Exhibit 10.2

 

EXECUTION VERSION

 

 

 

WADDELL & REED FINANCIAL, INC.

 

$190,000,000

 

5.00% Senior Notes, Series A, due 2018
5.75% Senior Notes, Series B, due 2021

 

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NOTE PURCHASE AGREEMENT

 

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Dated as of August 31, 2010

 

 

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

SECTION 1.

AUTHORIZATION OF NOTES

 

1

 

 

 

 

SECTION 2.

SALE AND PURCHASE OF NOTES

 

1

 

 

 

 

SECTION 3.

CLOSING

 

2

 

 

 

 

SECTION 4.

CONDITIONS TO CLOSING

 

2

 

 

 

 

Section 4.1.

Representations and Warranties

 

2

Section 4.2.

Performance; No Default

 

2

Section 4.3.

Compliance Certificates

 

2

Section 4.4.

Opinions of Counsel

 

3

Section 4.5.

Purchase Permitted By Applicable Law, Etc.

 

3

Section 4.6.

Sale of Other Notes

 

3

Section 4.7.

Payment of Special Counsel Fees

 

3

Section 4.8.

Private Placement Numbers

 

3

Section 4.9.

Changes in Corporate Structure

 

4

Section 4.10.

Funding Instructions

 

4

Section 4.11.

Proceedings and Documents

 

4

 

 

 

 

SECTION 5.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

4

 

 

 

 

Section 5.1.

Organization; Power and Authority

 

4

Section 5.2.

Authorization, Etc.

 

4

Section 5.3.

Disclosure

 

4

Section 5.4.

Organization and Ownership of Shares of Subsidiaries

 

5

Section 5.5.

Financial Statements; Material Liabilities

 

5

Section 5.6.

Compliance with Laws, Other Instruments, Etc.

 

6

Section 5.7.

Governmental Authorizations, Etc.

 

6

Section 5.8.

Litigation; Observance of Agreements, Statutes and Orders

 

6

Section 5.9.

Taxes

 

6

Section 5.10.

Title to Property; Leases

 

7

Section 5.11.

Licenses, Permits, Etc.

 

7

Section 5.12.

Compliance with ERISA

 

7

Section 5.13.

Private Offering by the Company

 

8

Section 5.14.

Use of Proceeds; Margin Regulations

 

8

Section 5.15.

Existing Indebtedness; Future Liens

 

9

Section 5.16.

Foreign Assets Control Regulations, Etc.

 

9

Section 5.17.

Status under Certain Statutes

 

10

Section 5.18.

Environmental Matters

 

10

 

 

 

 

SECTION 6.

REPRESENTATIONS OF THE PURCHASERS

 

11

 

 

 

 

Section 6.1.

Purchase for Investment

 

11

Section 6.2.

Source of Funds

 

11

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

SECTION 7.

INFORMATION AS TO COMPANY

 

12

 

 

 

 

Section 7.1.

Financial and Business Information

 

12

Section 7.2.

Officer’s Certificate

 

15

Section 7.3.

Visitation

 

16

 

 

 

 

SECTION 8.

PAYMENT AND PREPAYMENT OF THE NOTES

 

17

 

 

 

 

Section 8.1.

Maturity

 

17

Section 8.2.

Optional Prepayments with Make-Whole Amount

 

17

Section 8.3.

Prepayment in Connection with a Change of Control

 

17

Section 8.4.

Allocation of Partial Prepayments

 

19

Section 8.5.

Maturity; Surrender, Etc.

 

19

Section 8.6.

Purchase of Notes

 

19

Section 8.7.

Make-Whole Amount

 

19

 

 

 

 

SECTION 9.

AFFIRMATIVE COVENANTS

 

21

 

 

 

 

Section 9.1.

Compliance with Law

 

21

Section 9.2.

Insurance

 

21

Section 9.3.

Maintenance of Properties

 

21

Section 9.4.

Payment of Taxes and Claims

 

21

Section 9.5.

Corporate Existence, Etc.

 

22

Section 9.6.

Books and Records

 

22

 

 

 

 

SECTION 10.

NEGATIVE COVENANTS

 

22

 

 

 

 

Section 10.1.

Maintenance of Financial Conditions

 

22

Section 10.2.

Subsidiary Indebtedness, Etc.

 

22

Section 10.3.

Liens

 

23

Section 10.4.

Transactions with Affiliates

 

24

Section 10.5.

Merger, Consolidation, Etc.

 

25

Section 10.6.

Sales and Leasebacks

 

25

Section 10.7.

Hedging Agreements

 

26

Section 10.8.

Restricted Payments

 

26

Section 10.9.

Line of Business

 

26

Section 10.10.

Terrorism Sanctions Regulations

 

26

 

 

 

 

SECTION 11.

EVENTS OF DEFAULT

 

26

 

 

 

 

SECTION 12.

REMEDIES ON DEFAULT, ETC.

 

28

 

 

 

 

Section 12.1.

Acceleration

 

28

Section 12.2.

Other Remedies

 

29

Section 12.3.

Rescission

 

29

Section 12.4.

No Waivers or Election of Remedies, Expenses, Etc.

 

29

 

ii

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

SECTION 13.

REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

 

30

 

 

 

 

Section 13.1.

Registration of Notes

 

30

Section 13.2.

Transfer and Exchange of Notes

 

30

Section 13.3.

Replacement of Notes

 

30

 

 

 

 

SECTION 14.

PAYMENTS ON NOTES

 

31

 

 

 

 

Section 14.1.

Place of Payment

 

31

Section 14.2.

Home Office Payment

 

31

 

 

 

 

SECTION 15.

EXPENSES, ETC.

 

31

 

 

 

 

Section 15.1.

Transaction Expenses

 

31

Section 15.2.

Survival

 

32

 

 

 

 

SECTION 16.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

 

32

 

 

 

 

SECTION 17.

AMENDMENT AND WAIVER

 

32

 

 

 

 

Section 17.1.

Requirements

 

32

Section 17.2.

Solicitation of Holders of Notes

 

33

Section 17.3.

Binding Effect, etc.

 

33

Section 17.4.

Notes Held by Company, etc.

 

33

 

 

 

 

SECTION 18.

NOTICES

 

33

 

 

 

 

SECTION 19.

REPRODUCTION OF DOCUMENTS

 

34

 

 

 

 

SECTION 20.

CONFIDENTIAL INFORMATION

 

34

 

 

 

 

SECTION 21.

SUBSTITUTION OF PURCHASER

 

35

 

 

 

 

SECTION 22.

MISCELLANEOUS

 

36

 

 

 

 

Section 22.1.

Successors and Assigns

 

36

Section 22.2.

Payments Due on Non-Business Days

 

36

Section 22.3.

Accounting Terms; Changes in GAAP

 

36

Section 22.4.

Severability

 

36

Section 22.5.

Construction, etc.

 

37

Section 22.6.

Counterparts

 

37

Section 22.7.

Governing Law

 

37

Section 22.8.

Jurisdiction and Process; Waiver of Jury Trial

 

37

 

iii

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SCHEDULE A

—

INFORMATION RELATING TO PURCHASERS

 

 

 

SCHEDULE B

—

DEFINED TERMS

 

 

 

SCHEDULE 5.3

—

Disclosure Materials

 

 

 

SCHEDULE 5.4

—

Subsidiaries of the Company and Ownership of Subsidiary Stock

 

 

 

SCHEDULE 5.5

—

Financial Statements

 

 

 

SCHEDULE 5.8

—

Litigation

 

 

 

SCHEDULE 5.15

—

Existing Indebtedness

 

 

 

SCHEDULE 10.2

—

Existing Subsidiary Indebtedness

 

 

 

SCHEDULE 10.3

—

Existing Liens

 

 

 

SCHEDULE 10.6

—

Sale/Leaseback Properties

 

 

 

EXHIBIT 1(a)

—

Form of 5.00% Senior Note, Series A, due 2018

 

 

 

EXHIBIT 1(b)

—

Form of 5.75% Senior Note, Series B, due 2021

 

 

 

EXHIBIT 4.4(a)(i)

—

Form of Signing Date Opinion of Special Counsel for the Company

 

 

 

EXHIBIT 4.4(a)(ii)

—

Form of Closing Opinion of Special Counsel for the Company

 

 

 

EXHIBIT 4.4(b)(i)

—

Form of Signing Date Opinion of Internal Counsel to the Company

 

 

 

EXHIBIT 4.4(b)(ii)

—

Form of Closing Opinion of Internal Counsel to the Company

 

 

 

EXHIBIT 4.4(c)(i)

—

Form of Signing Date Opinion of Special Counsel for the Purchasers

 

 

 

EXHIBIT 4.4(c)(ii)

—

Form of Closing Opinion of Special Counsel for the Purchasers

 

 

 

EXHIBIT 7.1(f)(i)

—

Form of Report on Net Asset Values

 

 

 

EXHIBIT 7.1(f)(ii)

—

Form of Report on Aggregate Revenue Base

 

i

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WADDELL & REED FINANCIAL, INC.
6300 Lamar Avenue
Overland Park, Kansas 66202

 

 

Re:

5.00% Senior Notes, Series A, due 2018

 

 

5.75% Senior Notes, Series B, due 2021

 

As of August 31, 2010

 

TO EACH OF THE PURCHASERS LISTED IN
SCHEDULE A HERETO:

 

Ladies and Gentlemen:

 

Waddell & Reed Financial, Inc., a Delaware corporation (the “Company”), agrees
with each of the purchasers whose names appear at the end hereof (each, a
“Purchaser” and, collectively, the “Purchasers”) as follows:

 

SECTION 1.                                                                           
AUTHORIZATION OF NOTES.

 

The Company has duly authorized the issue and sale of $190,000,000 aggregate
principal amount of its senior notes in two series, of which $95,000,000
aggregate principal amount shall be its 5.00% Senior Notes, Series A, due 2018
(the “Series A Notes,” such term to include any such notes issued in
substitution therefor pursuant to Section 13) and $95,000,000 aggregate
principal amount shall be its 5.75% Senior Notes, Series B, due 2021 (the
“Series B Notes,” such term to include any such notes issued in substitution
therefor pursuant to Section 13, and, together with the Series A Notes, the
“Notes”).  The Notes shall be substantially in the respective forms set out in
Exhibits 1(a) and 1(b).  The terms “Note,” “Series A Note” and “Series B Note”
mean one of the Notes, one of the Series A Notes and one of the Series B Notes,
respectively.  Certain capitalized and other terms used in this Note Purchase
Agreement (this “Agreement”) are defined in Schedule B and references to a
“Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.

 

SECTION 2.                                                                           
SALE AND PURCHASE OF NOTES.

 

Subject to the terms and conditions of this Agreement, the Company will issue
and sell to each Purchaser and each Purchaser will purchase from the Company, at
the Closing provided for in Section 3, Notes of the series and in the principal
amount specified opposite such Purchaser’s name in Schedule A at the purchase
price of 100% of the principal amount thereof.  The Purchasers’ obligations
hereunder are several and not joint obligations and no Purchaser shall have any
liability to any Person for the performance or non-performance of any obligation
by any other Purchaser hereunder.

 

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SECTION 3.                                                                           
CLOSING.

 

The sale and purchase of the Notes to be purchased by each Purchaser shall occur
at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York,
New York 10019, at 10:00 a.m., New York City time, at a closing (the “Closing”)
on January 13, 2011 or on such other Business Day thereafter on or prior to
January 15, 2011 as may be agreed upon by the Company and the Purchasers.  At
the Closing the Company will deliver to each Purchaser the Notes to be purchased
by such Purchaser in the form of a single Note of each series to be purchased by
such Purchaser (or such greater number of Notes in denominations of at least
$1,000,000 or integral multiples of $500,000 in excess thereof as such Purchaser
may request) dated the date of the Closing and registered in such Purchaser’s
name (or in the name of its nominee), against delivery by such Purchaser to the
Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for the
account of the Company as set forth in the letter delivered pursuant to
Section 4.10 hereof.

 

If at the Closing the Company shall fail to tender such Notes to any Purchaser
as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such
Purchaser shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights such Purchaser may have by
reason of such failure or such nonfulfillment.

 

SECTION 4.                                                                           
CONDITIONS TO CLOSING.

 

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such
Purchaser at the Closing is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at the Closing, of the following conditions:

 

Section 4.1.                                                Representations and
Warranties.  The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.

 

Section 4.2.                                                Performance; No
Default.  The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the date of this Agreement and prior to or at the date of
the Closing and immediately prior to and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Section 5.14) no Default or Event of Default shall have occurred and be
continuing.  Neither the Company nor any Subsidiary shall have entered into any
transaction since July 23, 2010 that would have been prohibited by Sections 10.1
through 10.8, inclusive, had such Sections applied since such date.  No Change
of Control shall have occurred or be contemplated.

 

Section 4.3.                                                Compliance
Certificates.

 

(a)                                  Officer’s Certificate.  The Company shall
have delivered to such Purchaser an Officer’s Certificate, dated the date of
this Agreement and the date of the Closing, respectively, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled as of such
date.

 

2

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(b)                                 Secretary’s Certificate.  The Company shall
have delivered to such Purchaser a certificate of its Secretary or Assistant
Secretary, dated the date of this Agreement and the date of the Closing,
respectively, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and this Agreement or the absence of changes to such resolutions and
other corporate proceedings, if the same were previously certified to pursuant
to this Section 4.3(b).

 

Section 4.4.                                                Opinions of
Counsel.  Such Purchaser shall have received opinions in form and substance
satisfactory to such Purchaser, dated the date of this Agreement and the date of
the Closing, respectively, (a) from Fulbright & Jaworski L.L.P., counsel for the
Company, substantially in the form of Exhibits 4.4(a)(i) and 4.4(a)(ii),
respectively, and covering such other matters incident to the transactions
contemplated hereby as such Purchaser or its counsel may reasonably request (and
the Company hereby instructs its counsel to deliver such opinion to the
Purchasers), (b) from internal counsel to the Company, substantially in the form
of Exhibits 4.4(b)(i) and 4.4(b)(ii), respectively, and covering such other
matters incident to the transactions contemplated hereby as such Purchaser or
its counsel may reasonably request, and (c) from Willkie Farr & Gallagher LLP,
the Purchasers’ special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(c)(i) and 4.4(c)(ii),
respectively, and covering such other matters incident to such transactions as
such Purchaser may reasonably request.

 

Section 4.5.                                                Purchase Permitted
By Applicable Law, Etc.  On the date of the Closing such Purchaser’s purchase of
Notes shall (a) be permitted by the laws and regulations of each jurisdiction to
which such Purchaser is subject, without recourse to provisions (such as section
1405(a)(8) of the New York Insurance Law) permitting limited investments by
insurance companies without restriction as to the character of the particular
investment, (b) not violate any applicable law or regulation (including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and (c) not subject such Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof.  If requested by such
Purchaser, such Purchaser shall have received an Officer’s Certificate
certifying as to such matters of fact as such Purchaser may reasonably specify
to enable such Purchaser to determine whether such purchase is so permitted.

 

Section 4.6.                                                Sale of Other
Notes.  Contemporaneously with the Closing the Company shall sell to each other
Purchaser and each other Purchaser shall purchase the Notes to be purchased by
it at the Closing as specified in Schedule A.

 

Section 4.7.                                                Payment of Special
Counsel Fees.  Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the date of this Agreement and the date of the
Closing, respectively, the fees, charges and disbursements of the Purchasers’
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the date of this Agreement and the date of the Closing, as applicable.

 

Section 4.8.                                                Private Placement
Numbers.  A Private Placement Number issued by Standard & Poor’s CUSIP Service
Bureau (in cooperation with the SVO) shall have been obtained for the Notes of
each series.

 

3

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Section 4.9.                                                Changes in Corporate
Structure.  The Company shall not have changed its jurisdiction of incorporation
or organization, as applicable, or been a party to any merger or consolidation
or succeeded to all or any substantial part of the liabilities of any other
entity, at any time following June 30, 2010.

 

Section 4.10.                                         Funding Instructions.  At
least three Business Days prior to the date of the Closing, each Purchaser shall
have received written instructions signed by a Responsible Officer on letterhead
of the Company setting out the information contemplated by Section 3, including
(a) the name and address of the Company’s bank, (b) such bank’s ABA number,
(c) the account name and number into which the purchase price for the Notes is
to be deposited and (d) the name and telephone number of a contact person at
such bank.

 

Section 4.11.                                         Proceedings and
Documents.  All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to such Purchaser and its
special counsel, and such Purchaser and its special counsel shall have received
all such counterpart originals or certified or other copies of such documents as
such Purchaser or such special counsel may reasonably request.

 

SECTION 5.                                                                           
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each Purchaser on and as of the date of
this Agreement and on and as of the date of the Closing that:

 

Section 5.1.                                                Organization; Power
and Authority.  The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.  The Company has the corporate power and authority to
own or hold under lease the properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions hereof and
thereof.

 

Section 5.2.                                                Authorization, Etc. 
This Agreement and the Notes have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes, and
upon execution and delivery thereof each Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

Section 5.3.                                                Disclosure.  The
Company, through its agents, Bank of America Merrill Lynch and Wells Fargo &
Co., has delivered to each Purchaser a copy of a Private Placement Memorandum,
dated July 2010 (the “Memorandum”), relating to the transactions contemplated
hereby.  The Memorandum fairly describes, in all material respects, the general
nature of the

 

4

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business of the Company and its Subsidiaries.  This Agreement, the Memorandum
and the documents, certificates or other writings delivered to the Purchasers by
or on behalf of the Company in connection with the transactions contemplated
hereby and identified in Schedule 5.3 (collectively, as the “Disclosure
Documents”), and the financial statements listed in Schedule 5.5, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made.  Except as disclosed in
the Disclosure Documents or the financial statements listed in Schedule 5.5 as
of the date of this Agreement, since December 31, 2009, there has been no change
in the financial condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.  There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Disclosure
Documents.

 

Section 5.4.                                                Organization and
Ownership of Shares of Subsidiaries.  (a)  Schedule 5.4 contains (except as
noted therein or as updated prior to the Closing) complete and correct lists
(i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary, and (ii) of the Company’s directors
and senior officers.

 

(b)                                 All of the outstanding shares of capital
stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as
being owned by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or another Subsidiary
free and clear of any Lien (except as otherwise disclosed in Schedule 5.4 as of
the date of this Agreement).

 

(c)                                  Each Subsidiary identified in Schedule 5.4
is a corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.  Each such Subsidiary has the corporate, limited
liability company or other similar power and authority to own or hold under
lease the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.

 

(d)                                 No Subsidiary is a party to, or otherwise
subject to any legal, regulatory, contractual or other restriction (other than
this Agreement, the agreements listed on Schedule 5.4 as of the date of this
Agreement and customary limitations imposed by regulation, corporate law or
similar statutes) restricting the ability of such Subsidiary to pay dividends
out of profits or make any other similar distributions of profits to the Company
or any of its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.

 

Section 5.5.                                                Financial
Statements; Material Liabilities.  The Company has delivered to each Purchaser
copies of the consolidated and consolidating financial statements of the Company
listed on Schedule 5.5 (as updated prior to the Closing).  All of said financial

 

5

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statements (including in each case the related schedules and notes) fairly
present in all material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).  The Company and its Subsidiaries do not have any
Material liabilities that are not disclosed on such financial statements or
otherwise disclosed in the Disclosure Documents or the financial statements of
the Company listed on Schedule 5.5 as of the date of this Agreement.

 

Section 5.6.                                                Compliance with
Laws, Other Instruments, Etc.  The execution, delivery and performance by the
Company of this Agreement and the Notes will not (i) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien
in respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which the
Company or any Subsidiary is bound or by which the Company or any Subsidiary or
any of their respective properties may be bound or affected, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (iii) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.

 

Section 5.7.                                                Governmental
Authorizations, Etc.  No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this Agreement or
the Notes.

 

Section 5.8.                                                Litigation;
Observance of Agreements, Statutes and Orders.  (a)  Except as described on
Schedule 5.8 as of the date of this Agreement, there are no actions, suits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any property of
the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Neither the Company nor any Subsidiary is in
default under any term of any agreement or instrument to which it is a party or
by which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation Environmental Laws
or the USA Patriot Act) of any Governmental Authority, which default or
violation, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

 

Section 5.9.                                                Taxes.  The Company
and its Subsidiaries have filed all tax returns that are required to have been
filed in any jurisdiction, and have paid all taxes shown to be due and payable
on such returns and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (i) the amount of which is not individually
or in the aggregate Material or (ii) the amount, applicability

 

6

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or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP.  The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect.  The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate.  The Federal income tax
liabilities of the Company and its Subsidiaries have been finally determined
(whether by reason of completed audits or the statute of limitations having run)
for all fiscal years up to and including the fiscal year ended 2004 and paid for
all fiscal years up to and including the fiscal year ended 2009.

 

Section 5.10.                                         Title to Property;
Leases.  The Company and its Subsidiaries have good and sufficient title to
their respective properties that are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement.  All leases that
are Material are valid and subsisting and are in full force and effect in all
material respects.

 

Section 5.11.                                         Licenses, Permits, Etc. 
(a)  The Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, proprietary software, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without conflict with the rights of others to the
actual knowledge of the Responsible Officers after due internal inquiry.

 

(b)                                 To the actual knowledge of the Responsible
Officers after due internal inquiry, no product of the Company or any of its
Subsidiaries infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark, trademark,
trade name or other right owned by any other Person.

 

(c)                                  To the actual knowledge of the Responsible
Officers after due internal inquiry, there is no Material violation by any
Person of any right of the Company or any of its Subsidiaries with respect to
any patent, copyright, proprietary software, service mark, trademark, trade name
or other right owned or used by the Company or any of its Subsidiaries.

 

Section 5.12.                                         Compliance with ERISA. 
(a)  The Company and each ERISA Affiliate have operated and administered each
Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect.  Neither the Company nor any ERISA
Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans
(as defined in section 3(3) of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to section 430(k) of the Code, other than such liabilities or Liens as
would not be individually or in the aggregate Material.

 

7

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(b)                                 The present value of the aggregate benefit
liabilities under each of the Pension Plans, determined as of the end of such
Pension Plan’s most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Pension Plan’s most recent
actuarial valuation report, did not exceed the aggregate current value of the
assets of such Pension Plan allocable to such benefit liabilities by more than
$20,000,000 in the case of any single Pension Plan.  The term “benefit
liabilities” has the meaning specified in section 4001 of ERISA and the terms
“current value” and “present value” have the meaning specified in section 3 of
ERISA.

