Exhibit 10.286

 

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$800,000,000

CREDIT AGREEMENT

(364-DAY COMMITMENT)

dated as of June 16, 2006

Among

THE CHARLES SCHWAB CORPORATION

and

CITICORP USA, INC.,

as Administrative Agent

and

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

and

BANK OF AMERICA, N.A.

CALYON NEW YORK BRANCH

JPMORGAN CHASE BANK, N.A.

and

LLOYDS TSB BANK PLC

as Co-Documentation Agents

and

CITIGROUP GLOBAL MARKETS INC.,

as Sole Lead Arranger and Sole Book Manager

 

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Table of Contents

 

               Page 1.    DEFINITIONS    1 2.    THE CREDIT FACILITY    11   
2.1    The Revolving Credit Facility    11    2.2    Term Loan Facility    11   
2.3    Evidence of Borrowing/Promissory Notes    12    2.4    Making of
Revolving Loans and Term Loans, Borrowings; Interest Periods; Notice    12   
2.5    Conversion and Continuation Elections    14    2.6    Interest Periods   
15    2.7    Interest Rates    15    2.8    Substitute Rates    16    2.9   
Fees    17    2.10    Reduction of Credit    17    2.11    Termination Date;
Extensions    18    2.12    Payments by the Lenders to the Agent    18    2.13
   Sharing of Payments, Etc.    19    2.14    Computation of Fees and Interest
   19 3.    PAYMENT    20    3.1    Repayment    20    3.2    Method of Payment
   20    3.3    Optional Prepayment    20    3.4    Taxes/Net Payments    20   
3.5    Illegality    21    3.6    Increased Costs and Reduction of Return    22
   3.7    Funding Losses    22    3.8    Certificates of Lenders    23    3.9   
Substitution of Lenders    23    3.10    Survival    23 4.    CONDITIONS    23
   4.1    Conditions Precedent to the Effectiveness of this Agreement    23   
4.2    Conditions Precedent to Revolving Loans and Term Loans    24 5.   
REPRESENTATIONS AND WARRANTIES    25    5.1    Organization and Good Standing   
25    5.2    Corporate Power and Authority    25

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   5.3    Enforceability    26    5.4    No Violation of Laws or Agreements   
26    5.5    No Consents    26    5.6    Financial Statements    26    5.7   
Broker Subsidiary Licenses, Etc.    26    5.8    Broker Subsidiary/Broker
Registration    26    5.9    Broker Subsidiary/SIPC    26    5.10    Taxes    27
   5.11    ERISA    27    5.12    No Extension of Credit for Default
Remedy/Hostile Acquisition    27    5.13    Use of Proceeds/Margin Regulations
   27    5.14    Authorized Persons    27    5.15    Material Contracts    27   
5.16    Litigation    27    5.17    Investment Company    28 6.    AFFIRMATIVE
COVENANTS    28    6.1    Notice of Events of Default    28    6.2    Financial
Statements    28    6.3    Insurance    28    6.4    Books and Records    28   
6.5    Change in Business    28    6.6    Capital Requirements    28 7.   
NEGATIVE COVENANTS    29    7.1    Net Capital    29    7.2    Minimum
Stockholders’ Equity    29    7.3    Merger/Disposition of Assets    29    7.4
   Broker Subsidiary Indebtedness    29    7.5    Indebtedness Secured by
Subsidiary Stock    30    7.6    Liens and Encumbrances    30 8.    EVENTS OF
DEFAULT    30    8.1    Defaults    30    8.2    Remedies    32 9.    THE AGENT
   32    9.1    Appointment and Authorization    32    9.2    Delegation of
Duties    33    9.3    Liability of Agent    33    9.4    Reliance by Agent   
33    9.5    Notice of Default    34    9.6    Credit Decision    34

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   9.7    Indemnification of Agent    34    9.8    Agent in Individual Capacity
   35    9.9    Successor Agent    35    9.10    Withholding Tax    35    9.11
   Co-Agents    37 10.    MISCELLANEOUS    37    10.1    Amendments and Waivers
   37    10.2    Notices    38    10.3    No Waiver-Cumulative Remedies    39   
10.4    Costs and Expenses    39    10.5    Borrower Indemnification    40   
10.6    Payments Set Aside    41    10.7    Successors and Assigns    41    10.8
   Assignments, Participations Etc.    41    10.9    Confidentiality    43   
10.10    Notification of Addresses, Lending Offices, Etc.    44    10.11   
Counterparts    44    10.12    Severability    44    10.13    No Third Parties
Benefited    44    10.14    Governing Law and Jurisdiction    45    10.15   
Waiver of Jury Trial    45    10.16    Entire Agreement    45    10.17   
Headings    45    10.18    USA Patriot Act    46

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SCHEDULES:

 

Schedule 1- Lenders’ Commitments

Schedule 2 - List of Borrowing Agreements

Schedule 6.2 - Compliance Certificate

Schedule 10.2 - Notices

EXHIBITS:

 

Exhibit A-1 - Revolving Note

Exhibit A-2 - Term Note

Exhibit B - Borrowing Advice

Exhibit C - Notice of Conversion/Continuation

Exhibit D - Commitment and Termination Date Extension Request

Exhibit E - Borrower’s Opinion of Counsel

Exhibit F - Form of Assignment and Acceptance

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CREDIT AGREEMENT (364-DAY COMMITMENT)

THIS CREDIT AGREEMENT (364-DAY COMMITMENT) (“this Agreement”) is entered into as
of June 16, 2006, among The Charles Schwab Corporation, a Delaware corporation
(the “Borrower”), the several financial institutions from time to time party to
this Agreement (collectively the “Lenders”; individually each a “Lender”), and
Citicorp USA, Inc., as administrative agent for the Lenders (the “Agent”).

WHEREAS, the Lenders are willing to make from time to time Revolving Loans to
the Borrower through June 15, 2007, and to make Term Loans to the Borrower on or
before June 15, 2007 and maturing no later than June 13, 2008, upon the terms
and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants herein contained, the parties hereto agree as follows:

 

1. DEFINITIONS. The following terms have the following meanings:

 

Affiliate:    As to any Person, any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person. A Person shall be deemed to control another Person if the controlling
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether through
the ownership of voting securities, membership interests, by contract, or
otherwise. Agent:    Citicorp USA in its capacity as administrative agent for
the Lenders hereunder and any successor agent appointed under Section 9.9.
Agent-Related Persons:    Citicorp USA and any successor agent appointed under
Section 9.9, together with Citicorp USA’s Affiliate, the Arranger, and the
officers, directors, employees, agents and attorney-in-fact of such Persons and
Affiliate. Agreement:    This Credit Agreement. Agent’s Payment Office:    The
address for payments set forth on the signature page hereto in relation to the
Agent, or such other address as the Agent may from time to time specify.
Applicable Margin:    (i) with respect to Federal Funds Rate Loans, 0.325%; and
   (ii) with respect to Eurodollar Rate Loans, 0.325%.

 

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Arranger:    Citigroup Global Markets Inc. Assignee:    The meaning specified in
Section 10.8. Attorney Costs:    Without duplication, (1) all fees and
disbursements of any law firm or other external counsel, and (2) the allocated
cost of internal legal services and all disbursements of internal counsel. Bank
Subsidiary:    Any national member bank (as defined in 12 U.S.C. §1813(d)(1)) or
state member bank (as defined in 12 U.S.C. §1813(d)(2)) that is a subsidiary (as
defined in 12 U.S.C. §1841(d)) of the Borrower. Bankruptcy Code:    The Federal
Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended. Base Rate:
   For any day, the higher of: (a) 0.475% per annum above the Federal Funds
Rate; and (b) the rate of interest in effect for such day as publicly announced
from time to time by Citibank, N.A. as its “Base Rate”. The “Base Rate” is a
rate set by Citibank, N.A. based upon various factors including Citibank, N.A.’s
costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in such rate announced by Citibank,
N.A. shall take effect at the opening of business on the day specified in the
public announcement of such change. Base Rate Loan:    A Revolving Loan or Term
Loan that bears interest based on the Base Rate. Borrowing:    A borrowing
hereunder consisting of Revolving Loans or Term Loans of the same Type made to
the Borrower on the same day by the Lenders under Section 2 and, other than in
the case of a Base Rate Loan or Federal Funds Rate Loan, having the same
Interest Period. Borrowing Advice:    A written request made by the Borrower
with respect to any Loan substantially in the form of Exhibit B specifying the
information required in Section 2.4 hereof and executed by the Borrower from
time to time. Borrowing Agreements:    The credit agreement(s) between the
Borrower and the lenders listed in Schedule 2. Borrowing Date:    Any date on
which a Borrowing occurs under Section 2.4.

 

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Broker Subsidiary:    Charles Schwab & Co., Inc., a California corporation, and
its successors and assigns. Business Day:    A day other than a Saturday, Sunday
or any other day on which commercial banks are authorized or required to close
in California or New York and, if the applicable Business Day relates to a
Eurodollar Rate Loan, such a day on which dealings are carried on in the
applicable offshore dollar interbank market. Capital Adequacy Regulation:    Any
guideline, directive or requirement of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not having the force
of law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank. Change in Control:    The consummation of a
reorganization, merger or consolidation by the Borrower or the sale or other
disposition of all or substantially all of the assets of the Borrower (a
“Business Combination”), unless, following such Business Combination, (i) no
person or entity (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Borrower or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 35% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation (except to the extent that such ownership existed
prior to the Business Combination); and (ii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the board of directors of the Borrower as of the
time of the action of the board of directors of the Borrower providing for such
Business Combination. Citicorp USA:    Citicorp USA, Inc., a Delaware
corporation. Closing Date:    The date (not before June 16, 2006) on which all
conditions precedent set forth in Section 4 are satisfied or waived by all
Lenders or, in the case of subsection 4.1(g), waived by the person entitled to
receive such payment. Code:    The Internal Revenue Code of 1986, as amended,
and Regulations promulgated thereunder. Commitment:    The meaning specified in
Section 2.1.

 

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Commitment Fee:    The meaning specified in subsection 2.9(b). Consolidated
Stockholders’ Equity:    With respect to any Person, as of any date of
determination, all amounts that would, in accordance with GAAP, be included
under shareholders’ equity on a consolidated balance sheet of such Person as at
such date, plus any preferred stock. Controlled Subsidiary:    Any corporation
80% of whose voting stock (except for any qualifying shares) is owned directly
or indirectly by the Borrower. Conversion/Continuation Date:    Any date on
which under Section 2.5, the Borrower (a) converts Loans of one Type to another
Type, or (b) continues as Loans of the same Type, but with a new Interest
Period, Loans having Interest Periods expiring on such date. Credit:    The
aggregate amount of the Commitments of all Lenders to make Revolving Loans under
the Revolving Credit Facility and Term Loans under the Term Loan Facility in an
amount not to exceed Eight Hundred Million and no/100 Dollars ($800,000,000.00),
as the same may be reduced under Section 2.10. Default:    Any event or
circumstance which, with the giving of notice, the lapse of time, or both, would
(if not cured or otherwise remedied during such time) constitute an Event of
Default. Dollars, dollars, and $:    Each mean lawful money of the United
States. Effective Amount:    With respect to any Revolving Loans and Term Loans
on any date, the aggregate outstanding principal amount thereof after giving
effect to any Borrowings and prepayments or repayments of Revolving Loans and
Term Loans occurring on such date. Eligible Assignee:    (i) A commercial bank
organized under the laws of the United States, or any state thereof, and having
total equity capital of at least $1,000,000,000 and a senior debt rating of a
least “A” by Standard & Poor’s Ratings Service, a Division of The McGraw-Hill
Companies, Inc. or at least “A-2” by Moody’s Investors Service, Inc. or, if not
rated by either of the foregoing organizations, an equivalent rating from a
nationally recognized statistical rating organization; or (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the OECD), or a political
subdivision of any such country, and having total equity capital of at least
$1,000,000,000 and a senior debt

 

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   rating of at least “A” by Standard & Poor’s Ratings Service, a Division of
The McGraw-Hill Companies, Inc. or at least “A-2” by Moody’s Investors Service,
Inc., or, if not rated by either of the foregoing organizations, an equivalent
rating from a nationally recognized statistical rating organization; provided
that such bank is acting through a branch or agency located in the United
States. Eurodollar Base Rate:    For any Interest Period:    (a) the rate per
annum equal to the rate determined by the Agent to be the offered rate that
appears on the page of the Telerate screen (or any successor thereto) that
displays an average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of such Interest Period) with
a term equivalent to such Interest Period, determined as of approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period, or    (b) in the event the rate referenced in the preceding subsection
(a) does not appear on such page or service or such page or service shall cease
to be available, the rate per annum equal to the rate determined by the Agent to
be the offered rate on such other page or other service that displays an average
British Bankers Association Interest Settlement Rate for deposits in Dollars
(for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period, or    (c) in
the event the rates referenced in the preceding subsections (a) and (b) are not
available, the rate per annum equal to the average (rounded upward to the next
1/100th of 1%) of the rates of interest per annum notified to the Agent by each
Reference Lender as the rate at which deposits in Dollars for delivery on the
first day of such Interest Period in same day funds in the approximate amount of
the Eurodollar Rate Loan being made, continued or converted by such Reference
Lender in its capacity as a Lender and with a term equivalent to such Interest
Period would be offered by its Offshore Lending Office to major banks in the
offshore Dollar market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period.
Eurodollar Rate:    The rate obtained by dividing (i) Eurodollar Base Rate by
(ii) a percentage (expressed as a decimal) equal to 1.00 minus the Eurodollar
Rate Reserve Percentage.

 

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Eurodollar Rate Loan:    A Revolving Loan or Term Loan that bears interest based
on the Eurodollar Rate. Eurodollar Rate Reserve Percentage:    For any Interest
Period for any Loan for which the Eurodollar Rate has been selected or is
applicable, the percentage (expressed as a decimal) as calculated by the Agent
that is in effect on the first day of such Interest Period, as prescribed by the
Board of Governors of the U.S. Federal Reserve System (or any successor), for
determining reserve requirements to be maintained by the Agent under
Regulation D (or any successor regulation thereof) as amended to the date hereof
(including such reserve requirements as become applicable to the Agent pursuant
to phase-in or other similar requirements of Regulation D at any time subsequent
to the date hereof) in respect of “Eurocurrency liabilities” (as defined in
Regulation D). The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurodollar Rate Reserve Percentage.
Event of Default:    Any of the events or circumstances specified in Section
8.1. Exchange Act:    The Securities and Exchange Act of 1934, as amended, and
regulations promulgated thereunder. Federal Funds Rate:    For any day, the
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York. Federal Funds Effective Rate:    For any day, an interest rate per
annum equal to the arithmetic mean as determined by the Agent of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, received by the Agent by each of
three Federal funds brokers of recognized standing in New York City prior to
11:00 a.m. (San Francisco time) selected by Agent in its sole discretion.
Federal Funds Rate Loan:    A Revolving Loan or Term Loan that bears interest
based on the Federal Funds Effective Rate. Fee Letter:    The meaning specified
in subsection 2.9(a).

 

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FRB:    The Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions. GAAP:   
Generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession), which
are applicable to the circumstances as of the date of determination.
Governmental Authority:    Any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing. Hedge Agreements:   
Interest rate swap, interest rate cap or interest rate collar agreements.
Indebtedness:    As to any corporation, any obligation of, or guaranteed or
assumed by, such corporation for (i) borrowed money evidenced by bonds,
debentures, notes or other similar instruments, (ii) the deferred purchase price
of property or services (excluding trade and other accounts payable), (iii) the
leasing of tangible personal property under leases which, under any applicable
Financial Accounting Standards Board Statement, have been or should be recorded
as capitalized leases or (iv) direct or contingent obligations under letters of
credit issued for the account of such corporation. Indemnified Liabilities:   
The meaning specified in Section 10.5. Indemnified Person:    The meaning
specified in Section 10.5. Insolvency Proceeding:    As to a debtor, (a) any
case, action or proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshaling of assets for creditors, or
other similar arrangement in respect of its creditors

 

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   generally or any substantial portion of its creditors, undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code. Interest Payment
Date:    As to any Loan other than a Base Rate Loan or Federal Funds Rate Loan,
the last day of each Interest Period applicable to such Loan and, as to any Base
Rate Loan or Federal Funds Rate Loan, the last Business Day of each calendar
quarter, provided, however, that if any Interest Period for a Eurodollar Rate
Loan exceeds three months, the date that falls three months after the beginning
of such Interest Period and after each Interest Payment Date thereafter is also
an Interest Payment Date. Interest Period:    Any period specified in accordance
with Section 2.6 hereof. Intermediate Parent:    Schwab Holdings, Inc., a
Delaware corporation and its successors and assigns. Lender:    The meaning
specified in the introductory clause hereto. Lending Office:    As to any
Lender, the office or offices of such Lender specified as its “Lending Office”
or “Domestic Lending Office” or “Offshore Lending Office”, as the case may be,
on Schedule 10.2, or such other office or offices as such Lender may from time
to time notify the Borrower and the Agent. Loan:    An extension of credit by a
Lender to the Borrower under Section 2 in the form of a Revolving Loan or Term
Loan. Loan Document:    This Agreement, any Notes, the Fee Letter, and all other
documents delivered to the Agent or any Lender in connection herewith. Minimum
Stockholders’ Equity:    As of the Closing Date, and the last day of each fiscal
quarter thereafter, the greater of:    (a) $2,500,000,000, or    (b) the sum of
–   

(i) $2,500,000,000, plus

  

(ii) 50% of the sum of cumulative Net Earnings for each fiscal quarter
commencing with the fiscal quarter ended June 30, 2006.

