EXHIBIT 4.1


 




 





WADDELL &
REED FINANCIAL, INC.


 


(a Delaware
corporation)


 


$200,000,000


 


5.60% Notes
due 2011


 


 


SECOND
SUPPLEMENTAL INDENTURE


 


 


Dated as of January 13,
2006


 


J. P. MORGAN
TRUST COMPANY, NATIONAL ASSOCIATION

As Trustee


 





















 


SECOND
SUPPLEMENTAL INDENTURE dated as of January 13, 2006 (“Supplemental
Indenture”), to the Indenture dated as of January 18, 2001 (as
supplemented, the “Indenture”), by and among WADDELL & REED FINANCIAL,
INC., a Delaware corporation (the “Company”), and J. P. MORGAN TRUST COMPANY,
NATIONAL ASSOCIATION (as successor to Chase Manhattan Trust Company, National
Association), as trustee (the “Trustee”).


 


Each party
agrees as follows for the benefit of the other party and for the equal and
ratable benefit of the holders of Notes (as defined below):


 


WHEREAS, the
Company and the Trustee have duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of senior debt
securities (the “Securities”) to be issued in one or more series as in the
Indenture provided;


 


WHEREAS, the
Company desires and has requested the Trustee to join it in the execution and
delivery of this Supplemental Indenture in order to establish and provide for
the issuance by the Company of a series of Securities designated as its 5.60%
Notes due 2011 in the aggregate principal amount of $200,000,000, substantially
in the form attached hereto as Exhibit A (the “Notes”), on the
terms set forth herein;


 


WHEREAS,
Sections 3.1 and 9.1 of the Indenture provides that a supplemental indenture
may be entered into by the Company and the Trustee for such purpose provided
certain conditions are met;


 


WHEREAS, the
Company hereby certifies that the conditions set forth in the Indenture for the
execution and delivery of this Supplemental Indenture have been complied with;
and


 


WHEREAS, all
things necessary to make this Supplemental Indenture a valid agreement of the
Company and the Trustee, in accordance with its terms, and a valid amendment
of, and supplement to, the Indenture have been done;


 


NOW,
THEREFORE:


 


In
consideration of the premises and the purchase and acceptance of the Notes by
the holders thereof, the Company covenants and agrees with the Trustee, for the
equal and ratable benefit of the holders, that the Indenture is supplemented
and amended, to the extent expressed herein, as follows:


 


ARTICLE I



Scope of Supplemental Indenture; General


 


This
Supplemental Indenture supplements and, to the extent inconsistent therewith,
replaces the provisions of the Indenture, to which provisions reference is
hereby made.


 


The changes,
modifications and supplements to the Indenture effected by this Supplemental
Indenture shall be applicable only with respect to, and govern the terms of,
the Notes, which shall initially be in aggregate principal amount of
$200,000,000, which amount may be increased pursuant to an Officers’
Certificate in accordance with the Indenture and shall


 





















 


not apply to any other Securities that may be issued under the
Indenture unless a supplemental indenture with respect to such other Securities
specifically incorporates such changes, modifications and supplements. Pursuant
to this Supplemental Indenture, there is hereby created and designated a series
of Securities under the Indenture entitled “5.60% Notes due 2011.” The Notes
shall be in the form of Exhibit A hereto. If required, the Notes
may bear an appropriate legend regarding original issue discount for federal
income tax purposes.


 


In the event
that the Company shall issue and the Trustee shall authenticate any Notes
issued under this Supplemental Indenture subsequent to the Issue Date (such
Notes, “Additional Securities”), the Company shall use its best efforts to
obtain the same “CUSIP” number for such Notes as is printed on the Notes
Outstanding at such time; provided, however, that if any series
of Notes issued under this Supplemental Indenture subsequent to the Issue Date
is determined, pursuant to an Opinion of Counsel of the Company in a form
reasonably satisfactory to the Trustee, to be a different class of security
than the Notes Outstanding at such time for federal income tax purposes, the
Company may obtain a “CUSIP” number for such Notes that is different than the “CUSIP”
number printed on the Notes then Outstanding. Notwithstanding the foregoing,
all Notes issued under this Supplemental Indenture shall vote and consent
together on all matters as one class and no series of Notes will have the right
to vote or consent as a separate class on any matter.