 

(c)                                  Neither the Company nor any ERISA Affiliate
contributes to or is obligated to contribute to any Multiemployer Plan.

 

(d)                                 The expected postretirement benefit
obligation (determined as of the last day of the Company’s most recently ended
fiscal year in accordance with Financial Accounting Standards Board ASC 715,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Subsidiaries is not Material.

 

(e)                                  The execution and delivery of this
Agreement and the issuance and sale of the Notes at Closing hereunder will not
involve any transaction that is subject to the prohibitions of section 406 of
ERISA or in connection with which a tax or penalty could be imposed pursuant to
section 502(i) of ERISA or section 4975(c)(1)(A)-(D) of the Code.  The
representation by the Company to each Purchaser in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of such
Purchaser’s representation in Section 6.2 as to the sources of the funds used to
pay the purchase price of the Notes to be purchased by such Purchaser.

 

Section 5.13.                                         Private Offering by the
Company.  Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the Notes or any similar securities from, or otherwise approached or
negotiated in respect thereof with, any person other than the Purchasers and not
more than 50 other Institutional Investors, each of which has been offered the
Notes at a private sale for investment.  Neither the Company nor anyone acting
on its behalf has taken, or will take, any action that would subject the
issuance or sale of the Notes to the registration requirements of Section 5 of
the Securities Act or to the registration requirements of any securities or blue
sky laws of any applicable jurisdiction.

 

Section 5.14.                                         Use of Proceeds; Margin
Regulations.  The Company will apply the proceeds of the sale of the Notes to
repay existing Indebtedness or for general corporate purposes or for both such
purposes.  No part of the proceeds from the sale of the Notes hereunder will be
used, and no part of the proceeds of such Indebtedness being repaid was used,
directly or indirectly, for the purpose of buying or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220).  Margin stock
does not constitute more than 25% of the value of the consolidated assets of the
Company and its Subsidiaries and the Company does not have any present intention
that margin stock will constitute more than 25% of the value of such assets.  As
used in this Section, the terms “margin

 

8

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stock” and “purpose of buying or carrying” shall have the meanings assigned to
them in said Regulation U.

 

Section 5.15.                                         Existing Indebtedness;
Future Liens.  (a)  Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of the date of the most recent financial statements referred to
in Schedule 5.5 as of the date of this Agreement or as updated in writing prior
to the date of the Closing, as applicable (including a description of the
obligors and obligees, principal amount outstanding and collateral therefor, if
any, and Guaranty thereof, if any), since which date there has been no Material
change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Indebtedness of the Company or its Subsidiaries.  Neither the
Company nor any Subsidiary is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any Indebtedness of
the Company or such Subsidiary and no event or condition exists with respect to
any Indebtedness of the Company or any Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.

 

(b)                                 Except as disclosed in Schedule 5.15 as of
the date of this Agreement, neither the Company nor any Subsidiary has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 10.3.

 

(c)                                  Neither the Company nor any Subsidiary is a
party to, or otherwise subject to any provision contained in, any instrument
evidencing Indebtedness of the Company or such Subsidiary, any agreement
relating thereto or any other agreement (including, but not limited to, its
charter or other organizational document) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Indebtedness of the Company,
except as specifically indicated in Schedule 5.15 as of date of this Agreement.

 

Section 5.16.                                         Foreign Assets Control
Regulations, Etc.  (a)  Neither the Company nor any Subsidiary is in violation
of, none of the holders of Notes solely as a result of purchasing, holding,
receiving any payment or exercising any rights in respect of, any Note, will be
in violation of, and neither the issuance and sale of the Notes by the Company
nor its use of the proceeds thereof as contemplated by this Agreement will
violate, (i) the Trading with the Enemy Act, as amended, the International
Emergency Economic Powers Act, as amended, or any executive orders,
proclamations or regulations issued pursuant thereto, or any of the foreign
assets control regulations of the United States Department of Treasury (31
C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto, or (ii) the USA Patriot Act.

 

(b)                                 Neither the Company nor any Subsidiary
(i) is a Person described or designated in the Specially Designated Nationals
and Blocked Persons List of the Office of Foreign Assets Control or in Section 1
of the Anti-Terrorism Order or (ii) knowingly engages in any dealings or
transactions with any such Person.  The Company and its Subsidiaries are in
compliance, in all material respects, with the USA Patriot Act.

 

9

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(c)                                  No part of the proceeds from the sale of
the Notes hereunder will be used, directly or indirectly, for any payments to
any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended, assuming in all cases that such Act applies to the Company.

 

Section 5.17.                                         Status under Certain
Statutes.  (a)  Neither the Company 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, as amended, (ii) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 2005, or
(iii) subject to regulation under the ICC Termination Act of 1995, as amended,
or the Federal Power Act, as amended.  Except for net capital and other
requirements imposed on registered broker-dealers, neither the Company nor any
of its Subsidiaries is subject to any regulation under any Requirement of Law
(other than Regulation X of the Board of Governors of the Federal Reserve
System) that limits its ability to incur Indebtedness.

 

(b)                                 The Company and each Subsidiary of the
Company that 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 Company that 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 Financial Industry Regulatory Authority.

 

Section 5.18.                                         Environmental Matters. 
(a)  Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.

 

(b)                                 Neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly owned,
leased or operated by any of them or to other assets or their use, except, in
each case, such as could not reasonably be expected to result in a Material
Adverse Effect.

 

(c)                                  Neither the Company nor any Subsidiary has
stored any Hazardous Materials on real properties now or formerly owned, leased
or operated by any of them and has not disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and

 

(d)                                 All buildings on all real properties now
owned, leased or operated by the Company or any Subsidiary are in compliance
with applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.

 

10

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SECTION 6.                                                                        
REPRESENTATIONS OF THE PURCHASERS.

 

Section 6.1.                                                Purchase for
Investment.  Each Purchaser severally represents that it is purchasing the Notes
for its own account or for one or more separate accounts maintained by such
Purchaser or for the account of one or more pension or trust funds and not with
a view to the distribution thereof, provided that the disposition of such
Purchaser’s or their property shall at all times be within such Purchaser’s or
their control.  Each Purchaser understands that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.

 

Section 6.2.                                                Source of Funds. 
Each Purchaser severally represents that at least one of the following
statements is an accurate representation as to each source of funds (a “Source”)
to be used by such Purchaser to pay the purchase price of the Notes to be
purchased by such Purchaser hereunder:

 

(a)                                 the Source is an “insurance company general
account” (as the term is defined in the United States Department of Labor’s
Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves
and liabilities (as defined by the annual statement for life insurance companies
approved by the NAIC (the “NAIC Annual Statement”)) for the general account
contract(s) held by or on behalf of any employee benefit plan together with the
amount of the reserves and liabilities for the general account contract(s) held
by or on behalf of any other employee benefit plans maintained by the same
employer (or affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the general account do not exceed 10% of the total reserves and
liabilities of the general account (exclusive of separate account liabilities)
plus surplus as set forth in the NAIC Annual Statement filed with such
Purchaser’s state of domicile; or

 

(b)                                 the Source is a separate account that is
maintained solely in connection with such Purchaser’s fixed contractual
obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any
annuitant)) are not affected in any manner by the investment performance of the
separate account; or

 

(c)                                  the Source is either (i) an insurance
company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 and, except as
disclosed by such Purchaser to the Company in writing pursuant to this clause
(c), no employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets allocated
to such pooled separate account or collective investment fund; or

 

(d)                                 the Source constitutes assets of an
“investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM
Exemption”)) managed by a “qualified professional asset manager” or “QPAM”
(within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s
assets that are included in such investment fund, when combined with the assets
of all other employee benefit plans established or maintained by the same
employer or by an

 

11

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affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such
employer or by the same employee organization and managed by such QPAM, exceed
20% of the total client assets managed by such QPAM, the conditions of
Part I(a), (c) and (g) of the QPAM Exemption are satisfied, the QPAM does not
own a 10% or more interest in the Company and any person controlling or
controlled by the QPAM (applying the definition of “control” in Section V(e) of
the QPAM Exemption) does not own a 20% or more interest in the Company and
(i) the identity of such QPAM and (ii) the names of all employee benefit plans
whose assets are included in such investment fund have been disclosed to the
Company in writing pursuant to this clause (d); or

 

(e)                                  the Source constitutes assets of a
“plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM
Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the
meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and
(h) of the INHAM Exemption are satisfied, neither the INHAM nor a person
controlling or controlled by the INHAM (applying the definition of “control” in
Section IV(d) of the INHAM Exemption) owns a 5% or more interest in the Company
and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit
plan(s) whose assets constitute the Source have been disclosed to the Company in
writing pursuant to this clause (e); or

 

(f)                                   the Source is a governmental plan; or

 

(g)                                  the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in writing
pursuant to this clause (g); or

 

(h)                                 the Source does not include assets of any
employee benefit plan, other than a plan exempt from the coverage of ERISA and
Section 4975 of the Code.

 

As used in this Section 6.2, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall have the respective meanings assigned to
such terms in section 3 of ERISA.

 

SECTION 7.                                                                        
INFORMATION AS TO COMPANY.

 

Section 7.1.                                                Financial and
Business Information.  The Company shall deliver to each holder of Notes that is
an Institutional Investor:

 

(a)                                 Quarterly Statements — within 45 days after
the end of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal year),
duplicate copies of

 

(i)                                     a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarter, and

 

(ii)                                  consolidated statements of income, changes
in stockholders’ equity and cash flows of the Company and its Subsidiaries, for
such quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,

 

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setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company’s Quarterly Report on Form 10-Q (“Form 10-Q”) prepared in
compliance with the requirements therefor and filed by the Company with the SEC
shall be deemed to satisfy the requirements of this Section 7.1(a), provided,
further, that the Company shall be deemed to have made such delivery of such
Form 10-Q if it shall have timely made such Form 10-Q available on “EDGAR” and
on its home page on the worldwide web (at the date of this Agreement located
at:  http//www.waddell.com) (such availability being referred to as “Electronic
Delivery”), and provided, further, that in the case of Electronic Delivery of
any such financial statements, the Company shall deliver to each holder of Notes
that is an Institutional Investor upon request (including by electronic mail) by
such holder of Notes (x) printed copies of such financial statements or (y) an
electronic copy of such Form 10-Q or a link to the page on the worldwide web on
which such Form 10-Q is available, free of charge, via electronic mail to the
electronic mail address or addresses of such holder set forth in Schedule A or
otherwise provided to the Company in accordance with Section 18;

 

(b)                                 Annual Statements — within 90 days after the
end of each fiscal year of the Company, duplicate copies of

 

(i)                                     a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year, and

 

(ii)                                  consolidated statements of income, changes
in stockholders’ equity and cash flows of the Company and its Subsidiaries for
such year,

 

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with Public Company Accounting Oversight Board standards, and that
such audit provides a reasonable basis for such opinion in the circumstances,
and provided that the delivery within the time period specified above of the
Company’s Annual Report on Form 10-K (“Form 10-K”) for such fiscal year
(together with the Company’s annual report to stockholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act), prepared in accordance with the
requirements therefor and filed with the SEC, shall be deemed to satisfy the
requirements of this Section 7.1(b), provided, further, that the Company shall
be deemed to have made such delivery of such Form 10-K and annual report to
stockholders if it shall have timely made Electronic Delivery thereof, and
provided, further, that in the case of Electronic Delivery of any such financial
statements, the Company shall deliver to each holder of Notes that is an
Institutional Investor upon request (including by electronic mail) by such
holder of Notes (x) printed copies of such financial statements or (y) an
electronic copy

 

13

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of such Form 10-K and annual report to stockholders or a link to the page on the
worldwide web on which such Form 10-K and annual report to stockholders is
available, free of charge, via electronic mail to the electronic mail address or
addresses of such holder set forth in Schedule A or otherwise provided to the
Company in accordance with Section 18;

 

(c)                                  SEC and Other Reports — promptly upon their
becoming available, one copy of each current report on Form 8-K (except for such
reports that are required to be filed solely pursuant to Item 2.02 of Form 8-K
or any successor item) and each proxy statement filed by the Company or any
Subsidiary with the SEC, provided that the Company shall be deemed to have made
such delivery of any such current report on Form 8-K or proxy statement if it
shall have timely made Electronic Delivery thereof and shall have given each
such holder of Notes prompt notice of such availability on EDGAR and on its home
page via electronic mail to the electronic mail address or addresses of such
holder set forth in Schedule A or otherwise provided to the Company in
accordance with Section 18 in connection with each such delivery;

 

(d)                                 Notice of Default or Event of Default —
promptly, and in any event within five Business Days after a Responsible Officer
becoming aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in Section 11(f), a
written notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;

 

(e)                                  ERISA Matters — promptly, and in any event
within five days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with respect
thereto:

 

(i)                                     with respect to any Pension Plan, any
reportable event, as defined in section 4043(c) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant to such
regulations as in effect from time to time; or

 

(ii)                                  the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action has been
taken by the PBGC with respect to such Multiemployer Plan; or

 

(iii)                               any event, transaction or condition that
could result in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the imposition
of any Lien on any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to have a
Material Adverse Effect;

 

14

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(f)                                   Net Asset Value and Aggregate Revenue Base
— after the end of each calendar month, (i) a schedule of the Net Asset Value of
the investment companies, funds and accounts managed by the Company and its
Subsidiaries on the last day of such calendar month and certain other
information, substantially in the form of Exhibit 7.1(f)(i), 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 7.1(f)(ii), or in each case, in such other
form as is provided to the Company’s principal lending banks pursuant to the
terms of the Existing Credit Facility or any other Major Credit Facility;
provided that the Company shall be deemed to have made such delivery of any such
schedule if it shall have sent such schedule to the electronic mail address or
addresses of such holder set forth in Schedule A or otherwise provided to the
Company in accordance with Section 18 in connection with such delivery; and
provided, further, that if, at any time, any such schedule is not required to be
(and is not) delivered to the Company’s principal lending banks pursuant to the
terms of the Existing Credit Facility or any other Major Credit Facility, the
Company shall not be required to deliver such schedule pursuant to this
Section 7.1(f);

 

(g)                                  Notices from Governmental Authority —
promptly, and in any event within 30 days of receipt thereof, copies of any
notice to the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or regulation that
could reasonably be expected to have a Material Adverse Effect;

 

(h)                                 Certain Other Events — promptly, and in any
event within 30 days of any Responsible Officer becoming aware thereof, notice
of:

 

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

 

(ii)                                  any suspension or termination of the
registration of the Company or any Subsidiary 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 Company or any Subsidiary is a party; and

 

(i)                                     Requested Information — with reasonable
promptness, such other data and information relating to the business,
operations, affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested by any such holder of Notes.

 

Each notice delivered under Section 7.1(g) or Section 7.1(h) shall be
accompanied by a certificate of a Senior Financial Officer setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

 

Section 7.2.                                                Officer’s
Certificate.  Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate

 

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of a Senior Financial Officer setting forth (which, in the case of Electronic
Delivery of any such financial statements, shall be by physical delivery of such
certificate to each holder of Notes within the applicable time period set forth
in Section 7.1):

 

(a)                                  Covenant Compliance — (i) the information
(including detailed calculations) required in order to (x) establish whether the
Company was in compliance with the requirements of Section 10.1 as at the end of
the quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section, where applicable, the calculations
of the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence), and (y) show the aggregate amount of
Subsidiary Indebtedness, secured Indebtedness and Attributable Debt in
connection with Sale/Leaseback Transactions permitted to be incurred pursuant to
Sections 10.2, 10.3, 10.5 and 10.6, respectively, as of the last day of the
quarterly or annual period covered by the statements then being furnished and
(ii) a full description of any material change to the basis on which such
financial statements shall have been prepared and the impact of such change on
the financial and other covenants set forth in Sections 10.1, 10.2, 10.3, 10.5
and 10.6, including a reasonable reconciliation of the relevant figures required
for the purpose of clause (i)(x) of this Section 7.2(a) and such other
information as shall be sufficient to enable a holder of a Note to make a
reasonable comparison between the financial position and results of operations
shown by the financial statements then being furnished and the most recent
audited financial statements previously delivered pursuant to Section 7.1(b);
and

 

(b)                                 Event of Default — a statement that such
Senior Financial Officer has reviewed the relevant terms hereof and has made, or
caused to be made, under his or her supervision, a review of the transactions
and conditions of the Company and its Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being furnished to the
date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default and is continuing as of the date of such
statement or, if any such condition or event exists (including, without
limitation, any such event or condition resulting from the failure of the
Company or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.

 

For the avoidance of doubt, for the purposes of determining compliance with the
requirements of Sections 10.1, 10.2 and 10.3, any election by the Company or its
Subsidiaries to measure a financial liability using fair value (as permitted by
Financial Accounting Standards Board ASC 825 and ASC 470-20 or any similar
accounting standard), shall be disregarded and such determination shall be made
as if such election had not been made.

 

Section 7.3.                                Visitation.  The Company shall
permit the representatives of each holder of Notes that is an Institutional
Investor:

 

(a)                                  No Default — if no Default or Event of
Default then exists, at the expense of such holder and upon reasonable prior
notice to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company’s officers, and (with the consent of the Company,
which consent will not be

 

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unreasonably withheld) its independent public accountants, and (with the consent
of the Company, which consent will not be unreasonably withheld) to visit the
other offices and properties of the Company and each Subsidiary, during normal
business hours and as often as may be reasonably requested; and

 

(b)                                 Default — if a Default or Event of Default
then exists, at the expense of the Company to visit and inspect any of the
offices or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to discuss the
affairs, finances and accounts of the Company and its Subsidiaries), all at such
reasonable times and as often as may be requested.

 

SECTION 8.                                                               
PAYMENT AND PREPAYMENT OF THE NOTES.

 

Section 8.1.                                Maturity.  As provided therein, the
entire unpaid principal balance of the Notes of each series shall be due and
payable on the stated maturity date thereof.

 

Section 8.2.                                Optional Prepayments with Make-Whole
Amount.  The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes (in a minimum
principal amount of $5,000,000 and integral multiples of $1,000,000 in excess
thereof in the case of a partial prepayment) at 100% of the principal amount so
prepaid, plus the applicable Make-Whole Amount for the Notes of each series
determined for the prepayment date with respect to such principal amount.  The
Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment.  Each such notice shall
specify such date (which shall be a Business Day), the aggregate principal
amount of the Notes of each series to be prepaid on such date, the principal
amount of each Note held by such holder to be prepaid (determined in accordance
with Section 8.4), and the interest to be paid on the prepayment date with
respect to such principal amount being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Make-Whole Amount
for the Notes of each series due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation.  Two Business Days prior to such prepayment,
the Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount for the
Notes of each series as of the specified prepayment date.

 

Section 8.3.                                Prepayment in Connection with a
Change of Control.  Promptly and in any event within five Business Days after
the occurrence of a Change of Control, the Company will give written notice
thereof (a “Change of Control Notice”) to the holders of all outstanding Notes,
which Change of Control Notice shall (a) refer specifically to this Section 8.3,
(b) describe the Change of Control in reasonable detail and specify the Change
of Control Prepayment Date and the Response Date (as respectively defined below)
in respect thereof and (c) offer to prepay all Notes at the price specified
below on the date therein specified (the “Change of Control Prepayment Date”),
which shall be a Business Day following the Response Date referred to below and
in any event not more than 90 days after the date of such Change of Control
Notice.  Each holder of a Note will notify the Company of such holder’s

 

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acceptance or rejection of such offer by giving written notice of such
acceptance or rejection to the Company on or before the date for such notice
specified in such Change of Control Notice (the “Response Date”), which
specified date shall be not less than 30 days nor more than 60 days after the
date of such Change of Control Notice.  The Company shall prepay on the Change
of Control Prepayment Date all of the Notes held by the holders as to which such
offer has not been so rejected (it being understood that failure of any holder
to reject such offer on or before the Response Date shall be deemed to
constitute a rejection by such holder), at 100% of the principal amount of each
such Note, together with interest accrued thereon to the Change of Control
Prepayment Date for each such Note.  If any holder shall reject (or is deemed to
have rejected) such offer with respect to any Note held by such holder on or
before the Response Date, such holder shall be deemed to have waived its rights
under this Section 8.3 to require prepayment of such Note for which such offer
was rejected in respect of such Change of Control but not in respect of any
subsequent Change of Control.

 

For purposes of this Section 8.3, any holder of more than one Note may act
separately with respect to each Note so held (with the effect that a holder of
more than one Note may accept such offer with respect to one or more Notes so
held and reject such offer with respect to one or more other Notes so held).

 

As used herein, a “Change of Control” shall be deemed to have occurred if,
whether by an event or series of events:

 

(a)                                  any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, as amended, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time (such right, an “option right”)), directly or indirectly, of 25%
or more of the equity securities of the Company entitled to vote for members of
the board of directors or equivalent governing body of the Company on a
fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right);

 

(b)                                 during any period of 12 consecutive months,
a majority of the members of the board of directors or other equivalent
governing body of the Company cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or nomination to that board or
other equivalent governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body
(excluding, in the case of both clause (ii) and clause (iii), any individual
whose initial nomination for, or assumption of office as, a member of that board
or equivalent governing body occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors by any

 

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person or group other than a solicitation for the election of one or more
directors by or on behalf of the board of directors); or

 

(c)                                  any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon consummation thereof, will result in its or
their acquisition of control over the equity securities of the Company entitled
to vote for members of the board of directors or equivalent governing body of
the Company on a fully-diluted basis (and taking into account all such
securities that such Person or group has the right to acquire pursuant to any
option right) representing 25% or more of the combined voting power of such
securities.

 

Section 8.4.                                Allocation of Partial Prepayments. 
In the case of each partial prepayment of the Notes pursuant to Section 8.2, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.

 

Section 8.5.                                Maturity; Surrender, Etc.  In the
case of any prepayment of Notes pursuant to this Section 8, the principal amount
of each Note to be prepaid shall mature and become due and payable on the date
fixed for such prepayment (which shall be a Business Day), together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any.  From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue.  Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.

 

Section 8.6.                                Purchase of Notes.  The Company will
not and will not permit any Subsidiary to purchase, redeem, prepay or otherwise
acquire, directly or indirectly, any of the outstanding Notes except upon the
payment or prepayment of the Notes in accordance with the terms of this
Agreement and the Notes.  The Company will promptly cancel all Notes acquired by
it or any Affiliate pursuant to any payment or prepayment of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

 

Section 8.7.                                Make-Whole Amount.

 

“Make-Whole Amount” means, with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments with
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero.  For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:

 

“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

 

“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal

 

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from their respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on
the Notes is payable) equal to the Reinvestment Yield with respect to such
Called Principal.

