UNDERWRITING AGREEMENT

 

Table of Contents

 

			Page
SECTION 1.	Representations and Warranties		2
(a)	Representations and Warranties by the Company		2
	(i)	Compliance with Registration Requirements	2
	(ii)	Disclosure Package	3
	(iii)	Well-Known Seasoned Issuer	3
	(iv)	Company Not Ineligible Issuer	3
	(v)	Issuer Free Writing Prospectuses	4
	(vi)	Distribution of Offering Material by the Company	4
	(vii)	Incorporated Documents	4
	(viii)	Independent Accountants	4
	(ix)	Financial Statements	4
	(x)	No Material Adverse Change in Business	5
	(xi)	Good Standing of the Company	5
	(xii)	Good Standing of Subsidiaries	5
	(xiii)	Capitalization	6
	(xiv)	This Agreement	6
	(xv)	The Indenture	6
	(xvi)	The Securities	6
	(xvii)	Description of the Securities and the Indenture	6
	(xviii)	Absence of Defaults and Conflicts	7
	(xix)	Absence of Proceedings	7
	(xx)	Possession of Intellectual Property	7
	(xxi)	Absence of Further Requirements	8
	(xxii)	Possession of Licenses and Permits	8
	(xxiii)	Investment Company Act	8
	(xxiv)	Adviser Activities	8
	(xxv)	Broker-Dealer Business	9
	(xxvi)	Compliance with Applicable Laws	9
	(xxvii)	Agreements with Funds	9
	(xxviii)	Transfer Agent	9
	(xxix)	Compliance with Money Laundering Laws	10
	(xxx)	Compliance with OFAC	10
	(xxxi)	No Restrictions on Subsidiaries	10
	(xxxii)	Internal Controls and Procedures	10
	(xxxiii)	No Material Weakness in Internal Controls	10
	(xxxiv)	Disclosure Controls	11
	(xxxv)	Sarbanes-Oxley Act	11
(b)	Officer’s Certificates		11
SECTION 2.	Sale and Delivery to Underwriters; Closing		11

 

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(a)	Sale of Securities	11
(b)	Payment	11
(c)	Denominations; Registration	12
(d)	No Advisory or Fiduciary Responsibility	12
SECTION 3.	Covenants of the Company	13
(a)	Compliance with Securities Regulations and Commission Requests	13
(b)	Representatives’ Review of Proposed Amendments and Supplements	13
(c)	Amendments and Supplements to the Registration Statement and Prospectus	14
(d)	Final Term Sheet	14
(e)	Permitted Free Writing Prospectuses	14
(f)	Delivery of Registration Statements	15
(g)	Delivery of Prospectuses	15
(h)	Blue Sky Qualifications	15
(i)	Rule 158	16
(j)	Use of Proceeds	16
(k)	“Clear Market” Provision	16
(l)	Reporting Requirements	16
(m)	No Stabilization.	16
(n)	Record Retention	16
SECTION 4.	Payment of Expenses	16
(a)	Expenses	16
(b)	Termination of Agreement	17
SECTION 5.	Conditions of Underwriters’ Obligations	17
(a)	Effectiveness of Registration Statement	17
(b)	Opinions of Counsel for Company	17
(c)	Opinion of Counsel for Underwriters	17
(d)	Officers’ Certificate	18
(e)	Accountant’s Comfort Letter	18
(f)	Bring-down Comfort Letter	18
(g)	Maintenance of Rating	18
(h)	Additional Documents	18
(i)	Termination of Agreement	19
SECTION 6.	Indemnification	19
(a)	Indemnification of Underwriters	19
(b)	Indemnification of Company, Directors and Officers	20
(c)	Notifications and Other Indemnification Procedures	20
(d)	Settlements	21
(e)	Information Furnished by Underwriters	22
SECTION 7.	Contribution	22

 

