Document:

Exhibit 4.1

 

MOTHERS WORK, INC.

 

and

 

STOCKTRANS, INC.,

 

Rights Agent

 

 

Amended and Restated Rights Agreement

 

Dated as of October 9, 2005

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
   

  	
  Certain Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  Appointment of Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  Issue of Rights Certificates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  Form of Rights Certificates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  Countersignature and Registration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  Transfer, Split Up, Combination and
  Exchange of Rights Certificates:  Mutilated, Destroyed, Lost or
  Stolen Rights Certificates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  Exercise of Rights; Purchase Price;
  Expiration Date of Rights

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  Cancellation and Destruction of Rights
  Certificates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  Reservation and Availability of Capital
  Stock

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  Preferred Stock Record Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  Adjustment of Purchase Price, Number and
  Kind of Shares or Number of Rights

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
   

  	
  Certificate of Adjusted Purchase Price or
  Number of Shares

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
   

  	
  Consolidation, Merger or Sale or Transfer
  of Assets or Earning Power

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
   

  	
  Fractional Rights and Fractional Shares

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
   

  	
  Rights of Action

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
   

  	
  Agreement of Rights Holders

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
   

  	
  Rights Certificate Holder Not Deemed a Shareholder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
   

  	
  Concerning the Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
   

  	
  Merger or Consolidation or Change of Name
  of Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
   

  	
  Duties of Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
   

  	
  Change of Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
   

  	
  Issuance of New Rights Certificates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
   

  	
  Redemption and Termination

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 24.

  	
   

  	
  Notice of Certain Events

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 25.

  	
   

  	
  Notices

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 26.

  	
   

  	
  Supplements and Amendments

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 27.

  	
   

  	
  Successors

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 28.

  	
   

  	
  Determinations and Actions by the Board of Directors, etc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 29.

  	
   

  	
  Benefits of this Agreement

  	
   

  	
   

  

 

i

 

	
  SECTION 30.

  	
   

  	
  Severability

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 31.

  	
   

  	
  Governing Law

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 32.

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 33.

  	
   

  	
  Descriptive Headings

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 34.

  	
   

  	
  Exchange

  	
   

  	
   

  

 

ii

 

AMENDED AND RESTATED RIGHTS AGREEMENT

 

AMENDED AND
RESTATED RIGHTS AGREEMENT dated as of October 9, 2005 (the “Agreement”),
between MOTHERS WORK, INC., a Delaware corporation (the “Company”) and
STOCKTRANS, INC. (the “Rights Agent”).

 

WHEREAS,
effective October 5, 1995 (the “Rights Dividend Declaration Date”),
the Board of Directors of the Company authorized and declared a distribution of
one right for each share of common stock, par value $.01 per share, of the
Company (the “Company Common Stock”) outstanding at the Close of
Business (as hereinafter defined) on October 16, 1995 (the “Record Date”),
and authorized the issuance of one right (as such number may hereinafter be
adjusted pursuant hereto) for each share of Company Common Stock issued between
the Record Date (whether originally issued or delivered from the Company’s
treasury) and, except as otherwise provided in Section 22, the
Distribution Date (as hereinafter defined), each right issued in respect of a
share of Company Common Stock (“Right”) initially representing the right
to purchase, upon the terms and subject to the conditions hereinafter set
forth, one Unit of Series B Junior Participating Preferred Stock;

 

WHEREAS,
between the Rights Dividend Declaration Date and the date hereof, the Agreement
has been amended on June 4, 1997, October 24, 2001, June 3, 2002
and January 15, 2003; and

 

WHEREAS, the
Company desires to amend the Agreement to, among other things, to extend the
expiration date of the Rights, and to restate the Agreement, as thereby
amended, in its entirety;

 

NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set forth, the parties hereby agree as follows:

 

SECTION 1.      Certain
Definitions.  For purposes of this
Agreement, the following terms have the meanings indicated:

 

(a)           “Acquiring
Person” means any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity) that shall be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding; provided, however, that the term “Acquiring
Person” shall not include an Exempt Person. 
Notwithstanding the foregoing, if the Board of Directors determines in
good faith that a Person who would otherwise be an Acquiring Person has become
such inadvertently (including, without limitation, because (A) such person
was unaware that he or it is the Beneficial Owner of a percentage of Common
Stock that would otherwise cause such Person to be an Acquiring Person, or (B) such
Person was aware of the percentage of securities of which he or it was the
Beneficial Owner but had no actual knowledge of the consequences of being the
Beneficial Owner of such percentage under this Agreement) and without any
intention of changing or influencing control of the Company, and if such
Person, as promptly as practicable after being advised of such determination,
divests himself or itself of a sufficient number of shares of Common Stock so
that such Person would no longer be the Beneficial Owner of that percentage of
securities which would otherwise result in him or it being an Acquiring Person,
then such

 

 

Person shall not be deemed to be or to have become an Acquiring Person
for any purposes of this Agreement.

 

(b)           “Affiliate”
and “Associate” have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as in effect on the date hereof.

 

(c)           A Person
shall be deemed the “Beneficial Owner” of, and shall be deemed to “beneficially
own,” any securities:

 

(i)            of which
such Person or any of such Person’s Affiliates or Associates is considered to
be a “beneficial owner” under Rule 13d-3 of the General Rules and
Regulations under the Exchange Act (the “Exchange Act Regulations”) as
in effect on the date hereof; provided, however, that a Person shall not be
deemed the “Beneficial Owner” of, or to “beneficially own”, any securities
under this subparagraph (i) as a result of an agreement, arrangement or
understanding to vote such securities if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response
to a proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the Exchange Act and the Exchange Act Regulations
and (B) is not reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report);

 

(ii)           which are
beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate of such other Person) with which such Person (or any of
such Person’s Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (i) of this paragraph (c) of Section 1)
or disposing of such securities; or

 

(iii)          which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction of
conditions) pursuant to any agreement, arrangement or understanding (whether or
not in writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that under this
paragraph (c) a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own”, (A) securities tendered pursuant to a tender or
exchange offer made in accordance with Exchange Act Regulations by such Person
or any of such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, (B) securities that may be issued
upon exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities that may be issued upon exercise of Rights from
and after the occurrence of a Triggering Event, which Rights were acquired by
such Person or any of such Person’s Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(c) or Section 22 (the
“Original Rights”) or pursuant to Section 11(i) in connection with an
adjustment made with respect to any Original Rights.

 

PROVIDED, HOWEVER, any of the foregoing to the
contrary notwithstanding, (x) a certain individual, Robert Brown (“Brown,” an
individual who has served as a general partner of certain entities within the
Meridian Group), shall not be deemed to beneficially own shares of

 

2

 

Company Common Stock beneficially owned by the Meridian Group during
such time as it remains an Exempt Person, and (y) the Meridian Group shall not
be deemed to beneficially own any shares beneficially owned by Brown at any
time during which this Amended and Restated Rights Agreement is in effect, so
long as Brown shall not be the beneficial owner of 10% or more of the Company
Common Stock then outstanding, provided, in the case of each of clause (x) and
clause (y), neither Brown nor the Meridian Group acquires or holds beneficial
ownership of any shares of Company Common Stock for the purpose or with the
effect of changing or influencing control of the Company, or participates in
any transaction (other than a transaction approved by the Board of Directors of
the Company) having such purpose or effect.

 

(d)           Board
of Directors” means the Board of Directors of the Company, as constituted
from time to time.

 

(e)           “Business
Day” means any day other than a Saturday, Sunday or a day on which banking
institutions in New York City are authorized or obligated by law or executive
order to be closed.

 

(f)            “Close
of Business” on any given date means 5:00 P.M., New York City time, on
such date; provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.

 

(g)           “Common
Stock” of any Person other than the Company means the capital stock of such
Person with the greatest voting power, or, if such Person shall have no capital
stock, the equity securities or other equity interest having power to control
or direct the management of such Person.

 

(h)           “Company
Common Stock” has the meaning set forth in the Recital.

 

(i)            “Crown
Group” means (A) Crown-Glynn Associates, Ltd., (B) Crown-Associates
III, Limited, (C) Crown Trust Limited Partnership, and (D) any
Affiliate or Associate of any Person listed in clauses (A), (B) or (C) of
this paragraph (i).

 

(j)            “Distribution
Date” has the meaning set forth in Section 3(a).

 

(k)           “Exempt
Person” means:

 

(i)            the
Company, any Subsidiary of the Company, any employee benefit plan or employee
stock plan of the Company or of any Subsidiary of the Company, or any person or
entity organized, appointed, established or holding Company Common Stock for or
pursuant to the terms of any such plan;

 

(ii)           any member
of the Matthias Group, any member of the Mass Financial Group, or any member of
the Crown Group; PROVIDED, HOWEVER, that all the members of the Mass Financial
Group or the Crown Group, as applicable, shall immediately and thereafter cease
to be an Exempt Person if the members of such group shall acquire, at any time
after the Rights Dividend Declaration Date, additional shares resulting in an
increase in such group’s aggregate beneficial ownership of Company Common Stock
from time to time

 

3

 

outstanding by more than 46,833 shares of Company Common Stock; and
PROVIDED, FURTHER, that all members of the Matthias Group shall immediately and
thereafter cease to be an Exempt Person if such group at any time shall acquire
additional shares resulting in an increase in its aggregate beneficial
ownership of Company Common Stock from time to time outstanding, except for
increases resulting from the future issuance to such members of options
hereafter issued by the Company, or by inheritance or laws of descent;

 

(iii)          any
member of the Meridian Group, PROVIDED, HOWEVER, that all members of the
Meridian Group shall immediately and thereafter cease to be an Exempt Person if
the members of such group shall acquire, at any time after the Rights Dividend
Declaration Date, additional shares resulting in such group’s aggregate
beneficial ownership of Company Common Stock to exceed the aggregate number of
shares of Company Common Stock held by such group on the close of business on June 3,
2002 (such aggregate number of shares to be appropriately adjusted for a
dividend or distribution on Company Common Shares payable in such shares or
securities convertible into such shares (other than the Rights) or for any
subdivision, combination or reclassification of such Company Common Stock;

 

(iv)          Robert
Fleming Inc. (“Fleming”); PROVIDED, HOWEVER, that Fleming shall immediately and
thereafter cease to be an Exempt Person if it, individually or together with
its Affiliates or Associates, shall acquire, at any time after May 22,
1997, additional shares resulting in an increase in its aggregate beneficial
ownership of Company Common Stock from time to time outstanding by more than
46,833;

 

(v)           Centre
Capital Investors III, L.P. (“Centre Capital”), Centre Capital Individual
Investors III, L.P. (“Centre Individual”), Centre Capital Offshore Investors
III, L.P. (“Centre Offshore”), Centre Capital Tax-Exempt Investors III, L.P. (“Centre
Tax-Exempt”) and Centre Partners Coinvestment III, L.P. (“Centre Coinvestment”
and Centre Coinvestment, Centre Capital, Centre Individual, Centre Offshore,
Centre Tax-Exempt, Centre Partners Management, LLC and their Affiliates are
sometimes collectively referred to herein as “Centre Partners”) insofar as
Centre Partners (or any of them) acquires the Series C Shares, acquires up
to 400,000 shares of Company Common Stock pursuant to the Purchase Right during
the Open Market Purchase Period (the “Open Market Shares”), acquires up to
175,000 shares of Company Common Stock upon exercise of a certain Warrant(s)
dated October 17, 2001 issued to Centre Partners (the “Warrant Shares”)
and acquires up to 193,229 shares of Company Common Stock issued upon exercise
of the Conversion Right (the “Conversion Shares”); PROVIDED, HOWEVER, that
Centre Partners and all of its officers, directors, employees and Affiliates
shall immediately and thereafter cease to be an Exempt Person if it,
individually or together with its Affiliates or Associates, shall acquire, at
any time hereafter, additional shares of Common Stock other than the Series C
Shares, the Open Market Shares, the Warrant Shares and the Conversion Shares
which acquisition results in Centre Partners’ aggregate beneficial ownership of
Company Common Stock then outstanding equaling or exceeding 10%; and

 

(vi)          any Person
who would otherwise become an Acquiring Person solely by virtue of a reduction
in the number of outstanding shares of Company Common Stock; PROVIDED, HOWEVER,
that such Person shall not be an Exempt Person if, subsequent to such
reduction, such Person shall become the Beneficial Owner of any additional
shares of Company Common Stock.

 

4

 

(l)            “Expiration
Date” has the meaning set forth in Section 7(a).

 

(m)          “Mass
Financial Group” means Massachusetts Financial Services Company and any
Affiliate or Associate of Massachusetts Financial Services Company.

 

(n)           “Matthias
Group” means (i) Dan W. Matthias, (ii) Rebecca C. Matthias, or (iii) any
Affiliate or Associate of any Person listed in clauses (i) or (ii) of
this paragraph (o).

 

(o)           “Meridian
Group” means Meridian Venture Partners and MVP Distribution Partners, or
any Affiliate or Associate of either of them, but shall expressly exclude
Brown.

 

(p)           “Person”
means any individual, partnership, firm, corporation, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
deemed to be a person under Section 14(d)(2) of the Exchange Act.

 

(q)           “Preferred
Stock” the Series B Junior Participating Preferred Stock, par value
$.01 per share, of the Company having the voting powers, designation,
preferences and relative, participating, optional or other special rights and
qualifications, limitations and restrictions described in the Certificate of
Designation set forth as Exhibit B.

 

(r)            “Purchase
Price” has the meaning set forth in Section 7(b).

 

(s)           “Record
Date” has the meaning set forth in the Recital.

 

(t)            “Right”
has the meaning set forth in the Recital.

 

(u)           “Rights
Certificate” has the meaning set forth in Section 3(a).

 

(v)           “Rights
Dividend Declaration Date” has the meaning set forth in the Recital.

 

(w)          “Section 11(a)(ii) Event”
means any event described in Section 11(a)(ii)(A), (B) or (C).

 

(x)            “Section 13
Event” means any event described in clause (x), (y) or (z) of Section 13(a).

 

(y)           “Stock
Acquisition Date” means the first date of public announcement (including,
without limitation, the filing of any report pursuant to Section 13(d) of
the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.

 

(z)            “Subsidiary”
means, with reference to any Person, any other Person of which an amount of voting
securities or equity interests sufficient to elect at least a majority of the
directors or equivalent governing body of such other Person is beneficially

 

5

 

owned, directly or indirectly, by such Person, or otherwise controlled
by such first-mentioned Person.

 

(aa)         “Summary
of Rights” has the meaning set forth in Section 3(b).

 

(bb)         “Triggering
Event” means any Section 11(a)(ii) Event or any Section 13
Event.

 

(cc)         “Unit”
has the meaning set forth in Section 7(b).

 

SECTION 2.      Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.  With the consent of the
Rights Agent, the Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.

 

SECTION 3.      Issue
of Rights Certificates.

 

(a)           Until (i) the
earlier of the Close of Business on the tenth Business Day after (A) the
Stock Acquisition Date, (B) the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan maintained by the Company or any of its Subsidiaries or any
trustee or fiduciary with respect to such plan acting in such capacity) is
commenced, if upon consummation of such tender or exchange offer such Person
would be the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding (a “Tender or Exchange Offer”), or (C) the
date when any pre-commencement communication meeting the description of Rule 14d-2(b) of
the Exchange Act Regulations (or any successor rule) is made in connection with
or relating to a Tender or Exchange Offer, or (ii) such later date as may
be determined by action of the Board of Directors (such determination to be
made prior to the Close of Business on the tenth Business Day after the
earliest to occur of the three dates specified in (i) above) and of which
the Company will give the Rights Agent prompt written notice (such date above
being the “Distribution Date”), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for shares of Company Common Stock registered in the names of the
holders of shares of Company Common Stock as of and subsequent to the Record
Date (which certificates for shares of Company Common Stock shall be deemed
also to be certificates for Rights) and not by separate certificates, and (y)
the Rights will be transferable only in connection with the transfer of the
underlying shares of Company Common Stock (including a transfer to the
Company).  As soon as practicable after
the Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of shares of Company Common Stock
as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more rights certificates, in
substantially the form of Exhibit A (the “Rights Certificates”),
evidencing one Right for each share of Company Common Stock so held, subject to
adjustment as provided herein.  In the
event that an adjustment in the number of Rights per share of Company Common
Stock has been made pursuant to Section 11(p), at the time of distribution
of the Rights Certificates, the Company may make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers of Rights are

 

6

 

distributed and cash is paid in lieu of any fractional Rights.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.

 

(b)           As
promptly as practicable following the Record Date, the Company will send a copy
of a Summary of Rights to Purchase Preferred Stock, in a form which may be
appended to certificates that evidence shares of Company Common Stock; in
substantially the form attached hereto as Exhibit C (the “Summary of
Rights”), by first-class, postage prepaid mail, to each record holder of
shares of Company Common Stock as of the Close of Business on the Record Date,
at the address of such holder shown on the records of the Company.

 

(c)           Rights shall,
without any further action, be issued in respect of all shares of Company
Common Stock that are issued (including any shares of Company Common Stock held
in treasury) after the Record Date (but prior to the earlier of the
Distribution Date and the Expiration Date), and certificates evidencing such
shares of Company Common Stock issued after the Record Date shall bear the
following legend:

 

“This certificate also evidences and entitles
the holder hereof to certain Rights as set forth in the Rights Agreement
between Mothers Work, Inc. (the “Company”) and StockTrans, Inc.
(the “Rights Agent”) originally dated as of October 9, 1995, and as
amended to date (the “Rights Agreement), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal office of the stock transfer administration office of the Rights
Agent.  Under certain circumstances; as
set forth in the Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.  The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request therefor.  Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may become null and void.”

 

With respect
to certificates evidencing shares of Company Common Stock (whether or not such
certificates include the foregoing legend or have appended to them the Summary
of Rights), until the earlier of the Distribution Date and the Expiration Date,
the Rights associated with the shares of Company Common Stock evidenced by such
certificates shall be evidenced by such certificates alone and registered
holders of the shares of Company Common Stock shall also be the registered
holders of the associated Rights, and the transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the shares of
Company Common Stock evidenced by such certificates.

 

 

7

 

SECTION 4.      Form of
Rights Certificates.

 

(a)           The Rights
Certificates (and the forms of election to purchase, assignment and certificate
to be printed on the reverse thereof) shall each be substantially in the form
set forth in Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or any rule or
regulation thereunder or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed or to conform to
usage.  Subject to the provisions of Section 11
and Section 22, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of Units of Preferred Stock as shall be set forth
therein at the price set forth therein, but the amount and type of securities,
cash or other assets that may be acquired upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.

 

(b)           Any Rights
Certificate issued pursuant hereto that represents Rights beneficially owned
by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) that becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and that receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer that the Board of Directors has determined to be part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7(e) shall, upon the written direction of the
Board of Directors, contain (to the extent feasible) the following legend:

 

“The Rights
represented by this Rights Certificate are or were beneficially owned by a
Person who was or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement).  Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of such Agreement.”

 

SECTION 5.      Countersignature
and Registration.

 

(a)           Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, the President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries.  The signature of any of
these officers on the Rights Certificates may be manual or facsimile.  Rights Certificates bearing the manual or
facsimile signatures of the individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at
the date of such Rights Certificates.  No
Rights Certificate shall be

 

8

 

entitled to any benefit under this Agreement or be valid for any
purpose unless there appears on such Rights Certificate a countersignature duly
executed by the Rights Agent by manual signature of an authorized signatory,
and such countersignature upon any Rights Certificate shall be conclusive
evidence, and the only evidence, that such Rights Certificate has been duly
countersigned as required hereunder.

 

(b)           Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for surrender of Rights Certificates upon exercise or
transfer, books for registration and registration of transfer of the Rights
Certificates issued hereunder.  Such
books shall show the name and address of each holder of the Rights
Certificates, the number of Rights evidenced on its face by each Rights
Certificate and the date of each Rights Certificate.

 

SECTION 6.      Transfer,
Split Up, Combination and Exchange of Rights
Certificates:  Mutilated, Destroyed, Lost or Stolen Rights
Certificates.

 

(a)           Subject to
the provisions of Sections 4(b), 7(e) and 14, at any time after the Close
of Business on the Distribution Date, and at or prior to the Close of Business
on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of
Units of Preferred Stock (or, following a Triggering Event, other securities,
cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose.  Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificate until the registered holder shall
have completed and executed the certificate set forth in the form of assignment
on the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of Section 4(b),
Section 7(e) and Section 14, countersign and deliver to the
Person entitled thereto, a Rights Certificate or Rights Certificates, as the
case may be, as so requested.  The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.

 

(b)           If a
Rights Certificate shall be mutilated, lost, stolen or destroyed, upon request
by the registered holder of the Rights represented thereby and upon payment to
the Company and the Rights Agent of all reasonable expenses incident thereto,
there shall be issued, in exchange for and upon cancellation of the mutilated
Rights Certificate, or in substitution for the lost, stolen or destroyed Rights
Certificate, a new Rights Certificate, in substantially the form of the prior
Rights Certificate, of like tenor and evidencing the equivalent number of
Rights, but, in the case of loss, theft or destruction, only upon receipt of
evidence satisfactory to the

 

9

 

Company and the Rights Agent of such loss, theft or destruction of such
Rights Certificate and, if requested by the Company or the Rights Agent,
indemnity also satisfactory to it.

 

SECTION 7.      Exercise
of Rights; Purchase Price; Expiration Date of Rights.

 

(a)           Prior to
the earlier of (i) the Close of Business on October 9, 2015 “Final
Expiration Date”), and (ii) the time at which the Rights are redeemed
as provided in Section 23 (the earlier of (i) and (ii) being the
“Expiration Date”), the registered holder of any Rights Certificate may,
subject to the provisions of Sections 7(e) and 9(c), exercise the Rights
evidenced thereby in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price (as hereinafter defined) for the
number of Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) for which such
surrendered Rights are then exercisable.

 

(b)           The
purchase price for each one one-thousandth of a share (each such one
one-thousandth of a share being a “Unit”) of Preferred Stock upon
exercise of Rights shall be $85.00, subject to adjustment from time to time as
provided in Sections 11 and 13(a) (such purchase price, as so adjusted,
being the “Purchase Price”), and shall be payable in accordance with
paragraph (c) below.

