exv4w4



 





Exhibit 4.4




LODGENET ENTERTAINMENT CORPORATION,




a Delaware corporation,




and




COMPUTERSHARE INVESTOR SERVICES, LLC,




a Delaware Limited Liability Company,




Rights Agent




Amended and Restated Rights Agreement




Dated as of February 28, 2007














 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE	 
	1. CERTAIN DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2. APPOINTMENT OF RIGHTS AGENT
	 	 	9	 
	 
	 	 	 	 
	3. ISSUE OF RIGHTS CERTIFICATES
	 	 	9	 
	 
	 	 	 	 
	4. FORM OF RIGHTS CERTIFICATES
	 	 	11	 
	 
	 	 	 	 
	5. COUNTERSIGNATURE AND REGISTRATION
	 	 	11	 
	 
	 	 	 	 
	6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES
	 	 	12	 
	 
	 	 	 	 
	7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS
	 	 	12	 
	 
	 	 	 	 
	8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES
	 	 	15	 
	 
	 	 	 	 
	9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK
	 	 	15	 
	 
	 	 	 	 
	10. PREFERRED STOCK RECORD DATE
	 	 	16	 
	 
	 	 	 	 
	11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS
	 	 	16	 
	 
	 	 	 	 
	12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES
	 	 	23	 
	 
	 	 	 	 
	13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS, CASH FLOW OR EARNING POWER
	 	 	24	 
	 
	 	 	 	 
	14. ADDITIONAL COVENANTS
	 	 	26	 
	 
	 	 	 	 
	15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
	 	 	27	 
	 
	 	 	 	 
	16. RIGHTS OF ACTION
	 	 	28	 
	 
	 	 	 	 
	17. AGREEMENT OF RIGHTS HOLDERS
	 	 	28	 
	 
	 	 	 	 
	18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER
	 	 	29	 
	 
	 	 	 	 
	19. CONCERNING THE RIGHTS AGENT
	 	 	29	 
	 
	 	 	 	 
	20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
	 	 	30	 






i









 






	 	 	 	 	 
	 	 	PAGE	 
	21. DUTIES OF RIGHTS AGENT
	 	 	30	 
	 
	 	 	 	 
	22. CHANGE OF RIGHTS AGENT
	 	 	32	 
	 
	 	 	 	 
	23. ISSUANCE OF NEW RIGHTS CERTIFICATES
	 	 	33	 
	 
	 	 	 	 
	24. REDEMPTION, TERMINATION AND EXCHANGE
	 	 	34	 
	 
	 	 	 	 
	25. NOTICE OF CERTAIN EVENTS
	 	 	38	 
	 
	 	 	 	 
	26. NOTICES
	 	 	39	 
	 
	 	 	 	 
	27. SUPPLEMENTS AND AMENDMENTS
	 	 	39	 
	 
	 	 	 	 
	28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC
	 	 	40	 
	 
	 	 	 	 
	29. SUCCESSORS
	 	 	41	 
	 
	 	 	 	 
	30. BENEFITS OF THIS AGREEMENT
	 	 	41	 
	 
	 	 	 	 
	31. SEVERABILITY
	 	 	41	 
	 
	 	 	 	 
	32. GOVERNING LAW
	 	 	41	 
	 
	 	 	 	 
	33. COUNTERPARTS
	 	 	41	 
	 
	 	 	 	 
	34. DESCRIPTIVE HEADINGS
	 	 	41	 
	 
	 	 	 	 
	Exhibit A — Form of Rights Certificate
	 	 	A-1	 
	Exhibit B — Form of Summary of Rights
	 	 	B-1	 







ii









 








AMENDED AND RESTATED RIGHTS AGREEMENT




     THIS AMENDED AND RESTATED AGREEMENT is dated as of February 28, 2007 between LODGENET
ENTERTAINMENT CORPORATION, a Delaware corporation (the “Company”), and COMPUTERSHARE INVESTOR
SERVICES, LLC, a Delaware Limited Liability Company, as successor-in-interest to HARRIS TRUST AND
SAVINGS BANK, an Illinois banking corporation (the “Rights Agent”).



W I T N E S S E T H:




     WHEREAS, the Board of Directors of the Company (the “Board of Directors”) previously (a)
authorized and declared a dividend distribution of one Right (as hereinafter defined) for each
share of Common Stock, par value $.01 per share, of the Company (the “Common Stock”) outstanding as
of the close of business on March 10, 1997 (the “Record Date”), and (b) authorized the issuance of
one Right (subject to adjustment as provided herein) for each share of Common Stock of the Company
issued between the Record Date and the earlier of the Distribution Date and the Expiration Date, as
such terms are hereinafter defined (with Rights also to be issued in connection with certain
issuances of Common Stock after the Distribution Date, as provided more fully herein), each Right
representing the right to purchase one one-thousandth of a share of Series A Participating
Preferred Stock, par value $.01 per share, of the Company (“Preferred Stock”) having the rights,
powers and preferences set forth in the form of Certificate of Designation previously filed with
the Delaware Secretary of State (“Certificate of Designation”), upon the terms and subject to the
conditions hereinafter set forth (the “Rights”);



