Exhibit 4.1



 





Exhibit 4.1

Execution Copy








 

 








RIGHTS AGREEMENT




dated as of

October 23, 2007




between




Fremont General Corporation




and




Mellon Investor Services LLC

Rights Agent




 

 






 









 












TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 1.
	 	Certain Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.
	 	Appointment of Rights Agent	 	 	7	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Issuance of Rights Certificates	 	 	7	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Form of Rights Certificates	 	 	9	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Countersignature and Registration	 	 	10	 
	 
	 	 	 	 	 	 
	Section 6.
	 	Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates	 	 	10	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	 	11	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Cancellation and Destruction of Rights Certificates	 	 	13	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Reservation and Availability of Capital Stock	 	 	14	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Preferred Stock Record Date	 	 	15	 
	 
	 	 	 	 	 	 
	Section 11.
	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	 	 	16	 
	 
	 	 	 	 	 	 
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Shares	 	 	23	 
	 
	 	 	 	 	 	 
	Section 13.
	 	Consolidation, Merger or Sale or Transfer of Assets Cash Flow or Earning Power	 	 	24	 
	 
	 	 	 	 	 	 
	Section 14.
	 	Fractional Rights and Fractional Shares	 	 	26	 
	 
	 	 	 	 	 	 
	Section 15.
	 	Rights of Action	 	 	28	 
	 
	 	 	 	 	 	 
	Section 16.
	 	Agreement of Rights Holders	 	 	28	 
	 
	 	 	 	 	 	 
	Section 17.
	 	Rights Certificate Holder Not Deemed a Stockholder	 	 	29	 
	 
	 	 	 	 	 	 
	Section 18.
	 	Concerning the Rights Agent	 	 	29	 
	 
	 	 	 	 	 	 
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	 	30	 
	 
	 	 	 	 	 	 
	Section 20.
	 	Duties of Rights Agent	 	 	30	 
	 
	 	 	 	 	 	 
	Section 21.
	 	Change of Rights Agent	 	 	33	 
	 
	 	 	 	 	 	 
	Section 22.
	 	Issuance of New Rights Certificates	 	 	34	 
	 
	 	 	 	 	 	 
	Section 23.
	 	Redemption and Termination	 	 	34	 
	 
	 	 	 	 	 	 
	Section 24.
	 	Exchange	 	 	35	 
	 
	 	 	 	 	 	 
	Section 25.
	 	Notice of Certain Events	 	 	36	 
	 
	 	 	 	 	 	 
	Section 26.
	 	Notices	 	 	37	 
	 
	 	 	 	 	 	 
	Section 27.
	 	Supplements and Amendments	 	 	38	 
	 
	 	 	 	 	 	 
	Section 28.
	 	Successors	 	 	39	 






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	 	 	 	 	Page	 
	Section 29.
	 	Determinations and Actions by the Board of Directors, etc.	 	 	39	 
	 
	 	 	 	 	 	 
	Section 30.
	 	Benefits of this Agreement	 	 	39	 
	 
	 	 	 	 	 	 
	Section 31.
	 	Severability	 	 	39	 
	 
	 	 	 	 	 	 
	Section 32.
	 	Governing Law	 	 	40	 
	 
	 	 	 	 	 	 
	Section 33.
	 	Counterparts	 	 	40	 
	 
	 	 	 	 	 	 
	Section 34.
	 	Descriptive Headings	 	 	40	 






EXHIBITS




Exhibit A    Form of Certificate of Designation

Exhibit B     Form of Rights Certificate

Exhibit C     Form of Summary of Rights





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RIGHTS AGREEMENT




          RIGHTS AGREEMENT, dated as of October 23, 2007 (the “Agreement”), between Fremont
General Corporation, a Nevada corporation (the “Company”), and Mellon Investor Services
LLC, a New Jersey limited liability company (the “Rights Agent”).




WITNESSETH




          WHEREAS, on October 22, 2007 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company authorized and the Company declared a dividend distribution of one Right
(as hereinafter defined) for each share of common stock, par value $1.00 per share, of the Company
(the “Common Stock”) outstanding at the close of business on November 2, 2007 (the
“Record Date”), and the Board of Directors has authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock of the Company issued between the Record Date and the Distribution Date
(as hereinafter defined), each Right initially representing the right to purchase one
one-thousandth of a share of Series A Junior Participating Preferred Stock of the Company (the
“Preferred Stock”) having the rights, powers and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the “Rights”); and



          WHEREAS, the Company has generated net operating losses for United States federal income tax
purposes (“NOLs”), such NOLs may potentially provide valuable tax benefits to the Company,
the Company desires to avert an “ownership change” within the meaning of Section 382 of the
Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations
promulgated thereunder, and thereby preserve its ability to utilize such NOLs, and, in furtherance
of such objective, the Company desires to enter into this Agreement.



          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 who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 5% or more of the shares
of Common Stock then outstanding, but shall not include:




          (i) the Company,




          (ii) any Subsidiary of the Company,




          (iii) any employee benefit plan of the Company, or of any Subsidiary of the Company,
or any Person or entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan,



 









 






          (iv) any Person who becomes the Beneficial Owner of five percent (5%) or more of the
shares of Common Stock then outstanding as a result of a reduction in the number of shares
of Common Stock outstanding due to the repurchase of shares of Common Stock by the Company
unless and until such Person, after becoming aware that such Person has become the
Beneficial Owner of five percent (5%) or more of the then outstanding shares of Common
Stock, acquires beneficial ownership of any additional shares of Common Stock;




          (v) any Person who was, together with such Person’s Affiliates and Associates, the
Beneficial Owner of five percent (5%) or more of the then outstanding shares of Common
Stock on the date hereof, provided that after the date of this Agreement such
Person, together with such Person’s Affiliates and Associates, does not (A) become the
Beneficial Owner of any additional shares of Common Stock, in which case such Person shall
be deemed to be an Acquiring Person for purposes of this Agreement, or (B) decrease its
percentage ownership below five percent (5%) of the then outstanding shares of Common
Stock, in which case such Person shall no longer be eligible to be excepted from the
definition of Acquiring Person by operation of this Subsection 1(a)(v); or




          (vi) any such Person who has reported or is required to report such ownership (but
less than 10%) on Schedule 13G under the Exchange Act (or any comparable or successor
report) or on Schedule 13D under the Exchange Act (or any comparable or successor report)
which Schedule 13D does not state any intention to or reserve the right to control or
influence the management or policies of the Company or engage in any of the actions
specified in Item 4 of such schedule (other than the disposition of the Common Stock) and,
within 10 Business Days of being requested by the Company to do so, certifies to the
Company that such Person acquired shares of Common Stock in excess of 4.9% inadvertently or
without knowledge of the terms of the Rights and who or which, together with all Affiliates
and Associates, disposes of such number of shares of Common Stock so that it, together with
all Affiliates and Associates, is no longer the Beneficial Owner of 5% or more of the
shares of Common Stock then outstanding; provided, however, that if the
Person requested to so certify or sell shares of Common Stock fails to do so within 10
Business Days, then such Person shall become an Acquiring Person immediately after such
10-Business-Day period;


provided, however, that no Person shall be an Acquiring Person unless the Board of
Directors of the Company shall have affirmatively determined, within ten Business Days after such
Person has otherwise met the requirements of this Section 1(a), that such Person shall be an
Acquiring Person.