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SECTION 8.	Representations, Warranties and Agreements to Survive Delivery	23
SECTION 9.	Termination of Agreement	23
(a)	Termination; General	23
(b)	Liabilities	23
SECTION 10.	Default by One or More of the Underwriters	23
SECTION 11.	Notices	24
SECTION 12.	Parties	24
SECTION 13.	GOVERNING LAW	25
SECTION 14.	Effect of Headings	25
SECTION 15.	Counterparts	25
SCHEDULES
Schedule A - List of Underwriters		Schedule A-1
Schedule B - List of Subsidiaries		Schedule B-1
Schedule C – Issuer Free Writing Prospectuses		Schedule C-1
Schedule D – Pricing Term Sheet		Schedule D-1
EXHIBITS
Exhibit A - Form of Opinion of Vinson & Elkins L.L.P., counsel for the Company		A-1
Exhibit B - Form of Opinion of Daniel C. Schulte, Esq., Senior Vice President and General Counsel for the Company		B-1

 

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WADDELL & REED FINANCIAL, INC.

 

(a Delaware corporation)

 

$200,000,000

 

5.60% Notes due 2011

 

UNDERWRITING AGREEMENT

 

January 10, 2006

 

Banc of America Securities LLC
J.P. Morgan Securities Inc.
     as Representatives of the several Underwriters

 

c/o Banc of America Securities LLC
 9 West 57 ^th Street
New York, New York  10019

 

J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York  10017

 

Ladies and Gentlemen:

 

Waddell & Reed Financial, Inc., a Delaware corporation (the “ Company ”), confirms its agreement with Banc of America Securities LLC (“ Banc of America ”) and J.P. Morgan Securities Inc. (“ JPMorgan ”) and each of the other underwriters named on Schedule A hereto (collectively, the “ Underwriters ”, which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for which Banc of America and JPMorgan are acting as Representatives (in such capacity, the “ Representatives ”), with respect to the issue and sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of the respective principal amounts set forth on Schedule A hereto of $200,000,000 aggregate principal amount of the Company’s 5.60% Notes due 2011 (the “ Securities ”). The Securities will be issued pursuant to an indenture dated as of January 18, 2001 between the Company and J.P. Morgan Trust Company, National Association (as successor to Chase Manhattan Trust Company, National Association), as trustee (the “ Trustee ”), to be supplemented by a supplemental indenture (the “ Supplemental Indenture ”) to be executed as of the Closing Time (as defined below) (collectively, the “ Indenture ”).  The Company understands that the Underwriters propose to make a public offering of the Securities as soon as the Representatives deem advisable after this Agreement has been executed and delivered.

 

The Company has prepared and filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement on Form S-3 (File No. 333-43862), Pre-Effective Amendment No. 1 thereto and Post-Effective Amendment No. 1 thereto, which

 

 

Post-Effective Amendment No. 1 contains a base prospectus (the “ Base Prospectus ”) to be used in connection with the public offering and sale of the Securities.  Such registration statement, as so amended, including the financial statements, exhibits and schedules thereto, in the form in which Post-Effective Amendment No. 1 thereto was declared effective by the Commission under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the “ Securities Act ”), including any required information (“ Rule 430A Information ”) deemed to be a part thereof pursuant to Rule 430A under the Securities Act, is referred to herein as the “ Registration Statement .”  Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called a “ Rule 462(b) Registration Statement ,” and from and after the date and time of filing of any such Rule 462(b) Registration Statement, the term “Registration Statement” includes any such Rule 462(b) Registration Statement.  The Base Prospectus, together with the preliminary prospectus supplement dated January 10, 2006 relating to the Securities and as used prior to filing of the Prospectus, is referred to herein as the “ Preliminary Prospectus .”  The Base Prospectus, together with the final prospectus supplement dated the date hereof relating to the Securities and as first filed pursuant to Rule 424(b) after the date and time that this Agreement is executed and delivered by the parties hereto, is referred to herein as the “ Prospectus .”  Any reference herein to the Registration Statement, the Preliminary Prospectus, any other preliminary prospectus relating to the Securities or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act; any reference to any amendment or supplement to the Preliminary Prospectus, any other preliminary prospectus relating to the Securities or the Prospectus shall be deemed to refer to and include any documents filed after the date of the Preliminary Prospectus, any other preliminary prospectus relating to the Securities or the Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “ Exchange Act ”), and incorporated by reference in the Preliminary Prospectus, any other preliminary prospectus relating to the Securities or the Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement.  All references in this Agreement to the Registration Statement, the Preliminary Prospectus, the Prospectus, any other preliminary prospectus relating to the Securities, or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“ EDGAR ”).