     WHEREAS, the Company previously appointed the Rights Agent to act on behalf of the Company,
and the Rights Agent is willing so to act, in connection with the issuance, transfer, exchange,
replacement and redemption of the Rights Certificates (as hereinafter defined), the exercise of
Rights and other matters referred to herein;



     WHEREAS, the Company entered into a Rights Agreement with the Rights Agent dated March 5,
1997, to govern the administration of the Rights (the “Prior Agreement”);



     WHEREAS, the Prior Agreement would have expired on February 28, 2007;




     WHEREAS, the Board of Directors has determined that it is in the best interests of the Company
and its stockholders to amend and restate the Prior Agreement, to among other things, extend the
term of the Prior Agreement as described herein;



     NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein,
the parties hereby agree that the Prior Agreement is hereby amended and restated in its entirety to
provide as follows:



     1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following terms have the meanings
indicated:



     (a) “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates (as such term is hereinafter defined) and Associates (as



1









 







such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term
is hereinafter defined) of securities representing twenty percent (20%) or more of the shares of
Common Stock then outstanding or who was such a Beneficial Owner at any time on or after the date
hereof, whether or not such Person continues to be the Beneficial Owner of securities representing
twenty percent (20%) or more of the outstanding shares of Common Stock. Notwithstanding the
foregoing,




     (i) in no event shall a Person who or which, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of less than twenty percent (20%) of the
Company’s outstanding shares of Common Stock become an Acquiring Person solely as a result
of a reduction of the number of shares of outstanding Common Stock, including repurchases of
outstanding shares of Common Stock by the Company, which reduction increases the percentage
of outstanding shares of Common Stock beneficially owned by such Person (provided that any
subsequent increase in the amount of Common Stock beneficially owned by such Person after
such Person becomes aware that such Person is the Beneficial Owner of twenty percent (20%)
or more of the then outstanding shares of Common Stock, together with all Affiliates and
Associates of such Person acquiring beneficial ownership of additional shares of Common
Stock which in the aggregate represent more than one percent (1%) of the shares of Common
Stock outstanding, without the prior written approval of the Board of Directors shall cause
such Person to be an Acquiring Person);




     (ii) the term Acquiring Person shall not mean (A) the Company, (B) any subsidiary (as
such term is hereinafter defined) of the Company, (C) any employee benefit plan of the
Company or any of its subsidiaries, (D) any entity holding securities of the Company
organized, appointed or established by the Company or any of its subsidiaries for or
pursuant to the terms of any such plan, or (E) any underwriter acting in good faith in a
firm commitment underwriting of an offering of the Company’s securities pursuant to
arrangements with the Company which have been approved by the Board of Directors (HOWEVER,
the exception provided by this clause (E) shall no longer be available in the event that any
such underwriter is otherwise an Acquiring Person on or after the date which is forty (40)
days after the date of initial acquisition of the Company’s securities by such underwriter
in connection with such offering);




     (iii) no Person shall be deemed to be an Acquiring Person if: (A) such Person has
reported or is required to report such ownership (but less than twenty-five percent (25%))
on Schedule 13G under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
(or any comparable or successor report), or any Schedule 13D under the Exchange Act (or any
comparable or successor report) and any such report filed (or required to be filed) by such
Person does not (or would 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 (or any comparable or successor Item) of such Schedule 13D (other than
the disposition of Common Stock); (B) either (1) within ten (10) Business Days of being
requested by the Company to advise the Company regarding the same, such Person certifies in
writing to the Company that such Person acquired Beneficial Ownership of securities
representing shares of Common Stock in excess of twenty percent (20%) inadvertently or
without knowledge of the terms of the Rights, or (2) the



2









 







Board of Directors determines in good faith that such Person has become an Acquiring Person
inadvertently; (C) such Person divests as promptly as practicable a sufficient number of
securities representing shares of Common Stock so that such Person shall not be deemed to be
an Acquiring Person pursuant to the first sentence of this Section 1(a); and (D) promptly
following such Person’s divestiture of such securities, such Person certifies to the Board
of Directors that such Person is no longer an Acquiring Person as defined pursuant to the
first sentence of this Section 1(a); and




     (iv) the term Acquiring Person shall not mean any Person who or which has entered into
any agreement or arrangement with the Company or any subsidiary of the Company providing for
an Acquisition Transaction (as hereinafter defined).



     (b) “Acquisition Transaction” shall mean (i) a merger, consolidation or similar transaction
involving the Company or any of its subsidiaries as a result of which stockholders of the Company
will no longer own a majority of the outstanding shares of (A) Common Stock of the Company or a
publicly-traded entity which controls the Company or, (B) if appropriate, the entity into which the
Company may be merged, consolidated or otherwise combined (based solely on the shares of Common
Stock received or retained by such stockholders, in their capacity as stockholders of the Company,
pursuant to such transaction); (ii) a purchase or other acquisition of all or a substantial portion
of the assets of the Company and its subsidiaries; or (iii) a purchase or other acquisition of
securities representing twenty percent (20%) or more of the shares of Common Stock then
outstanding.



     (c) “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 as in effect on the date of
this Agreement.



