriction or condition), (c) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale to the extent that such restrictions and conditions apply only to the Subsidiary or assets to be sold and such sale is permitted hereunder or (d) any agreements governing purchase money Indebtedness or Capital Lease Obligations, provided that such restrictions relate to only the assets financed with such Indebtedness.

SECTION 6.06. Transactions with Affiliates. The Borrower will not, and will not permit any of the Subsidiaries to, sell, lease or otherwise transfer any material property or assets to, or purchase, lease or otherwise acquire any material property or assets from, or otherwise engage in any other material transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and its Subsidiaries, or between or among Subsidiaries, in each case not involving any other Affiliate, (c) the declaration and payment of dividends with respect to its Equity Interests, (d) the making of grants or payments pursuant to and in accordance with equity award, bonus or incentive plans or other benefit plans

 

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for management, directors or employees of the Borrower and the Subsidiaries, (e) the payment of the Dividend and the entry into or the effectiveness of, and the performance under, any contractual arrangement with ADP or any Affiliates of ADP in connection with the Spin-Off to the extent such arrangements are consistent in all material respects with the information contained in the Form 10, (f) the transactions set forth on Schedule 6.06 and (g) employment agreements, officer and director indemnification agreements, confidentiality agreements, non-compete agreements and similar arrangements entered into by the Borrower or any of its Subsidiaries with its officers, directors and employees.

SECTION 6.07. Leverage Ratio. The Borrower will not permit the Leverage Ratio as of the last day of any period of four consecutive fiscal quarters of the Borrower, commencing with the period of four consecutive fiscal quarters ending on March 31, 2007, to exceed 3.50 to 1.00.

SECTION 6.08. Ratio of EBITDA to Consolidated Interest Expense. The Borrower will not permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense for any period of four consecutive fiscal quarters of the Borrower, commencing with the period of four consecutive fiscal quarters ending on March 31, 2007, to be less than 3.00 to 1.00.

ARTICLE VII

Events of Default

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

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

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

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

(d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.03 (with respect to the Borrower’s existence) or 5.08 or in Article VI;

(e) the Borrower shall fail to observe or perform any covenant, condition or

 

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agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent (which may be given at the request of any Lender) to the Borrower;

(f) the Borrower or any Subsidiary shall default in the payment (whether of principal or interest and regardless of amount) of any Material Indebtedness when and as the same shall become due and payable after giving effect to any applicable grace periods;

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that (i) this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

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

(i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(j) the Borrower or any Material Subsidiary shall become unable, admit in writing its inability, or fail generally, to pay its debts as they become due;

(k) one or more judgments for the payment of money in an aggregate amount in excess of $75,000,000 ( provided , that such amount shall be calculated after deducting therefrom any amount of such judgment that is covered by a valid and binding policy of

 

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insurance from a third party insurer that is rated at least “A-” by A.M. Best Company, which insurer has been notified of such judgment and has not disputed the claim made for payment) shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged and not vacated or paid in full for a period of 30 consecutive days during which execution shall not be effectively stayed (which stay shall include the posting of a bond pending appeal that has the effect of staying execution of such judgment), or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

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

(m) (i) any license, permit or registration of any Broker Dealer Subsidiary shall be revoked, suspended or otherwise terminated by the SEC, the NASD or any other applicable Governmental Authority, except where such revocation, suspension or termination could not reasonably be expected to result in a Material Adverse Effect, (ii) the SIPC shall apply for or obtain a protective decree or other restrictive order with regard to any Broker Dealer Subsidiary, (iii) any Broker Dealer Subsidiary shall be found by a Governmental Authority to have violated any law or regulation, or be the subject of any judgment or arbitration award, and such violation or award has resulted or would reasonably be expected to result in a Material Adverse Effect, or (iv) any action or proceeding by or before any Governmental Authority involving any Broker Dealer Subsidiary shall be pending as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, would reasonably be expected to result in a Material Adverse Effect; or

(n) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal or other amount not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

 

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ARTICLE VIII

The Agent

Each of the Lenders hereby irrevocably appoints the Agent as its agent and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.

The Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by it or any of its Affiliates in any capacity. The Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or wilful misconduct. The Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Agent by the Borrower or a Lender, and the Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Agent.

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

The Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. The Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through its respective

 

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Related Parties. The exculpatory provisions of the preceding paragraphs and the provisions of Section 9.03 shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent, and shall apply to its respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

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

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

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

The parties agree that none of the Joint Lead Arrangers and Joint Bookrunners or the Syndication Agent referred to on the cover page of this Agreement shall, in its capacity as such, have any powers, duties or responsibilities under this Agreement or any other Loan Document.

