Exhibit 10.1

 

Scotiabank

THE BANK OF NOVA SCOTIA

International Banking Division

Derivative Products

44 King Street West, 14th Floor, Toronto, Ontario, Canada M5H 1H1

 

August 8, 2005

 

WADDELL & REED FINANCIAL, INC.

6300 LAMAR AVENUE

OVERLAND PARK, KANSAS

66202

 

FAX #:  923-236-1930

 

Attention:  Daniel P. Connealy, CFO

 

Dear Sirs,

 

Re:  Interest Rate Swap Transaction Reference ID: S53278 (Previously S53252)

 

The purpose of this letter agreement is to set forth the terms and conditions of
the “Transaction” entered into between us on the Trade Date specified below.

 

The definitions and provisions contained in the 2000 ISDA Definitions (as
published by the International Swap Dealers Association, Inc.) are incorporated
into this Confirmation.  In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will govern.

 

1.         This Confirmation evidences a complete and binding agreement between
you and us as to the terms of the Transaction to which this Confirmation
relates.  In addition, you and we agree to use reasonable efforts promptly to
negotiate, execute and deliver an agreement in the form of an ISDA Master
Agreement (Multicurrency-Cross Border) (the “ISDA Form”), with such
modifications as you and we will in good faith agree.  Upon the execution by you
and us of such an agreement, this Confirmation will supplement, form a part of
and be subject to that agreement.  All provisions contained in or incorporated
by reference in that agreement upon its execution will govern this Confirmation
except as expressly modified below.

 

Until we execute and deliver that Agreement, this Confirmation, together with
all other documents referring to the ISDA Form (each a “Confirmation”)
confirming transactions (each a “Transaction”) entered into between us (not
withstanding anything to the contrary in a Confirmation), shall supplement, form
part of, and be subject to an agreement in the form of the ISDA Form as if we
had executed an agreement in such form (but without any Schedule) except for the
following elections:

 

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(a)                      Governing Law.  This Agreement will be governed by and
construed in accordance with the laws of the State of New York (without
reference to the choice of law doctrine);

 

(b)                     “Termination Currency” means United States Dollars;

 

(c)                      Payments on Early Termination.  For the purpose of
section 6(e) of this Agreement, Second Method and Market Quotation shall apply;

 

(d)                     “Cross Default” shall apply to The Bank of Nova Scotia
and WADDELL & REED FINANCIAL, INC., and all references therein to “Threshold
Amount” shall mean, in respect of The Bank of Nova Scotia, 5% of its
shareholders’ equity as set out in The Bank of Nova Scotia’s most recently
published audited annual financial statement, and shall mean, in respect of
WADDELL & REED FINANCIAL, INC., USD 5,000,000.00 (or its equivalent in any other
currency);

 

(e)                      The “Credit Event Upon Merger” provisions of
section 5(b)(iv) will apply to both parties;

 

(f)                        “Credit Support Document” in relation to WADDELL &
REED FINANCIAL, INC., shall mean each document that by its terms secures,
guarantees or otherwise supports WADDELL & REED FINANCIAL, INC.’s obligations
hereunder (whether or not this Confirmation or the Transaction evidenced hereby
is specifically referenced or described therein), as such document(s) may be
amended, revised, restated, supplemented or replaced from time to time, and

 

(g)                     “Credit Support Provider” in relation to WADDELL & REED
FINANCIAL, INC., shall mean any party to a Credit Support Document that provides
or is obligated to provide security, a guarantee or other credit support for
WADDELL & REED FINANCIAL, INC.’s obligations hereunder;

 

on the Trade Date of the first such Transaction between us.  In the event of any
inconsistency between the provisions of that agreement and this Confirmation,
this Confirmation shall prevail for the purposes of this Transaction.

 

2.                           The following provisions shall also apply:

 

(a)                      Set Off.  Any amount (the “Early Termination Amount”)
payable to one party (“the Payee”) by the other party (“the Payer”) under
Section 6(e) in circumstances where there is a Defaulting Party or one Affected
Party in the case where a Termination Event under Section 5(b)(iv) or
Section 5(b)(v) (if applicable) has occurred, will, at the option of the party
(“X”) other than the Defaulting Party or the Affected Party (“Y”) (and without
prior notice to Y), be reduced by its set-off against any amount(s) (the “Other
Agreement Amount”) payable (whether at such time or in the future or upon the
occurrence of a contingency) by the Payee to the Payer (irrespective of the
currency, place of payment or booking office of the obligation) under any other

 

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agreement(s) between the Payee and the Payer or instrument(s) or undertaking(s)
issued or executed by one party to, or in favor of, the other party (and the
Other Agreement Amount will be discharged promptly and in all respects to the
extent it is so set-off).  X will give notice to Y and any set-off effected
under this section.

 

For this purpose, either the Early Termination Amount or the Other Agreement
Amount (or the relevant portion of such amounts) may be converted by X into the
currency in which the other is denominated at the rate of exchange at which such
party is able, acting in a reasonable manner and in good faith, to purchase the
relevant amount of such currency.

 

If an obligation is unascertained, X may in good faith estimate that obligation
and set-off in respect of the estimate, subject to the relevant party accounting
to the other when the obligation is ascertained.

 

Nothing contained in this section shall be effective to create a charge or other
security interest, and shall be without prejudice and in addition to any right
of set-off, combination of accounts, lien or other right to which any party is
at any time otherwise entitled (whether by operation of law, contract or
otherwise).

