Document:

Exhibit 4.1

 

CERTIFICATE OF DESIGNATION,
PREFERENCES AND

RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

 

of

 

WADDELL & REED
FINANCIAL, INC.

 

Pursuant to Section 151 of the General
Corporation Law

of the State of Delaware

 

We, Henry J. Herrmann, Chief Executive Officer, and Wendy J. Hills, Vice President, Secretary, and Associate
General Counsel, of Waddell & Reed Financial, Inc., a
corporation organized and existing under the General Corporation Law of the State
of Delaware, in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:

 

That pursuant to the authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation of the said Corporation, the said
Board of Directors on April 8, 2009, adopted the following resolution
creating a series of 750,000 shares of Preferred Stock designated as Series B
Junior Participating Preferred Stock:

 

RESOLVED, that pursuant to the authority in the Board of Directors of
this Corporation in accordance with the provisions of its Restated Certificate
of Incorporation, a series of Preferred Stock of the Corporation be and it
hereby is created, and that the designation and amount thereof and the voting
powers, preferences, and relative, participating, optional, and other special
rights of the shares of such series, and the qualifications, limitations, or
restrictions thereof are as follows:

 

Section 1.                                            Designation and Amount.  The
shares of such series shall he designated as “Series B Junior
Participating Preferred Stock” and the number of shares constituting such series
shall be 750,000.

 

Section 2.                                            Dividends and
Distributions.

 

(A)                              Subject to the
prior and superior rights of the holders of any shares of any series of Preferred
Stock ranking prior and superior to the shares of Series B Junior
Participating Preferred Stock with respect to dividends, the holders of shares
of Series B Junior Participating Preferred Stock shall be entitled to
receive, when, as, and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first day of February, May, August, and November in each year (each such
date being referred to herein as a “Quarterly Dividend Payment Date”),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series B Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock (as defined below) or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Class A Common 

 

 

Stock, $0.01 par value, of
the Corporation (the “Common Stock”) since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series B
Junior Participating Preferred Stock.  In
the event the Corporation shall at any time after April 28, 2009 (the “Rights
Declaration Date”) (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series B Junior Participating
Preferred Stock were entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

 

(B)                                The Corporation
shall declare a dividend or distribution on the Series B Junior
Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock); provided that, in the event
no dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series B
Junior Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

 

(C)                                Dividends shall
begin to accrue and be cumulative on outstanding shares of Series B Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B Junior
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of Series B
Junior Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Series B
Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix a record date for the determination of holders of shares of Series B
Junior Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than 30
days prior to the date fixed for the payment thereof.

 

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

 

(A)                              Subject to the
provision for adjustment hereinafter set forth, each share of Series B
Junior Participating Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.  In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on the Common

 

2

 

Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares of Series B
Junior Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

 

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

 

(C)                                (i) If at
any time dividends on any Series B Junior Participating Preferred Stock
shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a
period (herein called a “default period”) which shall extend until such time
when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series B
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series B Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of series, shall have the
right to elect two (2) directors.

 

(ii)                                  During any
default period, the voting right of the holders of Series B Junior
Participating Preferred Stock described in Paragraph (C)(i) of this Section may
be exercised initially at a special meeting called pursuant to subparagraph (iii) of
this Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that neither such
voting right nor the right of the holders of any other series of Preferred
Stock, if any, to increase, in certain cases, the authorized number of
directors shall be exercised unless the holders of ten percent (10%) in number
of shares of Preferred Stock outstanding shall be present in person or by proxy.  The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of Preferred Stock of
such voting right.  At any meeting at
which the holders of Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) directors or, if such right is exercised at
an annual meeting, to elect two (2) directors.  If the number which may be so elected at any
special meeting does not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase in the number of
directors as shall be necessary to permit the election by them of the required
number.  After the holders of the
Preferred Stock shall have exercised their right to elect directors in any
default period and during the continuance of such period, the number of directors
shall not be increased or decreased except by vote of the holders of Preferred Stock
as herein provided or pursuant to the rights of any equity securities ranking
senior to or pari  passu with the Series B Junior
Participating Preferred Stock.

 

(iii)                               Unless the
holders of Preferred Stock shall, during an existing default period, have
previously exercised their right to elect directors, the Board of Directors 

 

3

 

may order, or any
stockholder or stockholders owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting of the holders
of Preferred Stock, which meeting shall thereupon be called by the President, a
Vice-President or the Secretary of the Corporation.  Notice of such meeting and of any annual
meeting at which holders of Preferred Stock are entitled to vote pursuant to
this Paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation.  Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such order or request or
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding.  Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed
for the next annual meeting of the stockholders.

 

(iv)                              In any default
period, the holders of Common Stock, and other classes of stock of the
Corporation if applicable, shall continue to be entitled to elect the whole
number of directors until the holders of Preferred Stock shall have exercised
their right to elect two (2) directors voting as a class, after the
exercise of which right (x) the directors so elected by the holders of Preferred
Stock shall continue in office until their successors shall have been elected
by such holders or until the expiration of the default period, and (y) any
vacancy in the Board of Directors may (except as provided in Paragraph (C)(ii) of
this Section 3) be filled by vote of a majority of the remaining directors
theretofore elected by the holders of the class of stock which elected the
director whose office shall have become vacant. 
References in this Paragraph (C) to directors elected by the holders
of a particular class of stock shall include directors elected by such
directors to fill vacancies as provided in clause (y) of the foregoing
sentence.

 

(v)                                 Immediately
upon the expiration of a default period, (x) the right of the holders of Preferred
Stock as a class to elect directors shall cease, (y) the term of any
directors elected by the holders of Preferred Stock as a class shall terminate,
and (z) the number of directors shall be such number as may be provided
for in the certificate of incorporation or bylaws irrespective of any increase
made pursuant to the provisions of Paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or bylaws).  Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining directors.

 

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

 

Section 4.                                            Certain
Restrictions.

 

(A)                              Whenever
quarterly dividends or other dividends or distributions payable on the Series B
Junior Participating Preferred Stock as provided in Section 2 are in
arrears, 

 

4

 

thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series B Junior Participating Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:

 

(i)                                     declare or pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series B
Junior Participating Preferred Stock;

 

(ii)                                  declare or pay
dividends on or make any other distributions on any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution, or winding
up) with the Series B Junior Participating Preferred Stock, except
dividends paid ratably on the Series B Junior Participating Preferred
Stock and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;

 

(iii)                               redeem or
purchase or otherwise acquire for consideration shares of any stock ranking on
a parity (either as to dividends or upon liquidation, dissolution, or winding
up) with the Series B Junior Participating Preferred Stock, provided that
the Corporation may at any time redeem, purchase, or otherwise acquire shares of
any such parity stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation, or winding up)
to the Series B Junior Participating Preferred Stock; or

 

(iv)                              purchase or
otherwise acquire for consideration any shares of Series B Junior
Participating Preferred Stock, or any shares of stock ranking on a parity with
the Series B Junior Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.

 

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

 

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

 

Section 6.                                            Liquidation,
Dissolution or Winding Up.  (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be 

 

5

 

made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution, or winding up) to the Series B Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series B Junior
Participating Preferred Stock shall have received an amount equal to $1,000 per
share of Series B Junior Participating Preferred Stock, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the “Series B Liquidation
Preference”).  Following the payment of
the full amount of the Series B Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series B Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of Common
Stock shall have received an amount per share (the “Common Adjustment”) equal
to the quotient obtained by dividing (i) the Series B Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
(C) below to reflect such events as stock splits, stock dividends, and
recapitalizations with respect to the Common Stock) (such number in clause
(ii), the “Adjustment Number”).  Following
the payment of the full amount of the Series B Liquidation Preference and
the Common Adjustment in respect of all outstanding shares of Series B
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series B Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.

 

(B)                                In the event,
however, that there are not sufficient assets available to permit payment in full
of the Series B Liquidation Preference and the liquidation preferences of
all other series of preferred stock, if any, which rank on a parity with the Series B
Junior Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of the Series B Junior Participating
Preferred Stock and such parity shares in proportion to their respective
liquidation preferences.  In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.

 

(C)                                In the event
the Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

 

Section 7.                                            Consolidation,
Merger, etc.  In case the Corporation
shall enter into any consolidation, merger, combination, or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash, and/or any other property, then in any such case the
shares of Series B Junior Participating Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash, and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged.  In the
event the Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in 

 

6

 

shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series B Junior Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

Section 8.                                            No Redemption.  The shares of Series B Junior
Participating Preferred Stock shall not be redeemable.

 

Section 9.                                            Ranking.  The Series B Junior Participating
Preferred Stock shall rank (a) pari  passu with the Series A Junior
Participating Preferred Stock of the Corporation as to the payment of
dividends and the distribution of assets and (b) junior to all other
series of the Corporation’s Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.

 

Section 10.                                      Amendment.  At any time when any shares of Series B
Junior Participating Preferred Stock are outstanding, neither the Restated Certificate
of Incorporation of the Corporation nor this Certificate of Designation shall be
amended in any manner which would materially alter or change the powers,
preferences, or special rights of the Series B Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series B
Junior Participating Preferred Stock, voting separately as a class.

 

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

 

IN WITNESS WHEREOF, we have executed and subscribed
this Certificate and do affirm the foregoing as true under the penalties of
perjury this 9th day of April, 2009.