 

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Net Capital Ratio:    As of the date of determination, that percentage of net
capital to aggregate debit items of any entity subject to the Net Capital Rule
15c3-1 promulgated by the Securities Exchange Commission pursuant to the
Securities Exchange Act of 1934 and any successor or replacement rule or
regulation therefor. Net Earnings:    With respect to any fiscal period, the
consolidated net income of the Borrower and its Subsidiaries, after taking into
account all extraordinary items, taxes and other proper charges and reserves for
the applicable period, determined in accordance with U.S. generally accepted
accounting principles, consistently applied. Note:    A promissory note executed
by the Borrower in favor of a Lender pursuant to Section 2.3 in substantially
the form of Exhibits A-1 and A-2. Notice of Conversion/Continuation:    A notice
in substantially the form of Exhibit C. Obligations:    All borrowings, debts,
liabilities, obligations, covenants and duties arising under any Loan Document
owing by the Borrower to any Lender, the Agent, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising. Person:   
An individual, partnership, corporation, limited liability company, business
trust, unincorporated association, trust, joint venture or Governmental
Authority. Pro Rata Share:    As to any Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender’s Commitment divided by the combined Commitments of all
Lenders. Reference Lenders:    Citicorp USA, Bank of America, N.A. and JPMorgan
Chase Bank, N.A. Replacement Lender:    The meaning specified in Section 3.9.
Required Lenders:    At any time at least two Lenders then holding in excess of
50% of the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, at least two Lenders then having in excess
of 50% of the Commitments. Requirement of Law:    As to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or

 

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   any of its property or to which the Person or any of its property is subject.
Responsible Officer:    Any senior vice president or more senior officer of the
Borrower, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants, the
chief financial officer, executive vice president-finance, controller or the
treasurer of the Borrower, or any other officer having substantially the same
authority and responsibility. Revolving Credit Facility:    The revolving credit
facility available to the Borrower pursuant to Section 2.1 hereof. Revolving
Loan:    The meaning specified in Section 2.1, and may be a Base Rate Loan,
Federal Funds Rate Loan or a Eurodollar Rate Loan (each a “Type” of Revolving
Loan). Revolving Note:    The meaning specified in Section 2.3. Revolving
Termination Date:    The earlier to occur of:    (a) June 15, 2007; and    (b)
the date on which the Commitments terminate in accordance with the provisions of
this Agreement. SEC:    The Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions. Senior
Medium-Term Notes, Series A:    Senior debt securities or senior subordinated
debt securities issued by The Charles Schwab Corporation with a maturity between
9 months and 30 years in accordance with the Senior Indenture, as amended, and
the Senior Subordinated Indenture, as amended, both dated as of July 15, 1993 by
and between The Charles Schwab Corporation and The Chase Manhattan Bank, as
trustee. Subsidiary:    Any corporation or other entity of which a sufficient
number of voting securities or other interests having power to elect a majority
of the board of directors or other persons performing similar functions are at
the time directly or indirectly owned by the Borrower. Term Commitment:    Eight
Hundred Million and no/100 Dollars ($800,000,000.00), as the same may be reduced
under Section 2.10.

 

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Term Loan:    The meaning specified in Section 2.2 and may be a Base Rate Loan,
Federal Funds Rate Loan or Eurodollar Rate Loan (each a “Type” of Term Loan).
Term Loan Facility:    The term loan facility available to the Borrower pursuant
to Section 2.2 hereof. Term Loan Maturity Date:    The meaning specified in
Section 2.2. Term Note:    The meaning specified in Section 2.3. Type:    The
meaning specified in the definition of “Revolving Loan”.

 

2. THE CREDIT FACILITY.

2.1 The Revolving Credit Facility Each Lender severally agrees, on the terms and
conditions set forth herein, to make loans to the Borrower (each such loan, a
“Revolving Loan”) from time to time on any Business Day during the period from
the Closing Date to the Revolving Termination Date, in an aggregate amount not
to exceed at any time outstanding, together with the principal amount of Term
Loans outstanding in favor of such Lender at such time, the amount set forth
next to such Lender’s name on Schedule 1 (such amount together with the Lender’s
Pro Rata Share of the Term Commitment, as the same may be reduced under
Section 2.10 or as a result of one or more assignments under Section 10.8, the
Lender’s “Commitment”); provided, however, that, after giving effect to any
Borrowing of Revolving Loans, the Effective Amount of all outstanding Revolving
Loans shall not at any time exceed the combined Commitments; and provided
further that the Effective Amount of the Revolving Loans, together with all Term
Loans outstanding at such time, of any Lender shall not at any time exceed such
Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject
to the other terms and conditions hereof, the Borrower may borrow under this
Section 2.1, prepay under Section 3.3 and reborrow under this Section 2.1.

2.2 Term Loan Facility. Each Lender severally agrees, on the terms and
conditions set forth herein, to make Loans to the Borrower during the period
from the Closing Date to June 15, 2007, in an aggregate amount not to exceed
such Lender’s Pro Rata Share of the Term Commitment. The Borrower from time to
time may borrow under the Term Loan Facility (and may reborrow any amount
theretofore prepaid) until close of business on June 15, 2007, for a term not to
exceed 364 days from the date of the Borrowing. Each such loan under the Term
Loan Facility (a “Term Loan”) shall be in the minimum amount of $10,000,000 and
shall become due and payable on the last day of the term selected by the
Borrower for such Term Loan (the “Term Loan Maturity Date”), which shall in no
event be later than 364 days from the date of such Term Loan. The maximum
availability under the Term Loan Facility shall be the amount of the Credit
minus the aggregate outstanding principal amount of Revolving Loans and Term
Loans made by the Lenders; provided, however, that to the extent the proceeds of
a Term Loan are used to repay an outstanding Revolving Loan (or a portion
thereof), such Revolving Loan (or portion thereof) shall not be considered part
of the aggregate principal amount of outstanding Revolving Loans made by the
Lenders for purposes of this sentence (such maximum

 

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availability hereafter being referred to as the “Term Loan Availability”). Under
no circumstances shall the aggregate outstanding principal amount of Term Loans
and Revolving Loans made by the Lenders exceed the Credit, and under no
circumstances shall any Lender be obligated (i) to make any Term Loan (nor may
the Borrower reborrow any amount heretofore prepaid) after June 15, 2007, or
(ii) to make any Term Loan in excess of the Term Loan Availability. Each Term
Loan made hereunder shall fully and finally mature and be due and payable in
full on the Term Loan Maturity Date specified in the Borrowing Advice for such
Term Loan; provided, however, that to the extent the Borrowing Advice for any
Term Loan selects an Interest Period that expires before the Term Loan Maturity
Date specified in such Borrowing Advice, the Borrower may from time to time
select additional interest rate options and Interest Periods (none of which
shall extend beyond the Term Loan Maturity Date for such Term Loan) by
delivering a Borrowing Advice or Notice of Conversion/Continuation, as
applicable.

2.3 Evidence of Borrowing/Promissory Notes. The obligation of the Borrower to
repay the aggregate unpaid principal amount of the Revolving Loans and Term
Loans shall be evidenced by promissory notes of the Borrower (respectively the
“Revolving Note and the Term Note”) in substantially the form attached hereto as
Exhibits A-1 and A-2, with the blanks appropriately completed, payable to the
order of each Lender in the principal amount of its Commitment, bearing interest
as hereinafter specified. Each Revolving Note and Term Note shall be dated, and
shall be delivered to each Lender, on the date of the execution and delivery of
this Agreement by the Borrower. Each Lender shall, and is hereby authorized by
the Borrower to, endorse on the schedule contained on the Revolving Note and
Term Note, or on a continuation of such schedule attached thereto and made a
part thereof, appropriate notations regarding the Revolving Loans and Term Loans
evidenced by such Note as specifically provided therein and such Lender’s record
shall be conclusive absent manifest error; provided, however, that the failure
to make, or error in making, any such notation shall not limit or otherwise
affect the obligations of the Borrower hereunder or under the Revolving Note and
Term Note. The Agent, by notice to the Borrower (to be given not later than two
Business Days prior to the initial Borrowing or Term Loan hereunder) may request
that Revolving Loans or Term Loans made hereunder for which the interest
calculation is to be based on the Eurodollar Rate be evidenced by separate
Revolving Notes (in the case of Revolving Loans) and Term Notes (in the case of
Term Loans), substantially in the form of Exhibit A-1 hereto (in the case of
Revolving Loans) and Exhibit A-2 hereto (in the case of Term Loans), payable to
the order of each Lender for the account of its office, branch or affiliate it
may designate as its Lending Office.

2.4 Making of Revolving Loans and Term Loans, Borrowings; Interest Periods;
Notice.

(a) Each Borrowing of Revolving Loans or Term Loans shall be made upon
Borrower’s irrevocable written notice delivered to the Agent in the form of a
Borrowing Advice (which notice must be received by the Agent prior to 10:00 a.m.
San Francisco time for a Eurodollar Rate Loan, and prior to 11:00 a.m. San
Francisco time for a Base Rate Loan or a Federal Funds Rate Loan) (i) the same
Business Day as the requested Borrowing Date in the case of Base Rate Loans and
Federal Funds Rate Loans to be made on such Business Day, or (ii) three Business
Days prior to the requested Borrowing Date in the case of Eurodollar Rate Loans,
with each Borrowing Advice setting forth the following information:

(A) the requested Borrowing Date, which shall be a Business Day, on which such
Revolving Loan or Term Loan is to be made;

 

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(B) for a Eurodollar Rate Loan, the duration of the Interest Period selected in
accordance with Section 2.6 hereof (if the Borrowing Advice fails to specify the
duration of the Interest Period for any Borrowing comprised of a Eurodollar Rate
Loan, such Interest Period shall be three months);

(C) the Type of Loans comprising the Borrowing and the interest rate option
selected in accordance with Section 2.7 hereof; and

(D) the aggregate principal amount of the Revolving Loan or Term Loan (which
shall be in an aggregate minimum amount of $10,000,000) to which such Interest
Period and interest rate shall apply.

(b) The Agent will promptly notify each Lender of its receipt of any Borrowing
Advice and of the amount of such Lender’s Pro Rata Share of that Borrowing.

(c) Each Lender will make the amount of its Pro Rata Share of each Borrowing
available to the Agent for the account of the Borrower at the Agent’s Payment
Office by 1:00 p.m. San Francisco time on the Borrowing Date requested by the
Borrower in funds immediately available to the Agent. Each Loan to the Borrower
under this Agreement shall be made by 1:30 p.m. (San Francisco time) on the date
of the Requested Borrowing Date, and shall be in immediately available funds (in
the aggregate amount made available to the Agent by the Lenders) wired to the
Borrower’s account at Citibank, N.A. or such other account as may be designated
by the Borrower in writing.

(d) After giving effect to any Borrowing, there may not be more than ten
(10) different Interest Periods in effect.

With respect to any Borrowing having an Interest Period ending on or before
June 15, 2007, if prior to the last day of the Interest Period for such
Borrowing the Borrower fails timely to provide a Notice of
Conversion/Continuation in accordance with Section 2.5, such Borrowing shall, on
the last day of the then-existing Interest Period for such Borrowing,
automatically convert into a Base Rate Loan. In the event of any such automatic
conversion, the Borrower on the date of such conversion shall be deemed to make
a representation and warranty to the Lenders that, to the best of the Borrower’s
knowledge, (i) neither the Borrower nor any Bank Subsidiary is in violation of
the capital requirements as described in Section 6.6, (ii) the Broker Subsidiary
is not in violation of minimum net capital requirements as described in
Section 7.1, (ii) the Borrower’s Consolidated Stockholders’ Equity is not below
the Minimum Stockholders’ Equity as described in Section 7.2, and (iv) no amount
owing with respect to any Commitment Fee, any outstanding Borrowing, or any
interest thereon, or any other amount hereunder, is due and unpaid. If prior to
the last day of the Interest Period applicable to any Term Loan the Borrower
fails timely to provide a Notice of Conversion/Continuation in accordance with

 

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Section 2.5, such Term Loan shall, on the last day of the then-existing Interest
Period for such Term Loan, automatically convert into a Base Rate Loan.

2.5 Conversion and Continuation Elections.

(a) The Borrower may, upon irrevocable written notice to the Agent in accordance
with this Section 2.5:

(i) elect, as of any Business Day, in the case of Base Rate Loans or Federal
Funds Rate Loans, or as of the last day of the applicable Interest Period, in
the case of any other Type of Loan, to convert any such Loan (or any part
thereof in an amount not less than $10,000,000), into Loans of any other Type;
or

(ii) elect as of the last day of the applicable Interest Period, to continue any
Loans having Interest Periods expiring on such day (or any part thereof in an
amount not less than $10,000,000);

provided, that if at any time the aggregate amount of Eurodollar Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $10,000,000, such Eurodollar Rate Loans shall
automatically convert into Base Rate Loans.

(b) The Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Agent not later than 10:00 a.m. San Francisco time for a
Eurodollar Rate Loan, and not later than 11:00 a.m. San Francisco time for a
Base Rate Loan or a Federal Funds Rate Loan, at least (i) three Business Days in
advance of the Conversion/Continuation Date, as to any Loan that is to be
converted into or continued as a Eurodollar Rate Loan; and (ii) the same
Business Day as the Conversion/Continuation Date, as to any Loan that is to be
converted into a Base Rate Loan or Federal Funds Rate Loan, specifying:

(A) the proposed Conversion/Continuation Date;

(B) the aggregate amount of the Loan or Loans to be converted or renewed;

(C) the Type of Loan or Loans resulting from the proposed conversion or
continuation; and

(D) other than in the case of conversions into Base Rate Loans or Federal Funds
Rate Loans, the duration of the requested Interest Period.

(c) If upon the expiration of any Interest Period applicable to Eurodollar Rate
Loans, the Borrower has failed to select timely a new Interest Period to be
applicable to such Eurodollar Rate Loans, or if any Default or Event of Default
then exists, the Borrower shall be deemed to have elected to convert such
Eurodollar Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.

 

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(d) The Agent will promptly notify each Lender of its receipt of a Notice of
Conversion/Continuation, or, if no timely notice is provided by the Borrower,
the Agent will promptly notify each Lender of the details of any automatic
conversion. All conversions and continuations shall be made ratably according to
the respective outstanding principal amounts of the Loans with respect to which
the notice was given as held by each Lender.

(e) Unless the Required Lenders otherwise agree, during the existence of a
Default or Event of Default, the Borrower may not elect to have a Loan converted
into or continued as a Eurodollar Rate Loan.

(f) After giving effect to any conversion or continuation of Loans, there may
not be more than ten (10) different Interest Periods in effect.

2.6 Interest Periods. The Borrower may select for any Eurodollar Rate Loan the
Interest Period (as defined in the next sentence) for each Borrowing, it being
understood that the Borrower may request multiple Borrowings on the same day and
may select a different Interest Period for each such Borrowing. An Interest
Period shall be each period, as selected by the Borrower in accordance with the
terms of this Agreement, beginning on the Borrowing Date of any Eurodollar Rate
Loan, or on the Conversion/Continuation Date on which any Loan is converted into
or continued as a Eurodollar Rate Loan, and ending on the date specified by the
Borrower that is one, two, three or six months thereafter; provided that
whenever the first day of any Interest Period occurs on a day of an initial
calendar month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such Interest Period
shall end on the last Business Day of such succeeding calendar month; and
provided further that if the last day of an Interest Period would be a day that
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless such next succeeding Business Day is in a
different calendar month, in which case such interest period shall end on the
next preceding Business Day; but provided, however, that (i) no Interest Period
applicable to any Revolving Loan shall extend beyond the Revolving Termination
Date; and (ii) no Interest Period applicable to any Term Loan shall extend
beyond the Term Loan Maturity Date specified in the Borrowing Advice for such
Term Loan, which in no event shall be later than June 13, 2008.

2.7 Interest Rates.

(a) (i) Each Revolving Loan, while outstanding, shall bear interest from the
applicable Borrowing Date at a rate per annum equal to the Eurodollar Rate, the
Federal Funds Effective Rate, or the Base Rate, as the case may be, (and subject
to the Borrower’s right to convert to other Types of Loans under Section 2.5)
plus the Applicable Margin.

(ii) Each Term Loan, while outstanding, shall bear interest from the applicable
Borrowing Date at a rate per annum equal to the Eurodollar Rate, the Federal
Funds Effective Rate, or the Base Rate, as the case may be, (and subject to the
Borrower’s right to convert to other Types of Loans under Section 2.5) plus the
sum of the Applicable Margin and 0.15% per annum.

 

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(b) Interest on each Revolving Loan and Term Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Loans under Section 3.3 for the portion of the Loan so prepaid and
upon payment (including prepayment) in full thereof, and, during the existence
of any Event of Default interest shall be paid on demand of the Agent at the
request or with the consent of the Required Lenders.

(c) After the principal amount of any Revolving Loan or Term Loan, accrued
interest upon such Loan, the commitment fee, or any other amount hereunder shall
have become due and payable by acceleration, or otherwise, it shall thereafter
(until paid) bear interest, payable on demand, (i) until the end of the Interest
Period with respect to such Loan at a rate per annum equal to 2% per annum in
excess of the rate or rates in effect with respect to such Loan, and
(ii) thereafter, at a rate per annum equal to 2% per annum in excess of the Base
Rate.