 

(c)           As
promptly as practicable following the occurrence of the Distribution Date, the
Company shall deposit with a corporation in good standing organized under the
laws of the United States or any State of the United States, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority
(such institution being the “Depositary Agent”) certificates evidencing
the shares of Preferred Stock that may be acquired upon exercise of the Rights
and shall cause such Depositary Agent to enter into an agreement pursuant to
which the Depositary Agent shall issue receipts evidencing interests in the
shares of Preferred Stock so deposited. 
Upon receipt of a Rights Certificate evidencing exercisable Rights, with
the form of election to purchase and the certificate duly executed, accompanied
by payment, with respect to each Right so exercised, of the Purchase Price for
the Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) to be purchased thereby
as set forth below and an amount equal to any applicable transfer tax or
evidence satisfactory to the Company of payment of such tax, the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) requisition
from the Depositary Agent depositary receipts evidencing such number of Units
of Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14, (iii) after receipt of such depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such
cash, if any, to or upon the order of the registered holder of such Rights
Certificate.  In the event that the
Company is obligated to issue Company Common Stock, other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a),
the Company will make all arrangements necessary so that such Company Common
Stock, other securities, cash and/or other property are

 

10

 

available for distribution by the Rights Agent, if and when appropriate.  The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be
made in cash or by certified or bank check or money order payable to the order
of the Company.

 

(d)           In case
the registered holder of any Rights Certificate shall exercise less than all
the Rights evidenced thereby, a new Rights Certificate evidencing the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14.

 

(e)           Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of any Section 11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) that
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) that
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and that receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person (or any
such Associate or Affiliate) to holders of equity interests in such Acquiring
Person (or any such Associate or Affiliate) or to any Person with whom the
Acquiring Person (or such Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights, shares of
Company Common Stock or the Company or (B) a transfer that the Board of
Directors has determined to be part of a plan, arrangement or understanding that
has as a primary purpose or effect the avoidance of this Section 7(e),
shall be null and void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. 
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are
complied with, but shall have no liability to any holder of Rights or any other
Person as a result of its failure to make any determination under this Section 7(e) or
such Section 4(b) with respect to an Acquiring Person or its
Affiliates, Associates or transferees.

 

(f)            Notwithstanding
anything in this Agreement or any Rights Certificate to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise by such registered holder unless such registered holder shall have (i) completed
and executed the certificate following the form of election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) of the Rights evidenced by
such Rights Certificate or Affiliates or Associates thereof as the Company
shall reasonably request.

 

SECTION 8.      Cancellation
and Destruction of Rights Certificates. 
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement.  The Company
shall deliver to the Rights Agent for cancellation and retirement, and

 

11

 

the Rights Agent shall so cancel and retire, any Rights Certificates
acquired by the Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all canceled
Rights Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

 

SECTION 9.      Reservation
and Availability of Capital Stock.

 

(a)           The
Company shall at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of Preferred Stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights.  Upon the occurrence of any events resulting
in an increase in the aggregate number of shares of Preferred Stock (or other
equity securities of the Company) issuable upon exercise of all outstanding
Rights above the number then reserved, the Company shall make appropriate increases
in the number of shares so reserved.

 

(b)           If the
shares of Preferred Stock to be issued and delivered upon the exercise of the
Rights may be listed on any national securities exchange, the Company shall
during the period from the Distribution Date through the Expiration Date use
its best efforts to cause all securities reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.

 

(c)           The
Company shall use its best efforts (i) as soon as practicable following
the occurrence of a Section 11 (a)(ii) Event and a determination by
the Company in accordance with Section 11(a)(iii) of the
consideration to be delivered by the Company upon exercise of the Rights or, if
so required by law, as soon as practicable following the Distribution Date
(such date being the “Registration Date”), to file a registration
statement on an appropriate form under the Securities Act of 1933, as amended
(the “Securities Act”), with respect to the securities that may be
acquired upon exercise of the Rights (the “Registration Statement”), (ii) to
cause the Registration Statement to become effective as soon as practicable
after such filing, (iii) to cause the Registration Statement to continue
to be effective (and to include a prospectus complying with the requirements of
the Securities Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for the securities covered by the Registration
Statement, and (B) the Expiration Date and (iv) to take as soon as
practicable following the Registration Date such action as may be required to
ensure that any acquisition of securities upon exercise of the Rights complies
with any applicable state securities or “blue sky” laws.

 

(d)           The
Company shall take such action as may be necessary to ensure that all shares of
Preferred Stock (and, following the occurrence of a Triggering Event, any other
securities that may be delivered upon exercise of Rights) shall be, at the time
of delivery of the certificates or depositary receipts for such securities,
duly and validly authorized and issued and fully paid and non-assessable.

 

(e)           The
Company shall pay any documentary, stamp or transfer tax imposed in connection
with the issuance or delivery of the Rights Certificates or upon the exercise
of Rights; provided, however, that the Company shall not be
required to pay any such tax imposed in connection with the issuance or
delivery of Units of Preferred Stock, or any

 

12

 

certificates or depositary receipts for such Units of Preferred Stock
(or, following the occurrence of a Triggering Event, any other securities, cash
or assets, as the case may be) to any person other than the registered holder
of the Rights Certificates evidencing the Rights surrendered for exercise.  The Company shall not be required to issue or
deliver any certificates or depositary receipts for Units of Preferred Stock
(or, following the occurrence of a Triggering Event, any other securities, cash
or assets, as the case may be) to, or in a name other than that of, the
registered holder upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company’s
satisfaction that no such tax is due.

 

SECTION 10.      Preferred
Stock Record Date.  Each Person in
whose name any certificate for Units of Preferred Stock (or, following the
occurrence of a Triggering Event, other securities) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Units of Preferred Stock (or, following the occurrence of a Triggering
Event, other securities) evidenced thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) transfer books of the
Company are closed, such Person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or, following the
occurrence of a Triggering Event, other securities) transfer books of the
Company are open and, further  provided, however, that if
delivery of Units of Preferred Stock is delayed pursuant to Section 9(c),
such Persons shall be deemed to have become the record holders of such Units of
Preferred Stock only when such Units first become deliverable.  Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any rights
of a shareholder of the Company with respect to securities for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.

 

SECTION 11.      Adjustment
of Purchase Price, Number and Kind of Shares or Number of Rights.  The Purchase Price, the number and kind of
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.

 

(a)           (i) 
In the event the Company shall at any time after the date of this Agreement (A) declare
a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide
the outstanding shares of Preferred Stock, (C) combine the outstanding
shares of Preferred Stock into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be, issuable on
such date upon exercise of the Rights, shall be proportionately adjusted

 

13

 

so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock or capital stock, as the
case may be, which, if such Right had been exercised immediately prior to such
date, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification.  If an event occurs
that would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).

 

(ii)           In the
event:

 

(A)          any
Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any
time after the date hereof, directly or indirectly, (1) shall merge into
the Company or otherwise combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or combination and Company
Common Stock shall remain outstanding and unchanged, (2) shall, in one
transaction or a series of transactions, transfer any assets to the Company or
to any of its Subsidiaries in exchange (in whole or in part) for shares of
Company Common Stock, for other equity securities of the Company or any such
Subsidiary, or for securities exercisable for or convertible into shares of
equity securities of the Company or any of its Subsidiaries (whether Company
Common Stock or otherwise) or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of such
equity securities or securities exercisable for or convertible into such equity
securities (other than pursuant to a pro  rata distribution to all
holders of Company Common Stock), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the Company or any of
its Subsidiaries or any employee benefit plan maintained by the Company or any
of its Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity, assets (including securities) on terms and conditions
less favorable to the Company or such Subsidiary or plan than those that could
have been obtained in arm’s-length negotiations with an unaffiliated third
party, other than pursuant to a transaction set forth in Section 13(a), (4) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of transactions, to, from
or with the Company or any of the Company’s Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or any
trustee or fiduciary with respect to such plan acting in such capacity (other
than transactions, if any, consistent with those engaged in, as of the date
hereof, by the Company and such Acquiring Person or such Associate or
Affiliate), assets (including securities) having an aggregate fair market value
of more than $5 million, other than pursuant to a transaction set forth in Section 13(a),
(5) shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such plan acting in such capacity, any
material trademark or material service mark, other than pursuant to a
transaction set forth in Section 13(a), (6) shall receive, or any
designee, agent or representative of such Acquiring Person or any Affiliate or
Associate of such Acquiring Person shall receive, any compensation from the
Company or any of its Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the Company’s (or
its Subsidiaries’) past practices, or (7) shall receive the benefit,
directly or indirectly (except

 

14

 

proportionately as a holder of Company Common Stock or as required by
law or governmental regulation), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries or any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity; or

 

(B)           any Person
shall become an Acquiring Person, other than pursuant to any transaction set
forth in Section 13(a); or

 

(C)           during
such time as there is an Acquiring Person, there shall be any reclassification
of securities (including any reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions involving the
Company or any of its Subsidiaries, other than a transaction or transactions to
which the provisions of Section 13(a) apply (whether or not with or
into or otherwise involving an Acquiring Person), which has the effect,
directly or indirectly, of increasing by more than 1% the proportionate share
of the outstanding shares of any class of equity securities of the Company or
any of its Subsidiaries that is directly or indirectly beneficially owned by
any Acquiring Person or any Associate or Affiliate of any Acquiring Person;

 

then,
immediately upon the date of the occurrence of an event described in Section 11
(a)(ii)(A)-(C) (a “Section 11(a)(ii) Event”), proper
provision shall be made so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of the number of Units of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11 (a)(ii) Event, such number of Units of
Preferred Stock as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of Units of Preferred Stock for which
a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event
(such product thereafter being, for all purposes of this Agreement other than Section 13,
the “Purchase Price”), and (y) dividing that product by 50% of the then
current market price (determined pursuant to Section 11(d) hereof)
per Unit of Preferred Stock on the date of such first occurrence (such Units of
Preferred Stock being the “Adjustment Shares”).

 

(iii)          In
the event that the number of shares of Preferred Stock that are authorized by
the Company’s Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company, with the
approval of the Board of Directors, shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a Right (the “Current
Value”) over (2) the Purchase Price (such excess being the “Spread”),
and (B) with respect to each Right, make adequate provision to substitute
for such Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Company Common Stock or
other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock (such other shares being “preferred
stock equivalents”)), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined

 

15

 

by the Board of Directors, after receiving advice from a nationally
recognized investment banking firm; provided, however, that if the Company
shall not have made adequate provision to deliver value pursuant to clause (B) above
within 30 days following the later of (x) the first occurrence of a Section 11(a)(ii) Event
and (y) the date on which the Company’s right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the “Section 11(a)(iii) Trigger
Date”), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price,
Units of Preferred Stock (to the extent available) and then, if necessary,
cash, which Units of Preferred Stock and/or cash shall have an aggregate value
equal to the Spread.  To the extent that
the Company determines that some action need be taken pursuant to the first
sentence of this Section 11(a)(iii), the Company shall provide, subject to
Section 7(e), that such action shall apply uniformly to all outstanding
Rights.  For purposes of this Section 11(a)(iii),
the value of a Unit of Preferred Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Unit of Preferred
Stock on the Section 11(a)(iii) Trigger Date and the value of any
preferred stock equivalent shall be deemed to have the same value as the
Preferred Stock on such date.

 

(b)           In case
the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within 45 days after such record date) shares
of Preferred Stock (or shares having substantially the same rights, privileges
and preferences as shares of Preferred Stock (“Equivalent Preferred Stock”))
or securities convertible into Preferred Stock or Equivalent Preferred Stock at
a price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the current market
price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the sum of the number of shares of Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock that the
aggregate offering price of the total number of shares of Preferred Stock
and/or Equivalent Preferred Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date plus
the number of additional shares of Preferred Stock and/or Equivalent Preferred
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).  In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights, shares of Preferred Stock owned by or held for the
account of the Company or any Subsidiary shall not be deemed outstanding for
the purpose of any such computation. 
Such adjustment shall be made successively whenever such a record date
is fixed, and in the event that such rights or warrants are not so issued the
Purchase Price shall be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.

 

16

 

(c)           In case
the Company shall fix a record date for a distribution to all holders of shares
of Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets (other than a
dividend payable in shares of Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holder of the Rights) of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants distributable
in respect of a share of Preferred Stock and the denominator of which shall be
such current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock.  Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.

 

(d)           (i) 
For the purpose of any computation hereunder, the “current market price” per
share of Company Common Stock or Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such shares for the 10
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that if prior to the
expiration of such requisite ten Trading Day-period the issuer announces either
(A) a dividend or distribution on such shares payable in such shares or
securities convertible into such shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such shares, then, following
the ex-dividend date for such dividend or the record date for such subdivision,
as the case may be, the “current market price” shall be properly adjusted to
take into account such event.  The
closing price for each day shall be, if the shares are listed and admitted to
trading on a national securities exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such shares are listed or
admitted to trading or, if such shares are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System (“NASDAQ”) or such other system then in use,
or, if on any such date such shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in such shares selected by the Board of
Directors.  If on any such date no market
maker is making a market in such shares, the fair value of such shares on such
date as determined in good faith by the Board of Directors shall be used.  If such shares are not publicly held or not
so listed or traded, “current market price” per share shall mean the fair value
per share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. 
The term “Trading Day” shall mean, if such shares are listed or
admitted to trading on any national securities exchange, a day on which the
principal national securities exchange on which such shares are listed or
admitted to trading is

 

17

 

open for the transaction of business or, if such shares are not so
listed or admitted, a Business Day.

 

(ii)  For the purpose of any computation
hereunder, the “current market price” per share of Preferred Stock shall be
determined in the same manner as set forth above for Company Common Stock in
clause (i) of this Section 11(d) (other than the fourth sentence
thereof).  If the current market price
per share of Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the “current market
price” per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such amount may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
Company Common Stock occurring after the date of this Agreement) multiplied by
the current market price per share of Company Common Stock.  If neither Company Common Stock nor Preferred
Stock is publicly held or so listed or traded, “current market price” per share
of the Preferred Stock shall mean the fair value per share as determined in
good faith by the Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights.  For
all purposes of this Agreement, the “current market price” of a Unit of
Preferred Stock shall be equal to the “current market price” of one share of
Preferred Stock divided by 1,000.

 

(e)           Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-thousandth of a share
of Company Common Stock or Common Stock or other share or hundred-thousandth of
a share of Preferred Stock, as the case may be. 
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction that mandates
such adjustment and (ii) the Expiration Date.

 

(f)            If as a
result of an adjustment made pursuant to Section 11(a)(ii) or 13(a) the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock other than Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h),
(i), (j), (k), (l) and (m),  and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock
shall apply on like terms to any such other shares.

 

(g)           All Rights
originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of Units of Preferred Stock (or other securities or
amount of cash or combination thereof) that may be acquired from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.

 

18

 

(h)           Unless the
Company shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made
in Sections 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of Units of Preferred Stock
(calculated to the nearest hundred-thousandth of a Unit) obtained by (i) multiplying
(x) the number of Units of Preferred Stock covered by a Right immediately prior
to this adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.

 

(i)            The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of
Units of Preferred Stock that may be acquired upon the exercise of a
Right.  Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of Units of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment.  Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest hundred-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price.  The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. 
This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Rights Certificates have been issued, shall
be at least 10 days later than the date of such public announcement.  If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.  Rights Certificates to be so distributed
shall be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

 

(j)            Irrespective
of any adjustment or change in the Purchase Price or the number of Units of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit and the number of Units of Preferred Stock that were
expressed in the initial Rights Certificates issued hereunder.

 

(k)           Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then par value of the number of Units of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the

 

19

 

opinion of its counsel, be necessary in order that the Company may
validly and legally issue such fully paid and nonassessable number of Units of
Preferred Stock at such adjusted Purchase Price.

 

(l)            In any
case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of that number of
Units of Preferred Stock and shares of other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of Units
of Preferred Stock and shares of other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder’s right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.

 

(m)          Anything in
this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent
that in their good faith judgment the Board of Directors shall determine to be
advisable in order that any (i) consolidation or subdivision of the
Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred
Stock at less than the current market price, (iii) issuance wholly for
cash of shares of Preferred Stock or securities that by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Preferred
Stock, shall not be taxable to such holders or shall reduce the taxes payable
by such holders.

 

(n)           The
Company shall not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)
hereof), if (x) at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger
or sale, the Person which constitutes, or would constitute, the “Principal
Party” for purposes of Section 13(a) shall have distributed or
otherwise transferred to its shareholders or other persons holding an equity
interest in such Person, Rights previously owned by such Person or any of its
Affiliates and Associates; provided, however, that this Section 11(n)
shall not affect the ability of any Subsidiary of the Company to consolidate
with, merge with or into, or sell or transfer assets or earning power to, any
other Subsidiary of the Company.

 

20

 

(o)           After the
Distribution Date, the Company shall not, except as permitted by Section 23
or Section 26, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.

 

(p)           Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the Rights Dividend Declaration Date and prior
to the Distribution Date (i) declare a dividend on the outstanding shares
of Company Common Stock payable in shares of Company Common Stock, (ii) subdivide
the outstanding shares of Company Common Stock, (iii) combine the
outstanding shares of Company Common Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock in a reclassification of Company Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Company Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Company Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each share of Company Common Stock immediately prior to such event by a
fraction, the numerator of which shall be the total number of shares of Company
Common Stock outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of shares of Company Common
Stock outstanding immediately following the occurrence of such event.

 

SECTION 12.      Certificate
of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as provided in
Section 11 or Section 13, the Company shall (a) promptly prepare
a certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Preferred Stock and the Company Common
Stock, a copy of such certificate, and (c) mail a brief summary thereof to
each holder of a Rights Certificate (or, if prior to the Distribution Date, to
each holder of a certificate evidencing shares of Company Common Stock) in
accordance with Section 25.  The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.

 

SECTION 13.      Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.

 

(a)           In the
event that, following the Stock Acquisition Date, directly or indirectly,
either (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving corporation
of such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Company Common Stock shall be
converted into or exchanged for stock or other securities of any other Person
or cash or any other property, or (z) the Company shall sell

 

21

 

or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer) to any Person or Persons (other than the Company or any of
its Subsidiaries in one or more transactions each of which complies with Section 11(o)
hereof), in one or more transactions assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) (any such event being a “Section 13 Event”),
then, and in each such case, proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e), shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price, such number of validly authorized and issued, fully paid and
nonassessable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Units of Preferred Stock for which
a Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such
Units for which a Right would be exercisable hereunder but for the occurrence
of such Section 11(a)(ii) Event by the Purchase Price which would be
in effect hereunder but for such first occurrence) and (2) dividing that
product (which, following the first occurrence of a Section 13 Event,
shall be the “Purchase Price” for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d) hereof)
per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term “Company” shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of Section 11
shall apply only to such Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps (including, but not
limited to the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall
be of no further effect following the first occurrence of any Section 13
Event.

 

(b)           “Principal
Party” means:

 

(i)            in the
case of any transaction described in clause (x) or (y) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities
into which shares of Company Common Stock are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer of Common
Stock that has the highest aggregate current market price (determined pursuant
to Section 11(d) hereof) and (B) if no securities are so issued,
the Person that is the other party to such merger or consolidation, or, if
there is more than one such Person, the Person the Common Stock of which has
the highest aggregate current market price (determined pursuant to Section 11(d) hereof);
and

 

(ii)           in the
case of any transaction described in clause (z) of the first sentence of Section 13(a),
the Person that is the party receiving the largest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or, if
each Person that is a party to such transaction or transactions receives the
same portion of the assets or

 

22

 

earning power transferred pursuant to such transaction or transactions
or if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to Section 11(d) hereof);
provided, however, that in any such case, (1) if the Common
Stock of such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act
(“Registered Common Stock”), or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, “Principal Party” shall refer to such
other Person: (2) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary of another Person but is not a direct or indirect
Subsidiary of another Person which has Registered Common Stock outstanding, “Principal
Party” shall refer to the ultimate parent entity of such first-mentioned
Person; (3) if the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and one or more of such other
Persons has Registered Common Stock outstanding, “Principal Party” shall refer
to whichever of such other Persons is the issuer of the Registered Common Stock
having the highest aggregate current market price (determined pursuant to Section 11(d) hereof);
and (4) if the Common Stock of such Person is not Registered Common Stock
or such Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and none of such other Persons have
Registered Common Stock outstanding, “Principal Party” shall refer to whichever
ultimate parent entity is the corporation having the greatest shareholders
equity or, if no such ultimate parent entity is a corporation, shall refer to
whichever ultimate parent entity is the entity having the greatest net assets.

 

(c)           The
Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13, and
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that the Principal Party will:

 

(i)            (A) file
on an appropriate form, as soon as practicable following the execution of such
agreement, a registration statement under the Securities Act with respect to
the Common Stock that may be acquired upon exercise of the Rights, (B) cause
such registration statement to remain effective (and to include a prospectus
complying with the requirements of the Securities Act) until the Expiration
Date, and (C) as soon as practicable following the execution of such
agreement, take such action as may be required to ensure that any acquisition
of such Common Stock upon the exercise of the Rights complies with any
applicable state security or “blue sky” laws; and

 

(ii)           deliver to
holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.

 

(d)           In case
the Principal Party that is to be a party to a transaction referred to in this Section 13
has a provision in any of its authorized securities or in its Certificate

 

23

 

of Incorporation or By-laws or other instrument governing its corporate
affairs, which provision would have the effect of (i) causing such
Principal Party to issue, in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into Common Stock of such Principal Party at
less than such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of the
Common Stock of such Principal Party pursuant to the provisions of this Section 13;
then, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

 

(e)           The
provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. 
In the event that a Section 13 Event shall occur at any time after
the occurrence of a Section 11(a)(ii) Event, the Rights which have
not theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).

 

SECTION 14.      Fractional
Rights and Fractional Shares.

 

(a)           The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates that evidence fractional Rights.  In lieu of such fractional Rights, there
shall be paid to the Persons to which such fractional Rights would otherwise be
issuable, an amount in cash equal to such fraction of the market value of a
whole Right.  For purposes of this Section 14(a),
the market value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable.  The
closing price of the Rights for any day shall be, if the Rights are listed or
admitted to trading on a national securities exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of
Directors.  If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors shall be used
and such determination shall be described in a statement filed with the Rights
Agent and the holders of the Rights.