 

 

	
   

  	
   

  	
  /s/
  Henry J. Herrmann

  
	
   

  	
   

  	
  Henry
  J. Herrmann

  
	
   

  	
   

  	
  Chief
  Executive Officer

  

 

 

Attest:

 

 

	
  /s/
  Wendy J. Hills

  	
   

  	
   

  
	
  Wendy
  J. Hills

  	
   

  	
   

  
	
  Vice
  President, Secretary and

  	
   

  	
   

  
	
  Associate
  General Counsel

  	
   

  	
   

  

 

7Exhibit 4.2
 
WADDELL & REED FINANCIAL, INC.
 
AND
 
COMPUTERSHARE TRUST COMPANY, N.A., as Rights Agent
 
 
RIGHTS AGREEMENT
 
dated as of
 
April 8, 2009
 

 
TABLE OF CONTENTS
 

	
   

  	
   

  	
  Page

  
	 
	 
	 

	Section 1
	Certain Definitions
	1

	 
	 
	 

	Section 2
	Appointment of Rights Agent
	6

	 
	 
	 

	Section 3
	Issue of Right Certificates
	6

	 
	 
	 

	Section 4
	Form of Right Certificates
	7

	 
	 
	 

	Section 5
	Countersignature and Registration
	8

	 
	 
	 

	Section 6
	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates
	8

	 
	 
	 

	Section 7
	Exercise of Rights: Purchase Price; Final Expiration Date of Rights
	9

	 
	 
	 

	Section 8
	Cancellation and Destruction of Right Certificates
	10

	 
	 
	 

	Section 9
	Reservation and Availability of Shares of Preferred Stock
	10

	 
	 
	 

	Section 10
	Preferred Stock Record Date
	11

	 
	 
	 

	Section 11
	Adjustment of Purchase Price, Number of Shares or Number of Rights
	12

	 
	 
	 

	Section 12
	Certificate of Adjusted Purchase Price or Number of Shares
	19

	 
	 
	 

	Section 13
	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	19

	 
	 
	 

	Section 14
	Fractional Rights and Fractional Shares
	21

	 
	 
	 

	Section 15
	Rights of Action
	22

	 
	 
	 

	Section 16
	Agreement of Right Holders
	23

	 
	 
	 

	Section 17
	Right Certificate Holder Not Deemed a Stockholder
	23

	 
	 
	 

	Section 18
	Concerning the Rights Agent
	24

	 
	 
	 

	Section 19
	Merger or Consolidation or Change of Name of Rights Agent
	24

	 
	 
	 

	Section 20
	Duties of Rights Agent
	25

	 
	 
	 

	Section 21
	Change of Rights Agent
	27

	 
	 
	 

	Section 22
	Issuance of New Right Certificates
	28

	 
	 
	 

	Section 23
	Redemption
	28

 

 

	Section 24
	Exchange
	29

	 
	 
	 

	Section 25
	Notice of Certain Events
	30

	 
	 
	 

	Section 26
	Notices
	30

	 
	 
	 

	Section 27
	Supplements and Amendments
	31

	 
	 
	 

	Section 28
	Successors
	31

	 
	 
	 

	Section 29
	Benefits of this Agreement
	31

	 
	 
	 

	Section 30
	Determinations and Actions by the Board
	32

	 
	 
	 

	Section 31
	Three Year Independent Director Evaluation
	32

	 
	 
	 

	Section 32
	Severability
	32

	 
	 
	 

	Section 33
	Governing Law
	32

	 
	 
	 

	Section 34
	Descriptive Headings; References
	32

	 
	 
	 

	Section 35
	Counterparts
	33

	 
	 
	 

	Section 36
	Force Majeure
	33

 
Exhibit A
 
Form of Certificate of Designation, Preferences and Rights of Series B Junior Participating Preferred Stock of Waddell & Reed Financial, Inc.
 
Exhibit B
 
Form of Right Certificate
Form of Assignment
Form of Election to Purchase
 
Exhibit C
 
Summary of Rights to Purchase Preferred Stock
 

 

RIGHTS AGREEMENT

 

This
Rights Agreement, dated as of April 8, 2009 (this “Agreement”), is between WADDELL &
REED FINANCIAL, INC.,
a Delaware corporation (the “Company”), and COMPUTERSHARE TRUST COMPANY,
N.A., a national
banking association (the “Rights Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Board (the “Board”) has
authorized and declared a dividend distribution of one preferred share purchase
right (a “Right”) for each outstanding share of Common Stock (as defined
below) outstanding as of 5:00 p.m., New York City time, on April 28,
2009 (the “Record Date”) and has authorized the issuance of one Right
(subject to adjustment) in respect of each share of Common Stock issued between
the Record Date and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date (as such terms are hereinafter defined) and under
certain other circumstances, each Right representing the right to purchase one
one-thousandth of one share of Series B Junior Participating Preferred
Stock of the Company having the rights and preferences set forth in the form of
Certificate of Designation, Preferences and Rights of Series B Junior
Participating Preferred Stock of Waddell & Reed Financial, Inc.,
attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth;

 

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

 

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

 

(a)                                  “Acquiring Person” shall mean any
Person (other than a Company Entity) who or that shall be or become the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding.  Notwithstanding the
foregoing:

 

(i)            no
Person shall become an “Acquiring Person” as the result of an
acquisition of Common Stock by a Company Entity that, by reducing the number of
shares outstanding, increases the proportionate number of shares Beneficially
Owned by a Person to 15% or more of the shares of Common Stock then
outstanding; provided, however, that if such Person becomes the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding
by reason of share acquisitions by Company Entities and shall, after such share
acquisitions by Company Entities, become the Beneficial Owner of any additional
shares of Common Stock (other than by reason of a stock dividend, stock split or
other corporate action effected by the Company), then such Person shall be
deemed to be an “Acquiring Person,” except as otherwise provided in Section 1(a)(ii),
unless upon consummation of the acquisition of such additional shares of Common
Stock such Person does not beneficially own 15% or more of the shares of Common
Stock then outstanding; and

 

(ii)           if
(A) the Board determines in good faith that a Person who or that has
satisfied the conditions for becoming an “Acquiring Person” pursuant to
the foregoing provisions of this Section 1(a) did so
inadvertently (including, without limitation, because (1) such Person 

 

 

was unaware that such Person had become the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding or (2) such
Person was aware of the extent of its Beneficial Ownership of Common Stock but
had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or influencing control of
the Company, (B) such Person (and/or its Affiliates and Associates)
divests a sufficient number of shares of Common Stock so that such Person would
no longer satisfy the conditions for being an “Acquiring Person”
pursuant to the foregoing provisions of this Section 1(a), and (C) such
determination by the Board is made and such divestment by such Person (and/or
its Affiliates and Associates) is completed prior to the time when the first
Right is distributed by the Rights Agent pursuant to Section 3(a),
then such Person shall not be an “Acquiring Person” and shall be deemed
to have never been an “Acquiring Person” for all purposes of this
Agreement (such that, for the avoidance of doubt, no Distribution Date shall
occur, or be deemed to have occurred, as a result thereof and no adjustment
pursuant to Section 11(a)(ii) or Section 13 shall
be made in respect thereof); provided, however, that if such
Person, after such determination and divestment, becomes the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding by reason of
becoming the Beneficial Owner of any additional shares of Common Stock, then
such Person shall be deemed to be an “Acquiring Person” unless a
subsequent determination and divestment is made pursuant to this Section 1(a)(ii).

 

(b)                                 “Affiliate” shall have the meaning
ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.

 

(c)                                  “Agreement” shall have the meaning
set forth in the preamble hereto.

 

(d)                                 “Associate,” when used to indicate
a relationship with any Person, shall mean each, any and all of the following:

 

(i)            any
firm, corporation, limited liability company, partnership, joint venture, bank,
trust or other entity of which such Person is an officer or partner;

 

(ii)           any
firm, corporation, limited liability company, partnership, joint venture, bank,
trust or other entity of which such Person is, directly or indirectly, the
Beneficial Owner of 10% or more of any class of equity securities; provided,
however, that any such firm, corporation, limited liability company,
partnership, joint venture, bank, trust or other entity shall not be an “Associate”
of a Person if, and only for so long as, such Person (A) satisfies the
criteria set forth in both Rule 13d-1(b)(1)(i) and Rule 13d-1(b)(1)(ii) of
the General Rules and Regulations under the Exchange Act, (B) has
reported Beneficial Ownership of the equity securities of such firm,
corporation, limited liability company, partnership, joint venture, bank, trust
or other entity on Schedule 13G under the Exchange Act and is not required to
report its ownership of such equity securities on Schedule 13D under the
Exchange Act, (C) is the Beneficial Owner of less than 15% of the shares
of Common Stock then outstanding (including any such shares that are
beneficially owned by such Person’s Affiliates and Associates after giving
effect to this proviso) and (D) has not reported and is not required to
report its ownership of Common Stock on Schedule 13D under the Exchange Act;

 

2

 

(iii)          any
trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity; and

 

(iv)          any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person.