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



          (c) “Adjustment Shares” shall have the meaning set forth in Section 11(a)(ii) hereof.



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          (d) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. The terms
“Affiliate” and “Associate” shall also include, with respect to any Person, any other Person whose
Common Stock would be deemed constructively owned by such first Person, owned by a single “entity”
as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with
shares owned by such first Person pursuant to the provisions of Section 382 of the Code, or any
successor provision or replacement provision, and the Treasury Regulations thereunder.



          (e) “Agreement” shall have the meaning set forth in the preamble of this Agreement.



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




          (i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange rights, other
rights, warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” (A) 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, (B) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event (as hereinafter defined), or (C) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event, which Rights were
acquired by such Person or any of such Person’s Affiliates or Associates prior to the
Distribution Date (as hereinafter defined) or pursuant to Section 3(a) or Section 22 hereof
(the “Original Rights”) or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;




          (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” any security under this subparagraph (ii)
as a result of an agreement, arrangement or understanding to vote such security if such
agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations under the Exchange
Act, and (B) is not reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or



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          (iii) which are beneficially owned, directly or indirectly, by any other Person (or
any Affiliate or Associate thereof) 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 subparagraph (ii) of this paragraph (f)) or disposing
of any voting securities of the Company; provided, however, that nothing in
this paragraph (f) 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 such expiration of forty days.



     Notwithstanding anything herein to the contrary, to the extent not within the foregoing
provisions of this Section 1(f), a Person shall be deemed the “Beneficial Owner” of, and shall be
deemed to “beneficially own” or have “beneficial ownership” of, securities which such Person would
be deemed to constructively own or which otherwise would be aggregated with shares of Common Stock
owned by such Person pursuant to Section 382 of the Code, or any successor provision or replacement
provision, and the Treasury Regulations thereunder.



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



          (h) “Close of business” on any given date shall mean 5:00 P.M., New York City time, on
such date; provided, however, that if such date is not a Business Day, it shall
mean 5:00 P.M., New York City time, on the next succeeding Business Day.



          (i) “Code” shall have the meaning set forth in the recitals to this Agreement.



          (j) “Common Stock” shall mean the common stock, par value $1.00 per share, of the
Company, except that “Common Stock” when used with reference to any Person other than the Company
shall mean the capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the management, of such
Person.



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



          (l) “Company” shall have the meaning set forth in the preamble of this Agreement.



          (m) “Current Market Price” shall have the meaning set forth in Section 11(d)(i)
hereof.



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



          (o) “Distribution Date” shall mean the earlier to occur of (i) the close of business
on the tenth Business Day after the Stock Acquisition Date (or, if the tenth Business Day after the
Stock Acquisition Date occurs before the Record Date, the close of business on the Record Date), or
(ii) the close of business on the tenth Business Day (or such later date as the Board shall
determine) after the date that a tender or exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof,
such Person would become an Acquiring Person (without regard to the proviso contained in Section
1(a) hereof requiring the Board of Directors to affirmatively determine that such Person shall be
an Acquiring Person); provided, however, that a Distribution Date shall not occur
unless, within either of the ten Business Day periods (or such later date) specified in the cases
of (i) and (ii) above, the Board of Directors of the Company shall have affirmatively determined
that a Distribution Date shall occur upon the end of such applicable ten Business Day (or later)
period.



          (p) “Equivalent Preferred Stock” shall have the meaning set forth in Section 11(b)
hereof.



          (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) hereof.



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



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



          (u) “NASDAQ” shall have the meaning set forth in Section 11(d)(i) hereof.



          (v) “NOLs” shall have the meaning set forth in the recitals to this Agreement.



          (w) “Person” shall mean any individual, firm, corporation, partnership, limited
liability company, limited liability partnership, trust, syndicate or other entity, group of
persons making a “coordinated acquisition” of shares or otherwise treated as an entity within the
meaning of Section 1.382-3(a)(1) of the Treasury Regulations or otherwise, and includes, without
limitation, an unincorporated group of persons who, by



5









 







formal or informal agreement or arrangement
(whether or not in writing), have embarked on a common purpose or act, and also includes any
successor (by merger or otherwise) of any such individual or entity.



          (x) “Preferred Stock” shall mean shares of Series A Junior Participating Preferred
Stock, par value $0.01 per share, of the Company, and, to the extent that there are not a
sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit
the full exercise of the Rights, any other series of preferred stock of the Company designated for
such purpose containing terms substantially similar to the terms of the Series A Junior
Participating Preferred Stock.



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



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



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



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



          (cc) “Rights” shall have the meaning set forth in the recitals to this Agreement.



          (dd) “Rights Agent” shall have the meaning set forth in the preamble of this
Agreement.



          (ee) “Rights Certificates” shall have the meaning set forth in Section 3(a) hereof.



          (ff) “Rights Dividend Declaration Date” shall have the meaning set forth in the
recitals to this Agreement.



          (gg) “Section 11(a)(ii) Event” shall mean any event described in Section 11(a)(ii)
hereof.



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



          (ii) “Section 13 Event” shall mean any event described in clauses (x), (y) or (z) of
Section 13(a) hereof.



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



6









 





          (kk) “Stock Acquisition Date” shall mean the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such.



          (ll) “Subsidiary” shall mean, with reference to any Person, any corporation of which
an amount of voting securities sufficient to elect at least a majority of the directors of such
corporation is beneficially owned, directly or indirectly, by such Person, or otherwise controlled
by such Person.



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



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



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



          (pp) “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.



          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 (10) 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
agent.



          Section 3. Issuance of Rights Certificates.



          (a) Until the Distribution Date, (x) the Rights will be evidenced (subject to the provisions
of paragraph (b) of this Section 3) by the certificates for the Common Stock registered in the
names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Company). As soon as practicable after the Distribution Date, the
Company will prepare
and execute, and the Rights Agent will countersign, and the Rights Agent will (if provided
with all necessary information) send by first-class, insured, postage-prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights certificates, in substantially
the form of Exhibit B hereto (the “Rights Certificates”), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time



7









 







of distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates. The Company shall promptly notify the Rights Agent in writing
upon the occurrence of the Distribution Date and, if such notification is given orally, the Company
shall confirm the same in writing on or prior to the Business Day next following. 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) The Company will make available, as promptly as practicable following the Record Date, a
copy of a Summary of Rights, in substantially the form attached hereto as Exhibit C (the
“Summary of Rights”) to any holder of Rights who may so request from time to time prior to
the Expiration Date. With respect to certificates for the Common Stock outstanding as of the Record
Date, or issued subsequent to the Record Date, unless and until the Distribution Date shall occur,
the Rights will be evidenced by such certificates for the Common Stock and the registered holders
of the Common Stock shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date (as such term is defined in Section 7(a)
hereof), the transfer of any certificates representing shares of Common Stock in respect of which
Rights have been issued shall also constitute the transfer of the Rights associated with such
shares of Common Stock.