 

“Reinvestment Yield” means, with respect to the Called Principal of any Note,
0.50% (50 basis points) over the yield to maturity implied by (i) the yields
reported, as of 10:00 a.m. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, (x) on the
Bloomberg Financial Markets News screen PX1 or the equivalent screen provided by
Bloomberg Financial Markets News, or (y) if such on-line market data is not at
the time provided by Bloomberg Financial Markets News, on the display designated
as “Pages K:232 through K:238” on the Analytics Display of the Reuters Trading
System, in any case for the most recently issued actively traded on the run U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable (including by way of interpolation), the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded on the
run U.S. Treasury securities having a constant maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date.

 

In the case of each determination under clause (i) or clause (ii), as the case
may be, of the preceding paragraph, such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between (1) the applicable actively traded on the run U.S. Treasury
security with a maturity closest to and greater than such Remaining Average Life
and (2) the applicable actively traded on the run U.S. Treasury security with a
maturity closest to and less than such Remaining Average Life.

 

“Remaining Average Life” means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing
(i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or Section 12.1.

 

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“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

 

SECTION 9.                                                               
AFFIRMATIVE COVENANTS.

 

So long as any of the Purchasers have the obligation to purchase Notes on the
terms and subject to the conditions set forth herein, any of the Notes are
outstanding, or any amounts payable hereunder remain unpaid or unsatisfied, the
Company covenants that:

 

Section 9.1.                                Compliance with Law.  Without
limiting Section 10.10, the Company will, and will cause each of its
Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental
rules or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

Section 9.2.                                Insurance.  The Company will, and
will cause each of its Subsidiaries to, maintain, with financially sound and
reputable insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto) as is
customary in the case of entities of established reputations engaged in the same
or a similar business and similarly situated.

 

Section 9.3.                                Maintenance of Properties.  The
Company will, and will cause each of its Subsidiaries to, maintain and keep, or
cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 9.4.                                Payment of Taxes and Claims.  The
Company will, and will cause each of its Subsidiaries to, file all tax returns
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their properties,
assets, income or franchises, to the extent the same have become due and payable
and before they have become delinquent and all claims for which sums have become
due and payable that have or might become a Lien on properties or assets of the
Company or any Subsidiary, provided that neither the Company nor any Subsidiary
need pay any such tax, assessment, charge, levy or claim if (i) the amount,
applicability or validity thereof is contested by the Company or such Subsidiary
on a timely basis in good faith and in appropriate proceedings, and the Company
or a

 

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Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
taxes, assessments, charges, levies and claims in the aggregate could not
reasonably be expected to have a Material Adverse Effect.

 

Section 9.5.                                Corporate Existence, Etc.  Subject
to Section 10.5, the Company will at all times preserve and keep in full force
and effect its corporate existence and the corporate existence of each of its
Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary) and
all rights and franchises of the Company and its Subsidiaries unless, in the
good faith judgment of the Company, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right or franchise
could not, individually or in the aggregate, have a Material Adverse Effect.

 

Section 9.6.                                Books and Records.  The Company
will, and will cause each of its Subsidiaries to, maintain proper books of
record and account in conformity with GAAP and all applicable requirements of
any Governmental Authority having legal or regulatory jurisdiction over the
Company or such Subsidiary, as the case may be.

 

SECTION 10.                                                         NEGATIVE
COVENANTS.

 

So long as any of the Purchasers have the obligation to purchase Notes on the
terms and subject to the conditions set forth herein, any of the Notes are
outstanding, or any amounts payable hereunder remain unpaid or unsatisfied, the
Company covenants that:

 

Section 10.1.                         Maintenance of Financial Conditions.  The
Company will not permit:

 

(a)                                  the ratio of Consolidated Total Debt on the
last day of any Relevant Period to Consolidated EBITDA in respect of such
Relevant Period to equal or exceed 3.00 to 1.00; and

 

(b)                                 the ratio of Consolidated EBITDA to
Consolidated Interest Expense in respect of any Relevant Period to be less than
or equal to 4.00 to 1.

 

Section 10.2.                         Subsidiary Indebtedness, Etc.

 

(a)                                  The Company will not permit any Subsidiary
to create, incur, assume, guarantee or otherwise become liable with respect to
or permit to exist any Indebtedness other than:

 

(i)                                     Indebtedness existing on the date hereof
and set forth in Schedule 10.2, but not any extensions, renewals or replacements
of any such Indebtedness;

 

(ii)                                  Indebtedness of any Subsidiary to the
Company or any Wholly-Owned Subsidiary;

 

(iii)                               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

 

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outstanding principal amount thereof; provided, that (A) such Indebtedness is
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement, and (B) the aggregate principal amount of
Indebtedness permitted by this clause (iii) shall not exceed $10,000,000 at any
time outstanding;

 

(iv)                              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, provided that neither the
Company nor any other Subsidiary will assume or otherwise become directly or
indirectly liable for such Indebtedness;

 

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

 

(vi)                              Indebtedness not otherwise permitted by
clauses (i) through (v) above; provided, that the sum (without duplication) of
(A) the aggregate principal amount of Indebtedness of all Subsidiaries (other
than Indebtedness as permitted by clauses (i), (ii) and (iii) above), plus
(B) the aggregate principal amount of Indebtedness secured by Liens permitted by
clause (e) of Section 10.3 shall not at any time exceed 15% of the Consolidated
Net Worth of the Company.

 

(b)                                 The Company will not and will not permit any
Subsidiary to become a party to, or otherwise subject to, any agreement that
materially restricts the ability of such Subsidiary to pay dividends out of
profits, repay intercompany obligations or make any other distributions of
profits to the Company or any of its Subsidiaries that own outstanding shares of
capital stock or similar equity interests of such Subsidiary; provided, that the
foregoing shall not apply to any (i) restrictions and conditions contained in
this Agreement and (ii) 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.

 

Section 10.3.                         Liens.  The Company 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
Company or any Subsidiary existing on the date hereof and set forth in Schedule
10.3; provided, that (i) such Lien shall not apply to any other property or
asset of the Company 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 Company 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 Company or any
Subsidiary, and (iii) such Lien shall secure only

 

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those obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be;

 

(d)                                 Liens on property, plant and equipment
acquired, constructed or improved by the Company or any Subsidiary; provided,
that (i) such Liens secure Indebtedness permitted by Section 10.2(a)(iii),
(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 Company or any Subsidiary; and

 

(e)                                  Liens not otherwise permitted by clauses
(a) through (d) above securing Indebtedness of the Company or a Subsidiary;
provided, that the sum (without duplication) of (i) the aggregate principal
amount of Indebtedness secured by all such Liens permitted by this clause (e),
plus (ii) the aggregate principal amount of Indebtedness of all Subsidiaries
(other than Indebtedness as permitted by subclauses (i), (ii) and (iii) of
Section 10.2(a)) shall not at any time exceed 15% of the Consolidated Net Worth
of the Company.  The Company agrees that neither it nor any of its Subsidiaries
shall use any capacity under this Section 10.3(e) to secure any amounts owed or
outstanding under any Major Credit Facility unless the Notes and this Agreement
are also concurrently secured equally and ratably pursuant to documentation in
form and substance reasonably satisfactory to the Majority Holders (including,
but not limited to, documentation such as security agreements and other
necessary or desirable collateral agreements and instruments, an intercreditor
agreement and an opinion of independent legal counsel reasonably satisfactory to
the Majority Holders).

 

If the Company shall, or shall permit any of its Subsidiaries to, directly or
indirectly create or incur, or suffer to be incurred or to exist, any Lien,
other than those Liens permitted by the provisions of clauses (a) through (e),
inclusive, of this Section 10.3, it will make or cause to be made effective
provision whereby the Notes and this Agreement will be secured equally and
ratably with any and all other obligations thereby secured pursuant to
documentation in form and substance reasonably satisfactory to the Majority
Holders as provided in clause (e) above and, in any such case, the Notes and
this Agreement shall have the benefit, to the fullest extent that, and with such
priority as, the holders of the Notes may be entitled under applicable law, of
an equitable and ratable Lien on such property.  For the avoidance of doubt, no
grant of security or other action in accordance with this paragraph shall cure
or be deemed to cure any breach of this Section 10.3.

 

Section 10.4.                         Transactions with Affiliates.  The Company
will not and will not permit any Subsidiary to enter into directly or indirectly
any transaction or group of related transactions (including without limitation
the purchase, lease, sale or exchange of properties of any kind or the rendering
of any service) with any Affiliate (other than the Company or another
Subsidiary), except (a) in accordance with the Company’s Corporate Code of
Business Conduct and Ethics or as approved by a Committee of the Board of
Directors of the Company or a majority of the independent members of the Board
of Directors of the Company and upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate or (b) with respect to
Restricted Payments otherwise permitted by clause (b) or clause (c) of
Section 10.8.

 

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Section 10.5.                         Merger, Consolidation, Etc.  The Company
will not and will not permit any of its Subsidiaries to consolidate, amalgamate
or merge with any other Person or convey, transfer or lease all or substantially
all of its assets in a single transaction or series of transactions to any
Person except:

 

(a)                                  a Subsidiary may consolidate, amalgamate or
merge with the Company or any Wholly-Owned Subsidiary of the Company or convey
or transfer all or substantially all of its assets to:

 

(i)                                     the Company, provided that the Company
shall be the continuing, surviving or acquiring corporation, or

 

(ii)                                  any Wholly-Owned Subsidiary of the
Company.

 

(b)                                 the Company may consolidate, amalgamate or
merge with any other Person or convey or transfer all or substantially all of
its assets to any other Person, provided that the successor formed by such
consolidation or amalgamation or the survivor of such merger or the Person that
acquires by conveyance, transfer or lease all or substantially all of the assets
of the Company as an entirety, as the case may be, shall be a solvent
corporation organized and existing under the laws of the United States or any
State thereof (including the District of Columbia), and, if the Company is not
such corporation, (i) such corporation shall have executed and delivered to each
holder of any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the Notes and
(ii) such corporation shall have caused to be delivered to each holder of a Note
an opinion of nationally recognized independent counsel, or other independent
counsel reasonably satisfactory to the Majority Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof, and provided,
further, that immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing and the Company shall have complied with the provisions of
Section 8.3, if applicable.

 

No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 10.5 from its liability under this Agreement or the Notes.

 

Section 10.6.                         Sales and Leasebacks.  The Company will
not, and will not permit any of its Subsidiaries to, enter into any arrangement
with any Person providing for the leasing by the Company or any Subsidiary of
real or personal property that has been or is to be sold or transferred by the
Company 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 Company or such Subsidiary (a “Sale/Leaseback
Transaction”), except  (a) the Sale/Leaseback Transactions entered into with
respect to the real property listed on Schedule 10.6 as of the date of this
Agreement and (b) one or more Sale/Leaseback Transactions in addition to those
described in clause (a) of this Section 10.6 if after giving effect to such
transaction and the incurrence of Attributable Debt in respect thereof, the
aggregate Attributable

 

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Debt in respect of all Sale/Leaseback Transactions entered into pursuant to this
clause (b) shall not exceed $20,000,000 (determined on the date such transaction
occurred).

 

Section 10.7.              Hedging Agreements.  The Company will not, and will
not permit any Subsidiary to, enter into any Hedging Agreement, other than
(a) Hedging Agreements entered into in the ordinary course of business to hedge
or mitigate risks to which the Company or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities and not for
purposes of speculation or taking a “market view” and (b) interest rate Hedging
Agreements in respect of Indebtedness under the Notes.

 

Section 10.8.              Restricted Payments.  The Company will not, and will
not permit any of Subsidiary to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (a) the Company or any
Subsidiary 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 Company, no Event of Default has occurred and
is continuing or would result therefrom, (b) the Company may make Restricted
Payments pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Company and its Subsidiaries, (c) the
Company may, in addition to the foregoing, repurchase shares of the Company’s
common stock and options therefor granted by the Company pursuant to its
employee stock option plans and (d) the Company may repurchase shares of the
Company’s common stock in the open market or in private transactions, provided
that in the case of any such repurchase by the Company, no Event of Default has
occurred and is continuing or would result therefrom.

 

Section 10.9.              Line of Business.  The Company will not and will not
permit any Subsidiary to engage to any material extent in any business if, as a
result, the general nature of the business in which the Company and its
Subsidiaries, taken as a whole, would then be engaged would be substantially
changed from the general nature of the business in which the Company and its
Subsidiaries, taken as a whole, are engaged on the date of this Agreement as
described in the Memorandum.

 

Section 10.10.           Terrorism Sanctions Regulations.  The Company will not
and will not permit any Subsidiary to (a) become a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the
Office of Foreign Assets Control or in Section 1 of the Anti Terrorism Order or
(b) knowingly engage in any dealings or transactions with any such Person.

 

SECTION 11.                                                                    
EVENTS OF DEFAULT.

 

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

 

(a)           the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or

 

(b)           the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or

 

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(c)           the Company defaults in the performance of or compliance with any
term contained in Section 7.1(d) or Sections 10.1, 10.2, 10.3, 10.5 and 10.6; or

 

(d)           the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in Sections 11(a), (b) and
(c)) and such default is not remedied within 30 days after the earlier of (i) a
Responsible Officer obtaining actual knowledge of such default and (ii) the
Company receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a “notice of default” and to refer
specifically to this Section 11(d)); or

 

(e)           any representation or warranty made in writing by or on behalf of
the Company in this Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or

 

(f)            (i) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an
aggregate principal or notional amount of at least $10,000,000 beyond any period
of grace provided with respect thereto, or (ii) the Company or any Subsidiary is
in default in the performance of or compliance with any term of any evidence of
any Indebtedness in an aggregate outstanding principal or notional amount of at
least $10,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such default or
condition such Indebtedness has become, or has been declared (or one or more
Persons are entitled to declare such Indebtedness to be), due and payable before
its stated maturity or before its regularly scheduled dates of payment or
unwound or terminated prior to its termination date, or (iii) as a consequence
of the occurrence or continuation of any event or condition (other than the
passage of time or the right of the holder of Indebtedness to convert such
Indebtedness into equity interests), (x) the Company or any Subsidiary has
become obligated to purchase or repay Indebtedness before its regular maturity
or before its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $10,000,000 or unwind or terminate any Hedging
Contract in a notional amount at least equal to $10,000,000, or (y) one or more
Persons have the right to require the Company or any Subsidiary so to purchase,
repay or unwind or terminate such Indebtedness or Hedging Contract; provided
that this clause (f) 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; or

 

(g)           the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or

 

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(h)           a court or Governmental Authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Subsidiaries,
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or

 

(i)            a final judgment or judgments for the payment of money
aggregating in excess of $25,000,000 are rendered against one or more of the
Company and its Subsidiaries and which judgments are not, within 45 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 45 days after the expiration of such stay; or

 

(j)            if (i) any Pension Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Pension
Plan shall have been or is reasonably expected to be filed with the PBGC or the
PBGC shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Pension Plan or the PBGC shall have notified
the Company or any ERISA Affiliate that a Pension Plan may become a subject of
any such proceedings, (iii) the aggregate “amount of unfunded benefit
liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all
Plans, determined in accordance with Title IV of ERISA, shall exceed
$50,000,000, (iv) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer
Plan, or (vi) the Company or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a manner
that would increase the liability of the Company or any Subsidiary thereunder;
and any such event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect.

 

As used in Section 11(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in section 3 of ERISA.

 

SECTION 12.                                                                    
REMEDIES ON DEFAULT, ETC.

 

Section 12.1.              Acceleration.

 

(a)           If an Event of Default with respect to the Company described in
Section 11(g) or (h) (other than an Event of Default described in clause (i) of
Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact
that such clause encompasses clause (i) of Section 11(g)) has occurred, all the
Notes then outstanding shall automatically become immediately due and payable.

 

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(b)           If any other Event of Default has occurred and is continuing, the
Majority Holders may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.

 

(c)           If any Event of Default described in Section 11(a) or (b) has
occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.

 

Upon any Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate) and (y) the Make-Whole Amount for a Note of such series determined in
respect of such principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived. 
The Company acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company (except as herein specifically provided for) and that the
provision for payment of a Make-Whole Amount by the Company in the event that
the Notes are prepaid or are accelerated as a result of an Event of Default, is
intended to provide compensation for the deprivation of such right under such
circumstances.

 

Section 12.2.              Other Remedies.  If any Default or Event of Default
has occurred and is continuing, and irrespective of whether any Notes have
become or have been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and enforce
the rights of such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in any Note, or for an injunction against a violation of any
of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.

 

Section 12.3.              Rescission.  At any time after any Notes have been
declared due and payable pursuant to Section 12.1(b) or (c), the Majority
Holders, by written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on any
Notes that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes, at the Default Rate, (b) neither the Company nor any other
Person shall have paid any amounts which have become due solely by reason of
such declaration, (c) all Events of Default and Defaults, other than non-payment
of amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (d) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes.  No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.

 

Section 12.4.              No Waivers or Election of Remedies, Expenses, Etc. 
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or

 

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remedy shall operate as a waiver thereof or otherwise prejudice such holder’s
rights, powers or remedies.  No right, power or remedy conferred by this
Agreement or by any Note upon any holder thereof shall be exclusive of any other
right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.  Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys’
fees, expenses and disbursements.

 

SECTION 13.                                                                    
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

 

Section 13.1.              Registration of Notes.  The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes.  The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register.  Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary.  The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.

 

Section 13.2.              Transfer and Exchange of Notes.  Upon surrender of
any Note to the Company at the address and to the attention of the designated
officer (all as specified in Section 18(iii)), for registration of transfer or
exchange (and in the case of a surrender for registration of transfer
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or such holder’s attorney duly authorized in writing and
accompanied by the relevant name, address and other information for notices of
each transferee of such Note or part thereof), within ten Business Days
thereafter, the Company shall execute and deliver, at the Company’s expense
(except as provided below), one or more new Notes of the same series (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note.  Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1.  Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon.  The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes.  Notes shall not be transferred in denominations of less than
$500,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $500,000.  Any transferee, by its acceptance of a Note registered in its
name (or the name of its nominee), shall be deemed to have made the
representations set forth in Sections 6.1 and 6.2.

 

Section 13.3.              Replacement of Notes.  Upon receipt by the Company at
the address and to the attention of the designated officer (all as specified in
Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of
and the loss, theft, destruction or mutilation of any Note (which evidence shall
be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and

 

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(a)           in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or any other Institutional Investor, such Person’s
own unsecured agreement of indemnity shall be deemed to be satisfactory), or

 

(b)           in the case of mutilation, upon surrender and cancellation
thereof,

 

within ten Business Days thereafter, the Company at its own expense shall
execute and deliver, in lieu thereof, a new Note of the same series, dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

 

SECTION 14.                                                                    
PAYMENTS ON NOTES.

 

Section 14.1.              Place of Payment.  Subject to Section 14.2, payments
of principal, Make-Whole Amount, if any, and interest becoming due and payable
on the Notes shall be made at the principal office of Bank of America, N.A. in
New York City.  The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

 

Section 14.2.              Home Office Payment.  So long as any Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below such
Purchaser’s name in Schedule A, or by such other method or at such other address
as such Purchaser shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1.  Prior to any sale or other disposition
of any Note held by a Purchaser or its nominee, such Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2.  The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by a
Purchaser under this Agreement and that has made the same agreement relating to
such Note as the Purchasers have made in this Section 14.2.

 

SECTION 15.                                                                    
EXPENSES, ETC.

 

Section 15.1.              Transaction Expenses.  Whether or not the
transactions contemplated hereby are consummated, the Company will pay all costs
and expenses (including reasonable attorneys’ fees of one special counsel)
incurred by the Purchasers in connection with such transactions and will pay all
costs and expenses (including reasonable attorneys’ fees of one special counsel
and, if reasonably required by the Majority Holders, local or other counsel) of

 

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each Purchaser or other holder of a Note in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, (b) the costs and expenses, including
financial advisors’ fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated hereby and by the Notes and
(c) the costs and expenses incurred in connection with the initial filing of
this Agreement and all related documents and financial information with the SVO,
provided that such costs and expenses under this clause (c) shall not exceed
$3,000.  The Company will pay, and will save each Purchaser and each other
holder of a Note harmless from, all claims in respect of any fees, costs or
expenses, if any, of brokers and finders (other than those, if any, retained by
a Purchaser or other holder in connection with its purchase of the Notes).

 

Section 15.2.              Survival.  The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.

 

SECTION 16.                                                                    
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

 

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any subsequent holder of a Note, regardless
of any investigation made at any time by or on behalf of such Purchaser or any
other holder of a Note.  All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement.  Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between each Purchaser and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.

 

SECTION 17.                                                                    
AMENDMENT AND WAIVER.

 

Section 17.1.              Requirements.  This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Majority Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the

 

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Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

 

Section 17.2.              Solicitation of Holders of Notes.

 

(a)           Solicitation.  The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes.  The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.

 

(b)           Payment.  The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security or provide other credit
support, to any holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted or other credit support concurrently provided,
on the same terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.

 

Section 17.3.              Binding Effect, etc.  Any amendment or waiver
consented to as provided in this Section 17 applies equally to all holders of
Notes and is binding upon them and upon each future holder of any Note and upon
the Company without regard to whether such Note has been marked to indicate such
amendment or waiver.  No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon.  No course of dealing
between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of
any holder of such Note.  As used herein, the term “this Agreement” and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.

 

Section 17.4.              Notes Held by Company, etc.  Solely for the purpose
of determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

 

SECTION 18.                                                                    
NOTICES.

 

Except as otherwise provided in Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f), all
notices and communications provided for hereunder shall be in writing and sent
(a) by telecopy if the sender

 

33

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

 

on the same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized overnight
delivery service (with charges prepaid).  Any such notice must be sent:

 

(i)            if to any Purchaser or its nominee, to such Purchaser or nominee
at the address specified for such communications in Schedule A, or at such other
address as such Purchaser or nominee shall have specified to the Company in
writing,

 

(ii)           if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in writing, or

 

(iii)          if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Wendy J. Hills, Esq., Vice President,
Secretary and Associate General Counsel (telecopier:  (913) 236-2627), or at
such other address as the Company shall have specified to the holder of each
Note in writing.

 

Notices under this Section 18 will be deemed given only when actually received.

 

SECTION 19.                                                                    
REPRODUCTION OF DOCUMENTS.

 

This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, electronic,
digital, or other similar process and such Purchaser may destroy any original
document so reproduced.  The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Purchaser in the regular course of business) and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.  This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.

 

SECTION 20.                                                                    
CONFIDENTIAL INFORMATION.