 


ARTICLE II



Certain Definitions


 


The following
terms have the meanings set forth below in this Supplemental Indenture.
Capitalized terms used but not defined herein have the meanings ascribed to
such terms in the Indenture. To the extent terms defined herein differ from the
Indenture, the terms defined herein will govern.


 


“Bankruptcy
Law” means title 11 of the United States Code, as amended, or any similar
federal or state law for the relief of debtors.


 


“Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.


 


“Debt”
means with respect to the Company at any date, without duplication, obligations
(other than nonrecourse obligations) for borrowed money or evidenced by bonds,
debentures, notes or similar instruments.


 


“Default”
means any event, act or condition that is, or after notice or the passage of
time or both would be, an Event of Default.


 


“Event of
Default” means any event or condition specified as such in Section 4.1
hereof.


 


“Holder”
means the Person in whose name a Note is registered in the books of the
Securities Registrar for the Notes.


 


“Issue Date”
means the date on which the Notes are originally issued under the Indenture.


 


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“Trustee”
means the party named as such above until a successor replaces such party in
accordance with the applicable provisions of the Indenture and thereafter means
the successor serving hereunder.


 


ARTICLE III



Covenants


 


Section 3.1                                      Reports
to Holders of Notes.  The Company
shall file with the Commission the annual reports and the information,
documents and other reports required to be filed pursuant to Section 13 or
15(d) of the Exchange Act. The Company shall file with the Trustee after
it files them with the Commission and make generally available to each Holder
of record of Notes such reports, information and documents within 15 days after
it files them with the Commission. If the Company is no longer subject to these
periodic requirements of the Exchange Act, it will nonetheless continue to file
reports with the Commission and the Trustee and mail such reports to each
Holder of Notes as if it were subject to such reporting requirements.


 


ARTICLE IV



Remedies


 


Section 4.1                                      Events
of Default.


 


“Event of Default” means any one or more of the following
events:


 


(i)                                     the
failure by the Company to pay interest on any Note when the same becomes due
and payable and the continuance of any such failure for a period of 30 days;


 


(ii)                                  the
failure by the Company to pay the principal of any Note when the same becomes
due and payable at Maturity or any Make-Whole Amount payable upon redemption of
any Note;


 


(iii)                               the
failure by the Company to comply with any of its covenants or warranties in, or
provisions of, the Notes or the Indenture and such failure continues for the
period and after the notice specified below;


 


(iv)                              (1) the
failure of the Company to make any payment by the end of any applicable grace
period after Maturity of Debt in an amount (taken together with amounts in
clause (2) of this Section 4.1(iv)) in excess of $20,000,000 and
continuance of such failure, or (2) the acceleration of Debt in an amount
(taken together with amounts in clause (1) of this Section 4.1(iv))
in excess of $20,000,000 because of a default with respect to such Debt without
such Debt having been discharged or such acceleration having been cured,
waived, rescinded or annulled, in the case of (1) or (2) above, for a
period of 30 days after receipt by the Company of a Notice of Default;


 


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(v)                                 the
Company, pursuant to or within the meaning of any Bankruptcy Law:


 


(A)                              commences
a voluntary case;


 


(B)                                consents
to the entry of an order for relief against it in an involuntary case;


 


(C)                                consents
to the appointment of a Custodian of it or for all or substantially all of its
property; or


 


(D)                               makes
a general assignment for the benefit of its creditors; or


 


(vi)                              a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:


 


(A)                              is
for relief against the Company as debtor in an involuntary case;


 


(B)                                appoints
a Custodian of the Company for all or substantially all of the property of the
Company; or


 


(C)                                orders
the liquidation of the Company;


 


and the order or decree remains unstayed and in effect for 60 days.


 


A Default as described in subclause (iii) above will not be deemed
an Event of Default until the Trustee, if indemnified as provided in Section 6.3(5) of
the Indenture, notifies the Company, or the Holders of not less than 25% in
aggregate principal amount at Maturity of the then Outstanding Notes notify the
Company and the Trustee, of the Default and the Company fails to cure such
Default within 60 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a “Notice of
Default.” If such a Default is cured within such time period, it ceases.