 

(b)           The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates that evidence such fractional shares of Preferred Stock (other
than fractions which are integral multiples of one one-

 

24

 

thousandth of a share of Preferred Stock).  In lieu of such fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth of a
share, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the then current market price of a share of Preferred
Stock on the day of exercise, determined in accordance with Section 11(d).

 

(c)           The holder
of a Right by the acceptance of the Rights expressly waives his or her right to
receive any fractional Rights or any fractional shares upon exercise of a
Right, except as permitted by this Section 14.

 

SECTION 15.      Rights
of Action.  All rights of action in
respect of this Agreement, other than rights of action vested in the Rights
Agent pursuant to Section 18, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of certificates evidencing shares of Company Common Stock);
and any registered holder of a Rights Certificate (or, prior to the Distribution
Date, of a certificate evidencing shares of Company Common Stock), without the
consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of a certificate evidencing shares of
Company Common Stock), may, in his or her own behalf and for his or her own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company or any other Person to enforce, or otherwise act in respect
of, his or her right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person subject
to this Agreement.

 

SECTION 16.      Agreement
of Rights Holders.  Every holder of a
Right by accepting the same consents to and agrees with the Company and the
Rights Agent and with every other holder of a Right that:

 

(a)           prior to
the Distribution Date, the Rights will be transferable only in connection with
the transfer of Company Common Stock;

 

(b)           after the
Distribution Date, the Rights Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the office of the Rights
Agent designated for such purposes duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates duly
executed;

 

(c)           subject to
Section 6(a) and Section 7(f), the Company and the Rights Agent
may deem and treat the person in whose name a Rights Certificate (or, prior to
the Distribution Date, the associated Company Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Company Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e),
shall be affected by any notice to the contrary; and

 

25

 

(d)           notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or any other Person as
a result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have
any such order, decree or ruling lifted or otherwise overturned as promptly as
practicable.

 

SECTION 17.     Rights Certificate
Holder Not Deemed a Shareholder.  No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of Preferred
Stock or any other securities of the Company that may at any time be issuable
on the exercise of the Rights evidenced thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24, to
receive notice of meetings or other actions affecting shareholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.

 

SECTION 18.     Concerning
the Rights Agent.

 

(a)           The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses, including reasonable fees and
disbursements of its counsel, incurred in connection with the execution and
administration of this Agreement and the exercise and performance of its duties
hereunder.  The Company shall indemnify
the Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or wilful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
hereunder.

 

(b)           The Rights
Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration
of this Agreement in reliance upon any Rights Certificate or certificate for
Preferred Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to have been signed and/or executed or made by
the proper Person or Persons.

 

SECTION 19.     Merger
or Consolidation or Change of Name of Rights Agent.

 

(a)           Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting

 

26

 

from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or shareholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21. 
In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or
in the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

 

(b)           In case at
any time the name of the Rights Agent shall be changed and at such time any of
the Rights Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its changed
name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.

 

SECTION 20.     Duties of Rights Agent.  The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:

 

(a)           The Rights
Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.

 

(b)           Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of “current
market price”) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specified herein) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; provided, however, that so long as
any Person is an Acquiring Person hereunder, such certificate shall be signed
and delivered by a majority of the Board of Directors; and such certificate
shall be full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in reliance
upon such certificate.

 

27

 

(c)           The Rights
Agent shall be liable hereunder only for its own gross negligence, bad faith or
wilful misconduct.

 

(d)           The Rights
Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates or be
required to verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be deemed to
have been made by the Company only.

 

(e)           The Rights
Agent shall not have any responsibility for the validity of this Agreement or
the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or for the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or failure by the Company to satisfy
conditions contained in this Agreement or in any Rights Certificate; nor shall
it be responsible for any adjustment required under the provisions of Section 11
or Section 13 or for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt by the Rights Agent of the certificate describing
any such adjustment contemplated by Section 12); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or any other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Preferred Stock or any other securities will, when
so issued, be validly authorized and issued, fully paid and nonassessable.

 

(f)            The
Company shall perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Rights Agent
for the performance by the Rights Agent of its duties under this Agreement.

 

(g)           The Rights
Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer; provided,
however, that so long as any Person is an Acquiring Person hereunder,
the Rights Agent shall accept such instructions and advice only from the Board of
Directors and shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with such instructions of the Board of
Directors.  Any application by the Rights
Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted
by the Rights Agent under this Rights Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the
date any such officer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the

 

28

 

effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.

 

(h)           The Rights
Agent and any shareholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this
Agreement.  Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.

 

(i)            The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents.

 

(j)            No
provision of this Agreement shall require the Rights Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties or in the exercise of its rights hereunder if the Rights
Agent shall have reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.

 

(k)           If, with
respect to any Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been completed, not
signed or indicates an affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.  If such certificate has been completed and
signed and shows a negative response to clauses 1 and 2 of such certificate,
unless previously instructed otherwise in writing by the Company (which
instructions may impose on the Rights Agent additional ministerial
responsibilities, but no discretionary responsibilities), the Rights Agent may
assume without further inquiry that the Rights Certificate is not owned by a
person described in Section 4(b) or Section 7(e) and shall
not be charged with any knowledge to the contrary.

 

SECTION 21.     Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days’ prior notice in writing mailed to the Company, and to each transfer agent
of the Preferred Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail.  The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days’ prior notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail.  If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his or her Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for

 

29

 

the appointment of a new Rights Agent. 
Any successor Rights Agent, whether appointed by the Company or by such
a court, shall be (a) a corporation organized and doing business under the
laws of the United States or any state of the United States in good standing,
shall be authorized to do business as a banking institution in the State of New
York or the Commonwealth of Pennsylvania, shall be authorized under such laws
to exercise corporate trust or stock transfer powers, shall be subject to
supervision or examination by federal or state authorities and shall have at
the time of its appointment as Rights Agent a combined capital and surplus of
at least $100,000,000 or (b) an Affiliate of a corporation described in
clause (a).  After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Stock and the Company Common Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent.

 

SECTION 22.     Issuance of New Rights
Certificates.  Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by the Board of Directors to reflect any adjustment or
change made in accordance with the provisions of this Agreement in the Purchase
Price or the number or kind or class of shares or other securities or property
that may be acquired under the Rights Certificates.  In addition, in connection with the issuance
or sale of shares of Company Common Stock following the Distribution Date and
prior to the Expiration Date, the Company (a) shall with respect to shares
of Company Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent
that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.

 

SECTION 23.     Redemption and
Termination.

 

(a)           Subject to
Section 30, the Company may, at its option, by action of the Board of
Directors, at any time prior to the Distribution Date, but in no event later
than the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being the “Redemption
Price”), and the Company may, at its option, by action of the Board of
Directors, pay the Redemption Price either in shares of Company Common Stock
(based on

 

30

 

the “current market price” as defined in Section 11(d), of the
shares of Company Common Stock at the time of redemption) or cash.

 

(b)           Immediately
upon the action of the Board of Directors ordering the redemption of the
Rights, evidence of which shall be filed with the Rights Agent, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held.  Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder’s last address
as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for Company
Common Stock.  Any notice that is mailed
in the manner herein provided shall be deemed given whether or not the holder
receives the notice.  Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.

 

SECTION 24.     Notice of Certain
Events.

 

(a)           In case
the Company shall propose, at any time after the Distribution Date, (i) to
pay any dividend payable in stock of any class to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred Stock
(other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of
a Rights Certificate, to the extent feasible and in accordance with Section 25,
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock whichever
shall be the earlier; provided, however, that no such notice
shall be required pursuant to this Section 24, if any Subsidiary of the
Company effects a consolidation or merger with or into, or effects a sale or
other transfer of assets or earnings power to, any other Subsidiary of the
Company.

 

31

 

(b)           In case
any of the events set forth in Section 11(a)(ii) shall occur, then,
in any such case, (i) the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii).

 

SECTION 25.     Notices.  All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
by telex, telegram or cable) and mailed or sent or delivered, if to the
Company, at its address at:

 

456 North Fifth Street

Philadelphia, PA  19123

Attention:  Chief Executive Officer

Fax: (215) 873-2200

 

and if to the
Rights Agent, at its address at:

 

StockTrans, Inc.

44 West Lancaster Avenue

Ardmore, PA  19003

Attention: President

Fax: (610) 649-7302

 

Notices or
demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates representing shares of Company
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.

 

SECTION 26.     Supplements and
Amendments.  Prior to the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company (upon the approval of the Board of Directors) and the Rights Agent
shall, if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates evidencing shares
of Company Common Stock.  From and after
the Distribution Date and subject to the penultimate sentence of this Section 26,
the Company (upon the approval of the Board of Directors) and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); provided, however, that
without the approval of the holders of a majority of the Rights then
outstanding, this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) subject to Section 30,
a time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the

 

32

 

rights of, and/or the benefits to the holders of Rights.  Upon the delivery of a certificate from an
appropriate officer of the Company or, so long as any Person is an Acquiring
Person hereunder, from the majority of the Board of Directors that states that
the proposed supplement or amendment is in compliance with the terms of this Section 26,
the Rights Agent shall execute such supplement or amendment, subject to the
Right Agent’s right to apply to counsel chosen by the Right Agent and the Right
Agent being reasonably assured that such supplement or amendment is in no way
detrimental to the Right Agent’s right or interest.  Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made that
changes the Redemption Price, the Purchase Price, the Expiration Date or the
number of Units of Preferred Stock for which a Right is exercisable without the
approval of the Board of Directors. 
Prior to the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of Company Common
Stock.

 

SECTION 27.     Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

 

SECTION 28.     Determinations and
Actions by the Board of Directors, etc. 
For all purposes of this Agreement, any calculation of the number of
shares of Company Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding
shares of Company Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of
the Exchange Act Regulations as in effect on the date hereof.  Except as otherwise specifically provided
herein, the Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of
this Agreement, and (ii) to make all determinations deemed necessary or
advisable for the administration of this Agreement.  All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by
the Board of Directors in good faith shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board or any member thereof to any liability
to the holders of the Rights.

 

SECTION 29.     Benefits of this
Agreement.  Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of shares of Company Common
Stock).

 

SECTION 30.     Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or

 

33

 

invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid, void
or unenforceable and the Board of Directors determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement and the Rights shall not then be
redeemable, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board of
Directors.

 

SECTION 31.     Governing Law.  This Agreement each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely in such State; provided, however, that
Sections 18, 19, 20 and 21 shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania.

 

SECTION 32.     Counterparts.  This Agreement may be executed (including by
facsimile) in one or more counterparts and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.

 

SECTION 33.     Descriptive Headings.  The headings contained in this Agreement are
for descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

SECTION 34.     Exchange.

 

(a)           The
Company may at any time prior to the Distribution Date, upon resolution of the
Board of Directors, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to Section 7(e) hereof) for Units of Preferred Stock at an
exchange ratio specified in the following sentence,  as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof.  Subject to such adjustment, upon
such resolution each Right may be exchanged for that number of Units of
Preferred Stock obtained by dividing the Adjustment Spread (as defined below)
by the then current market price (determined pursuant to Section 11(d) hereof)
per Unit of Preferred Stock on the earlier of (i) the date on which any
Person becomes an Acquiring Person and (ii) the date on which a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity) is first published or sent or given within the meaning of Rule 14d-4(a) of
the Exchange Act Regulations or any successor rule, if upon consummation
thereof such Person would be the Beneficial Owner of 15% or more of the shares
of Company Common Stock then outstanding (such exchange ratio being the “Exchange
Ratio”).  The “Adjustment Spread”
shall equal (x) the aggregate market price on the date of such event of the
number of Adjustment Shares determined pursuant to Section 11(a)(ii),
minus (y) the Purchase Price.

 

(b)           Immediately
upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to Section 34(a) and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only
right thereafter of a holder

 

34

 

of such Rights shall be to receive that number of Units of Preferred
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio.  The Company shall promptly
give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the
validity of such exchange.  The Company
promptly shall mail a notice of any such exchange to all the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent.  Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice.  Each such notice of
exchange shall state the method by which the exchange of Units of Preferred
Stock for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged.

 

Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.

 

(c)           In the
event that the number of shares of Preferred Stock that are authorized by the
Company’s Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit any exchange of Rights as contemplated in accordance with this Section 34,
the Company shall take all such action as may be necessary to authorize
additional shares of Preferred Stock for issuance upon exchange of the Rights
or make adequate provision to substitute (1) cash, (2) Company Common
Stock or other equity securities of the Company, (3) debt securities of
the Company, (4) other assets, or (5) any combination of the
foregoing, having an aggregate value equal to the Adjustment Spread, where such
aggregate value has been determined by the Board of Directors.

 

(d)           The
Company shall not be required to issue fractions of Units of Preferred Stock or
to distribute certificates that evidence fractional Units.  In lieu of fractional Units, the Company may
pay to the registered holders of Rights Certificates at the time such Rights
are exchanged as herein provided an amount in cash equal to the same fraction
of the current market price (determined pursuant to Section 11(d) hereof)
of one Unit of Preferred Stock.

 

35

 

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

 

	
  ATTEST:

  	
  MOTHERS WORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dan W.
  Matthias

  	
   

  	
  By:

  	
  /s/ Edward
  M. Krell

  	
   

  
	
   

  	
  Dan W.
  Matthias

  	
   

  	
  Edward M.
  Krell

  
	
   

  	
  Secretary

  	
   

  	
  Executive
  Vice President- CFO

  
						

 

 

	
  ATTEST:

  	
  STOCKTRANS, INC.

  

 

	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert
  J. Winterle

  	
   

  	
  By:

  	
  /s/ Gina M.
  Hardin

  	
   

  
	
   

  	
  Robert J.
  Winterle

  	
   

  	
  Gina M.
  Hardin

  
	
   

  	
  Assistant
  Vice-President

  	
   

  	
  Vice-President

  
						

 

36

 

EXHIBIT A

 

Form of Series B Rights Certificate

 

	
  Certificate No. B-      

  	
   

  	
                Rights

  

 

NOT
EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]*

 

Series B
Rights Certificate

 

MOTHERS WORK, INC.

 

This certifies
that              ,
or registered assigns, is the registered holder of the number of Rights set
forth above, each of which entitles the registered holder thereof, subject to
the terms and conditions of the Rights Agreement originally dated as of October 9,
1995, and as amended to date (the “Rights Agreement; terms defined therein are
used herein with the same meaning unless otherwise defined herein) between
MOTHERS WORK, INC., a Delaware corporation (the “Company”), and STOCKTRANS,
INC., as Rights Agent (which term shall include any successor Rights Agent
under the Rights Agreement), to purchase from the Company at any time after the
Distribution Date and prior to the Expiration Date at the office of the Rights
Agent, one one-thousandth of one fully paid and nonassessable share of Series B
Junior Participating Preferred Stock, par value $.01 per share (the “Preferred
Stock”), of the Company at the Purchase Price initially of $85.00 per one
one-thousandth share (each such one one-thousandth of a share being a “Unit”)
of Preferred Stock, upon presentation and surrender of this Rights Certificate
with the Election to Purchase and related certificate duly executed. The number
of Rights evidenced by this Rights Certificate (and the number of Units that
may be

 

* The portion
of the legend in brackets shall be inserted only if applicable and shall
replace the preceding sentence.

 

A-1

 

purchased upon
exercise thereof) set forth above, and the Purchase Price per Unit set forth
above shall be subject to adjustment in certain events as provided in the
Rights Agreement.

 

Upon the
occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by
this Rights Certificate are beneficially owned by an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person or, under certain circumstances
described in the Rights Agreement, a transferee of any such Acquiring Person,
Associate or Affiliate, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.

 

In certain
circumstances described in the Rights Agreement, the rights evidenced hereby
may entitle the registered holder thereof to purchase capital stock of an
entity other than the Company or receive common stock, cash or other assets,
all as provided in the Rights Agreement.

 

This Rights
Certificate is subject to all the terms and conditions of the Rights Agreement,
which terms and conditions are hereby incorporated herein by reference and made
a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file at the
principal office of the Company and are available from the Company upon written
request.

 

This Rights
Certificate, with or without other Rights Certificates, upon surrender at the
office of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing an aggregate number of Rights equal to the aggregate number of
Rights evidenced by the Rights Certificate or Rights Certificates surrendered.
If this Rights Certificate shall be exercised in part, the registered holder
shall be entitled to receive, upon surrender hereof, another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.

 

Subject to the
provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company under certain circumstances at its option at a
redemption price of $.01 per Right, payable at the Company’s option in cash or
in common stock of the Company, subject to adjustment in certain events as
provided in the Rights Agreement.

 

No fractional
shares of Preferred Stock will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

 

No holder of
this Rights Certificate, as such, shall he entitled to vote or receive
dividends or be deemed for any purpose the holder of Preferred Stock or of any
other securities which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be constituted to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to

 

A-2

 

any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in the
Rights Agreement.

 

This Rights
Certificate shall not be valid or obligatory for any purpose until it shall
have been countersigned by the Rights Agent.

 

WITNESS the
facsimile signature of the proper officers of the Company and its corporate
seal. Dated as of         , 20  . 

 

	
  ATTEST:

  	
  MOTHERS WORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  STOCKTRANS, INC.,

  	
   

  
	
  as Rights Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

A-3

 

[Form of Reverse Side of
Rights Certificate]

 

FORM OF
ASSIGNMENT

 

	
  (To be executed by the registered holder if
  such holder desires to transfer the Rights Certificate)

  
	
   

  
	
  FOR VALUE
  RECEIVED                                    hereby
  sells, assigns and transfers
  unto                                                     

  
	
   

  
	
  (Please
  print name and address of transferee)

  
	
   

  
	
                                                                                                                              ,
  this Rights Certificate, together with all right, title and interest therein,
  and does hereby irrevocably constitute and appoint
             Attorney, to
  transfer the within Rights Certificate on the books of the within-named
  Company, with full power of substitution.

  

 

Dated:           
  , 20  

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  	
   

  
					

 

A-4

 

Certificate

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(1)                                  this
Rights Certificate / / is / / is not being sold, assigned and transferred by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement); and

 

(2)                                  after
due inquiry and to the best knowledge of the undersigned, it / / did / / did
not acquire the Rights evidenced by this Rights Certificate from any Person who
is, was or subsequently became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person.

 

Dated:           
  , 20  

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  	
   

  
					

 

A-5

 

NOTICE

 

The signature
to the foregoing Assignment and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.

 

Signatures
must be guaranteed by a member in the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange
Medallion Program.

 

In the event
the certification set forth above is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and, in the case of an Assignment, will affix a legend. to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.

 

A-6

 

FORM OF ELECTION TO PURCHASE

 

(To be executed
if the registered holder desires to exercise Rights represented by the Rights
Certificate.)

 

The
undersigned hereby irrevocably elects to exercise         
Rights represented by this Rights Certificate to purchase the Units of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person or other property which may be
issuable upon the exercise of the Rights) and requests that certificates for
such Units be issued in the name of and delivered to: 

 

	
   

  
	
  (Please
  print name and address)

  

 

Please insert social security or other
identifying number:                                         

 

If such number
of Rights shall not be all the Rights evidenced by this Rights Certificate, a
new Rights Certificate for the balance of such Rights shall he registered in
the name of and delivered to:

 

	
   

  
	
  (Please
  print name and address)

  

 

Please insert social security or other
identifying number:                                         

 

Dated:           
  , 20  

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  	
   

  	
   

  	
   

  
						

 

A-7

 

Certificate 

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(1)                                  the
Rights evidenced by this Rights Certificate / / are / / are not beneficially
owned by an Acquiring Person or an Affiliate or an Associate thereof (as
defined in the Rights Agreement); and

 

(2)                                  after
due inquiry and to the best knowledge of the undersigned, the undersigned / /
did / / did not acquire the Rights evidenced by this Rights Certificate from
any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.

 

Dated:           
  , 20  

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  	
   

  	
   

  
					

 

A-8

 

NOTICE

 

The signature
in the foregoing Election to Purchase and Certificate must conform to the name
as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.

 

Signatures
must be guaranteed by a member in the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange
Medallion Program.

 

In the event
the certification set forth above is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.

 

A-9

 

EXHIBIT B

 

CERTIFICATE OF DESIGNATION OF
THE VOTING POWERS, DESIGNATIONS

PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL

RIGHTS AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS OF THE

 

SERIES B JUNIOR PARTICIPATING
PREFERRED STOCK

 

Pursuant to Section 151 of
the General Corporation Law of

the State of Delaware

 

Section 1.
Designation and Amount. The shares of such series shall be designated as
“Series B Junior Participating Preferred Stock” and the number of shares
constituting such series shall be 300,000.

 

Section 2.  Dividends and Distributions.

 

(A)            Subject to the prior
and superior rights of the holders of any shares of any other series of
Preferred Stock or any other shares of preferred stock of the Corporation
ranking prior and superior to the shares of Series B Preferred Stock with
respect to dividends, each holder of one one-thousandth (1/1000) of a share (a “Unit”)
of Series B Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for that
purpose, (i) dividends payable in cash when and if declared by the Board
of Directors of the Corporation in respect of the common stock (each such date
being a “Dividend Payment Date”) commencing on the first Dividend Payment Date
after the first issuance of such Unit of Series B Preferred Stock, in an
amount per Unit (rounded to the nearest cent) equal to, subject to the
provision for adjustment hereinafter set forth, the aggregate per share amount
of all cash dividends declared on shares of the common stock since the
immediately preceding Dividend Payment Date, or, with respect to the first
Dividend Payment Date, since the first issuance of a Unit of Series B
Preferred Stock, and (ii) subject to the provision for adjustment
hereinafter set forth, distributions (payable in kind) on each Dividend Payment
Date in an amount per Unit equal to the aggregate per share amount of all
noncash dividends or other distributions (other than a dividend payable in
shares of common stock or a subdivision of the outstanding shares of common
stock, by reclassification or otherwise) declared on shares of common stock
since the immediately preceding Dividend Payment Date, or with respect to the
first Dividend Payment Date, since the first issuance of a Unit of Series B
Preferred Stock. In the event that the Corporation shall at any time after October 5,
1995 (the

 

B-1

 

“Rights Declaration Date”), (i) declare any dividend on
outstanding shares of common stock payable in shares of common stock, (ii) subdivide
outstanding shares of common stock or (iii) combine outstanding shares of
common stock into a smaller number of shares, then in each such case the amount
to which the holder of a Unit of Series B Preferred Stock was entitled
immediately prior to such event pursuant to the next preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which
shall be the number of shares of common stock that are outstanding immediately
after such event and the denominator of which shall be the number of shares of
common stock that were outstanding immediately prior to such event.