 

For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
prior to the time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by such Purchaser or any person acting on such
Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than
through disclosure by the Company or any Subsidiary, or (d) constitutes
financial statements delivered to such Purchaser under Section 7.1 that are

 

34

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

 

otherwise publicly available.  Each Purchaser will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties
delivered to such Purchaser, provided that such Purchaser may deliver or
disclose Confidential Information to (i) its directors, officers, employees,
agents, attorneys, trustees and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by its
Notes), (ii) its financial advisors and other professional advisors who agree to
hold confidential the Confidential Information substantially in accordance with
the terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which it sells or offers to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which it offers to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over such
Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization,
or any nationally recognized rating agency that requires access to information
about such Purchaser’s investment portfolio, or (viii) any other Person to which
such delivery or disclosure may be necessary (w) to effect compliance with any
law, rule, regulation or order applicable to such Purchaser, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation to
which such Purchaser is a party or (z) if an Event of Default has occurred and
is continuing, to the extent such Purchaser may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under such Purchaser’s Notes and this
Agreement.  Each holder of a Note, by its acceptance of a Note, will be deemed
to have agreed to be bound by and to be entitled to the benefits of this Section
20 as though it were a party to this Agreement.  On reasonable request by the
Company in connection with the delivery to any holder of a Note of information
required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company embodying
the provisions of this Section 20.

 

SECTION 21.                                                                    
SUBSTITUTION OF PURCHASER.

 

Each Purchaser shall have the right to substitute any one of its Affiliates as
the purchaser of the Notes that it has agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both such Purchaser and
such Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6.  Upon receipt
of such notice, any reference to such Purchaser in this Agreement (other than in
this Section 21), shall be deemed to refer to such Affiliate in lieu of such
original Purchaser.  In the event that such Affiliate is so substituted as a
Purchaser hereunder and such Affiliate thereafter transfers to such original
Purchaser all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, any reference to such Affiliate as a
“Purchaser” in this Agreement (other than in this Section 21), shall no longer
be deemed to refer to such Affiliate, but shall refer to such original
Purchaser, and such original Purchaser shall again have all the rights of an
original holder of the Notes under this Agreement.

 

35

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

 

SECTION 22.                                                                    
MISCELLANEOUS.

 

Section 22.1.              Successors and Assigns.  All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.

 

Section 22.2.              Payments Due on Non-Business Days.  Anything in this
Agreement or the Notes to the contrary notwithstanding (but without limiting the
requirement in Section 8.2 that the notice of any optional prepayment specify a
Business Day as the date fixed for such prepayment), any payment of principal of
or Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; provided that if the maturity date of any Note is
a date other than a Business Day, the payment otherwise due on such maturity
date shall be made on the next succeeding Business Day and shall include the
additional days elapsed in the computation of interest payable on such next
succeeding Business Day.

 

Section 22.3.              Accounting Terms; Changes in GAAP.  All accounting
terms used herein which are not expressly defined in this Agreement have the
meanings respectively given to them in accordance with GAAP.  Except as
otherwise specifically provided herein, (a) all computations made pursuant to
this Agreement shall be made in accordance with GAAP, and (b) all financial
statements shall be prepared in accordance with GAAP.

 

If at any time after the date of this Agreement there is a change to the basis
on which the Company’s financial statements are prepared (an “Accounting
Change”), the Company and the holders of Notes shall, at the request of the
Company or the Majority Holders, negotiate in good faith with a view to agreeing
on such amendments to the financial covenants set forth in Section 10.1 and/or
the related defined terms as may be necessary, after giving effect to the
Accounting Change, to provide to the holders of the Notes protection comparable
to that provided on the date of this Agreement.  Any such amendments shall take
effect on the effective date specified in the writing executed by the Company
and the Majority Holders to reflect such amendments in accordance with
Section 17.  If the Company and the Majority Holders are unable agree on such
amendments within 90 days after the date of the applicable Accounting Change,
the Company shall request that its independent public accountants prepare a
certificate which sets forth the amendments to such financial covenants and
defined terms as are needed to place the Company and the holders of the Notes in
the same respective positions as they would have been had such Accounting Change
not occurred.  Such certificate shall, in the absence of manifest error, be
binding on all of the parties hereto.

 

Section 22.4.              Severability.  Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.

 

36

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

 

Section 22.5.              Construction, etc.  Each covenant contained herein
shall be construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that compliance with any
one covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant.  Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.

 

For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement shall be deemed to be a part hereof.

 

Section 22.6.              Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument.  Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.

 

Section 22.7.              Governing Law.  This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding choice of law principles of the law
of such State that would permit the application of the laws of a jurisdiction
other than such State.

 

Section 22.8.              Jurisdiction and Process; Waiver of Jury Trial.  (a) 
The Company irrevocably submits to the non-exclusive jurisdiction of any New
York State or federal court sitting in the Borough of Manhattan, The City of New
York, over any suit, action or proceeding arising out of or relating to this
Agreement or the Notes.  To the fullest extent permitted by applicable law, the
Company irrevocably waives and agrees not to assert, by way of motion, as a
defense or otherwise, any claim that it is not subject to the jurisdiction of
any such court, any objection that it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

 

(b)           The Company consents to process being served by or on behalf of
any holder of Notes in any suit, action or proceeding of the nature referred to
in Section 22.8(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section. 
The Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it. 
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

 

(c)           Nothing in this Section 22.8 shall affect the right of any holder
of a Note to serve process in any manner permitted by law, or limit any right
that the holders of any of the Notes may have to bring proceedings against the
Company in the courts of any appropriate jurisdiction

 

37

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

 

or to enforce in any lawful manner a judgment obtained in one jurisdiction in
any other jurisdiction.

 

(d)           THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

 

*    *    *    *    *

 

38

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

 

If you are in agreement with the foregoing, please sign the form of agreement in
the space below provided on a counterpart of this Agreement and return it to the
Company, whereupon this Agreement shall become a binding agreement between you
and the Company.

 

 

Very truly yours,

 

 

 

WADDELL & REED FINANCIAL, INC.

 

 

 

 

 

By:

/s/ Daniel P. Connealy

 

Name: Daniel P. Connealy

 

Title: Senior Vice President and Chief Financial Officer

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

METROPOLITAN LIFE INSURANCE COMPANY

 

METLIFE INVESTORS INSURANCE COMPANY

 

by Metropolitan Life Insurance Company,

its Investment Manager

 

METLIFE INSURANCE COMPANY OF CONNECTICUT

 

by Metropolitan Life Insurance Company,

its Investment Manager

 

 

By:

/s/ Judith A. Gulotta

 

Name:

Judith A. Gulotta

 

Title:

Managing Director

 

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

MIDLAND NATIONAL LIFE INSURANCE COMPANY

By:  Guggenheim Partners Asset Management, LLC

 

 

By:

/s/ Michael Damaso

 

Name:

Michael Damaso

 

Title:

Senior Managing Director

 

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE

By:  Guggenheim Partners Asset Management, LLC

 

 

By:

/s/ Michael Damaso

 

Name:

Michael Damaso

 

Title:

Senior Managing Director

 

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

SECURITY BENEFIT LIFE INSURANCE COMPANY

By:  Guggenheim Partners Asset Management, LLC

 

 

By:

/s/ Michael Damaso

 

Name:

Michael Damaso

 

Title:

Senior Managing Director

 

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

WILTON REASSURANCE COMPANY

By:  Guggenheim Partners Asset Management, LLC

 

 

By:

/s/ Michael Damaso

 

Name:

Michael Damaso

 

Title:

Senior Managing Director

 

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

GENWORTH LIFE INSURANCE COMPANY

 

 

By:

/s/ John R. Endres

 

Name:

John R. Endres

 

Title:

Investment Officer

 

 

 

 

 

 

 

GENWORTH LIFE AND ANNUITY INSURANCE COMPANY

 

 

 

 

 

 

By:

/s/ John R. Endres

 

Name:

John R. Endres

 

Title:

Investment Officer

 

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

JOHN HANCOCK LIFE INSURANCE
COMPANY (U.S.A.)

 

 

By:

/s/ John M. Garrison

 

Name:  John M. Garrison

Title:    Managing Director

 

 

JOHN HANCOCK LIFE INSURANCE
COMPANY OF NEW YORK

 

 

By:

/s/ John M. Garrison

 

Name:  John M. Garrison

Title:    Authorized Signatory

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

JPMORGAN CHASE BANK, N.A., not
individually but solely in its capacity as
Directed Trustee of the SBC Master Pension Trust

 

 

By:

/s/ Barry O’Connor

 

Name:  Barry O’Connor

Title:    Executive Director

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY

 

 

By:

/s/ Randal W. Ralph

 

Name:  Randal W. Ralph

Title:    Its Authorized Representative

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

KNIGHTS OF COLUMBUS

 

 

By:

/s/ Donald R. Kehoe

 

Name:  Donald R. Kehoe

Title:    Supreme Secretary

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 

 

THE UNION CENTRAL LIFE INSURANCE COMPANY

 

By:  Summit Investment Advisors, Inc., as Agent

 

 

By:

/s/  Andrew S. White

 

Name:  Andrew S. White

Title:    Managing Director - Private Placements

 

 

ACACIA LIFE INSURANCE COMPANY

 

By:  Summit Investment Advisors, Inc., as Agent

 

 

By:

/s/ Andrew S. White

 

Name:  Andrew S. White

Title:    Managing Director - Private Placements

 

 

AMERITAS LIFE INSURANCE CORP.

 

By:  Summit Investment Advisors, Inc., as Agent

 

 

By:

/s/  Andrew S. White

 

Name:  Andrew S. White

Title:    Managing Director - Private Placements

 

[Signature page to Waddell & Reed Financial, Inc. Note Purchase Agreement]

 

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

 

SCHEDULE A

 

INFORMATION RELATING TO PURCHASERS

 

This Schedule A shows the names and addresses of the Purchasers under the
foregoing Note Purchase Agreement and the respective principal amounts and
series of Notes to be purchased by each.

 

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series A

 

 

 

METROPOLITAN LIFE INSURANCE COMPANY

 

$14,000,000

 

METROPOLITAN LIFE INSURANCE COMPANY
1095 Avenue of the Americas
New York, New York  10036

 

(Securities to be registered in the name of Metropolitan Life Insurance Company)

 

(1)                                  All notices and communications (other than
as provided in (2) below):

 

Metropolitan Life Insurance Company

Investments, Private Placements

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Director

Facsimile (973) 355-4250

 

2

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

 

With a copy OTHER than with respect to deliveries of financial statements to:

 

Metropolitan Life Insurance Company
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention: Chief Counsel-Securities Investments (PRIV)
Email:  sec_invest_law@metlife.com

 

(2)                                  Electronic mail address for electronic
delivery of information for purposes of Sections 7.1(a), 7.1(b), 7.1(c) and
7.1(f) of the Note Purchase Agreement:

 

PPUcompliance@MetLife.com

 

(3)                                  Original notes delivered to:

 

Metropolitan Life Insurance Company
Securities Investments, Law Department
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Daniel F. Scudder, Esq.

 

3

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series A

 

 

 

METLIFE INSURANCE COMPANY OF CONNECTICUT, on behalf of its Separate Account MGA

 

$20,000,000

 

METLIFE INSURANCE COMPANY OF CONNECTICUT
c/o Metropolitan Life Insurance Company
1095 Avenue of the Americas
New York, New York  10036

 

(Securities to be registered in the name of MetLife Insurance Company of
Connecticut,
on behalf of its Separate Account MGA)

 

(1)           All notices and communications (other than as provided in
(2) below):

 

MetLife Insurance Company of Connecticut
c/o Metropolitan Life Insurance Company
Investments, Private Placements
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Director
Facsimile:  (973) 355-4250

 

4

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

 

With a copy OTHER than with respect to deliveries of financial statements to:

 

MetLife Insurance Company of Connecticut
c/o Metropolitan Life Insurance Company
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Chief Counsel-Securities Investments (PRIV)

 

Email:  sec_invest_law@metlife.com

 

(2)                                  Electronic mail address for electronic
delivery of information for purposes of Sections 7.1(a), 7.1(b), 7.1(c) and
7.1(f) of the Note Purchase Agreement:

 

PPUcompliance@MetLife.com

 

(3)           Original notes delivered to:

 

MetLife Insurance Company of Connecticut
c/o Metropolitan Life Insurance Company
Securities Investments, Law Department
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Daniel F. Scudder, Esq.

 

5

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

METROPOLITAN LIFE INSURANCE COMPANY

 

$10,000,000

 

METROPOLITAN LIFE INSURANCE COMPANY
1095 Avenue of the Americas
New York, New York  10036

 

(Securities to be registered in the name of Metropolitan Life Insurance Company)

 

(1)           All notices and communications (other than as provided in
(2) below):

 

Metropolitan Life Insurance Company
Investments, Private Placements
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Director
Facsimile:  (973) 355-4250

 

6

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

 

With a copy OTHER than with respect to deliveries of financial statements to:

 

Metropolitan Life Insurance Company
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention: Chief Counsel-Securities Investments (PRIV)

 

Email:  sec_invest_law@metlife.com

 

(2)           Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

PPUcompliance@MetLife.com

 

(3)           Original notes delivered to:

 

Metropolitan Life Insurance Company
Securities Investments, Law Department
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Daniel F. Scudder, Esq.

 

7

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

METLIFE INVESTORS INSURANCE COMPANY

 

$1,500,000

 

METLIFE INVESTORS INSURANCE COMPANY
c/o Metropolitan Life Insurance Company
1095 Avenue of the Americas
New York, New York  10036

 

(Securities to be registered in the name of MetLife Investors Insurance Company)

 

(1)           All notices and communications (other than as provided in
(2) below):

 

MetLife Investors Insurance Company
c/o Metropolitan Life Insurance Company
Investments, Private Placements
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Director
Facsimile:  (973) 355-4250

 

8

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

 

With a copy OTHER than with respect to deliveries of financial statements to:

 

MetLife Investors Insurance Company
c/o Metropolitan Life Insurance Company
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention: Chief Counsel-Securities Investments (PRIV)
Email:  sec_invest_law@metlife.com

 

(2)           Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

PPUcompliance@MetLife.com

 

(3)           Original notes delivered to:

 

MetLife Investors Insurance Company
c/o Metropolitan Life Insurance Company
Securities Investments, Law Department
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Daniel F. Scudder, Esq.

 

9

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

METLIFE INSURANCE COMPANY OF CONNECTICUT

 

$3,500,000

 

METLIFE INSURANCE COMPANY OF CONNECTICUT
c/o Metropolitan Life Insurance Company
1095 Avenue of the Americas
New York, New York  10036

 

(Securities to be registered in the name of MetLife Insurance Company of
Connecticut)

 

(1)           All notices and communications (other than as provided in
(2) below):

 

MetLife Insurance Company of Connecticut
c/o Metropolitan Life Insurance Company
Investments, Private Placements
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Director
Facsimile: (973) 355-4250

 

10

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

 

With a copy OTHER than with respect to deliveries of financial statements to:

 

MetLife Insurance Company of Connecticut
c/o Metropolitan Life Insurance Company
P.O. Box 1902
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention: Chief Counsel-Securities Investments (PRIV)

 

Email:  sec_invest_law@metlife.com

 

(2)           Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

PPUcompliance@MetLife.com

 

(3)           Original notes delivered to:

 

MetLife Insurance Company of Connecticut
c/o Metropolitan Life Insurance Company
Securities Investments, Law Department
10 Park Avenue
Morristown, New Jersey 07962-1902
Attention:  Daniel F. Scudder, Esq.

 

11

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

MIDLAND NATIONAL LIFE INSURANCE COMPANY

 

$22,500,000

 

(1)       Address for all notices relating to payments:

 

Midland National Life Insurance Company

c/o Guggenheim Partners

227 W. Monroe St. 48th Floor

Chicago, IL 60606

Attn:  Melissa Carlson

Phone:

312-827-0192

Fax:

201-215-9353

Email:

gpambackoffice@guggenheimpartners.com

 

(2)       Address for all other communications and notices (other than as
provided in (3) below):

 

Guggenheim Partners

135 E. 57th St., 6th Floor

New York, NY 10022

Attn:  Kaitlin Trinh/Mabel Chui

Phone:

212-651-0840

Fax:

212-644-8396

E-mail:

kaitlin.trinh@guggenheimpartners.com

 

12

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(3)       Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

kaitlin.trinh@guggenheimpartners.com

 

13

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE

 

$13,000,000

 

(1)       Address for all notices relating to payments:

 

North American Company for Life and Health Insurance

c/o Guggenheim Partners

227 W. Monroe St. 48th Floor

Chicago, IL 60606

Attn: Melissa Carlson

Phone:

312-827-0192

Fax:

201-215-9354

Email:

gpambackoffice@guggenheimpartners.com

 

(2)       Address for all other communications and notices (other than as
provided in (3) below):

 

Guggenheim Partners

135 E. 57th St., 6th Floor

New York, NY 10022

Attn: Kaitlin Trinh/Mabel Chui

Phone:

212-651-0840

Fax:

212-644-8396

E-mail:

kaitlin.trinh@guggenheimpartners.com

 

14

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(3)       Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

kaitlin.trinh@guggenheimpartners.com

 

15

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

SECURITY BENEFIT LIFE INSURANCE COMPANY

 

$8,500,000

 

(1)       Address for all notices relating to payments:

 

Guggenheim Partners Asset Management, Inc.

227 W. Monroe Street - Suite 4900

Chicago, IL 60606

Attn: Maureen Moster

Tel:      312-873-1477

Fax:      312-827-0157

 

16

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(2)       Address for all other communications and notices (other than as
provided in (3) below):

 

Guggenheim Partners

135 E. 57th St., 6th Floor

New York, NY 10022

Attn: Kaitlin Trinh/Mabel Chui

Phone:       212-651-0840

Fax:             212-644-8396

E-mail:            kaitlin.trinh@guggenheimpartners.com

 

(3)       Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

kaitlin.trinh@guggenheimpartners.com

 

17

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

WILTON REASSURANCE COMPANY

 

$1,000,000

 

 

(1)       Address for all notices relating to payments:

 

C/O The Bank of New York

F/A/O:

P.O. Box 19266

Newark, NJ 07195

Attn: Principal & Interest Dept

 

In addition, it is requested that duplicate correspondence be sent to:

 

Guggenheim Partners Asset Management, Inc.

227 W. Monroe Street - Suite 4900

Chicago, IL 60606

Attn: Maureen Moster

Tel:        312-873-1477

Fax:         312-827-0157

 

18

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(2)       Address for all other communications and notices (other than as
provided in (3) below):

 

Guggenheim Partners

135 E. 57th St., 6th Floor

New York, NY 10022

Attn: Kaitlin Trinh/Mabel Chui

Phone:       212-651-0840

Fax:             212-644-8396

E-mail:            kaitlin.trinh@guggenheimpartners.com

 

(3)       Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

kaitlin.trinh@guggenheimpartners.com

 

19

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Name and Address of Purchaser

 

Principal Amount and Series of 
Notes to be Purchased

 

 

 

 

 

Series A

 

 

 

GENWORTH LIFE AND ANNUITY INSURANCE COMPANY I/N/O HARE & CO.

 

$5,000,000

 

(1)           All notices and communications including original note agreement,
conformed copy of the note agreement, amendment requests, financial statements
and other general information to be addressed as follows (other than as provided
in (2) below):

 

Genworth Financial, Inc.

Account:  Genworth Life and Annuity Insurance Company

3001 Summer Street, 2nd Floor

Stamford, CT  06905

Attn:  Dorothy Michalowski

Telephone No:

(212) 895-4031

Fax No:

(866) 745-0947

 

If available, an electronic copy is additionally requested.  Please send to the
following e-mail address:  GNW.privateplacements@genworth.com

 

20

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(2)           Electronic mail address for electronic delivery of
information for purposes of Sections 7.1(a), 7.1(b),
7.1(c) and 7.1(f) of the Note Purchase Agreement:

 

GNW.privateplacements@genworth.com

 

(3)           All corporate actions, including payments and prepayments, should
be sent to the above address with copies to:

 

Genworth Financial, Inc.

Account:  Genworth Life and Annuity Insurance Company

3001 Summer Street

Stamford, CT  06905

Attn:  Trade Operations

Telephone No:

(203) 708-3368

Fax No:

(866) 745-3305

 

If available, an electronic copy is additionally requested.  Please send to the
following e-mail address:  GNWInvestmentsOperations@genworth.com

 

(4)           Notices with respect to payments and written confirmation of each
such payment, including interest payments, redemptions, premiums, make wholes,
and fees should also be addressed as above with additional copies addressed to
the following:

 

The Bank of New York
Income Collection Department
P.O. Box 19266
Newark, NJ  07195

Attn:

PP P&I Department

Ref:

GLAIC

,

CUSIP/PPN & Security Description

P&I Contact:

Purisima Teylan - (718) 315-3035

 

(5)           Physical Delivery of the Notes:

 

The Bank of New York

One Wall Street

Window A, 3rd Floor

New York, NY  10286

 

Register In Nominee Name:

HARE & CO.

 

21

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

GENWORTH LIFE INSURANCE COMPANY I/N/O HARE & CO.

 

$25,000,000

 

(1)           All notices and communications including original note agreement,
conformed copy of the note agreement, amendment requests, financial statements
and other general information to be addressed as follows (other than as provided
in (2) below):

 

Genworth Financial, Inc.

Account:  Genworth Life Insurance Company

3001 Summer Street, 2nd Floor

Stamford, CT  06905

Attn:  Dorothy Michalowski

Telephone No

(212) 895-4031

Fax No:

(866) 745-0947

 

If available, an electronic copy is additionally requested.  Please send to the
following e-mail address:  GNW.privateplacements@genworth.com

 

(2)           Electronic mail address for electronic delivery of information for
purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

GNW.privateplacements@genworth.com

 

22

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(3)           All corporate actions, including payments and prepayments, should
be sent to the above address with copies to:

 

Genworth Financial, Inc.

Account:  Genworth Life Insurance Company

3001 Summer Street

Stamford, CT  06905

Attn:  Trade Operations

Telephone No:

(203) 708-3368

Fax No:

(866) 745-3305

 

If available, an electronic copy is additionally requested.  Please send to the
following e-mail address:  GNWInvestmentsOperations@genworth.com

 

(4)           Notices with respect to payments and written confirmation of each
such payment, including interest payments, redemptions, premiums, make wholes,
and fees should also be addressed as above with additional copies addressed to
the following:

 

The Bank of New York

Income Collection Department

P.O. Box 19266

Newark, NJ  07195

Attn:

PP P&I Department

Ref:

GLIC

,

CUSIP/PPN & Security Description

P&I Contact:

Purisima Teylan - (718) 315-3035

 

(5)           Physical Delivery of the Notes:

 

The Bank of New York

One Wall Street

Window A, 3rd Floor

New York, NY  10286

 

Register In Nominee Name:              HARE & CO.