 

SECTION 1.                                 Representations and Warranties .

 

(a)                                   Representations and Warranties by the Company . The Company represents and warrants to each Underwriter as of the date hereof and as of the Closing Time referred to in Section 2(b) hereof, and agrees with each Underwriter, as follows:

 

(i)                                      Compliance with Registration Requirements . The Registration Statement has been declared effective by the Commission under the Securities Act.  No order suspending the effectiveness of the Registration Statement or any part thereof has been issued by the Commission and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering has been initiated or,

 

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to the knowledge of the Company, threatened by the Commission; each of the Registration Statement and any amendment thereto, as of the applicable effective date or dates, complied and will comply in all material respects with the Securities Act and the Trust Indenture Act of 1939, as amended, and the rules and regulations promulgated thereunder (collectively, the “ Trust Indenture Act ”), and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Time, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , however , that the Company makes no representation and warranty with respect to (A) that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification (Form T-1) of the Trustee under the Trust Indenture Act or (B) any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement and the Prospectus and any amendment or supplement thereto.

 

(ii)                                   Disclosure Package .  As used herein, “ Disclosure Package ” means (A) the Preliminary Prospectus, (B) the issuer free writing prospectuses as defined in Rule 433 under the Securities Act (each, an “ Issuer Free Writing Prospectus ”), if any, identified on Schedule C hereto and (C) any other free writing prospectus that the parties hereto hereafter expressly agree in writing to treat as part of the Disclosure Package.  As of 2:00 p.m. (New York City time) on the date of this Agreement (the “ Initial Sale Time ”), the Disclosure Package did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein (it being understood and agreed that the only such information furnished by or on behalf of any Underwriter consists of the information described as such in Section 6 hereof).

 

(iii)                                Well-Known Seasoned Issuer .  (A) At the time of filing the Preliminary Prospectus, (B) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 433(h)(3) under the Securities Act) made any offer relating to the Securities in reliance on the exemption of Rule 164 or Rule 433 under the Securities Act, and (C) at the date and time of execution of this Agreement (with such date being used as the determination date for purposes of this clause (C), the Company was and is a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act.

 

(iv)                               Company Not Ineligible Issuer .  (A) At the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer of the Securities (within the meaning of Rule 164(h)(2)) under the Securities Act and (B) as of the date of the execution and delivery of this Agreement (with such

 

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date being used as the determination date for purposes of this Section 1(a)(iv), the Company was not and is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act), without taking account of any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an “ineligible issuer.”

 

(v)                                  Issuer Free Writing Prospectuses .  No Issuer Free Writing Prospectus includes any information that conflicts with the information contained in the Registration Statement, including any document incorporated by reference therein that has not been superseded or modified.  The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein (it being understood and agreed that the only such information furnished by any Underwriter consists of, if applicable, the names of the Underwriters).

 

(vi)                               Distribution of Offering Material by the Company .  The Company has not distributed, and will not distribute prior to the later of the Closing Time and the completion of the Underwriters’ distribution of the Securities, any offering material in connection with the offering and sale of the Securities other than the Registration Statement, the Preliminary Prospectus, the Prospectus and any Issuer Free Writing Prospectus reviewed and consented to by the Representatives and included on Schedule C hereto.

 

(vii)                            Incorporated Documents . The documents incorporated or deemed to be incorporated by reference in the Registration Statement, the Prospectus and the Disclosure Package, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act, and, at the time the Registration Statement became effective, at the Initial Sale Time and at the Closing Time, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

 

(viii)                         Independent Accountants . KPMG LLP, which has certified certain financial statements of the Company and its subsidiaries, is an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Accounting Oversight Board (United States) and as required by the Securities Act.