 

(B)             The Corporation shall
declare a dividend or distribution on Units of Series B Preferred Stock as
provided in paragraph (A) above immediately after it declares a dividend
or distribution on the shares of common stock (other than a dividend payable in
shares of common stock).

 

Section 3.  Voting Rights.  The holders of Units of Series B
Preferred Stock shall have the following voting rights:

 

(A)            Subject to the
provision for adjustment hereinafter set forth, each Unit of Series B
Preferred Stock shall entitle the holder thereof to one vote on all matters
submitted to a vote of the holders of Common Stock of the Corporation. In the
event the Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, then in
each such case the number of votes per Unit to which holders of Units of Series B
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.

 

(B)             Except as otherwise
provided herein or by law, the holders of Units of Series B Preferred
Stock and the holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of holders of Common Stock of the
Corporation.

 

(C)             Except as set forth
herein, holders of Units of Series B Preferred Stock shall have no special
voting rights and their consents shall not be required (except to the extent
they are entitled to vote with holders of shares of Common Stock as set forth
herein) for taking any corporate action.

 

Section 4.  Certain Restrictions.

 

(A)            Whenever any dividends
or distributions payable, on Units of Series B Preferred Stock as provided
in Section 2 have not been paid in full, thereafter and until all such
accrued and unpaid dividends and distributions, whether or not declared, on
outstanding Units of Series B Preferred Stock shall have been paid in
full, the Corporation shall not:

 

B-2

 

(i)          declare or pay dividends
on, make any other distributions on, or redeem or repurchase or otherwise
acquire for consideration, any shares of junior stock;

 

(ii)         declare or pay dividends
on or make any other distributions on any shares of parity stock, except
dividends paid ratably on Units of Series B Preferred Stock and shares of
all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of such Units and all such
shares are then entitled;

 

(iii)        redeem or repurchase or
otherwise acquire for consideration shares of any parity stock; provided,
however, that the Corporation may at any time redeem, repurchase or otherwise
acquire shares of any such parity stock in exchange for shares of any junior
stock;

 

(iv)        repurchase or otherwise
acquire for consideration (other than shares of junior stock) any Units of Series B
Preferred Stock, except in accordance with a repurchase offer made in writing
or by publication (as determined by the Board of Directors) to all holders of
such Units on the same terms.

 

(B)             The Corporation shall
not permit any subsidiary of the Corporation to purchase or otherwise acquire
for consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, repurchase or otherwise
acquire such shares at such time and in such manner.

 

Section 5.  Reacquired Shares.  Any Units of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
Units shall, upon their cancellation, become authorized but unissued Units of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein.

 

Section 6.  Liquidation, Dissolution or Winding Up.

 

(A)            Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of junior stock
unless the holders of Units of Series B Preferred Stock shall have
received, subject to adjustment as hereinafter provided in paragraph (B), the
amount, per Unit, equal to the aggregate per share amount to be distributed to
holders of shares of common stock, or (ii) to the holders of shares of
parity stock, unless simultaneously therewith distributions are made ratably on
Units of Series B Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of Units of Series B
Preferred Stock are entitled under clause (i) of this sentence and to
which the holders of shares of such parity stock are entitled, in each case
upon such liquidation, dissolution or winding up.

 

(B)             In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on outstanding shares of common stock payable in shares of common
stock, (ii) subdivide outstanding shares of common stock, or (iii) combine
outstanding shares of common stock into a smaller number of shares, then in
each such case the aggregate amount to which holders of Units of Series B
Preferred Stock were entitled

 

B-3

 

immediately prior to such event pursuant to clause (i)(b) of
paragraph (A) of this Section 6 shall be adjusted by multiplying such
amount by a fraction the numerator of which shall be the number of shares of
common stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of common stock that were
outstanding immediately prior to such event.

 

Section 7.  Consolidation, Merger, etc.  In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
common stock are exchanged for or converted into other stock or securities,
cash and/or any other property, then in any such case Units of Series B
Preferred Stock shall at the same time be similarly exchanged for or converted
into an amount per Unit (subject to the provision for adjustment hereinafter
set forth) equal to the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of common stock is converted or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on outstanding shares of common stock payable in shares of common
stock, (ii) subdivide outstanding shares of common stock, or (iii) combine
outstanding common stock into a smaller number of shares, then in each such
case the amount set forth in the immediately preceding sentence with respect to
the exchange or conversion of Units of Series B Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which shall
be the number of shares of common stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of common
stock that were outstanding immediately prior to such event.

 

Section 8.  Redemption.  The Units of Series B Preferred Stock
shall not be redeemable.

 

Section 9.  Ranking. The Units of Series B
Preferred Stock shall rank junior to all other series of the Preferred Stock
and to any other class of preferred stock that hereafter may be issued by the
Corporation as to the payment of dividends and the distribution of assets,
unless the terms of any such series or class shall provide otherwise.

 

Section 10.  Amendment.  The Certificate, including, without
limitation, this resolution, shall not hereafter be amended, either directly or
indirectly, or through merger or consolidation with another corporation in any
manner that would alter or change the powers, preferences or special rights of
the Series B Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding Units
of Series B Preferred Stock, voting separately as a class.

 

Section 11.  Fractional Shares.  The Series B Preferred Stock may be
issued in Units or other fractions of a share, which Units or fractions shall
entitle the holder, in proportion to such holder’s fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series B Preferred
Stock.

 

Section 12.  Certain Definitions.  As used herein with respect to the Series A
Preferred Stock, the following terms shall have the following meanings:

 

B-4

 

(A)            The term “Common Stock”
means the class of common stock designated as the Common Stock, par value $.01
per share, of the Corporation at the date hereof or any other class of stock
resulting from successive changes or reclassification of the common stock.

 

(B)             The term “junior
stock” (i) as used in Section 4 means the common stock and any other
class or series of capital stock of the Corporation hereafter authorized or
issued over which the Series B Preferred Stock has preference or priority
as to the payment of dividends and (ii) as used in Section 6, shall
mean the common stock and any other class or series of capital stock of the
Corporation over which the Series A Preferred Stock has preference or
priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.

 

(C)             The term “parity
stock” (i) as used in Section 4, means any class or series of stock
of the Corporation hereafter authorized or issued ranking pari passu with the Series B
Preferred Stock as to dividends and (ii) as used in Section 6, shall
mean any class or series of capital stock ranking pari passu with the Series B
Preferred Stock in the distribution of assets on any liquidation, dissolution
or winding up. 

 

B-5

 

EXHIBIT C

 

SUMMARY OF RIGHTS
TO PURCHASE

PREFERRED STOCK

 

On October 5,
1995, the Board of Directors of Mothers Work, Inc., a Delaware corporation
(the “Company”), declared a distribution of one Right (as defined below) for
each outstanding share of Common Stock, par value $.01 per share (the “Company
Common Stock”), to stockholders of record at the close of business on October 16,
1995 (the “Record Date”) and for each share of Company Common Stock issued
(including shares distributed from Treasury) by the Company thereafter and
prior to the Distribution Date. Each Right entitles the registered holder,
subject to the terms of the Rights Agreement, to purchase from the Company one
one-thousandth of a share (a “Unit”) of Series B Preferred Stock, par
value $.01 per share (the “Preferred Stock”), at a Purchase Price of $85.00 per
Unit, subject to adjustment (the “Right”). The Purchase Price is payable in
cash or by certified or bank check or money order payable to the order of the
Company. The Company adopted a number of amendments following the initial
adoption of the rights plan.  Pursuant to
due authorization of the Board of Directors, on October 9, 2005 the
Company entered into an amendment and restatement (the “Amended and Restated
Rights Agreement”) of the Rights Agreement, dated as of October 9, 1995,
with StockTrans, Inc., as Rights Agent (as amended prior to October 9,
2005, the “Rights Agreement”). The Amended and Restated Rights Agreement
restates the Rights Agreement, makes certain changes to the rights agreement
including, among others, to increase the common stock beneficial ownership
threshold that will trigger the exercisability of the Rights from 10% to 15%,
and the extension of the Rights Agreement for an additional ten years so as to
expire on October 9, 2015.

 

The Amended
and Restated Rights Agreement and the Certificate of Designation for the
Preferred Stock has been filed with the Securities and Exchange Commission as
an exhibit to the Company’s Current Report on Form 8-K dated October __,
2005, copies of which are available free of charge from the Company.  This summary description of the Rights and
the Preferred Stock does not purport to be complete and is qualified in its
entirety by reference to all the provisions of the Amended and Restated Rights
Agreement and the Certificate of Designation, as amended, including the
definitions therein of certain terms, which Amended and Restated Rights
Agreement and Certificate of Designation, as amended, are incorporated herein
by reference.

 

Initially, the
Rights will attach to all certificates representing shares of outstanding
Company Common Stock, and no separate Rights Certificates will be distributed.
The Rights will separate from the Company Common Stock and the “Distribution
Date” will occur (i) upon the earlier of (x) 10 business days following a
public announcement (the date of such announcement being the “Stock Acquisition
Date”) that a person or group of affiliated or associated persons (other than
the Company, any subsidiary of the Company or any employee benefit plan of the
Company or such subsidiary) (an “Acquiring Person”) has acquired, obtained the
right to acquire, or otherwise obtained beneficial ownership of 15% or more of
the then outstanding shares of Company Common Stock, and (y) 10 business days
following the

 

C-1

 

announcement or commencement of a tender offer or exchange offer that
would result in an Acquiring Person owning 15% or more of the then outstanding
shares of Company Common Stock, or (ii) such later date as may be
determined by action of the Board of Directors (such determination to be made
prior to such time as any person becomes an Acquiring Person pursuant to (x) or
(y) above). Until the Distribution Date, (i) the Rights will be evidenced
by Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from Treasury) will contain a notation incorporating the Amended and Restated
Rights Agreement by reference and (iii) the surrender for transfer of any
certificates representing outstanding Company Common Stock will also constitute
the transfer of the Rights associated with the Company Common Stock represented
by such certificates.

 

The Rights are
not exercisable until the Distribution Date and will expire at the close of
business on October 9, 2015 unless earlier redeemed by the Company as
described below.

 

As soon as
practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of Company Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will
represent the Rights.

 

In the event
that (i) the Company is the surviving corporation in a merger with an
Acquiring Person and shares of Company Common Stock shall remain outstanding, (ii) a
Person becomes the beneficial owner of 15% or more of the then outstanding
shares of Company Common Stock, (iii) an Acquiring Person engages in one
or more “self-dealing” transactions as set forth in the Amended and Restated
Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person’s ownership
interest being increased by more than 1% (e.g., by means of a reverse stock
split or recapitalization), then, in each such case, each holder of a Right
will thereafter have the right to receive, upon exercise, Units of Preferred
Stock (or, in certain circumstances, Company Common Stock, cash, property or
other securities of the Company) having a value equal to two times the exercise
price of the Right. The exercise price is the Purchase Price multiplied by the
number of Units of Preferred Stock issuable upon exercise of a Right prior to
the events described in this paragraph. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Amended and
Restated Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void.

 

In the event
that, at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction and the Company
is not the surviving corporation (other than a merger described in the
preceding paragraph), (ii) any Person consolidates or merges with the
Company and all or part of the Company Common Stock is converted or exchanged
for securities, cash or property of any other Person or (iii) 50% or more
of the Company’s assets or earning power is sold or transferred, each holder of
a Right (except Rights which previously have been voided as described above)
shall thereafter have the right to receive, upon exercise, common stock of the
Acquiring Person having a value equal to two times the exercise price of the
Right.

 

C-2

 

As a result of
certain arrangements entered into after the initial adoption of the Rights Plan
in October 1995 and before the execution of the Amended and Restated
Rights Agreement in October 2005, the Amended and Restated Rights
Agreement exempts certain stockholders from triggering the distribution of the
Rights unless they, individually or together with their affiliates or
associates, increase their beneficial ownership of Company Common Stock by more
than specified amounts or over specified percentage thresholds.  These stockholders consist of Dan and Rebecca
Matthias, the Company’s Chairman and Chief Executive Officer, and President and
Chief Operating Officer, respectively, Meridian Venture Partners, Massachusetts
Financial Services Company, Centre Capital Investors III, L.P., Robert Fleming, Inc.
and Crown-Glynn Associates, Ltd., and their respective affiliates and
associates.  In the case of Mr. and Mrs. Matthias,
increases in their beneficial ownership of Company Common Stock resulting from
the future issuance of employee stock options or from inheritance or by the
laws of descent are not counted towards the 15% threshold that will result in
the occurrence of a Distribution Date.

 

The Purchase
Price payable, and the number of Units of Preferred Stock issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) if holders
of the Preferred Stock are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock, or (iii) upon the distribution to the holders of
the Preferred Stock of evidences of indebtedness, cash or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).

 

With certain
exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments amount to at least 1% of the Purchase Price. The Company
is not required to issue fractional Units. In lieu thereof, an adjustment in
cash may be made based on the market price of the Preferred Stock prior to the
date of exercise.

 

At any time
until (i) ten business days following the Stock Acquisition Date or (ii) such
later date as the Board of Directors shall determine (such determination to be
made prior to the date specified in (i) above), a majority of the
Directors may redeem the Rights in whole, but not in part, at a price of $.01
per Right (subject to adjustment in certain events) (the “Redemption Price”),
payable, at the election of such majority of the Directors, in cash or shares
of Company Common Stock. Immediately upon the action of a majority of the
Directors ordering the redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.

 

Until a Right
is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).

 

Any of the
provisions of the Rights Agreement may be amended without the approval of the
holders of Company Common Stock at any time prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended in order to

 

C-3

 

cure any ambiguity, defect or inconsistency, to make changes which do
not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that without the approval of the
holders of a majority of the Rights then outstanding, no amendment to adjust
the time period governing redemption shall be made at such time as the Rights are
not redeemable.

 

The Units of
Preferred Stock that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may
be issued by the Company.

 

Each Unit of
Preferred Stock will be entitled to dividends at the same rate per share as
dividends declared on the Company Common Stock and shall be entitled to payment
of dividends to the extent dividends are declared on the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock will
receive the per share amount paid in respect of a share of Company Common
Stock.

 

In the event
of any merger, consolidation or other transaction in which shares of Company
Common Stock are exchanged, each Unit of Preferred Stock will be entitled to
receive the per share amount paid in respect of each share of Company Common
Stock. Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock. The rights of holders of the Preferred Stock to
dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.

 

Because of the
nature of the Preferred Stock’s dividend, liquidation and voting rights, the
economic value of one Unit of Preferred Stock that may be acquired upon the
exercise of each Right should approximate the economic value of one share of
the Company Common Stock.

 

C-4Exhibit
10.1

 

EXECUTION
COPY

 

 

CREDIT
AGREEMENT

 

dated as of

 

October 7,
2005

 

among

 

WADDELL &
REED FINANCIAL, INC.,

 

The Lenders
Party Hereto,

 

and

 

JPMORGAN CHASE
BANK,

as Administrative Agent

 

 

BANK OF
AMERICA, N.A.,

as Syndication
Agent

 

 

$200,000,000
REVOLVING CREDIT AND COMPETITIVE ADVANCE FACILITY

 

 

J.P. MORGAN
SECURITIES INC.

 

 

and

 

 

BANC OF
AMERICA SECURITIES LLC,

as Lead Arrangers and Book Managers

 

 

	
  Table
  of Contents

  
	
   

  	
   

  
	
  ARTICLE I Definitions

  	
   

  
	
  SECTION
  1.01. Defined Terms

  	
   

  
	
  SECTION
  1.02. Classification of Loans and Borrowings

  	
   

  
	
  SECTION
  1.03. Terms Generally

  	
   

  
	
  SECTION
  1.04. Accounting Terms; GAAP

  	
   

  
	
   

  	
   

  
	
  ARTICLE II The
  Credits

  	
   

  
	
  SECTION
  2.01. Commitments

  	
   

  
	
  SECTION
  2.02. Loans and Borrowings

  	
   

  
	
  SECTION
  2.03. Requests for Revolving Borrowings

  	
   

  
	
  SECTION
  2.04. Competitive Bid Procedure

  	
   

  
	
  SECTION
  2.05. Funding of Borrowings

  	
   

  
	
  SECTION
  2.06. Interest Elections

  	
   

  
	
  SECTION
  2.07. Termination and Reduction of Commitments

  	
   

  
	
  SECTION
  2.08. Repayment of Loans; Evidence of Debt

  	
   

  
	
  SECTION
  2.09. Prepayment of Loans

  	
   

  
	
  SECTION
  2.10. Fees

  	
   

  
	
  SECTION
  2.11. Interest

  	
   

  
	
  SECTION 2.12. Alternate Rate
  of Interest

  	
   

  
	
  SECTION
  2.13. Increased Costs

  	
   

  
	
  SECTION
  2.14. Break Funding Payments

  	
   

  
	
  SECTION
  2.15. Taxes

  	
   

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

  	
   

  
	
  SECTION
  2.17. Mitigation Obligations; Replacement of Lenders

  	
   

  
	
  SECTION
  2.18. New Lenders; Commitment Increases

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  III Representations and Warranties

  	
   

  
	
  SECTION
  3.01. Organization; Powers

  	
   

  
	
  SECTION
  3.02. Authorization; Enforceability

  	
   

  
	
  SECTION
  3.03. Governmental Approvals; No Conflicts

  	
   

  
	
  SECTION
  3.04. Financial Condition; No Material Adverse Effect

  	
   

  
	
  SECTION
  3.05. Properties

  	
   

  
	
  SECTION
  3.06. Litigation and Environmental Matters

  	
   

  
	
  SECTION
  3.07. Compliance with Laws and Agreements

  	
   

  
	
  SECTION
  3.08. Investment and Holding Company Status

  	
   

  
	
  SECTION
  3.09. Taxes

  	
   

  
	
  SECTION
  3.10. ERISA

  	
   

  
	
  SECTION
  3.11. Disclosure

  	
   

  
	
  SECTION
  3.12. No Default

  	
   

  

 

 

	
  SECTION
  3.13. Subsidiaries

  	
   

  
	
  SECTION
  3.14. Federal Regulations

  	
   

  
	
  SECTION
  3.15. No Burdensome Restrictions

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV Conditions

  	
   

  
	
  SECTION
  4.01. Effective Date

  	
   

  
	
  SECTION
  4.02. Each Credit Event

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  V Affirmative Covenants

  	
   

  
	
  SECTION
  5.01. Financial Statements and Other Information

  	
   

  
	
  SECTION
  5.02. Notices of Material Events

  	
   

  
	
  SECTION
  5.03. Existence; Conduct of Business

  	
   

  
	
  SECTION
  5.04. Payment of Obligations

  	
   

  
	
  SECTION
  5.05. Maintenance of Properties; Insurance

  	
   

  
	
  SECTION
  5.06. Books and Records; Inspection Rights

  	
   

  
	
  SECTION
  5.07. Compliance with Laws

  	
   

  
	
  SECTION
  5.08. Use of Proceeds

  	
   

  
	
  SECTION 5.09. Environmental Laws

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI Negative Covenants

  	
   

  
	
  SECTION 6.01. Financial Condition Covenants

  	
   

  
	
  SECTION 6.02. Indebtedness

  	
   

  
	
  SECTION 6.03. Liens

  	
   

  
	
  SECTION 6.04. Fundamental Changes

  	
   

  
	
  SECTION 6.05. Investments, Loans, Advances, Guarantees
  and Acquisitions; Hedging Agreements

  	
   

  
	
  SECTION 6.06. Restricted Payments

  	
   

  
	
  SECTION 6.07. Transactions with Affiliates

  	
   

  
	
  SECTION 6.08. Restrictive Agreements

  	
   

  
	
  SECTION 6.09. Capital Expenditures

  	
   

  
	
  SECTION 6.10. Sales and Leasebacks

  	
   

  
	
  SECTION 6.11. Changes in Fiscal Periods

  	
   

  
	
  SECTION 6.12. Negative Pledge Clauses

  	
   

  
	
  SECTION 6.13. Optional Payments and Modifications of
  Certain Debt Instruments

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII Events of Default

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII The Administrative Agent

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX Miscellaneous

  	
   

  
	
  SECTION 9.01. Notices

  	
   

  
	
  SECTION 9.02. Waivers; Amendments

  	
   

  
	
  SECTION 9.03. Expenses; Indemnity; Damage Waiver

  	
   

  
	
  SECTION 9.04. Successors and Assigns

  	
   

  
	
  SECTION 9.05. Survival

  	
   

  
	
  SECTION 9.06. Counterparts; Integration; Effectiveness

  	
   

  
	
  SECTION 9.07. Severability

  	
   

  

 

ii

 

	
  SECTION 9.08. Right of Setoff

  	
   

  
	
  SECTION 9.09. Governing Law; Jurisdiction; Consent to
  Service of Process

  	
   

  
	
  SECTION 9.10. WAIVER OF JURY TRIAL

  	
   

  
	
  SECTION 9.11. Headings

  	
   

  
	
  SECTION 9.12. Confidentiality

  	
   

  
	
  SECTION 9.13. Interest Rate Limitation

  	
   

  
	
  SECTION 9.14. USA PATRIOT Act

  	
   

  

 

 

	
  ANNEXES

  	
   

  
	
   

  	
   

  
	
  Annex I-A Pricing Grid

  	
   

  
	
   

  	
   

  
	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  Exhibit A — Form of Assignment and
  Acceptance

  	
   

  
	
  Exhibit B — Form of Opinion of Borrower’s
  General Counsel

  	
   

  
	
  Exhibit C-1 — Form of Report Under Section
  5.01(e)(A)

  	
   

  
	
  Exhibit C-2 — Form of Report Under Section
  5.01(e)(B)

  	
   

  
	
  Exhibit D —
  Form of Competitive Bid

  	
   

  

 

iii

 

THIS CREDIT AGREEMENT is entered into as of October 7, 2005, among
Waddell & Reed Financial, Inc. (the “Borrower”), the several
financial institutions from time to time party to this Agreement (collectively,
the “Lenders” and each individually, a “Lender”), JPMORGAN CHASE
BANK (“JPMorgan”), as administrative agent for the Lenders (herein in
such capacity, together with any successors thereto in such capacity, the “Administrative
Agent”), and BANK OF
AMERICA, N.A., as syndication agent (in such capacity, the “Syndication
Agent”).