          (c) Rights shall be issued in respect of all shares of Common Stock which are issued after the
Record Date but prior to the earlier of the Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be deemed to be certificates for Rights, and
shall bear a legend in substantially the following form:




This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Fremont General
Corporation (the “Company”) and Mellon Investor Services LLC (the “Rights
Agent”) dated as of October 23, 2007 (the “Rights Agreement”), the terms
of which are hereby incorporated herein by reference and a copy of which
is on file at the principal offices of the Rights Agent. 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. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge, promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights



8









 







Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, may become null and void.


With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates.




          Section 4. Form of Rights Certificates.



          (a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substantially in the form set forth in 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 which do not affect the
rights, duties or responsibilities of the Rights Agent) 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 on
which the Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one one-thousandth of a share, the
“Purchase Price”), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as provided herein.



          (b) Any Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22 hereof
that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent the Rights Agent has knowledge thereof and to the extent feasible) a legend
in substantially the following form:



9









 





The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of the Rights Agreement.



          Section 5. Countersignature and Registration.



          (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either manually or by facsimile signature, and shall
have affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The
Rights 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 Rights Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement any such person was not such an
officer.



          (b) Following the Distribution Date, and receipt by the Rights Agent of notice that the
Distribution Date has occurred, the Rights Agent will keep, or cause to be kept, at its principal
office or offices designated as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights Certificates.



          Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.



          (a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that may have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one one-thousandths of a share of Preferred Stock
(or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the



10









 







Rights Certificate or Certificates surrendered then entitles such holder (or
former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates
to be transferred, split up, combined or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. The Rights Certificates are transferable only on the registry
books of the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e), Section 14 and Section 24 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates,
as the case may be, as so requested. The Company or the Rights Agent may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates. The Rights Agent shall have no
duty or obligation under this Section unless and until it is satisfied that all such taxes and/or
governmental charges have been paid.



          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security satisfactory to them, and 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 Rights Certificate, if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.



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



          (a) Subject to Section 7(e) hereof, at any time after the Distribution Date the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part upon surrender of
the Rights Certificate, with the form of election to purchase and the certificate on the reverse
side thereof duly executed, to the Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of one one-thousandths of a share (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior
to the earlier of (i) 5:00 P.M., New York City time, on November 2, 2017, or such later date as may
be established by the Board of Directors prior to the expiration of the Rights (such date, as it
may be extended by the Board, the (“Final Expiration Date”), or (ii) the time at



11









 







which the
Rights are redeemed or exchanged as provided in Section 23 and Section 24 hereof (the earlier of
(i) and (ii) being herein referred to as the “Expiration Date”).



          (b) The Purchase Price for each one one-thousandth of a share of Preferred Stock pursuant to
the exercise of a Right initially shall be $12.00, shall be subject to adjustment from time to time
as provided in Section 11 and Section 13(a) hereof and shall be payable in accordance with
paragraph (c) below.



          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-thousandth of a share of Preferred Stock
(or other shares, securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable tax or charge, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares
of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-thousandths of a share of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, 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 will direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or, upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by such holder, and
(iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by certified bank check or
bank draft payable to the order of the Company. In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution by the Rights
Agent, if and when appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock would be issued.



          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such



12









 







name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.



          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance
of this Section 7(e), shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or any other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or any of its Affiliates, Associates or
transferees hereunder. The Company shall give the Rights Agent written notice of the identity of
any such Acquiring Person, Associate or Affiliate, or the nominee of any of the foregoing, and the
Rights Agent may rely on such notice in carrying out its duties under this Agreement and shall be
deemed not to have any knowledge of the identity of any such Acquiring Person, Associate or
Affiliate, or the nominee of any of the foregoing unless and until it shall have received such
notice.



          (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the form of election to purchase
set forth on the reverse side of the Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably
request.



          Section 8. Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or 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 Rights 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



13









 







cancel and retire, any
other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.



          Section 9. Reservation and Availability of Capital Stock.



          (a) The Company covenants and agrees that it will cause to be reserved and authorized for
issuance and kept available out of its authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common
Stock and/or other securities), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) that, as provided in this
Agreement, including Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full
of all outstanding Rights.



          (b) So long as the shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange, 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 on such exchange upon official notice of issuance upon such exercise.



          (c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii) hereof, a registration
statement under the Act, with respect to the securities purchasable upon exercise of the Rights on
an appropriate form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and (B) the date of the
expiration of the Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or “blue sky” laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily suspend, for a period of time
not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon 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 has been rescinded. In addition,
if the Company shall determine that a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. The Company shall notify the Rights Agent
whenever it makes a public announcement pursuant to this Section 9(c) and give the Rights Agent a
copy of such



14









 







announcement. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be permitted under
applicable law, or a registration statement shall not have been declared effective.



          (d) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all one one-thousandths of a share of Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and nonassessable.



          (e) The Company further covenants and agrees that it will pay when due and payable any and all
taxes and charges which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any tax or charge which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance
or delivery of a number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than, that of the
registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of one one-thousandths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax or charge shall have been paid
(any such tax or charge being payable by the holder of such Rights
Certificates at the time of surrender) or until it has been established to the Company’s or
the Rights Agent’s satisfaction that no such tax or charge is due.



          Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of record of such
fractional shares of Preferred Stock (or Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered with the forms of election and
certification duly executed and payment of the Purchase Price (and all 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 (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be



15









 







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.



          Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares 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 date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of
shares, 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) and Section 7(e) hereof, 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 Preferred Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Preferred Stock or capital stock, as the case
may be, which, 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, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, 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) hereof.




               (ii) In the event any Person shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person, unless the event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof, then, promptly following the occurrence of such
event, proper provision shall be made so that each holder of a Right (except as provided below and
in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of
one one-thousandths of a share of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following such first occurrence, shall thereafter be referred to as
the “Purchase Price” for each Right and for all purposes of this Agreement) by 50% of the Current
Market Price (determined pursuant to Section 11(d) hereof) per share of Common Stock on the date of
such first occurrence (such number of shares, the “Adjustment Shares”).