 

(ix)                                 Financial Statements . The financial statements included or incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus, together with the related schedules, if any, and notes, present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and the statement of operations, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; and such financial statements have been prepared in conformity with generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved. The supporting schedules, if any,

 

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included or incorporated by reference in the Registration Statement present fairly in accordance with GAAP the information required to be stated therein. The summary financial information included in the Preliminary Prospectus and the Prospectus under the captions “Summary—Summary Financial Information” and “Capitalization” present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included or incorporated by reference in the Registration Statement.

 

(x)                                    No Material Adverse Change in Business . Since the respective dates as of which information is given in the Disclosure Package and the Prospectus, except as otherwise described therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “ Material Adverse Effect ”), (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise, and (C) except for regular quarterly dividends on the Company’s Common Stock, par value $.01 per share, of the Company in amounts per share that are consistent with past practice, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

 

(xi)                                 Good Standing of the Company . The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect.

 

(xii)                              Good Standing of Subsidiaries . The Company has no material subsidiaries other than those listed on Schedule B hereto. Each such subsidiary (a “ Material Subsidiary ”) of the Company has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect; and except as otherwise disclosed in the Disclosure Package and the Prospectus, all of the issued and outstanding capital stock of each Material Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and none of the outstanding shares of capital stock of any Material Subsidiary was issued in

 

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violation of the preemptive or similar rights of any securityholder of such Material Subsidiary.

 

(xiii)                           Capitalization . The authorized, issued and outstanding capital stock of the Company is as set forth in the Disclosure Package and the Prospectus in the column entitled “Actual” under the caption “Capitalization” (except for subsequent issuances, if any, pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in, or incorporated by reference into, the Disclosure Package and the Prospectus or pursuant to the exercise of convertible securities or options referred to in, or incorporated by reference into, the Disclosure Package and the Prospectus). The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; and none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company.

 

(xiv)                          This Agreement . This Agreement has been duly authorized, executed and delivered by the Company.

 

(xv)                             The Indenture . The Indenture (including the Supplemental Indenture) has been duly authorized by the Company, the Indenture has been duly executed and delivered by the Company (other than the Supplemental Indenture, which will be duly executed and delivered by the Company prior to or at the Closing Time), and the Indenture has been duly qualified under the Trust Indenture Act, and the Indenture (other than the Supplemental Indenture) constitutes, and the Indenture (including the Supplemental Indenture) prior to or at the Closing Time will constitute, a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

(xvi)                          The Securities . The Securities have been duly authorized and, at the Closing Time, will have been duly executed by the Company and, when authenticated, issued and delivered in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture.

 

(xvii)                       Description of the Securities and the Indenture . The Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the Disclosure Package and the Prospectus and will be in

 

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substantially the respective forms filed or incorporated by reference, as the case may be, as exhibits to the Registration Statement or a Current Report on Form 8-K.

 

(xviii)                    Absence of Defaults and Conflicts . Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary is subject (collectively, “ Agreements and Instruments ”) (except for such defaults that would not result in a Material Adverse Effect); and the execution, delivery and performance of this Agreement, the Indenture and the Securities and the consummation of the transactions contemplated herein and in the Disclosure Package and the Prospectus (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Prospectus under the caption “Use of Proceeds”) and compliance by the Company with its obligations hereunder and under the Indenture and the Securities have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary pursuant to, the Agreements and Instruments, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their assets, properties or operations. As used herein, “ Repayment Event ” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any subsidiary.

 

(xix)                            Absence of Proceedings . There are no actions, suits, proceedings, inquiries or investigations before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against or affecting the Company or any subsidiary (A) which, individually or in the aggregate, are required to be disclosed in the Disclosure Package or the Prospectus (other than as disclosed in the Disclosure Package or the Prospectus), (B) which, except as disclosed in the Disclosure Package and the Prospectus, would reasonably be expected to result in a Material Adverse Effect, or (C) which would reasonably be expected to materially and adversely affect the consummation of the transactions contemplated in this Agreement or, except as disclosed in the Disclosure Package and the Prospectus, the performance by the Company of its obligations hereunder.