 

ARTICLE
I

Definitions

 

SECTION 1.01.  Defined Terms.
As used in this Agreement, the following terms have the meanings specified
below:

 

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

 

“Adjusted LIBO
Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.

 

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

 

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

 

“Affiliate”
means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.

 

“Aggregate
Revenue Base” means the sum of Revenue Bases for all W&R Funds and for
all other assets managed by the Borrower or any Subsidiary of the Borrower for
other entities.

 

“Agreement”
means this Credit Agreement, as amended, supplemented or otherwise modified
from time to time.

 

“Alternate
Base Rate” means, for any day, a rate per annum equal to the greater of (a)
the Prime Rate in effect on such day, or (b) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. 
Any change in the Alternate Base Rate due to a change in the Prime Rate
or

 

 

the Federal
Funds Effective Rate shall be effective from and including the effective date
of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.

 

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

 

“Applicable
Rate” means, for any day, with respect to any ABR Loan or Eurodollar Loan,
or with respect to the facility fees payable hereunder, as the case may be, the
applicable rate per annum determined pursuant to the Pricing Grid attached
hereto as Annex A.

 

“Approved
Fund” means any Fund that is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender, or (c) an entity that administers or manages a
Lender.

 

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

 

“Availability
Period” means the period from and including the Effective Date to but
excluding the earlier of the Revolving Credit Termination Date or the date of
termination of the Commitments.

 

“Board”
means the Board of Governors of the Federal Reserve System of the United States
of America.

 

“Borrower”
means Waddell & Reed Financial, Inc., a Delaware corporation.

 

“Borrowing”
means (a) Revolving Loans of the same Type, made or continued on the same date
and, in the case of Eurodollar Loans, as to which a single Interest Period is
in effect, or (b) a Competitive Loan or group of Competitive Loans of the same
Type made on the same date and as to which a single Interest Period is in
effect.

 

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

 

“Capital
Expenditures” means, for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.

 

“Capital
Lease Obligations” of any Person means the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying
the right to use)

 

2

 

real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.

 

“Capital
Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.

 

“Change in
Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934, as amended, and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) other than
the Borrower, of shares representing more than 25% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the
Borrower, (b) occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Borrower by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by
directors so nominated, or (c) the acquisition of direct or indirect Control of
the Borrower by any Person or group.

 

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

 

“Class”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans or Competitive
Loans.

 

“Closing
Date” means the date on which the conditions precedent set forth in Section
4.01 shall have been satisfied, which date is October 7, 2005.

 

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

 

“Commitment”
means, with respect to each Lender, the commitment of such Lender to make
Revolving Loans
hereunder, expressed as an amount representing the maximum aggregate
outstanding principal amount of such Lender’s Revolving Loans hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.07, (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04, and (c) increased from time to time pursuant
to Section 2.18.  The initial amount of
each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment
and Acceptance pursuant to which such Lender shall have assumed its Commitment,
as applicable, and the initial aggregate amount of the Commitments of the Lenders
(as set forth on Schedule 2.01) is $200,000,000.

 

3

 

“Commitment
Utilization Percentage” means, on any day, the percentage equivalent of a
fraction (a) the numerator of which is the sum of the aggregate outstanding
principal amount of Loans, and (b) the denominator of which is the aggregate
amount of the Commitments (or, on any day after termination of the Commitments,
the aggregate amount of the Commitments in effect immediately preceding such
termination).

 

“Competitive
Bid” means an offer by a Lender to make a Competitive Loan in accordance
with Section 2.04.

 

“Competitive
Bid Rate” means, with respect to any Competitive Bid, the Margin or the
Fixed Rate, as applicable, offered by the Lender making such Competitive Bid.

 

“Competitive
Bid Request” means a request by the Borrower for Competitive Bids in
accordance with Section 2.04.

 

“Competitive
Loan” means a Loan made pursuant to Section 2.04.

 

“Confidential
Information Memorandum” means the Confidential Information Memorandum dated
September 2005 and furnished to the Lenders.

 

“Consolidated
EBITDA” means, for any period, Consolidated Net Income for such period plus,
without duplication and to the extent reflected as a charge in the statement of
such Consolidated Net Income for such period, the sum of (a) income tax
expense, (b) interest expense, amortization or writeoff of debt discount and
debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary, unusual or
non-recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, non-cash losses on sales of assets outside of the ordinary
course of business), provided, that the amounts referred to in this
clause (e) shall not, in the aggregate, exceed $1,000,000 for any fiscal year
of the Borrower, and (f) any other non-cash charges.  For the purposes of calculating Consolidated
EBITDA for any period of four consecutive fiscal quarters (each, a “Reference
Period”) pursuant to any determination of the Consolidated Leverage Ratio, (i)
if at any time during such Reference Period the Borrower or any Subsidiary
shall have made any Material Disposition, the Consolidated EBITDA for such
Reference Period shall be reduced by an amount equal to the Consolidated EBITDA
(if positive) attributable to the property that is the subject of such Material
Disposition for such Reference Period or increased by an amount equal to the
Consolidated EBITDA (if negative) attributable thereto for such Reference Period,
and (ii) if during such Reference Period the Borrower or any Subsidiary shall
have made a Material Acquisition, Consolidated EBITDA for such Reference Period
shall be calculated after giving pro  forma effect thereto as if
such Material Acquisition occurred on the first day of such Reference
Period.  As used in this definition, “Material
Acquisition” means any acquisition of property or series of related
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by the Borrower and its Subsidiaries in excess of $1,000,000;
and “Material

 

4

 

Disposition”
means any Disposition of property or series of related Dispositions of property
that yields gross proceeds to the Borrower or any of its Subsidiaries in excess
of $1,000,000.

 

“Consolidated
Interest Coverage Ratio” means, for any period, the ratio of (a)
Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.

 

“Consolidated
Interest Expense” means, for any period, interest expense (including that
attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries
for such period with respect to all outstanding Indebtedness of the Borrower
and its Subsidiaries (including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Hedging Agreements in respect of interest rates
to the extent such net costs are allocable to such period in accordance with
GAAP).

 

“Consolidated
Leverage Ratio” means, as at the last day of any period, the ratio of (a)
Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period.

 

“Consolidated
Net Income” means, for any period, the consolidated net income (or loss) of
the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, (b) the income (or deficit) of any Person (other
than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions, and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation or Requirement of Law
applicable to such Subsidiary.

 

“Consolidated
Total Debt” means, at any date, the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries at such date, determined on a
consolidated basis in accordance with GAAP.

 

“Contractual
Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings
correlative thereto.

 

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

 

“Disclosed
Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06 or otherwise delivered in writing to each of
the Lenders on or prior to the Closing Date.

 

5

 

 “Distribution Fees” means all fees
payable pursuant to a plan contemplated by Rule 12b-1 under the Investment
Company Act of 1940, as amended, in connection with the distribution of shares
of W&R Funds that are open-end funds.

 

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

 

“Effective
Date” means the date on which the conditions precedent specified in Section
4.01 are satisfied (or waived in accordance with Section 9.02).

 

“Environmental
Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.

 

“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment,
or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.

 

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

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.

 

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

 

6

 

determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

 

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

 

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

 

“Excess
Utilization Day” means each day on which the Commitment Utilization
Percentage exceeds the applicable percentage set forth in Section 2.10(b)(i) or
Section 2.10(b)(ii).

 

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

 

“Existing
Credit Agreement” means the Credit Agreement dated as of October 8, 2004,
among the Borrower, certain financial institutions and the Administrative
Agent.

 

“Federal
Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

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

 

“Fixed Rate”
means, with respect to any Competitive Loan (other than a Eurodollar
Competitive Loan), the fixed rate of interest per annum specified by the Lender
making such Competitive Loan in its related Competitive Bid.

 

“Fixed Rate
Loan” means a Competitive Loan bearing interest at a Fixed Rate.

 

7

 

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

 

“Fund”
means any Person that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the
ordinary course of its business.

 

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

 

“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body (including self-regulatory
body), court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government, including, in any event, the Securities and Exchange
Commission and any applicable state securities commission or similar body.

 

“Guarantee”
of or by any Person (the “guarantor”) means any obligation, contingent
or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation, or (d) as an account party in respect of
any letter of credit or letter of guaranty issued to support such Indebtedness
or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.

 

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

 

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

 

“Indebtedness”
of any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all

 

8

 

obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person upon which interest charges are customarily
paid, (d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, (j) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances, and (k) net liabilities of such Person under
Hedging Agreements.  The Indebtedness of
any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Interest
Election Request” means a request by the Borrower to convert or continue a
Revolving Borrowing in accordance with Section 2.06.

 

“Interest
Payment Date” means (a) with respect to any ABR Loan, the last day of each
March, June, September and December, (b) with respect to any Eurodollar Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration, after
the first day of such Interest Period, and (c) with respect to any Fixed Rate
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest
Period of more than 90 days’ duration (unless otherwise specified in the
applicable Competitive Bid Request), each day prior to the last day of such
Interest Period that occurs at intervals of 90 days’ duration after the first
day of such Interest Period, and any other dates that are specified in the
applicable Competitive Bid Request as Interest Payment Dates with respect to
such Borrowing.

 

“Interest
Period” means (a) with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, and (b) with respect to any Fixed Rate
Borrowing, the period (which shall not be less than seven days or more than 364
days) commencing on the date of such Borrowing and ending on the date specified
in the applicable Competitive Bid Request; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the
case of a Eurodollar Borrowing only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day, (ii) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar
month (or on a day

 

9

 

for which
there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month
of such Interest Period, and (iii) any Interest Period that would otherwise
extend beyond the Revolving Credit Termination Date shall end on the Revolving
Credit Termination Date or such date of final payment, as the case may be.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of
a Revolving Borrowing, thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.

 

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

 

“LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, the
rate appearing on the Telerate Markets Screen (or on any successor or
substitute page of such Screen, or any successor to or substitute for such
Screen, providing rate quotations comparable to those currently provided on
such page of such Screen, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period.  In the event that such
rate is not available at such time for any reason, then the “LIBO Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

 

“Lien”
means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to
such asset, and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

 

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

 

“Management
Contract” means an agreement, written or oral, pursuant to which the
Borrower or any Subsidiary of the Borrower provides (a) investment advisory,
management or administrative services to a W&R Fund, or (b) investment
advisory or management services to any Person, including, without limitation,
unregistered investment companies and personal or corporate investment
accounts.

 

“Margin”
means, with respect to any Competitive Loan bearing interest at a rate based on
the LIBO Rate, the marginal rate of interest, if any, to be added to or
subtracted from the LIBO Rate to determine the rate of interest applicable to
such Loan, as specified by the Lender making such Loan in its related
Competitive Bid.

 

10

 

“Material
Adverse Effect” means a material adverse effect on (a) the business,
assets, property, prospects or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole, or (b) the validity or
enforceability of this Agreement or the rights or remedies of the
Administrative Agent or the Lenders hereunder.

 

“Material
Indebtedness” means Indebtedness (other than the Loans), or obligations in
respect of one or more Hedging Agreements, of any one or more of the Borrower
and its Subsidiaries in an aggregate principal amount exceeding
$5,000,000.  For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of the
Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.

 

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

 

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

 

“Net Asset
Value” means, at any date of determination and with respect to any
investment company or account manager, the “current net asset” value (as
defined in Rule 2a-4 under the Investment Company Act of 1940, as amended), in
the aggregate, of all outstanding redeemable securities issued by such
investment company at such date.

 

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

 

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

 

“Permitted
Acquisition” means an acquisition of a Person, or the assets of a Person or
a line of business of a Person, in the same or a related line of business as
the Borrower, provided that after giving effect to such acquisition (a)
no Default or Event of Default shall have occurred and be continuing, (b) the
Borrower shall be in compliance, on a pro  forma basis, as of the
end of the most recent fiscal quarter of the Borrower with the provisions of
Section 6.01, and (c) in the case of an acquisition involving aggregate
consideration valued at $20,000,000 or more, at least three Business Days prior
to the date of such acquisition, the Borrower shall have furnished to the
Administrative Agent and the Lenders a compliance certificate to the effect of
clauses (a) and (b) showing in reasonable detail the calculations supporting
the determination of compliance, on such a pro  forma basis, with
such provisions.

 

11

 

“Permitted
Encumbrances” means:

 

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

 

(b)   Carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
compliance with Section 5.04;

 

(c)   pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;

 

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

 

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

 

(f)    judgment
Liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII, so long as such judgment Liens are not in effect for
more than 45 days;

 

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

 

“Permitted
Investments” means:

 

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

 

(b) investments in commercial paper maturing
within 270 days from the date of acquisition thereof and having, at such date of
acquisition, an investment-grade credit rating from S&P or from Moody’s;

 

(c) investments in certificates of deposit,
banker’s acceptances and time deposits maturing within 540 days from the date
of acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not less
than $500,000,000;

 

12

 

(d) investments in newly created funds or
investments intended for sale to newly created funds advised or managed by the
Borrower and its Subsidiaries, in an aggregate amount (based upon book value on
the books of the Borrower and its Subsidiaries) of not more than $40,000,000 at
any time;

 

(e) investments in funds advised or managed
by the Borrower and its Subsidiaries for the benefit of the Borrower’s and its
Subsidiaries’ senior executives and portfolio management personnel in
conjunction with various nonqualified deferral compensation arrangements
adopted by the Borrower and its Subsidiaries, in an aggregate amount (based on
book value on the books of the Borrower and its Subsidiaries) of not more than
$25,000,000 at any time;

 

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

 

(g) other than those contained in (a), (b),
(c) and (e) above, United States dollar denominated fixed income securities and
syndicated bank loans not to exceed $7,500,000 per issuer, with the exception
of United States government securities, and not to exceed $7,500,000 per
country, with the exception of the United States of America.

 

“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 

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

 

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

 

“Register”
has the meaning set forth in Section 9.04.

 

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

 

“Required
Lenders” means Lenders having Revolving Credit Exposures and unused
Commitments representing at least 51% of the sum of the total Revolving Credit
Exposures and unused Commitments at such time; provided that, for
purposes of declaring the Loans to be due and payable pursuant to Article VII, and
for all purposes after the Loans become due and payable pursuant to Article VII
or the Commitments expire or terminate, the outstanding Competitive Loans of
the Lenders shall be included in their respective Revolving Credit Exposures in
determining the Required Lenders.

 

13

 

“Requirement
of Law” means, as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

 

“Restricted
Payment” means (a) any dividend or other distribution (whether in cash,
securities or other property) with respect to any shares of any class of
capital stock of the Borrower or any Subsidiary, or (b) any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, for (i) the purchase, redemption, retirement, acquisition,
cancellation or termination of any shares of the Borrower’s capital stock, or
(ii) any option, warrant or other right to acquire any shares of the Borrower’s
capital stock.

 

“Revenue
Base” means the sum of (a) the product of (i) with respect to each W&R
Fund, the Net Asset Value of the W&R Fund on the date of calculation and
with respect to assets managed for other entities, the market value or Net
Asset Value of such assets on the date of calculation, and (ii) the rate
provided for in the applicable Management Contract for determining the annual
fee required for such advisory, management or administrative services on such
date, and (b) Distribution Fees for such W&R Fund.

 

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

 

“Revolving
Credit Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Revolving Loans at such time.

 

“Revolving Credit Termination Date”
means October 6, 2008 or such earlier date as the Commitments shall terminate
pursuant to the terms hereof (or, if such day is not a Business Day, the next
preceding Business Day).

 

“Revolving
Loan” means a Loan made pursuant to Section 2.03.

 

“S&P”
means Standard & Poor’s.

 

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

 

“subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity the accounts of

 

14

 

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

 

“Subsidiary”
means any subsidiary of the Borrower.

 

“Syndication Agent” has the meaning set forth
in the introductory paragraph of this Agreement.

 

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

 

“Transactions”
means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans and the use of the proceeds thereof.

 

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

 

“W&R
Fund” means all closed-end funds and open-end mutual funds sponsored by the
Borrower or any of its Subsidiaries or for which the Borrower or any of its
Subsidiaries provides investment advisory, management, administrative,
supervisory, consulting, underwriting or similar services.

 

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

 

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

 

15

 

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

 

SECTION 1.04.  Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

 

ARTICLE
II

The Credits

 

SECTION 2.01.  Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Revolving Loans to the Borrower from time to
time during the Availability Period in an aggregate principal amount that will
not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s
Commitment, or (b) the sum of the total Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans exceeding the total
Commitments.  Within the foregoing limits
and subject to the terms and conditions set forth herein, the Borrower may
borrow, prepay and reborrow Revolving Loans.

 

SECTION 2.02.  Loans and
Borrowings.  (a)   Each
Revolving Loan shall be made as part of a Borrowing consisting of Revolving
Loans made by the Lenders ratably in accordance with their respective
Commitments.  Each Competitive Loan shall
be made in

 

16

 

accordance with the procedures
set forth in Section 2.04.  The failure
of any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments
and Competitive Bids of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

(b)  Subject to Section 2.12, (i) each Revolving Borrowing shall
be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith, and (ii) each Competitive Borrowing shall be
comprised entirely of Eurodollar Loans or Fixed Rate Loans as the Borrower may
request in accordance herewith.  Each
Lender at its option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)  At
the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000.  At the time that each ABR Revolving Borrowing
is made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000; provided that an
ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Commitments. 
Each Competitive Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.  Borrowings of more than one Type and Class
may be outstanding at the same time; provided that there shall not at
any time be more than a total of ten (10) Eurodollar Revolving Borrowings
outstanding.

 

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

 

SECTION 2.03.  Requests for
Revolving Borrowings.  To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone prior to 10:00 a.m., New York City time (a) three (3)
Business Days before the date of the proposed Borrowing in the case of a
Eurodollar Borrowing, or (b) one (1) Business Day before the date of the
proposed Borrowing in the case of an ABR Borrowing.  Each such telephonic Revolving Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent of a written Revolving Borrowing
Request in a form approved by the Administrative Agent and signed by the
Borrower.  Each such telephonic and
written Revolving Borrowing Request shall specify the following information in
compliance with Section 2.02:

 

(i)            the aggregate
amount of the requested Borrowing;

 

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

 

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

 

17

 

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

 

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

 

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

 

SECTION 2.04.  Competitive Bid
Procedure.  (a)   Subject
to the terms and conditions set forth herein, from time to time during the
Availability Period the Borrower may request Competitive Bids and may (but
shall not have any obligation to) accept Competitive Bids and borrow
Competitive Loans; provided that the sum of the total Revolving Credit
Exposures plus the aggregate principal amount of outstanding Competitive Loans
at any time shall not exceed the total Commitments.  To request Competitive Bids, the Borrower
shall notify the Administrative Agent of such request by telephone, in the case
of a Eurodollar Borrowing, not later than 10:00 a.m., New York City time, four
(4) Business Days before the date of the proposed Borrowing and, in the case of
a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, one (1)
Business Day before the date of the proposed Borrowing; provided that the
Borrower may submit up to (but not more than) two (2) Competitive Bid Requests
on the same day, but a Competitive Bid Request shall not be made within five
(5) Business Days after the date of any previous Competitive Bid Request,
unless any and all such previous Competitive Bid Requests shall have been
withdrawn or all Competitive Bids received in response thereto rejected.  Each such telephonic Competitive Bid Request
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Competitive Bid Request in a form approved by the
Administrative Agent and signed by the Borrower.  Each such telephonic and written Competitive
Bid Request shall specify the following information in compliance with Section
2.02:

 

(i)            the aggregate
amount of the requested Borrowing;

 

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

 

(iii)          whether such
Borrowing is to be a Eurodollar Borrowing or a Fixed Rate Borrowing;

 

(iv)          the Interest Period
to be applicable to such Borrowing, which shall be a period contemplated by the
definition of the term “Interest Period”;

 

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

 

18

 

(vi)          the maturity date of
such Borrowing, which shall not be less than seven (7) or more than 364 days
from the date of such Borrowing and shall not be later than the Revolving
Credit Termination Date.

 

Promptly
following receipt of a Competitive Bid Request in accordance with this Section,
the Administrative Agent shall notify the Lenders of the details thereof by
telecopy, inviting the Lenders to submit Competitive Bids.

 

(b)  Each
Lender may (but shall not have any obligation to) make one (1) or more
Competitive Bids to the Borrower in response to a Competitive Bid Request.  Each Competitive Bid by a Lender must be
substantially in the form of Exhibit D and must be received by the
Administrative Agent by telecopy, in the case of a Eurodollar Competitive
Borrowing, not later than 9:30 a.m., New York City time, three (3) Business
Days before the proposed date of such Competitive Borrowing, and in the case of
a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on the
proposed date of such Competitive Borrowing. 
Competitive Bids that do not conform substantially to the form of
Exhibit D may be rejected by the Administrative Agent, and the Administrative
Agent shall notify the applicable Lender as promptly as practicable.  Each Competitive Bid shall specify (i) the
principal amount (which shall be a minimum of $5,000,000 and an integral
multiple of $1,000,000 and which may equal the entire principal amount of the
Competitive Borrowing requested by the Borrower) of the Competitive Loan or
Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or
Rates at which the Lender is prepared to make such Loan or Loans (expressed as
a percentage rate per annum in the form of a decimal to no more than four
decimal places), and (iii) the Interest Period applicable to each such Loan and
the last day thereof.

 

(c)  The
Administrative Agent shall promptly notify the Borrower by telecopy of the
Competitive Bid Rate and the principal amount specified in each Competitive Bid
and the identity of the Lender that shall have made such Competitive Bid.