2.8 Substitute Rates. If upon receipt by the Agent of a Borrowing Advice
relating to any Borrowing or of a Notice of Conversion/Continuation:

(a) the Agent shall determine that by reason of changes affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the applicable Eurodollar Rate with respect to any Interest Period; or

(b) the Agent shall determine that by reason of any change since the date hereof
in any applicable law or governmental regulation (other than any such change in
the regulations described in the definition of Eurodollar Rate Reserve
Percentage in Section 1 hereof), guideline or order (or any interpretation
thereof), the adoption or enactment of any new law or governmental regulation or
order or any other circumstance affecting the Lenders or the London interbank
market, the Eurodollar Rate shall no longer represent the effective cost to the
Lenders of U.S. dollar deposits in the relevant amount and for the relevant
period; or

(c) Agent shall determine that, as a result of any change since the date hereof
in any applicable law or governmental regulation or as a result of the adoption
of any new applicable law or governmental regulation, the applicable Eurodollar
Rate would be unlawful;

then, the Agent will promptly so notify the Borrower and each Lender, whereupon,
the obligation of the Lenders to make or maintain Eurodollar Rate Loans
hereunder shall be suspended until the Agent upon the instruction of the
Required Lenders revokes such notice in writing. Upon receipt of such notice,
the Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it and, at its election, submit a
Borrowing Advice or Notice of Conversion/Continuation selecting another Type of
Loan. If the Borrower does not revoke such Notice or give a Notice as provided
herein, the Lenders shall make, convert or continue the Loans, as proposed by
the Borrower in the amount specified in the applicable notice submitted by the
Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Eurodollar Rate Loans.

 

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2.9 Fees.

(a) Arrangement, Agency Fees. The Borrower shall pay an arrangement fee to the
Arranger for the Arranger’s account, and shall pay an agency fee to the Agent
for the Agent’s account, as required by the letter agreement (“Fee Letter”)
between the Borrower, the Agent and the Arranger dated April 24, 2006.

(b) Commitment Fee. The Borrower shall pay to the Agent for the account of each
Lender a commitment fee (the “Commitment Fee”) on the actual daily unused
portion of such Lender’s Commitment computed on a quarterly basis in arrears on
the last Business Day of each quarter based upon the daily utilization for that
quarter as calculated by the Agent, equal to eight-one hundredths of one percent
(0.08%) per annum. For purposes of calculating utilization under this
subsection, the Commitments shall be deemed used to the extent of the Effective
Amount of Revolving Loans and Term Loans then outstanding. Such Commitment Fee
shall accrue from the Closing Date to the Revolving Termination Date and shall
be due and payable quarterly in arrears on the last Business Day of each quarter
commencing on the quarter ending June 30, 2006 through the Revolving Termination
Date, with the final payment to be made on the Revolving Termination Date;
provided that, in connection with any reduction or termination of Commitments
under Section 2.10, the accrued commitment fee calculated for the period ending
on such date shall also be paid on the date of such reduction or termination,
with the following quarterly payment being calculated on the basis of the period
from such reduction or termination date to such quarterly payment date.

(c) Utilization Fee. The Borrower shall pay to the Agent for the account of each
Lender quarterly in arrears commencing on June 30, 2006 a utilization fee equal
to five hundredths of one percent (0.05%) per annum on the aggregate amount of
outstanding Revolving Loans and Term Loans, provided that the outstanding amount
of such Loans exceeds fifty percent (50%) of the aggregate amount of all the
Commitments of the Lenders to the Borrower.

2.10 Reduction of Credit. The Borrower, from time to time, upon at least three
(3) Business Days’ written notice to the Agent, may terminate the commitments,
or permanently reduce the Commitments by an aggregate minimum amount of
$10,000,000, without penalty or premium; unless after giving effect thereto and
to any prepayments of Loans made on the effective date thereof, the Effective
Amount of all Revolving Loans and Term Loans together would exceed the amount of
the combined Commitments then in effect. Once reduced in accordance with this
Section, the Commitments may not be increased. Any reduction of the Commitments
shall be applied to each Lender’s Commitment according to its Pro Rata Share.
All accrued Commitment Fees to, but not including, the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination. During the continuation of the Credit, the
computation of the Commitment Fee and the Lenders’ obligations to make Revolving
Loans or Term Loans shall be based upon such reduced Commitments. In the event
the Credit shall be reduced to zero pursuant to this Section, the Credit shall
be deemed terminated, and any Commitment Fee or any other amount payable
hereunder then accrued shall become immediately payable. Such termination of the
Credit shall terminate the Borrower’s obligations with respect to the Commitment
Fee to the extent not theretofore accrued and shall terminate the Lenders’
obligations to make any further Revolving Loans or Term Loans under this
Agreement.

 

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2.11 Termination Date; Extensions. The termination date of each Lender’s
Commitment with respect to the Credit (the “Termination Date”), including both
the Revolving Credit Facility under Section 2.1 hereof and the Term Loan
Facility under Section 2.2 hereof, is initially June 15, 2007. At any time no
earlier than forty-five (45) days and no later than thirty (30) days prior to
the Termination Date then in effect (whether the initial Termination Date of
June 15, 2007 or any later Termination Date as extended under this
Section 2.11), the Borrower may, by written notice to the Agent in the form
attached as Exhibit D hereto, request that the Termination Date be extended for
a period of 364 calendar days. Such request shall be irrevocable and binding
upon the Borrower. In no event will any Lender agree to approve any extension
more than thirty (30) days before the Termination Date then in effect. Failure
of any Lender to respond shall mean that such Lender has not approved such
extension. If each Lender (in its sole discretion) agrees to so extend its
Commitment and the Termination Date (which agreement may be given or withheld in
such Lender’s sole and absolute discretion), the Agent shall evidence such
agreement by executing and returning to the Borrower a copy of the Borrower’s
written request no later than fifteen (15) days after the Agent’s receipt of the
Borrower’s written request. If the Agent fails to so respond to and accept the
Borrower’s request for extension of the Termination Date then in effect, the
Lenders’ Commitments shall be terminated on the Termination Date then in effect.
If, on the other hand, the Agent so responds to and accepts the Borrower’s
request for extension of the Termination Date, then upon receipt by the Borrower
of a copy of the Borrower’s written request countersigned by the Agent, (i) the
Lenders’ Commitments then in effect and the Termination Date then in effect
shall automatically be extended for the 364-day period specified in such written
request, and (ii) each reference in this Agreement to “June 15, 2007”, and “June
13, 2008” (and any prior extension thereof pursuant to this Section 2.11) also
shall automatically be correspondingly extended for 364 days.

2.12 Payments by the Lenders to the Agent.

(a) Unless the Agent receives notice from a Lender on or prior to the Closing
Date or, with respect to any Borrowing after the Closing Date, at least one
Business Day before the date of such Borrowing in the case of a Eurodollar Rate
Loan, or, in the case of a Base Rate Loan or Federal Funds Rate Loan, prior to
noon (12:00) San Francisco time on the date of such Borrowing, that such Lender
will not make available as and when required hereunder to the Agent for the
account of the Company the amount of that Lender’s Pro Rata Share of the
Borrowing, the Agent may assume that each Lender has made such amount available
to the Agent in immediately available funds on the Borrowing Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent any Lender shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made a
corresponding amount available to the Borrower such Lender shall on the Business
Day following such Borrowing Date make such amount available to the Agent,
together with interest at the Federal Funds Rate for each day during such
period. A notice of the Agent submitted to any Lender with respect to amounts
owing under this subsection (a) shall be conclusive, absent manifest error. If
such amount is so made available, such payment to the Agent shall constitute
such Lender’s Loan on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to the Agent on the Business Day following
the Borrowing Date, the Agent

 

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will notify the Borrower of such failure to fund and, upon demand by the Agent,
the Borrower shall pay such amount to the Agent for the Agent’s account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Loans comprising such Borrowing.

(b) The failure of any Lender to make any Loan on any Borrowing Date shall not
relieve any other Lender of any obligation hereunder to make a Loan on such
Borrowing Date, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender on any Borrowing Date.

2.13 Sharing of Payments, Etc.. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Loans made by it any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) in excess of its Pro Rata Share, such Lender shall immediately
(a) notify the Agent of such fact, and (b) purchase from the other Lenders such
participation in the Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment pro rata with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of such
paying Lender’s required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.5) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. The Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participation purchased under this Section and will in each case notify the
Lenders following any such purchase or repayment.

2.14 Computation of Fees and Interest.

(a) All computations of interest for Base Rate Loans when the Base Rate is
determined by Citibank N.A.’s “Base Rate” shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed. All other
computations of interest, and all computation of fees under subsection 2.9(b)
and (c) shall be made on the basis of a 360-day year and actual days elapsed.
Interest and such fees shall accrue during each period during which interest or
such fees are computed from and including the first day thereof to and excluding
the last day thereof.

(b) If any Reference Lender’s Commitment shall terminate (otherwise than on
termination of all the Commitments), or for any reason whatsoever such Reference
Lender shall cease to be a Lender hereunder, such Reference Lender shall
thereupon cease to be a Reference Lender, and the determination of the
Eurodollar Base Rate under subsection (c) of the definition of such term shall
be determined on the basis of the rates as notified by the remaining Reference
Lenders.

 

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3. PAYMENT.

3.1 Repayment.

(a) The Term Credit. The Borrower shall repay to the Agent for the account of
the Lenders the aggregate principal amount of the Term Loans outstanding on each
Term Loan Maturity Date, as applicable.

(b) The Revolving Credit. The Borrower shall repay to the Agent, for the account
of the Lenders, on the Revolving Termination Date the aggregate principal amount
of Revolving Loans outstanding on such date.

3.2 Method of Payment. All payments hereunder and under the Revolving Note and
the Term Note shall be payable in lawful money of the United States of America
and in immediately available funds not later than 12:00 noon (San Francisco
time) on the date when due at the principal office of the Agent or at such other
place as the Agent may, from time to time, designate in writing to the Borrower.

3.3 Optional Prepayment. Subject to Section 3.7, the Borrower shall be entitled
at any time or from time to time, upon not less than one (1) Business Day
irrevocable notice to the Agent, to ratably prepay Loans in whole or in part in
minimum amounts of $10,000,000 without premium or penalty. Each notice of
payment shall specify the date and aggregate principal amount of any such
prepayment and the Type(s) of Loans to be repaid. The Agent will promptly notify
each Lender of its receipt of any such Notice and of such Lender’s Pro Rata
Share of such prepayment. If such Notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount, specified in such Notice
shall be due and payable on the date specified therein, together with all
accrued interest to each such date on the amount prepaid, and any amounts
required in accordance with Section 3.7 hereof as a result of such prepayment.

3.4 Taxes/Net Payments. All payments by Borrower hereunder and under the
Revolving Note and the Term Note to the Agent or any Lender shall be made
without set-off or counterclaim and in such amounts as may be necessary in order
that all such payments, after deduction or withholding for or on account of any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any Governmental Authority or taxing authority thereof
(collectively, “Taxes”), shall not be less than the amounts otherwise specified
to be paid under this Agreement. The Borrower shall pay all Taxes when due and
shall promptly send to the Lender original tax receipts or copies thereof
certified by the relevant taxing authority together with such other documentary
evidence with respect to such payments as may be required from time to time by
the Agent. If the Borrower fails to pay any Taxes to the appropriate taxing
authorities when due or fails to remit to the Agent or Lender any such original
tax receipts or certified copies thereof as aforesaid or other required
documentary evidence, the Borrower shall indemnify the Agent or Lender within
thirty (30) days of demand by the Lender or Agent for any taxes, interest or
penalties that may become payable by the Agent or Lender as a result of such
failure.

 

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Notwithstanding the foregoing, (i) the Borrower shall not be liable for the
payment of any tax on or measured by the net income of any Lender pursuant to
the laws of the jurisdiction where an office of such Lender making any loan
hereunder is located or does business, and (ii) the foregoing obligation to
gross up the payments to any Lender so as not to deduct or offset any
withholding taxes or Taxes paid or payable by the Borrower with respect to any
payments to such Lender shall not apply (x) to any payment to any Lender which
is a “foreign corporation, partnership or trust” within the meaning of the Code
if such Lender is not, on the date hereof (or on the date it becomes a Lender
under this Agreement pursuant to the assignment terms of this Agreement), or on
any date hereafter that it is a Lender under this Agreement, entitled to submit
either a Form W-8BEN or any successor form thereto (relating to such Lender and
entitling it to a complete exemption from withholding on all interest to be
received by it hereunder in respect of the Loans) or Form W-8ECI or any
successor form thereto (relating to all interest to be received by such Lender
hereunder in respect of the Loans) of the U.S. Department of Treasury, or (y) to
any item referred to in the preceding sentence that would not have been imposed
but for the failure by such Lender to comply with any applicable certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or connections of such Lender with the United
States if such compliance is required by statute or regulation of the United
States as a precondition to relief or exemption from such item.

3.5 Illegality.

(a) If any Lender determines that the introduction of any Requirement of Law, or
any change in any Requirement of Law, or in the interpretation or administration
of any Requirement of Law, has made it unlawful, or that any central bank or
other Governmental Authority has asserted that it is unlawful, for any Lender or
its applicable Lending Office to make Eurodollar Rate Loans, then, on notice
thereof by the Lender to the Borrower through the Agent, any obligation of that
Lender to make Eurodollar Rate Loans shall be suspended until the Lender
notifies the Agent and the Borrower that the circumstances giving rise to such
determination no longer exist.

(b) If a Lender determines that it is unlawful to maintain any Eurodollar Rate
Loan, the Borrower shall, upon its receipt of notice of such fact and demand
from such Lender (with a copy to the Agent), prepay in full such Eurodollar Rate
Loans of that Lender then outstanding, together with interest accrued thereon
and amounts required under Section 3.7, either on the last day of the Interest
Period thereof, if the Lender may lawfully continue to maintain such Eurodollar
Rate Loans to such day, or immediately, if the Lender may not lawfully continue
to maintain such Eurodollar Rate Loan. If the Borrower is required to so prepay
any Eurodollar Rate Loan, then concurrently with such prepayment, the Borrower
shall borrow from the affected Lender, in the amount of such repayment, a Base
Rate Loan or Federal Funds Rate Loan.

(c) If the obligation of any Lender to make or maintain Eurodollar Rate Loans
has been so terminated or suspended, the Borrower may elect, by giving notice to
the Lender through the Agent that all Loans which would otherwise be made by the
Lender as Eurodollar Rate Loans shall be instead Base Rate Loans, or Federal
Funds Rate Loans.

 

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(d) Before giving any notice to the Agent under this Section, the affected
Lender shall designate a different Lending Office with respect to its Eurodollar
Rate Loans if such designation will avoid the need for giving such notice or
making such demand and will not, in the judgment of the Lender, be illegal or
otherwise disadvantageous to the Lender.

3.6 Increased Costs and Reduction of Return.

(a) If any Lender determines that, due to either (i) the introduction of or any
change (other than any change by way of imposition of or increase in reserve
requirements included in the calculation of the Eurodollar Rate) in or in the
interpretation of any law or regulation, or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or maintaining
any Eurodollar Rate Loan, then the Borrower shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the Agent),
pay to the Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs.

(b) If any Lender shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Lender (or
its Lending Office) or any corporation controlling the Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Lender or any corporation controlling the
Lender and determines that the amount of such capital is increased as a
consequence of its Commitment, Loans, credits or obligations under this
Agreement then, upon demand of such Lender to the Borrower through the Agent,
the Borrower shall pay to the Lender, from time to time as specified by the
Lender, additional amounts sufficient to compensate the Lender for the cost of
such increase.

3.7 Funding Losses. The Borrower shall reimburse each Lender and hold each
Lender harmless from any loss or expense which the Lender may sustain or incur
as a consequence of:

(a) the failure of the Borrower to make on a timely basis any payment of
principal of any Eurodollar Rate Loan;

(b) the failure of the Borrower to borrow, continue or convert a Loan after the
Borrower has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation;

(c) the failure of the Borrower to make any prepayment in accordance with any
notice delivered under Section 3.3;

 

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(d) the prepayment or other payment (including after acceleration thereof) of
any Eurodollar Rate Loan on a day that is not the last day of the relevant
Interest Period; or

(e) the automatic conversion under Section 2.5 of any Eurodollar Rate Loan to a
Base Rate Loan on a day that is not the last day of the relevant Interest
Period,

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Borrower to the Lenders under
this Section and under subsection 3.6(a), each Eurodollar Rate Loan made by a
Lender and each related reserve, special deposit or similar requirement shall be
conclusively deemed to have been funded at the LIBO-based rate used in
determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan is
in fact so funded,.

3.8 Certificates of Lenders. Any Lender claiming reimbursement or compensation
under this Section 3 shall deliver to the Borrower (with a copy to the Agent) a
certificate setting forth in reasonable detail the amount payable to the Lender
hereunder and such certificate shall be conclusive and binding on the Borrower
in the absence of manifest error.

3.9 Substitution of Lenders. Upon the receipt by the Borrower from any Lender
(an “Affected Lender”) of a claim for compensation under Section 3.6, the
Borrower may: (i) request the Affected Lender to use its best efforts to obtain
a replacement bank or financial institution satisfactory to the Borrower to
acquire and assume all or a ratable part of all of such Affected Lender’s Loans
and Commitment (a “Replacement Lender”); (ii) request one or more of the other
Lenders to acquire and assume all or part of such Affected Lender’s Loans and
Commitment (but no other Lender shall be required to do so); or (iii) designate
a Replacement Lender. Any such designation of a Replacement Lender under clause
(ii) or (iii) shall be subject to the prior written consent of the Agent (which
consent shall not be unreasonably withheld).