     (d) 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 payment 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 23
hereof (the “Original Rights”) or pursuant to Section 11(a)(i) hereof in connection
with an adjustment made with respect to any Original Rights;



3









 






     (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 the 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 of 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




     (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 (d)) or disposing of any voting securities of the Company; provided,
however, that nothing in this paragraph (d) 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 (40) 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 (40) days; and provided further, however, that
any stockholder of the Company, with affiliate(s), associate(s) or other person(s)
who may be deemed representatives of it serving as director(s) of the Company, shall
not be deemed to beneficially own securities held by other Persons as a result of
(A) persons affiliated or otherwise associated with such stockholder serving as
directors or taking any action in connection therewith; (B) discussing the status of
its shares with the Company or other stockholders of the Company similarly situated;
or (C) voting or acting in a manner similar to other stockholders similarly
situated, absent a specific finding by the Board of Directors of an express
agreement among such stockholders to act in concert with one another as stockholders
so as to cause, in the good faith judgment of the Board of Directors, each such
stockholder to be the Beneficial Owner of the shares held by the other
stockholder(s).



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



     (f) The term “close of business” on any given date shall mean 5 P.M., Eastern time, on such
date; provided, however, that if such date is not a Business Day it shall mean 5 P.M., Eastern
time, on the next succeeding Business Day.



4









 





     (g) “Common Stock” shall mean the Common Stock, par value $.01 per share, of the Company,
except that “Common Stock” when used with reference to stock issued by any Person other than the
Company shall mean the capital stock with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management, of such Person or, if such
Person is a subsidiary of another Person, of the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such capital stock, equity securities
or equity interests.



     (h) “Person” shall mean any individual, firm, corporation, partnership, limited liability
company, joint venture, association, trust or other entity.



     (i) “Preferred Stock” shall mean the Series A Participating Preferred Stock, par value $.01
per share, of the Company, and to the extent that there are not sufficient numbers of shares of
Series A 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 Participating Preferred Stock.



     (j) “Qualified Offer” shall mean a tender offer for all outstanding shares of Common Stock not
already beneficially owned by the Person making the offer that meets all of the following
requirements on the date on which the Qualified Offer is commenced (for purposes of this
definition, the “date on which the Qualified Offer is commenced” shall be determined within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act) and
immediately prior to the consummation of the Qualified Offer:




     (i) the same per share price and consideration is offered for all shares of Common
Stock in the Qualified Offer, provided that such per share price and consideration is
greater than the highest reported market price for the Common Stock during the twenty-four
(24) month period immediately preceding the date on which the Qualified Offer is commenced
and represents a premium above the average of the closing prices (as determined pursuant to
Section 11(d)(i) hereof) for the five (5) Trading Days immediately preceding the date on
which the Qualified Offer is commenced;




     (ii) the consideration is at least eighty percent (80%) cash (and any non-cash portion
is comprised of shares of common stock of the offering Person that are listed on either the
New York Stock Exchange or The Nasdaq Stock Market LLC, such consideration to be adjusted to
reflect any decrease in the value of such shares prior to the consummation of the Qualified
Offer) and is to be paid upon consummation of the Qualified Offer for all shares of Common
Stock tendered or exchanged in the Qualified Offer;




     (iii) in the case of a Qualified Offer that includes shares of common stock of the
offering Person, (A) the value of such shares for purposes of this definition shall be the
lower of (1) the average of the last sale prices (regular way) of such shares reported in
the principal consolidated transaction reporting system with respect to such shares for the
five (5) Trading Days immediately preceding the date of any determination, and (2) the
lowest reported market price for common stock of the offering Person during the five (5)
Trading Days immediately preceding the date on which the offer is commenced, (B) the



5









 







offering Person is a publicly owned corporation organized under the federal laws of the
United States or the state laws of any of the fifty (50) states or the District of Columbia,
and its common stock is listed or admitted to trading on a national securities exchange, (C)
no stockholder approval of the offering Person is required to issue such common stock, or,
if required, has already been obtained, (D) no other class of voting stock of the offering
Person is outstanding, and (E) the offering Person shall permit a nationally recognized
investment banking firm retained by the Board of Directors and legal counsel designated by
the Company to have access to such offering Person’s books, records, management, accountants
and other appropriate outside advisers for the purposes of permitting such investment
banking firm and such legal counsel to conduct a due diligence review of the offering Person
in order to permit such investment banking firm (relying as appropriate on the advice of
such legal counsel) to be able to render an opinion to the Board of Directors with respect
to whether the consideration being offered to the Company’s stockholders is fair;




     (iv) on or prior to the date on which the Qualified Offer is commenced, such offering
Person:




     (A) has on hand cash or cash equivalents for the full amount necessary to
consummate such offer and has irrevocably committed in writing to the Company to
utilize such cash or cash equivalents for purposes of such offer if consummated and
to set apart and maintain available such cash or cash equivalents for such purposes
until the offer is consummated or withdrawn; or