 

23

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Name and Address of Purchaser

 

Principal Amount and Series of 
Notes to be Purchased

 

 

 

 

 

Series A

 

 

 

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

 

$20,000,000
$ 3,000,000

 

REGISTERED NAME OF SECURITIES:  John Hancock Life Insurance Company (U.S.A.)

 

(1)           All notices with respect to payments, prepayments (scheduled and
unscheduled, whether partial or in full) and maturity shall be sent to:

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA 02116

Attention:  US Securities Operations, C-4

Fax Number:  (617) 572-0628

 

AND

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA  02116

Attention:  Investment Administration, C-2

Fax Number:  (617) 572-5495

 

24

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(2)           Other than as provided in (3) below, all notices and communication
with respect to compliance reporting, financial statements and related
certifications shall be sent to:

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA  02116

Attention:  Bond and Corporate Finance, C-2

Fax Number:

(617) 572-0073

Email:

wdroege@jhancock.com   AND

 

TDellaPiana@jhancock.com

 

(3)           Electronic mail addresses for electronic delivery of information
for purposes of Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(f) of the Note Purchase
Agreement:

 

wdroege@jhancock.com   AND
TDellaPiana@jhancock.com

 

(4)           All other notices shall be sent to:

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA  02116

Attention:  Investment Law, C-3

Fax Number:

(617) 572-9269

Email:

pmemishian@jhancock.com

 

AND

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA  02116

Attention:  Bond and Corporate Finance, C-2

Fax Number:

(617) 572-0073

Email:

wdroege@jhancock.com

 

25

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series A

 

 

 

JOHN HANCOCK LIFE INSURANCE COMPANY OF NEW YORK

 

$2,000,000

 

REGISTERED NAME OF SECURITIES:  John Hancock Life Insurance Company of New York

 

(1)                                  All notices with respect to payments,
prepayments (scheduled and unscheduled, whether partial or in full) and maturity
shall be sent to:

 

John Hancock Financial Services
197 Clarendon Street
Boston, MA  02116
Attention:  US Securities Operations, C-4

Fax Number:

(617) 572-0628

 

AND

 

John Hancock Financial Services
197 Clarendon Street
Boston, MA  02116
Attention:  Investment Administration, C-2

Fax Number:

(617) 572-5495

 

26

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

 

(2)                                  Other than as provided in (3) below, all
notices and communication with respect to compliance reporting, financial
statements and related certifications shall be sent to:

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA 02116

Attention: Bond and Corporate Finance, C-2

Fax Number:

(617) 572-0073

Email:

wdroege@jhancock.com AND

 

TDellaPiana@jhancock.com

 

(3)                                  Electronic mail addresses for electronic
delivery of information for purposes of Sections 7.1(a), 7.1(b), 7.1(c) and
7.1(f) of the Note Purchase Agreement:

 

wdroege@jhancock.com AND

TDellaPiana@jhancock.com

 

(4)                                  All other notices shall be sent to:

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA 02116

Attention: Investment Law, C-3

Fax Number:

(617) 572-9269

Email:

pmemishian@jhancock.com

 

AND

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA 02116

Attention: Bond and Corporate Finance, C-2

Fax Number:

(617) 572-0073

Email:

wdroege@jhancock.com

 

27

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series A

 

 

 

JPMORGAN CHASE BANK,
AS DIRECTED TRUSTEE FOR THE SBC MASTER PENSION TRUST I/N/O KANE & CO.

 

$1,000,000

 

REGISTERED NAME OF SECURITIES:  Kane & Co.

 

(1)                                  All notices with respect to payments,
prepayments (scheduled and unscheduled, whether partial or in full) and maturity
shall be sent to:

 

JPMorgan Chase Bank
3 MetroTech Center, 5th Floor
Brooklyn, NY 11245
Attn: Robert M. Lauer
Fax: (718) 242-2319

 

28

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(2)                                  Other than as provided in (3) below, all
notices and communication with respect to compliance reporting, financial
statements and related certifications shall be sent to:

 

John Hancock Financial Services

197 Clarendon Street

Boston, MA 02116

Attention: Bond and Corporate Finance, C-2

Fax Number:

(617) 572-0073

Email:

wdroege@jhancock.com AND

 

TDellaPiana@jhancock.com

 

(3)                                  Electronic mail addresses for electronic
delivery of information for purposes of Sections 7.1(a), 7.1(b), 7.1(c) and
7.1(f) of the Note Purchase Agreement:

 

wdroege@jhancock.com AND

TDellaPiana@jhancock.com

 

(4)                                  All other notices shall be sent to:

 

John Hancock Financial Services
197 Clarendon Street
Boston, MA  02116
Attention:  Investment Law, C-3

Fax Number:

(617) 572-9269

Email:

pmemishian@jhancock.com

 

AND

 

John Hancock Financial Services
197 Clarendon Street
Boston, MA  02116
Attention:  Bond and Corporate Finance, C-2

Fax Number:

(617) 572-0073

Email:

wdroege@jhancock.com

 

29

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

 

 

Series A

 

Series B

 

 

 

 

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

 

$15,000,000

 

$5,000,000

 

Name and address of purchaser:

 

The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI  53202

 

(1)                                  All notices of payments and written
confirmations of such wire transfers:

 

The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI  53202
Attention:  Investment Operations
Email:  privates@northwesternmutual.com

 

(2)                                  All other communications (other than as
provided in (3) below):

 

The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI  53202
Attention:  Securities Department
Email:  privateinvest@northwesternmutual.com

 

(3)                                  Electronic mail address for electronic
delivery of information for purposes of Sections 7.1(a), 7.1(b), 7.1(c) and
7.1(f) of the Note Purchase Agreement:

 

privateinvest@northwesternmutual.com

 

(4)                                  Address for delivery of Notes:

 

30

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

 

The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI  53202
Attention:  Abim O. Kolawole

 

31

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series A

 

 

 

KNIGHTS OF COLUMBUS

 

$15,000,000

 

Name and Address of Purchaser:

 

Knights of Columbus
One Columbus Plaza
New Haven, CT 06510-3326
Attn:  Investment Accounting Department, 14th Floor

 

(1)                                  Other than as provided in (2) below, all
notices and communications should be mailed and faxed to:

 

Knights of Columbus

FPA Account # 201047

Attn: Investment Department, 19th Floor

One Columbus Plaza

New Haven, CT 06510-3326 USA

Phone:

(203) 752 - 4127

Fax:

(203) 752 - 4117

Email:

Investments@kofc.org AND

 

Michael.Prinzivalli@kofc.org

 

32

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(2)                                  Electronic mail addresses for electronic
delivery of
information for purposes of Sections 7.1(a), 7.1(b),
7.1(c) and 7.1(f) of the Note Purchase Agreement:

 

Investments@kofc.org AND
Michael.Prinzivalli@kofc.org

 

(3)                                  Name of Nominee in which Notes are to be
issued:  None

 

(4)                                  Physical delivery of Notes to:

 

Mary Wong, Assistant Treasurer
Physical Delivery
The Bank of New York Mellon
One Wall Street, 3rd Floor, Window “A”
New York, NY   10286 USA

Tel.                                                    212-635-1003
Email:                                         marywong@bankofny.com

 

33

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

THE UNION CENTRAL LIFE INSURANCE COMPANY I/N/O/ CUDD & CO.

 

$3,000,000

 

Name and Address of Purchaser:

 

The Union Central Life Insurance Company
c/o Summit Investment Advisors, Inc.
390 North Cotner Blvd.
Lincoln, NE 68505

 

(1)                                  All notices of payments and written
confirmations of such wire transfers sent to:

 

The Union Central Life Insurance Company
1876 Waycross Rd
Cincinnati, Ohio 45240
Attention:                         Treasury Department
Fax:                                                           (513) 674-5275

 

(2)                                  Other than as provided in (3) below, all
other communications sent to:

 

The Union Central Life Insurance Company
c/o Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505

 

(3)                                  Electronic mail address for electronic
delivery of
information for purposes of Sections 7.1(a), 7.1(b),
7.1(c) and 7.1(f) of the Note Purchase Agreement:

 

AWhite@summitinvestments.com

 

34

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

 

(4)                                  Delivery of certificates by registered mail
to:

 

JPMorgan Chase Bank, N.A.
4 Chase Metrotech Center, 3rd Floor
Brooklyn, NY  11245-0001
ATTN:  Physical Receive Department
REF:  The Union Central Life Insurance Company

 

To be registered in the nominee name of CUDD & CO. as nominee for The Union
Central Life Insurance Company

 

AND

 

Copy of Certificates sent to:

 

Andy White
Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505

 

35

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Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

ACACIA LIFE INSURANCE COMPANY I/N/O/ CUDD & CO.

 

$1,000,000

 

Name and Address of Purchaser:

 

Acacia Life Insurance Company
390 North Cotner Blvd.
Lincoln, NE 68505

 

(1)                                  All notices of payments and written
confirmations of such wire transfers sent to:

 

Acacia Life Insurance Company
Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505
Fax:                           (402) 467-6970

 

(2)                                  Other than as provided in (3) below, all
other communications sent to:

 

Acacia Life Insurance Company
Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505
Fax:                           (402) 467 - 6970

 

(3)                                  Electronic mail address for electronic
delivery of
information for purposes of Sections 7.1(a), 7.1(b),
7.1(c) and 7.1(f) of the Note Purchase Agreement:

 

AWhite@summitinvestments.com

 

36

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

 

(4)                                  Delivery of certificates by registered mail
to:

 

JPMorgan Chase Bank, N.A.
4 Chase Metrotech Center, 3rd Floor
Brooklyn, NY  11245-0001
ATTN:  Physical Receive Department
REF:  Acacia Life Insurance Company

 

To be registered in the nominee name of CUDD & CO. as nominee for Acacia Life
Insurance Company

 

AND

 

Copy of Certificates sent to:

 

Andy White
Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505

 

37

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

 

Name and Address of Purchaser

 

Principal Amount and Series of
Notes to be Purchased

 

 

 

 

 

Series B

 

 

 

AMERITAS LIFE INSURANCE CORP. I/N/O/ CUDD & CO.

 

$1,000,000

 

Name and Address of Purchaser:

 

Ameritas Life Insurance Corp.
390 North Cotner Blvd.
Lincoln, NE 68505

 

(1)                                  All notices of payments and written
confirmations of such wire transfers sent to:

 

Ameritas Life Insurance Corp.
Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505
Fax #: (402) 467-6970

 

(2)                                  Other than as provided in (3) below, all
other communications sent to:

 

Ameritas Life Insurance Corp.
Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505

 

(3)                                  Electronic mail address for electronic
delivery of
information for purposes of Sections 7.1(a), 7.1(b),
7.1(c) and 7.1(f) of the Note Purchase Agreement:

 

AWhite@summitinvestments.com

 

38

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

 

(4)                                  Delivery of certificates by registered mail
to:

 

JPMorgan Chase Bank, N.A.
4 Chase Metrotech Center, 3rd Floor
Brooklyn, NY  11245-0001
ATTN:  Physical Receive Department
REF:  Ameritas Life Insurance Corp.

 

To be registered in the nominee name of CUDD & CO. as nominee for Ameritas Life
Insurance Corp.

 

AND

 

Copy of Certificates sent to:

 

Andy White
Summit Investment Partners
390 North Cotner Blvd.
Lincoln, NE 68505

 

39

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SCHEDULE B

 

DEFINED TERMS

 

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

 

“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person, and, with respect to the Company, shall include any Person beneficially
owning or holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any corporation of which
the Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests. 
As used in this definition, “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of the Company.

 

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

 

“Anti-Terrorism Order” means Executive Order No. 13,224 of September 24, 2001,
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

 

“Attributable Debt” means, as to any particular lease relating to a
Sale/Leaseback transaction, the total amount of rent (discounted semiannually
from the respective due dates thereof at the interest rate implicit in such
lease) required to be paid by the lessee under such lease during the remaining
term thereof.  The amount of rent required to be paid under any such lease for
any such period shall be (a) the total amount of the rent payable by the lessee
with respect to such period after excluding amounts required to be paid on
account of maintenance and repairs, insurance, taxes, assessments, utilities,
operating and labor costs and similar charges plus (b) without duplication, any
guaranteed residual value in respect of such lease to the extent such guarantee
would be included in indebtedness in accordance with GAAP.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York City are required or authorized to be closed.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

 

“Capital Lease Obligations” of any Person means, at any time, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as Capital Leases on a balance sheet of such Person under GAAP,

 

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

 

and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

 

“Change of Control” is defined in Section 8.3.

 

“Closing” is defined in Section 3.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

 

“Company” means Waddell & Reed Financial, Inc., a Delaware corporation, or any
successor that becomes such in the manner prescribed in Section 10.5.

 

“Confidential Information” is defined in Section 20.

 

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such
period, plus (a) without duplication and to the extent reflected as a charge in
the statement of such Consolidated Net Income for such period, the sum of
(i) income tax expense, (ii) 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 Notes), (iii) depreciation
and amortization expense, (iv) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (v) 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
(v) shall not, in the aggregate, exceed $10,000,000 for any fiscal year of the
Company, and (vi) any other non-cash charges, minus (b) without duplication and
to the extent reflected as income in the statement of such Consolidated Net
Income for such period, any extraordinary, unusual or non-recurring non-cash
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period, non-cash
gains on sales of assets outside of the ordinary course of business), provided
that the Company shall not be required to deduct more than $10,000,000 in the
aggregate of the amounts referred to in this clause (b) for any fiscal year of
the Company.  For the purposes of calculating Consolidated EBITDA for any
Relevant Period pursuant to Section 10.1(a), (x) if at any time during such
Relevant Period the Company or any Subsidiary shall have made any Material
Disposition, the Consolidated EBITDA for such Relevant 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 Relevant
Period or increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Relevant Period, and (y) if during such Relevant
Period the Company or any Subsidiary shall have made a Material Acquisition,
Consolidated EBITDA for such Relevant Period shall be calculated after giving
pro forma effect thereto as if such Material Acquisition occurred on the first
day of such Relevant Period.  As used in this definition, “Material Acquisition”
means any acquisition of property or series of related acquisitions of property
that (1) 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 (2) involves the payment of consideration by the Company and its
Subsidiaries in excess of $1,000,000; and “Material Disposition” means any
Disposition of property or series

 

2

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of related Dispositions of property that yields gross proceeds to the Company or
any of its Subsidiaries in excess of $1,000,000.

 

“Consolidated Interest Expense” means, for any period, interest expense
(including that attributable to Capital Lease Obligations) of the Company and
its Subsidiaries for such period with respect to all outstanding Indebtedness of
the Company 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 Net Income” means, for any period, the consolidated net income (or
loss) of the Company 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
Company or is merged into or consolidated with the Company or any of its
Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary
of the Company) in which the Company or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by the
Company or such Subsidiary in the form of dividends or similar distributions,
and (c) the undistributed earnings of any Subsidiary of the Company 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.  As used in this
definition, “Contractual Obligation” means, as to any Person, any provision of
any security issued by such Person or of any indenture, agreement, instrument or
other undertaking to which such Person is a party or by which it or any of its
property is bound; and “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, order, injunction, writ or decree 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.

 

“Consolidated Net Worth” means, at a particular date, all amounts which would,
in conformity with GAAP, be included under stockholders’ equity on a
consolidated balance sheet of the Company and its Subsidiaries at such date.

 

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

 

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

 

“Default Rate” means that rate of interest that is the greater of (a) 2% per
annum above the rate of interest stated in clause (a) of the first paragraph of
the Notes or (b) 2% over the rate of interest publicly announced by Bank of
America, N.A. in New York, New York as its “base” or “prime” rate.

 

“Disclosure Document” is defined in Section 5.3.

 

3

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“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.

 

“Electronic Delivery” is defined in Section 7.1(a).

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to Hazardous Materials.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.

 

“Event of Default” is defined in Section 11.

 

“Existing Credit Facility” means the Credit Agreement, dated as of
August 31, 2010, by and among the Company, the lenders from time to time party
thereto, as lenders, and Bank of America, N.A., as administrative agent.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.

 

“Governmental Authority” means

 

(a)                                  the government of

 

(i)                                     the United States of America or any
State or other political subdivision thereof, or

 

(ii)                                  any other jurisdiction in which the
Company or any Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any Subsidiary, or

 

(b)                                 any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, any such government.

 

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

 

4

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(a)                                  to purchase such indebtedness or obligation
or any property constituting security therefor;

 

(b)                                 to advance or supply funds (i) for the
purchase or payment of such indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available funds
for the purchase or payment of such indebtedness or obligation;

 

(c)                                  to lease properties or to purchase
properties or services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person to make payment of
the indebtedness or obligation; or

 

(d)                                 otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof.

 

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

 

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
other substances that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law including,
but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.

 

“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.

 

“holder” means, with respect to any Note the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.

 

“Indebtedness” with respect to any Person means, at any time, without
duplication,

 

(a)                                  its liabilities for borrowed money and its
redemption obligations in respect of mandatorily redeemable Preferred Stock;

 

(b)                                 its liabilities for the deferred purchase
price of property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
any such property);

 

(c)                                  (i) Capital Lease Obligations and (ii) all
liabilities that would appear on its balance sheet in accordance with GAAP in
respect of Synthetic Leases assuming such Synthetic Leases were accounted for as
Capital Leases;

 

5

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(d)                                 all liabilities for borrowed money secured
by any Lien with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);

 

(e)                                  all its liabilities in respect of letters
of credit or instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not representing
obligations for borrowed money);

 

(f)                                    the aggregate Termination Value of all
Hedging Agreements of such Person; and

 

(g)                                 any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through (f) hereof.

 

Indebtedness of any Person shall include (x) all obligations of such Person of
the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP and (y) 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.

 

“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a
Note holding (together with one or more of its affiliates) more than 5.00% of
the aggregate principal amount of the Notes then outstanding, (c) any bank,
trust company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form, and (d) any Related Fund of any holder of any Note.

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

 

“Major Credit Facility” means (a) the Existing Credit Facility and (b) any other
working capital credit, loan or borrowing facility (including any renewal,
extension, replacement or refinancing thereof) entered into on or after the date
of the Closing by the Company or any Subsidiary in a principal amount equal to
or greater than $10,000,000.

 

“Majority Holders” means, at any time, the holders of more than 50% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company or any of its Affiliates).

 

“Make-Whole Amount” is defined in Section 8.7.

 

“Management Contract” means an agreement, written or oral, pursuant to which the
Company or any Subsidiary of the Company provides (a) investment advisory,
management or administrative services to a W&R Fund, or (b) investment advisory
or management services to

 

6

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

 

any Person, including, without limitation, unregistered investment companies and
personal or corporate investment accounts.

 

“Material” means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company to
perform its obligations under this Agreement and the Notes, or (c) the validity
or enforceability of this Agreement or the Notes.

 

“Memorandum” is defined in Section 5.3.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).

 

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

 

“Net Asset Value” means, at any date of calculation 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 calculation date.

 

“Notes” is defined in Section 1.

 

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

 

“Pension Plan” means a Plan, other than a Multiemployer Plan, that is subject to
Title IV of ERISA.

 

“Permitted Encumbrances” means:

 

(a)                                  Liens imposed by law for taxes that are not
yet due or are being contested in compliance with Section 9.4;

 

(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 9.4;

 

(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;

 

7

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(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 Company or
any Subsidiary; and

 

(f)                                    judgment Liens in respect of judgments
that do not constitute an Event of Default under Section 11(i), 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.

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.

 

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
subject to Title I of ERISA that is maintained, or to which contributions are
made or required to be made, by the Company or any ERISA Affiliate or with
respect to which the Company or any ERISA Affiliate may have any liability.

 

“Preferred Stock” means any class of capital stock of a Person that is preferred
over any other class of capital stock (or similar equity interests) of such
Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.

 

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

 

“PTE” is defined in Section 6.2(a).

 

“Purchaser” is defined in the first paragraph of this Agreement.

 

“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (i) invests in Securities or bank loans, and (ii) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.

 

“Relevant Period” means, at any date of determination, the most recently
completed four fiscal quarters of the Company.

 

“Responsible Officer” means the Chief Executive Officer, President, any Senior
Financial Officer and any other officer of the Company with responsibility for
the administration of the relevant portion of this Agreement.

 

“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 Company or any Subsidiary, or (b) any payment (whether in
cash, securities or other property),

 

8

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including any sinking fund or similar deposit, for (i) the purchase, redemption,
retirement, acquisition, cancellation or termination of any shares of the
Company’s capital stock, or (ii) any option, warrant or other right to acquire
any shares of the Company’s capital stock.

 

“Revenue Base” means, at any date of calculation, 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 such
calculation date and with respect to assets managed for other entities, the
market value or Net Asset Value of such assets on such calculation date 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.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.

 

“Sale/Leaseback Transaction” is defined in Section 10.6.

 

“SEC” means the Securities and Exchange Commission of the United States, or any
successor thereto.

 

“Securities” or “Security” shall have the meaning specified in Section 2(1) of
the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

 

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

 

“Series A Notes” is defined in Section 1.

 

“Series B Notes” is defined in Section 1.

 

“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries).  Unless the context otherwise clearly requires, any reference to
a “Subsidiary” is a reference to a Subsidiary of the Company.

 

“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.

 

“Synthetic Lease” means, at any time, any lease (including leases that may be
terminated by the lessee at any time) of any property (a) that is accounted for
as an operating lease under

 

9

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GAAP and (b) in respect of which the lessee retains or obtains ownership of the
property so leased for U.S. federal income tax purposes, other than any such
lease under which such Person is the lessor.

 

“Termination Value” means, in respect of any one or more Hedging Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Hedging Agreements, (a) for any date on or after the
date such Hedging Agreements have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in clause (a), the
amounts(s) determined as the mark-to-market values(s) for such Hedging
Agreements, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Hedging
Agreements.

 

“USA Patriot Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act) Act of 2001.

 

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

 

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent
of all of the equity interests (except directors’ qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company’s
other Wholly-Owned Subsidiaries at such time.

 

10

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Schedule 5.3

 

Disclosure Documents

 

1.             Private Placement Memorandum dated July 2010.

 

2.             Note Purchase Agreement, dated as of August 31, 2010, by and
among Waddell & Reed Financial, Inc. and the Purchasers.