 

(d)  Subject
only to the provisions of this paragraph, the Borrower may accept or reject any
Competitive Bid.  The Borrower shall
notify the Administrative Agent by telephone, confirmed by telecopy in a form
approved by the Administrative Agent, whether and to what extent it has decided
to accept or reject each Competitive Bid, in the case of a Eurodollar
Competitive Borrowing, not later than 10:30 a.m., New York City time, three (3)
Business Days before the date of the proposed Competitive Borrowing, and in the
case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City time,
on the proposed date of the Competitive Borrowing; provided that (i) the
failure of the Borrower to give such notice shall be deemed to be a rejection
of each Competitive Bid, (ii) the Borrower shall not accept a Competitive Bid
made at a particular Competitive Bid Rate if the Borrower rejects a Competitive
Bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the Borrower shall not exceed the aggregate amount
of the requested Competitive Borrowing specified in the related Competitive Bid
Request, (iv) to the extent necessary to comply with clause (iii) above, the
Borrower may accept Competitive Bids at the same Competitive Bid Rate in part,
which acceptance, in the case of multiple Competitive Bids at such Competitive
Bid Rate, shall be made pro rata in accordance with the amount of each such
Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive
Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in
a minimum principal 

 

19

 

amount of $5,000,000 and an integral multiple
of $1,000,000; provided  further that if a Competitive Loan must
be in an amount less than $5,000,000 because of the provisions of clause (iv)
above, such Competitive Loan may be for a minimum of $1,000,000 or any integral
multiple thereof, and in calculating the pro rata allocation of acceptances of
portions of multiple Competitive Bids at a particular Competitive Bid Rate
pursuant to clause (iv) the amounts shall be rounded to integral multiples of
$1,000,000 in a manner determined by the Borrower.  A notice given by the Borrower pursuant to
this paragraph shall be irrevocable.

 

(e)  The
Administrative Agent shall promptly notify each bidding Lender by telecopy
whether or not its Competitive Bid has been accepted (and, if so, the amount
and Competitive Bid Rate so accepted), and each successful bidder will
thereupon become bound, subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.

 

(f)  If
the Administrative Agent shall elect to submit a Competitive Bid in its
capacity as a Lender, it shall submit such Competitive Bid directly to the
Borrower at least one quarter of an hour earlier than the time by which the
other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) of this Section.

 

SECTION 2.05.  Funding of
Borrowings.  (a)   Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders.  The Administrative Agent
will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower maintained
with the Administrative Agent in New York City and designated by the Borrower
in the applicable Revolving Borrowing Request or Competitive Bid Request.

 

(b)  Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate, or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans.  If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.

 

20

 

SECTION 2.06.  Interest
Elections.  (a)   Each
Revolving Borrowing initially shall be of the Type specified in the applicable
Revolving Borrowing Request and, in the case of a Eurodollar Revolving
Borrowing, shall have an initial Interest Period as specified in such Revolving
Borrowing Request.  Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.  This
Section shall not apply to Competitive Borrowings, which may not be converted
or continued.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)  Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender’s portion of
each resulting Borrowing.

 

21

 

(e)  If
the Borrower fails to deliver a timely Interest Election Request with respect
to a Eurodollar Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be continued as a
Eurodollar Revolving Borrowing with an Interest Period of one month.  Notwithstanding any contrary provision
hereof, (i) if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (A) no outstanding
Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing
and (B) unless repaid, each Eurodollar Revolving Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto, and
(ii) no Revolving Loan may be converted into or continued as a Eurodollar
Borrowing after the date that is one month or 30 days, respectively, prior to
the Revolving Credit Termination Date, as the case may be.

 

SECTION 2.07.  Termination and
Reduction of Commitments.  (a)   Unless
previously terminated, the Commitments shall terminate on the Revolving Credit
Termination Date.

 

(b)  The
Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall
be in an amount that is an integral multiple of $1,000,000 and not less than
$10,000,000, and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans
in accordance with Section 2.09, the sum of the Revolving Credit Exposures plus
the aggregate principal amount of outstanding Competitive Loans would exceed
the total Commitments.

 

(c)  The
Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Commitments under paragraph (b) of this Section at least three (3)
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof.  Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower
pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied.  Any
termination or reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be
made ratably among the Lenders in accordance with their respective Commitments.

 

SECTION 2.08.  Repayment of
Loans; Evidence of Debt.  (a)   The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender (i) the then unpaid principal amount of each
Revolving Loan on the Revolving Credit Termination Date (or such earlier date
on which the Revolving Loans become due and payable pursuant to Article VII),
and (ii) the then unpaid principal amount of each Competitive Loan on the last
day of the Interest Period applicable to such Loan (or such earlier date on
which the Competitive Loans become due and payable pursuant to Article VII).

 

22

 

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

 

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

 

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

 

(e)  Any
Lender may request that Loans made by it be evidenced by a promissory
note.  In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).

 

SECTION 2.09.  Prepayment of
Loans.  (a)   The Borrower
shall have the right at any time and from time to time to prepay any Borrowing
in whole or in part, subject to prior notice in accordance with paragraph (b)
of this Section; provided that the Borrower shall not have the right to
prepay any Competitive Loan without the prior consent of the Lender thereof.

 

(b)  The
Borrower shall notify the Administrative Agent by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time,
three (3) Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York
City time, one (1) Business Day before the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment
is given in connection with a conditional notice of termination of the Commitments
as contemplated by Section 2.07, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.07.  Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof.  Each
partial prepayment of any Revolving Borrowing shall be in an amount that would
be permitted in the case of an advance of a Revolving Borrowing of the same
Type as provided in Section 2.02.  Each
prepayment of a

 

23

 

Revolving Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. 
Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.11.

 

SECTION 2.10.  Fees.  (a)   The Borrower agrees to pay to
the Administrative Agent for the account of each Lender a facility fee, which
shall accrue at the Applicable Rate on the daily amount of the Commitment of
such Lender (whether used or unused), during the period from and including the
Closing Date to but excluding the date on which such Commitment terminates; provided
that, if such Lender continues to have any outstanding Loans after its
Commitment terminates, then such facility fee shall continue to accrue on the
daily amount of such Lender’s outstanding Loans from and including the date on
which its Commitment terminates to but excluding the date on which such Lender
ceases to have any outstanding Loans. 
Accrued facility fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
Commitments terminate, commencing on the first such date to occur after the
date hereof; provided that any facility fees accruing after the date on
which the Commitments terminate shall be payable on demand.  All facility fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

 

(b)  The
Borrower agrees to pay to the Administrative Agent for the account of each
Lender a utilization fee equal to (i) 0.125% per annum for each day on which
the Commitment Utilization Percentage exceeds 50%, which fee shall accrue on
the daily amount of such Lender’s outstanding Loans for each Excess Utilization
Day during the period from and including the day on which the Commitment
Utilization Percentage exceeds 50% to but excluding the day on which the
Commitment Utilization Percentage no longer exceeds 50%.  Accrued utilization fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the date on which the Commitments terminate, commencing on the first such
date to occur after the date hereof; provided that any utilization fees
accruing after the date on which the Commitments terminate shall be payable on
demand.  All utilization fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

 

(c)  The
Borrower agrees to pay to the Administrative Agent, for its own account, fees
payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

 

(d)  All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, in the case of facility
fees, to the Lenders.  Fees paid shall
not be refundable under any circumstances.

 

SECTION 2.11.  Interest.  (a)   The Loans comprising each ABR
Borrowing shall bear interest at a rate per annum equal to the Alternate Base
Rate plus the Applicable Rate.

 

(b)  The
Loans comprising each Eurodollar Borrowing shall bear interest at a rate per
annum equal to (i) in the case of a Eurodollar Loan, the Adjusted LIBO Rate for
the Interest Period in effect for such Borrowing plus the Applicable Rate, or
(ii) in the case of a Eurodollar Competitive Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus (or minus, as applicable) the
Margin applicable to such Loan.

 

24

 

(c)  Each
Fixed Rate Loan shall bear interest at a rate per annum equal to the Fixed Rate
applicable to such Loan.

 

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

 

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

 

(f)  All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the Alternate Base Rate at times when
the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).  The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

 

SECTION 2.12.  Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:

 

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

 

(b)   the Administrative Agent is advised by the
Required Lenders (or, in the case of a Eurodollar Competitive Loan, the Lender
that is required to make such Loan) that the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

 

then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing

 

25

 

to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, (ii) if any Revolving Borrowing Request requests a Eurodollar
Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing, and
(iii) any request by the Borrower for a Eurodollar Competitive Borrowing shall
be ineffective; provided that (A) if the circumstances giving rise to
such notice do not affect all the Lenders, then requests by the Borrower for
Eurodollar Competitive Borrowings may be made to Lenders that are not affected
thereby, and (B) if the circumstances giving rise to such notice affect only
one Type of Borrowings, then the other Type of Borrowings shall be permitted.

 

SECTION 2.13.  Increased Costs.  (a)   If any Change in Law shall:

 

(i)            impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate); or

 

(ii)           impose on any
Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans or Fixed Rate Loans made by such Lender;

 

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

 

(b)  If
any Lender determines that any Change in Law regarding capital requirements has
or would have the effect of reducing the rate of return on such Lender’s
capital or on the capital of such Lender’s holding company, if any, as a
consequence of this Agreement or the Loans made hereunder, to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s policies and
the policies of such Lender’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender or such Lender’s
holding company for any such reduction suffered.

 

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

 

(d)  Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than six (6) months prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or

 

26

 

reductions and of such Lender’s intention to
claim compensation therefor; provided  further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the six-month period referred to above shall be extended to include the period
of retroactive effect thereof.

 

(e)  Notwithstanding
the foregoing provisions of this Section, a Lender shall not be entitled to
compensation pursuant to this Section in respect of any Competitive Loan if the
Change in Law that would otherwise entitle it to such compensation shall have
been publicly announced prior to submission of the Competitive Bid pursuant to
which such Loan was made.

 

SECTION 2.14.  Break Funding
Payments.  In the event of (a) the
payment of any principal of any Eurodollar Loan or Fixed Rate Loan other than
on the last day of an Interest Period applicable thereto (including as a result
of an Event of Default), (b) the conversion of any Eurodollar Loan other than
on the last day of the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Revolving Loan on the date specified in
any notice delivered pursuant hereto (regardless of whether such notice is
permitted to be revocable under Section 2.09(b) and is revoked in accordance
herewith), (d) the failure to borrow any Competitive Loan after accepting the
Competitive Bid to make such Loan, or (e) the assignment of any Eurodollar Loan
or Fixed Rate Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.17,
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, the loss to
any Lender attributable to any such event shall be deemed to include an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount
of interest that such Lender would pay for a deposit equal to the principal
amount of such Loan for the period from the date of such payment, conversion,
failure or assignment to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, convert or continue, the
duration of the Interest Period that would have resulted from such borrowing,
conversion or continuation) if the interest rate payable on such deposit were
equal to the Adjusted LIBO Rate (in the case of a Eurodollar Loan) for such
Interest Period, over (ii) the amount of interest that such Lender would earn
on such principal amount for such period if such Lender were to invest such
principal amount for such period at the interest rate that would be bid by such
Lender (or an affiliate of such Lender) for dollar deposits from other banks in
the eurodollar market at the commencement of such period.  A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error.  The Borrower shall pay
such Lender the amount shown as due on any such certificate within ten (10)
days after receipt thereof.

 

SECTION 2.15.  Taxes.  (a)   Any and all payments by or an
account of any obligation of the Borrower hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent or Lender (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions, and (iii) the Borrower shall

 

27

 

pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.

 

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

 

(c)  The
Borrower shall indemnify the Administrative Agent and each Lender within ten
(10) days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the
Administrative Agent or such Lender, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or by the Administrative
Agent on its own behalf or on behalf of a Lender, shall be conclusive absent
manifest error.

 

(d)  As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

(e)  Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be made
without withholding or at a reduced rate.

 

SECTION 2.16.  Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.  (a)  The Borrower shall make each payment required
to be made by it hereunder (whether of principal, interest, fees, or under
Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without set-off or
counterclaim.  Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon.  All
such payments shall be made to the Administrative Agent, c/o The Loan and
Agency Services Group at the address set forth in Section 9.01, except that
payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly
to the Persons entitled thereto.  The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof.  If any payment
hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension.  All payments
hereunder shall be made in dollars.

 

28

 

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

 

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

 

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

 

(e)  If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(b) or 2.16(d), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.

 

SECTION 2.17.  Mitigation
Obligations; Replacement of Lenders. 
(a)   If any Lender requests
compensation under Section 2.13, or if the Borrower is required to pay any

 

29

 

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

 

(b)  If
any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, or if any
Lender defaults in its obligation to fund Loans hereunder, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement
(other than any outstanding Competitive Loans held by it) to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower shall
have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
(other than Competitive Loans), accrued interest thereon, accrued fees and all
other amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts), and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.15, such assignment will result in a reduction
in such compensation or payments.  A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

SECTION 2.18.  New Lenders;
Commitment Increases.  (a)   With the consent of the Borrower and the
Administrative Agent (which, in the case of the Administrative Agent, shall not
be unreasonably withheld), (i) one or more additional banks or other financial
institutions may become a party to this Agreement by executing a supplement
hereto, in form and substance satisfactory to such bank or other financial
institution, the Borrower and the Administrative Agent, whereupon such bank or
other financial institution (a “New Lender”) shall become a Lender for all
purposes hereof and to the same extent as if originally a party hereto and
shall be bound by and entitled to the benefits of this Agreement, and Schedule
2.01 hereto shall be deemed to be amended to add the name, address and
Commitment of such New Lender, and (ii) any Lender may increase the amount of
its Commitment by executing a supplement hereto, in form and substance
satisfactory to such Lender, the Borrower and the Administrative Agent,
whereupon such Lender shall be bound by and entitled to the benefits of this
Agreement with respect to the full amount of its Commitment as so increased,
and Schedule 2.01 hereto shall be deemed to be amended to reflect such increase
in the Commitment of such Lender.  In no
event may the aggregate Commitments be increased above $300,000,000 pursuant to
any supplement described in this Section 2.18(a).

 

30

 

(b)  If
on the date upon which a bank or other financial institution becomes a New
Lender or upon which a Lender’s Commitment is changed pursuant to Section
2.18(a), any Revolving Loans are then outstanding, the Borrower shall borrow
Revolving Loans from such Lender in such amount and with such Interest Period
such that, after giving effect thereto, the quotient of (x) the Revolving Loan
of such Lender of each Type and, in the case of Eurodollar Loans, with each
Interest Period and (y) such Lender’s Commitment is equal to the corresponding
comparable quotient of each other Lender. 
Any Eurodollar Borrowing borrowed pursuant to the preceding sentence
shall bear interest at a rate equal to the respective interest rates then
applicable to the Eurodollar Revolving Loans of the other Lenders or such other
rate as may be agreed upon by the Borrower and such Lender.

 

ARTICLE
III

Representations and Warranties

 

The Borrower represents and warrants to the
Lenders that:

 

SECTION 3.01.  Organization;
Powers.  Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.

SECTION 3.02.  Authorization;
Enforceability.  The Transactions are
within the Borrower’s corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action.  This Agreement has been duly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

 

SECTION 3.03.  Governmental
Approvals; No Conflicts.  The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument binding upon the
Borrower or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries.

 

SECTION 3.04.  Financial
Condition; No Material Adverse Effect. 
(a)   The Borrower has heretofore
furnished to the Lenders its consolidated balance sheet and statements of
income, stockholders equity and cash flows (i) as of and for the fiscal years
ended 2003 and

 

31

 

2004, reported on by KPMG LLP,
independent registered public accounting firm, and (ii) as of and for the
fiscal quarters and the portion of the fiscal year ended March 31, 2005 and
June 30, 2005, certified by its chief financial officer.  Such financial statements present fairly, in
all material respects, the financial position and results of operations and
cash flows of the Borrower and its consolidated Subsidiaries as of such dates
and for such periods in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above.  The Borrower
and its Subsidiaries do not have any Guarantees, contingent liabilities, or any
long-term leases or unusual forward or long-term commitments, including any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, in each case, that are required by GAAP
to be reflected or disclosed in such financial statements, that are not
reflected or disclosed in the most recent financial statements referred to in
this paragraph, except as disclosed on Schedule 3.04.

 

(b)  Since
December 31, 2004, there has been no event, development or circumstance that
has had or could reasonably be expected to have a Material Adverse Effect
(other than the Disclosed Matters).

 

SECTION 3.05.  Properties.  (a)   Each of the Borrower and its Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, and none of such property is subject to any
Lien except as permitted by Section 6.03.

 

(b)  Each
of the Borrower and its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.06.  Litigation and
Environmental Matters.  (a)   There are no actions, suits or proceedings by
or before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
of its Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters), or (ii) that involve this Agreement
or the Transactions.

 

(b)  Except
for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i)
has failed to comply with any Environmental Law or to obtain, maintain or
comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability,
(iii) has received notice of any claim with respect to any Environmental
Liability, or (iv) knows of any basis for any Environmental Liability.

 

(c)  Since
the date of this Agreement, there has been no change in the status of the
Disclosed Matters that, individually or in the aggregate, has resulted in, or
materially increased the likelihood of, a Material Adverse Effect.

 

32

 

SECTION 3.07.  Compliance with
Laws and Agreements.  Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments (including any material investment
advisory or management agreements) binding upon it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.08.  Investment and
Holding Company Status.  (a)   Neither the Borrower nor any of its
Subsidiaries is (i) an “investment company”, or a company “controlled” by an “investment
company”, each as defined in, or subject to regulation under, the Investment
Company Act of 1940, or (ii) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935.  Except for net capital and other requirements
imposed on registered broker-dealers, neither the Borrower nor any of its
Subsidiaries is subject to any regulation under any Requirement of Law (other
than Regulation X of the Board) that limits its ability to incur Indebtedness.

 

(b)  The
Borrower and each Subsidiary of the Borrower which is engaged in investment
advisory or investment management activities is, and at all times will be, duly
registered as an investment adviser as and to the extent required under the
Investment Advisers Act of 1940, as amended; and each Subsidiary of the
Borrower which is engaged in broker-dealer business is, and at all times will
be, duly registered as a broker-dealer as and to the extent required under the
Securities Exchange Act of 1934, as amended, and, as and to the extent
required, is, and at all times will be, a member in good standing of the
National Association of Securities Dealers, Inc.

 

SECTION 3.09.  Taxes.  Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves, or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

 

SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.  The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed by more
than $5,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $10,000,000
the fair market value of the assets of all such underfunded Plans.

 

33

 

SECTION 3.11.  Disclosure.  The Borrower has disclosed or made available
to the Lenders all agreements and instruments to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.  None of the reports,
financial statements, certificates or other information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection
with the execution and delivery of this Agreement or furnished to the Lenders
pursuant hereto (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that, with respect to projected
financial information and forward-looking statements, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.

 

SECTION 3.12.  No Default.  Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect.  No Default or Event of
Default has occurred and is continuing.

 

SECTION 3.13.  Subsidiaries.  Except as disclosed to the Administrative
Agent by the Borrower in writing from time to time after the Closing Date, (a)
Schedule 3.13 sets forth the name and jurisdiction of incorporation of each
Subsidiary and, as to each such Subsidiary, the percentage of each class of
Capital Stock owned by the Borrower, and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options or restricted stock granted to employees
or directors and directors’ qualifying shares) of any nature relating to any
Capital Stock of the Borrower or any Subsidiary.

 

SECTION 3.14.  Federal
Regulations.  No part of the proceeds
of any Loans will be used for “buying” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U as now
and from time to time hereafter in effect in any manner that violates the
provisions of the Regulations of the Board or for any other purpose that
violates the provisions of the Regulations of the Board.  If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.  No more than 25% of the
consolidated assets of the Borrower and its Subsidiaries (excluding treasury
shares) consist of “margin stock” under Regulation U as now and from time to
time hereafter in effect.

 

SECTION 3.15.  No Burdensome
Restrictions.  No Requirement of Law
or Contractual Obligation of the Borrower could reasonably be expected to have
a Material Adverse Effect.

 

34

 

ARTICLE
IV

Conditions

 

SECTION 4.01.  Effective Date.  The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions precedent is satisfied (or waived in accordance with
Section 9.02):

 

(a)  The
Administrative
Agent (or its counsel) shall have received from each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party, or (ii) written
evidence satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement.

 

(b)  The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
the General Counsel of the Borrower, substantially in the form of Exhibit B,
and covering such other matters relating to the Borrower, this Agreement or the
Transactions as the Required Lenders shall reasonably request.  The Borrower hereby requests such counsel to
deliver such opinion.

 

(c)  The
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, the authorization of
the Transactions and any other legal matters relating to the Borrower, this
Agreement or the Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.

 

(d)  The
Administrative Agent shall have received a certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial Officer of
the Borrower, confirming compliance with the conditions set forth in paragraphs
(a) and (b) of Section 4.02 without giving effect to the parenthetical set
forth in paragraph (a) of Section 4.02.

 

(e)  The
Administrative Agent shall have received evidence satisfactory to it that
simultaneously with the making of the initial Loans on the Closing Date, the
Borrower will have repaid in full all amounts outstanding under the Existing
Credit Agreement and the commitments of the lenders under the Existing Credit
Agreement will have been terminated, and the Administrative Agent shall have
received the promissory notes issued under the Existing Credit Agreement marked
“cancelled”.

 

(f)  The
Administrative Agent shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all reasonable out-of-pocket expenses required to
be reimbursed or paid by the Borrower hereunder.

 

(g)  All
governmental and third party approvals necessary in connection with the
continuing operations of the Borrower and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that

 

35

 

would restrain, prevent or otherwise impose
adverse conditions on the financing contemplated hereby.

 

(h)  The
Lenders shall have received (a) audited consolidated financial statements of
the Borrower for the 2003 and 2004 fiscal years, and (b) unaudited interim
consolidated financial statements of the Borrower for each quarterly period
ended subsequent to the date of the latest applicable financial statements
delivered pursuant to clause (a) of this paragraph as to which such financial
statements are available, and such financial statements shall not, in the
reasonable judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of the Borrower, as reflected in the financial
statements or projections contained in the Confidential Information Memorandum.

 

The Administrative
Agent shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. 
Notwithstanding the foregoing, the obligations of the Lenders to make
Loans hereunder shall not become effective unless each of the foregoing conditions
is satisfied (or waived pursuant to Section 9.02) at or prior to 5:00 p.m., New
York City time, on October 7, 2005 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).

 

SECTION 4.02.  Each Credit
Event.  The obligation of each Lender
to make a Loan on the occasion of any Borrowing (including, without limitation,
its initial Loan) is subject to the satisfaction of the following conditions:

 

(a)  The representations and
warranties of the Borrower set forth in this Agreement (with the exception of
the representation and warranty contained in Section 3.04(b)) shall be true and
correct on and as of the date of such Borrowing.

 

(b)  At the time of and
immediately after giving effect to such Borrowing, no Default shall have
occurred and be continuing.