 

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

 

(i)            that
such Person, or any of such Person’s Affiliates or Associates, beneficially
owns, directly or indirectly, within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement;

 

(ii)           that
such Person, or any of such Person’s Affiliates or Associates, has (A) the
right to acquire (whether such right is exercisable immediately or only after
the passage of time or the satisfaction of other conditions) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), written or otherwise, or upon the exercise of
conversion rights, exchange rights, warrants, options or other rights (other
than the Rights); provided, however, that a Person shall not be
deemed the “Beneficial Owner” of, or to “beneficially own,”
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding, written or otherwise; provided,
however, that a Person shall not be deemed the “Beneficial Owner”
of, or to “beneficially own,” any security under this clause (B) if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and (2) is
not then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report); or

 

(iii)          that
are beneficially owned, directly or indirectly, by any other Person with which
such Person, or any of such Person’s Affiliates or Associates, has any
agreement, arrangement or understanding, whether or not in writing, for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to Section 1(e)(ii)(B)) or disposing
of any securities of the Company; provided, however, that nothing
in this Section 1(e) shall cause a Person engaged in business
as an underwriter of securities to be the “Beneficial Owner” of, or
to “beneficially own,” any securities acquired through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition, and then only if
such securities continue to be owned by such Person at the expiration of such
forty-day period.

 

Notwithstanding anything in this Section 1(e) to
the contrary, the phrase “then outstanding,” when used with reference to
a Person’s Beneficial Ownership of securities of the Company, shall mean the number
of such securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding that such Person would be
deemed to own beneficially hereunder.

 

3

 

(f)            “Business
Day” shall mean any day other than a Saturday, Sunday, or a day on which
banking institutions in the State of Massachusetts are authorized or obligated
by law or executive order to close.

 

(g)           “close
of business” on any given date shall mean 5:00 p.m., Eastern time, on
such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., Eastern time, on the next succeeding Business
Day.

 

(h)           “Common
Stock” shall mean the Class A common stock, $0.01 par value (or as such par value may be
changed from time to time), of the Company.

 

(i)            “Common
Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii).

 

(j)            “Company”
shall have the meaning set forth in the preamble hereto.

 

(k)           “Company
Entity” shall mean (i) the Company, (ii) any subsidiary of the
Company or (iii) any employee benefit plan of the Company or of any
subsidiary of the Company, or any entity organized, appointed or established
pursuant to the terms of any such plan.

 

(l)            “current
market price per share” shall have the meaning set forth in Section 11(d).

 

(m)          “Current
Value” shall have the meaning set forth in Section 11(a)(iii).

 

(n)           “Definitive
Acquisition Agreement” shall mean any agreement entered into by the Company
that is conditioned on the approval by the holders of not less than a majority
of the outstanding shares of Common Shock at a meeting of stockholders with
respect to (i) a merger, consolidation, recapitalization, reorganization,
share exchange, business combination or similar transaction involving the
Company or (ii) the acquisition in any manner, directly or indirectly, of
more than 50% of the consolidated total assets (including, without limitation,
equity securities of its subsidiaries) of the Company.

 

(o)           “Distribution
Date” shall have the meaning set forth in Section 3(a).

 

(p)           “equivalent
preferred stock” shall have the meaning set forth in Section 11(b).

 

(q)           “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(r)            “Exchange
Ratio” shall have the meaning set forth in Section 24(a).

 

(s)           “Final
Expiration Date” shall have the meaning set forth in Section 7(a).

 

(t)            “Independent
Directors” shall mean members of the Board who are not officers, employees
or Affiliates (or designees of Affiliates) of the Company.

 

(u)           “invalidation
time” shall have the meaning set forth in Section 11(a)(ii).

 

(v)           “NASDAQ”
shall mean the NASDAQ National Market System.

 

4

 

(w)          “Person”
shall mean any individual, firm, corporation, limited liability company or
other entity, and shall include any successor (by merger or otherwise) of such
entity.

 

(x)            “Preferred
Stock” shall mean the Series B Junior Participating Preferred Stock of
the Company having the rights and preferences set forth in the form of
Certificate of Designation, Preferences and Rights of Series B Junior
Participating Preferred Stock of Waddell & Reed Financial, Inc.,
attached hereto as Exhibit A.

 

(y)           “Principal
Party” shall have the meaning set forth in Section 13(b).

 

(z)            “Purchase
Price” shall have the meaning set forth in Section 4.

 

(aa)         “Record
Date” shall have the meaning set forth in the recitals hereof.

 

(bb)         “Redemption
Date” shall have the meaning set forth in Section 7(a).

 

(cc)         “Redemption
Price” shall have the meaning set forth in Section 23(a).

 

(dd)         “Right”
shall have the meaning set forth in the recitals hereof.

 

(ee)         “Right
Certificate” shall have the meaning set forth in Section 3(a).

 

(ff)           “Rights
Agent” shall have the meaning set forth in the preamble hereto.

 

(gg)         “Section 11(a)(ii) Trigger
Date” shall have the meaning set forth in Section 11(a)(iii).

 

(hh)         “Securities
Act” shall mean the Securities Act of 1933, as amended.

 

(ii)           “Security”
shall have the meaning set forth in Section 11(d).

 

(jj)           “Senior
Voting Stock” shall have the meaning set forth in Section 13(b).

 

(kk)         “Shares
Acquisition Date” shall mean the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become an “Acquiring
Person” for purposes of this Agreement.

 

(ll)           “Spread”
shall have the meaning set forth in Section 11(a)(iii).

 

(mm)       “subsidiary”
of a Person shall mean any corporation or other entity of which a majority of
the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.

 

(nn)         “Substitution
Period” shall have the meaning set forth in Section 11(a)(iii).

 

(oo)         “Summary
of Rights” shall have the meaning set forth in Section 3(b).

 

(pp)         “TIDE
Committee” shall have the meaning set forth in Section 31.

 

5

 

(qq)         “Trading
Day” shall have the meaning set forth in Section 11(d).

 

Section 2.               Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such Co-Rights Agents as it may deem necessary or desirable,
upon ten days’ prior written notice to the Rights Agent. The Rights Agent shall
have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such Co-Rights Agents.

 

Section 3.               Issue of Right Certificates.

 

(a)           Until
the close of business on the tenth day after the Shares Acquisition Date (the “Distribution
Date”), (i) the Rights will be evidenced (subject to the provisions of
Section 3(b)) by the certificates for the Common Stock registered
in the names of the holders thereof (which certificates shall be deemed also to
be Right Certificates) and not by separate Right Certificates, and (ii) the
right to receive Right Certificates will be transferable only in connection
with the transfer of the Common Stock. 
As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if so requested by written
notice and provided with a stockholder list and all other relevant information
that the Rights Agent may reasonably request, send), by first class,
postage-prepaid mail, to each record holder of Common Stock as of the close of
business on the Distribution Date (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person), at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto (a “Right Certificate”), evidencing
one Right for each share of Common Stock so held.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.  The Company shall promptly notify the Rights
Agent in writing upon the occurrence of the Distribution Date.  Until such notice is received by the Rights
Agent, the Rights Agent may presume conclusively for all purposes that the
Distribution Date has not occurred.

 

(b)           On
the Record Date or as soon as practicable thereafter, the Company will send a
copy of a Summary of Rights to Purchase Preferred Stock, in substantially the
form attached hereto as Exhibit C (the “Summary of Rights”),
by first class, postage-prepaid mail or other means used by the Company to
deliver proxy statements to its stockholders, to each record holder of Common
Stock as of the close of business on the Record Date at the address of such
holder shown on the records of the Company. 
With respect to certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with a
copy of the Summary of Rights.  Until the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding on the Record Date, with or without a copy of the Summary of
Rights, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby.

 

(c)           Rights shall be
issued in respect of all shares of Common Stock issued or disposed of
(including, without limitation, upon disposition of Common Stock out of
treasury stock or issuance or reissuance of Common Stock out of authorized but
unissued shares) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date and the Final 

 

6

 

Expiration Date, or in
certain circumstances provided in Section 22, after the
Distribution Date.  Certificates issued
for Common Stock (including, without limitation, upon transfer of outstanding
Common Stock, disposition of Common Stock out of treasury stock or issuance or
reissuance of Common Stock out of authorized but unissued shares) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date and the Final Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:

 

This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Waddell &
Reed Financial, Inc. and Computershare Trust Company, N.A., as Rights Agent, dated as of
April 8, 2009, as the same may be supplemented or amended from time
to time (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Waddell & Reed Financial, Inc.  Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.  Computershare Trust Company, N.A. will mail to
the holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. 
Under certain circumstances, as set forth in the Rights Agreement,
Rights acquired or beneficially owned by any Person who becomes an Acquiring
Person or any Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) and their transferees will become null and
void and will not longer be transferable.

 

With
respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.

 

In the
event that the Company purchases or acquires any shares of Common Stock after
the Record Date but prior to the Distribution Date, any Rights associated with
such shares of Common Stock shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the shares
of Common Stock that are no longer outstanding.

 

Notwithstanding
this Section 3(c), the omission of a legend shall not affect the
enforceability of any part of this Agreement or the rights of any holder of the
Rights.

 

Section 4.               Form of
Right Certificates.  The Right
Certificates (and the forms of election to purchase shares and of assignment to
be printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate (but that do not affect the rights, duties or obligations of the
Rights Agent as set forth in this Agreement) and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or automated quotation

 

7

 

system on which the Rights may from time to time be
listed, or to conform to usage.  Subject
to the provisions of Section 22, the Right Certificates, in each
case, on their face shall entitle the holders thereof to purchase such number
of shares of the Preferred Stock as shall be set forth therein at the price per
share set forth therein (the “Purchase Price”), but the number of such
shares and the Purchase Price shall be subject to adjustment as provided
herein.