3.10 Survival. The agreements and obligations of the Borrower in this Section 3
shall survive the payment of all other Obligations.

 

4. CONDITIONS.

4.1 Conditions Precedent to the Effectiveness of this Agreement. The obligation
of each Lender to make its initial extension of credit hereunder is subject to
the condition that the Agent has received on or before the Closing Date all of
the following in form and substance satisfactory to the Agent and each Lender,
in sufficient copies for each Lender;

(a) This Agreement and the Notes executed by each party thereto.

(b) A copy of a resolution or resolutions adopted by the Board of Directors or
Executive Committee of the Borrower, certified by the Secretary or an Assistant

 

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Secretary of the Borrower as being in full force and effect on the date hereof,
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, and a copy of the
Certificate of Incorporation and the By-Laws of the Borrower, similarly
certified.

(c) A certificate, signed by the Secretary or an Assistant Secretary of the
Borrower and dated the date hereof, as to the incumbency of the person or
persons authorized to execute and deliver this Agreement.

(d) A certificate signed by the Chief Financial Officer, Treasurer or Corporate
Controller of the Borrower that, as of the date hereof, there has been no
material adverse change in its consolidated financial condition since
December 31, 2005 not reflected on its Quarterly Report on Form 10-Q filed with
the SEC for the period ending March 31, 2006.

(e) A certificate, signed by the Secretary or an Assistant Secretary of the
Borrower and dated the date hereof, as to the persons authorized to execute and
deliver a Borrowing Advice, a Notice of Conversion/Continuation, and the
Revolving Notes and the Term Notes. The Agent and each Lender may rely on such
certificate with respect to the Revolving Loans and Term Loans hereunder unless
and until it shall have received an updated certificate and, after receipt of
such updated certificate, similarly may rely thereon.

(f) A written opinion, dated the date hereof, of counsel for the Borrower, in
the form of Exhibit E.

(g) Evidence of payment by the Borrower of all accrued and unpaid fees, costs
and expenses to the extent then due and payable on the Closing Date, together
with Attorney Costs of Citicorp USA to the extent invoiced prior to or on the
Closing Date, plus such additional amounts of Attorney Costs as shall constitute
Citicorp USA’s reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Borrower and Citicorp
USA); including any such costs, fees and expenses arising under or referenced in
Sections 2.9 and 10.4.

(h) Written evidence that all of the Borrowing Agreements have been or
concurrently herewith are being terminated.

(i) A certificate, signed by the Chief Financial Officer, Treasurer or an
Assistant Treasurer of the Borrower and dated as of the date hereof, which
confirms that after giving effect to this Agreement, the aggregate principal
amount of credit available under all of the Borrower’s committed unsecured
revolving credit facilities combined will not exceed the amount authorized under
the resolutions of the Borrower referenced in subsection 4.1(b).

4.2 Conditions Precedent to Revolving Loans and Term Loans. The obligation of
each Lender to make any Revolving Loan or Term Loan to be made by it (including
its initial Revolving Loan), or to continue or convert any Loan under
Section 2.5 is subject to the

 

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satisfaction of the following conditions precedent on the relevant Borrowing
Date or Conversion/Continuation Date:

The Agent shall have received a Borrowing Advice or a Notice of
Conversion/Continuation, as applicable. Each Borrowing Advice or Notice of
Conversion/Continuation given by the Borrower shall be deemed to be a
representation and warranty by the Borrower to each Lender, effective on and as
of the date of such Notice and as of such Borrowing Date for a Revolving Loan or
Term Loan covered thereby, that (i) the representations and warranties set forth
in Section 5 hereof are true and correct as of such date, and (ii) no Default or
Event of Default has occurred and is continuing. No Lender shall be required to
make any Loan hereunder if:

(a) the Credit, the Revolving Credit Facility (in the case of a Revolving Loan)
or the Term Loan Facility (in the case of a Term Loan) has been terminated; or

(b) any of the representations or warranties of the Borrower set forth in
Section 5 hereof shall prove to have been untrue in any material respect when
made, or when any Default or Event of Default as defined in Section 8, has
occurred; or

(c) the Borrower or any Bank Subsidiary is in violation of the capital
requirements as described in Section 6.6; or

(d) the Broker Subsidiary is in violation of minimum net capital requirements as
described in Section 7.1; or

(e) the Borrower’s Consolidated Stockholders’ Equity is below the Minimum
Stockholders’ Equity as described in Section 7.2; or

(f) any amount owing with respect to any Commitment Fee or any outstanding
Revolving Loan or Term Loan or any interest thereon or any other amount payable
hereunder is due and unpaid.

 

5. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Agent and each Lender, as of the
date of delivery of this Agreement and as of the date of any Revolving Loan or
Term Loan, as follows:

5.1 Organization and Good Standing. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has full power, authority and legal right and has all governmental
licenses, authorizations, qualifications and approvals required to own its
property and assets and to transact the business in which it is engaged; and all
of the outstanding shares of capital stock of Borrower have been duly authorized
and validly issued, are fully paid and non-assessable.

5.2 Corporate Power and Authority. The Borrower has full power, authority and
legal right to execute and deliver, and to perform its obligations under, this
Agreement, and to borrow hereunder, and has taken all necessary corporate and
legal action to authorize the borrowings

 

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hereunder on the terms and conditions of this Agreement and to authorize the
execution and delivery of this Agreement, and the performance of the terms
thereof.

5.3 Enforceability. This Agreement has been duly authorized and executed by the
Borrower, and when delivered to the Lenders will be a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, except, in each case, as enforcement thereof may be limited by
bankruptcy, insolvency or other laws relating to or affecting enforcement of
creditors’ rights or by general equity principles.

5.4 No Violation of Laws or Agreements. The execution and delivery of this
Agreement by the Borrower and the performance of the terms hereof will not
violate any provision of any law or regulation or any judgment, order or
determination of any court or governmental authority or of the charter or
by-laws of, or any securities issued by, the Borrower or any provision of any
mortgage, indenture, loan or security agreement, or other instrument, to which
the Borrower is a party or which purports to be binding upon it or any of its
assets in any respect that reasonably could be expected to have a material
adverse effect on the Borrower and its Subsidiaries taken as a whole on a
consolidated basis; nor will the execution and the delivery of this Agreement by
the Borrower and the performance of the terms hereof result in the creation of
any lien or security interest on any assets of the Borrower pursuant to the
provisions of any of the foregoing.

5.5 No Consents. Except as disclosed in writing by Borrower, no consents of
others (including, without limitation, stockholders and creditors of the
Borrower) nor any consents or authorizations of, exemptions by, or
registrations, filings or declarations with, any Governmental Authority are
required to be obtained by the Borrower in connection with the execution and
delivery of this Agreement and the performance of the terms thereof.

5.6 Financial Statements. The consolidated financial statements of the Borrower
contained in the documents previously delivered to each Lender have been
prepared in accordance with U.S. generally accepted accounting principles and
present fairly the consolidated financial position of the Borrower.

5.7 Broker Subsidiary Licenses, Etc. The Broker Subsidiary possesses all
material licenses, permits and approvals necessary for the conduct of its
business as now conducted and as presently proposed to be conducted as are
required by law or the applicable rules of the SEC and the National Association
of Securities Dealers, Inc.

5.8 Broker Subsidiary/Broker Registration. The Broker Subsidiary is registered
as a broker-dealer under the Securities Exchange Act of 1934, as amended.

5.9 Broker Subsidiary/SIPC. The Broker Subsidiary is not in arrears with respect
to any assessment made upon it by the Securities Investor Protection
Corporation, except for any assessment being contested by the Broker Subsidiary
in good faith by appropriate proceedings and with respect to which adequate
reserves or other provisions are being maintained to the extent required by U.S.
generally accepted accounting principles.

 

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5.10 Taxes. The Borrower has paid and discharged or caused to be paid and
discharged all taxes, assessments, and governmental charges prior to the date on
which the same would have become delinquent, except to the extent that such
taxes, assessments or charges are being contested in good faith and by
appropriate proceedings by or on behalf of the Borrower and with respect to
which adequate reserves or other provisions are being maintained to the extent
required by U.S. generally accepted accounting principles.

5.11 ERISA. The Borrower is in compliance with the provisions of and regulations
under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
and the Code applicable to any pension or other employee benefit plan
established or maintained by the Borrower or to which contributions are made by
the Borrower (the “Plans”). The Borrower has met all of the funding standards
applicable to each of its Plans, and there exists no event or condition that
would permit the institution of proceedings to terminate any of the Plans under
Section 4042 of ERISA. The estimated current value of the benefits vested under
each of the Plans does not, and upon termination of any of the Plans will not,
exceed the estimated current value of any such Plan’s assets. The Borrower has
not, with respect to any of the Plans, engaged in a prohibited transaction set
forth in Section 406 of ERISA or Section 4975(c) of the Code.

5.12 No Extension of Credit for Default Remedy/Hostile Acquisition. The Borrower
will not use any amounts borrowed by it under this Agreement to remedy a default
under any mortgage, indenture, agreement or instrument under which there may be
issued any Indebtedness of the Borrower to any bank or bank holding company, or
their respective assignees, for borrowed money. Further, the Borrower will not
use any amounts advanced to it under this Agreement for the immediate purpose of
acquiring a company where the Board of Directors or other governing body of the
entity being acquired has made (and not rescinded) a public statement opposing
such acquisition.

5.13 Use of Proceeds/Margin Regulations. The Borrower will use the proceeds for
general corporate purposes, including, without limitation, for the back-up of
the issuance of commercial paper notes. The Borrower will not use the proceeds
of any loan provided hereby in such a manner as to result in a violation of
Regulations T, U or X of the Board of Governors of the Federal Reserve System.

5.14 Authorized Persons. The persons named for such purpose in the certificates
delivered pursuant to subsection 4.1(e) hereof are authorized to execute
Borrowing Advices.

5.15 Material Contracts. Borrower is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement, note or
lease to which the Borrower is a party or by which it may be bound.

5.16 Litigation. There is no action, suit or proceeding pending against, or to
the knowledge of the Borrower, threatened against or affecting, the Borrower or
any of its Subsidiaries before any court, arbitrator, governmental body, agency
or official in which there is a significant probability of an adverse decision
which could have a material adverse affect on the business or the financial
condition of the Borrower.

 

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5.17 Investment Company. The Borrower is not an “investment company” or a
company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

 

6. AFFIRMATIVE COVENANTS.

The Borrower covenants and agrees that so long as any Lender shall have a
Commitment hereunder or any Loan or other obligation hereunder shall remain
outstanding, unpaid or unsatisfied and until full payment of all amounts due to
the Lenders hereunder, it will, unless and to the extent the Required Lenders
waive compliance in writing:

6.1 Notice of Events of Default. Give prompt notice to the Agent and each
Lender, no later than three Business Days after becoming aware thereof, of any
Default or Event of Default.

6.2 Financial Statements. Deliver to the Agent, in form and detail satisfactory
to the Agent and the Required Lenders with sufficient copies for each Lender,
within ten Business Days of the filing thereof with the SEC, a copy of each
registration statement filed under the Securities Act of 1933, a copy of each
filing (including exhibits) made by the Borrower with the SEC under the
Securities Exchange Act of 1934, as amended, accompanied by a compliance
certificate with an attached schedule of calculations (in the form attached
hereto as Schedule 6.2) demonstrating compliance with the Section 7.1 and 7.2
financial covenants; and, in the event the Borrower requests an extension of any
such filing from the SEC, promptly (but not later than the second Business Day
following the filing of such request) deliver a copy of such request to the
Agent.

6.3 Insurance. Maintain and keep in force in adequate amounts such insurance as
is usual in the business carried on by the Borrower and cause the Broker
Subsidiary to maintain and keep in force in adequate amounts such insurance as
is usual in the business carried on by the Broker Subsidiary.

6.4 Books and Records. Maintain adequate books, accounts and records and prepare
all financial statements required hereunder in accordance with U.S. generally
accepted accounting principles and practices and in compliance with the
regulations of any governmental regulatory body having jurisdiction thereof.

6.5 Change in Business. Advise the Agent and each Lender, in a timely manner, of
material changes to the nature of business of the Borrower or the Broker
Subsidiary as at present conducted. The Broker Subsidiary is at present engaged
in the business of providing financial services, primarily to individual
investors and/or their advisors.

6.6 Capital Requirements. The Borrower will maintain, and cause each Bank
Subsidiary to maintain, at all times such amount of capital as may be prescribed
by the Board of Governors of the Federal Reserve System (in the case of the
Borrower and any state member Bank Subsidiary) or the Comptroller of the
Currency (in the case of any national member Bank

 

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Subsidiary), as the case may be, from time to time, whether by regulation,
agreement or order. The Borrower shall at all times ensure that all Bank
Subsidiaries shall be “well capitalized” within the meaning of 12 U.S.C.
§1831(o), as amended, reenacted or redesignated from time to time.

 

7. NEGATIVE COVENANTS.

The Borrower covenants and agrees that so long as any Lender shall have any
Commitment hereunder, or any Loan or other obligation, shall remain outstanding,
unpaid or unsatisfied and until full payment of all amounts due to the Lenders
hereunder, unless and to the extent the Required Lenders waive compliance in
writing:

7.1 Net Capital. The Borrower will not permit the Broker Subsidiary to allow any
month-end Net Capital Ratio to be less than 5%.

7.2 Minimum Stockholders’ Equity. The Borrower will not allow its Consolidated
Stockholders’ Equity to fall below the Minimum Stockholders’ Equity.

7.3 Merger/Disposition of Assets. The Borrower will not (i) permit either Broker
Subsidiary or Intermediate Parent to (a) merge or consolidate, unless the
surviving company is a Controlled Subsidiary, or (b) convey or transfer its
properties and assets substantially as an entirety except to one or more
Controlled Subsidiaries; or (ii) except as permitted by subsection 7.3(i) sell,
transfer or otherwise dispose of any voting stock of Broker Subsidiary or
Intermediate Parent, or permit either Broker Subsidiary or Intermediate Parent
to issue, sell or otherwise dispose of any of its voting stock, unless, after
giving effect to any such transaction, Broker Subsidiary or Intermediate Parent,
as the case may be, remains a Controlled Subsidiary.

7.4 Broker Subsidiary Indebtedness. The Borrower will not permit the Broker
Subsidiary to create, incur or assume any Indebtedness other than:

(a) (i) Indebtedness to customers, other brokers or dealers, securities
exchanges or securities markets, self-regulatory organizations, clearing houses
and like institutions (including, without limitation, letters of credit or
similar credit support devices issued for the account of Broker Subsidiary and
for the benefit of any of the foregoing in order to comply with any margin,
collateral or similar requirements imposed by or for the benefit of any of the
foregoing), (ii) ”broker call” credit, (iii) indebtedness consisting of
borrowings secured solely by margin loans made by Broker Subsidiary, together
with any underlying collateral of Broker Subsidiary, (iv) stock loans,
(v) obligations to banks for disbursement accounts, (vi) Indebtedness incurred
for the purchase of tangible personal property on a non-recourse basis or for
the leasing of tangible personal property under a capitalized lease,
(vii) Indebtedness incurred for the purchase, installation or servicing of
computer equipment and software, and (viii) Indebtedness incurred in the
ordinary course of the Broker Subsidiary’s business, to the extent not already
included in the foregoing clauses (i) through (vii);

(b) intercompany Indebtedness; and

(c) other Indebtedness in the aggregate not exceeding $100,000,000.

 

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7.5 Indebtedness Secured by Subsidiary Stock. The Borrower will not, and will
not permit any Subsidiary at any time directly or indirectly to create, assume,
incur or permit to exist any Indebtedness secured by a pledge, lien or other
encumbrance (hereinafter referred to as a “lien”) on the voting stock of any
Subsidiary without making effective provision whereby the Revolving Notes and
the Term Notes shall be secured equally and ratably with such secured
Indebtedness so long as other Indebtedness shall be so secured; provided,
however, that the foregoing covenant shall not be applicable to Permitted Liens
(as defined in Section 7.6 below).

7.6 Liens and Encumbrances. The Borrower will not create, incur, assume or
suffer to exist any lien or encumbrance upon or with respect to any of its
properties, whether now owned or hereafter acquired, except the following (the
“Permitted Liens”):

(a) liens securing taxes, assessments or governmental charges or levies, or in
connection with workers’ compensation, unemployment insurance or social security
obligations, or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons not yet delinquent or which are
being contested in good faith by appropriate proceedings with respect to which
adequate reserves or other provisions are being maintained to the extent
required by U.S. generally accepted accounting principles;

(b) liens not for borrowed money incidental to the conduct of its business or
the ownership of property that do not materially detract from the value of any
item of property;

(c) attachment, judgment or other similar liens arising in the connection with
court proceedings that do not, in the aggregate, materially detract from the
value of its property, materially impair the use thereof in the operation of its
businesses and (i) that are discharged or stayed within sixty (60) days of
attachment or levy, or (ii) payment of which is covered in full (subject to
customary and reasonable deductibles) by insurance or surety bonds; and

(d) liens existing at Closing Date provided that the obligations secured thereby
are not increased.