 

3.             Investor Presentation dated July 30, 2010.

 

4.             Earnings Press Release dated July 28, 2010.

 

5.             Annual Report and Form 10-K for the year ended December 31, 2005.

 

6.             Annual Report and Form 10-K for the year ended December 31, 2006.

 

7.             Annual Report and Form 10-K for the year ended December 31, 2007.

 

8.             Annual Report and Form 10-K for the year ended December 31, 2008.

 

9.             Annual Report and Form 10-K for the year ended December 31, 2009.

 

10.           Quarterly Report on Form 10-Q for the quarter ended March 31,
2010.

 

11.           Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.

 

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Schedule 5.4

 

Subsidiaries of the Company and Ownership of Subsidiary Stock

 

(i) Subsidiaries — The Company or a Subsidiary thereof owns, directly or
indirectly, 100% of all capital stock of each of the Company’s Subsidiaries as
indicated in the table below:

 

Name

 

Jurisdiction of
Incorporation
or Formation

 

Ownership

 

 

 

 

 

Waddell & Reed Financial Services, Inc.

 

Missouri

 

Waddell & Reed Financial, Inc.

 

 

 

 

 

Waddell & Reed, Inc.

 

Delaware

 

Waddell & Reed Financial Services, Inc.

 

 

 

 

 

Waddell & Reed Investment Management Company

 

Kansas

 

Waddell & Reed, Inc.

 

 

 

 

 

Waddell & Reed Services Company

 

Missouri

 

Waddell & Reed, Inc.

 

 

 

 

 

W&R Capital Management Group, Inc.

 

Delaware

 

Waddell & Reed Investment Management Company

 

 

 

 

 

W&R Corporate LLC

 

Delaware

 

Waddell & Reed Services Company

 

 

 

 

 

Ivy Investment Management Company

 

Delaware

 

Waddell & Reed Financial, Inc.

 

 

 

 

 

Ivy Funds Distributor, Inc.

 

Florida

 

Ivy Investment Management Company

 

 

 

 

 

Fiduciary Trust Company of New Hampshire

 

New Hampshire

 

Waddell & Reed, Inc.

 

 

 

 

 

W & R Insurance Agency, Inc.

 

Missouri

 

Waddell & Reed, Inc.

 

 

 

 

 

W & R Insurance Agency of Alabama, Inc.

 

Alabama

 

Waddell & Reed, Inc.

 

 

 

 

 

W & R Insurance Agency of Colorado, Inc.

 

Colorado

 

Waddell & Reed, Inc.

 

 

 

 

 

W & R Insurance Agency of Montana, Inc.

 

Montana

 

Waddell & Reed, Inc.

 

 

 

 

 

W & R Insurance Agency of Nevada, Inc.

 

Nevada

 

Waddell & Reed, Inc.

 

 

 

 

 

W & R Insurance Agency of Utah, Inc.

 

Utah

 

Waddell & Reed, Inc.

 

 

 

 

 

W & R Insurance Agency of Wisconsin, Inc.

 

Wisconsin

 

Waddell & Reed, Inc.

 

 

 

 

 

Unicon Agency, Inc.

 

New York

 

Waddell & Reed, Inc.

 

 

 

 

 

Unicon Insurance Agency of Massachusetts, Inc.

 

Massachusetts

 

Waddell & Reed, Inc.

 

 

 

 

 

Legend Group Holdings, LLC

 

Delaware

 

Waddell & Reed Financial, Inc.

 

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Legend Advisory Corporation

 

New York

 

Legend Group Holdings, LLC

 

 

 

 

 

Legend Equities Corporation

 

Delaware

 

Legend Group Holdings, LLC

 

 

 

 

 

Advisory Services Corporation

 

Nevada

 

Legend Group Holdings, LLC

 

 

 

 

 

The Legend Group, Inc.

 

Delaware

 

Legend Group Holdings, LLC

 

 

 

 

 

LEC Insurance Agency, Inc.

 

Texas

 

Legend Equities Corporation

 

(ii)           Directors and Senior Executive Officers of the Company

 

Directors

 

Sharilyn S. Gasaway

Thomas C. Godlasky

Henry J. Herrmann

Alan W. Kosloff

Dennis E. Logue

Michael F. Morrissey

James M. Raines

Ronald C. Reimer

William L. Rogers

Jerry W. Walton

 

Senior Executive Officers

 

Henry J. Herrmann, Chairman of the Board and Chief Executive Officer

Michael L. Avery, President and Chief Investment Officer

Thomas W. Butch, Executive Vice President and Chief Marketing Officer

Brent K. Bloss, Senior Vice President — Finance, Treasurer and Principal
Accounting Officer

Daniel P. Connealy, Senior Vice President and Chief Financial Officer

Mark A. Schieber, Senior Vice President and Controller

Daniel C. Schulte, Senior Vice President and General Counsel

Michael D. Strohm, Senior Vice President and Chief Operations Officer

John E. Sundeen, Jr., Senior Vice President and Chief Administrative Officer —
Investments

Wendy J. Hills, Vice President, Secretary and Associate General Counsel

 

2

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

 

Schedule 5.5

 

Financial Statements

 

1.             Audited consolidated financial statements of the Company for the
2005 fiscal year.

 

2.             Audited consolidated financial statements of the Company for the
2006 fiscal year.

 

3.             Audited consolidated financial statements of the Company for the
2007 fiscal year.

 

4.             Audited consolidated financial statements of the Company for the
2008 fiscal year.

 

5.             Audited consolidated financial statements of the Company for the
2009 fiscal year.

 

6.             Unaudited interim consolidated financial statements of the
Company for the quarterly period ended March 31, 2010.

 

7.             Unaudited interim consolidated financial statements of the
Company for the quarterly period ended June 30, 2010.

 

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

 

Schedule 5.8

 

Litigation

 

1.             Michael E. Taylor, Kenneth B. Young, individuals, on behalf of
themselves individually and on behalf of others similarly situated v. Waddell &
Reed, Inc., a Delaware Corporation; Waddell & Reed Financial, Inc., a Delaware
Corporation; Waddell & Reed Development, Inc., a Delaware Corporation; Waddell &
Reed Financial Advisors, a fictitious business name; and DOES 1 through 10
inclusive; Case No. 09-CV-2909 DMS WVG; in the United States District Court for
the Southern District of California.

 

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

 

Schedule 5.15

 

Existing Indebtedness

 

1.             $190.0 million in principal amount 5.60% senior notes due
January 15, 2011.

 

2.             Credit Agreement, dated as of August 31, 2010, by and among
Waddell & Reed Financial, Inc., the lenders party thereto from time to time,
Bank of America, N.A., as administrative agent, and Bank of America Securities
LLC, as lead arranger and book manager.

 

3.             Waddell & Reed Financial, Inc. - $2 thousand of capital lease
obligations.

 

4.             Waddell & Reed, Inc. - $748 thousand of capital lease
obligations.

 

5.             W&R Corporate LLC - $10 thousand of capital lease obligations.

 

6.             Advisory Services Corporation - $15 thousand of capital lease
obligations.

 

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

 

Schedule 10.2

 

Existing Subsidiary Indebtedness

 

1.             Waddell & Reed, Inc. - $748 thousand of capital lease
obligations.

 

2.             W&R Corporate LLC - $10 thousand of capital lease obligations.

 

3.             Advisory Services Corporation - $15 thousand of capital lease
obligations.

 

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

 

Schedule 10.3

 

Existing Liens

 

1.             Aircraft Lease, dated as of September 24, 2008, by and between
Waddell & Reed, Inc. as Lessee and Wilmington Trust Company, not in its
individual capacity, but solely as the Owner Trustee under Trust Agreement dated
as of April 3, 2006, as Lessor.

 

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

 

Schedule 10.6

 

Sale/Leaseback Properties

 

1.             6300 Lamar Avenue, Overland Park, Kansas

 

2.             6301 Glenwood, Overland Park, Kansas

 

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

 

 

EXHIBIT 1(a)

 

[FORM OF SERIES A NOTE]

 

WADDELL & REED FINANCIAL, INC.

 

5.00% SENIOR NOTE, SERIES A, DUE 2018

 

No. [          ]

[Date]

 

 

$[              ]

PPN[                            ]

 

FOR VALUE RECEIVED, the undersigned, WADDELL & REED FINANCIAL, INC. (herein
called the “Company”), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to [                        ], or
registered assigns, the principal sum of
[                                          ] DOLLARS (or so much thereof as
shall not have been prepaid) on January 13, 2018, with interest (computed on the
basis of a 360-day year of twelve 30 day months) (a) on the unpaid balance
hereof at the rate of 5.00% per annum from the date hereof, payable
semiannually, on the 13th day of January and July in each year, commencing with
the January or July next succeeding the date hereof, until the principal hereof
shall have become due and payable, and (b) to the extent permitted by law, on
any overdue payment of interest and, during the continuance of an Event of
Default, on such unpaid balance and on any overdue payment of any Make Whole
Amount, at a rate per annum from time to time equal to the greater of (i) 7.00%
or (ii) 2% over the rate of interest publicly announced by Bank of America, N.A.
from time to time at its principal office in New York City as its “base” or
“prime” rate, payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand).

 

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at said
principal office of Bank of America, N.A. in New York City or at such other
place as the Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreement referred to below.

 

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated as of August 31, 2010 (as from
time to time amended, the “Note Purchase Agreement”), between the Company and
the respective Purchasers named therein and is entitled to the benefits
thereof.  Each holder of this Note will be deemed, by its acceptance hereof, to
have (i) agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) made the representations and acknowledgements
set forth in Sections 6.1 and 6.2 of the Note Purchase Agreement.  Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

 

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer accompanied by a
written instrument of transfer

 

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

 

duly executed, by the registered holder hereof or such holder’s attorney duly
authorized in writing, a new Note of the same series and for a like principal
amount will be issued to, and registered in the name of, the transferee.  Prior
to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

 

This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

 

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

 

 

WADDELL & REED FINANCIAL, INC.

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

2

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

 

EXHIBIT 1(b)

 

[FORM OF SERIES B NOTE]

 

WADDELL & REED FINANCIAL, INC.

 

5.75% SENIOR NOTE, SERIES B, DUE 2021

 

No. [          ]

[Date]

 

 

$[              ]

PPN[                            ]

 

FOR VALUE RECEIVED, the undersigned, WADDELL & REED FINANCIAL, INC. (herein
called the “Company”), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to [                        ], or
registered assigns, the principal sum of
[                                          ] DOLLARS (or so much thereof as
shall not have been prepaid) on January 13, 2021, with interest (computed on the
basis of a 360-day year of twelve 30 day months) (a) on the unpaid balance
hereof at the rate of 5.75% per annum from the date hereof, payable
semiannually, on the 13th day of January and July in each year, commencing with
the January or July next succeeding the date hereof, until the principal hereof
shall have become due and payable, and (b) to the extent permitted by law, on
any overdue payment of interest and, during the continuance of an Event of
Default, on such unpaid balance and on any overdue payment of any Make Whole
Amount, at a rate per annum from time to time equal to the greater of (i) 7.75%
or (ii) 2% over the rate of interest publicly announced by Bank of America, N.A.
from time to time at its principal office in New York City as its “base” or
“prime” rate, payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand).

 

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at said
principal office of Bank of America, N.A. in New York City or at such other
place as the Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreement referred to below.

 

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated as of August 31, 2010 (as from
time to time amended, the “Note Purchase Agreement”), between the Company and
the respective Purchasers named therein and is entitled to the benefits
thereof.  Each holder of this Note will be deemed, by its acceptance hereof, to
have (i) agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) made the representations and acknowledgements
set forth in Sections 6.1 and 6.2 of the Note Purchase Agreement.  Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

 

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer accompanied by a
written instrument of transfer

 

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

 

duly executed, by the registered holder hereof or such holder’s attorney duly
authorized in writing, a new Note of the same series and for a like principal
amount will be issued to, and registered in the name of, the transferee.  Prior
to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

 

This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

 

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

 

 

WADDELL & REED FINANCIAL, INC.

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

2

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

 

 

EXHIBITS 4.4(a)(i) and 4.4(a)(ii)

 

Forms of Opinions of Special Counsel to the Company

 

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

 

 

Exhibit 4.4(a)(i)

 

Form of Special Counsel to the Company Signing Opinion

 

August 31, 2010

 

To the Purchasers Listed on Exhibit A

 

Re:          Waddell & Reed Financial, Inc.

 

Ladies and Gentlemen:

 

We have acted as counsel to Waddell & Reed Financial, Inc., a Delaware
corporation (the “Company”), in connection with that certain Note Purchase
Agreement, dated as of August 31, 2010 by and among the Company and the
Purchasers identified on Schedule A thereto (such agreement without Exhibits and
Schedules thereto being hereinafter referred to as the “Note Purchase
Agreement”).  This opinion is being delivered to you pursuant to
Section 4.4(a)(i) of the Note Purchase Agreement.  All capitalized terms used
herein and not otherwise defined herein shall have the same meanings herein as
set forth in the Note Purchase Agreement.

 

In connection with this opinion, we have examined the Note Purchase Agreement
and the Exhibits and Schedules thereto, including the forms of the Notes, and
such documents, corporate records and questions of law as we deem necessary for
the purposes of this opinion.  We have also examined such certificates of public
officials, corporate officers of the Company and of other Persons as we have
deemed relevant and appropriate as a basis for the opinions expressed herein,
and we have made no effort to independently verify the facts set forth in such
certificates.  Further, in making the foregoing examinations, we have assumed
the genuineness of all signatures, the legal capacity of each person signatory
to any of the documents reviewed by us, the authenticity of all documents
submitted to us as originals and the conformity to authentic original documents
of all documents submitted to us as copies.  In making the foregoing
examinations, as to factual matters, we have assumed that all representations
and warranties made in the aforesaid documents were and are true, correct and
complete.

 

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

 

(a)           each of the documents (other than the Note Purchase Agreement) we
examined 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
in accordance with its terms;

 

(b)           the Note Purchase Agreement has 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 the Note Purchase Agreement, and that the Note Purchase Agreement
constitutes the legal, valid and binding obligations of each such party thereto
(other than the Company), enforceable in accordance with its terms;

 

(c)           no order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any court,
governmental authority, or any subdivision thereof, is required to authorize or
is required in connection with, the execution and delivery by any Person
identified in the Note Purchase Agreement 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 we make no such assumption
with respect to consents, approvals and the like applicable to the Company to
the extent that we express our opinion rendered in paragraph 4 below);

 

(d)           that there are no facts or circumstances relating solely to the
Purchasers that might prevent the Purchasers from enforcing any of the rights to
which our opinion relates; and

 

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

 

Based upon the foregoing, and upon an examination of such questions of law as we
have considered necessary or appropriate, and subject to the assumptions,
exceptions, qualifications and limitations set forth herein, we advise you that,
in our opinion:

 

1.             The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware and has the corporate power to
execute and deliver the Note Purchase Agreement and to perform its obligations
thereunder.

 

2.             The Note Purchase Agreement has been duly authorized, executed
and delivered by the Company and constitutes the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.

 

3.             The Company’s execution and delivery of, and the performance of
its obligations under, the Note Purchase Agreement do not (a) contravene, or
result in a violation of, the Restated Certificate of Incorporation or the
Amended and Restated Bylaws of the Company, in each case, as in effect on the
date hereof (after giving effect to any amendment thereto), (b) contravene,
result in any breach or violation of, or constitute a default (or give rise to
any right of termination, cancellation or acceleration) under, any existing
obligation of the Company pursuant to the express provisions of the Existing
Credit Facility or any agreement or instrument in effect on the date hereof to
which the Company is a party and that has been identified as a

 

2

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

 

material agreement in the exhibits to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2009 and Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 2010 and June 30, 2010, other than the
Credit Agreement, dated as of October 5, 2009, by and among the Company, the
lenders party thereto from time to time, Bank of America, N.A., and Bank of
America Securities LLC, which has been replaced by the Existing Credit Facility,
or (c) violate any provision of any Applicable Laws (as hereinafter defined)
applicable to the Company.

 

4.             No consent, approval or authorization of or registration,
designation, declaration or filing with, any United States Federal or New York
state governmental authority or pursuant to the General Corporation Law of the
State of Delaware (the “DGCL”) is required as a condition to the execution and
delivery by the Company of the Note Purchase Agreement or the performance by the
Company of its obligations thereunder.  Please note that United States Federal
securities law require the filing of Current Reports on Form 8-K with the
Securities and Exchange Commission with respect to the execution and delivery of
the Note Purchase Agreement.  Based in part upon the representations and
warranties of each of the Purchasers set forth in the Note Purchase Agreement,
it is not necessary in connection with the offering of the Notes and the
execution and delivery of the Note Purchase Agreement to register the Notes to
be sold and delivered thereunder under the Securities Act, or to qualify an
indenture in respect of said Notes under the Trust Indenture Act of 1939, as
amended.

 

5.             The Company is not 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, as amended.

 

To our knowledge, except as otherwise specifically disclosed in the Disclosure
Documents, 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 or any Subsidiary of the Company is a party or to which the business,
assets or property of the Company or any Subsidiary of the Company is subject
and, to our knowledge, no such action, suit or proceeding is threatened to which
the Company or any Subsidiary of the Company or the business, assets or property
of the Company or any Subsidiary of the Company would be subject that in either
case questions the validity of the Note Purchase Agreement.

 

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

 

A.            The foregoing opinions are expressly limited to matters under and
governed by the DGCL, and applicable Federal laws of the United States of
America and the internal substantive laws of the State of New York.  With
respect to laws, regulations and the like referred to herein, in addition to all
other limitations set forth herein, such references are limited to laws,
regulations and the like of the DGCL, and such applicable Federal laws of the
United States of America and laws of the State of New York as each is in effect
and force as of even date of this opinion and which, in our experience, are
normally applicable to the transactions of the type provided for in the Note
Purchase Agreement, in each case, however,

 

3

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

 

exclusive of, and without regard to, any Excluded Laws (collectively, the
“Applicable Laws”).  The term “Excluded Laws” means all (A) 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 (B) statutes, laws,
rules and regulations relating to (1) pollution or protection of the
environment, (2) zoning, land use, building or construction, (3) operation of
any asset or property, (4) labor, employment, employee rights and benefits, or
occupational safety and health, (5)  utility regulation or regulation of matters
pertaining to the acquisition, transportation, transmission, storage or use of
energy sources used in connection therewith or generated thereby, (6) antitrust,
(7) taxation and (8) except as set forth in the opinion in paragraph 4 above,
securities laws and laws applicable to the regulation of broker dealers, in each
case with respect to each of 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, any State
of the United States of America and the United States of America, 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.            The foregoing opinion regarding the enforceability of the Note
Purchase Agreement is subject to the following:

 

(1)           The enforceability of the Note Purchase Agreement may be limited
or affected by (a) bankruptcy, insolvency, reorganization, moratorium,
liquidation, rearrangement, probate, conservatorship, fraudulent transfer,
fraudulent conveyance and other similar laws (including court decisions) now or
hereafter in effect and affecting the rights and remedies of creditors generally
or providing for the relief of debtors generally, (b) the refusal of a
particular court to grant (i) equitable remedies, including, without limiting
the generality of the foregoing, specific performance and injunctive relief, or
(ii) a particular remedy sought under the Note Purchase Agreement as opposed to
another remedy provided for therein or another remedy available at law or in
equity, (c) general principles of equity (regardless of whether such remedies
are sought in a proceeding in equity or at law), and (d) judicial discretion.

 

(2)           We express no opinion as to the validity or enforceability of any
provision of the Note Purchase Agreement that purports to: (a) waive or
otherwise affect any right, warranty or defense that cannot be waived or
otherwise affected as a matter of law, (b) negate the effect of any course of
dealing or any exercise, or failure or delay to exercise, any right, power,
privilege or remedy, (c) relate to indemnities or contribution, or the
exculpation, release or exemption of a party from liability, to the extent
prohibited by

 

4

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

 

public policy or otherwise prohibited by applicable federal or state law, or
require indemnification or contribution (as applicable) for, or release,
exculpation or exemption of a party from, liability on account of fraud,
negligence, recklessness, gross negligence, willful misconduct, breach of the
performance of an agreed undertaking, violation of law or illegal conduct (or
the public policy underlying such action or conduct) of any Person seeking or
asserting the benefit of such indemnity, exculpation, release, exemption or
contribution provision, (d) limit liability of any Person to claims for gross
negligence or willful misconduct, (e) authorize conclusive determinations by any
party or permit a party to make determinations in its sole discretion,
(f) restrict or otherwise affect jurisdiction, venue, submission to, or
acceptance of, a court’s jurisdiction, objections to the laying of venue or
submission or acceptance of jurisdiction, limitation periods or other procedural
rights in any proceeding, (g) waive or otherwise restrict or deny access to jury
trial, claims, causes of action or remedies that may be available or asserted in
any action, or (h) permit modification thereof only by means of an agreement
signed in writing by the parties thereto.

 

(3)           We express no opinion as to the validity or enforceability of any
provision of the Note Purchase Agreement that states that (a) prohibition,
illegality, invalidity or unenforceability of any provision of the Note Purchase
Agreement in any jurisdiction shall not (1) invalidate the remaining provisions
of the Note Purchase Agreement or (2) affect that provision in any other
jurisdiction, or (b) the right of any Person to exercise any right or remedy on
the basis of any misrepresentation or breach of warranty is not affected by any
action by any Purchaser.

 

(4)           We note that the enforceability of specific provisions of the Note
Purchase Agreement may be subject to standards of reasonableness, care and
diligence and “good faith” and similar limitations and obligations provided for
under applicable principles of common law and judicial decisions.

 

C.            In rendering the opinion expressed in paragraph 1 above relating
to existence and good standing, as to factual matters set forth therein we have
relied solely upon a review of certificates of public officials, without further
investigation as to matters set forth therein, and such opinion is limited to
the dates of such certificates.

 

D.            In giving the opinion in paragraph 3, we have assumed that the
proceeds of the issuance of the Notes shall be used in accordance with the terms
of the Note Purchase Agreement.

 

E.             Our opinions expressed in paragraphs 3 and 4 above as to
violations of laws, rules or regulations applicable to the Company and as to the
need for any approvals or

 

5

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

 

consents of, or any registrations or filings with, any federal, New York or
Delaware corporate governmental authority, is based upon a review of those laws,
rules and regulations that, in our experience, are normally applicable to the
transactions contemplated by the Note Purchase Agreement.  We express no opinion
with respect to the laws, rules and regulations applicable to the regulation of
broker dealers.  Further, our opinion expressed in paragraph 4 above does not
encompass compliance with, or exemptions from, the registration and prospectus
delivery requirements of the Federal securities laws, except as expressly set
forth therein.  Further, we express no opinion herein with respect to compliance
with any of the anti-fraud provisions of applicable Federal or state securities
laws, rules or regulations.