     (B) has all financing in the full amount necessary to consummate such offer and
has: (1) entered into, and provided to the Company certified copies of, definitive
financing agreements (including exhibits and related documents) for funds for such
offer which, when added to the amount of cash and cash equivalents available,
committed in writing, set apart and maintained in the same manner as described in
clause (A) above, are in an amount not less than the full amount necessary to
consummate such offer, which agreements are with one or more responsible financial
institutions or other entities having the necessary financial capacity and ability
to provide such funds, constitute firm, unqualified commitments to provide the
funding described above without market or company maximum limitations, and are
subject only to customary terms and conditions (which shall in no event include
conditions requiring access by such financial institutions to non-public information
to be provided by the Company, conditions based on the accuracy of any information
concerning the Company, or conditions requiring the Company to make any
representations, warranties or covenants in connection with such financing), and (2)
provided to the Company copies of all written materials prepared by such Person for
such financial institutions in connection with entering into such financing
agreements; provided that, “the full amount necessary to consummate such offer” in
either clause (A) or (B) above shall be an amount sufficient to pay for all shares
of Common Stock outstanding on a fully diluted basis the consideration pursuant to
the offer and the second-step transaction required by clause (viii) below and all
related expenses;



6









 






     (v) such offer is conditioned on receiving a minimum of at least ninety percent (90%)
of the outstanding shares of Common Stock (other than those owned by the offering Person and
its Affiliates or Associates) being tendered and not withdrawn as of the Qualified Offer’s
expiration date, which condition shall not be waivable;




     (vi) prior to or on the date that such offer is commenced, the Company shall have
received an irrevocable written commitment of the offering Person that the offer will remain
open for at least sixty (60) days and, if a Special Meeting is duly requested in accordance
with Section 24(a)(iii), for at least ten (10) Business Days after the date of the Special
Meeting or, if no Special Meeting is held within ninety (90) Business Days following receipt
of the Special Meeting Notice in accordance with Section 24(a)(iii), for at least ten (10)
Business Days following such ninety (90) Business Day period;




provided, however, that (x) if there is any increase in the price of such offer, such offer
must remain open for at least an additional fifteen (15) Business Days after the last such
increase, (y) such offer must remain open for at least fifteen (15) Business Days after the
date that any bona fide alternative offer is made which, in the opinion of one or more
investment banking firms designated by the Company, provides for consideration per share in
excess of that provided for in such offer, and (z) such offer must remain open for at least
fifteen (15) Business Days after the date, if any, on which such offering Person reduces the
per share price offered in accordance with clause (viii)(B) below (provided, in the case of
each of clauses (x),(y) and (z) above, in no event will such Qualified Offer have been
outstanding for less than sixty (60) days);




provided further, however, that such offer need not remain open, as a result of this clause
(vi), beyond (1) the time which any other offer satisfying the criteria for a Qualified
Offer is then required to be kept open under this clause (vi), or (2) the scheduled
expiration date, as such date may be extended by public announcement on or prior to the then
scheduled expiration date, of any other tender offer for shares of Common stock with respect
to which the Board of Directors has agreed to redeem the Rights immediately prior to
acceptance for payment of shares of Common Stock thereunder (unless such other offer is
terminated prior to its expiration without any shares of Common Stock having been purchased
thereunder);




     (vii) such offer is accompanied by a written opinion, in customary form, of a
nationally recognized investment banking firm which is addressed to the Company and the
holders of shares of Common Stock (other than such offering Person) and states that the
price to be paid to holders pursuant to the offer is fair from a financial point of view to
such holders and includes any written presentation of such firm showing the analysis and
range of values underlying such conclusions and such written opinion and any such
presentation is updated and provided to the Company within two (2) Business Days prior to
the date such offer is consummated;



7









 






     (viii) prior to or on the date that such Qualified Offer is commenced, such offering
Person makes an irrevocable written commitment to the Company and, with respect to clause
(A) to the Company’s stockholders,




     (A) to consummate a transaction or transactions promptly upon the completion of
such Qualified Offer (and in no event later than five (5) Business Days thereafter),
whereby all shares of Common Stock not purchased in such Qualified Offer will be
acquired at the same cash price per share paid in such Qualified Offer,




     (B) that the offering Person will not make any amendments to the Qualified
Offer to reduce the offer consideration, or otherwise change the terms of the
Qualified Offer in a way that is adverse to a tendering stockholder (other than a
reduction to reflect any dividend declared by the Company, other than a regular
quarterly dividend, after the commencement of such Qualified Offer or any material
change in the capital structure of the Company initiated by the Company after the
commencement of such Qualified Offer, whether by way of reclassification,
recapitalization, reorganization, repurchase or otherwise), and




     (C) if the Qualified Offer is not consummated, that neither such offering
Person nor any of its Affiliates or Associates will make any offer for or purchase
any equity securities of the Company for a period of one (1) year after the
commencement of the original offer if such original offer does not result in the
tender of at least eighty-five percent (85%) of the outstanding shares of Common
Stock not owned by such offering Person (including its Affiliates and Associates),
unless another tender offer by another party for all outstanding shares of Common
Stock is commenced that (a) constitutes a Qualified Offer (in which event, any new
offer by such offering Person or of any Affiliates or Associates must be at a price
no less than that provided for in such original offer) or (b) is approved by the
Board of Directors (in which event, any new offer by such offering Person or of any
of its Affiliates or Associates must be at a price no less than that provided for in
such approved offer); and




     (ix) in addition to each of the requirements set forth above, the Qualified Offer is
subject only to the conditions required in this definition and other customary terms and
conditions, and is not subject to any financing, funding or similar condition, nor any
condition relating to completion of or satisfaction with any due diligence or similar
investigation.