 

8. EVENTS OF DEFAULT.

8.1 Defaults. The occurrence of any of the following events shall constitute an
“Event of Default”:

(a) The Borrower shall fail to pay any interest with respect to the Revolving
Notes or the Term Notes or any Commitment Fee in accordance with the terms
hereof within 10 days after such payment is due.

(b) The Borrower shall fail to pay any principal with respect to the Revolving
Notes or the Term Notes in accordance with the terms thereof on the date when
due.

 

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(c) Any representation or warranty made by the Borrower herein or hereunder or
in any certificate or other document furnished by the Borrower hereunder shall
prove to have been incorrect when made (or deemed made) in any respect that is
materially adverse to the interests of the Lenders or their rights and remedies
hereunder.

(d) Except as specified in (a) and (b) above, the Borrower shall default in the
performance of, or breach, any covenant of the Borrower with respect to this
Agreement, and such default or breach shall continue for a period of thirty days
after there has been given, by registered or certified mail, to the Borrower by
the Agent a written notice specifying such default or breach and requiring it to
be remedied.

(e) An event of default as defined in any mortgage, indenture, agreement or
instrument under which there may be issued, or by which there may be secured or
evidenced, any Indebtedness of the Borrower in a principal amount not less than
$75,000,000, shall have occurred and shall result in such Indebtedness becoming
or being declared due and payable prior to the date on which it otherwise would
become due and payable, or an event of default or a termination event as defined
in any Hedge Agreement shall have occurred and shall result in a net payment
obligation of the Borrower thereunder of not less than $75,000,000; provided,
however, that if such event of default shall be remedied or cured by the
Borrower, or waived by the holders of such Indebtedness, within twenty days
after the Borrower has received written notice of such event of default and
acceleration, then the Event of Default hereunder by reason thereof shall be
deemed likewise to have thereupon been remedied, cured or waived without further
action upon the part of either the Borrower or the Agent and Lenders.

(f) Any involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief against
the Borrower or the Broker Subsidiary, or against all or a substantial part of
the property of either of them, under Title 11 of the United States Code or any
other federal, state or foreign bankruptcy, insolvency, reorganization or
similar law, (ii) the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the Borrower or the
Broker Subsidiary or for all or a substantial part of the property of either of
them, or (iii) the winding-up or liquidation of the Borrower or the Broker
Subsidiary; and, in any such case, such involuntary proceeding or involuntary
petition shall continue undismissed for 60 days, or, before such 60-day period
has elapsed, there shall be entered an order or decree ordering the relief
requested in such involuntary proceeding or involuntary petition.

(g) The Borrower or the Broker Subsidiary shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case under such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Borrower or Broker Subsidiary or for any substantial
part of its respective properties, or shall make any general assignment for the
benefit of creditors, or shall fail generally to pay its respective debts as
they become due or shall take any corporate action in furtherance of any of the
foregoing.

 

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(h) A final judgment or judgments for the payment of money in excess of
$75,000,000 in the aggregate shall be entered against the Borrower by a court or
courts of competent jurisdiction, and the same shall not be discharged (or
provisions shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within 30 days from the date of entry thereof and the
Borrower shall not, within said period of 30 days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom and cause
the execution thereof to be stayed during such appeal.

(i) At any time after a Change in Control, the Borrower fails to maintain at
least one of the following credit ratings for its Senior Medium-Term Notes,
Series A: (a) BBB- (or better) by Standard & Poor’s Ratings Service, a Division
of The McGraw-Hill Companies, Inc., or (b) Baa3 (or better) by Moody’s Investors
Service, Inc.

8.2 Remedies. If an Event of Default occurs and is continuing, then and in every
such case the Agent shall, at the request of, or may, with the consent of, the
Required Lenders (i) declare the Commitment of each Lender to make Loans to be
terminated whereupon such Commitments and obligation shall be terminated, and
declare the unpaid principal of all outstanding Loans, any and all accrued and
unpaid interest, any accrued and unpaid Commitment Fees, or any other amounts
owing or payable under the Notes, to be immediately due and payable, by a notice
in writing to the Borrower, and upon such declaration such principal, interest,
Commitment Fees, or other amounts payable hereunder and accrued thereon shall
become immediately due and payable, together with any funding losses that may
result as a consequence of such declaration, without presentment, demand,
protest or other notice of any kind, all of which are expressly waived by the
Borrower; provided, however, that in the case of any of the Events of Default
specified in subsection (f) or (g) of Section 8.1, automatically without any
notice to the Borrower or any other act by the Agent, the Credit and the
obligations of each Lender to make Loans shall automatically terminate and the
unpaid principal amount of all outstanding Loans, any accrued and unpaid
interest, any accrued and unpaid Commitment Fees or any other amounts payable
hereunder shall become immediately due and payable, together with any funding
losses that may result as a consequence thereof, without further act of the
Agent or any Lender and without presentment, demand, protest or other notice of
any kind, all of which are expressly waived by the Borrower.

 

9. THE AGENT.

9.1 Appointment and Authorization. Each Lender hereby irrevocably (subject to
Section 9.9) appoints, designates and authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duties or responsibilities
except those expressly set forth, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.

 

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9.2 Delegation of Duties. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.

9.3 Liability of Agent. None of the Agent-Related Persons shall (i) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower or any of the
Borrower’s Subsidiaries or Affiliates.

9.4 Reliance by Agent.

(a) The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Borrower), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.

(b) For purposes of determining compliance with the conditions specified in
Section 4.1, each Lender that has executed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter either sent by Agent to such Lender for consent, approval,
acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to the Lender.

 

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9.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Agent for the account of the Lenders, unless the Agent shall have received
written notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
“notice of default”. The Agent will notify the Lenders of its receipt of any
such notice. The Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Required Lenders in accordance with
Section 8; provided, however, that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.

9.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it and that no act by the
Agent hereinafter taken, including any review of the affairs of the Borrower and
its Subsidiaries, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender. Each Lender represents to the Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of any of
the Agent-Related Persons.

9.7 Indemnification of Agent. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from any such
Person’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand for its ratable
share, of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein to

 

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the extent that the Agent is not reimbursed for such expenses by or on behalf of
the Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.

9.8 Agent in Individual Capacity. Citicorp USA and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though Citicorp USA were not the Agent hereunder
and without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, Citicorp USA or its Affiliates may receive
information regarding the Borrower or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Borrower or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, Citicorp USA shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent.

9.9 Successor Agent. The Agent may, and at the request of the Required Lenders
shall, resign as Agent upon 30 days’ notice to the Lenders and Borrower. If the
Agent resigns under this Agreement, the Required Lenders, with the consent of
the Borrower, which consent shall not be unreasonably withheld, shall appoint
from among the Lenders a successor agent for the Lenders which successor agent
shall be approved by the Borrower. If no successor agent is appointed prior to
the effective date of the resignation of the Agent, the Agent with the consent
of the Borrower, which consent shall not be unreasonably withheld, may appoint,
after consulting with the Lenders and the Borrower, a successor agent from among
the Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term “Agent” shall mean such successor
agent and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 9 and Sections 10.4 and 10.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent’s notice of resignation,
the retiring Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above. The retiring Agent shall refund to Borrower that portion of any
agency fee paid to such Agent as is not earned due to such Agent’s resignation,
prorated to the date of such Agent’s resignation.

9.10 Withholding Tax.

(a) If any Lender is a “foreign corporation, partnership or trust” within the
meaning of the Code and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Section 1441 or 1442 of the Code, such Lender agrees
with and in favor of the Agent, to deliver to the Agent:

(i) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty, properly completed IRS Form W-8BEN before

 

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the payment of any interest in the first calendar year and before the payment of
any interest in any subsequent calendar year during which the Form W-8BEN (or
any successor thereto) then in effect expires;

(ii) if such Lender claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected with a
United States trade or business of such Lender, two properly completed copies of
IRS Form W-8ECI or any successor form thereto before the payment of any interest
is due in the first taxable year of such Lender and before the payment of any
interest in any subsequent calendar year during which the Form W-8ECI (or any
successor thereto) then in effect expires; and

(iii) such other form or forms as may be required under the Code or other laws
of the United States as a condition to exemption from, or reduction of, United
States withholding tax.

Such Lender agrees to promptly notify the Agent of any change in circumstances
which would render invalid any claimed exemption or reduction.

(b) If any Lender claims exemption from, or reduction of, withholding tax under
a United States tax treaty by providing IRS Form W-8BEN and such Lender sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Lender, such Lender agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender’s IRS Form W-8BEN or any successor form
thereto as no longer valid.

(c) If any Lender claiming exemption from United States withholding tax by
filing IRS Form W-8ECI or any successor form thereto with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.

(d) If any Lender is entitled to a reduction in the applicable withholding tax,
the Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to the Agent or if any Lender which is a “foreign
corporation, partnership or trust” within the meaning of the Code is not
entitled to claim exemption from or a reduction of U.S. withholding tax under
Section 1441 or 1442 of the Code, then the Agent shall withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.

(e) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify the Agent of a

 

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change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason other than the Agent’s
gross negligence or willful misconduct) such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The obligation
of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of the Agent.

9.11 Co-Agents. None of the Lenders identified on the facing page or signature
pages of this Agreement as a “co-agent”, “managing agent”, “syndication agent”
or “documentation agent” shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders so
identified as a “co-agent”, “syndication agent” or “documentation agent” shall
have or be deemed to have any fiduciary relationship with any Lender. Each
Lender acknowledges that it has not relied, and will not rely, on any of the
Lenders so identified in deciding to enter into this Agreement or in taking or
not taking action hereunder.

 

10. MISCELLANEOUS.

10.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
(or by the Agent at the written request of the Required Lenders) and the
Borrower and acknowledged by the Agent, and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Lenders and the Borrower and
acknowledged by the Agent, do any of the following:

(a) increase or extend the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.2);

(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due to
the Lenders (or any of them) hereunder or under any other Loan Document;

(c) reduce the principal of, or the rate of interest specified herein on any
Loan, or (subject to clause (ii) below) any fees or other amounts payable
hereunder or under any other Loan Document;

(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Lenders or any of them
to take any action hereunder; or

 

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(e) amend this Section, or Section 2.13, or any provision herein providing for
consent or other action by all Lenders;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Lenders or all the
Lenders, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended or
rights or privileges thereunder waived, in a writing executed by the parties
thereto.

10.2 Notices.

(a) All notices, requests and other communications shall be either (i) in
writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Borrower by
facsimile shall be immediately confirmed by a telephone call to the recipient at
the number specified on Schedule 10.2) or (ii) as and to the extent set forth in
clause (d) below, by electronic mail.

(b) All such notices, requests and communications shall, when transmitted by
overnight delivery, faxed or e-mailed, be effective when delivered for overnight
(next-day) delivery, transmitted in legible form by facsimile machine (provided
that the sender has retained its facsimile machine-generated confirmation of the
receipt of such fax by the recipient’s facsimile machine) or transmitted by
e-mail (provided that the e-mail was sent to the e-mail address provided by the
recipient and that the e-mail was not returned to the sender as undeliverable),
respectively, or if mailed, upon the third Business Day after the date deposited
into the U.S. mail, or if delivered, upon delivery; except that notices pursuant
to Section 2 or 9 shall not be effective until actually received by the Agent.

(c) The agreement of the Agent and the Lenders herein to receive certain notices
by telephone, facsimile or e-mail is solely for the convenience of the Borrower,
the Agent and the Lenders. The Agent and the Lenders shall be entitled to rely
on the authority of any Person purporting to be a Person who is named in the
then-current certificate delivered pursuant to subsection 4.1(e) hereof as
authorized to execute Borrowing Advices (each an “Authorized Person”) and the
Lenders shall not have any liability to the Borrower or other Person on account
of any action taken or not taken by the Agent or the Lenders in reliance upon
such telephonic, facsimile or e-mail notice, provided the Agent and the Lenders
reasonably believe such Person to be an Authorized Person. The obligation of the
Borrower to repay the Loans shall not be affected in any way to any extent by
any failure by the Agent and the Lenders to receive written confirmation of any
telephonic, facsimile or e-mail notice or the receipt by the Agent and the
Lenders of a confirmation which is at variance with the terms understood by the
Agent and the Lenders to be contained in the telephonic, facsimile or e-mail
notice.

(d) The compliance certificate described in Section 6.2 shall be delivered to
the Agent by the Borrower by mail or overnight delivery. Except for the
compliance certificate described in Section 6.2, materials required to be
delivered pursuant to Section 6.2 shall be delivered to the Agent in an
electronic medium format reasonably acceptable to the Agent by e-mail at
oploanswebadmin@citigroup.com. The Borrower agrees that the Agent may make such
materials (collectively, the “Communications”) available to the Lenders by
posting

 

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such materials on IntraLinks, “e-Disclosure” (the Agent’s internet delivery
system that is part of SSB Direct, Global Fixed Income’s primary web portal) or
a substantially similar electronic transmission system (collectively, the
“Platform”). In addition, to the extent the Borrower in its sole discretion so
elects and confirms in writing or by e-mail to the Agent, any other written
information, documents, instruments or other material relating to the Borrower,
any of its Subsidiaries or any other materials or matters relating to this
Agreement, the Notes or any of the transactions contemplated hereby and supplied
by the Borrower to the Agent (other than any such communication that (i) relates
to a request for a new, or a conversion of an existing, Borrowing (including any
election of an interest rate or Interest Period relating thereto), (ii) relates
to the payment of any principal or other amount due hereunder prior to the
scheduled date therefor, (iii) provides notice of any Default or Event of
Default or (iv) is required to be delivered to satisfy any condition precedent
set forth in Section 4.1 or Section 4.2), shall, to the extent of such election
and confirmation by the Borrower, constitute materials that are “Communications”
for purposes of this subparagraph (d). The Borrower and each of the Lenders
acknowledges that (i) the distribution of material through an electronic medium
is not necessarily secure and that there are confidentiality and other risks
associated with such distribution, (ii) the Platform is provided “as is” and “as
available” and (iii) neither the Agent nor any of its Affiliates warrants the
accuracy, adequacy or completeness of the Communications or the Platform and
each expressly disclaims liability for errors or omissions in the Communications
or the Platform (provided, as to such disclaimer, that the Agent and its
Affiliates have not been grossly negligent or engaged in any willful misconduct
in respect of the Platform). No warranty of any kind, express, implied or
statutory, including, without limitation, any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by the Agent or any of its
Affiliates in connection with the Platform.

(e) Each Lender agrees that notice to it (as provided in the next sentence) (a
“Notice”) specifying that any Communications have been posted to the Platform
shall constitute effective delivery of such information, documents or other
materials to such Lender for purposes of this Agreement. Each Lender agrees
(i) to notify the Agent in writing of such Lender’s e-mail address to which a
Notice may be sent by electronic transmission (including by electronic
communication) on or before the date such Lender becomes a party to this
Agreement (and from time to time thereafter to ensure that the Agent has on
record an effective e-mail address for such Lender) and (ii) that any Notice may
be sent to such e-mail address.

10.3 No Waiver-Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.

10.4 Costs and Expenses. The Borrower shall:

(a) whether or not the transactions contemplated hereby are consummated, pay or
reimburse Citicorp USA including in its capacity as Agent and Lender within five
Business Days after demand, subject to subsection 4.1(g) for all reasonable
costs and

 

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expenses incurred by Citicorp USA including in its capacity as Agent and Lender
in connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by Citicorp USA (including in its capacity as
Agent and Lender with respect thereto); and

(b) pay or reimburse the Agent, the Arranger and each Lender within five
Business Days after demand (subject to subsection 4.1(g)) for all reasonable
costs and expenses (including reasonable Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any “workout” or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding). In connection
with any claim, demand, action or cause of action relating to the enforcement,
preservation or exercise of any rights or remedies covered by this Section 10.4
against the Borrower, all Lenders shall be represented by the same legal counsel
selected by such Lenders; provided, that if such legal counsel determines in
good faith that representing all such Lenders would or could result in a
conflict of interest under laws or ethical principles applicable to such legal
counsel or that a claim is available to a Lender that is not available to all
such Lenders, then to the extent reasonably necessary to avoid such a conflict
of interest or to permit an unqualified assertion of such a claim, each Lender
shall be entitled to separate representation by legal counsel selected by that
Lender, with all such legal counsel using reasonable efforts to avoid
unnecessary duplication of effort by counsel for all Lenders.

10.5 Borrower Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Borrower shall indemnify and hold the Agent-Related
Persons, and each Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an “Indemnified Person”)
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of this Agreement or any document contemplated by
or referred to herein, or the transactions contemplated hereby, or any action
taken or omitted by any such Person under or in connection with any of the
foregoing, including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the “Indemnified Liabilities”); provided, that the Borrower shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting from the gross negligence or willful
misconduct of such Indemnified Person. If any claim, demand, action or cause of
action is asserted against any Indemnified Person, such Indemnified Person shall
promptly notify Borrower, but the failure to so promptly notify Borrower shall
not affect Borrower’s obligations under this Section unless such failure
materially prejudices Borrower’s

 

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right to participate in the contest of such claim, demand, action or cause of
action, as hereinafter provided. If requested by Borrower in writing, such
Indemnified Person shall in good faith contest the validity, applicability and
amount of such claim, demand, action or cause of action and shall permit
Borrower to participate in such contest. Any Indemnified Person that proposes to
settle or compromise any claim or proceeding for which Borrower may be liable
for payment of indemnity hereunder shall give Borrower written notice of the
terms of such proposed settlement or compromise reasonably in advance of
settling or compromising such claim or proceeding and shall obtain Borrower’s
prior consent. In connection with any claim, demand, action or cause of action
covered by this Section 10.5 against more than one Indemnified Person, all such
Indemnified Persons shall be represented by the same legal counsel selected by
the Indemnified Persons and reasonably acceptable to Borrower; provided, that if
such legal counsel determines in good faith that representing all such
Indemnified Persons would or could result in a conflict of interest under laws
or ethical principles applicable to such legal counsel or that a defense or
counterclaim is available to an Indemnified Person that is not available to all
such Indemnified Persons, then to the extent reasonably necessary to avoid such
a conflict of interest or to permit unqualified assertion of such a defense or
counterclaim, each Indemnified Person shall be entitled to separate
representation by legal counsel selected by that Indemnified Person and
reasonably acceptable to Borrower, with all such legal counsel using reasonable
efforts to avoid unnecessary duplication of effort by counsel for all
Indemnified Persons. The agreements in this Section shall survive payment of all
other Obligations.