 

Section 5.               Countersignature
and Registration.  The Right
Certificates shall be executed on behalf of the Company in the manner provided
in the By-Laws of the Company for Common Stock certificates.  The Right Certificates shall be countersigned
by the Rights Agent, either manually or by facsimile signature, and shall not
be valid for any purpose unless so countersigned.

 

In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any such person was not
such an officer.

 

Following
the Distribution Date, and receipt by the Rights Agent of (i) written
notice of the Distribution Date pursuant to Section 3(a), and (ii) a
stockholder list and all relevant information reasonably requested by the
Rights Agent pursuant to Section 3(a), the Rights Agent will keep
or cause to be kept, at its office designated for such purposes, books for
registration and transfer of the Right Certificates issued hereunder.  Such books shall show the names and addresses
of the respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the date of each of
the Right Certificates.

 

Section 6.               Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates. 
Subject to the provisions of Section 7(e) and Section 14,
at any time after the close of business on the Distribution Date, and prior to
the close of business on the earlier of the Redemption Date and the Final
Expiration Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to Section 11(a)(ii) or
that have been exchanged pursuant to Section 24) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of shares of the Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such
purposes.  Thereupon the Rights Agent
shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.  As a condition to such transfer, division,
combination or exchange, the Company may require payment by the surrendering
holder of a sum sufficient to cover any tax or charge that may be imposed in 

 

8

 

connection with any transfer, split up, combination or
exchange of Right Certificates.  The
Rights Agent shall have no duty or obligation to take any action under any section
of this Agreement that requires the payment by a Rights holder of applicable
taxes and/or charges unless and until it is satisfied that all such taxes
and/or charges have been paid.

 

Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in the case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company’s request, reimbursement
to the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

 

Section 7.               Exercise of Rights: 
Purchase Price; Final Expiration Date of Rights.

 

(a)           The
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purposes
together with payment of the Purchase Price for each one one-thousandth of one
share of the Preferred Stock as to which the Rights are exercised, at or prior
to the earliest of (i) the close of business on April 28,
2019 (the “Final Expiration Date”), or (ii) the time at which the
Rights are redeemed as provided in Section 23 (“Redemption Date”),
or (iii) the time at which such Rights are exchanged as provided for in Section 24.

 

(b)           The
Purchase Price for each one one-thousandth of one share of the Preferred Stock
pursuant to the exercise of a Right shall initially be $80.00, shall be subject
to adjustment from time to time as provided in Section 11 and Section 13,
and shall be payable in lawful money of the United States of America in
accordance with Section 7(c).

 

(c)           Upon
receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Purchase
Price for shares to be purchased and an amount equal to any applicable tax or
charge required to be paid by the holder of such Right Certificate in
accordance with Section 6 in cash, or by certified check or cashier’s
check payable to the order of the Company, the Rights Agent shall thereupon (i) (A) promptly
requisition from any transfer agent of the Preferred Stock of the Company, or
make available if the Rights Agent is the transfer agent of the Preferred
Stock, certificates for the number of shares of the Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) promptly requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, promptly requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14, (iii) after receipt of such
certificates or depositary receipts, promptly cause the same to be delivered to
or upon the 

 

9

 

order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate.

 

(d)           In
case the registered holder of any Right Certificate shall exercise less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to such holder’s
duly authorized assigns, subject to the provisions of Section 14.

 

(e)           Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
purported transfer or exercise of Rights pursuant to Section 6 or
this Section 7 unless the registered holder shall have duly
completed and executed the form of assignment or election to purchase on the
reverse side of the Right Certificate surrendered for such transfer or exercise
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or such former or proposed Beneficial Owner) thereof or such
Beneficial Owner’s Affiliates or Associates as the Company or the Rights Agent
shall reasonably request.

 

Section 8.               Cancellation
and Destruction of Right Certificates. 
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination, redemption or exchange shall, if surrendered
to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement.  The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

 

Section 9.               Reservation
and Availability of Shares of Preferred Stock.  The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued
Preferred Stock, or its authorized and issued Preferred Stock held in its
treasury, the number of shares of the Preferred Stock that will be sufficient
to permit the exercise in full of all outstanding Rights in accordance with
this Agreement.

 

So
long as the Preferred Stock (and, following the time that a Person becomes an
Acquiring Person, shares of Common Stock) issuable upon the exercise of Rights
may be listed or admitted to trading on any national securities exchange or
automated quotation system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed or admitted for trading on such exchange or
automated quotation system upon official notice of issuance upon such exercise.

 

The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all shares of the Preferred Stock (and, following the
time that a Person becomes an Acquiring Person, shares of Common Stock)
delivered upon exercise of Rights shall, at the time 

 

10

 

of delivery of the certificates for such (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.

 

The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges that may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of the Preferred Stock upon the exercise of Rights.  The Company shall not, however, be required (a) to
pay any tax or charge that may be payable in respect of any transfer involved
in the transfer or delivery of Right Certificates or the issuance or delivery
of certificates for the Preferred Stock in a name other than that of the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or (b) to issue or deliver any certificates for shares of the
Preferred Stock upon the exercise of any Rights until any such tax or charge
shall have been paid (any such tax or charge being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company’s satisfaction that no such tax or charge is due.

 

The
Company shall, if legally required, (i) prepare and file, as soon as
reasonably possible following the Distribution Date, a registration statement
under the Securities Act with respect to the securities purchasable upon
exercise of or exchangeable for the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as reasonably possible
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until no longer required to do so under the Securities Act with
respect to securities purchasable upon exercise of or exchangeable for the
Rights.  The Company also shall take all
such action as may be required or as is appropriate under the securities or
blue sky laws of such jurisdictions as may be necessary or appropriate with
respect to the securities purchasable upon the exercise of or exchangeable for
the Rights.  The Company may temporarily
suspend, for a period not to exceed 120 days following the Distribution Date,
the exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. 
Upon any such suspension of exercisability of Rights referred to in this
paragraph, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.

 

Section 10.             Preferred
Stock Record Date.  Each Person in
whose name any certificate for shares of the Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of the Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such
Rights, together with the form of election to purchase duly completed and
executed, was duly surrendered and payment of the Purchase Price (and any
applicable taxes or charges) was made; provided, however, that if
the date of such surrender and payment is a date upon which the Preferred Stock
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock transfer
books of the Company are open.  Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

 

11

 

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

 

(a)                                  (i)            In
the event the Company shall at any time after the Record Date (A) declare
a dividend on the Preferred Stock payable in Preferred Stock, (B) subdivide
the outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares of Preferred Stock or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock that, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, the holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of Preferred Stock
issuable upon exercise of one Right.  If
an event occurs that would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).

 

(ii)           Subject
to Section 24, in the event any Person becomes an Acquiring Person,
each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the Purchase Price in effect immediately prior to
such Person becoming an Acquiring Person multiplied by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of Common Stock as shall equal
the result obtained by (A) multiplying such Purchase Price by the number
of one one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (B) 50% of the current market
price per share of the Common Stock (determined pursuant to Section 11(d))
on the date of the occurrence of such event; provided, however,
that if the transaction that would otherwise give rise to the adjustment is
also subject to the provisions of Section 13, then only the
provisions of Section 13 shall apply and no adjustment shall be
made pursuant to this Section 11(a)(ii).  In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action that would eliminate or diminish the benefits intended to
be afforded by the Rights. 
Notwithstanding anything in this Agreement to the contrary, however,
from and after the time (the “invalidation time”) when any Person first
becomes an Acquiring Person, any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate of
any Acquiring Person), including, without limitation, any such Rights when held
by (1) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the invalidation time, (2) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the invalidation time pursuant
to either (x) a transfer from 

 

12

 

the Acquiring Person to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding, written or otherwise,
regarding the transferred Rights or (y) a transfer that the Board
determines is part of a plan, arrangement or understanding, written or
otherwise, that has the purpose or effect of avoiding the provisions of this Section 11(a)(ii),
or (3) a subsequent transferee of any Person described in the foregoing
clauses (1) or (2), shall be void without any further action and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. 
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Rights or other Person as a result of
its failure to make any determinations with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder.  No Right Certificate shall be issued pursuant
to Section 3, Section 6 or Section 7(d) that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person or any
Associate or Affiliate whose Rights would be void pursuant to the provisions of
this paragraph shall be cancelled.