16










 





               (iii) In the event that the number of shares of Common Stock which is authorized by the
Company’s articles of incorporation, but not outstanding or reserved and authorized for issuance
for purposes other than upon exercise of the Rights, is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall (A) determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current Value”), and (B) with respect to each Right (subject to Section 7(e)
hereof), make adequate provision to substitute for the Adjustment Shares, upon the exercise of a
Right and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Stock or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock, such as the Preferred Stock, which the Board has
deemed to have essentially the same value or economic rights as shares of Common Stock (such shares
of preferred stock being referred to as “Common Stock Equivalents”)), (4) debt securities
of the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value (less the amount of any reduction in the Purchase Price), where
such aggregate value has been determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board; provided, however, that
if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company’s right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. For purposes of the preceding sentence, the term “Spread” shall mean the
excess of (i) the Current Value over (ii) the Purchase Price. If the Board determines 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, 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 action should be
taken pursuant to the first and/or third sentences of this Section 11(a)(iii), the Company (1)
shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek such stockholder approval for such authorization of
additional shares and/or to decide the appropriate form of distribution to be made pursuant to such
first 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. The Company shall notify the Rights Agent whenever it makes a public announcement
pursuant to this Section 11(a) and give the Rights Agent a copy of such announcement. For purposes
of this Section 11(a)(iii), the value of each



17









 







Adjustment Share shall be the Current Market Price per share of the Common Stock on the
Section 11(a)(ii) Trigger Date and the per share or per unit value of any Common Stock Equivalent
shall be deemed to equal the Current Market Price per share of the Common Stock on such date.



          (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 to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of Preferred Stock
(“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or per share of 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 (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock 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 which 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 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). In case such subscription price may be paid by delivery of
consideration, part or all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. 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 which would then be in effect if such record date had not been fixed.




          (c) In case the Company shall fix a record date for 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 cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or
evidences of indebtedness, or of subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), 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 (as determined pursuant to
Section




18









 







11(d) hereof) per share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock, and the denominator of which shall be such Current Market
Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock. 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 be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.




          (d) (i) For the purpose of any computation hereunder, other than computations made pursuant
to Section 11(a)(iii) hereof, the Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days immediately prior to but not including such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price per
share of Common Stock on any date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the ten (10) consecutive Trading Days immediately following but not
including such date; provided, however, that in the event that the Current Market
Price per share of the Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of such Common Stock (other than
the Rights), or (B) any subdivision, combination or reclassification of such Common Stock, and the
ex-dividend date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, shall not have occurred prior to the commencement of the requisite
thirty (30) Trading Day or ten (10) Trading Day period, as set forth above, then, and in each such
case, the Current Market Price shall be properly 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 such sale
takes place on such day, the average of the closing bid and asked 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 shares of Common
Stock are 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 shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock 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 asked prices in the over-the-counter market, as reported by The Nasdaq Stock Market
(“NASDAQ”) or such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock selected by the Board.
If on any such date no market maker is making a market in the Common Stock, the fair value of such
shares on such



19









 






date shall be as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all purposes. The term
“Trading Day” shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not publicly held or not so listed or
traded, Current Market Price per share shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.




               (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 the Common Stock in
clause (i) of this Section 11(d) (other than the last sentence thereof). If the Current Market
Price per share of Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the Current Market Price per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted for such events
as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the Current Market Price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or
traded, Current Market Price per share of the Preferred Stock shall mean the fair value per share
as determined in good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.



          (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments which 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 or one-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 (i)
three (3) years from the date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.




          (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of
capital stock other than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof 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 Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the provisions of Sections




20









 







7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.




          (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 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 Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandths
of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying
(x) the number of one one-thousandths of a share 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 lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in 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 one-ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement (with prompt written notice thereof to the Rights Agent) of its election
to adjust the number of Rights, indicating the record date for the adjustment, 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 Rights Certificates have been issued,
shall be at least ten (10) days later than the date of the public announcement. If Rights
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 Rights Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, 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 Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the



21









 






Company, the adjusted Purchase Price) and shall be registered in the names of the holders of
record of Rights 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 Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandth of a share which were expressed in
the initial Rights Certificates issued hereunder.




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then stated value, if any, of the number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and legally issue fully
paid and nonassessable such number of one one-thousandths of a share of 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 to defer
(with prompt written notice to the Rights Agent) until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of one one-thousandths of a
share of Preferred Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of one one-thousandths of a share of 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 (fractional or otherwise) or securities 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 in their good faith judgment the Board of Directors
of the Company shall determine to be advisable in order that any (i) consolidation or subdivision
of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than
the Current Market Price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Preferred Stock shall not be taxable to such stockholders.




          (n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), (ii) merge



22









 






with or into any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets, cash flow 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 or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or
(y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Company shall not consummate any
consolidation, merger, sale or transfer described in clause (i), (ii) or (iii) of the prior
sentence unless prior thereto the Company and such other Person shall have executed and delivered
to the Rights Agent a supplemental agreement evidencing compliance with this Section 11(n).




          (o) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 26 hereof, 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 otherwise eliminate the benefits intended to be afforded by the Rights.




          (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common Stock immediately prior to such event by
a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the occurrence of such event.




          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is
made or any event affecting the Rights or their exercisability (including without limitation an
event which causes Rights to become null and void) as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such adjustment or describing
such event and a brief reasonably detailed statement of the facts, computations and methodology accounting
for such


23









 







adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of Common Stock in
accordance with Section 26 hereof). The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment or statement therein contained and shall have no duty or
liability with respect to, and shall not be deemed to have knowledge of any adjustment or any such
event unless and until it shall have received such certificate.




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




          (a) In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation of such consolidation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing
or surviving corporation of such consolidation or merger and, in connection with such consolidation
or merger, all or part of the outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with Section 11(o) hereof), then,
and in each such case, proper provision shall be made so that: (i) each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is exercisable immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such one one-thousandths of a
share for which a Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence of a
Section 11(a)(ii) Event), and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each Right
and for all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such



24









 






Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.




          (b) “Principal Party” shall mean:





          (i) in the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the other party to such merger or
consolidation; and




          (ii) in the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of the assets,
cash flow or earning power transferred pursuant to such transaction or transactions;


provided, however, that in any such case, (1) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so registered, “Principal Party” shall
refer to such other Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stock of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the Common Stock having
the greatest aggregate market value.




          (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized shares of its Common Stock which
have not been issued or reserved and authorized for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for
the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as
soon as practicable after the date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will




25









 









          (i) prepare and file a registration statement under the Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration Date; and




          (ii) take all such other action as may be necessary to enable the Principal Party to
issue the securities purchasable upon exercise of the Rights, including but not limited to
the registration or qualification of such securities under all requisite securities laws of
jurisdictions of the various states and the listing of such securities on such exchanges
and trading markets as may be necessary or appropriate; and




          (iii) will deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.


The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).




          Section 14. Fractional Rights and Fractional Shares.




          (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights, the Company shall pay to the
registered holders of the Rights 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 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 of the Rights 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 asked 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 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 asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on



26









 






any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Rights, selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company shall be used.




          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of one one-thousandth of a
share of Preferred Stock. For purposes of this Section 14(b), the current market value of one
one-thousandth of a share of Preferred Stock shall be one one-thousandth of the closing price of a
share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.