10.6 Payments Set Aside. To the extent that the Borrower makes a payment to the
Agent or the Lenders, or the Agent or the Lenders exercise any right of set-off,
and such payment or the proceeds of such set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the Agent or
such Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred, and (b) each
Lender severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.

10.7 Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Lender.

10.8 Assignments, Participations Etc.

(a) Any Lender may, with the written consent of the Agent and the Borrower,
which consent shall not be unreasonably withheld (except Borrower’s consent
shall not be required if (i) a Default or an Event of Default exists and is
continuing, and (ii) the Eligible Assignee is not engaged in the securities
brokerage business or the investment advisory business), at any time assign and
delegate to one or more Eligible Assignees (provided that no written consent of
the Agent shall be required in connection with any assignment and delegation by
a Lender to an Eligible Assignee that is an Affiliate of such Lender) (each an
“Assignee”) all,

 

41

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or any ratable part of all, of the Loans, the Commitments, and the other rights
and obligations of such Lender hereunder, in a minimum amount of $10,000,000;
provided, however, that the Borrower and, the Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (A) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee; (B) such Lender and its Assignee shall have delivered to the Borrower
and the Agent an Assignment and Acceptance in the form of Exhibit F (“Assignment
and Acceptance”) together with any Note or Notes subject to such assignment; and
(C) the assignor Lender or Assignee has paid to the Agent a processing fee in
the amount of $3,500.

(b) From and after the date that the Agent notifies the assignor Lender and the
Borrower that it has received (and the Borrower and the Agent have provided
their consent with respect to) an executed Assignment and Acceptance and payment
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.

(c) Within five Business Days after its receipt of notice by the Agent that it
has received an executed Assignment and Acceptance and payment of the processing
fee (and provided that it consents to such assignment in accordance with
subsection 10.8(a)), the Borrower shall execute and deliver to the Agent, new
Notes evidencing such Assignee’s assigned Loans and Commitment and, if the
assignor Lender has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Commitment retained by the
assignor Lender (such Notes to be in exchange for, but not in payment of, the
Notes held by such Lender). Immediately upon each Assignee’s making its
processing fee payment under the Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assignor Lender pro tanto.

(d) Any Lender may at any time sell to one or more commercial banks or other
Persons not Affiliates of the Borrower (a “Participant”) participating interests
in any Loans, the Commitment of that Lender and the other interests of that
Lender (the “originating Lender”) hereunder and under the other Loan Documents;
provided, however, that (i) the originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Borrower,
and the Agent shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender’s rights and obligations under
this Agreement and the other Loan Documents, and (iv) no Lender shall transfer
or grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document. Any Lender that sells a participation to
any Person that is a “foreign corporation, partnership or trust” within the

 

42

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meaning of the Code shall include in its participation agreement with such
Person a covenant by such Person that such Person will comply with the
provisions of Section 9.10 as if such Person were a Lender and provide that the
Agent and the Borrower shall be third party beneficiaries of such covenant.

(e) Notwithstanding any other provision in this Agreement, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement and the Note held by it in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

(f) Any Lender (a “Granting Lender”) may, with notice to the Agent, grant to a
special purpose funding vehicle (an “SPC”) the option to fund all or any part of
any Loan that such Granting Lender would otherwise be obligated to fund pursuant
to this Agreement. The funding of a Loan by an SPC hereunder shall utilize the
Revolving Credit Commitment of the Granting Lender to the same extent, and as
if, such Loan were funded by such Granting Lender. Each party hereto hereby
agrees that no SPC shall be liable for any indemnity or payment under this
Agreement for which a Lender would otherwise be liable for so long as, and to
the extent, the Granting Lender provides such indemnity or makes such payment.
Notwithstanding anything to the contrary contained in the foregoing or anywhere
else in this Agreement, (i) nothing herein shall constitute a commitment by any
SPC to fund any Loan, (ii) if an SPC elects not to exercise such option or
otherwise fails to fund all or any part of such Loan, the Granting Lender shall
be obligated to fund such Loan pursuant to the terms hereof, and (iii) the
Borrower and Agent shall continue to deal exclusively with the Granting Lender
and any funding by an SPC hereunder shall not constitute an assignment,
assumption or participation of any rights or obligations of the Granting Lender.
Any SPC may disclose on a confidential basis any non-public information relating
to its funding of Loans to any rating agency, commercial paper dealer or
provider of any surety or guarantee to such SPC, provided, as a condition
precedent to such disclosure, (A) such agency, dealer or provider has delivered
to such Granting Lender for the benefit of Borrower a written confidentiality
agreement substantially similar to Section 10.9, and (B) simultaneous with or
prior to such disclosure, such Granting Lender has given written notice to
Borrower of the agency, dealer or provider to which such disclosure is being
made and the contents of such disclosure. This Section may not be amended
without the prior written consent of each Granting Lender, all or any part of
whose Loan is being funded by an SPC at the time of such amendment.

10.9 Confidentiality. Each Lender agrees to hold any confidential information
that it may receive from Borrower or from the Agent on such Borrower’s behalf,
pursuant to this Agreement in confidence, except for disclosure: (a) to legal
counsel and accountants for Borrower or any Lender; (b) to other professional
advisors to Borrower or any Lender, provided that the recipient has delivered to
such Lender a written confidentiality agreement substantially similar to this
Section 10.9; (c) to regulatory officials having jurisdiction over any Lender;
(d) as required by applicable law or legal process or in connection with any
legal proceeding in which any Lender and Borrower are adverse parties; and
(e) to another financial institution in connection with a disposition or
proposed disposition to that financial institution of all or part of

 

43

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any Lender’s interests hereunder or a participation interest in the Revolving
Note and/or the Term Note, each in accordance with Section 10.8 hereof, provided
that the recipient has delivered to such Lender a written confidentiality
agreement substantially similar to this Section 10.9. Each Lender further agrees
that it will not use such confidential information in any activity or for any
purpose other than the administration of credit facilities extended to Borrower
and its Subsidiaries and, without limitation, will take such steps as are
reasonably appropriate to preclude access to any such confidential information
to be obtained by any Person employed by any Lender, or by an affiliate of any
Lender, who is not involved in the administration of credit facilities extended
to Borrower and its Subsidiaries. For purposes of the foregoing, “confidential
information” shall mean any information respecting Borrower or its Subsidiaries
reasonably specified by Borrower as confidential, other than (i) information
filed with any governmental agency and available to the public, and
(ii) information disclosed by Borrower to any Person not associated with
Borrower without a written confidentiality agreement substantially similar to
this Section 10.9. Certain of the confidential information pursuant to this
Agreement is or may be valuable proprietary information that constitutes a trade
secret of Borrower or its Subsidiaries; neither the provision of such
confidential information to any Lender or the limited disclosures thereof
permitted by this Section 10.9 shall affect the status of any such confidential
information as a trade secret of Borrower and its Subsidiaries. Each Lender, and
each other Person who agrees to be bound by this Section 10.9, acknowledges that
any breach of the agreements contained in this Section 10.9 would result in
losses that could not be reasonably or adequately compensated by money damages.
Accordingly, if any Lender or any other person breaches its obligations
hereunder, such Lender or such other Person recognizes and consents to the right
of Borrower, Intermediate Parent, and/or Broker Subsidiary to seek injunctive
relief to compel such Lender or other Person to abide by the terms of this
Section 10.9.

10.10 Notification of Addresses, Lending Offices, Etc. Each Lender shall notify
the Agent in writing of any changes in the address to which notices to the
Lender should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.

10.11 Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one
and the same instrument.

10.12 Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Agreement or any instrument or agreement required hereunder.

10.13 No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and legal benefit of the Borrower, the Lenders, the Agent
and the Arranger, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents.

 

44

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10.14 Governing Law and Jurisdiction.

(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND
THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.

10.15 Waiver of Jury Trial. TO THE FULL EXTENT PERMITTED BY LAW, THE BORROWER,
THE LENDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTION CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. TO THE FULL EXTENT PERMITTED BY LAW, THE BORROWER, THE LENDERS AND
THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

10.16 Entire Agreement. This Agreement, together with the other Loan Documents,
embodies the entire agreement and understanding among the Borrower, the Lenders
and the Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.

10.17 Headings. Articles and Section headings in this Agreement are included
herein for the convenience of reference only.

 

45

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10.18 USA Patriot Act. Each Lender hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies each borrower, guarantor or grantor (the
“Loan Parties”), which information includes the name and address of each Loan
Party and other information that will allow such Lender to identify such Loan
Party in accordance with the Act.

(SIGNATURE PAGE FOLLOWS)

 

46

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized officers as of the date first above written.

 

Borrower: THE CHARLES SCHWAB CORPORATION By:   /s/ Joseph R. Martinetto Name:  
Joseph R. Martinetto Title:   Senior Vice President and Treasurer

--------------------------------------------------------------------------------

Lenders:

CITICORP USA, INC., as Agent and

individually as Lender

By:   /s/ Kevin Ege Name:   Kevin Ege Title:   Vice President

 

BANK OF AMERICA, N.A. By:   /s/ Eyal Namordi Name:   Eyal Namordi Title:   Vice
President

 

CALYON NEW YORK BRANCH

By:   /s/ Sebastian Rocco Name:   Sebastian Rocco Title:   Managing Director

 

By:   /s/ William Denton Name:   William Denton Title:   Managing Director

 

JPMORGAN CHASE BANK, N.A. By:   /s/ Therese Bechet Name:   Therese Bechet Title:
  Managing Director

 

LLOYDS TSB BANK PLC

By:   /s/ James M. Rudd Name:   James M. Rudd Title:   Vice President, Financial
Institutions, USA, R091

 

By:   /s/ Michael J. Gilligan Name:   Michael J. Gilligan Title:   Director,
Financial Institutions, USA, G311

 

BNP PARIBAS

By:   /s/ Frank Sodano Name:   Frank Sodano Title:   Managing Director

--------------------------------------------------------------------------------

By:   /s/ David Seaman Name:   David Seaman Title:   Vice President

 

NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK AND/OR CAYMAN ISLANDS BRANCH By:
  /s/ Stephen K. Hunter Name:   Stephen K. Hunter Title:   Senior Vice President

 

By:   /s/ Jutta Gieseler Name:   Jutta Gieseler Title:   Assistant Treasurer

 

PNC BANK, NATIONAL ASSOCIATION By:   /s/ Edward J. Chidiac Name:   Edward J.
Chidiac Title:   Managing Director

 

WELLS FARGO BANK, NATIONAL ASSOCIATION By:   /s/ Robert P. Fialkowski Name:  
Robert P. Fialkowski Title:   Vice President

 

WESTLB AG, NEW YORK BRANCH By:   /s/ Dee Dee Sklar Name:   Dee Dee Sklar Title:
  Managing Director

 

By:   /s/ Wendy Ferguson Name:   Wendy Ferguson Title:   Associate Director

 

BANK OF HAWAII

By:   /s/ Linda R. Ho Name:   Linda R. Ho Title:   Assistant Vice President

--------------------------------------------------------------------------------

COMMERZBANK AG NEW YORK AND GRAND CAYMAN BRANCHES By:   /s/ Gerard A. Araw Name:
  Gerard A. Araw Title:   Assistant Treasurer

 

By:   /s/ Michael P. McCarthy Name:   Michael P. McCarthy Title:   Vice
President

 

DEUTSCHE BANK AG NEW YORK BRANCH

By:   /s/ Sean C. Davy Name:   Sean C. Davy Title:   Director

 

By:   /s/ Charles Kohler Name:   Charles Kohler Title:   Managing Director

 

HARRIS N.A. By:   /s/ Linda C. Haven Name:   Linda C. Haven Title:   Managing
Director

 

HSBC BANK USA, N.A. By:   /s/ Joseph Travaglione Name:   Joseph Travaglione
Title:   Senior Vice President

 

MELLON BANK, N.A. By:   /s/ Thomas Caruso Name:   Thomas Caruso Title:   First
Vice President

--------------------------------------------------------------------------------

STATE STREET BANK AND TRUST COMPANY

By:   /s/ James H. Reichert Name:   James H. Reichert Title:   Vice President

 

UBS LOAN FINANCE LLC

By:   /s/ Richard L. Tavrow Name:   Richard L. Tavrow Title:   Director

 

By:   /s/ Irja R. Otsa Name:   Irja R. Otsa Title:   Associate Director

--------------------------------------------------------------------------------

Schedule 1

LENDERS’ COMMITMENTS

The Charles Schwab Corporation $800,000,000 Credit Agreement (364-Day
Commitment) dated as of June 16, 2006.

 

     Lender Commitment
Amount

1.      Citicorp USA, Inc.

   1.    $ 80,000,000

2.      Bank of America, N.A.

   2.      70,000,000

3.      Calyon New York Branch

   3.      70,000,000

4.      JPMorgan Chase Bank, N.A.

   4.      70,000,000

5.      Lloyds TSB Bank plc

   5.      70,000,000

6.      BNP Paribas

   6.      48,000,000

7.      Norddeutsche Landesbank Girozentrale, New York and/or Cayman Islands
Branch

   7.      48,000,000

8.      PNC Bank, National Association

   8.      48,000,000

9.      Wells Fargo Bank, National Association

   9.      48,000,000

10.    WestLB AG, New York Branch

   10.      48,000,000

11.    Bank of Hawaii

   11.      25,000,000

12.    Commerzbank AG New York and Grand Cayman Branches

   12.      25,000,000

13.    Deutsche Bank AG New York Branch

   13.      25,000,000

14.    Harris N.A.

   14.      25,000,000

15.    HSBC Bank USA, N.A.

   15.      25,000,000

16.    Mellon Bank, N.A.

   16.      25,000,000

17.    State Street Bank and Trust Company

   17.      25,000,000

18.    UBS Loan Finance LLC

   18.      25,000,000 Total       $ 800,000,000

--------------------------------------------------------------------------------

Schedule 2

LIST OF BORROWING AGREEMENTS

1. $800,000,000 Credit Agreement (364-Day Commitment) dated as of June 17, 2005
among the Borrower, the lenders party thereto, and Citicorp USA, Inc., as
administrative agent for such lenders.

--------------------------------------------------------------------------------

Schedule 6.2

COMPLIANCE CERTIFICATE

I,                         , certify that I am the              of The Charles
Schwab Corporation (the “Borrower”), and that as such I am authorized to execute
this Compliance Certificate on behalf of the Borrower, and do hereby further
certify on behalf of the Borrower that:

1. I have reviewed the terms of that certain Credit Agreement (364-Day
Commitment) dated as of June 16, 2006 among the Borrower, the financial
institutions named therein (the “lenders”) and Citicorp USA, Inc., as Agent for
the lenders (the “Credit Agreement”), and I have made, or have caused to be made
by employees or agents under my supervision, a detailed review of the
transactions and conditions of the Borrower during the accounting period covered
by the attached financial statements dated                     , 200  .

2. The examination described in paragraph 1 did not disclose, and I have no
knowledge of the existence of any condition or event which constitutes a Default
or Event of Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Compliance Certificate,
except as set forth below.

3. Schedule I attached hereto sets forth financial data and computations
evidencing compliance with the covenants set forth in Sections 7.1 and 7.2 of
the Credit Agreement, all of which data and computations are true, complete and
correct. Capitalized terms not otherwise defined herein are defined in the
Credit Agreement.

4. Described below are the exceptions, if any, to paragraph 2 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event.

The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Compliance
Certificate in support hereof, are made and delivered this          day of
                     200  .

 

By:      Name:      Title:     

--------------------------------------------------------------------------------

The Charles Schwab Corporation

Credit Agreement (364-Day Commitment)

Dated as of June 16, 2006

Schedule I

to

Compliance Certificate

(Dollars in Thousands)

 

1. Net Capital Ratio of the Broker Subsidiary.

Requirement: Broker Subsidiary - month-end ratio not less than 5%.

Net Capital Ratio for Broker Subsidiary

 

Month

  Month-end Ratio

 

2. Minimum Stockholders’ Equity of Borrower.

Requirement: As of                     , 200  , required Minimum Stockholders’
Equity is $2,500,000,000 plus 50% of cumulative Net Earnings from June 30, 2006.