 

(iii)          The
Company may, at its option, substitute for a share of Common Stock issuable
upon the exercise of Rights in accordance with Section 11(a)(ii) a
number of shares of Preferred Stock or fraction thereof such that the current
market price per share of one share of Preferred Stock multiplied by such
number or fraction is equal to the current market price per share of one share
of Common Stock.  In the event that there
shall not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Board shall, with respect to
such deficiency, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, (A) determine
the excess (such excess, the “Spread”) of (1) the value of the
shares of Common Stock issuable upon the exercise of a Right in accordance with
Section 11(a)(ii) (the “Current Value”) over (2) the
Purchase Price in effect immediately prior to such Person becoming an Acquiring
Person and (B) with respect to each Right (other than Rights that have
become void pursuant to Section 11(a)(ii)), make adequate provision
to substitute for the shares of Common Stock issuable in accordance with Section 11(a)(ii) upon
exercise of the Right and payment of the applicable Purchase Price, (1) cash,
(2) a reduction in such Purchase Price, (3) shares of Preferred Stock
or other equity securities of the Company (including, without limitation,
shares or fractions of shares of preferred stock that, by virtue of having
dividend, voting and liquidation rights substantially comparable to those of
the shares of Common Stock, are deemed in good faith by the Board to have substantially
the same value as the shares of Common Stock (such shares of Preferred Stock
and shares or fractions of shares of preferred stock are hereinafter referred
to as “Common Stock Equivalents”)), (4) debt securities of the
Company, (5) other assets or (6) any combination of the foregoing,
having a value that, when added to the value of the shares of Common Stock
issued upon exercise of such Right, shall have an aggregate value equal to the
Current Value (less the amount of any reduction in such Purchase Price), where
such aggregate value has been determined by the Board upon the advice of a
nationally recognized investment banking firm selected in good faith by the
Board; provided, however, that if the Company shall not make
adequate provision to deliver value pursuant to 

 

13

 

clause (B) above within thirty (30) days
following the date on which any Person becomes an Acquiring Person (the date on
which any Person becomes an Acquiring Person being the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party, upon the surrender for exercise of a Right and without
requiring payment of such Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions of shares of
Preferred Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread.  If, upon any Person becoming an Acquiring
Person, the Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board so elects, the thirty
(30) day period set forth above may be extended to the extent necessary, but
not more than ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such thirty (30) day period, as it may
be extended, is herein called the “Substitution Period”).  To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentence of
this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) and the last sentence of this Section 11(a)(iii),
that such action shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such second sentence and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.  For purposes of this Section 11(a)(iii),
the value of the shares of Common Stock shall be the current market price per
share (as determined pursuant to Section 11(d)) on the Section 11(a)(ii) Trigger
Date and the per share or fractional value of any Common Stock Equivalent shall
be deemed to equal the current market price per share of the Common Stock.  The Board may, but shall not be required to,
establish procedures to allocate the right to receive shares of Common Stock
upon the exercise of the Rights among holders of Rights pursuant to this Section 11(a)(iii).

 

(b)           In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or shares having the same rights, privileges and
preferences as the Preferred Stock (“equivalent preferred stock”)) or
securities convertible into Preferred Stock or equivalent preferred stock at a
price per share of Preferred Stock or equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price per share of the
Preferred Stock (as defined in Section 11(d)) on such record date,
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock that the aggregate offering price of the total number of shares
of Preferred Stock and/or equivalent preferred stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock 

 

14

 

and/or equivalent preferred
stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of Preferred Stock
issuable upon exercise of one Right.  In
case such subscription price may be paid in consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described
in a written statement filed with the Rights Agent.  Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation.  Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.

 

(c)           In
case the Company shall fix a record date for the making of a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than (i) a
regular periodic cash dividend, the record date for which occurs at a time when
there is no Acquiring Person, or (ii) a regular periodic cash dividend,
the record date for which occurs at a time when there is an Acquiring Person,
at a rate not in excess of 125% of the rate of the last cash dividend theretofore
paid or (iii) a dividend payable in Preferred Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b)),
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price
per share of the Preferred Stock (as defined in Section 11(d)) on
such record date, less the fair market value (as determined in good faith by
the Board, whose determination shall be described in a written statement filed
with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock and the denominator of which shall
be such current market price per share of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
Preferred Stock issuable upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price that would then be in effect if such record date had not been fixed.

 

(d)           (i) 
For the purpose of any computation hereunder, the “current market price per
share” of any security (a “Security”) on any date shall be deemed to
be the average of the daily closing prices per share of such Security for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the
current market price per share of the Security is determined during the period
following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such Security or
securities convertible into shares of such Security, or (B) any
subdivision, combination or reclassification of such Security, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current market price per
share shall be appropriately adjusted to take into account ex-dividend
trading.  The closing price for each day
shall be the last sale price, regular way, or, in case no 

 

15

 

such sale takes place on such day, the average of the
closing bid and ask prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low ask
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the Security is not quoted by such
organization, the average of the closing bid and ask prices as furnished by a
professional market maker making a market in the Security selected by the
Board.  The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

 

(ii)  For the purpose of any computation
hereunder, the “current market price per share” of Preferred Stock shall
be determined in the same manner as set forth above for Common Stock in Section 11(d)(i).  If the Preferred Stock is not publicly traded
or if the current market price per share of Preferred Stock cannot be
determined in the manner provided above, the “current market price per share”
of Preferred Stock shall be conclusively deemed to be the current market price
per share of Common Stock (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the Record Date),
multiplied by one thousand.  If neither
the Common Stock nor the Preferred Stock is publicly held or so listed or
traded, the “current market price per share” of Preferred Stock shall
mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a written statement filed with the Rights
Agent.

 

(e)                                  No adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any
adjustments that by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.  All calculations
under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share (other than Preferred Stock) or ten-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (A) three years from the date
of the transaction that mandates such adjustment or (B) the date of the
expiration of the right to exercise any Rights.

 

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

 

16

 

(g)           All
Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-thousandths of a share of the
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

 

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

 

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

 

(j)            Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of the Preferred Stock issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase 

 

17

 

Price per one one-thousandth of a share of Preferred
Stock and the number of one one-thousandths of a share that were expressed in
the initial Right Certificates issued hereunder.

 

(k)           Before
taking any action that would cause an adjustment reducing the Purchase Price
below one one-thousandth of the then par value, if any, of the shares of the
Preferred Stock issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of such Preferred Stock at such adjusted Purchase Price.

 

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

 

(m)          Anything
in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of the Preferred Stock at less than the current
market price, issuance wholly for cash of any shares of the Preferred Stock or
securities that by their terms are convertible into or exchangeable for
Preferred Stock, dividends on the Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.

 

(n)           In
the event that at any time after the Record Date and prior to the Distribution
Date, the Company shall (i) declare or pay any dividend on the Common
Stock payable in Common Stock or (ii) effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock) into a greater or lesser number of shares
of Common Stock, then in any such case (A) the number of one
one-thousandths of a share of Preferred Stock purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of
one one-thousandths of a share of Preferred Stock so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately before such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event, and (B) each share of Common Stock
outstanding immediately after such event shall have issued with respect to it
that number of Rights that each share of Common Stock outstanding immediately
prior to such event had issued with respect to it.  The adjustments provided for in this Section 11(n) shall
be made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.  If an event occurs that would require an
adjustment under Section 11(a)(ii) and this Section 11(n),
the 

 

18

 

adjustments provided for in this Section 11(n) shall
be in addition and prior to any adjustment required pursuant to Section 11(a)(ii).

 

(o)           The
Company agrees that, after the Shares Acquisition Date, it will not, except as
permitted by Section 23, Section 24 or Section 27,
take (or permit any subsidiary to take) any action if, at the time such action
is taken, it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the Rights.

 

Section 12.             Certificate
of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as provided in
Section 11 and Section 13, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief written
statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common Stock and the
Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25.  The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment or statement contained
therein and shall have no duty or liability with respect to and shall not be
deemed to have knowledge of such adjustment or event unless and until it shall
have received such certificate.

 

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

 

(a)           In
the event that, following the time at which any Person becomes an Acquiring
Person, (i) the Company shall consolidate with, or merge with and into,
any other Person, (ii) any Person shall consolidate with or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (iii) the Company shall sell or otherwise transfer (or one or more of
its subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its subsidiaries (taken as a whole) to any other
Person (other than the Company or one or more of its wholly-owned
subsidiaries), then, and in each such case, proper provision shall be made so
that (A) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at the
Purchase Price in effect immediately prior to such Person becoming an Acquiring
Person multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of shares of Preferred Stock, such number of shares
of validly issued, fully paid, non-assessable and freely tradable Senior Voting
Stock (as hereinafter defined) of the Principal Party (as hereinafter defined)
(including the Company as successor thereto or as the surviving corporation),
unencumbered and not subject to any liens, encumbrances, rights of call or
first refusal or other adverse claims, as shall be equal to the result obtained
by (1) multiplying such Purchase Price by the then number of one
one-thousandths of share of Preferred Stock for which a Right is then
exercisable and dividing that product by (2) 50% of the current market
price per share of the Senior Voting Stock of such Principal Party (determined
in the manner described in Section 11(d)) on the date of
consummation of such consolidation, merger, sale or transfer; (B) the
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (C) the term 

 

19

 

“Company” shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of Section 11
shall apply to such Principal Party following the occurrence of such
consolidation, merger, sale or transfer; and (D) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Senior Voting Stock in accordance with Section 9,
with each reference to Preferred Stock in Section 9 being deemed to
be a reference to the shares of its Senior Voting Stock) in connection with
such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Senior Voting Stock thereafter deliverable upon the exercise
of the Rights.

 

(b)           “Principal Party” shall mean (i) in the
case of any transaction described in Section 13(a)(i) or Section 13(a)(ii),
the Person that is the issuer of any securities into which shares of Common
Stock are converted in such merger or consolidation, and if no securities are
so issued, the Person that is the other party to the merger or consolidation;
and (ii) in the case of any
transaction described in Section 13(a)(iii), the Person that is the
other party to such transaction or, if more than one, the Person that is the
party receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction; provided, however, that in any such
case, if the Senior Voting Stock of such Person is not at such time and has not
been continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, then (A) if such Person is a direct or indirect
subsidiary of another Person the Senior Voting Stock of which is and has been
so registered, the term “Principal Party” shall refer to such other
Person; or (B) if such Person is a subsidiary, directly or indirectly, of
more than one Person and the Senior Voting Stock of any two or more of such
Persons is and has been so registered, the term “Principal Party” shall
refer to whichever of such Persons is the issuer of the Senior Voting Stock
having the greatest aggregate market value of shares outstanding; or (C) if
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (A) and (B) above shall apply to
each of the owners having an interest in such joint venture as if such joint
venture were a subsidiary of both or all of such joint venturers and the
Principal Party in each such chain shall bear the obligations set forth in this
Section 13 in the same ratio as their direct or indirect interests
in such joint venture bear to the total of such interests.  “Senior Voting Stock” shall mean the
capital stock (or equity interest) of the Principal Party with the greatest
voting power.