 

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ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Borrower, to it at Broadridge Financial Solutions Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, Attention of Chief Financial Officer (Telecopy No. 201-714-3758);

(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, Texas 77002, Attention of Toyin Ojeahere (Telecopy No. 713-750-2938), with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, NY 10017, Attention of Stella Millas (Telecopy No. 212-270-4164);

(iii) if to any other Lender to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures must be in writing and may be limited to particular notices or communications.

(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Borrower, the Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the

 

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specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Agent or any Lender may have had notice or knowledge of such Default at the time.

(b) None of this Agreement, any other Loan Document or any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower, the Administrative Agent and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Borrower, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.19(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender or (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Agent without the prior written consent of the Agent. Notwithstanding anything else in this Section to the contrary, any amendment of the definition of “Applicable Rate” pursuant to the last sentence of that definition shall require only the written consent of the Borrower and the Required Lenders.

SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Agent, the Joint Lead Arrangers and Joint Bookrunners named on the cover page of this Agreement and their respective Affiliates, including the reasonable and documented fees, charges and disbursements of counsel, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all reasonable and documented out-of-pocket expenses incurred by the Agent or any Lender, including the reasonable and documented fees, charges and disbursements of any counsel for the Agent or any Lender and all such out-of pocket expenses incurred during any workout, restructuring or negotiations in respect of the Loans, in connection with the enforcement or protection of its rights under any Loan Document, including its rights under this Section or in connection with the Loans made hereunder.

(b) The Borrower shall indemnify the Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”), against, and hold each Indemnitee harmless from, any and all losses, liabilities and out-of-pocket costs or expenses, including the reasonable and documented fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee (whether by a third

 

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party or by the Borrower or any of its Affiliates) arising out of, in connection with, or as a result of (i) the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom or (iii) the execution, delivery or performance by the Borrower and the Subsidiaries of the Loan Documents, or any actions or omissions of the Borrower or any of the Subsidiaries in connection therewith; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, liabilities, costs or expenses shall have resulted from the gross negligence or wilful misconduct of such Indemnitee.

(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Agent such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed loss, liability, cost or expense, as the case may be, was incurred by or asserted against the Agent in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the total Revolving Exposures and unused Commitments at the time.

(d) To the extent permitted by applicable law, the Borrower shall not assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions or any Loan or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable within 15 Business Days after receipt by the Borrower of a reasonably detailed invoice therefor.

SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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

(i) the Borrower; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender or a Related Fund (as defined below), or, if an Event of Default has occurred and is continuing, to any other assignee; and

 

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(ii) the Administrative Agent.

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

(i) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Related Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than US$5,000,000 unless each of the Borrower and the Administrative Agent otherwise consents; provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement as such rights and obligations relate to Loans or Commitments being assigned;

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

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

(v) “ Related Fund ” means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

(d) Subject to acceptance and recording thereof pursuant to paragraph (e) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (g) of this Section.

(e) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption

 

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delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

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

(g) Any Lender may, without the consent of, or notice to, the Borrower or the Administrative Agent sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under the Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (i), (ii) or (iii) of the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (d) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided such Participant agrees to be subject to Section 2.19(c) as though it were a Lender.

(h) A Participant shall not be entitled to receive any greater payment under Section 2.16 or 2.18 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.18 unless such Participant agrees, for the benefit of the Borrower, to comply with Section 2.18(e) and (f) as though it were a Lender.

(i) Any Lender may at any time pledge or assign a security interest in all or any

 

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portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Borrower herein, in the other Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.16, 2.17, 2.18 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the Transactions or the other transaction contemplated hereby, the repayment of the Loans, the expiration or termination the Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Agent constitute the entire agreement among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic image scan transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.07. Severability. Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions of such Loan Document; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits

 

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(general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to and shall not limit other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

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

(c) Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document or the Transactions in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

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

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS OR THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES

 

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THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality. (a) The Agent and each Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors, to Related Funds’ directors and officers and to any direct or indirect contractual counterparty in swap agreements (it being understood that each Person to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any Governmental Authority, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; provided that in connection with any such requirement by a subpoena or similar legal process, the Borrower is given prior notice to the extent such prior notice is permissible under the circumstances and an opportunity to object to such disclosure, (iv) to any other party to this Agreement, (v) to the extent required or advisable in the judgment of counsel in connection with any suit, action or proceeding relating to the enforcement of rights of the Agent or the Lenders against the Borrower under this Agreement or any other Loan Document, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower or (viii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section of which the Agent or Lender is aware or (B) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower other than as a result of a breach of this Section of which the Agent or Lender is aware. For the purposes of this Section, “ Information ” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Agent or any Lender on a non-confidential basis prior to disclosure by the Borrower other than as a result of a breach of this Section of which the Agent or such Lender is aware. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

(b) Each Lender acknowledges that Information furnished to it pursuant to this Agreement may include material non–public information concerning the Borrower and its Related Parties or the Borrower’s securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

 

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(c) All information, including requests for waivers and amendments, furnished by the Borrower or the Agent pursuant to, or in the course of administering, this Agreement will be syndicate-level information, which may contain material non-public information about the Borrower and its Related Parties or the Borrower’s securities. Accordingly, each Lender represents to the Borrower and the Agent that it has identified in its Administrative Questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.

SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.14. Conversion of Currencies. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given.

(b) The obligations of the Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the “ Applicable Creditor ”) shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than the currency in which such sum is stated to be due hereunder (the “ Agreement Currency ”), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrower contained in this Section 9.14 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder.

 

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SECTION 9.15. Patriot Act. Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

SECTION 9.16. No Fiduciary Relationship. The Borrower, on behalf of itself and the Subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower, the Subsidiaries and their Affiliates, on the one hand, and the Agent, the Lenders, and their Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Agent, any Lender or any of their Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications.

[remainder of page intentionally blank; signature page is the next page]

 

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

 

BROADRIDGE FINANCIAL SOLUTIONS, INC., as the Borrower,
by  

/s/ Dan Sheldon

  Name: Dan Sheldon
  Title:   Vice President, Chief Financial Officer

[S IGNATURE P AGE TO B ROADRIDGE I NTERIM C REDIT A GREEMENT ]


JPMORGAN CHASE BANK, N.A., as Administrative Agent and a Lender,
by  

/s/ Tracey Navin Ewing

  Name: Tracey Navin Ewing
  Title:   Vice President
CITIBANK, N.A., as a Lender,
by  

/s/ Shannon A. Sweeney

  Name: Shannon A. Sweeney
  Title:   Vice President

[S IGNATURE P AGE TO B ROADRIDGE I NTERIM C REDIT A GREEMENT ]

Exhibit 99.1

LOGO

Former ADP Brokerage Services Group Begins Trading as an Independent Company

Broadridge lists on the New York Stock Exchange

NEW YORK — April 2, 2007 — Broadridge Financial Solutions, Inc. (NYSE: BR) CEO Rich Daly and COO John Hogan will greet members of the New York Stock Exchange this morning to begin the first trading day of Broadridge as an independent, public company focused on providing services to the financial services industry. Broadridge Financial Solutions, Inc. was officially spun off from Automatic Data Processing, Inc. (NYSE: ADP) on Friday, March 30 th . The newly independent company begins trading as a member of the S&P MidCap 400 Index.

“This is a very exciting milestone for Broadridge that exemplifies our commitment to pursue continued growth and build value for our shareholders and clients,” said Broadridge CEO Rich Daly. “As an independent company focused on providing solutions to the financial services industry, we believe Broadridge is well positioned to execute strategic initiatives specific to our business needs, provide expanded solutions for our clients and increase opportunities for our associates.”

Broadridge is an industry leader with nearly $2 billion in revenue. The company specializes in three areas of services to the financial services industry: investor communications, securities processing, and clearing and outsourcing. Broadridge distributes over 1 billion investor communications each year, and components of its securities processing solutions are used by 7 of the top 10 U.S. broker-dealers. Additionally, its fixed income business processes trades with an aggregate settlement value of over $2 trillion each day.

As a result of the spin off, ADP shareholders received one share of Broadridge Financial Solutions, Inc. stock for every four shares of stock they held in ADP on March 23, 2007. Approximately 138.5 million shares of Broadridge stock were distributed on Friday March 30 th to ADP shareholders.

-ends-

About Broadridge

Broadridge is a leading global provider of technology-based outsourcing solutions to the financial services industry. Our integrated systems and services include investor communication, securities processing, and clearing and outsourcing solutions. Broadridge offers a broad, integrated suite of innovative global solutions across the investment lifecycle and provides a wide range of cost-effective and scalable solutions to the financial industry. Our systems help reduce the need for clients to make significant capital investments in operations infrastructure, thereby allowing them to increase their focus on core business activities. For more information about Broadridge, please visit www.broadridge.com .

 


Forward-Looking Statements

This release and other written or oral statements made from time to time by representatives of Broadridge may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could be” and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include: the impact of Broadridge’s separation from ADP on the clients, employees and other aspects of Broadridge’s business; Broadridge’s cost structure and capital structure as a stand-alone company, including its credit ratings and indebtedness; Broadridge’s success in obtaining, retaining and selling additional services to clients; the pricing of products and services; changes in laws regulating registered clearing agencies and broker-dealers; overall market and economic conditions; competitive conditions; financial market activity; changes in technology; availability of skilled technical employees and the impact of new acquisitions and divestitures. Broadridge disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Investor Relations:

Marvin Sims

Broadridge

(212) 981-1427

marvin.sims@broadridge.com

Media:

Dorothy Friedman

Broadridge

(212) 918-6920 office

(516) 521-3146 mobile

dorothy.friedman@broadridge.com