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



     (l) “Section 13 Event” shall mean any event described in Section 13(a) hereof.



     (m) “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.



8









 





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



     (o) “Trading Day” shall mean a day on which the national securities exchange on which the
shares of Common Stock of the Company or shares of stock of another Person, as applicable, are
principally listed or admitted to trading or quoted is open for the transaction of business or, if
the shares of Common Stock of the Company or shares of stock of another Person, as applicable, are
not listed or admitted to trading or quoted on any national securities exchange, a Business Day.



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



     (q) “Voting power” shall mean the voting power of all securities of the Company then
outstanding and generally entitled to vote for the election of directors of the Company.



     2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall
prior to the Distribution Date also be the holders of the Common Stock) 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 in no event be liable for, the acts or omissions of any such co-Rights Agent. In
the event the Company appoints one or more Co-Rights Agents, the respective duties of the Rights
Agents and any Co-Rights Agents shall be as the Company shall determine.



     3. ISSUE OF RIGHTS CERTIFICATES.



     (a) Until the earlier of (i) the close of business on the tenth (10th) Business Day after the
Stock Acquisition Date, or (ii) the close of business on the tenth (10th) Business Day (or such
later date as the Board of Directors shall determine) after the date of the commencement of a
tender offer or exchange offer by any Person (other than the Company, any subsidiary of the
Company, any employee benefit plan of the Company or any of its subsidiaries, or any Person or
entity organized, appointed or established by the Company or any of its subsidiaries for or
pursuant to the terms of any such plan) within the meaning of Rule 14d-2(a) of the General Rules
and Regulations under the Exchange Act, or any successor provision thereto, if upon consummation
thereof, such Person would become an Acquiring Person (the earliest of (i) and (ii) being herein
referred to as the “Distribution Date”), (A) the Rights shall be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for 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 (B) the Rights (and the
right to receive certificates therefor) shall be transferable only in connection with the transfer
of the underlying shares of Common Stock. As soon as practicable after the Distribution Date, the
Rights Agent shall 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, a



9









 




certificate for Rights, in substantially the form of Exhibit A 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(n) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in accordance with Section
15(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 shall be evidenced solely by such Rights Certificates.




     The Company will make available, as soon as practicable following the date hereof, a Summary
of Rights, in substantially the form attached hereto as Exhibit B (the “Summary of Rights”), to any
holder of Rights who may so request from time to time prior to the Final Expiration Date. With
respect to certificates for the Common Stock issued at any time after the Record Date and until the
Distribution Date (or earlier redemption, expiration or termination of the Rights), the Rights
shall be evidenced by such certificates for the Common Stock together with the Summary of Rights
and the registered holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or earlier redemption, expiration or termination
of the Rights), the surrender for transfer of any of the certificates for the Common Stock
outstanding at any time after the Record Date, even without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.



     (b) Certificates issued for Common Stock (including, without limitation, certificates issued
upon transfer or exchange of Common Stock) after the Record Date, but prior to the earlier of the
Distribution Date or the Expiration Date (as such term is hereinafter defined), shall be deemed
also to be certificates for Rights, and shall have impressed, printed, stamped, written or
otherwise affixed onto them the following legend:




     This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in an Amended and Restated Rights Agreement between LodgeNet
Entertainment Corporation (the “Company”) and the Rights Agent thereunder dated as
of February 28, 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 Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire, or may 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 without charge
within five Business Days after receipt of a written request therefor. Under
certain circumstances, Rights issued to Acquiring Persons (as defined in the Rights
Agreement) or certain related Persons and any subsequent holder of such Rights may
become null and void.



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



10









 





     4. FORM OF RIGHTS CERTIFICATES.



     (a) The Rights Certificates (and the forms of election to purchase shares and of assignment
and certificates to be printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit A hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or interdealer quotation system on which the Rights may from time to time be
listed or traded, or to conform to usage. Subject to the provisions of Section 11 and Section 23
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 per one one-thousandth of a
share set forth therein (the “Purchase Price”), but the number of such shares and the Purchase
Price shall be subject to adjustment as provided herein.



     (b) Any Rights Certificate issued pursuant to Section 3(a) hereof that represents Rights
beneficially owned by an Acquiring Person or any Associate or Affiliate thereof and any Rights
Certificate issued at any time upon the transfer of any Rights to such an Acquiring Person or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate,
and any Rights Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this sentence, shall
contain the following legend:




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


The provisions of Section 7(e) of this Rights Agreement shall be operative whether or not the
foregoing legend is contained on any such Rights Certificate.




     5. COUNTERSIGNATURE AND REGISTRATION. The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, any Vice Chairman of the Board, its President, Chief
Operating Officer 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



11









 




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.




     Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its office
designated for such purpose, 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.



     6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED, DESTROYED,
LOST OR STOLEN RIGHTS CERTIFICATES. Subject to the provisions of Sections 7(e), 7(f) and 15
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 may be
transferred, split up, combined or exchanged for another Rights Certificate or Rights Certificates,
entitling the registered holder to purchase a like number of shares of Preferred Stock as the
Rights Certificate or Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company 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.