 

(c)           The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such Principal Party or Parties shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in Section 13(a) and
Section 13(b) and further providing that, as soon as
practicable after the date of any consolidation, merger or sale or transfer of
assets mentioned in Section 13(a), the Principal Party or Parties
will (i) prepare and file a
registration statement under the Securities Act with respect to the Rights and
the securities purchasable upon exercise of the Rights on an appropriate form,
will use its best efforts (A) to cause such registration statement to
become effective as soon as practicable after such filing, (B) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the date of expiration of
the Rights, and (C) to similarly comply with applicable state securities
laws, and use its best efforts to list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on a national
securities exchange; and (ii) will deliver to holders of the Rights
historical financial statements for the Principal Party or Parties 

 

20

 

and each of its Affiliates
that comply in all respects with the requirements for registration on Form 10
(or any successor form) under the Exchange Act.

 

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

 

(e)           The Company covenants and agrees that it shall not,
at any time after a Person first becomes an Acquiring Person, enter into any
transaction of the kind referred to in this Section 13 if (x) at
the time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements that, as a result of
the consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights, (y) prior to,
simultaneously with or immediately after such transaction, the stockholders of
the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13(b) shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates or
Associates or (z) the form or nature of organization of the Principal
Party would preclude or limit the exercisability of the Rights.  The provisions of this Section 13
shall similarly apply to successive mergers or consolidations or sales or other
transfers.

 

Section 14.             Fractional Rights and Fractional
Shares.

 

(a)           The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates that evidence fractional Rights.  In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates, with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable.  The closing price
for any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and ask prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on 

 

21

 

the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low ask prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and ask prices as furnished by a professional market
maker making a market in the Rights, selected by the Board.  If on any such date, no such market maker is
making a market in the Rights, the fair market value of the Rights on such date
as determined in good faith by the Board shall be used.

 

(b)           The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock) upon exercise or exchange of the Rights or to
distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock).  Fractions of
shares of Preferred Stock in integral multiples of one one-thousandth of a
share of Preferred Stock may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it, provided that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
shares of Preferred Stock.  In lieu of
fractional shares that are not integral multiples of one one-thousandth of a
share of Preferred Stock, the Company shall pay to the registered holders of
Right Certificates with regard to which such fractional shares would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Preferred Stock. 
For purposes of this Section 14(b), the current market value
of a whole share of Preferred Stock shall be the closing price of a share of
Preferred Stock (as determined pursuant to the second sentence of Section 11(d)(i))
for the Trading Day immediately prior to the date of such exercise or
exchange).

 

(c)           The
Company shall not be required to issue fractions of shares of Common Stock upon
exercise or exchange of the Rights or to distribute certificates that evidence
fractional shares of Common Stock.  In
lieu of such fractional shares, the Company shall pay to the registered holders
of Right Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock.  For purposes of this Section 14(c),
the current market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the second sentence
of Section 11(d)(i)) for the Trading Day immediately prior to the
date of such exercise or exchange).

 

(d)           The
holder of a Right by the acceptance of the Right expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise
of a Right (except as above provided).

 

Section 15.             Rights
of Action.  All rights of action in
respect of this Agreement are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the 

 

22

 

Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
such holder’s own behalf and for such holder’s own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce this Agreement, or otherwise act in respect of such holder’s right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement.  Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.

 

Notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a
result of the Company’s or the Rights Agent’s inability to perform any of their
respective obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether
interlocutory or final) issued by a court or by a governmental, regulatory,
self-regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation.

 

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

 

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

 

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

 

(c)           the
Company and the Rights Agent may deem and treat the Person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Stock certificates made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.

 

Section 17.             Right
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Stock or any other securities of the Company that may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting 

 

23

 

stockholders (except as provided in Section 23,
Section 24 or Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.

 

Section 18.             Concerning
the Rights Agent.  The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense (including, without limitation, the reasonable
fees and expenses of legal counsel), incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent for any action
taken, suffered or omitted by the Rights Agent in connection with the
acceptance, administration and performance of its duties under this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises and the enforcement of this indemnification.  This indemnification shall survive the
termination of this Agreement, the exercise of or expiration of the Rights and
the resignation, replacement or removal of the Rights Agent.

 

The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons or
otherwise upon the advice of counsel as set forth in Section 20.

 

Section 19.             Merger
or Consolidation or Change of Name of Rights Agent.  Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to the
appropriate business of the Rights Agent or any successor Rights Agent shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21.  In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.

 

In
case at any time the name of the Rights Agent shall be changed and at such time
any of the Right Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and
deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the 

 

24

 

Rights Agent may countersign such Right Certificates
either in its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

 

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

 

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

 

(b)           Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full and complete authorization
and protection to the Rights Agent for any action taken, suffered or omitted by
it under the provisions of this Agreement in reliance upon such certificate.

 

(c)           The
Rights Agent shall be liable hereunder for only its own gross negligence, bad
faith or willful misconduct.  Anything to
the contrary notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, consequential or incidental loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage.  Any liability of the Rights Agent under this
Agreement will be limited to the aggregate amount of fees paid by the Company
to the Rights Agent.

 

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

 

(e)           The
Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of Rights (including any
Rights becoming void pursuant to Section 11(a)(ii)) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, Section 11, Section 13,
Section 23 or Section 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after 

 

25

 

actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of the Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of the Preferred Stock will, when
issued, be validly authorized and issued, fully paid and nonassessable.

 

(f)            The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.

 

(g)           The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Secretary or the Treasurer of the Company, and such instructions shall be full
authorization and protection to the Rights Agent and the Rights Agent shall not
be liable for or in respect of any action taken, suffered or omitted by it in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. 
The Rights Agent shall be fully authorized and protected in relying upon
the most recent instructions received by any such officer.  Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken, suffered or omitted by
the Rights Agent under this Agreement and the date on and/or after which such
action shall be taken or suffered or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken or suffered by, or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after the date specified
in such application (which date shall not be less than five Business Days after
the date any officer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken, suffered or
omitted.

 

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

 

(i)            The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
in the selection and continued employment thereof.

 

(j)            If,
with respect to any Right Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or
form of election to 

 

26

 

purchase, as the case may be, has either not been
completed or indicates that the Rights are beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof, the Rights Agent shall not take
any further action with respect to such requested exercise or transfer without
first consulting with the Company.

 

(k)           The
Rights Agent shall have no responsibility to the Company, any holders of Rights
or any holders of shares of Preferred Stock or other securities for interest or
earnings on any monies held by the Rights Agent pursuant to this Agreement,
except as otherwise specifically agreed in a separate writing by the Company
and the Rights Agent.

 

(l)            The
Rights Agent shall not be required to take notice or be deemed to have notice
of any event or condition hereunder, including, but not limited to, a
Distribution Date, a Redemption Date, any adjustment of the Purchase Price, the
existence of an Acquiring Person or any other event or condition that may
require action by the Rights Agent, unless the Rights Agent shall be
specifically notified in writing of such event or condition by the Company, and
all notices or other instruments required by this Agreement to be delivered to
the Rights Agent must, in order to be effective, be received by the Rights
Agent as specified in Section 26, and in the absence of such notice
so delivered, the Rights Agent may conclusively assume no such event or
condition exists.

 

Section 21.             Change
of Rights Agent.  The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days’ notice in writing mailed to the Company and to
each transfer agent of the Common Stock and the Preferred Stock by registered
or certified mail.  In the event the
transfer agency relationship in effect between the Company and the Rights Agent
terminates, the Rights Agent will be deemed to have resigned automatically and
be discharged from its duties under this Agreement as of the effective date of
such termination.  The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days’ notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Stock and the Preferred Stock by
registered or certified mail.  The
Company will provide notice of any resignation (including any automatic
resignation) or removal of any Rights Agent to the holders of the Right
Certificates by first class mail as soon as practicable after such event.  If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such notice,
submit such holder’s Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a Person (or an Affiliate of such a
Person) organized and doing business under the laws of the United States or of
the State of Kansas or the State of  Massachusetts
(or of any other state of the United States so long as such Person is
authorized to do business as a banking institution in the State of Kansas or
the State of  Massachusetts), in good standing,
that is authorized under such laws to exercise corporate trust powers or stock
transfer powers and is subject to supervision or examination by federal or
state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million.  After appointment, the successor Rights Agent
shall

 

27

 

be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock or Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.

 

Section 22.             Issuance
of New Right Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company, at its option, may issue new Right Certificates
evidencing Rights in such form as may be approved by its Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement.  In addition, in connection with the issuance
or sale of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company may, with respect to shares of Common Stock so
issued or sold pursuant to (a) the exercise of stock options, (b) under
any employee plan or arrangement, (c) the exercise, conversion or exchange
of securities, notes or debentures issued by the Company or (d) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale.