 


If an Event of
Default (other than an Event of Default with respect to the Company resulting
from subclauses (v) or (vi) above), shall have occurred and be
continuing under the Indenture, the Trustee, if indemnified as provided in Section 6.3(5) of
the Indenture, by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount at Maturity of the Notes then Outstanding by notice
to the Company and the Trustee, may declare all Notes, plus all accrued and
unpaid interest, to be due and payable immediately. Upon such declaration of
acceleration, the amounts due and payable on the Notes will be due and payable
immediately. If an Event of Default with respect to the Company specified in
subclauses (v) or (vi) above occurs, such an amount will
automatically become and be immediately due and payable without any
declaration, notice or other act on the part of the Trustee and the Company or
any Holder.


 


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Section 4.2                                      Waiver
of Defaults by Majority of Noteholders. 
The Holders of a majority in aggregate principal amount at Maturity of
the Notes then Outstanding by written notice to the Trustee and the Company may
waive any Default or Event of Default (other than any Default or Event of
Default in payment of principal or interest) under the Indenture. Upon any such
waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of the
Indenture. Holders of a majority in aggregate principal amount at Maturity of
the then Outstanding Notes may rescind an acceleration and its consequence
(except an acceleration due to nonpayment of principal or interest on the
Notes) if the rescission would not conflict with any judgment or decree and if
all existing Events of Default have been cured or waived.


 


Section 4.3                                      Direction
of Proceedings.  The Holders may not
enforce the provisions of the Indenture and the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in aggregate
principal amount at Maturity of the Notes then Outstanding may direct the
Trustee, if indemnified as provided in Section 6.3(5) of the
Indenture, in its exercise of any trust or power; provided, however,
that such direction does not conflict with the terms of the Indenture. The
Trustee may withhold from the Holders notice of any continuing Default or Event
of Default (except any Default or Event of Default in payment of principal or
interest on the Notes) if the Trustee determines that withholding such notice
is in the Holders’ interest.


 


Section 4.4                                      Notice
of Defaults.  The Company is required
to deliver to the Trustee an annual statement regarding compliance with the
Indenture, and include in such statement, if any officer of the Company is
aware of any Default or Event of Default, a statement specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto. In addition, the Company is required to deliver to the
Trustee prompt written notice of the occurrence of any Default or Event of
Default.


 


ARTICLE V



The Notes


 


Section 5.1                                      Book
Entry, Delivery and Form.


 


The Notes will
be issued in the form of a fully registered Global Note (the “Global Note”).
The Global Note will be deposited on or about the Issue Date with, or on behalf
of, The Depository Trust Company (“DTC”) and registered in the name of Cede &
Co., as nominee of DTC (such nominee being referred to herein as the “Global
Note Holder”).


 


So long as the
Global Note Holder is the registered owner of any Notes, the Global Note Holder
will be considered the sole owner or holder of such Notes Outstanding under the
Indenture for all purposes. Except as provided in Section 6.2 below,
owners of Notes will not be entitled to have Notes registered in their names,
will not receive or be entitled to receive physical delivery of Notes in
definitive form, and will not be considered the Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder, or giving of
notices and enforcement of remedies. As a result, the ability of a Person
having a beneficial interest in Notes represented by the Global Note


 


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to pledge such interest to Persons or entities that do not participate
in DTC’s system or to otherwise take actions in respect of such interest may be
affected by the lack of a physical certificate evidencing such interest.


 


Neither the
Company, the Trustee, the Paying Agent nor the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of the Notes by DTC, or for maintaining, supervising
or reviewing any records of DTC relating to such Notes.


 


Payments in
respect of the principal, premium, if any, and interest on any Notes registered
in the name of a Global Note Holder on the applicable record date will be
payable by the Trustee to or at the direction of such Global Note Holder in its
capacity as the registered holder under the Indenture. Under the terms of the
Indenture, the Company and the Trustee may treat the Persons in whose names the
Notes, including the Global Note, are registered as the owners thereof for the
purpose of receiving such payments and for any and all other liability for the
payment of such amounts to beneficial owners of Notes (including principal,
premium, if any, and interest).