          (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of this Section 14(c), the current market
value of one share of Common Stock shall be the closing price per share of Common Stock (as
determined pursuant to Section 11(d)(i) hereof) on the Trading Day immediately prior to the date of
such exercise.




          (d) The holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.




          (e) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payments and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make
such payments. The Rights Agent shall be fully protected in relying upon such a certificate and
shall have no duty with respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement relating to the payment
of fractional Rights or fractional shares unless and until the Rights Agent shall have received
such a certificate and sufficient monies.




27









 








          Section 15. Rights of Action. All rights of action in respect of this Agreement, except the
rights of action given to the Rights Agent herein, are vested in the respective registered holders
of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such Rights 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 by the Company of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or threatened
violations by the Company of the obligations hereunder of any Person subject to this Agreement.




          Section 16. Agreement of Rights 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 Common Stock;




          (b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates duly completed and fully executed;




          (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem
and treat the person in whose name a Rights 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 Rights Certificates
or the associated Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be required to be affected by any notice to the contrary;
and




          (d) 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 its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order



28









 






promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, the
Company must use its best efforts to prevent the issuance of any such order, decree or ruling and
to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.




          Section
17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of
the number of one one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to confer upon the holder
of any Rights 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 stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions hereof.




          Section 18. Concerning the Rights Agent.




          (a) 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 disbursements and other disbursements incurred in the preparation,
delivery, amendment 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, damage, judgment, fine, penalty, claim, demand, settlement,
cost 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
(which gross negligence, bad faith or willful misconduct must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent jurisdiction), for any
action taken, suffered or omitted by the Rights Agent in connection with the acceptance, administration, exercise and performance of its duties under
this Agreement. The costs and expenses incurred in enforcing this right of indemnification shall
be paid by the Company. The provisions of this Section 18 and Section 20 below shall survive the
termination of this Agreement, the exercise or expiration of the Rights and the resignation,
replacement or removal of the Rights Agent.




          (b) The Rights Agent shall be authorized and protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its acceptance and
administration of this Agreement and the exercise and performance of its duties hereunder, in
reliance upon any Rights Certificate or certificate for Common 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



29









 






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 hereof.




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




          (a) 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
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; however, such Person would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of
the Rights Certificates shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights Certificates either
in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights Certificates and in this
Agreement.




          (b) In case at any time the name of the Rights Agent shall be changed and at such time any of
the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.




          Section 20. Rights and Duties of Rights Agent. The Rights Agent undertakes to perform only the
duties and obligations expressly imposed by this Agreement (and no implied duties) upon the
following terms and conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:




          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company
or an employee of the Rights Agent), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it and in accordance with
such advice or opinion; provided that in instances where the Rights Agent consults with an
employee of the Rights Agent or legal counsel which is not legal counsel for the Company, the
Rights Agent must rely in good faith on such advice or opinion.




30









 








          (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 (including, without limitation, the identity of
any Acquiring Person and the determination of Current Market Price) be proved or established by the
Company prior to taking, suffering or omitting to take 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 the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant 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 and the
Rights Agent shall incur no liability for or in respect of 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 to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction). 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 amount of annual 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 Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates), 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 have any liability for or 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 Rights
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 Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights (including the
Rights becoming null and void pursuant to Section 7(e) hereof) or any change or adjustment in the
terms of the Rights including any adjustment required under the provisions of Section 11, Section
13 or Section 24 hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such
adjustment, delivered pursuant to Section 12); 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 Common Stock
or Preferred Stock to be issued pursuant to this



31









 






Agreement or any Rights Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so 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, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions
in connection with its duties, and such instructions shall be full authorization and protection to
the Rights Agent and it 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 Rights 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 therein (which date shall not be less than five Business
Days after the date any such 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, suffering
or omitting any such action (or the effective date in case of an omission), the Rights Agent has
received written instructions in response to such application specifying the action to be taken, suffered or
omitted.




          (h) The Rights Agent and any stockholder, affiliate, 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 money to the Company or otherwise act as fully and freely as though the
Rights Agent were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent or any such stockholder, affiliate, director, officer or employee 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 (through its directors, officers and employees) 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



32









 






of any such attorneys or agents or for any loss to the
Company or any other Person resulting from any such act, default, neglect or misconduct, absent
gross negligence or bad faith in the selection and continued employment thereof (which gross
negligence or bad faith must be determined by a final, non-appealable order, judgment, decree or
ruling of a court of competent jurisdiction).




          (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not assured to it.




          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent will deem the beneficial owner of the rights evidenced by such
Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof and such
assignment or election to purchase will not be honored.




          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 thirty (30) days’ notice in writing mailed
to the Company, and to each transfer agent of the Common Stock and Preferred Stock known to the
Rights Agent, by registered or certified mail, and, if such resignation occurs after the
Distribution Date, to the registered holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty (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 Preferred Stock, by registered or certified mail, and, if
such removal occurs after the Distribution Date, to the holders of the Rights Certificates by first-class mail. 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 thirty (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 Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any Rights 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) a Person
organized and doing business under the laws of the United States or of the State of New York or of
any other state of the United States, in good standing, having an office in the State of New York,
which is authorized under such laws to exercise corporate trust, stock transfer or shareholder
services powers and which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a Person described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights Agent without
further act or



33









 






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 and the Preferred Stock, and, if such appointment
occurs after the Distribution Date, mail a notice thereof in writing to the registered holders of
the Rights 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 Rights Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board of Directors 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 Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, granted or awarded as of
the Distribution Date, or upon the exercise, conversion or exchange of securities hereinafter
issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.




          Section 23. Redemption and Termination.




          (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (i) the close of business on the tenth Business Day following the Stock Acquisition Date (or, if
the Stock Acquisition Date shall have occurred prior to the Record Date, the close of business on
the tenth Business Day following the Record Date), or (ii) the Final Expiration Date, direct the
Company to, and if directed, the Company shall redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the “Redemption Price”).
Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the
Company’s right of redemption hereunder has expired. The Company may, at its



34









 






option, pay the Redemption Price in cash, shares of Common Stock (based on the Current Market Price, as defined in
Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.




          (b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without
any further action and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price for each
Right so held. Promptly after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each holder’s last address as
it appears 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 which 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 of the Redemption Price will
be made.




          (c) Notwithstanding the provisions of Section 23(a) hereof, in the event that a majority of
the Board of Directors of the Company is elected by stockholder action by written consent, or is
comprised of persons elected at a meeting of stockholders who were not nominated by the Board of
Directors of the Company in office immediately prior to such meeting, then for a period of one
hundred and eighty (180) days following the effectiveness of such election the Rights shall not be
redeemed if such redemption is reasonably likely to have the purpose or effect of allowing any Person to become an Acquiring
Person or otherwise facilitating the occurrence of a Triggering Event or a transaction with an
Acquiring Person.




          Section 24. Exchange.