 

3.                           The terms of the particular Transaction to which
this Confirmation relates are as follows:

 

Trade Date:

August 8, 2005

 

 

Notional Amount:

USD 100,000,000.00

 

 

Effective Date:

January 18, 2006

 

 

Termination Date:

January 18, 2011

 

 

Fixed Amounts:

 

 

 

Fixed Rate Payer:

WADDELL & REED FINANCIAL, INC.

 

 

Fixed Rate Payer Payment Dates:

The 18th of each January and July commencing on July 18, 2006, to and including
the Termination Date, subject to adjustment in accordance with the Modified
Following Business Day Convention.

 

 

Fixed Rate Period End Dates:

The 18th of each January and July commencing on July 18, 2006, to and including
the Termination Date.

 

 

Fixed Rates:

4.84%

 

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Fixed Rate Day Count Fraction:

30/360

 

 

Business Days for Payments:

London, New York

 

 

Business Day Convention:

Modified Following Business Day Convention

 

 

Floating Amounts:

 

 

 

Floating Rate Payer:

The Bank of Nova Scotia

 

 

Floating Rate Payer Payment Dates:

The 18th of each January, April, July and October commencing on April 18, 2006,
to and including the Termination Date, subject to adjustment in accordance with
the Modified Following Business Day Convention.

 

 

Floating Rate Payer Period End Dates:

The 18th of each January, April, July and October commencing on April 18, 2006
to and including the Termination Date.

 

 

Floating Rate for initial Calculation Period:

To be determined

 

 

Floating Rate Option:

USD-LIBOR-BBA

 

 

Floating Rate Day Count Fraction:

Actual/360

 

 

Designated Maturity:

3-month

 

 

Spread:

None

 

 

Reset Dates:

The first day of the relevant Calculation period.

 

 

Compounding:

Inapplicable

 

 

Business Days for Payments:

London, New York

 

 

Business Day Convention:

Modified Following Business Day Convention

 

 

Calculation Agent:

The Bank of Nova Scotia

 

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MANDATORY EARLY TERMINATION PROVISION:

 

 

 

Mandatory Early Termination:

Applicable

 

 

Mandatory Early Termination Date:

January 13, 2006

 

 

Cash Settlement Payment Date:

January 18, 2006

 

 

Cash Settlement Valuation Time:

New York

 

 

Cash Settlement Method:

Par Yield Curve – Adjusted

 

 

Cash Settlement Reference Banks:

As selected by The Bank of Nova Scotia in its sole discretion and in good faith

 

 

Quotation Rate:

Mid

 

4.                           RELATIONSHIP BETWEEN PARTIES:

 

Each party will be deemed to represent to the other party on the date of this
Confirmation on which it enters into a Transaction that (absent a written
agreement between the parties that expressly imposes affirmative obligations to
the contrary for that Transaction):

 

(a)                      Non-Reliance.  It is acting for its own account, and it
has made its own independent decisions to enter into that Transaction and as to
whether that Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisers as it has deemed necessary.  It is
not relying on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into that Transaction; it
being understood that information and explanations related to the terms and
conditions of a Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction.  It has not received from the
other party any assurance or guarantee as to the expected results of that
Transaction.

 

(b)                     Assessment and Understanding.  It is capable of
assessing the merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts, the terms,
conditions and risks of that Transaction.  It is also capable of assuming and
assumes the risks of that Transaction.

 

(c)                      Status of Parties.  The other party is not acting as a
fiduciary for or as an adviser to it in respect of that Transaction.

 

(d)                     Commitment to Unwind.  Neither party has committed to
unwind any Transaction.

 

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5.                           OFFICES

 

(a)                      For purposes of this Transaction, the Office of THE
BANK OF NOVA SCOTIA, is Toronto, Ontario.

 

(b)                     For purposes of this Transaction, the Office of
WADDELL & REED FINANCIAL, INC. is Overland Park, Kansas.

 

6.                           Account Details

 

Payments to THE BANK OF NOVA SCOTIA:

 

Accounts for Payment in USD:

 

Bank of Nova Scotia, New York

 

 

A/C #602736

 

 

Swift Code: NOSCUS33

 

 

//FW026002532

 

 

Favour: Bank of Nova Scotia, Toronto

 

 

Attn: Derivative Products

 

Payments to WADDELL & REED FINANCIAL, INC.:

 

Accounts for payments in USD:                           (Please Advise)

 

7.                           The parties hereto agree that this Confirmation,
whether received in original or facsimile form, may be executed in counterparts,
which execution may be effected by means of facsimile transmission, and which
when taken together shall constitute a single and original agreement between the
parties and a binding supplement to the Agreement.  Where execution is effected
by means of facsimile transmission, the parties agree that the sender’s
signature as printed by the recipient’s facsimile machine shall be deemed to be
the sender’s original signature.

 

Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing a copy of this Confirmation enclosed for that purpose and
returning it to us by facsimile, Attention:  WBO Derivative Product
Confirmations, Telephone:  (416) 866-5415/3622, Facsimile:  (416) 933-2291.

 

 

 

Yours sincerely,

 

 

 

THE BANK OF NOVA SCOTIA

 

 

 

 

 

/s/ Regina Magdaluyo

 

 

 

 

Authorized Signature

 

Regina Magdaluyo M0060

 

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/s/ Gita Singh

 

 

 

 

Authorized Signature

 

Gita Singh S117

 

Confirmed as of the date first written:

 

WADDELL & REED FINANCIAL, INC.

 

 

/s/ Daniel P. Connealy

 

 

 

 

Name:

Daniel P. Connealy

Title:

Senior Vice President and Chief Financial Officer

 

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