 

Section 23.             Redemption.

 

(a)           The
Board may, at its option, at any time prior to the close of business on the
earlier of (i) the Shares Acquisition Date or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.001 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the Record Date (such redemption price being hereinafter referred to as the “Redemption
Price”).  The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish.  The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the current market
price of the Common Stock at the time of redemption as determined pursuant to Section 11(d)(i))
or any other form of consideration deemed appropriate by the Board, or any
combination thereof.

 

(b)           Immediately
upon the action of the Board ordering the redemption of the Rights pursuant to Section 23(a),
without any further action and without any notice, the right to exercise the
Rights will terminate and each Right will thereafter represent only the right
to receive the Redemption Price.  The
Company shall promptly give public notice of any such redemption and, within
ten days after such action causing a redemption of the Rights pursuant to Section 23(a),
the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock.  Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption
will state the method by which the payment 

 

28

 

of the Redemption Price will be made.  Notwithstanding the foregoing, the failure to
give, or any defect in, any notice required to be made or given pursuant to
this Section 23(b) shall not affect the validity of the
redemption of the Rights.

 

(c)           Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24, and other
than in connection with the repurchase of Common Stock prior to the
Distribution Date.

 

Section 24.             Exchange.

 

(a)           The
Board may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii)) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the Record Date (such exchange ratio being hereinafter referred to as the
“Exchange Ratio”). 
Notwithstanding the foregoing, the Board shall not be empowered to
effect such exchange at any time after any Acquiring Person, together with all
Affiliates and Associates of such Acquiring Person, becomes the Beneficial Owner
of 50% or more of the voting power of the shares of Common Stock then
outstanding.  From and after the
occurrence of an event specified in Section 13(a), any Rights that
theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be only exercisable in accordance with Section 13 and
may not be exchanged pursuant to this Section 24(a).  The exchange of the Rights by the Board may
be made effective at such time, on such basis and with such conditions as the
Board in its sole discretion may establish.

 

(b)           Immediately
upon the effectiveness of the action of the Board ordering the exchange of any
Rights pursuant to Section 24(a) and without any further
action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio.  The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange.  The Company promptly shall
mail a notice of any such exchange by first class mail to all of the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent.  Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.  Each such
notice of exchange will state the method by which the exchange of Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights that will be exchanged. 
Any partial exchange shall be effected pro rata based on the number of
Rights (other than Rights that have become void pursuant to the provisions of Section 11(a)(ii))
held by each holder of Rights.

 

(c)           The
Company may, at its option, substitute for a share of Common Stock issuable
upon the exchange of Rights in accordance with Section 24(a) a
number of shares of Preferred Stock or fraction thereof such that the current
market price per share of one share of Preferred Stock multiplied by such
number or fraction is equal to the current market price per share of one share
of Common Stock.

 

29

 

Section 25.             Notice
of Certain Events.  In case the
Company shall propose at any time following the Distribution Date (a) to
pay any dividend payable in stock of any class to the holders of its Preferred
Stock or to make any other distribution to the holders of its Preferred Stock
(other than a regular periodic cash dividend at a rate not in excess of 125% of
the rate of the last cash dividend theretofore paid), (b) to offer to the
holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of the Preferred Stock or shares of stock of any
class or any other securities, rights or options, (c) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding Preferred Stock), (d) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to, any
other Person, (e) to effect the liquidation, dissolution or winding up of
the Company or (f) to declare or pay any dividend on the shares of Common
Stock payable in shares of Common Stock or to effect a subdivision, combination
or consolidation of the shares of Common Stock (by reclassification or
otherwise than by payment of dividends in shares of Common Stock), then, in each
such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 26, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Stock and/or the Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least ten days prior to the record date for determining
holders of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least ten days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
Common Stock and/or the Preferred Stock, whichever shall be the earlier.  In case the event set forth in Section 11(a)(ii) shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right, in accordance with Section 26, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii).

 

Section 26.             Notices.  Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
overnight delivery service or first class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:

 

Waddell & Reed Financial, Inc.

6300 Lamar Avenue

Overland Park, Kansas 66202

Attention:  Corporate Secretary

 

Subject
to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by overnight delivery service or first class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:

 

30

 

Computershare Trust Company, N.A.

250 Royall Street

Canton, Massachusetts 02021

Attention:  Client Services

 

Notices or demands authorized by this Agreement to
be given or made by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by first class mail,
postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.

 

Section 27.             Supplements
and Amendments.  Except as otherwise
provided in this Section 27, for so long as the Rights are then
redeemable, the Company may from time to time in its sole and absolute
discretion, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Agreement in any respect without the approval of
any holders of the Rights.  At any time
when the Rights are no longer redeemable, except as otherwise provided in this Section 27,
the Company may, and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights in order to (a) cure any ambiguity, (b) correct or supplement
any provision contained herein that may be defective or inconsistent with any
other provisions herein, (c) shorten or lengthen any time period hereunder
or (d) change or supplement the provisions hereunder in any manner that
the Company may deem necessary or desirable; provided, however,
that at any time when the Rights are no longer redeemable, this Agreement shall
not be supplemented or amended in any manner that would adversely affect the
interests of the holders of Right Certificates as such, cause this Agreement to
become amendable other than in accordance with this Section 27 or
cause the Rights to again become redeemable. 
Upon the delivery of a certificate from an appropriate officer of the
Company that states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment; provided that such supplement or amendment does
not adversely affect the rights, duties or obligations of the Rights Agent
under this Agreement.

 

Notwithstanding anything contained in this Agreement
to the contrary, the Rights Agent may, but shall not be obligated to, enter
into any supplement or amendment that affects the Rights Agent’s own rights,
duties, obligations or immunities under this Agreement.

 

Section 28.             Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

 

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

 

31

 

Section 30.             Determinations
and Actions by the Board.  The Board
shall have the exclusive power and authority to administer this Agreement and
to exercise the rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (a) interpret
the provisions of this Agreement and (b) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights, to
exchange or not exchange the Rights, or to amend this Agreement).  All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights, as such, and all other Persons and
(y) not subject the Board to any liability to the holders of the Rights or
any other Person.

 

Section 31.             Three
Year Independent Director Evaluation. 
A committee of Independent Directors (the “TIDE Committee”),
which shall be the Nominating and Corporate Governance Committee of the Board
(or any successor committee) as long as the members of such committee meet such
requirements, shall review and evaluate this Agreement in order to consider
whether the maintenance of this Agreement continues to be in the best interests
of the Company and the stockholders of the Company.  The first such review and evaluation shall
occur no later than April 28, 2012, and each successive review and
evaluation shall occur no later than the three year anniversary of the date of
the immediately preceding review and evaluation.  Following each such review and evaluation,
the TIDE Committee shall communicate its conclusions to the full Board,
including any recommendation in light thereof as to whether this Agreement
should be modified or the Rights should be redeemed.  The TIDE Committee, when considering whether
this Agreement should be modified or the Rights should be redeemed, shall have
the power and authority (a) to set their own agenda, (b) to retain,
at the expense of the Company, its choice of legal counsel, investment bankers
and other advisors and (c) to review all information of the Company and to
consider any and all factors it deems relevant to an evaluation of whether this
Agreement should be modified or the Rights should be redeemed.

 

Section 32.             Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

 

Section 33.             Governing
Law.  This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state.

 

Section 34.             Descriptive
Headings; References.  Descriptive
headings of the several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.  Except as otherwise
specifically provided, any reference to any section or exhibit will be deemed
to refer to such section of or exhibit to this Agreement.

 

32

 

Section 35.             Counterparts.  This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

 

Section 36.             Force
Majeure.  Notwithstanding anything to
the contrary contained herein, the Rights Agent shall not be liable for any
delays or failures in performance resulting from acts beyond its reasonable
control including, without limitation, acts of God, terrorist acts, shortage of
supply, breakdowns or malfunctions, interruptions or malfunction of computer
facilities, or loss of data due to power failures or mechanical difficulties
with information storage or retrieval systems, labor difficulties, war, or
civil unrest.

 

{Remainder
of Page Left Intentionally Blank}

 

33

 

IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly executed and their respective seals to be hereunto affixed and attested,
all as of the day and year first above written.

 

 

	
  Attest:

  	
   

  	
  WADDELL &
  REED FINANCIAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Wendy J. Hills

  	
   

  	
  By:

  	
  /s/ Henry J. Herrmann

  
	
   

  	
  Wendy J. Hills

  	
   

  	
   

  	
  Henry J. Herrmann

  
	
   

  	
  Secretary

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPUTERSHARE
  TRUST COMPANY, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Dennis V. Moccia

  
	
   

  	
   

  	
   

  	
  Dennis V. Moccia

  
	
   

  	
   

  	
   

  	
  Managing Director

  

 

34

 

Exhibit A

 

Form of
Certificate of Designation, Preferences and Rights of Series B Junior
Participating

Preferred Stock of Waddell & Reed Financial, Inc.

 

{See
Attached}

 

 

Exhibit B

 

Form of Right Certificate
 

	Certificate No. R-
	 
	Rights              

 
NOT EXERCISABLE AFTER APRIL 28, 2019 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.  THE RIGHTS ARE SUBJECT, AT THE OPTION OF THE COMPANY, TO REDEMPTION AT $0.001 PER RIGHT OR TO EXCHANGE, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS AND THEIR AFFILIATES AND ASSOCIATES (AS SUCH TERMS ARE DEFINED IN SECTION 1 OF THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
 

Right Certificate

 

WADDELL & REED FINANCIAL, INC.