          (a) The Board of Directors of the Company 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 7(e)
hereof) for 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 date
hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).
Notwithstanding the foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.





35











 





          (b) Immediately upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24, evidence of which shall have been
filed with the Rights Agent, 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 (with prompt written notice thereof to the Rights Agent); 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 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 which 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 the Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.




          (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute
Preferred Stock (or Equivalent Preferred Stock, as such term is defined in paragraph (b) of Section
11 hereof) for Common Stock exchangeable for Rights, at the initial rate of one one-thousandth of a
share of Preferred Stock (or Equivalent Preferred Stock) for each share of Common Stock, as
appropriately adjusted to reflect stock splits, stock dividends and other similar transactions
after the date hereof.




          (d) In the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the Rights.




          (e) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock 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 the purposes of this subsection (e), 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) hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.




          Section 25. Notice of Certain Events.




36









 








          (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), 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 transaction or a series of
related transactions, of more than 50% of the assets, cash flow or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which complies with Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to the Rights Agent and to each holder of a Rights Certificate,
in accordance with Section 26 hereof, 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 shares of 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 (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty (20) days prior to the date of
the taking of such proposed action or the date of participation therein by the holders of the
shares of Preferred Stock, whichever shall be the earlier.




          (b) In case any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to the Rights Agent and, to
the extent feasible, to each holder of a Rights Certificate, in accordance with Section 26 hereof,
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) hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.




          Section 26. Notices.




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




37









 








Fremont General Corporation

2425 Olympic Boulevard

Santa Monica, California 90404

Attention: Alan Faigin




          (b) 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 Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing by the Rights Agent with the Company) as follows:




Mellon Investor Services LLC

480 Washington Boulevard

Jersey City, NJ 07310

Attention: General Counsel

Facsimile: (201) 680-4610




          (c) Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) 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. Prior to the Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein which may be defective or inconsistent with
any other provisions herein, (iii) to shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of Rights Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of the Company which 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. Notwithstanding anything herein to the contrary, this
Agreement may not be amended (other than pursuant to clauses (i) or (ii) of the preceding sentence)
at a time when the Rights are not redeemable. 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.




38









 








          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. Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of shares of Common Stock or
any other class of capital stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors
of the Company shall have the exclusive power and authority to administer this Agreement and to
exercise all 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 (i) interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which 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 and all other
parties, and (y) not subject the Board or any of the directors on the Board to any liability to the
holders of the Rights. The Rights Agent is entitled to always assume the Company’s Board acted in
good faith and shall be fully protected and incur no liability in reliance thereon.




          Section 30. 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 Rights Certificates (and, prior to the
Distribution Date, 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 Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).




          Section 31. 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; provided, however,
that notwithstanding anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the close of business on the tenth
Business Day following the date of such determination by the Board of Directors. Without limiting
the foregoing, if any provision requiring a specific group of directors to act is held to by any
court of competent





39









 







jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board of Directors of the Company in accordance with
applicable law and the Company’s articles of incorporation and Amended and Restated Bylaws.



          Section 32. Governing Law. This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Nevada and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State; provided, however, that the rights, duties
and obligations of the Rights Agent shall be governed by the laws of the State of New York, without
regard to the principles or rules concerning conflicts of laws which might otherwise require
application of the substantive laws of another jurisdiction.



          Section 33. 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 34. Descriptive Headings. 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.





40









 








          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as
of the day and year first above written.




	 	 	 	 	 
	 	FREMONT GENERAL CORPORATION

 	 
	 	By:  	/s/ Alan W. Faigin
 	 
	 	 	Name:  	Alan W. Faigin 	 
	 	 	Title:  	Senior Vice President,
General Counsel & Chief
Legal Officer 	 
	 
	 	MELLON INVESTOR SERVICES LLC

 	 
	 	By:  	/s/ James Kirkland
 	 
	 	 	Name:  	James Kirkland 	 
	 	 	Title:  	Assistant Vice President 	 
	 



[Signature Page to Rights Agreement]





 









 








Exhibit A




FORM OF




CERTIFICATE OF DESIGNATION

OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

FREMONT GENERAL CORPORATION




(Pursuant to NRS 78.1955)




          By resolution of the board of directors pursuant to a provision in the articles of
incorporation, this certificate establishes the following regarding the voting powers,
designations, preferences, limitations, restrictions and relative rights of the following class or
series of stock.




          Section 1. Designation and Amount. The shares of such series shall be classified and
designated as Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Series
A Junior Participating Preferred Stock”), and the number of shares constituting such series shall
be 200,000.




          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 A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if authorized by the Board of Directors and
declared by the Corporation out of funds legally available for the purpose, quarterly dividends
payable in cash on or before the 30th day of January, April, July and October 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 A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $0.01 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 or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1.00 per
share, 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 A Junior Participating Preferred Stock. In
the event the Corporation shall at any time after October 22, 2007 (the “Rights Declaration Date”)
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)



Ex. A-1









 







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 A
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 may not declare or pay a dividend or distribution on the Common Stock
(other than a dividend payable in shares of the Common Stock) unless it simultaneously declares and
pays a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in
paragraph (a) above; provided that, in the event no dividend payable in shares of 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 $0.01 per share
on the Series A 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 A Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A 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 A 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 A 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 A 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 A
Junior Participating Preferred Stock shall have the following voting rights:




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



Ex. A-2









 







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 number of votes per share to which holders of shares of Series A 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 A 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 A Junior Participating Preferred Stock shall be
in arrears in an amount equal to six 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 A 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 A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six
quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to
elect two directors.



                    (ii) During any default period, such voting right of the holders of Series A Junior
Participating Preferred Stock 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 in number of shares of
Series A Junior Participating 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 Series A Junior Participating Preferred Stock of such voting right. At any meeting at which the
holders of Series A Junior Participating 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 directors or,
if such right is exercised at an annual meeting, to elect two directors. If the number which may
be so elected at any special meeting does not amount to the required number, the holders of the
Series A Junior Participating 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 Series A Junior Participating Preferred Stock shall have exercised their
right to elect



Ex. A-3









 







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 Series A Junior Participating
Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior Participating Preferred Stock.