     Subject to the provisions of Sections 7(e), 7(f) and 15 hereof, 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 such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request, and, in case of loss, theft or destruction, of indemnity or security reasonably
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 shall 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.



     7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.



     (a) The registered holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part upon presentation of the Rights
Certificate, with the appropriate form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the Rights Agent, together with payment of
the Purchase Price for each one one-thousandth of a share of Preferred Stock (or such other number
of shares or other securities) as to which the Rights are exercised at any time after the



12









 




Distribution Date, provided that such exercise also occurs at or prior to the earliest of (i) the
close of business on February 28, 2016 (the “Final Expiration Date”), (ii) the time at which a
decision of the Board of Directors is made to terminate this Agreement, upon the recommendation of
the TIDE Committee (as hereinafter defined) as provided in Section 28(b) hereof, (iii) the time at
which the Rights are redeemed as provided in Section 24 hereof, (iv) the consummation of a
transaction contemplated by Section 13(d) hereof, (v) the time at which the Rights are exchanged as
provided in Section 24(c) hereof, or (vi) one (1) year from the date hereof if this Agreement is
not approved by the holders of a majority of shares of Common Stock present in person or
represented by proxy and entitled to vote on the subject matter (excluding the vote of any
Acquiring Person) at a duly called meeting of stockholders or any adjournment or postponement
thereof, at which a quorum is present, within such one (1) year period (the earliest time of (i),
(ii), (iii), (iv), (v) or (vi) being the “Expiration Date”). Notwithstanding any other provision
of this Agreement, any Person who prior to the Distribution Date becomes a record holder of shares
of Common Stock may exercise all of the rights of a registered holder of a Rights Certificate with
respect to the Rights associated with such shares of Common Stock in accordance with and subject to
the provisions of this Agreement, including the provisions of Section 7(e) hereof, as of the date
such Person becomes a record holder of shares of Common Stock.




     (b) The Purchase Price for each one one-thousandth share of Preferred Stock pursuant to the
exercise of a Right shall initially be $60.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.



     (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the appropriate
form of election to purchase duly executed, accompanied by payment of the Purchase Price for the
shares (or other securities or property) to be purchased and an amount equal to any applicable
transfer tax (as determined by the Rights Agent) in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall, subject to Section 21(k), 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) certificates for the number of shares 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, in its sole discretion, shall have elected
to deposit the shares of Preferred Stock issuable upon exercise of the Rights hereunder into a
depositary, 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 shall
direct the depositary agent to comply with such request, (ii) when appropriate, requisition from
the Company the amount of cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 15, (iii) promptly 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)
when appropriate, after receipt promptly deliver such cash to or upon the order of the registered
holder of such Rights Certificate. In the event that the Company is obligated to issue other
securities of the Company, and/or distribute other property pursuant to Section 11(a), the Company
shall make all arrangements necessary so that such other securities and/or property are



13









 




available
for distribution by the Rights Agent, if and when appropriate. In addition, in the case of an
exercise of the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return
such Rights Certificate to the registered holder thereof after imprinting, stamping or otherwise
indicating thereon that the rights represented by such Rights Certificate no longer include the
rights provided by Section 11(a)(ii) of the Rights Agreement and if less than all the Rights
represented by such Rights Certificate were so exercised, the Rights Agent shall indicate on the
Rights Certificate the number of Rights represented thereby which continue to include the rights
provided by Section 11(a)(ii). 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 (except pursuant to
Section 11(a)(ii)) less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Rights Certificate or to such registered holder’s duly
authorized assigns, subject to the provisions of Section 15 hereof.



     (e) Notwithstanding anything in this Agreement to the contrary, if there occurs any Triggering
Event, then any Rights that are or were on or after the Distribution Date beneficially owned by an
Acquiring Person or any Associate or Affiliate of an Acquiring Person shall become null and void,
without any further action, and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise.
Without limiting the foregoing sentence, Rights held by the following Persons shall be null and
void without any further action: (i) any direct or indirect transferee of any Rights that are or
were on or after the Distribution Date beneficially owned by an Acquiring Person or any Associate
or Affiliate of an Acquiring Person; (ii) any direct or indirect transferee of any Rights that were
on or before the Distribution Date beneficially owned by an Acquiring Person or any Associate or
Affiliate of an Acquiring Person if the transferee received such Rights, directly or indirectly,
(A) from an Acquiring Person or any Associate or Affiliate of an Acquiring Person (x) as a result
of a distribution by such Acquiring Person or any Associate or Affiliate of an Acquiring Person to
holders of its equity securities or similar interests (including, without limitation, partnership
interests) or (y) pursuant to any continuing agreement, arrangement or understanding with respect
to the Rights or (B) in a transfer (or series of transfers) which the Board of Directors determines
is part of a plan, arrangement or understanding which has the purpose or effect of avoiding the
provisions of this Section 7(e); and (iii) subsequent transferees of Persons referred to in the
foregoing clauses (i) and (ii) as well as this clause (iii). The Company shall use all reasonable
efforts to ensure that the provisions of
this Section 7(e) are complied with, but shall have no liability to any holder of Rights or any
Rights Certificate or to any other Person as a result of the Company’s failure to make any
determination with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.