--------------------------------------------------------------------------------

Schedule 10.2

NOTICES

If to the Borrower:

 

If by U.S. mail:

  

The Charles Schwab Corporation

  

Treasury Department

  

Attn: Joseph Martinetto or Successor

  

101 Montgomery Street (Mail Stop SF120KNY-13-471)

  

San Francisco, CA 94104

If by hand delivery (including courier and overnight messenger service):   

The Charles Schwab Corporation

  

Treasury Department

  

Attn: Joseph Martinetto or Successor

  

120 Kearny St. 13th Floor

  

San Francisco, CA 94104

Telephone:

  

(415) 667-3148

Facsimile:

  

(415) 636-9892

If to the Agent:

See information under Citicorp USA, Inc. in table below pertaining to Lenders.

If to the Lenders:

 

Credit Contact

  

Operations Contact

  

Lending Office

  

Payment Instructions

Bank of America, N.A.

231 South LaSalle Street

Chicago, IL 60604

Attention: Eyal Namordi

(312) 828-2575

Fax: (415) 503-5142

  

Bank of America, N.A.

101 N. Tryon Street

Charlotte, NC 28255-0001

Attention: Edna Reganess

(704) 386-8201

Fax: (704) 409-0058

  

Bank of America, N.A.

101 N. Tryon Street

Charlotte, NC 28255

  

Bank of America, N.A.

ABA #: 053000196

Charlotte, NC

Acct #: 1366212250600

Attention: Credit Services

Ref: The Charles Schwab Corporation

Bank of Hawaii

130 Merchant Street

20th Floor

Honolulu, HI 96813

Attention: James C. Polk

                 Senior Vice President

(808) 537-8489

Fax: (808) 537-8301

  

Bank of Hawaii

P.O. Box 2715

Honolulu, HI 96806

Attention: Debbie Sullivan

(808) 693-1694

Fax: (808) 693-1672

  

Bank of Hawaii

P.O. Box 2900

Honolulu, HI 96846

  

Bank of Hawaii

ABA #: 1213-01028

Honolulu, HI

Acct #: 9298-540626

Acct Name: Bank of Hawaii

Attn: Business Loan Center

Ref: The Charles Schwab Corporation

 

1

--------------------------------------------------------------------------------

Credit Contact

  

Operations Contact

  

Lending Office

  

Payment Instructions

BNP Paribas

787 7th Avenue, 27th Floor

New York, NY 10019

Attention: Frank Sodano

                 Director

(212) 841-2084

Fax: (212) 841-2717

  

BNP Paribas

787 7th Avenue, 27th Floor

New York, NY 10019

Attention: Frank Chiofalo

(212) 841-2297

Fax: (212) 841-2717

  

BNP Paribas

787 7th Avenue, 27th Floor

New York, NY 10019

  

BNP New York

ABA #: 026007689

New York, NY

Acct #: 10313000103

Attn: Loan Services

Clearing Account

Calyon New York Branch

1301 Avenue of the Americas

13th Floor

New York, NY 10019

Attention: Ken Ricciardi

(212) 261 7348

Fax: (212) 261 3438

  

Calyon New York Branch

1301 Avenue of the Americas

New York, NY 10019

Attention: Seth Ruffer

                 Asst. Vice President

(212) 261-7410

Fax: (212) 261-3401

  

Calyon New York Branch

1301 Avenue of the Americas

New York, NY 10019

  

Calyon New York Branch

ABA #: 026-008-073

New York, NY

Acct #:

01-88179-3701-00

Acct Name:

Loan Servicing

Attention: S. Ruffer

Ref: The Charles

Schwab Corporation

Citicorp USA, Inc.

388 Greenwich Street

New York, NY 10013

Attention: Michael Mauerstein

                 Vice President

(212) 816-3431

Fax: (212) 816-4140

  

Citicorp USA, Inc.

2 Penn’s Way, Suite 200

New Castle, DE 19720

Attention: Lee Ocasio

                 Assistant Manager

(302) 894-6065

Fax: (302) 894-6120

  

Citicorp USA, Inc.

399 Park Avenue

New York, NY 10043

  

Citibank NA

ABA #: 021-000-089

New York, NY

Acct #: 40610794

Acct Name:

Wall Street Fees

Attention: Lee Ocasio

Ref: The Charles Schwab

Corporation

Commerzbank AG New York and Grand Cayman Branches

Two World Financial Center

New York, NY 10281

Attention: Michael McCarthy

                 Vice President

(212) 266-7325

Fax: (212) 266-7629

  

Commerzbank AG New York and Grand Cayman Branches

Two World Financial Center

New York, NY 10281

Attention: Arndt Bruns

                 Asst. Vice President

(212) 266-7736

Fax: (212) 266-7629

  

Commerzbank AG New York and Grand Cayman Branches

Two World Financial Center

New York, NY 10281

Attention: Cheriese Brathwaite

(212) 266-7775

Fax: (212) 266-7491

  

Commerzbank AG New York and Grand Cayman Branches

ABA #: 026008044

Acct. No. 150-1035104

for The Charles Schwab Corporation

Attn: Commercial Lending Service

Deutsche Bank AG New York Branch

60 Wall Street

Mail Stop NYC60-3510

New York, NY 10005

Attention: Gene Ohin

(212) 250-7086

Fax: (212) 797-5917

  

Deutsche Bank AG New York Branch

90 Hudson Street

Mail Stop JCY05-0511

Jersey City, NJ 02302

Attention: Carmen Melendez

(201) 593-2226

Fax: (201) 593-2913

  

Deutsche Bank AG New York Branch

60 Wall Street

New York, NY 10005

  

Deutsche Bank AG New York Branch

Acct #: 60200119

ABA#: 021001033

Acct Name:

Charles Schwab Corp.

Account

Attention: Carmen Melendez

Harris N.A.

111 West Monroe, 5 East

Chicago, IL 60603

Attn: Charles F. Howes

         Vice President

(312) 461-4813

F: (312) 765-8201

  

Harris N.A.

111 West Monroe, 5 East

Chicago, IL 60603

Attn: Marielcy Romero

         Collateral Specialist

(312) 461-3524

F: (312) 293-5030

  

Harris N.A.

111 West Monroe

Chicago, IL 60603

  

Harris N.A.

Chicago, IL

Acct Name: Loan Accounting

Ref: The Charles Schwab Corp

Attn: M. Romero

 

2

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Credit Contact

  

Operations Contact

  

Lending Office

  

Payment Instructions

HSBC Bank USA, N.A.

452 5th Avenue

5th Floor

New York, NY 10018

Attention: Joseph Travaglione

(212) 525-2226

Fax: (212) 525-2570

  

HSBC Bank USA, N.A.

1 HSBC Center

Buffalo, NY 14203

Attention: Donna Riley

(716) 841-4178

Fax: (716) 841-0269

  

HSBC Bank USA, N.A.

1 HSBC Center

Buffalo, NY 14203

  

HSBC Bank USA, N.A.

ABA #: 021-001-088

New York, NY

Acct #: 001-94050-3

Acct Name:

Syndications & Asset

Trading

Ref: The Charles Schwab

Corporation

JPMorgan Chase Bank, N.A.

277 Park Avenue

23rd Floor

New York, NY 10172

Attention: Pandora Setian

(212) 622-5088

Fax: (646) 534-1720

  

JPMorgan Chase Bank, N.A.

277 Park Avenue

23rd Floor

New York, NY 10172

Attention: Evadney Sandiford

(212) 622-8720

Fax: (646) 534-1718

  

JPMorgan Chase Bank, N.A.

277 Park Avenue

23rd Floor

New York, NY 10172

  

JPMorgan Chase Bank, N.A.

Acct #: 066-999979

ABA #: 021000021

Acct Name:

Broker Dealer House

Account

Attention: Evadney Sandiford

Lloyds TSB Bank plc

1251 Avenue of the Americas

39th Floor

New York , NY 10020

Attention: James Rudd/Melissa Curry

(212) 930-8341/5026

Fax: (212) 930-5098

  

Lloyds TSB Bank plc

1251 Avenue of the Americas

39th Floor

New York , NY 10020

Attention: Pat Killian/Judy Chen

(212) 930-89014/8971

Fax: (212) 930-5098

  

Lloyds TSB Bank plc

1251 Avenue of the Americas

39th Floor

New York , NY 10020

  

Bank of America

International, New York

ABA #: 026-009-593

New York, NY

Acct #: 655-010-1938

Acct Name: Lloyds TSB

Bank plc, Miami

Ref: The Charles

Schwab Corporation

Mellon Bank, N.A.

One Penn Plaza, 29th Floor

New York, NY 10419

Attention: Thomas P. Caruso

Vice President

(212) 330-1317

Fax: (212) 330-1332

  

Mellon Bank, N.A.

3 Mellon Bank Center

Pittsburgh, PA 15259

Attention: Teresa Hayward

(412) 234-4744

Fax: (412) 209-6134

  

Mellon Bank, N.A.

One Mellon Center

Pittsburgh, PA 15258

  

Mellon Bank, N.A.

ABA #: 043000261

Pittsburgh, PA

Acct #: 9908 73 800

Acct Name: Mellon Bank

Attention: Teresa Hayward

Norddeutsche Landesbank

Girozentrale, New York

and/or Cayman Islands Branch

1114 Avenue of the Americas,

37th Floor

New York, NY 10036

Attention: Rebecca Rahe

(212) 812-6871

Fax: (212) 812-6860

  

Norddeutsche Landesbank

Girozentrale, New York

and/or Cayman Islands Branch

1114 Avenue of the Americas, 37th Floor

New York, NY 10036

Attention: Norman Liebenstein

(212) 812-6809

Fax: (212) 812-6860

  

Norddeutsche Landesbank

Girozentrale, Cayman

Islands Branch

1114 Avenue of the

Americas, 37th Floor

New York, NY 10036

  

Chase Manhattan Bank,

New York

ABA #: 021000021

New York, NY

Acct Name:

Norddeutsche Landesbank,

New York

Acct #: 001-1-352382

Ref: The Charles Schwab

Credit Facility

PNC Bank,

National Association

249 Fifth Avenue

Mailstop: P1-POPP-2-3

Pittsburgh, PA 15222

Attention: Philip K. Liebscher

                 Managing Director

(412) 762-3202

Fax: (412) 762-6484

  

PNC Bank,

National Association

1600 Market Street

Philadelphia, PA 19103

Attention: Marc Accamando

(412) 768-7647

Fax: (412) 768-4586

  

PNC Bank,

National Association

1600 Market Street

Philadelphia, PA

  

PNC Bank,

National Association

ABA #: 043000096

Pittsburgh, PA

Acct #: 196030010890

Acct Name: Corporate Banking

Attention: Wire Room

 

3

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Credit Contact

  

Operations Contact

  

Lending Office

  

Payment Instructions

State Street Bank and Trust Company

225 Franklin Street MAO7

Boston, MA 02110

Attention: James Reichert

(617) 664-0240

Fax: (617) 664-0646

  

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110

Attention: Eola Romano

(617) 664-6434

Fax: (617) 664-3874

  

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110

  

State Street Bank and Trust Company, Boston, MA

ABA#: 011-000-028

Acct #: 0006-332-1

Acct. Name: IS Loan Operations/CSU Internal

UBS Loan Finance LLC

677 Washington Boulevard

Stamford, CT 06901

Attention: Marie Haddad

(203) 719-5609

Fax: (203) 719-3888

  

UBS Loan Finance LLC

677 Washington Boulevard

Stamford, CT 06901

Attention: Marie Haddad

(203) 719-5609

Fax: (203) 719-3888

  

UBS Loan Finance LLC

677 Washington Boulevard

Stamford, CT 06901

  

UBS Loan Finance LLC

ABA #: 026 007 993

Stamford, CT

Acct #: WA-894001-001

Acct. Name: BPS Loan Finance Act

Attn: Marie Haddad

Ref: The Charles Schwab Corporation

Wells Fargo Bank,

National Association

230 West Monroe Street

Chicago, IL 60606-4703

Attention: Robert P. Fialkowski

                 Corporate Banking

                 Relationship Mgr.

(312) 726-2159

Fax: (312) 845-86067251

  

Wells Fargo Bank,

National Association

201 3rd Street, 8th Floor

A0187-081

San Francisco, CA 94103

Attention: Cindy Dunn

                  Loan Servicing Spec.

(415) 477-5431

Fax: (415) 979-0675

  

Wells Fargo Bank,

National Association

6th Street and Marquette Ave

N9305-075

Minneapolis, MN 55479

  

Wells Fargo Bank,

National Association

ABA #: 121000248

San Francisco, CA

Acct #: 2712507201

Account Name:

Member Syndication

Ref: The Charles Schwab

Corporation, Obligor

#1582242431

WestLB AG, New York Branch

1211 Avenue of the Americas

New York, NY 10036

Attention: Terence R. Law

                 Executive Director

(212) 852-6242

Fax: (212)852-6516

  

WestLB AG, New York Branch

1211 Avenue of the Americas

New York, NY 10036

Attention: Philip Green

(212) 852-6113

Fax: (212) 302-7946

  

WestLB AG, New York Branch

1211 Avenue of the

Americas

New York, NY 10036

  

WestLB AG, New York Branch

ABA #: 021-000-021

New York, NY

Acct #: 920-1-060663

Acct Name:

WestLB, New York

Branch

Attention: Loan

Administration

Ref: The Charles Schwab Corporation

 

4

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EXHIBIT A-1

REVOLVING NOTE

 

$             (Amount of Commitment)

   Date: June 16, 2006

For Value Received, The Charles Schwab Corporation (“Schwab”) hereby promises to
pay to the order of                              (the “Lender”) to Citicorp USA,
Inc., as Agent, at Agent’s office located at 388 Greenwich Street, New York, New
York 10013, for the account of the applicable Lending Office of the Lender, the
principal amount of                              ($            ) or the
aggregate amount of all Revolving Loans made to Schwab by the Lender, whichever
is less, on June 15, 2007. The undersigned also promises to pay interest on the
unpaid principal amount of each Borrowing from the date of such Borrowing until
such principal amount is paid, at the rates per annum, and payable at such
times, as are specified in the Credit Agreement. This Note shall be subject to
the terms of the Credit Agreement, and all principal and interest payable
hereunder shall be due and payable in accordance with the terms of the Credit
Agreement.

Schwab hereby authorizes the Lender to endorse on the Schedule attached to this
Note the amount and Type of Revolving Loans made to Schwab by the Lender and all
renewals, conversions, and payments of principal amounts in respect of such
Revolving Loans, which endorsements shall, in the absence of manifest error, be
conclusive as to the outstanding principal amount of all such Revolving Loans,
provided, however, that the failure to make such notation with respect to any
Revolving Loans or payments shall not limit or otherwise affect the obligation
of Schwab under the Credit Agreement or this Note.

This Note is the Revolving Note referred to in the Credit Agreement (364-Day
Commitment), dated as of June 16, 2006 among Schwab, the Lender, certain other
Lenders party thereto, and Citicorp USA, Inc., as Agent for the Lenders (the
“Credit Agreement”). Terms defined in the Credit Agreement are used herein with
the same meanings. The Credit Agreement, among other things, contains provisions
for acceleration of the maturity of this Note, upon the happening of certain
stated events and also for prepayments on account of the principal of this Note
prior to the maturity of this Note upon the terms and conditions specified in
the Credit Agreement.

Principal and interest payments shall be in money of the United States of
America, lawful at such times for the satisfaction of public and private debts,
and shall be in immediately available funds.

Schwab promises to pay the costs of collection, including reasonable attorney’s
fees, if default is made in the payment of this Note.

The terms and provisions of this Note shall be governed by the applicable laws
of the State of California.

IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by its
officers thereunto duly authorized and directed by appropriate corporate
authority.

 

The Charles Schwab Corporation

By:

    

Name:

    

Title:

    

 

1

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EXHIBIT A-1

SCHEDULE TO REVOLVING NOTE

 

Date Made, Continued,
Converted, or Paid

  

Type of Loan

  

Amount of Loan

  

Amount of Principal
Continued, Converted,
or Paid

  

Unpaid Principal
Balance of Revolving
Note

  

Name of Person
Making Notation

                                                           

 

2

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EXHIBIT A-2

TERM NOTE

Date: June 16, 2006

FOR VALUE RECEIVED, the undersigned, The Charles Schwab Corporation (“Schwab”)
hereby promises to pay to the order of                              (the
“Lender”), to Citicorp USA, Inc., as Agent, at the Agent’s office located at 388
Greenwich Street, New York New York 10013, for the account of the applicable
Lending Office of the Lender, the principal amount of each Term Loan made by the
Lender to Schwab pursuant to the terms of the Credit Agreement (364-Day
Commitment), dated as of June 16, 2006, as amended, among Schwab, the Lender,
certain other Lenders party thereto, and Citicorp USA, Inc., as Agent for the
Lenders (the “Credit Agreement”), as shown in the schedule attached hereto and
any continuation thereof, in lawful money of the United States and in
immediately available funds on the Term Loan Maturity Date for such Term Loan.
The undersigned also promises to pay interest on the unpaid principal amount of
each Term Loan from the date of such Term Loan until such principal amount is
paid, in like money, at said office for the account of the Lender’s applicable
Lending Office, at the rates per annum, and payable at such times as are
specified in the Credit Agreement. This Term Note shall be subject to the terms
of the Credit Agreement and all principal and interest payable hereunder should
be due and payable in accordance with the terms of the Credit Agreement. Terms
defined in the Credit Agreement are used herein with the same meanings.

This Term Note is one of the Term Notes referred to in, and is entitled to the
benefits of, the Credit Agreement. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity of this Term Note upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity of the Term Note upon the terms and
conditions specified in the Credit Agreement.