                    (iii) Unless the holders of Series A Junior Participating Preferred Stock shall, during an
existing default period, have previously exercised their right to elect directors, the Board of
Directors may authorize, or any stockholder or stockholders owning in the aggregate not less than
ten percent of the total number of shares of Series A Junior Participating Preferred Stock
outstanding, may request, the calling of a special meeting of the holders of Series A Junior
Participating 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 Series A Junior Participating Preferred Stock are entitled to vote pursuant to
this paragraph (c)(iii) shall be given to each holder of record of Series A Junior Participating
Preferred Stock by mailing a copy of such notice to such holder at its 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 authorization or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less than ten percent of the
total number of shares of Series A Junior Participating 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 Series A Junior Participating Preferred Stock shall have exercised their right
to elect two directors voting as a class, after the exercise of which right (x) the directors so
elected by the holders of Series A Junior Participating 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
Series A Junior Participating Preferred Stock as a class to elect directors shall cease, (y) the
term of any directors elected by the holders of Series A Junior Participating Preferred Stock as a
class shall terminate, and (z) the number of



Ex. A-4









 







directors shall be such number as may be provided for in the Restated Articles of Incorporation
(the “Articles”) or Bylaws of the Corporation 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 Articles or Bylaws of the Corporation). 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 A 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 A
Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A
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 A 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 A Junior Participating Preferred Stock, except dividends paid ratably on the Series A
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 A
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 A Junior Participating Preferred Stock; or



                    (iv) purchase or otherwise acquire for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of



Ex. A-5









 







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 A Junior Participating Preferred
Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall 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 made to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an amount equal to $1,000.00 per share of Series
A 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 A
Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares of Series A 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 A 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 A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A 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 A Liquidation Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a



Ex. A-6









 







parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of 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.



               (d) In determining whether a distribution (other than upon voluntary or involuntary
liquidation) by dividend, redemption or other acquisition of shares of stock of the Corporation or
otherwise is permitted under the Nevada General Corporation Law, no effect shall be given to
amounts that would be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of shares of stock of
the Company whose preferential rights upon dissolution are superior to those receiving the
distribution.



          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 A 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 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 A 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 A Junior Participating Preferred Stock
shall not be redeemable.




Ex. A-7









 








          Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank
junior to all other series of 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 A Junior Participating
Preferred Stock are outstanding, the Articles, including the terms of this Certificate of
Designation, shall not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A 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 A Junior Participating Preferred Stock, voting separately as a class.




          Section 11. Fractional Shares. Series A 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 A Junior Participating Preferred
Stock.





Ex. A-8












 





Exhibit B




[Form of Rights Certificate]




			
	 	 	 
	Certificate No. R-
	 	________ Rights





NOT EXERCISABLE AFTER NOVEMBER 2, 2017 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS EVIDENCED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS EVIDENCED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1




Rights Certificate




FREMONT GENERAL CORPORATION




          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 October 23, 2007 (the “Rights
Agreement”), between Fremont General Corporation, a Nevada corporation (the “Company”), and Mellon
Investor Services LLC, a New Jersey limited liability company (the “Rights Agent”), to purchase
from the Company at any time prior to 5:00 P.M. (New York City time) on November 2, 2017 (unless
such date is extended prior thereto by the Board of Directors), at the office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent, one one-thousandth of
a fully paid, non-assessable share of Series A Junior Participating Preferred Stock (the “Preferred
Stock”) of the Company, at a purchase price of $12.00 per one one-thousandth of a share (the
“Purchase Price”), upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set
forth above,






 




			
	1	 	The portion of the legend in brackets shall be inserted
only if applicable and shall replace the preceding sentence.




Ex. B-1









 









and the Purchase Price per share set forth above, are the number and Purchase Price as of
_________, 2007, based on the Preferred Stock as constituted at such date. The Company reserves
the right to require prior to the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement) that a number of Rights be exercised so that only whole shares of Preferred Stock
will be issued.




          Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of
a person who, after such transfer, became an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.




          As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities, which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.




          This Rights 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 Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written request to the
Rights Agent.




          This Rights Certificate, with or without other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-thousandths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.




          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $0.001 per Right at any time
prior to the earlier of the close of business on (i) the tenth Business Day following the Stock
Acquisition Date (as such time period may be



Ex. B-2









 






extended pursuant to the Rights Agreement), and (ii) the Final Expiration Date. The foregoing
notwithstanding, the Rights generally may not be redeemed for one hundred eighty (180) days
following a change in a majority of the Board as a result of a proxy contest. In addition, under
certain circumstances following the Stock Acquisition Date, the Rights may be exchanged, in whole
or in part, for shares of the Common Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such shares. Immediately upon the action of the
Board of Directors of the Company authorizing any such exchange, and without any further action or
any notice, the Rights (other than Rights which are not subject to such exchange) will terminate
and the Rights will only enable holders to receive the shares issuable upon such exchange.




          No fractional shares of Preferred Stock will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which 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), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.
The Company, at its election, may require that a number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.




          No holder of this Rights Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the
Company which 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 give consent to or withhold
consent from any corporate action, 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 Rights Certificate shall have
been exercised as provided in the Rights Agreement.




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




Ex. B-3









 








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




Dated as of ___________, ___




	 	 	 	 	 
	 	FREMONT GENERAL CORPORATION

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 



Countersigned:




MELLON INVESTOR SERVICES LLC






	 	 	 	 	 
	 	By:  	 	 
	 	 	Authorized Signature
 	 
	 	 	 	 
	 







Ex. B-4









 





[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT




(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)




          FOR
VALUE RECEIVED • hereby sells, assigns and transfers unto
• (Please print name and address
of transferee) this Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint • Attorney, to transfer the within Rights
Certificate on the books of the within named Company, with full power of substitution.




Dated: _____________,___




	 	 	 	 	 
	 	 	 
	 	 	  
	 	Signature 	 
	 	 	 
	 



Signature Guaranteed:




Ex. B-5









 





Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




          (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the Rights Agreement);




          (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.




Dated: _____________,___




	 	 	 	 	 
	 	 	 
	 	 	  
	 	Signature 	 
	 	 	 
	 



Signature Guaranteed:



Signatures must be guaranteed by a participant in the Securities Transfer Agent Medallion Program,
the Stock Exchanges Medallion Program or the New York Stock Exchange, Inc. Medallion Signature
Program.




Ex. B-6









 








NOTICE




          The signature to the foregoing Assignment and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.




Ex. B-7









 








FORM OF ELECTION TO PURCHASE




(To be executed if holder desires

to exercise Rights represented

by the Rights Certificate.)




To: Fremont General Corporation:




          The undersigned hereby irrevocably elects to exercise _______________ Rights represented by this
Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be issued in the name of
and delivered to:




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 Rights Certificate, a
new Rights Certificate for the balance 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: _____________,___




	 	 	 	 	 
	 	 	 
	 	 	  
	 	Signature 	 
	 	 	 
	 



Signature Guaranteed:




          Signatures must be guaranteed by a participant in the Securities Transfer Agent Medallion
Program, the Stock Exchanges Medallion Program or the New York Stock Exchange, Inc. Medallion
Signature Program.




Ex. B-8









 








Certificate




          The undersigned hereby certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by, or being assigned to, an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined pursuant to the Rights Agreement).




Ex. B-9









 








Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




          (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the Rights Agreement);




          (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.




Dated: _____________,___




	 	 	 	 	 
	 	 	 
	 	 	  
	 	Signature 	 
	 	 	 
	 



Signature Guaranteed:




          Signatures must be guaranteed by a participant in the Securities Transfer Agent Medallion
Program, the Stock Exchanges Medallion Program or the New York Stock Exchange, Inc. Medallion
Signature Program.