 


As long as the
Notes are represented by a Global Note, DTC’s nominee will be the holder of the
Notes and therefore will be the only entity that can exercise a right to
repayment or repurchase of the Notes. Notice by participants or indirect
participants of DTC of the exercise of the option to elect repayment of
beneficial interests in Notes represented by a Global Note must be transmitted
to DTC in accordance with its procedures on a form required by DTC and provided
to participants. In order to ensure that DTC’s nominee will timely exercise a
right to repayment with respect to a particular Note, the beneficial owner of
such Note must instruct the broker or the participant or indirect participant
through which it holds an interest in such Note to notify DTC of its desire to
exercise a right to repayment. Each beneficial owner should consult the broker
or other participant or indirect participant through which it holds an interest
in a Note in order to ascertain the cut-off time by which such an instruction
must be given in order for timely notice to be delivered to DTC. The Trustee
and the Company will not be liable for any delay in delivery of notices of the
exercise of the option to elect repayment.


 


Section 5.2                                      Certificated
Notes.


 


If (i) the
Company notifies the Trustee in writing that DTC is no longer willing or able
to act as a depository and the Company is unable to locate a qualified
successor within 90 days, (ii) the Company, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Notes in the form of
certificated Notes under the Indenture, or (iii) there shall have occurred
and be continuing an Event of Default with respect to the Notes, then, upon
surrender by the relevant Global Note Holder of its Global Note, Notes in the
form of certificated Notes will be issued to each Person that such Global Note
Holder and DTC identify as the beneficial owner of the related Notes.


 


Neither the
Company nor the Trustee shall be liable for any delay by the related Global
Note Holder or DTC in identifying the beneficial owners of Notes and each such
Person may conclusively rely on, and shall be protected in relying on, instructions
from the Global Note


 


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Holder or of DTC for all purposes (including with respect to the
registration and delivery, and the respective principal amounts, of the Notes
to be issued).


 


Section 5.3                                      Same-Day
Settlement and Payment.


 


The payments
in respect of the Notes (including principal, premium, if any, and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder.


 


Section 5.4                                      Transfer
and Exchange.


 


A holder may
transfer or exchange the Notes in accordance with the procedures set forth in the
Indenture. The Securities Registrar may require a holder, among other things,
to furnish appropriate endorsements and transfer documents, and to pay any
taxes and fees required by law or permitted by the Indenture.


 


The registered
Holder of a Note will be treated as the owner of it for all purposes.


 


ARTICLE VI


 


Section 6.1                                      Form of
Trustee’s Certificate of Authentication.


 


Notwithstanding
anything contained in the Indenture, the Trustee’s certificate of
authentication with respect to the Global Note shall be in substantially the
following form:


 


J. P.
Morgan Trust Company,

National Association, as Trustee,

certifies that this is the Global

Note referred to in the

within-mentioned Indenture.


 


	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  	
   

  



 


 


Date:


 


ARTICLE VII



Miscellaneous


 


Section 7.1                                      Governing
Law.  This Supplemental Indenture and
the Notes shall be governed by, and construed in accordance with, the laws of
the State of New York.


 


Section 7.2                                      No
Adverse Interpretation of other Agreements. 
This Supplemental Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Supplemental Indenture.


 


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Section 7.3                                      No
Recourse Against Others.  All
liability described in paragraph 11 of the Global Note of any director,
officer, employee or stockholder, as such, of the Company is waived and
released.


 


Section 7.4                                      Successors
and Assigns.  All covenants and
agreements of the Company in this Supplemental Indenture and the Notes shall
bind its successors and assigns. All agreements of the Trustee in this
Supplemental Indenture shall bind its successors and assigns.


 


Section 7.5                                      Duplicate
Originals.  The parties may sign any
number of copies of this Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.


 


Section 7.6                                      Severability.  In case any one or more of the provisions
contained in this Supplemental Indenture or in the Notes shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Supplemental Indenture or of the Notes.


 


Section 7.7                                      Trustee.  The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company.  The Trustee accepts the trusts created by the
Indenture, as amended and supplemented by this Supplemental Indenture, and
agrees to perform the same upon the terms and conditions of the Indenture, as
amended and supplemented by this Supplemental Indenture.  All of the provisions contained in the
Indenture in respect of the rights, privileges, immunities, powers and duties
of the Trustee shall be applicable in respect of this Supplemental Indenture as
fully and with like force and effect as though fully set forth in full herein.