     (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 the certificate
contained in the appropriate form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise shall have been properly completed and



14









 




duly
executed by the registered holder thereof and the Company shall have been provided with such
additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.




     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 canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights Certificates
shall be issued in lieu thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so 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
canceled Rights Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.



     9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK. The Company covenants and agrees that it
shall cause to be reserved and kept available out of its authorized and unissued shares of
Preferred Stock, or any authorized and issued shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights and, after the occurrence of a Triggering Event, shall so reserve and keep
available a sufficient number of shares of Common Stock (and/or other securities) which may be
required to permit the exercise in full of the Rights pursuant to this Agreement.



     So long as the shares of Preferred Stock (and, after the occurrence of a Triggering Event, any
other securities) issuable upon the exercise of the Rights may be listed on any national securities
exchange or national quotation system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares (or other securities) reserved for
such issuance to be listed on such exchange or system upon official notice of issuance upon such
exercise.



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



     The Company further covenants and agrees that it shall pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any certificates for shares of Preferred Stock and/or
other securities upon the exercise of Rights. The Company shall not, however, be required to (i)
pay any transfer tax which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or in respect of the issuance or delivery of the shares of
Preferred Stock and/or other securities in a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or (ii) issue or deliver any
certificates for shares of Preferred Stock and/or other securities in a name other than that of the



15









 




registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax is due.




     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 Securities Act of 1933, as amended
(the “Securities 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 Securities 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 paragraph, 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. 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.



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



     11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS. The Purchase
Price, the number of shares covered by each Right



16









 




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 in Section 7(e), the
Purchase Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the number and kind
of shares of capital stock issuable on such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of shares of capital
stock and other securities 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 Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).




     (ii) Subject to Section 24 of this Agreement, in the event any Person shall become an
Acquiring Person (except pursuant to a tender or exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least a majority of the members of
the Board of Directors who are not officers of the Company and are not representatives or
nominees of Acquiring Persons or Affiliates or Associates thereof to be in the best
interests of the Company and its stockholders (other than the Person or an Affiliate or
Associate thereof on whose behalf the offer is being made) that the price offered is fair to
stockholders and not inadequate (taking into account all factors which such members of the
Board of Directors deem relevant, including, without limitation, prices which could
reasonably be achieved if the Company or its assets were
sold on an orderly basis designed to realize maximum value), after receiving advice from one
or more nationally recognized investment banking firms (a “Permitted Offer”)), 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 first occurrence of an event described in
this Section 11(a)(ii), proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall have a right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement,
in lieu of shares 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 is then
exercisable (prior to any adjustment required pursuant to this Section 11(a)(ii)) 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 fifty
percent (50%) of the current market price per one share of



17









 






Common Stock (determined pursuant
to Section 11(d)) on the date of the occurrence of the event set forth in this subparagraph
(ii) (such shares, as adjusted as provided in this Section 11(a)(ii), being referred to as
the “Adjustment Shares”).




     (iii) In the event that the number of shares of Common Stock which is authorized by the
Company’s Certificate of Incorporation, as amended, but not outstanding or reserved 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 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 of Directors 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 of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors; 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 to occur 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 24(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 of Directors 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 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



18









 






is no longer in effect. For purposes of
this Section 11(a)(iii), the value of each Adjustment Share shall be the current market
price (as determined pursuant to Section 11(d) hereof) per share of 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) If the Company shall fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Stock entitling them (for a period expiring within forty-five (45)
calendar days after such record date) to subscribe for or purchase Preferred Stock (or shares
having the same or more favorable rights, privileges and preferences as the Preferred Stock
(“equivalent preferred stock”)) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or 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 defined in Section 11(d)) 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
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 in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be determined reasonably and with good faith
to the holders of Rights by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for
all purposes. 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) If the Company shall fix a record date for the making of a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Company is the continuing corporation) of evidences of indebtedness, 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 subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as defined in Section 11(d)) per share of
Preferred Stock on such record date, less the fair market value (as determined reasonably and with
good faith to the holders of Rights by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and
conclusive for all purposes) of the portion of the cash, assets or



19









 




evidences of indebtedness so to
be distributed or of such subscription rights or warrants distributable in respect of one share of
Preferred Stock and the denominator of which shall be the current market price (as defined in
Section 11(d)) per share of the 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 again be adjusted to be the Purchase Price which would be in effect if such
record date had not been fixed.




     (d) (i) For the purpose of any computation hereunder, other than as provided in Section
11(a)(iii), 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 such date; provided, however, that in the event that
the current per share market price 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 prior to the expiration of thirty (30) Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the “current market price” 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 (including The
Nasdaq Stock Market LLC) on which the shares of Common Stock are listed or admitted to trading or,
if the shares of Common Stock are not listed or quoted on a 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 National Association of Securities Over the Counter
Bulletin Board 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
of Directors. If on any such date no market maker is making a market in the Common Stock, the fair
value of such shares on such
date as determined reasonably and with good faith by the Board of Directors shall be used and shall
be binding on the Rights Agent. 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 determined reasonably
and with good faith to the holders of Rights by the Board of Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent.