 

(xx)                               Possession of Intellectual Property . The Company and its subsidiaries own or possess, or can acquire on commercially reasonable terms, all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or

 

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procedures), trademarks, service marks, trade names or other intellectual property (collectively, “ Intellectual Property ”) necessary to carry on the business now operated by them as disclosed in the Disclosure Package and the Prospectus, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would result in a Material Adverse Effect.

 

(xxi)                            Absence of Further Requirements . No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions contemplated by this Agreement or for the due execution, delivery or performance of the Indenture by the Company, except such as have been already obtained or as may be required under the Securities Act or state securities laws and except for the qualification of the Indenture under the Trust Indenture Act.

 

(xxii)                         Possession of Licenses and Permits . The Company and its subsidiaries possess all material permits, licenses, approvals, consents and other authorizations (collectively, “ Governmental Licenses ”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, individually or in the aggregate, have a Material Adverse Effect; and all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

 

(xxiii)                      Investment Company Act . The Company is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be, an “investment company” or an entity “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the “ Investment Company Act ”).

 

(xxiv)                     Adviser Activities . The Company is not required to register as an investment adviser with the Commission under the Investment Advisers Act of 1940, as amended and the rules and regulations promulgated thereunder (the “ Advisers Act ”). Each subsidiary of the Company which is engaged in investment advisory or investment

 

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management activities (“ Adviser Activities ”) is duly registered as an investment adviser under the Advisers Act and none of such subsidiaries is prohibited by any provision of the Advisers Act or the Investment Company Act, or the respective rules and regulations thereunder, from acting as an investment adviser. None of the Company or any of its subsidiaries is required to be registered, licensed or qualified as an investment adviser under the laws requiring any such registration, licensing or qualification in any state in which it or its subsidiaries conduct business or is not subject to material liability or disability by reason of the failure to be so registered, licensed or qualified.

 

(xxv)                        Broker-Dealer Business . The Company is not required to register as a broker-dealer under the Exchange Act or under the securities laws of any state where it conducts business. Each subsidiary of the Company which is engaged in the broker-dealer business (“ Broker-Dealer Business ”) is duly registered as a broker-dealer under the Exchange Act and under the securities laws of each state where the conduct of its business requires such registration and is in compliance with all United States federal and state laws requiring such registration, except where non-compliance, individually, or in the aggregate, would not have a Material Adverse Effect. Each subsidiary of the Company which is engaged in the Broker-Dealer Business is a member in good standing of the National Association of Securities Dealers, Inc. (the “ NASD ”). The Company is not required to be a member of the NASD.

 

(xxvi)                     Compliance with Applicable Laws . Each of the subsidiaries of the Company which are engaged in the Adviser Activities or the Broker-Dealer Business, as the case may be, is and has been in compliance with all, and no such entity has, as the case may be, received any notice of any violation of any, laws, regulations, ordinances and rules (including those of any non-governmental self-regulatory agencies) applicable to it or its operations relating to the Adviser Activities or the Broker-Dealer Business, except where non-compliance would not have a Material Adverse Effect.

 

(xxvii)                  Agreements with Funds . Each agreement between the Company or any subsidiary of the Company engaged in the Adviser Activities, on the one hand, and any Fund or private client, on the other hand (each, an “ Investment Advisory Agreement ”), is a legal and valid obligation of the Company or such subsidiary, and none of the Company or any such subsidiary is in breach or violation of or in default under any such Investment Advisory Agreement, except where such breach or violation would not have a Material Adverse Effect. The consummation of the transactions contemplated herein will not constitute an “assignment” (as such term is defined in the Advisers Act and the Investment Company Act), of any of the Investment Advisory Agreements.