 

This
certifies that
                                      
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of April 8,
2009 (the “Rights
Agreement”) between WADDELL & REED FINANCIAL, INC., a Delaware corporation (the “Company”),
and Computershare Trust Company, N.A., a national banking association (the “Rights
Agent”), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to the close
of business (as such term is defined in the Rights Agreement) on April 28,
2019 at the office of
the Rights Agent, or its successors as Rights Agent, designated for such
purposes, one one-thousandth of one fully paid and non-assessable share of the Series B
Junior Participating Preferred Stock (the “Preferred Stock”) of the
Company, at a purchase price of $80.00 per one one-thousandth of one share (the
“Purchase Price”), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.  The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a share of Preferred
Stock that may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as
of April 28, 2009, based on the shares of the Preferred Stock of the Company as
constituted at such date.

 

As
provided in the Rights Agreement, the Purchase Price, the number and kind or
class of shares of stock of the Company that may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.

 

1

 

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

 

This
Right Certificate, with or without other Right Certificates, upon surrender at
the office of the Rights Agent designated for such purposes, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of the Preferred Stock as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder to purchase.

 

If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.

 

Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may, but are not required to, be (i) redeemed by the Company
at its option at a redemption price of $0.001 per Right or (ii) exchanged
by the Company in whole or in part for shares of Preferred Stock or Common
Stock, par value $0.01 per share, of the Company.

 

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

 

No
holder of this Right Certificate shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Stock or of any other
securities of the Company that may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.

 

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

 

2

 

WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.

 

	
  Dated
  as of
                                ,
  20        .

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
  WADDELL &
  REED FINANCIAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  COMPUTERSHARE
  TRUST COMPANY, N.A.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  	
   

  	
   

  
						

 

3

 

[Form of Reverse Side of Right Certificate]

 

FORM OF ASSIGNMENT

 

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

 

	
  FOR VALUE RECEIVED

  	
   

  	
  hereby

  

 

	
  sells, assigns and transfers unto

  	
   

  

 

	
   

  
	
  (Please print name and
  address of transferee)

  

 

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

 

	
  Dated:

  	
   

  	
  , 20

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  

 

(Signature must conform in all
respects to the name of holder as written upon the face

of this Right Certificate, without alteration or enlargement or any change
whatsoever.)

 

Signature Guaranteed:

 

Signatures
must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.

 

	
   

  
	
  (to be completed if
  applicable)

  

 

The
undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  

 

4

 

FORM OF ELECTION TO PURCHASE

 

(To be executed by
the registered holder if such holder desires to exercise the Right Certificate)

 

TO:  WADDELL & REED
FINANCIAL, INC.

 

The
undersigned hereby irrevocably elects to exercise _________________________________________________
Rights represented by this Right Certificate to purchase the shares of the
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:

 

[Please insert social
security or other identifying number]
_____________________________________________________________

 

	
   

  
	
  (Please print name and
  address)

  

 

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

 

[Please insert social
security or other identifying number]
_____________________________________________________________

 

	
   

  
	
  (Please print name and
  address)

  

 

	
  Dated:

  	
   

  	
  , 20

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  

 

(Signature must conform in all
respects to the name of holder as written upon the face

of this Right Certificate, without alteration or enlargement or any change
whatsoever.)

 

Signature Guaranteed:

 

Signatures
must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.

 

	
   

  
	
  (to be completed if
  applicable)

  

 

The
undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  

 

5

 

Exhibit C

 

WADDELL & REED FINANCIAL, INC.

 

SUMMARY OF RIGHTS
TO PURCHASE PREFERRED STOCK

 

On April 8, 2009,
the Board of Directors of WADDELL & REED FINANCIAL, INC. (the “Company”) declared a
dividend distribution of one preferred stock purchase right (a “Right”)
for each outstanding share of Class A common stock, $0.01 par value, of the Company (the “Common
Stock”).  The distribution is payable
at 5:00 p.m., New York City time, on April 28, 2009 to the stockholders of record
at 5:00 p.m., New York City time, on April 28, 2009 (the “Record Date”).  Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of the Company’s Series B
Junior Participating Preferred Stock (the “Preferred Stock”) at a price
of $80.00 per one one-thousandth of a share of Preferred Stock (the “Purchase
Price”), subject to adjustment.  The
description and terms of the Rights are set forth in a Rights Agreement dated April 8,
2009 (the “Rights
Agreement”), between the Company and Computershare Trust Company, N.A., as
Rights Agent (the “Rights Agent”).

 

A copy of the Rights
Agreement has been filed with the Securities and Exchange Commission as an Exhibit to
a Registration Statement on Form 8-A dated April 10, 2009.  Copies of the Rights Agreement are available
free of charge from the Rights Agent, Computershare Trust Company, N.A.  The following summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.

 

Until the close of
business on the Distribution Date, the Rights will be evidenced, with respect
to any of the Common Stock certificates outstanding as of the Record Date, by
such Common Stock certificate with a copy of this Summary of Rights.  The “Distribution Date” will be the
tenth day following a public announcement that a person or group of affiliated
or associated persons (an “Acquiring Person”) has acquired beneficial
ownership of 15% or more of the outstanding shares of the Common Stock (the “Shares
Acquisition Date”).

 

The Rights Agreement
provides that, until the Distribution Date (or earlier redemption or expiration
of the Rights), the Rights will be transferable only in connection with the
transfer of the Common Stock.  Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of the Common Stock, will contain a notation incorporating the Rights
Agreement by reference.  Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as
of the Record Date, even without a copy of this Summary of Rights, will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.  As soon
as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Right Certificates”) will be mailed to holders
of record of the Common Stock as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.

 

1

 

The Rights are not
exercisable until the Distribution Date. 
The Rights will expire on April 28, 2019 (the “Final Expiration Date”)
unless the Final Expiration Date is extended or unless earlier redeemed or
exchanged by the Company, in each case as described below.

 

Each share of Preferred
Stock purchasable upon exercise of the Rights will have a preferential
quarterly dividend rate equal to the greater of $1.00  per share or 1,000 times the dividend
declared on one share of the Common Stock. 
In the event of liquidation, the holders of the Preferred Stock will
receive a preferential liquidation payment of $1,000 per share plus accrued and
unpaid dividends thereon, but will be entitled to receive an aggregate
liquidation payment equal to 1,000 times the payment made on one share of
Common Stock.

 

Each share of Preferred
Stock will have 1,000 votes voting together with the Common Stock.  Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Preferred Stock will be entitled to receive 1,000
times the amount received per one share of Common Stock.  The Rights are protected by customary
anti-dilution provisions.  Because of the
nature of the Preferred Stock dividend, liquidation and voting rights, the
value of the one one-thousandth interest in a share of Preferred Stock
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock.

 

The Purchase Price
payable, and the number of shares of the Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for shares of the Preferred Stock or convertible securities at less
than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends out of earnings or retained
earnings at a rate not in excess of 125% of the rate of the last cash dividend
theretofore paid or dividends payable in the Preferred Stock) or of
subscription rights or warrants (other than those referred to above).

 

The number of outstanding
Rights and the number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations as of the Common Stock occurring, in any such case, prior to the
Distribution Date.

 

In the event that the
Company is acquired in a merger or other business combination transaction or
50% or more of its assets or earning power are sold after a person or group has
become an Acquiring Person, proper provision will be made so that each holder
of a Right will thereafter have the right to receive, upon the exercise thereof
at the Purchase Price, that number of shares of the senior voting stock of the
acquiring company that at the time of such transaction would have a market
value of two times the Purchase Price. 
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision will be made so that each
holder of a Right, other than Rights that were or are beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the
right to receive upon 

 

2

 

exercise that number of
shares of the Common Stock having a market value of two times the Purchase
Price.

 

With certain exceptions,
no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price.  No fractional shares of Preferred Stock will
be issued (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise.

 

At any time after any
person or group becomes an Acquiring Person and prior to the acquisition by
such person or group of 50% or more of the outstanding shares of Common Stock,
the Board may exchange the Rights (other than Rights owned by such person or
group that will have become void) in whole or in part, at an exchange ratio of
one share of Common Stock (or, if there is an insufficient number of issued but
not outstanding or authorized but unissued shares of Common Stock to permit
such exchange, then one one-thousandth of a Preferred Share) per Right (subject
to adjustment).

 

At any time prior to 5:00 p.m.,
Eastern time, on the earlier of (i) the Shares Acquisition Date and (ii) the
Final Expiration Date, the Board may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (the “Redemption Price”).

 

Immediately upon the
action of the Board to redeem or exchange the Rights, the Company shall make
announcement thereof, and upon such action, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price, or the shares of Common Stock or Preferred Stock exchangeable
for the Rights, as applicable.

 

Until a Right is
exercised, the holder thereof, as such, will have no rights as a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends.

 

A committee of
independent directors of the Company will review and evaluate the Rights
Agreement periodically (at least once every three years) in order to consider
whether the maintenance of the Rights Agreement continues to be in the best
interests of the Company and its stockholders. 
Following each such review, the committee shall communicate its
conclusions to the full Board of Directors of the Company, including any
recommendation in light thereof as to whether the Rights Agreement should be
modified or the Rights should be redeemed.

 

3

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