Ex. B-10









 








NOTICE




          The signature to the foregoing Election to Purchase and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.




          In the event the certification set for above in the Election to Purchase is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and such Assignment or Election to Purchase will not be honored.





Ex. B-11









 








Exhibit C




SUMMARY OF RIGHTS TO PURCHASE




PREFERRED STOCK




          On October 22, 2007, the Board of Directors of Fremont General Corporation (the “Company”)
authorized and the Company declared a dividend distribution of one Right for each outstanding share
of Company Common Stock to stockholders of record at the close of business on November 2, 2007 (the
“Record Date”). Each Right entitles the registered holder to purchase from the Company a unit
consisting of one one-thousandth of a share (a “Unit”) of Series A Junior Participating Preferred
Stock, par value $0.01 per share at a Purchase Price of $12.00 per Unit, subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the “Rights
Agreement”) between the Company and Mellon Investor Services LLC, a New Jersey limited liability
company, as Rights Agent.




          Initially, the Rights will be attached to all Common Stock certificates representing shares
then outstanding, and no separate Rights Certificates will be distributed. Subject to certain
exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 business days following a public
announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has
acquired beneficial ownership of 5% or more of the outstanding shares of Common Stock (the “Stock
Acquisition Date”) or (ii) 10 business days (or such later date as the Board shall determine)
following the commencement of a tender offer or exchange offer that would result in a person or
group becoming an Acquiring Person (notwithstanding the requirement described below that the Board
of Directors affirmatively determine that such person shall be an Acquiring Person);
provided, however, that the Distribution Date shall not occur unless, within either
of the ten business day periods (or such later date) specified in clauses (i) and (ii) above, the
Board of Directors of the Company shall have affirmatively determined that a Distribution Date
shall occur upon the end of such applicable ten business day (or later) period. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common Stock certificates
issued after the Record Date will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common Stock outstanding
will also constitute the transfer of the Rights associated with the Common Stock represented by
such certificate. Pursuant to the Rights Agreement, the Company reserves the right to require
prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights,
a number of Rights be exercised so that only whole shares of Preferred Stock will be issued.




          The definition of Acquiring Person contained in the Rights Agreement contains several
exemptions, including for (i) the Company or any of its subsidiaries, (ii) any employee benefit
plan of the Company, or of any subsidiary of the Company, or any


Ex. C-1









 







person or entity organized, appointed or established by the Company for or pursuant to the
terms of any such plan, (iii) any person who becomes the beneficial owner of 5% or more of the
shares of Common Stock then outstanding as a result of a reduction in the number of shares of
Common Stock by the Company, unless and until such person, after becoming aware that such person
has become the beneficial owner of such percentage of shares of Common Stock, acquires beneficial
ownership of any additional shares of Common Stock, (iv) any person who beneficially owns 5% or
more of the shares of Common Stock on the date of the Rights Agreement, unless and until such
person and its affiliates and associates acquire any additional shares of Common Stock or such
person decreases its percentage ownership below 5% of the Common Stock then outstanding, or (v) any
such person who has reported or is required to report such ownership (but less than 10%) on
Schedule 13G or Schedule 13D under the Securities Exchange Act of 1934, as amended, which Schedule
13D does not state any intention to or reserve the right to control or influence the management or
policies of the Company, and who, upon request, certifies to the Company that such person acquired
shares of Common Stock in excess of 4.9% inadvertently or without knowledge of the terms of the
Rights and who or which, together with all affiliates and associates, disposes of such number of
shares of Common Stock so that it, together with all affiliates and associates, is no longer the
beneficial owner of 5% or more of the shares of Common Stock then outstanding. No person shall be
an Acquiring Person unless the Board of Directors of the Company affirmatively determines, within
ten business days after such person otherwise meets the requirements of the definition of Acquiring
Person, that such person shall be an Acquiring Person.




          The Rights are not exercisable until the Distribution Date and will expire at 5:00 P.M. (New
York City time) on November 2, 2017, unless such date is extended or the Rights are earlier
redeemed or exchanged by the Company as described below.




          As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of the Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, only shares of Common Stock issued prior to the Distribution
Date will be issued with Rights.




          In the event that a Person becomes an Acquiring Person, each holder of a Right will thereafter
have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times the exercise price
of the Right. Notwithstanding any of the foregoing, following the occurrence of the event set
forth in this paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void. However,
Rights are not exercisable following the occurrence of the event set forth above until such time as
the Rights are no longer redeemable by the Company as set forth below.




          For example, at an exercise price of $12.00 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $24.00 worth of Common



Ex. C-2









 






Stock (or other consideration, as noted above) for $12.00. Assuming that the Common Stock had
a per share value of $4.00 at such time, the holder of each valid Right would be entitled to
purchase 6 shares of Common Stock for $12.00.




          In the event that, at any time following the Stock Acquisition Date, (i) the Company engages
in a merger or other business combination transaction in which the Company is not the surviving
corporation, (ii) the Company engages in a merger or other business combination transaction in
which the Company is the surviving corporation and the Common Stock of the Company is changed or
exchanged, or (iii) 50% or more of the Company’s assets, cash flow or earning power is sold or
transferred, each holder of a Right (except Rights which have previously been voided as set forth
above) shall thereafter have the right to receive, upon exercise, common stock of the acquiring
company having a value equal to two times the exercise price of the Right. The events set forth in
this paragraph and in the second preceding paragraph are referred to as the “Triggering Events.”




          At any time after a person becomes an Acquiring Person and prior to the acquisition by such
person or group of fifty percent (50%) or more of the outstanding Common Stock, the Board may
exchange the Rights (other than Rights owned by such person or group which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock, or one one-thousandth of a
share of Preferred Stock (or of a share of a class or series of the Company’s preferred stock
having equivalent rights, preferences and privileges), per Right (subject to adjustment).




          The Purchase Price payable, and the number of Units of 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) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for 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 quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).




          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No fractional Units will be issued 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 until ten business days following the Stock Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $0.001 per Right, referred to as the
“Redemption Price” (payable in cash, Common Stock or other consideration deemed appropriate by the
Board of Directors). Immediately upon the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption



Ex. C-3









 






Price. The foregoing notwithstanding, the Rights generally may not be redeemed for one
hundred eighty (180) days following a change in a majority of the Board of Directors as a result of
a proxy contest.




          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. While
the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for common stock of the
acquiring company or in the event of the redemption of the Rights as set forth above.




          Any of the provisions of the Rights Agreement may be amended by the Board of Directors of the
Company prior to the Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights, or to shorten or lengthen any time period
under the Rights Agreement. The foregoing notwithstanding, no amendment may be made at such time
as the Rights are not redeemable.




          A copy of the Rights Agreement will be filed with the Securities and Exchange Commission as an
Exhibit to a Registration Statement on Form 8-A and a Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from the Rights Agent. This 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 incorporated herein by reference.





Ex. C-4