 


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SIGNATURES


 


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


 


	
   

  	
  WADDELL &
  REED FINANCIAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Daniel P.
  Connealy

  
	
   

  	
  Title:

  	
  Senior Vice
  President and

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  J. P. MORGAN
  TRUST COMPANY,

  	
   

  
	
  NATIONAL
  ASSOCIATION, as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
  George N.
  Reaves

  	
   

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  	
   

  
								



 


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EXHIBIT A


 


THIS NOTE IS A
GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A
SUCCESSOR DEPOSITORY. THIS GLOBAL NOTE IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS GLOBAL NOTE (OTHER THAN A TRANSFER OF THIS GLOBAL NOTE AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.


 


UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


 


	
  No. R-1

  	
  CUSIP
  No.: 930059AB6

  
	
   

  	
   

  



5.60% Notes
due 2011


 


WADDELL &
REED FINANCIAL, INC.

A DELAWARE CORPORATION


 


Waddell &
Reed Financial, Inc. (the “Company”) promises to pay to CEDE &
CO. or registered assigns the principal sum of TWO HUNDRED MILLION DOLLARS on January 15,
2011 and to pay interest on the principal Outstanding amount hereof on January 15
and July 15, commencing July 15, 2006, through but not including January 15,
2011.


 


All
capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Indenture by and between the Company and J. P. Morgan
Trust Company, National Association (as successor to Chase Manhattan Trust
Company, National Association), as Trustee (the “Trustee”) dated as of January 18,
2001, as supplemented by the Second Supplemental Indenture dated as of January 13,
2006, between the Company and the Trustee (collectively, the “Indenture”).


 


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The provisions
of this Security are continued on the attached “Terms of Notes” set forth on
the other side of this Security.


 


	
   

  	
  WADDELL &
  REED FINANCIAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Daniel P.
  Connealy

  
	
   

  	
  Title:

  	
  Senior Vice
  President and

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Daniel C.
  Schulte

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice
  President and

  	
   

  	
   

  
	
   

  	
  General
  Counsel

  	
   

  	
   

  
	
   

  	
   

  
	
  TRUSTEE’S
  CERTIFICATE OF AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  J. P. Morgan
  Trust Company,

  	
   

  
	
  National
  Association, as Trustee,

  	
   

  
	
  certifies
  that this is the

  	
   

  
	
  Global Note
  referred to in the

  	
   

  
	
  within-mentioned
  Indenture.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  	
   

  
										



 


 


Date:  January 13, 2006


 


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Terms of Notes


 


WADDELL &
REED FINANCIAL, INC.


 


5.60% Notes
due 2011


 


1.                                       Interest.


 


WADDELL &
REED FINANCIAL, INC. (the “Company”), a Delaware corporation, promises to pay
interest on the principal amount of this Note at the rate per annum shown
above. The Company will pay interest semiannually on January 15 and July 15
of each year, commencing on July 15, 2006, until the principal is paid or
made available for payment. Interest on the Notes will accrue from the most
recent date to which interest has been paid or duly provided for or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.


 


2.                                       Method
of Payment.


 


The Company
will pay interest on the Notes (except defaulted interest, if any, which will
be paid on such special payment date to Holders of record on such special
record date as may be fixed by the Company) to the Persons who are registered
Holders of Notes at the close of business on the January 1 and July 1
immediately preceding the interest payment date (the “Record Date”). Holders
must surrender Notes to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts (i) by
check mailed to the Holder at such address as shall appear in the Security
Register or (ii) by transfer to an account maintained by the Person
entitled thereto; provided that proper written transfer instructions
have been received by the relevant record date.


 


3.                                       Paying
Agent and Registrar.


 


Initially, J.
P. Morgan Trust Company, National Association (the “Trustee”) will act as
Paying Agent and Securities Registrar. The Company may change or appoint any
Paying Agent, Securities Registrar or co-Securities Registrar without notice.
The Company or any of its Subsidiaries may act as Paying Agent, Securities
Registrar or co- Securities Registrar.