 

(xxviii)               Transfer Agent . The Company is not required to be registered as a transfer agent under the Exchange Act or under the laws of any state where it conducts business. Each subsidiary of the Company which is a transfer agent is duly registered as a transfer agent under the Exchange Act and under the securities laws of each state where the conduct of its business requires such registration and is in compliance with all such federal and state laws, except where non-compliance would not have a Material Adverse Effect.

 

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(xxix)                       Compliance with Money Laundering Laws .  The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(xxx)                          Compliance with OFAC .  None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“ OFAC ”); and the Company will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

 

(xxxi)                       No Restrictions on Subsidiaries .  No subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company.

 

(xxxii)                    Internal Controls and Procedures .  The Company maintains (A) effective internal control over financial reporting as defined in Rule 13a-15 under the Exchange Act, and (B) a system of internal accounting controls sufficient to provide reasonable assurance that (1) transactions are executed in accordance with management’s general or specific authorizations; (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (3) access to assets is permitted only in accordance with management’s general or specific authorization; and (4) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(xxxiii)                 No Material Weakness in Internal Controls .  Except as disclosed in the Disclosure Package and the Prospectus, or in any document incorporated by reference therein, since the end of the Company’s most recent audited fiscal year, (A) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) has been identified by the Company and (B) there has been no change in the Company’s internal control over financial reporting that has materially affected, or is

 

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reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

(xxxiv)                Disclosure Controls .  The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure.  The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.

 

(xxxv)                   Sarbanes-Oxley Act .  There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply, in all material respects, with any applicable provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including, without limitation, Section 402 related to loans and Sections 302 and 906 related to certifications.

 

(b)                                  Officer’s Certificates . Any certificate signed by any officer of the Company or any of its subsidiaries delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby.

 

SECTION 2.                                 Sale and Delivery to Underwriters; Closing .

 

(a)                                   Sale of Securities . On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Company the aggregate principal amount of Securities set forth on Schedule A opposite the name of such Underwriter, plus any additional principal amount of Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof.  The purchase price to be paid by the Underwriters for the Securities will be 99.365% of the principal amount thereof.

 

(b)                                  Payment . Payment of the purchase price for, and delivery of certificates for, the Securities shall be made at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, or at such other place as shall be agreed upon by the Representatives and the Company, at 9:30 A.M. (New York City time) on January 13, 2006 (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Company (such time and date of payment and delivery is referred to herein as the “ Closing Time ”).

 

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Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representatives for the respective accounts of the Underwriters of certificates for the Securities to be purchased by them. It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which it has agreed to purchase.  JPMorgan, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased by any Underwriter whose funds have not been received by the Closing Time, but such payment will not relieve such Underwriter from its obligations hereunder.

 

(c)                                   Denominations; Registration . Certificates for the Securities shall be in such denominations ($1,000 or integral multiples thereof) and registered in such names as the Representatives may request in writing at least one full business day before the Closing Time. The certificates representing the Securities, which may be in temporary form, shall be made available for examination and packaging by the Representatives in The City of New York not later than 2:00 P.M. (New York City time) on the business day prior to the Closing Time.

 

(d)                                  No Advisory or Fiduciary Responsibility

 

  The Company acknowledges and agrees that: (i) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the public offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other hand, and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary of the Company or its affiliates, stockholders, creditors or employees or any other party; (iii) no Underwriter has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Company with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) and no Underwriter has any obligation to the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement; (iv) the several Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and that the several Underwriters have no obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

 

This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the several Underwriters, or any of them, with respect to the subject matter of this Section 2(d).  The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the several Underwriters with respect to any breach or alleged breach of agency or fiduciary duty.

 

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SECTION 3.                                 Covenants of the Company . The Company covenants with each Underwriter as follows:

 

(a)                                   Compliance with Securities Regulations and Commission Requests . The Company, subject to Section 3(b), will notify the Representatives immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective, or any amendment or supplement to the Prospectus or Issuer Free Writing Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of the Preliminary Prospectus or any other