 

Each Borrowing
and the increase of the aggregate Commitments pursuant to Section 2.18 shall be
deemed to constitute a representation and warranty by the Borrower on the date
thereof as to the matters specified in paragraphs (a) and (b) of this Section
(with references to “such Borrowing” being deemed to be references to any such
increase, as appropriate), provided that such increase of the aggregate
Commitments shall also be deemed to constitute a representation and warranty by
the Borrower that the matters specified in Section 3.04(b) are true and correct
on and as of the date thereof.

 

ARTICLE
V

Affirmative Covenants

 

Until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full, the Borrower covenants and agrees with the
Lenders that:

 

36

 

SECTION 5.01.  Financial
Statements and Other Information. 
The Borrower will furnish to the Administrative Agent and each Lender:

 

(a)  within 90 days after the end
of each fiscal year of the Borrower, the annual report of the Borrower on Form
10-K filed by the Borrower with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission;

 

(b)  within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
the quarterly report of the Borrower on Form 10- Q filed by the Borrower with
the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission;

 

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

 

(d)  promptly after the same
become publicly available, copies of all annual reports on Form 10-K, all
quarterly reports on Form 10-Q, all reports on Form 8-K (except for such
reports required to be filed pursuant to Item 2.02 of Form 8-K) and all proxy
statements, filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be;

 

(e)  after the end of each
calendar month, (i) a schedule of the Net Asset Value of the investment
companies and accounts managed by the Borrower and its Subsidiaries on the last
day of such calendar month and certain other information, substantially in the
form of Exhibit C-1, and (ii) a schedule showing the calculation of the
Aggregate Revenue Base as of the end of such calendar month, and an analysis of
changes from the preceding calendar month, substantially in the form of Exhibit
C-2, or in such other form as may be reasonably satisfactory to the
Administrative Agent; and

 

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

 

Information
required to be delivered pursuant to paragraphs (a), (b) and (c) shall be
deemed to have been delivered on the date on which the Borrower provides notice
to the Administrative Agent, or the Administrative Agent gives notice to the
Lenders, as the case may

 

37

 

be, that such information
has been posted on the Borrower’s website at the address listed in such notice
and accessible by the Lenders without charge, or on the IntraLinks website
(with customary e-mail notification of any such posting to the IntraLinks
website); provided that the Borrower shall deliver paper copies of the
reports and financial statements referred to in paragraphs (a), (b) and (c) of
this Section 5.01 to the Administrative Agent or any Lender who requests the
Borrower to deliver such paper copies until written notice to cease delivering
paper copies is given by the Administrative Agent or such Lender.

 

SECTION 5.02.  Notices of
Material Events.  The Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of
the following:

 

(a)  the occurrence of any
Default;

 

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

 

(c)  the occurrence of any ERISA
Event that, alone or together with any other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding $5,000,000;

 

(d)  any suspension or
termination of the registration of the Borrower or any of its Subsidiaries as
an investment adviser under the Investment Advisers Act of 1940, as amended, or
any cancellation or expiration without renewal of any material investment
advisory agreement or similar contract to which the Borrower or any of its
Subsidiaries is a party; and

 

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

 

Each notice
delivered under this Section shall be accompanied by a statement of a Financial
Officer or other executive officer of the Borrower setting forth the details of
the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto.  The
Borrower may, by delivering to the Administrative Agent written notice
specifically referring to this Section 5.02, notify the Lenders that the Borrower
wishes to amend any Schedule to this Agreement to include information about
events, occurrences, or transactions arising after the Closing Date that would
render untrue any representation or warranty by the Borrower under or pursuant
to this Agreement.  Such amendment will
be deemed effective as of the date that such notice is delivered to the
Administrative Agent upon the Administrative Agent giving notice to the
Borrower and the Lenders within 10 Business Days from the receipt thereof that
the Required Lenders have consented thereto.

 

SECTION 5.03.  Existence;
Conduct of Business.  The Borrower
will, and will cause each of its Subsidiaries to, (a) do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business; provided that the foregoing
shall

 

38

 

not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.04, and (b)
comply with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

SECTION 5.04.  Payment of
Obligations.  The Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, and (c) the
failure to make payment pending such contest could not reasonably be expected
to result in a Material Adverse Effect.

 

SECTION 5.05.  Maintenance of
Properties; Insurance.  The Borrower
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.

 

SECTION 5.06.  Books and
Records; Inspection Rights.  The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities.  The Borrower will, and will cause each of its
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.

 

SECTION 5.07.  Compliance with
Laws.  The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property and
maintain all registrations and memberships with any Governmental Authority,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.08.  Use of Proceeds.  The proceeds of the Loans will be used to
finance the payment by the Borrower of outstanding Indebtedness under the
Existing Credit Agreement, to pay related fees and expenses and for general
corporate purposes, including but not limited (a) to repurchase shares of the
Borrower’s Class A Common Stock, and (b) to consummate Permitted
Acquisitions.  No part of the proceeds of
any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including
Regulations U and X.

 

39

 

SECTION 5.09.  Environmental
Laws.  The Borrower will, and will
cause each of its Subsidiaries to, (a) comply in all material respects
with all applicable Environmental Laws, and obtain and comply in all material
respects with and maintain any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws, and (b) conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws, except in each
case to the extent that non-compliance therewith could not reasonably be
expected to result in a Material Adverse Effect.

 

ARTICLE VI

Negative Covenants

 

Until the
Commitments have expired or terminated and the principal of and interest on
each Loan and all fees payable hereunder have been paid in full, the Borrower
covenants and agrees with the Lenders that:

 

SECTION 6.01.  Financial
Condition Covenants.

 

(a)  Consolidated Leverage Ratio.  The Borrower shall not permit the
Consolidated Leverage Ratio as at the last day of any period of four
consecutive fiscal quarters of the Borrower ending with any fiscal quarter to
equal or exceed the ratio of 3.0 to 1.0.

 

(b)  Consolidated Interest Coverage
Ratio.  The Borrower shall not permit
the Consolidated Interest Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower ending with any fiscal quarter to be less than
or equal to the ratio of 4.0 to 1.0.

 

SECTION 6.02.  Indebtedness.  The Borrower will not permit any Subsidiary
to create, incur, assume or permit to exist any Indebtedness, except:

 

(a)  Indebtedness existing on the date
hereof and set forth in Schedule 6.02, but not any extensions, renewals or
replacements of any such Indebtedness and without increasing, or shortening the
maturity of, the principal amount thereof;

 

(b)  Indebtedness of any Subsidiary to
the Borrower or any other Subsidiary;

 

(c)  Indebtedness of any Subsidiary
incurred to finance the acquisition, construction or improvement of any fixed
or capital assets, including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement, and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (d) shall not
exceed $10,000,000 at any time outstanding;

 

40

 

(d)  Indebtedness of any Person that
becomes a Subsidiary after the date hereof; provided that such
Indebtedness exists at the time such Person becomes a Subsidiary and is not
created in contemplation of or in connection with such Person becoming a
Subsidiary;

 

(e)  Indebtedness of any Subsidiary as
an account party in respect of trade letters of credit; and

 

(f)  Other unsecured Indebtedness
(including unsecured Guarantees of Indebtedness of the Borrower) in an
aggregate principal amount not exceeding $25,000,000 at any time outstanding.

 

SECTION 6.03.  Liens.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:

 

(a)  Permitted Encumbrances;

 

(b)  any Lien on any property or asset
of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 6.03;
provided that (i) such Lien shall not apply to any other property
or asset of the Borrower or any Subsidiary, and (ii) such Lien shall
secure only those obligations which it secures on the date hereof;

 

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

 

(d)  Liens on property, plant and
equipment acquired, constructed or improved by the Borrower or any Subsidiary; provided
that (i) such security interests secure Indebtedness permitted by clause (d) of
Section 6.02, (ii) such security interests and the Indebtedness
secured thereby are incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 70% of the cost of acquiring,
constructing or improving such property, plant and equipment, and (iv) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary.

 

SECTION 6.04.  Fundamental
Changes.  (a)   The Borrower will not, and will not permit
any Subsidiary to, merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or sell, transfer, lease
or otherwise dispose of (in one transaction or in a series of transactions) all
or substantially all of its assets, or all or substantially all of the stock of
any of its Subsidiaries (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve, except that, if at the time thereof and
immediately after giving

 

41

 

effect thereto no Default shall have occurred and be continuing (i) any
other Person, including a Subsidiary, may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary in a transaction in which the
surviving entity is a Subsidiary, (iii) any Subsidiary may sell, transfer,
lease or otherwise dispose of its assets to the Borrower or to another
Subsidiary, (iv) any Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders,
and (v) the Borrower may merge into or consolidate with another Person in
a transaction in which such other Person is the surviving entity if such other
Person is organized and validly existing under the laws of the United States or
any State thereof and by operation of law or otherwise assumes all obligations
of the Borrower hereunder and such assumption is evidenced by an opinion of
counsel to such other Person satisfactory in form and substance to the
Administrative Agent; provided that any such merger involving a Person
that is not a wholly owned Subsidiary immediately prior to such merger shall
not be permitted unless also permitted by Section 6.05.

 

(b)  The Borrower will not, and will not
permit any of its Subsidiaries to, engage to any material extent in any
business other than businesses of the type conducted by the Borrower and its
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto.

 

SECTION 6.05.  Investments,
Loans, Advances, Guarantees and Acquisitions; Hedging Agreements.  (a)  
The Borrower will not, and will not permit any of its Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets
of any other Person constituting a business unit, except:

 

(i)            Permitted
Investments;

 

(ii)           investments
by the Borrower existing on the date hereof in the capital stock of its
Subsidiaries;

 

(iii)          loans
or advances made by the Borrower to any Subsidiary and made by any Subsidiary
to the Borrower or any other Subsidiary;

 

(iv)          Guarantees
constituting Indebtedness permitted by Section 6.02;

 

(v)           Permitted
Acquisitions; and

 

(vi)          other
investments, loans, advances, guarantees or acquisitions in an aggregate
principal amount not exceeding $25,000,000 at any time outstanding.

 

(b)  The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any Hedging Agreement, other than
Hedging Agreements entered into in the ordinary course

 

42

 

of business to hedge or mitigate risks to which the Borrower or any
Subsidiary is exposed in the conduct of its business or the management of its
liabilities.

 

SECTION 6.06.  Restricted
Payments.  The Borrower will not, and
will not permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except (a) the
Borrower or any of its Subsidiaries may declare and pay dividends (whether in
cash, securities or other property) with respect to its capital stock provided
that, in the case of any such declaration or payment by the Borrower, no
Default or Event of Default has occurred or is continuing or would result
therefrom, (b) the Borrower may make Restricted Payments pursuant to and
in accordance with stock option plans or other benefit plans for management or
employees of the Borrower and its Subsidiaries, and (c) the Borrower may,
in addition to the foregoing, repurchase shares of the Borrower’s Class A
Common Stock and options therefor granted by the Borrower pursuant to its
employee stock option plans.

 

SECTION 6.07.  Transactions
with Affiliates.  The Borrower will
not, and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with,
any of its Affiliates, except (a) in the ordinary course of business at
prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among the Borrower and its wholly
owned Subsidiaries not involving any other Affiliate, and (c) any
Restricted Payment permitted by Section 6.06.

 

SECTION 6.08.  Restrictive
Agreements.  The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrower or any other
Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply
to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases
restricting the assignment thereof.

 

SECTION 6.09.  Capital
Expenditures.  The Borrower will not,
and will not permit any of its Subsidiaries to, make or commit to make any
Capital Expenditure, except Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding $40,000,000 in
the aggregate from the date hereof.

 

43

 

SECTION 6.10.  Sales and
Leasebacks.  The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property that has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary (a “Sale/Leaseback
Transaction”), except Sale/Leaseback Transactions entered into with respect
to the real property listed on Schedule 6.10.

 

SECTION 6.11.  Changes in
Fiscal Periods.  The Borrower will
not permit the fiscal year of the Borrower to end on a day other than December 31
or change the Borrower’s method of determining fiscal quarters.

 

SECTION 6.12.  Negative
Pledge Clauses.  The Borrower will
not, and will not permit any of its Subsidiaries to, enter into or suffer to
exist or become effective any agreement that prohibits or limits the ability of
the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, to secure its obligations under this Agreement other than (a) this
Agreement, and (b) any agreements governing any purchase money Liens or
Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition
or limitation shall only be effective against the assets financed thereby).

 

SECTION 6.13.  Optional
Payments and Modifications of Certain Debt Instruments.  The Borrower will not permit any of its
Subsidiaries to make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of or otherwise optionally or voluntarily
defease any Indebtedness, or amend, modify, waive or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to, any
of the terms relating to the payment or prepayment of principal of or interest
on, any such Indebtedness (other than any such amendment, modification, waiver
or other change that would extend the maturity or reduce the amount of any
payment of principal thereof or reduce the rate or extend any date for payment
of interest thereon).

 

ARTICLE VII

Events of Default

 

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

 

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

 

(b)  the Borrower shall fail to pay any
interest on any Loan or any fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable under this Agreement,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five (5) days;

 

44

 

(c)  any representation or warranty made
or deemed made by or on behalf of the Borrower or any Subsidiary in or in
connection with this Agreement or any amendment or modification hereof, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any amendment or
modification hereof, shall prove to have been materially incorrect when made or
deemed made;

 

(d)  the Borrower shall fail to observe
or perform any covenant, condition or agreement contained in Section 5.02,
5.03 (with respect to the Borrower’s existence) or 5.08 or in Article VI;

 

(e)  the Borrower shall fail to observe
or perform any covenant, condition or agreement contained in this Agreement
(other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent (given at the request of any
Lender) to the Borrower;

 

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

 

(g)  any event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or
any trustee or agent on its or their behalf to cause any Material Indebtedness
to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this
clause (g) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing
such Indebtedness;

 

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

 

(i)  the Borrower or any Subsidiary
shall (i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of
this Article, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any Subsidiary or for a substantial part

 

45

 

of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors, or (vi) take any action
for the purpose of effecting any of the foregoing;

 

(j)  the
Borrower or any Subsidiary shall become unable, admit in writing or fail
generally to pay its debts as they become due;

 

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

 

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

 

(m)  a
Change in Control shall occur;

 

then, and in
every such event (other than an event with respect to the Borrower described in
clause (h) or (i) of this Article), and at any time thereafter during
the continuance of such event, the Administrative Agent may, and at the request
of the Required Lenders shall, by notice to the Borrower, take either or both
of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately,
and/or (ii) declare the Loans then outstanding to be due and payable in
whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described
in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.

 

ARTICLE VIII

The Administrative Agent

 

Except as
provided below, each of the Lenders hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.

 

46

 

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

 

The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein.  Without
limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing by the Required Lenders, and (c) except as expressly set forth
herein, the Administrative Agent shall not have any duty to disclose, and shall
not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders or in the absence of its own gross negligence or willful
misconduct.  The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or
representation made by any other Person in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered by any other Person hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability,
effectiveness (other than its own due execution) or genuineness of this
Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to
the Administrative Agent.

 

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

 

The
Administrative Agent may perform any and all its duties and exercise its rights
and powers through Related Parties of the Administrative Agent.  The exculpatory provisions of the preceding
paragraphs shall apply to the Related Parties of the Administrative Agent, and
shall apply to their activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent.

 

47

 

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

 

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

 

ARTICLE IX

Miscellaneous

 

SECTION 9.01.  Notices.  Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

(a)  if to the Borrower, to it at 6300
Lamar Avenue, Overland Park, Kansas 66202, Attention of Daniel P. Connealy
(Telecopy No. (913) 236-1930, with a copy to Wendy J. Hills (Telecopy No. (913)
236-2379);

 

(b)  if to the Administrative Agent, to
JPMorgan Chase Bank, c/o Agent Bank Services Group, 1111 Fannin - 10th
Floor, Houston, TX 77002, Attention of Omar Musule (Telecopy No. (713) 750-2223),
with a copy to JPMorgan Chase Bank, 270 Park Avenue, New York, New York 10017,
Attention of Jeanne Horn (Telecopy No. (212) 270-9090); and

 

48

 

(c)  if to any other Lender, to it at
its address (or telecopy number) set forth in its Administrative Questionnaire.

 

Any party
hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

 

SECTION 9.02.  Waivers;
Amendments.  (a)   No
failure or delay by the Administrative Agent or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative
Agent and the Lenders hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement
or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.

 

(b)  Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the
Required Lenders or by the Borrower and the Administrative Agent with the
consent of the Required Lenders; provided that no such agreement shall (i) increase
the Commitment of any Lender without the written consent of such Lender, (ii) reduce
the principal amount of any Loan or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of the
principal amount of any Loan, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the
written consent of each Lender affected thereby, (iv) change Section 2.16(b) or
(c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) increase the
aggregate Commitments above $300,000,000, without the written consent of each
Lender, or (vi) change any of the provisions of this Section or the
definition of “Required Lenders” or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender; provided  further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder without the prior written consent of the
Administrative Agent.

 

SECTION 9.03.  Expenses;
Indemnity; Damage Waiver.  (a)   The
Borrower shall pay (i) all reasonable, documented out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates in amounts previously
agreed to in writing and the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of
this Agreement or any

 

49

 

amendments, modifications or waivers of the provisions hereof (whether
or not the transactions contemplated hereby or thereby shall be consummated),
and (ii) all out-of-pocket expenses incurred by the Administrative Agent
or any Lender, including the fees, charges and disbursements of any counsel for
the Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement, including its
rights under this Section, or in connection with the Loans made, including in
connection with any workout, restructuring or negotiations in respect thereof.

 

(b)  The Borrower shall indemnify the
Administrative Agent and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities, costs and related expenses, including the fees, charges
and disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory and regardless
of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities, costs or related expenses are determined
by a court of competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct of such
Indemnitee.

 

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

 

(d)  To the extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof.

 

(e)  All amounts due under this Section shall
be payable not later than five (5) days after written demand therefor.

 

SECTION 9.04.  Successors
and Assigns.  (a)   The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted
hereby, except that the Borrower may not assign or otherwise transfer any

 

50

 

of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

(b)  Any Lender may assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that (i) except in the case of an
assignment to a Lender or an Affiliate of a Lender, each of the Borrower and
the Administrative Agent must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld), (ii) except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment,
and the Loans at the time owing to it or in the case of an assignment to a
Lender or an Affiliate of a Lender or an Approved Fund with respect to a
Lender, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 or,
unless each of the Borrower and the Administrative Agent otherwise consent, (iii) each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement with
respect to the Loan or the Commitment assigned, except that this clause (iii) shall
not apply to rights in respect of outstanding Competitive Loans, (iv) the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire; provided
further that any consent of the Borrower otherwise required under this
paragraph shall not be required if an Event of Default under clause (h) or
(i) of Article VII has occurred and is continuing.  Upon acceptance and recording pursuant to
paragraph (d) of this Section, from and after the effective date specified
in each Assignment and Acceptance, the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.14, 2.15 and 9.03).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.

 

(c)  The Administrative Agent, acting
solely for this purpose as an agent of the Borrower, shall maintain at one of
its offices in The City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the

 

51

 

Register shall be conclusive, and the Borrower, the Administrative
Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary.

 

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

 

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

 

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

 

(g)  Any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including without limitation (i) any
such pledge or assignment to a Federal Reserve Bank, and (ii) in the case
of any Lender that is a Fund, any pledge or assignment of all or any portion of
such Lender’s rights under this Agreement to any holders of obligations owed,
or securities issued, by such Lender as security for such obligations or
securities, or to any trustee for, or any other representative of such holders
and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a
security interest shall release a Lender

 

52

 

from any of its obligations hereunder or substitute any such assignee
for such Lender as a party hereto.

 

SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated.  The provisions of Sections 2.13, 2.14, 2.15
and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Commitments or
the termination of this Agreement or any provision hereof.

 

SECTION 9.06.  Counterparts;
Integration; Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. 
Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

SECTION 9.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08.  Right of
Setoff.  If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be
unmatured.  The rights of each Lender
under this Section are in addition to other rights and remedies (including
other rights of setoff) which such Lender may have.

 

53

 

SECTION 9.09.  Governing
Law; Jurisdiction; Consent to Service of Process.  (a)  
This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the law
of the State of New York.

 

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

 

(c)  The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

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

 

SECTION 9.10.  WAIVER OF
JURY TRIAL.  EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

54

 

SECTION 9.12.  Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement, (g) with
the consent of the Borrower, or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section, (ii) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrower, or (iii) to the National
Association of Insurance Commissioners or any other similar organization or
nationally recognized rating agency that requires access to information about a
Lender’s investment portfolio in connection with rating issued with respect to
such Lender.  For the purposes of this
Section, “Information” means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent or any Lender on a nonconfidential
basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the date hereof, such information
is clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

SECTION 9.13.  Interest
Rate Limitation.  Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated
as interest on such Loan under applicable law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans
or periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.

 

SECTION 9.14.  USA
PATRIOT Act.  Each Lender which is
subject to Section 326 of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), hereby notifies
the Borrower that, pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Borrower, which
information includes

 

55

 

the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act. 