 

F.             With respect to references herein to “known to us”, “to our
knowledge” or words or phrases of similar import (whether or not modified by any
additional phrases), such references mean the actual knowledge that those
attorneys of this Firm, who, based upon our records as of the date hereof,
devoted substantive attention to the transactions to which this opinion relates,
have obtained from the following, which constituted the examination for the
purposes of the applicable opinions:  (A) their review of documents in
connection with rendering this opinion, and the due diligence performed in
connection therewith, which review and due diligence were limited to reviewing
the Note Purchase Agreement and the Notes, the exhibits and schedules thereto,
the stock record books, by-laws and charter documents of the Company, and
certificates of officers of the Company, and which due diligence did not include
any examination of courts, boards, other tribunals or public records with
respect to any litigation, investigation or proceedings, or judgments, orders or
decrees, in any event applicable to the Company or any of its properties;
(B) their participation in the negotiation of the Note Purchase Agreement and
the Notes; and (C) representations and warranties as to factual matters of any
of the Company set forth in the Note Purchase Agreement and the Notes, or
otherwise made to us in certifications and other writings.

 

The opinions expressed herein are solely for the benefit of, and may only be
relied upon by, each of the Purchasers listed in Schedule A to the Note Purchase
Agreement and its respective institutional successors and assigns in connection
with the Note Purchase Agreement and the Notes (provided that any reliance by
any successor or assign shall be to the opinions expressed herein as of the date
of this opinion letter and shall not constitute a reissuance of such opinions as
of any date subsequent to the date of this opinion letter) and may be used only
for the purposes set forth in the Note Purchase Agreement.  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 the
date thereof, and we make no undertaking to amend or supplement such opinions as
facts and circumstances come to our attention or changes in the law occur which
could affect such opinions.

 

6

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

 

 

Very truly yours,

 

 

 

7

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

 

EXHIBIT A

 

Purchasers

 

Metropolitan Life Insurance Company

 

MetLife Investors Insurance Company

 

MetLife Insurance Company of Connecticut

 

MetLife Insurance Company of Connecticut, on behalf of its Separate Account MGA

 

Midland National Life Insurance Company

 

North American Company for Life and Health Insurance

 

Security Benefit Life Insurance Company

 

Genworth Life and Annuity Insurance Company

 

Genworth Life Insurance Company

 

John Hancock Life Insurance Company (U.S.A.)

 

John Hancock Life Insurance Company of New York

 

JPMorgan Chase Bank as Directed Trustee for the SBC Master Pension Trust

 

The Northwestern Mutual Life Insurance Company

 

Knights of Columbus

 

The Union Central Life Insurance Company

 

Acacia Life Insurance Company

 

Ameritas Life Insurance Corp.

 

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

 

 

Exhibit 4.4(a)(ii)

 

Form of Special Counsel to the Company Closing Opinion

 

January 13, 2011

 

To the Purchasers Listed on Exhibit A

 

Re:          Waddell & Reed Financial, Inc.

 

Ladies and Gentlemen:

 

We have acted as counsel to Waddell & Reed Financial, Inc., a Delaware
corporation (the “Company”), in connection with that certain Note Purchase
Agreement, dated as of August 31, 2010 by and among the Company and the
Purchasers identified on Schedule A thereto (such agreement without Exhibits and
Schedules thereto being hereinafter referred to as the “Note Purchase
Agreement”).  This opinion is being delivered to you pursuant to
Section 4.4(a)(ii) of the Note Purchase Agreement.  All capitalized terms used
herein and not otherwise defined herein shall have the same meanings herein as
set forth in the Note Purchase Agreement.  Additionally, the term “Covered
Documents” shall mean the Note Purchase Agreement and the Notes.

 

In connection with this opinion, we have examined the Covered Documents and the
Exhibits and Schedules thereto, and such documents, corporate records and
questions of law as we deem necessary for the purposes of this opinion.  We have
also examined such certificates of public officials, corporate officers of the
Company and of other Persons as we have deemed relevant and appropriate as a
basis for the opinions expressed herein, and we have made no effort to
independently verify the facts set forth in such certificates.  Further, in
making the foregoing examinations, we have assumed the genuineness of all
signatures, the legal capacity of each person signatory to any of the documents
reviewed by us, the authenticity of all documents submitted to us as originals
and the conformity to authentic original documents of all documents submitted to
us as copies.  In making the foregoing examinations, as to factual matters, we
have assumed that all representations and warranties made in the aforesaid
documents were and are true, correct and complete.

 

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

 

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

 

(a)           each of the documents (other than the Covered Documents) we
examined 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 in accordance with its terms;

 

(b)           each of the Covered Documents has 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 the Covered Documents, and that each of the Covered Documents
constitutes the legal, valid and binding obligations of each such party thereto
(other than the Company), enforceable in accordance with its terms;

 

(c)           no order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any court,
governmental authority, or any subdivision thereof, is required to authorize or
is required in connection with, the execution and delivery by any Person
identified in the Covered Documents 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 we make no such assumption
with respect to consents, approvals and the like applicable to the Company to
the extent that we express our opinion rendered in paragraph 4 below);

 

(d)           that there are no facts or circumstances relating solely to the
Purchasers that might prevent the Purchasers from enforcing any of the rights to
which our opinion relates; and

 

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

 

Based upon the foregoing, and upon an examination of such questions of law as we
have considered necessary or appropriate, and subject to the assumptions,
exceptions, qualifications and limitations set forth herein, we advise you that,
in our opinion:

 

1.             The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware and has the corporate power to
execute and deliver the Notes and to perform its obligations under the Covered
Documents.

 

2.             The Notes have been duly authorized, executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms.

 

3.             The Company’s execution and delivery of, and the performance of
its obligations under, the Covered Documents do not (a) contravene, or result in
a violation of, the Restated Certificate of Incorporation or the Amended and
Restated Bylaws of the Company, in each case, as in effect on the date hereof
(after giving effect to any amendment thereto), (b) contravene, result in any
breach or violation of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under, any existing obligation of the
Company

 

2

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pursuant to the express provisions of the Existing Credit Facility or any
agreement or instrument in effect on the date hereof to which the Company is a
party and that has been identified as a material agreement in the exhibits to
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2009 and Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2010, June 30, 2010, and September 30, 2010 or (c) violate any provision of any
Applicable Laws (as hereinafter defined) applicable to the Company.

 

4.             No consent, approval or authorization of or registration,
designation, declaration or filing with, any United States Federal or New York
state governmental authority or pursuant to the General Corporation Law of the
State of Delaware (the “DGCL”) is required as a condition to the execution and
delivery by the Company of the Covered Documents or the performance by the
Company of its obligations thereunder.  Please note that United States Federal
securities law require the filing of Current Reports on Form 8-K with the
Securities and Exchange Commission with respect to the execution and delivery of
the Covered Documents.  Based in part upon the representations and warranties of
each of the Purchasers set forth in the Note Purchase Agreement, it is not
necessary in connection with the offering, sale and delivery of the Notes and
the execution and delivery of the Note Purchase Agreement to register the Notes
to be sold and delivered thereunder under the Securities Act, or to qualify an
indenture in respect of said Notes under the Trust Indenture Act of 1939, as
amended.

 

5.             The borrowings by the Company under the Covered Documents and the
application of the proceeds thereof as provided in the Note Purchase Agreement
will not violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System.

 

6.             The Company is not 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, as amended.

 

To our knowledge, except as otherwise specifically disclosed in the Disclosure
Documents, 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 or any Subsidiary of the Company is a party or to which the business,
assets or property of the Company or any Subsidiary of the Company is subject
and, to our knowledge, no such action, suit or proceeding is threatened to which
the Company or any Subsidiary of the Company or the business, assets or property
of the Company or any Subsidiary of the Company would be subject that in either
case questions the validity of the Covered Documents.

 

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

 

A.            The foregoing opinions are expressly limited to matters under and
governed by the DGCL, and applicable Federal laws of the United States of
America and the internal substantive laws of the State of New York and except as
provided in paragraph 4 above, we express no opinion as to any federal or state
securities laws.  With respect to laws, regulations and the like referred to
herein, in addition to all other limitations set forth herein, such references
are limited to laws,

 

3

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regulations and the like of the DGCL, and such applicable Federal laws of the
United States of America and laws of the State of New York as each is in effect
and force as of even date of this opinion and which, in our experience, are
normally applicable to the transactions of the type provided for in the Covered
Documents, in each case, however, exclusive of, and without regard to, any
Excluded Laws (collectively, the “Applicable Laws”).  The term “Excluded Laws”
means all (A) 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 (B) statutes, laws, rules and regulations relating to
(1) pollution or protection of the environment, (2) zoning, land use, building
or construction, (3) operation of any asset or property, (4) labor, employment,
employee rights and benefits, or occupational safety and health, (5)  utility
regulation or regulation of matters pertaining to the acquisition,
transportation, transmission, storage or use of energy sources used in
connection therewith or generated thereby, (6) antitrust, (7) taxation and
(8) except as set forth in the opinion in paragraph 4 above, securities laws and
laws applicable to the regulation of broker dealers, in each case with respect
to each of 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, any State of the United States
of America and the United States of America, 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.            The foregoing opinion regarding the enforceability of the Covered
Documents is subject to the following:

 

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

 

(2)           We express no opinion as to the validity or enforceability of any
provision of any Covered Document that purports to: (a) waive or otherwise
affect any right, warranty or defense that cannot be waived or otherwise
affected

 

4

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as a matter of law, (b) negate the effect of any course of dealing or any
exercise, or failure or delay to exercise, any right, power, privilege or
remedy, (c) relate to indemnities or contribution, or the exculpation, release
or exemption of a party from liability, to the extent prohibited by public
policy or otherwise prohibited by applicable federal or state law, or require
indemnification or contribution (as applicable) for, or release, exculpation or
exemption of a party from, liability on account of fraud, negligence,
recklessness, gross negligence, willful misconduct, breach of the performance of
an agreed undertaking, violation of law or illegal conduct (or the public policy
underlying such action or conduct) of any Person seeking or asserting the
benefit of such indemnity, exculpation, release, exemption or contribution
provision, (d) limit liability of any Person to claims for gross negligence or
willful misconduct, (e) authorize conclusive determinations by any party or
permit a party to make determinations in its sole discretion, (f) restrict or
otherwise affect jurisdiction, venue, submission to, or acceptance of, a court’s
jurisdiction, objections to the laying of venue or submission or acceptance of
jurisdiction, limitation periods or other procedural rights in any proceeding,
(g) waive or otherwise restrict or deny access to jury trial, claims, causes of
action or remedies that may be available or asserted in any action, or
(h) permit modification thereof only by means of an agreement signed in writing
by the parties thereto.

 

(3)           We express no opinion as to the validity or enforceability of any
provision of any Covered Document that states that (a) prohibition, illegality,
invalidity or unenforceability of any provision of any Covered Document in any
jurisdiction shall not (1) invalidate the remaining provisions of any Covered
Document or (2) affect that provision in any other jurisdiction, or (b) the
right of any Person to exercise any right or remedy on the basis of any
misrepresentation or breach of warranty is not affected by any action by any
Purchaser.

 

(4)           We note that the enforceability of specific provisions of the
Covered Documents may be subject to standards of reasonableness, care and
diligence and “good faith” and similar limitations and obligations provided for
under applicable principles of common law and judicial decisions.

 

C.            In rendering the opinion expressed in paragraph 1 above relating
to existence and good standing, as to factual matters set forth therein, we have
relied solely upon a review of certificates of public official, without further
investigation as to matters set forth therein, and such opinion is limited to
the dates of such certificates.

 

5

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D.            In giving the opinions in paragraphs 3 and 5, we have assumed that
the proceeds of the issuance of the Notes shall be used in accordance with the
terms of the Note Purchase Agreement.

 

E.             Our opinions expressed in paragraphs 3 and 4 above as to
violations of laws, rules or regulations applicable to the Company and as to the
need for any approvals or consents of, or any registrations or filings with, any
federal, New York or Delaware corporate governmental authority, is based upon a
review of those laws, rules and regulations that, in our experience, are
normally applicable to the transactions contemplated by the Covered Documents. 
We express no opinion with respect to the laws, rules and regulations applicable
to the regulation of broker dealers.  Further, our opinion expressed in
paragraph 4 above does not encompass compliance with, or exemptions from, the
registration and prospectus delivery requirements of the Federal securities
laws, except as expressly set forth therein.  Further, we express no opinion
herein with respect to compliance with any of the anti-fraud provisions of
applicable Federal or state securities laws, rules or regulations.

 

F.             In rendering our opinions in paragraph 4 above, we have assumed
that the Purchasers will comply with the restrictions on transfer set forth in
the Covered Documents.  Further, we have assumed that neither the Company nor
any Person acting on its behalf engaged in a general solicitation or used
advertising in connection with the offer and sale of the Notes.  We express no
opinion with respect to any transfer of the Notes.

 

G.            With respect to references herein to “known to us”, “to our
knowledge” or words or phrases of similar import (whether or not modified by any
additional phrases), such references mean the actual knowledge that those
attorneys of this Firm, who, based upon our records as of the date hereof,
devoted substantive attention to the transactions to which this opinion relates,
have obtained from the following, which constituted the examination for the
purposes of the applicable opinions:  (A) their review of documents in
connection with rendering this opinion, and the due diligence performed in
connection therewith, which review and due diligence were limited to reviewing
the Note Purchase Agreement and the Notes, the exhibits and schedules thereto,
the stock record books, by-laws and charter documents of the Company, and
certificates of officers of the Company, and which due diligence did not include
any examination of courts, boards, other tribunals or public records with
respect to any litigation, investigation or proceedings, or judgments, orders or
decrees, in any event applicable to the Company or any of its properties;
(B) their participation in the negotiation of the Covered Documents; and
(C) representations and warranties as to factual matters of any of the Company
set forth in the Covered Documents, or otherwise made to us in certifications
and other writings.

 

6

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The opinions expressed herein are solely for the benefit of, and may only be
relied upon by, each of the Purchasers listed in Schedule A to the Note Purchase
Agreement and its respective institutional successors and assigns in connection
with the Covered Documents (provided that any reliance by any successor or
assign shall be to the opinions expressed herein as of the date of this opinion
letter and shall not constitute a reissuance of such opinions as of any date
subsequent to the date of this opinion letter) and may be used only for the
purposes set forth in the Note Purchase Agreement.  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 the
date thereof, and we make no undertaking to amend or supplement such opinions as
facts and circumstances come to our attention or changes in the law occur which
could affect such opinions.

 

 

Very truly yours,

 

 

 

7

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EXHIBIT A

 

Purchasers

 

Metropolitan Life Insurance Company

 

MetLife Investors Insurance Company

 

MetLife Insurance Company of Connecticut

 

MetLife Insurance Company of Connecticut, on behalf of its Separate Account MGA

 

Midland National Life Insurance Company

 

North American Company for Life and Health Insurance

 

Security Benefit Life Insurance Company

 

Genworth Life and Annuity Insurance Company

 

Genworth Life Insurance Company

 

John Hancock Life Insurance Company (U.S.A.)

 

John Hancock Life Insurance Company of New York

 

JPMorgan Chase Bank as Directed Trustee for the SBC Master Pension Trust

 

The Northwestern Mutual Life Insurance Company

 

Knights of Columbus

 

The Union Central Life Insurance Company

 

Acacia Life Insurance Company

 

Ameritas Life Insurance Corp.

 

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EXHIBITS 4.4(b)(i) and 4.4(b)(ii)

 

Forms of Opinions of Internal Counsel to the Company

 

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Exhibit 4.4(b)(i)

 

Form of Internal Counsel to the Company Signing Opinion

 

August 31, 2010

 

To the Purchasers Listed on Exhibit A

 

Re:                               Note Purchase Agreement dated as of August 31,
2010 (the “Note Purchase Agreement”) among Waddell & Reed Financial, Inc. and
the Purchasers identified on Schedule A thereto

 

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 Note
Purchase Agreement.  Unless otherwise indicated, capitalized terms used but not
defined herein shall have the respective meanings set forth in the Note Purchase
Agreement.  This opinion is furnished to you pursuant to Section 4.4(b)(i) of
the Note Purchase Agreement.

 

In connection with this opinion, I have (a) examined (i) the Note Purchase
Agreement, signed by the Company and by the Purchasers, (ii) the forms of the
Notes attached as Exhibits 1(a) and 1(b) to the Note Purchase Agreement,
(iii) originals, or duplicates or certified or conformed copies, of such
records, agreements, instruments and other documents, (iv) such certificates of
public officials, of officers and representatives of the Company and other
Persons, and (b) 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 the foregoing examinations, I have assumed the genuineness of all
signatures (other than the signatures of the Company), 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 Note Purchase Agreement and the certificates referenced
above, without undertaking any independent investigation of such factual
matters, unless I know such statements not to be true and correct.

 

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.             Each of the Company and its Subsidiaries (a) has been duly
incorporated or formed and is validly existing and in good standing as a
corporation or limited liability company, as applicable, under the laws of the
jurisdiction in which it was so incorporated or formed, (b) is duly qualified to
do business as a foreign corporation or limited liability company, as
applicable, in each jurisdiction where its activities require such qualification
except where the failure to so qualify would not, individually or in the
aggregate, have a Material Adverse Effect, and (c) has the corporate or limited
liability company, as applicable, power and authority to own or hold under lease
the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact and, in the case of the Company,
to execute and deliver the Note Purchase Agreement and the Notes and to perform
its obligations thereunder.

 

2.             The Company (a) has duly authorized, by all requisite corporate
action, the execution, delivery and performance of its obligations under the
Note Purchase Agreement and the Notes and (b) has duly executed and delivered
the Note Purchase Agreement.

 

3.             The Company’s execution and delivery of, and performance of its
obligations under, the Note Purchase Agreement do not (a) contravene, or result
in any violation of, any corporate charter, certificate of formation, bylaws or
limited liability company agreement, as applicable of the Company or any
Subsidiary of the Company, in each case, as in effect on the date hereof (after
giving effect to any amendment thereto), (b) contravene, result in any breach or
violation of, or constitute a default (or give rise to any right of termination,
cancellation or acceleration) under, any existing obligation of the Company or
any Subsidiary of the Company pursuant to the express provisions of the Existing
Credit Facility or any material indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease or any other material agreement or
instrument, in each case, in effect on the date hereof to which the Company or
any Subsidiary of the Company is a party or by which the Company or any
Subsidiary of the Company or any of their respective properties may be bound or
affected, other than the Credit Agreement, dated as of October 5, 2009, by and
among the Company, the lenders party thereto from time to time, Bank of America,
N.A., and Bank of America Securities LLC, which has been replaced by the
Existing Credit Facility, (c) conflict in any material respect with or result in
a material breach or violation of any of the terms, conditions or provisions of
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary of the Company or
(d) violate any provision of any Applicable Laws (as hereinafter defined)
applicable to the Company or any Subsidiary of the Company.

 

4.             Neither the Company nor any Subsidiary of the Company is 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, as amended.

 

5.             Under Applicable Law, no consent, approval or authorization of,
or designation, declaration or filing with, any Governmental Authority is
required as a condition to the execution and delivery by the Company of the Note
Purchase Agreement

 

2

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

 

or the performance by the Company of its obligations thereunder.  Please note
that United States Federal securities law require the filing of Current Reports
on Form 8-K with the Securities and Exchange Commission with respect to the
execution and delivery of the Note Purchase Agreement.

 

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 or any Subsidiary of the Company is
a party or to which the business, assets or property of the Company or any
Subsidiary of the Company is subject and, to my knowledge, no such action, suit
or proceeding is threatened to which the Company or any Subsidiary of the
Company or the business, assets or property of the Company or any Subsidiary of
the Company would be subject that in either case questions the validity of the
Note Purchase Agreement or, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

 

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

 

(a)           The foregoing opinions are expressly limited to matters under and
governed by the General Corporation Law of the State of Delaware, applicable
Federal laws of the United States of America, and the laws of the States of
Kansas and Missouri, 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 Note Purchase Agreement, in each case, however, exclusive of, and without
regard to, any Excluded Laws (collectively, the “Applicable Laws”).  The term
“Excluded Laws” means all (A) 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 (B) statutes, laws, rules and regulations relating to
(1) pollution or protection of the environment, (2) zoning, land use, building
or construction, (3) operation of any asset or property, (4) labor, employment,
employee rights and benefits, or occupational safety and health, (5)  utility
regulation or regulation of matters pertaining to the acquisition,
transportation, transmission, storage or use of energy sources used in
connection therewith or generated thereby, (6) antitrust, (7) taxation and
(8) except as set forth in the opinion in paragraph 4 above, securities laws and
laws applicable to the regulation of broker dealers, in each case with respect
to each of 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, any State of the United States
of America and the United States of America, 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

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(c)           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 the Applicable Laws, 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.

 

The opinions expressed herein are solely for the benefit of, and may only be
relied upon by, each of the Purchasers listed in Schedule A to the Note Purchase
Agreement and its respective institutional successors and assigns in connection
with the Note Purchase Agreement and the Notes (provided that any reliance by
any successor or assign shall be to the opinions expressed herein as of the date
of this opinion letter and shall not constitute a reissuance of such opinions as
of any date subsequent to the date of this letter) and may be used only for the
purposes set forth in the Note Purchase Agreement.  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 the
date thereof, 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.

 

 

Very truly yours,

 

 

 

4

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

 

EXHIBIT A

 

Purchasers

 

Metropolitan Life Insurance Company

 

MetLife Investors Insurance Company

 

MetLife Insurance Company of Connecticut

 

MetLife Insurance Company of Connecticut, on behalf of its Separate Account MGA

 

Midland National Life Insurance Company

 

North American Company for Life and Health Insurance

 

Security Benefit Life Insurance Company

 

Genworth Life and Annuity Insurance Company

 

Genworth Life Insurance Company

 

John Hancock Life Insurance Company (U.S.A.)

 

John Hancock Life Insurance Company of New York

 

JPMorgan Chase Bank as Directed Trustee for the SBC Master Pension Trust

 

The Northwestern Mutual Life Insurance Company

 

Knights of Columbus

 

The Union Central Life Insurance Company

 

Acacia Life Insurance Company

 

Ameritas Life Insurance Corp.