 


The Company
issued the Notes under a Second Supplemental Indenture dated as of January 13,
2006 to the Indenture dated January 18, 2001, between the Company and the
Trustee (as supplemented, the “Indenture”). The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (the “Trust Indenture Act”) as in effect on
the date of the Indenture. The Notes are subject to all such terms, and Holders
are referred to the Indenture and the Trust Indenture Act for a statement of
them. Capitalized terms not defined herein have the meanings given to those
terms in the Indenture.


 


The Notes are
unsecured and unsubordinated obligations of the Company ranking equally with
all other unsecured and unsubordinated indebtedness of the Company from time to
time Outstanding.  The Company will
furnish to any Holder upon written request and without charge


 


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a copy of the Indenture. 
Requests may be made to: Waddell & Reed Financial, Inc.,
6300 Lamar Avenue, Overland Park, Kansas 66202, Attention: Chief Financial
Officer.


 


4.                                       Redemption.


 


The Company may redeem the Notes at any time in whole or from time to time in part at a Redemption Price equal to the sum of 100% of the aggregate principal amount of the Notes being redeemed, plus accrued but unpaid interest on those Notes to the Redemption Date, plus the Make-Whole Amount, if any, as defined below. The Company will, however, pay the interest installment due on any Interest Payment Date that occurs on or before a Redemption Date to the registered Holders of Notes as of the close of business on the Record Date immediately preceding that Interest Payment Date.
 
If the Company has given notice as provided in the Indenture and made funds available for the redemption of any Notes called for redemption on the Redemption Date referred to in that notice, those Notes will cease to bear interest on that Redemption Date and the only right of Holders of those Notes will be to receive payment of the Redemption Price.
 
The Company will give notice of any redemption of any Notes to Holders of Notes to be redeemed at their addresses, as shown in the Security Register for the Notes, not more than 60 nor less than 30 days prior to the date fixed for redemption. The notice of redemption will specify, among other items, the Redemption Price and the aggregate principal amount of the Notes to be redeemed.
 
If the Company chooses to redeem less than all of the Notes, it will notify the Trustee at least 45 days before giving notice of redemption, or such shorter period as is satisfactory to the Trustee, of the aggregate principal amount of the Notes to be redeemed and the applicable Redemption Date and the Redemption Price.  Such notice from the Company to the Trustee shall separately state the Make-Whole Amount, and provide the basis of computation of the Make-Whole Amount in reasonable detail. The Trustee will select, in the manner it deems fair and appropriate, the Notes to be redeemed in part, unless the Notes are held by DTC as Global Note Holder, in which case selection of such Notes will be made by DTC in accordance with its standard procedures.
 
As used in this Note:
 
“Make-Whole Amount” means, in connection with any optional redemption, the excess, if any, of (a) the aggregate present value as of the Redemption Date of each dollar of principal being redeemed and the amount of interest, exclusive of interest accrued to the Redemption Date, that would have been payable in respect of each such dollar if such redemption had not been made, determined by discounting, on a semiannual basis, such principal and interest at the Reinvestment Rate, determined on the third Business Day preceding the date notice of such redemption is given, from the respective dates on which such principal and interest would have been payable if such redemption had not been made, to the Redemption Date, over (b) the aggregate principal amount of the Notes being redeemed.


 


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“Reinvestment Rate” means 0.20% plus the arithmetic mean of the yields under the heading “Week Ending” published in the most recent Statistical Release under the caption “Treasury Constant Maturities” for the maturity, rounded to the nearest month, corresponding to the remaining life to Maturity, as of the payment date of the principal amount of the Notes being redeemed. If no maturity exactly corresponds to such Maturity, yields for the two published maturities most closely corresponding to such Maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. For the purposes of calculating the Reinvestment Rate, the most recent Statistical Release published prior to the date of determination of the Make-Whole Amount shall be used. If the format or content of the Statistical Release changes in a manner that precludes determination of the Treasury yield in the above manner, then the Treasury yield shall be determined in the manner that most closely approximates the above manner, as reasonably determined by the Company.
 