 

56

 

Annex I-A

 

PRICING GRID

 

	
   

  	
   

  	
  Level 1

  	
   

  	
  Level 2

  	
   

  	
  Level 3

  	
   

  	
  Level 4

  	
   

  	
  Level 5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S&P
  Rating:

  	
   

  	
  A- or better

  	
   

  	
  BBB+

  	
   

  	
  BBB

  	
   

  	
  BBB-

  	
   

  	
  Less than
  BBB-

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Moody’s
  Rating:

  	
   

  	
  A3 or better

  	
   

  	
  Baa1

  	
   

  	
  Baa2

  	
   

  	
  Baa3

  	
   

  	
  Less than
  Baa3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ABR Loans’
  Applicable Margin

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eurodollar
  Loans’ Applicable Margin

  	
   

  	
  0.295

  	
  %

  	
  0.400

  	
  %

  	
  0.500

  	
  %

  	
  0.600

  	
  %

  	
  0.825

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facility Fee
  Rate

  	
   

  	
  0.080

  	
  %

  	
  0.100

  	
  %

  	
  0.125

  	
  %

  	
  0.150

  	
  %

  	
  0.175

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Utilization
  Fee Rate

  	
   

  	
  0.125

  	
  %

  	
  0.125

  	
  %

  	
  0.125

  	
  %

  	
  0.125

  	
  %

  	
  0.125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Drawn

  	
   

  	
  0.375

  	
  %

  	
  0.500

  	
  %

  	
  0.625

  	
  %

  	
  0.750

  	
  %

  	
  1.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fully Drawn

  	
   

  	
  0.500

  	
  %

  	
  0.625

  	
  %

  	
  0.750

  	
  %

  	
  0.875

  	
  %

  	
  1.125

  	
  %

  

 

For purposes of determining the Applicable
Margins or the Facility Fee Rates, (i) in the event of a “split rating” (i.e.,
if the Moody’s Rating applicable to the Borrower at any time appears in the
chart above in a different column from that in which the S&P Rating then
applicable to the Borrower appears), the Applicable Margins and the Facility
Fee Rates will be based on the column which includes the higher rating (unless
the higher rating is more than one rating level higher than the lower rating,
in which case the pricing shall be that applicable to the rating level which is
one rating level lower than the higher rating level), (ii) if Moody’s or
S&P shall not have in effect a rating (other than because such rating
agency shall no longer be in the business of rating corporate debt
obligations), then such rating agency will be deemed to have established a
rating one rating level lower than the rating of either Moody’s or S&P, as
the case may be, that remains in effect, and (iii) the Applicable Margins
and the Facility Fee Rates shall be subject to adjustment (upwards or downwards,
as appropriate), effective as of the date on which S&P or Moody’s announces
a rating change which results in a change in the Applicable Margins and the
Facility Fee Rates.

 

 

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

 

	
  WADDELL & REED FINANCIAL, INC.,

  
	
   

  	
  By:

  	
  /s/ Daniel P. Connealy

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Daniel P. Connealy

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  6300 Lamar Avenue

  	
   

  
	
   

  	
   

  	
   

  	
  Overland Park, Kansas 66202

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Taxpayer ID:

  	
  51-0261715

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JPMORGAN CHASE BANK,

  
	
  individually and as Administrative Agent,

  
	
   

  
	
   

  	
  By:

  	
  /s/ Jeanne O’Connell Horn

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeanne O’Connell Horn

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A.

  
	
   

  
	
   

  	
  By:

  	
  /s/ George Kinne

  	
   

  
	
   

  	
   

  	
  Name:

  	
  George Kinne

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UMB
  BANK, NA

  
	
   

  
	
   

  	
  By:

  	
  /s/ David A. Profitt

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David A. Profitt

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANK
  MIDWEST, N.A.

  
	
   

  
	
   

  	
  By:

  	
  /s/ Paul P. Holewinski

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Paul P. Holewinski

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  THE
  BANK OF NEW YORK

  
	
   

  
	
   

  	
  By:

  	
  /s/ Joanne Carey

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joanne Carey

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SOCIETE
  GENERALE

  
	
   

  
	
   

  	
  By:

  	
  /s/ Edith L. Hornick

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edith L. Hornick

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE BANK
  OF NOVA SCOTIA

  
	
   

  
	
   

  	
  By:

  	
  /s/ Todd Meller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Todd Meller

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  

 

2

 

EXHIBIT A

 

FORM OF

ASSIGNMENT AND ACCEPTANCE

 

Reference is
made to the Credit Agreement, dated as of October 7, 2005 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Waddell & Reed Financial, Inc. (the “Borrower”), the
Lenders party thereto and JPMorgan Chase Bank, as administrative agent for the
Lenders (in such capacity, the “Administrative Agent”). Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.

 

The Assignor
identified on Schedule l hereto (the “Assignor”) and the Assignee
identified on Schedule l hereto (the “Assignee”) agree as follows:

 

i.              The
Assignor hereby irrevocably sells and assigns to the Assignee without recourse
to the Assignor, and the Assignee hereby irrevocably purchases and assumes from
the Assignor without recourse to the Assignor, as of the Effective Date (as
defined below), the interest described in Schedule 1 hereto (the “Assigned
Interest”) in and to the Assignor’s rights and obligations under the Credit
Agreement with respect to those credit facilities contained in the Credit
Agreement as are set forth on Schedule 1 hereto (individually, an “Assigned
Facility”; collectively, the “Assigned Facilities”), in a principal
amount for each Assigned Facility as set forth on Schedule 1 hereto.

 

ii.             The
Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than that the Assignor has not created any adverse
claim upon the interest being assigned by it hereunder and that such interest
is free and clear of any such adverse claim; (b) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower, any of its Subsidiaries or any other obligor or the
performance or observance by the Borrower, any of its Subsidiaries or any other
obligor of any of their respective obligations under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto; and (c) attaches
any promissory notes held by it evidencing the Assigned Facilities and (i) requests
that the Administrative Agent, upon request by the Assignee, exchange the
attached promissory notes for a new promissory note or notes payable to the
Assignee, and (ii) if the Assignor has retained any interest in the
Assigned Facility, requests that the Administrative Agent exchange the attached
promissory notes for a new promissory note or notes payable to 

 

 

the Assignor, in each case in amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).

 

iii.            The
Assignee (a) represents and warrants that it is legally authorized to
enter into this Assignment and Acceptance; (b) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements delivered pursuant to subsection 3.04 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; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be bound by
the provisions of the Credit Agreement and will perform in accordance with its
terms all the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender including, if it is organized under
the laws of a jurisdiction outside the United States, its obligation pursuant
to subsection 2.15(e) of the Credit Agreement.

 

iv.            The
effective date of this Assignment and Acceptance shall be the Effective Date of
Assignment described in Schedule 1 hereto (the “Effective Date”).  Following the execution of this Assignment
and Acceptance, it will be delivered to the Administrative Agent for acceptance
by it and recording by the Administrative Agent pursuant to the Credit
Agreement, effective as of the Effective Date (which shall not, unless
otherwise agreed to by the Administrative Agent, be earlier than five Business
Days after the date of such acceptance and recording by the Administrative
Agent).

 

v.             Upon
such acceptance and recording, from and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to the Effective Date and to the
Assignee for amounts which have accrued subsequent to the Effective Date.  The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Administrative Agent for periods
prior to the Effective Date or with respect to the making of this assignment
directly between themselves.

 

2

 

vi.            From
and after the Effective Date, (a) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and shall be bound by
the provisions thereof; and (b) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Credit Agreement.

 

vii.           This
Assignment and Acceptance shall be governed by and construed in accordance with
the laws of the State of New York

 

IN WITNESS
WHEREOF, the parties hereto have caused this Assignment and Acceptance to be
executed as of the date first above written by their respective duly authorized
officers on Schedule 1 hereto.

 

3

 

Schedule 1

to Assignment and Acceptance

 

Name of Assignor:

 

Name of Assignee:

 

Effective Date of Assignment:

 

	
  Credit

  Facility Assigned

  	
   

  	
  Principal

  Amount Assigned

  	
   

  	
  Commitment Percentage Assigned(1)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  $

  	
             

  	
   

  	
  .

  	
  %

  
								

 

 

	
  [Name of
  Assignee]

  	
  [Name of
  Assignor]

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Title:

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted:

  	
  Consented
  To:

  
	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK,

  	
  WADDELL &
  REED FINANCIAL, INC.(2)

  
	
  as
  Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Title:

  	
  Title:

  

 

(1)           Calculate
the
Commitment Percentage that is assigned to at least 15 decimal places and show
as a percentage of the aggregate commitments of all Lenders.

 

(2)           The
Borrower’s
consent may not be required pursuant to subsection 9.04 of the Credit
Agreement.

 

4

 

EXHIBIT B

 

Waddell & Reed Financial, Inc.

6300 Lamar Avenue

Overland Park, Kansas 66202

 

October 7, 2005

 

JPMorgan Chase
Bank, as Administrative Agent under

the Credit Agreement, as hereinafter defined (the “Administrative Agent”)

 

and

 

The Lenders
listed on Schedule I hereto which are parties 

to the Credit Agreement on the date hereof

 

Re:          Credit
Agreement dated as of October 7, 2005 (the “Credit Agreement”)
among Waddell & Reed Financial, Inc. (the “Company”), the
lending institutions identified in the Credit Agreement (the “Lenders”)
and the Administrative Agent

 

Ladies and Gentlemen:

 

I am General Counsel of Waddell & Reed Financial, Inc.
(the “Company”).  As General
Counsel, I have been requested to provide you my opinion as to certain matters
in connection with the preparation, execution and delivery of the Credit
Agreement and the promissory notes, if any, (the “Notes”) (collectively,
the “Loan Documents”) dated and delivered to the Lenders thereunder on the date
hereof.  Unless otherwise indicated,
capitalized terms used but not defined herein shall have the respective
meanings set forth in the Credit Agreement. 
This opinion is furnished to you pursuant to Section 4.01(b) of
the Credit Agreement.

 

In connection with this opinion, I have examined the Credit Agreement,
signed by the Company and by the Administrative Agent and certain of the
Lenders, and any Notes, each executed by the Company.  In addition to the Loan Documents, I have
examined (i) the originals, or duplicates or certified or conformed
copies, of such records, agreements, instruments and other documents, (ii) such
certificates of public officials, of officers and representatives of the
Company and other Persons, and (iii) have made such other investigations
as I have deemed relevant and necessary in connection with the opinions
expressed herein, and I have made no effort to independently verify the facts
set forth in such certificates.

 

In making for the foregoing examinations, I have assumed the
genuineness of all signatures (other than the signatures of the Company with
respect to the Loan Documents), the legal capacity of each person signatory to
any of the documents reviewed by me, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as duplicates or certified or conformed copies, and
the authenticity of the originals of such latter documents.  I have relied, as to factual matters, on the
statements of the Company set forth in the Credit Agreement, without
undertaking any independent investigation of such factual matters, unless I
know such statements not to be true and correct.

 

 

In rendering the opinions expressed herein, I have
assumed that:

 

(a)           each
of the documents examined by me (other than the Loan Documents) has been duly
authorized, executed and delivered by each of the parties thereto and
constitutes the legal, valid and binding obligation of each such party thereto
enforceable against it in accordance with its terms;

 

(b)           the
Loan Documents have been duly authorized by each of the parties thereto (other
than the Company), that each such party (other than the Company) has the
requisite power and authority to execute, deliver and perform such documents to
which it is a party, that the Loan Documents have been duly executed and
delivered by each of the parties thereto (other than the Company), and that the
Loan Documents constitute the legal, valid and binding obligations of each of
the parties thereto (other than the Company) enforceable in accordance with
their terms;

 

(c)           no
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any court, governmental body
or authority, or any subdivision thereof, is required to authorize or is
required in connection with, the execution and delivery by any Person
identified in any Loan Document as a party thereto, or in connection with the
performance of its obligations thereunder or the consummation of the
transactions contemplated thereby, other than those that have been obtained or
made and are in full force and effect (provided,
that I make no such assumption with respect to consents, approvals and the like
applicable to the Company to the extent that I express my opinion rendered in
paragraph 3 below);

 

(d)           the
Administrative Agent has been and is the duly appointed agent of each of the
other Lenders pursuant to the Credit Agreement; and

 

(e)           there
are no extrinsic agreements among the parties to the Loan Documents that would
modify or affect the interpretation of the terms of the Loan Documents or the
respective rights or obligations of the parties thereunder.

 

Based upon and subject to the foregoing, and subject to the
assumptions, exceptions, qualifications and limitations set forth herein, I am
of the opinion that:

 

1.             The
Company (a) has been duly incorporated and is validly existing and in good
standing as a corporation under the laws of the State of Delaware, (b) has
the corporate power and authority to execute and deliver the Loan Documents and
to borrow, and perform its obligations thereunder and (c) has duly
authorized, executed and delivered the Loan Documents.

 

2.             The
execution and delivery by the Company of the Loan Documents, its borrowings in
accordance with the terms of the Credit Agreement, and performance of its
payment obligations thereunder (a) will not result in any violation of (1) the
Amended and Restated Certificate of Incorporation or the Amended and Restated
Bylaws of the Company, (2)

 

2

 

assuming that proceeds of borrowings will be used in
accordance with the terms of the Credit Agreement, any Federal or Kansas
statute or the Delaware General Corporation Law or any rule or regulation
issued pursuant to any Federal or Kansas statute or the Delaware General
Corporation Law or any order known to me issued by any court or governmental
agency or body and (b) will not breach or result in a default under or
result in the creation of any lien upon, or security interest in, the Company’s
properties pursuant to the terms of any agreement or instrument.

 

3.             No
consent, approval, authorization, order, filing, registration or qualification
of or with any Federal or Kansas governmental agency or body or any Delaware
governmental agency or body acting pursuant to the Delaware General Corporation
Law is required for the execution and delivery by the Company of the Loan
Documents, the borrowings by the Company in accordance with the terms of the
Credit Agreement or the performance by the Company of its payment obligations
under the Loan Documents.

 

4.             The
Loan Documents constitute the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with their respective
terms.

 

5.             To
my knowledge, except as otherwise disclosed, there is no action, suit or
proceeding before or by any court, arbitrator or governmental agency, body or
official, now pending, to which the Company is a party or to which the
business, assets or property of the Company is subject and no such action, suit
or proceeding is threatened to which the Company or the business, assets or
property of the Company would be subject that in either case questions the
validity of the Credit Agreement.

 

The foregoing opinions are subject to the following
assumptions, exceptions, qualifications and limitations.

 

(a)           The foregoing opinions
are expressly limited to matters under and governed by the internal substantive
laws of the State of Kansas, the General Corporation Law of the State of
Delaware and applicable Federal laws of the United States of America, in each
case in effect on the date hereof and which, in my experience, are normally
applicable to the transactions of the type provided for in the Loan Documents,
in each case, however, exclusive of, and without regard to, any Excluded
Laws.  The term “Excluded Laws”
means all (i) municipal, political subdivision (whether created or enabled
through legislative action at the Federal, state, regional or local level),
local and county ordinances, statutes, administrative decisions, laws, rules and
regulations, and (ii) statutes, laws, rules and regulations relating
to (A) antitrust, (B) taxation, and (C) securities laws, in each
case with respect to the foregoing, (X) as interpreted, construed or enforced
pursuant to any judicial, arbitral or other decision or pronouncement, (Y) as
in effect in any jurisdiction, including, without limitation, the United States
of America and any State thereof, and (Z) including, without limitation, any
and all authorizations, permits, consents, applications, licenses, approvals,
filings, registrations, publications, exemptions and the like required by any
of them.

 

(b)           In rendering the
opinion expressed in paragraph 1 above regarding valid existence and good
standing, I have relied solely on certificates of public officials of a recent
date, and have conducted no further investigation.

 

3

 

(c)           The opinions expressed
in paragraph 3 above as to the lack of need for any consent, approval,
authorization, order, filing, registration or qualification of or with any
Federal or Kansas governmental agency or body or any Delaware governmental
agency or body acting pursuant to the Delaware General Corporation Law are
based upon a review of those laws, rules and regulations that, in my
experience, are normally applicable to the transactions contemplated by the
Loan Documents.

 

(d)           The opinions expressed
in paragraph 4 regarding the enforceability of the Loan Documents are subject
to the following:

 

(i)            The
enforceability of the Loan Documents may be limited or affected by (A) bankruptcy,
insolvency, reorganization, moratorium, liquidation, rearrangement, fraudulent
transfer, fraudulent conveyance and other similar laws (including court decisions)
now or hereafter in effect relating to or affecting creditors’ rights and
remedies generally, (B) the refusal of a particular court to grant (1) equitable
remedies, including, without limiting the generality of the foregoing, specific
performance and injunctive relief, or (2) a particular remedy sought under
any Loan Document as opposed to another remedy provided for therein or another
remedy available at law, admiralty or in equity, (C)  general equitable
principles (regardless of whether such remedies are sought in a proceeding in
equity, admiralty or at law), and (D) judicial discretion.

 

(ii)           In
rendering the foregoing opinions, I express no opinion as to (A) the
availability of certain equitable remedies, including specific performance, (B) provisions
in the Loan Documents that purport to (1) restrict access to legal or
equitable remedies, (2) establish presumptions or evidentiary standards,
or (3) waive or affect rights or defenses of any party that may not be
waived or affected under applicable law, (C) provisions in the Loan
Documents relating to severability clauses, (D) provisions in the Loan
Documents relating to indemnities and rights of contribution to the extent
prohibited by public policy or which might require indemnification for losses or
expenses caused by negligence, gross negligence, willful misconduct, fraud or
illegality of an indemnified party, and (E) the effect of any provision of
the Loan Documents (1) which is intended to permit modification thereof
only by means of an agreement signed in writing by the parties thereto or (2) insofar
as it provides that any person purchasing a participation from a Lender or
other Person may exercise set-off or similar rights with respect to such
participation or that any Lender or other Person may exercise set-off or
similar rights other than in accordance with applicable law.

 

(iii)          I
note that the enforceability of specific provisions of the Loan Documents may
be subject to standards of reasonableness, care and diligence and “good faith”
limitations and obligations such as those provided in Sections 1-102(3), 1-203
and 1-208 and other provisions of the Uniform Commercial Code and applicable
principles of common law and judicial decisions.

 

(iv)          I
have assumed that the Lenders will enforce and perform each Loan Document in
compliance with the provisions thereof and all requirements of applicable law.

 

4

 

(v)           In
connection with any provisions of the Loan Documents whereby the Company
submits to the jurisdiction of the United States District Court of the Southern
District of New York, I note the limitations of 28 U.S.C. §§ 1331 and 1332
on Federal court jurisdiction, and I also note that such submissions cannot
supersede such court’s discretion in determining whether to transfer an action
from one Federal court to another under 28 U.S.C. § 1404(a).

 

(e)           I do not express any
opinion with respect to any exhibit or schedule to, or other agreement
referred to in, any of the Loan Documents.

 

(f)            In rendering the
foregoing opinions, I have not endeavored to express any opinions, and I
express no opinions, and none are intended to be implied hereby nor shall be
inferred herefrom, as to (i) the various state and federal laws, statutes,
regulations, interpretations, opinions, directives, orders, rulings,
authorities or similar matters regulating or governing the Administrative Agent
or any Lender (collectively, the “Rules”) and/or their entry into,
execution, delivery or performance of the Loan Documents, or the transactions
provided for therein, or the conduct of their business related thereto, or (ii) the
Administrative Agent’s or any Lender’s compliance with any of the Rules in
connection with any Loan Document, or the transactions provided for therein.

 

(g)           Whenever any opinion
expressed herein with respect to the existence or absence of facts is qualified
by references to “known to me,” “to my knowledge” or words or phrases of
similar import (whether or not modified by any additional phrases), such
qualification indicates that, except as otherwise expressed, (i) no
information has come to my attention that has given me actual knowledge of the
existence of such facts, and (ii) I have not undertaken any independent
investigation to determine the existence or absence of such facts.

 

My opinion is limited to applicable laws of the United States of
America and the applicable laws of the states thereof, as appropriate, and is
based on the facts in existence and the laws in effect on the date hereof.  In rendering this opinion, note that I am a
member of the bar of the States of Kansas and Missouri only.  My opinion with respect to the law of the
State of Delaware is limited to the Delaware General Corporation Law.

 

The opinions expressed herein are solely for the benefit of, and may
only be relied upon by, you.  This
opinion may not be furnished to (except in connection with any legal or
arbitral proceedings or as may be required by applicable law, and in any event,
as shall be directed or required incident thereto pursuant to a duly issued
subpoena, writ, order or other legal process or as required by any regulatory
authority), or relied upon by, any other Person without my prior written
consent.  Notwithstanding the foregoing,
but subject to the following sentence, this opinion letter may be furnished to
any Person that purchases an interest in or a participation in the Credit
Agreement and any Loans thereunder as if it were addressed and had been
delivered to such Person on the date hereof. 
The opinions expressed herein are as of the date hereof (and not as of
any other date) or, to the extent a reference to a certificate or other
document is made herein, to such date, and I make no undertaking to amend or
supplement such opinions as facts and circumstances come to my attention or
changes in the law occur which could affect such opinions.

 

5

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Daniel C. Schulte

  
	
   

  	
  General Counsel

  

 

6

 

SCHEDULE I

 

Lenders

 

JPMorgan Chase Bank

Bank of America, N.A.

UMB Bank, NA

Bank Midwest, N.A.

The Bank of New York

Societe Generale

The Bank of Nova Scotia

 

 

EXHIBIT C-1

 

WADDELL & REED, IN C. MUTUAL
FUND MANAGEMENT FEES

2005 Actual ($000)

 

8

 

Change in Mutual Fund Assets Under Management

August 2005

Month to Date

 

9

 

Change in Mutual Fund Assets Under Management

August 2005

Year to Date

 

10

 

EXHIBIT C-2

 

Waddell &
Reed Financial, Inc. – Consolidated

Statement of Operations

For the period indicated in each column heading

Dollar amounts in thousands except per share amounts

 

 

EXHIBIT D

[FORM OF
COMPETITIVE BID]

JP Morgan Chase Bank, 
  as Administrative Agent

270 Park Avenue

New York, New York 10017

 

	
   

  	
                      ,

  
	
   

  	
   

  

 

Ladies and Gentlemen:

 

Pursuant to
subsection 2.04(b) of the Credit Agreement dated as of October 7,
2005 (the “Credit Agreement”), among Waddell & Reed Financial, Inc.
(the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, as
Administrative Agent, the undersigned hereby makes a Competitive Bid in
response to the Competitive Bid Request made by the Borrower on [Date], and in
that connection sets forth below the terms on which such Competitive Bid is
made:

 

(A)  Principal Amount (1)

 

(B) Competitive Bid Rate (2)

 

(C) Interest Period and last day thereof 

 

The
undersigned hereby confirms that it is prepared, subject to the conditions set
forth in the Credit Agreement, to extend credit to the Borrower upon acceptance
by the Borrower of this bid in accordance with subsection 2.04(d) of
the Credit Agreement.

 

Terms defined
in the Credit Agreement are used in this bid with their defined meanings.

 

	
   

  	
   Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF BANK],

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   
  Name:

  
	
   

  	
   
  Title:

  

 

(1)           Not
less
than $5,000,000 or greater than the requested Competitive Borrowing and in
integral multiples of $1,000,000. 
Multiple bids will be accepted by the Administrative Agent.

 

(2)           LIBO
Rate
+ or – [           ]%,
in the case of Eurodollar Loans, or
[           ]%, in the
case of Fixed Rate Loans, in either case such percentage rate to be expressed
to no more than four decimal places.

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