Schwab promises to pay costs of collection, including reasonable attorney’s
fees, if default is made in the payment of this Note.

The terms and provisions of this Term Note shall be governed by the applicable
laws of the State of California.

IN WITNESS WHEREOF, the undersigned has caused this Term Note to be executed by
its officer thereunto duly authorized and directed by appropriate corporate
authority.

 

The Charles Schwab Corporation

By:

    

Name:

    

Title:

    

 

1

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EXHIBIT A-2

SCHEDULE TO TERM NOTE

 

Date Made,
Continued,
Converted, or Paid

  

Type of Loan

  

Amount of Loan

  

Term Loan
Maturity Date

  

Amount of
Principal
Continued,
Converted, or Paid

  

Unpaid Principal
Balance of Term
Note

  

Name of Person
Making Notation

                                                     

 

2

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EXHIBIT B

BORROWING ADVICE

1. This Borrowing Advice is executed and delivered by The Charles Schwab
Corporation (“Borrower”) to you pursuant to that certain Credit Agreement dated
as of June 16, 2006 (the “Credit Agreement”), entered into by Borrower, Citicorp
USA, Inc. (“Citicorp USA”) and certain other Lenders parties thereto,
collectively with Citicorp USA (the “Lenders”) and Citicorp USA as Agent for the
Lenders (herein “Agent”). Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement.

2. Borrower hereby requests that the Lenders make a Revolving [or Term Loan] for
the account of Borrower (at                             , Account No.
                            ) pursuant to Section 2.4 of the Credit Agreement as
follows:

 

  (a) Amount of Revolving [or Term Loan]:                            .

 

  (b) Borrowing Date of Revolving [or Term Loan]:                             .

 

  (c) [If a Revolving Loan] Type of Revolving Loan (check one only):

¨ Eurodollar Rate with             - day Interest Period

¨ Federal Funds Rate

¨ Base Rate

 

  (d) [If a Term Loan] Type of Term Loan (check one only):

¨ Eurodollar Rate with initial             - day Interest Period

¨ Federal Funds Rate

¨ Base Rate

 

  (e) [If a Term Loan] Maturity Date of Term Loan:                            .

3. Following this request for a Revolving Loan [or Term Loan], the aggregate
outstanding amount of all Revolving Loans and Term Loans under the Revolving
Note will not exceed the aggregate amount of the Commitments.

4. This Borrowing Advice is executed on                              by the
Borrower.

 

BORROWER:

THE CHARLES SCHWAB CORPORATION,

a Delaware Corporation

By:

    

Name:

    

Title:

    

 

1

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EXHIBIT C

NOTICE OF CONVERSION/CONTINUATION

Dated as of:                     

Citicorp USA, Inc., as Agent

_______________________

_______________________

Ladies and Gentlemen:

This irrevocable Notice of Conversion/Continuation (this “Notice”) is delivered
to you under the Credit Agreement (364-Day Commitment) dated as of June 16, 2006
(as amended, restated or otherwise modified, the “Credit Agreement”) by and
among The Charles Schwab Corporation, a Delaware corporation (the “Company”)
(herein “Borrower”); and Citicorp USA, Inc., a Delaware corporation (herein
“Citicorp USA”) and the other Lenders signatory thereto (together with Citicorp
USA, collectively “Lenders”), and Citicorp USA as agent for the Lenders (herein
“Agent”).

1. This Notice is submitted for the purpose of:

(check one and complete applicable information in accordance with the Credit
Agreement)

 

  [    ] Converting or [    ] continuing all or a portion of the following type
of Loan:

 

  (a) (check, as applicable)

Base Rate Loan                                         ;

Federal Funds Rate Loan                        ;

Eurodollar Rate Loan                                .

 

  (b) The aggregate outstanding principal balance of the above Loan is
$                    .

 

  (c) As applicable, the last day of the current Interest Period for such Loan
is                     .

 

  (d) The principal amount of such Loan to be [converted or continued] is
$                    .

 

  (e) Such principal amount should be converted/continued into the following
type of Loan:

Base Rate Loan                                             ;

Federal Funds Rate Loan                            ;

Eurodollar Rate Loan                                    .

 

  (f) The requested effective date of the [conversion/continuation] of such Loan
is             .

 

1

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  (g) As applicable, the requested Interest Period applicable to the new Loan is
                    .

2. No Default or Event of Default under the Credit Agreement has occurred and is
continuing or will be caused by the advance requested hereby.

3. The representations and warranties set forth in Section 5 of the Credit
Agreement are true and correct as if made on the date hereof (except for such
representations and warranties as expressly relate to a prior date).

Capitalized terms used herein which are not defined herein shall have the
respective meanings set forth in the Credit Agreement.

IN WITNESS WHEREOF, the undersigned officer of the Company has executed this
Notice of Conversion/Continuation this         day of
                ,            .

 

THE CHARLES SCHWAB CORPORATION

By:

    

Name:

    

Title:

      

    [must be signed by an Authorized Officer]

 

 

2

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EXHIBIT D

COMMITMENT AND TERMINATION DATE EXTENSION REQUEST

 

[Bank name and address]    [Date]

Reference is made to that certain Credit Agreement (364-Day Commitment) dated as
of June 16, 2006 (“Credit Agreement”) entered into by The Charles Schwab
Corporation (“Borrower”), Citicorp USA, Inc., as Agent and Lenders party
thereto. Terms defined in the Credit Agreement and not otherwise defined herein
are used herein as defined in the Credit Agreement.

Pursuant to Section 2.11 of the Credit Agreement, Borrower hereby requests Agent
to obtain each Lender’s agreement to the extension of such Lender’s Commitment
presently in effect, in the amount of $[specify amount of existing Commitment],
and the Termination Date presently in effect, for an additional 364 days.

Agent’s execution of a copy of this letter in the space provided below and the
transmission of such executed copy to Borrower shall constitute all Lenders’
acceptance of Borrower’s request and all Lenders’ agreement to the 364-day
extension sought herein. More specifically, upon the execution of a copy of this
letter by Agent on behalf of Lenders and the transmission thereof to Borrower
within 15 days after Agent’s receipt of this letter, (1) the Termination Date as
defined in Section 2.11 of the Credit Agreement shall be extended 364 days and
deemed changed to                             , and (2) all other dates
appearing in the Credit Agreement that are referred to in Section 2.11 of the
Credit Agreement shall correspondingly be extended 364 days.

This Commitment and Termination Date Extension Request is executed by Borrower
on                         .

 

BORROWER:

THE CHARLES SCHWAB CORPORATION,

a Delaware Corporation

By:

    

Name:

    

Title:

    

 

ACCEPTED AND AGREED:

Agent, on Behalf of Lenders

By:   

    

Name:

    

Title:

    

 

1

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EXHIBIT E

BORROWER’S OPINION OF COUNSEL

[Howard Rice Letterhead]

[Date]

Citicorp USA, Inc., as Agent

_______________________

_______________________

 

  Re: Credit Agreement (364-Day Commitment), dated June 16, 2006, among

The Charles Schwab Corporation, Citicorp USA, Inc., as Agent

and the Lenders party thereto

Ladies and Gentlemen:

This opinion is delivered at the request of The Charles Schwab Corporation to
you in your capacity as Agent, on behalf of the Lenders, under the Credit
Agreement (364-Day Commitment) dated as of June 16, 2006 (the “Credit
Agreement”) among The Charles Schwab Corporation, a Delaware corporation
(“Borrower”), Citicorp USA, Inc., as the Administrative Agent and the Lenders
signatories thereto (each a “Lender” and collectively, the “Lenders”). This
opinion letter speaks as of close of business on June 16, 2006 (hereafter the
“operative date”).

We have acted as special counsel to Borrower in connection with the Credit
Agreement. In such capacity we have examined originals, or copies represented to
us by Borrower to be true copies, of the Credit Agreement; and we have obtained
such certificates of such responsible officials of Borrower and of public
officials as we have deemed necessary for purposes of this opinion. We have
assumed without investigation the genuineness of all signatures on original
documents, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as photostatic
copies of originals, and the accuracy and completeness of all corporate records
certified to us by the Borrower to be accurate and complete. We have further
assumed that the Credit Agreement is binding upon and enforceable against the
Agent and the Lenders. As to factual matters, we have relied upon the
representations and warranties contained in and made pursuant to the Credit
Agreement.

Capitalized terms not otherwise defined herein have the meanings given for such
terms in the Credit Agreement. For the purpose of this opinion, “Loan Documents”
as used herein means the Credit Agreement and the Notes.

 

1

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Based upon the foregoing and in reliance thereon, and subject to the exceptions
and qualifications set forth herein, we are of the opinion that:

1. Borrower is a corporation duly formed, validly existing, and in good standing
under the laws of Delaware.

2. Borrower has all requisite corporate power and authority to execute, deliver
and perform all of its obligations under the Loan Documents.

3. Each Loan Document has been duly authorized, executed and delivered by
Borrower. Each Loan Document constitutes the legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms, except
as such validity, binding nature or enforceability may be limited by:

(a) the effect of applicable federal or state bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or other similar laws and court
decisions relating to or affecting creditors’ rights generally;

(b) the effect of legal and equitable principles upon the availability of
creditors’ remedies, regardless of whether considered in a proceeding in equity
or at law;

(c) the effect of California judicial decisions involving statutes or principles
of equity which have held that certain covenants or other provisions of
agreements, including without limitation those providing for the acceleration of
indebtedness due under debt instruments upon the occurrence of events therein
described, are unenforceable under circumstances where it cannot be demonstrated
that the enforcement of such provisions is reasonably necessary for the
protection of the lender, has been undertaken in good faith under the
circumstances then existing, and is commercially reasonable;

(d) the effect of Section 1670.5 of the California Civil Code, which provides
that a court may refuse to enforce a contract or may limit the application
thereof or any clause thereof which the court finds as a matter of law to have
been unconscionable at the time it was made;

(e) the unenforceability, under certain circumstances, of provisions purporting
to require the award of attorneys’ fees, expenses, or costs, where such
provisions do not satisfy the requirements of California Civil Code Section 1717
et seq., or in any action where the lender is not the prevailing party;

(f) the unenforceability, under certain circumstances, of provisions waiving
stated rights or unknown future rights and waiving defenses to obligations,
where such waivers are contrary to applicable law or against public policy;

(g) the unenforceability, under certain circumstances, of provisions which
provide for penalties, late charges, additional interest in the event of a
default by the borrower or fees or costs related to such charges;

(h) the unenforceability, under certain circumstances, of provisions to the
effect that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy, or that the election of some particular remedy or remedies does not
preclude recourse to one or another remedy;

 

2

--------------------------------------------------------------------------------

(i) the unenforceability of provisions prohibiting waivers of provisions of
either of the Loan Documents otherwise than in writing to the extent that
Section 1698 of the California Civil Code permits oral modifications that have
been executed;

(j) limitations on the enforceability of release, contribution, exculpatory, or
nonliability provisions, under federal or state securities laws, Sections 1542
and 1543 of the California Civil Code, and any other applicable statute or court
decisions;

(k) limitations on the enforceability of any indemnity obligations imposed upon
or undertaken by the borrower to the extent that such obligations do not satisfy
the requirements of Sections 2772 et seq. of the California Civil Code and any
judicial decisions thereunder; provided that the limitations and qualifications
set forth in the immediately preceding sub-paragraphs (b) through (k) do not, in
our opinion, render the remedies available to the Lenders under the Loan
Documents inadequate for the practical realization of the primary rights and
benefits reasonably expected by an institutional lender in a comparable
unsecured credit facility transaction governed by California law; and

(l) the effect of Grafton Partners L.P. v. Superior Court, 36 Cal. 4th 944, 2005
WL 1831995 (Cal. 2005), in which the California Supreme Court held that
predispute contractual waivers of trial by jury are invalid, as well as the
effect of Section 631(d) of the California Code of Civil Procedure, which
provides that a court may, in its discretion upon just terms, allow a trial by
jury although there may have been a waiver of trial by jury.

The foregoing opinions are subject to the following exceptions and
qualifications:

a. We have not been requested to verify and have not verified the validity,
accuracy, or reasonableness of any of the factual representations contained in
either or both of the Loan Documents, and we express no opinion with respect to
any of such matters.

b. We are members of the bar of the State of California. We are opining herein
only concerning matters governed by the Federal laws of the United States of
America, the substantive laws of the State of California, and the General
Corporation Law of the State of Delaware, and only with respect to Borrower. We
express no opinion concerning the applicability to either or both of the Loan
Documents, or the effect thereon, of the laws of any other jurisdiction.
Furthermore, we express no opinion with respect to choice of law or conflicts of
law, and none of the opinions stated herein shall be deemed to include or refer
to choice of law or conflict of law.

c. We express no opinion on any Federal or state securities laws as they may
relate to either or both of the Loan Documents.

d. We express no opinion as to compliance with the usury laws of any
jurisdiction.

The opinions set forth herein are given as of the operative date. We disclaim
any obligation to notify you or any other person or entity after the operative
date if any change in fact and/or law should change our opinion with respect to
any matters set forth herein. This opinion letter is rendered to you in your
capacity as the Agent on behalf of the Lenders under the Credit Agreement and
may not be relied upon, circulated or quoted, in whole or in part, by any other

 

3

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person or entity (other than the Lenders and a person or entity who becomes an
assignee or successor in interest of any Lender or acquires a participation from
any Lender consistent with the terms of the Loan Documents) and shall not be
referred to in any report or document furnished to any other person or entity
without our prior written consent; provided, however, that the foregoing shall
not preclude any Lender from describing or otherwise disclosing the existence or
contents of this letter to (i) any bank regulatory authority having jurisdiction
over such Lender, as required by such authority, (ii) a person or entity who, in
good-faith discussions between such Lender and such person or entity, is
proposed to become an assignee or successor in interest of such Lender or to
acquire a participation from the Bank consistent with the terms of the Loan
Documents, and (iii) counsel to the Agent and the Lenders.

 

Very truly yours,

HOWARD RICE NEMEROVSKI

CANADY FALK & RABKIN

A Professional Corporation

By:

      

 

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EXHIBIT F

FORM OF ASSIGNMENT AND ACCEPTANCE

 

To: CITICORP USA, INC., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement (364-Day Commitment) dated as
of June 16, 2006 between THE CHARLES SCHWAB CORPORATION, a Delaware corporation
(“Borrower”), Lenders from time to time party thereto, and CITICORP USA, INC.,
as Administrative Agent (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement”, the terms
defined therein being used herein as therein defined).

1. We hereby give you notice of, and request your consent to, the assignment by
                (the “Assignor”) to                 (the “Assignee”) of
                % of the right, title and interest of the Assignor in and to the
Loan Documents, including, without limitation, the right, title and interest of
the Assignor in and to the Commitment of the Assignor, and all outstanding Loans
made by the Assignor. Before giving effect to such assignment:

(a) the aggregate amount of the Assignor’s Commitment is $            .

(b) the aggregate principal amount of its outstanding Loans is $            .

2. The Assignee hereby represents and warrants that it has complied with the
requirements of Section 10.8 of the Agreement in connection with this assignment
and acknowledges and agrees that: (a) other than the representation and warranty
that it is the legal and beneficial owner of the Pro Rata Share being assigned
hereby free and clear of any adverse claim, the Assignor has made no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness or
sufficiency of the Agreement of any other Loan Document; (b) the Assignor had
made no representation or warranty and assumes no responsibility with respect to
the financial condition of Borrower or the performance by Borrower of the
Obligations; (c) it has received a copy of the Agreement, together with copies
of the most recent financial statements delivered pursuant to Section 6.2
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (d) it will independently and without reliance upon Administrative
Agent or any Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Agreement; (e) it appoints and authorizes
Administrative Agent to take such action and to exercise such powers under the
Agreement and the other Loan Documents as are delegated to Administrative Agent
by the Agreement and such other Loan Documents; and (f) it will perform in
accordance with their terms all of the obligations which by the terms of the
Agreement are required to be performed by it as a Lender.

 

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3. The Assignee agrees that, upon receiving your consent to such assignment and
form and after             , the Assignee will be bound by the terms of the Loan
Documents, with respect to the interest in the Loan Documents assigned to it as
specified above, as fully and to the same extent as if the Assignee were a
Lender originally holding such interest in the Loan Documents.

4. The following administrative details apply to the Assignee:

 

  (a) Credit Contact:

Assignee name:                                         

Address:                                                     

_________________________________

Attention:                                                 

Telephone:                                                 

Telecopier:                                                 

 

  (b) Operations Contract:

Assignee name:                                         

Address:                                                     

_________________________________

Attention:                                                 

Telephone:                                                 

Telecopier:                                                 

 

  (c) Lending Office:

Assignee name:                                         

Address:                                                     

_________________________________

 

  (d) Payment Instructions:

Assignee name:                                         

ABA No.:                                                 

Account No.:                                             

Attention:                                                 

Reference:                                                 

 

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IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment
and Acceptance to be executed by their respective duly authorized officials,
officers or agents as of the date first above mentioned.

 

Very truly yours,

[ASSIGNOR]

By:

    

Name:

    

Title:

    

 

[ASSIGNEE]

By:

    

Name:

    

Title:

    

 

We hereby consent to the

foregoing assignment.

THE CHARLES SCHWAB CORPORATION,

as Borrower

By:

    

Name:

    

Title:

    

 

CITICORP USA, INC.,

as Administrative Agent

By:

    

Name:

    

Title:

    

 

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