“Statistical
Release” means the statistical release designated “H.15(519)” or any successor
publication which is published weekly by the Federal Reserve System and which
reports yields on actively traded United States government securities adjusted
to constant maturities, or, if such statistical release is not published at the
time of any required determination under the Indenture, then such other
reasonably comparable index which shall be designated by the Company.


 


5.                                       Denominations,
Transfer, Exchange.


 


The Notes are
in registered form only without coupons in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. A Holder may transfer or exchange Notes
by presentation of such Notes to the Securities Registrar or a co- Securities
Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Notes of other denominations. The Securities
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture.


 


6.                                       Persons
Deemed Owners.


 


The registered
Holder of this Note shall be treated as the owner of it for all purposes.


 


7.                                       Unclaimed
Money.


 


If money for
the payment of principal or interest remains unclaimed for a period ending on
the earlier of the date that is ten Business Days prior to the date such money
would escheat to the State or two years after such principal or interest has
become due and payable, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
Person.


 


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8.                                       Amendment,
Supplement, Waiver.


 


Subject to
certain exceptions, the Indenture and the Notes may be amended or supplemented
with the consent (which may include consents obtained in connection with a
tender offer or exchange offer for Notes) of the Holders of at least a majority
in aggregate principal amount at Maturity of the Notes then Outstanding, and
any existing Default under, or compliance with any provision of the Indenture
may be waived (other than any continuing Default or Event of Default in the
payment of interest on or the principal of the Notes) with the consent (which
may include consents obtained in connection with a tender offer or exchange
offer for Notes) of the Holders of a majority in aggregate principal amount at
Maturity of the Notes then Outstanding. Without the consent of any Holder, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency; to provide for uncertificated
Notes in addition to or in place of certificated Notes; or to make any change
that does not adversely affect the legal rights of any Holder.


 


Without the
consent of each Holder affected, the Company and the Trustee may not:


 


(1)                                  change
the Stated Maturity of any Note;


 


(2)                                  reduce
the principal amount of any Note;


 


(3)                                  reduce
the amount of principal amount of an Original Issue Discount Security;


 


(4)                                  reduce
the rate of interest on, or any Make-Whole Amount payable upon redemption of,
any Note;


 


(5)                                  change
any Place of Payment where any Note or interest thereon is payable, or make any
Note payable in money other than the currency of the United States of America;


 


(6)                                  impair
the right to institute suit for the enforcement of any payment on or after the
Stated Maturity date with respect to the Notes;


 


(7)                                  reduce
the percentage in principal amount of Outstanding Notes, the consent of whose
Holders is required for any modification, amendment or any waiver of the terms
of the Notes and the Indenture; or


 


(8)                                  modify
the ranking of the Notes.


 


The right of
any Holder to participate in any consent required or sought pursuant to any
provision of the Indenture (and the obligation of the Company to obtain any
such consent otherwise required from such Holder) may be subject to the
requirement that such Holder shall have been the Holder of record of any Notes
with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of the Indenture.


 


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9.                                       Successor
Substituted.


 


When a
successor assumes all the obligations of its predecessor under the Notes and in
accordance with the Indenture, the successor shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Notes and the Indenture with the same effect as if such successor had been
named as the Company herein, and thereafter, except in the case of a lease, the
predecessor shall be relieved of all obligations and covenants under the Notes
and the Indenture.


 


10.                                 Trustee
Dealings With Company.


 


J. P. Morgan
Trust Company, National Association, the Trustee under the Indenture, in its
individual or any other capacity, or any of its affiliates, may make loans to,
accept deposits from and perform services for the Company or its affiliates,
and may otherwise deal with the Company or its affiliates, as if it were not
Trustee; however, if it acquires any conflicting interest (as defined in the
Indenture), it must eliminate such conflict or resign.


 


11.                                 No
Recourse Against Others.


 


A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issue
of the Notes.


 


12.                                 Authentication.


 


This Note
shall not be valid until the Trustee signs the certificate of authentication
immediately below the Company’s execution of this Note.


 


13.                                 Governing
Law.


 


The Notes and
the Indenture shall be governed by, and construed in accordance with, the laws
of the State of New York.


 


14.                                 Abbreviations.


 


Customary
abbreviations may be used in the name of a Holder or an assignee, such as: TEN
COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (= Uniform Gifts to Minors Act).


 


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