 

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

 

Exhibit 4.4(b)(ii)

 

Form of Internal Counsel to the Company Closing Opinion

 

January 13, 2011

 

To the Purchasers Listed on Exhibit A

 

Re:                               Note Purchase Agreement dated as of August 31,
2010 (the “Note Purchase Agreement”) among Waddell & Reed Financial, Inc. and
the Purchasers identified on Schedule A thereto

 

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 Note
Purchase Agreement and the Notes (collectively, the “Note Documents”).  Unless
otherwise indicated, capitalized terms used but not defined herein shall have
the respective meanings set forth in the Note Purchase Agreement.  This opinion
is furnished to you pursuant to Section 4.4(b)(ii) of the Note Purchase
Agreement.

 

In connection with this opinion, I have examined the Note Purchase Agreement,
signed by the Company and by the Purchasers, and the Notes, each executed by the
Company.  In addition to the Note Documents, I have (a) examined (i) the
originals, or duplicates or certified or conformed copies, of such records,
agreements, instruments and other documents and (ii) such certificates of public
officials, of officers and representatives of the Company and other Persons, and
(b) 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 the foregoing examinations, I have assumed the genuineness of all
signatures (other than the signatures of the Company), 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 Note Purchase Agreement and the certificates referenced
above, without undertaking any independent investigation of such factual
matters, unless I know such statements not to be true and correct.

 

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

 

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.             Each of the Company and its Subsidiaries (a) has been duly
incorporated or formed and is validly existing and in good standing as a
corporation or limited liability company, as applicable, under the laws of the
jurisdiction in which it was so incorporated or formed, (b) is duly qualified to
do business as a foreign corporation or limited liability company, as
applicable, in each jurisdiction where its activities require such qualification
except where the failure to so qualify would not, individually or in the
aggregate, have a Material Adverse Effect, and (c) has the corporate or limited
liability company, as applicable, power and authority to own or hold under lease
the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact and, in the case of the Company,
to execute and deliver the Notes and to perform its obligations under the Note
Documents.

 

2.             The Company (a) has duly authorized, by all requisite corporate
action, the execution, delivery and performance of its obligations under the
Note Documents and (b) has duly executed and delivered the Notes.

 

3.             The Company’s execution and delivery of, and performance of its
obligations under, the Note Documents do not (a) contravene, or result in any
violation of, any corporate charter, certificate of formation, bylaws or limited
liability company agreement, as applicable of the Company or any Subsidiary of
the Company, in each case, as in effect on the date hereof (after giving effect
to any amendment thereto), (b) contravene, result in any breach or violation of,
or constitute a default (or give rise to any right of termination, cancellation
or acceleration) under, any existing obligation of the Company or any Subsidiary
of the Company pursuant to the express provisions of the Existing Credit
Facility or any material indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease or any other material agreement or instrument, in each
case, in effect on the date hereof to which the Company or any Subsidiary of the
Company is a party or by which the Company or any Subsidiary of the Company or
any of their respective properties may be bound or affected, (c) conflict in any
material respect with or result in a material breach or violation of any of the
terms, conditions or provisions of any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or any
Subsidiary of the Company or (d) violate any provision of any Applicable Laws
(as hereinafter defined) applicable to the Company or any Subsidiary of the
Company.

 

4.             Neither the Company nor any Subsidiary of the Company is 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, as amended.

 

5.             Under Applicable Law, no consent, approval or authorization of,
or designation, declaration or filing with, any Governmental Authority is
required as a condition to the execution and delivery by the Company of the Note
Documents or the performance by the Company of its obligations thereunder. 
Please note that United

 

2

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

 

States Federal securities law require the filing of Current Reports on Form 8-K
with the Securities and Exchange Commission with respect to the execution and
delivery of the Note Documents.

 

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 or any Subsidiary of the Company is
a party or to which the business, assets or property of the Company or any
Subsidiary of the Company is subject and, to my knowledge, no such action, suit
or proceeding is threatened to which the Company or any Subsidiary of the
Company or the business, assets or property of the Company or any Subsidiary of
the Company would be subject that in either case questions the validity of the
Note Documents or, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

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

 

(a)           The foregoing opinions are expressly limited to matters under and
governed by the General Corporation Law of the State of Delaware, applicable
Federal laws of the United States of America, and the laws of the States of
Kansas and Missouri, 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 Note Documents, in each case, however, exclusive of, and without regard
to, any Excluded Laws (collectively, the “Applicable Laws”).  The term “Excluded
Laws” means all (A) 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 (B) statutes, laws, rules and regulations relating to
(1) pollution or protection of the environment, (2) zoning, land use, building
or construction, (3) operation of any asset or property, (4) labor, employment,
employee rights and benefits, or occupational safety and health, (5)  utility
regulation or regulation of matters pertaining to the acquisition,
transportation, transmission, storage or use of energy sources used in
connection therewith or generated thereby, (6) antitrust, (7) taxation and
(8) except as set forth in the opinion in paragraph 4 above, securities laws and
laws applicable to the regulation of broker dealers, in each case with respect
to each of 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, any State of the United States
of America and the United States of America, 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.

 

(c)           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

 

3

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

 

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 the Applicable Laws, 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.

 

The opinions expressed herein are solely for the benefit of, and may only be
relied upon by, each of the Purchasers listed in Schedule A to the Note Purchase
Agreement and its respective institutional successors and assigns in connection
with the Note Documents (provided that any reliance by any successor or assign
shall be to the opinions expressed herein as of the date of this opinion letter
and shall not constitute a reissuance of such opinions as of any date subsequent
to the date of this letter) and may be used only for the purposes set forth in
the Note Purchase Agreement.  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 the date thereof, 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.

 

 

Very truly yours,

 

 

 

4

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

 

EXHIBIT A

 

Purchasers

 

Metropolitan Life Insurance Company

 

MetLife Investors Insurance Company

 

MetLife Insurance Company of Connecticut

 

MetLife Insurance Company of Connecticut, on behalf of its Separate Account MGA

 

Midland National Life Insurance Company

 

North American Company for Life and Health Insurance

 

Security Benefit Life Insurance Company

 

Genworth Life and Annuity Insurance Company

 

Genworth Life Insurance Company

 

John Hancock Life Insurance Company (U.S.A.)

 

John Hancock Life Insurance Company of New York

 

JPMorgan Chase Bank as Directed Trustee for the SBC Master Pension Trust

 

The Northwestern Mutual Life Insurance Company

 

Knights of Columbus

 

The Union Central Life Insurance Company

 

Acacia Life Insurance Company

 

Ameritas Life Insurance Corp.

 

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

 

EXHIBITS 4.4(c)(i) and 4.4(c)(ii)

 

Forms of Opinions of Special Counsel to the Purchasers

 

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

 

Exhibit 4.4(c)(i)

 

Form of Special Counsel to the Purchasers Signing Opinion

 

January 13, 2011

 

 

Re:

Waddell & Reed Financial, Inc.

 

 

5.00% Senior Notes, Series A, due 2018

 

 

5.75% Senior Notes, Series B, due 2021

 

To the several Purchasers listed in

Schedule A to the within-mentioned

Note Purchase Agreement

 

Ladies and Gentlemen:

 

We have acted as your special counsel in connection with the issuance by
Waddell & Reed Financial, Inc. (the “Company”) of $95,000,000 aggregate
principal amount of its 5.00% Senior Notes, Series A, due 2018 (the “Series A
Notes”) and $95,000,000 aggregate principal amount of its 5.75% Senior Notes,
Series B, due 2021 (the “Series B Notes”).  The Series A Notes and the Series B
Notes (collectively, the “Notes”) are being purchased by you on this date under
and pursuant to the Note Purchase Agreement, dated as of August 31, 2010 (the
“Note Purchase Agreement”), by and among you and the Company, in the respective
series and aggregate principal amounts set forth in Schedule A to the Note
Purchase Agreement.  All capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Note Purchase Agreement.

 

We have examined such corporate records of the Company, agreements and other
instruments, certificates of officers and representatives of the Company,
certificates of public officials, and such other documents, as we have deemed
necessary in connection with the opinions hereinafter expressed.  In such
examination we have assumed the genuineness of all signatures, the authenticity
of documents submitted to us as originals and the conformity with the authentic
originals of all documents submitted to us as copies.  As to questions of fact
material to such opinions, we have, when relevant facts were not independently
established, relied upon the representations set forth in the Note Purchase
Agreement and upon certifications by officers or other representatives of the
Company.

 

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

 

In addition, we attended the closing held today at our office at which you
purchased and made payment for Notes of the series and in the respective
aggregate principal amounts to be purchased by you, all in accordance with the
Note Purchase Agreement.

 

Based upon the foregoing and having regard for legal considerations that we deem
relevant, we render our opinion to you pursuant to Section 4.4(c)(ii) of the
Note Purchase Agreement as follows:

 

1.             The Company is a validly existing corporation in good standing
under the laws of the State of Delaware and has the corporate power to execute
and deliver the Notes and perform its obligations thereunder.

 

2.             The Notes being purchased by you today have been duly authorized,
executed and delivered and constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms.

 

3.             No consent, approval or authorization of, or declaration,
registration or filing with, any New York or United States Federal Governmental
Authority by the Company is required for the validity of the execution, delivery
or performance by the Company of said Notes.

 

4.             It was not necessary in connection with the offering, sale and
delivery of said Notes, under the circumstances contemplated by the Note
Purchase Agreement, to register said Notes under the Securities Act of 1933, as
amended, or to qualify an indenture in respect of the Notes under the Trust
Indenture Act of 1939, as amended.

 

5.             The opinions of even date herewith of Fulbright & Jaworski
L.L.P., special counsel for the Company, and Daniel C. Schulte, Esq., Senior
Vice President and General Counsel of the Company, delivered to you pursuant to
Sections 4.4(a)(ii) and 4.4(b)(ii) of the Note Purchase Agreement, respectively,
are satisfactory to us in form and scope with respect to the matters
respectively specified therein and we believe that you are justified in relying
thereon.

 

The opinions expressed above as to the enforceability of any agreement or
instrument in accordance with its terms are subject to the exceptions that
(a) such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors’ rights generally and (ii) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and (b) the enforceability of indemnity provisions contained in the Note
Purchase Agreement may be subject to limitations based upon public policy
considerations.

 

We express no opinion as to (a) whether a court outside the State of New York
will honor the choice of New York law to govern the Note Purchase Agreement and
the Notes, (b) Section 22.8 of the Note Purchase Agreement insofar as said
Section relates to (i) the waiver of the right to jury trial, (ii) the subject
matter jurisdiction of a United States Federal court sitting in New York to
adjudicate any controversy relating to the Note Purchase Agreement or the Notes
or

 

2

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

 

(iii) the waiver of inconvenient forum with respect to proceedings in any such
United States Federal court, or (c) any provisions of the Note Purchase
Agreement or the Notes which purport to provide for a rate of interest after
judgment.

 

We have made no examination of and express no opinion today with respect to any
matter covered by our opinion dated August 31, 2010 and delivered to you on such
date in connection with the execution and delivery of the Note Purchase
Agreement.

 

We are members of the bar of the State of New York and do not herein intend to
express any opinion as to any matters governed by any laws other than United
States Federal laws and the laws of the State of New York and the General
Corporation Law of the State of Delaware.

 

This opinion is given solely for your benefit, and for the benefit of other
institutional investor holders from time to time of the Notes purchased by you
today, in connection with the closing held today of the transactions
contemplated by the Note Purchase Agreement, and may not be relied upon by any
other person for any purpose without our prior written consent.

 

 

Very truly yours,

 

3

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

 

Exhibit 4.4(c)(ii)

 

Form of Special Counsel to the Purchasers Closing Opinion

 

August 31, 2010

 

 

Re:

Waddell & Reed Financial, Inc.

 

 

5.00% Senior Notes, Series A, due 2018

 

 

5.75% Senior Notes, Series B, due 2021

 

To the several Purchasers listed in
Schedule A to the within-mentioned
Note Purchase Agreement

 

Ladies and Gentlemen:

 

We have acted as your special counsel in connection with the proposed issuance
by Waddell & Reed Financial, Inc. (the “Company”) of $95,000,000 aggregate
principal amount of its 5.00% Senior Notes, Series A, due 2018 and $95,000,000
aggregate principal amount of its 5.75% Senior Notes, Series B, due 2021
(collectively, the “Notes”) pursuant to the Note Purchase Agreement, dated as of
August 31, 2010 (the “Note Purchase Agreement”), by and among you and the
Company.  All capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Note Purchase Agreement.

 

We have examined such corporate records of the Company, agreements and other
instruments, certificates of officers and representatives of the Company,
certificates of public officials, and such other documents, as we have deemed
necessary in connection with the opinions hereinafter expressed.  In such
examination we have assumed the genuineness of all signatures, the authenticity
of documents submitted to us as originals and the conformity with the authentic
originals of all documents submitted to us as copies.  As to questions of fact
material to such opinions, we have, when relevant facts were not independently
established, relied upon the representations set forth in the Note Purchase
Agreement and upon certifications by officers or other representatives of the
Company.

 

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

 

Based upon the foregoing and having regard for legal considerations that we deem
relevant, we render our opinion to you pursuant to Section 4.4(c)(i) of the Note
Purchase Agreement as follows:

 

1.             The Company is a validly existing corporation in good standing
under the laws of the State of Delaware and has the corporate power to execute
and deliver the Note Purchase Agreement and perform its obligations thereunder.

 

2.             The Note Purchase Agreement has been duly authorized, executed
and delivered by the Company and constitutes a legal, valid and binding
agreement of Company, enforceable against the Company in accordance with its
terms.

 

3.             No consent, approval or authorization of, or declaration,
registration or filing with, any New York or United States Federal Governmental
Authority is required to be obtained or made as a condition to the validity of
the execution and delivery by the Company of the Note Purchase Agreement or for
the performance by the Company of its obligations thereunder.

 

4.             It was not necessary in connection with the offering of the Notes
under the circumstances contemplated by the Note Purchase Agreement to register
the Notes to be sold and delivered thereunder under the Securities Act of 1933,
as amended, or to qualify an indenture in respect of the Notes under the Trust
Indenture Act of 1939, as amended.

 

5.             The opinions of even date herewith of Fulbright & Jaworski
L.L.P., special counsel for the Company, and Daniel C. Schulte, Esq., Senior
Vice President and General Counsel of the Company, delivered to you pursuant to
Sections 4.4(a)(i) and 4.4(b)(i) of the Note Purchase Agreement, respectively,
are satisfactory to us in form and scope with respect to the matters
respectively specified therein and we believe that you are justified in relying
thereon.

 

The opinions expressed above as to the enforceability of any agreement or
instrument in accordance with its terms are subject to the exceptions that
(a) such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors’ rights generally and (ii) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and (b) the enforceability of indemnity provisions contained in the Note
Purchase Agreement may be subject to limitations based upon public policy
considerations.

 

We express no opinion as to (a) whether a court outside the State of New York
will honor the choice of New York law to govern the Note Purchase Agreement and
the Notes, (b) Section 22.8 of the Note Purchase Agreement insofar as said
Section relates to (i) the waiver of the right to jury trial, (ii) the subject
matter jurisdiction of a United States Federal court sitting in New York to
adjudicate any controversy relating to the Note Purchase Agreement or the Notes
or (iii) the waiver of inconvenient forum with respect to proceedings in any
such United States Federal court, or

 

2

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

 

(c) any provisions of the Note Purchase Agreement or the Notes which purport to
provide for a rate of interest after judgment.

 

We are members of the bar of the State of New York and do not herein intend to
express any opinion as to any matters governed by any laws other than United
States Federal laws, the laws of the State of New York and the General
Corporation Law of the State of Delaware.

 

3

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

 

This opinion is given solely for your benefit and for the benefit of
institutional investor holders from time to time of the Notes purchased by you
pursuant to the Note Purchase Agreement, in connection with the transactions
contemplated by the Note Purchase Agreement, and may not be relied upon by any
other person for any purpose without our prior written consent.

 

 

Very truly yours,

 

4

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

 

EXHIBIT 7.1(f)(i)

 

Form of Report on Net Asset Values

 

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

 

EXHIBIT 7.1(f)(i)

 

W A D D E L L  &  R E E D  F I N A N C I A L, I N C.

Mutual Fund Management Fees by Fund Family

2010 Actual ($000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Inc (Dec)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of

 

YTD Mgmt

 

Variance

 

2009

 

Year

 

 

 

Jan

 

Feb

 

Mar

 

Apr

 

May

 

Jun

 

Jul

 

Aug

 

Sep

 

Oct

 

Nov

 

Dec

 

Y-T-D

 

Total

 

Fee Rate

 

From L-Y

 

Actual

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W&R Advisors Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continental Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Concepts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Managed Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vanguard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W&R Advisors Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy New Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cundill Global Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

European Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Natural Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Limited-Term Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed European/Pacific

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed International Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Micro Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

W A D D E L L  &  R E E D  F I N A N C I A L, I N C.

Mutual Fund Management Fees by Fund Family

2010 Actual ($000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Inc (Dec)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of

 

YTD Mgmt

 

Variance

 

2009

 

Year

 

 

 

Jan

 

Feb

 

Mar

 

Apr

 

May

 

Jun

 

Jul

 

Aug

 

Sep

 

Oct

 

Nov

 

Dec

 

Y-T-D

 

Total

 

Fee Rate

 

From L-Y

 

Actual

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy VIP Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Natural Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Micro Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy VIP Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Change in Mutual Fund Assets Under Management

July 2010

 

(Millions)

Month to Date

Exhibit C-1

 

 

 

Net Assets

 

 

 

 

 

Net

 

Net

 

Dividends

 

Net Investment

 

Dividends

 

Valuation

 

Net Assets

 

 

 

at 6-30-10

 

Sales

 

Redemptions

 

Sales

 

Exchanges

 

Reinvested

 

Income

 

Paid

 

Change

 

at 7-31-10

 

Waddell & Reed Advisors Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cont Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Concepts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Managed Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vanguard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Allocation Pass-Thru (MAP/SPA)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal of Long -Term Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Waddell & Reed Advisors Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy New Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cundill Global Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

European Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Natural Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Limited-Term Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed European/Pacific

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Int’l Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Microcap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Managed Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal of Long -Term Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal of Money Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Eliminations- Underlying Funds of Funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Change in Mutual Fund Assets Under Management

July 2010

 

(Millions)

Month to Date

 

 

 

 

Net Assets
at 6-30-10

 

Sales

 

Redemptions

 

Net
Sales

 

Net
Exchanges

 

Dividends
Reinvested

 

Net Investment
Income

 

Dividends
Paid

 

Valuation
Change

 

Net Assets
at 7-31-10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Conservative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy VIP Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced Port

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Natural Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Inc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Microcap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Mkt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Agressive Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Conservative Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Moderate Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Moderately Agressive Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Moderately Conservative Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Port

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Eliminations- Underlying Funds of Funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy VIP Funds Total *

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of All Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market Funds **

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Eliminations- Underlying InvestEd Funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Mutual Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

*All Ivy VIP Funds are considered to be Long-Term Mutual Funds. For the Ivy VIP
Funds only sales include exchanges in and redemptions include exchanges out.

**Money Market Funds consists of Advisors Cash Management and Invested Cash
Reserves, Ivy Money Market and Ivy Cash Reserves.

(1) Eliminations- Underlying Funds of Funds — These eliminations are to prevent
double counting due to reporting both at the fund of fund and underlying fund
levels.

 

BY INVESTMENT MANAGER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-Advised Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W&R Managed Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% BY INVESTMENT MANAGER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-Advised Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W&R Managed Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Change in Mutual Fund Assets Under Management

July 2010

 

(Millions)

Year to Date

 

 

 

 

Net Assets
at 12-31-09

 

Sales

 

Redemptions

 

Net
Sales

 

Net
Exchanges

 

Dividends
Reinvested

 

Net Investment
Income

 

Dividends
Paid

 

Valuation
Change

 

Net Assets
at 7-31-2010

 

Waddell & Reed Advisors Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cont Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Concepts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Managed Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vanguard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Allocation Pass-Thru (MAP/SPA)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal of Long -Term Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Waddell & Reed Advisors Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy New Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cundill Global Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

European Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Natural Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Limited-Term Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed European/Pacific

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Int’l Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Microcap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal High Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Managed Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal of Long -Term Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Eliminations- Underlying Funds of Funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Change in Mutual Fund Assets Under Management

July 2010

 

(Millions)

Year to Date

 

 

 

 

Net Assets
at 12-31-09

 

Sales

 

Redemptions

 

Net
Sales

 

Net
Exchanges

 

Dividends
Reinvested

 

Net Investment
Income

 

Dividends
Paid

 

Valuation
Change

 

Net Assets
at 7-31-2010

 

InvestEd Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Balanced

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Conservative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InvestEd Funds Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy VIP Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced Port

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Opportunities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Natural Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Inc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Microcap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid Cap Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Mkt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Agressive Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Conservative Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Moderate Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Moderately Agressive Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pathfinder- Moderately Conservative Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Port

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Cap Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Eliminations- Underlying Funds of Funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy VIP Funds Total*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of All Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market Funds **

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Eliminations- Underlying InvestEd Funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Mutual Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

*All Ivy VIP Funds are considered to be Long-Term Mutual Funds. For the Ivy Vip
Funds only sales include exchanges in and redemptions include exchanges out.

**Money Market Funds consists of Advisors Cash Management and Invested Cash
Reserves, Ivy Money Market and Ivy Cash Reserves.

(1) Eliminations- Underlying Funds of Funds — These eliminations are to prevent
double counting due to reporting both at the fund of fund and underlying fund
levels.

 

BY INVESTMENT MANAGER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-Advised Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W&R Managed Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% BY INVESTMENT MANAGER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub-Advised Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W&R Managed Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT 7.1(f)(ii)

 

Form of Report on Aggregate Revenue Base

 

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

 

EXHIBIT 7.1(f)(ii)

 

 

Waddell & Reed Financial, Inc. - Consolidated

 

 

Statement of Operations

 

 

For the period indicated in each column heading

 

 

Dollar amounts in thousands except per share amounts

 

 

 

 

QTD
Aug-2010

 

QTD
May-2010

 

Variance
Dollars

 

Variance
Percent

 

QTD
Aug-2010

 

QTD
Aug-2009

 

Variance
Dollars

 

Variance
Percent

 

YTD
Aug-2010

 

YTD
Aug-2009

 

Variance
Dollars

 

Variance
Percent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting & Distribution fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder Service Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aug-2009

 

Sep-2009

 

Oct-2009

 

Nov-2009

 

Dec-2009

 

Jan-2010

 

Feb-2010

 

Mar-2010

 

Apr-2010

 

May-2010

 

Jun-2010

 

Jul-2010

 

Aug-2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting & Distribution fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder Service Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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