     (ii) For the purpose of any computation hereunder, the “current market price” per share (or
one one-thousandth of a share) of Preferred Stock shall be determined in the same manner as set
forth above for the Common Stock in Section 11(d)(i) (other than the last sentence thereof). If
the current market price per share (or one one-thousandth of a 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 Section 11(d)(i), the “current market



20









 




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 recapitalization 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 and the “current market price” per one one-thousandth of
a share of Preferred Stock shall be equal to the current market price per share of the Common Stock
(as appropriately adjusted). If neither the Common Stock nor the Preferred Stock is publicly held
or so listed or traded, “current market price” per share shall mean the fair value per share as
determined in good faith by the Board of Directors, 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 years
from the date of the transaction which mandates such adjustment or (ii) the Expiration Date.



     (f) If as a result of any provision of Section 11(a) or Section 13(a), the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital stock of the Company
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
shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 15 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 shares 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 Section 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 of Preferred Stock covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.



21









 





     (i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in substitution for any adjustment in the number of shares 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 millionth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a public announcement
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) Business 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 15 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 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 shares 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 share and the number of shares
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 par value, if any, of the shares of Preferred Stock, Common Stock or other
securities 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 shares of Preferred Stock, Common Stock or other securities at
such adjusted Purchase Price. If upon any exercise of the Rights, a holder is to receive a
combination of Common Stock and common stock equivalents, a portion of the consideration paid upon
such exercise, equal to at least the then par value of a share of Common Stock of the Company,
shall be allocated as the payment for each share of Common Stock of the Company so received.



     (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
until the occurrence of such event the issuing to the holder of any Right exercised after such
record date the shares of Preferred Stock and other capital stock or securities of the



22









 




Company, if
any, issuable upon such exercise over and above the shares 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 upon the occurrence of the event requiring such adjustment.




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



     (n) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the date of this Agreement 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 Common Stock, (iii) combine the outstanding Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital stock in a reclassification of the
outstanding Common Stock, 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.



     (o) The exercise of Rights under Section 11(a)(ii) shall only result in the loss of rights
under Section 11(a)(ii) to the extent so exercised and shall not otherwise affect the rights
represented by the Rights under this Rights Agreement, including the rights represented by Section
13.



     12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES. Whenever an adjustment is
made as provided in Section 11 or 13 hereof, the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting for such 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) mail a brief summary thereof to each holder of
a Rights Certificate in accordance with Section 26 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein contained and shall not
be deemed to have knowledge of any adjustment unless and until it shall have received such
certificate. Notwithstanding the foregoing provisions of this Section 12, the failure of the
Company to make



23









 




such certification or give such notice shall not affect the validity of or the
force or effect of the requirement for such adjustment.




     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, (i) the
Company shall consolidate with, or merge with and into, any other Person; (ii) any Person shall
consolidate with the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger (other than, in the case of either transaction
described in (i) or (ii), a merger or consolidation which would result in all of the voting power
represented by the securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into securities of the surviving
entity) all of the voting power represented by the securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or consolidation); or (iii) the Company
shall sell or otherwise transfer (or one or more of its subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets, cash flow or earning power aggregating more than
fifty percent (50%) of the assets or earning power of the Company and its subsidiaries (taken as a
whole) to any other Person, then, and in each such case, proper provision shall be made so that (A)
following the Distribution Date, each holder of a Right (other than as provided in Section 7(e)
hereof) shall 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 shares of freely tradable
Common Stock of the Principal Party (as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims, as shall be equal to the result
obtained by (x) multiplying the then current Purchase Price by the number of one one-thousandths of
a share of Preferred Stock for which a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) hereof), and (y) dividing that product by
fifty percent (50%) of the current market price per share of the Common Stock of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (B) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations
and
duties of the Company pursuant to this Agreement; (C) the term “Company” shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the provisions of Section 11
hereof shall apply to such Principal Party; and (D) 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 accordance with Section 9 hereof) in connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the
Rights.



24









 





     (b) “Principal Party” shall mean:




     (i) in the case of any transaction described in (i) or (ii) of the first sentence of
this Section 13, 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 the merger or consolidation (including, if
applicable, the Company, if it is the surviving corporation); and




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




provided, however, that in any such case, (A) 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 or Affiliate of another Person the Common Stock of which is and has been so
registered, “Principal Party” shall refer to such other Person; (B) 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; and
(C) in case such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person, the rules
set forth in (A) and (B) above shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a “Subsidiary” of both or all of such
joint venturers and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.



     (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 that
have not been issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and each Principal Party and
each other Person who may become a Principal Party as a result of such consolidation, merger, sale
or transfer 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, sale or
transfer of assets mentioned in paragraph (a) of this Section 13, the Principal Party at its own
expense shall:



25









 






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




     (ii) use its best efforts to (A) qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the blue sky laws of such jurisdictions as may
be necessary or appropriate, and (B) cause the Rights and the securities purchasable upon
exercise of the Rights to be listed on any national securities exchange or national
quotation system upon which its Common Stock is listed, traded or quoted; and




     (iii) deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates which comply in all material 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).




     (d) Notwithstanding anything in this Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs (i) and (ii) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired shares of Common Stock pursuant to
a Permitted Offer (or a wholly owned subsidiary of any such Person or Persons); (ii) the price per
share of Common Stock offered in such transaction is not less than the price per share of Common
Stock paid to all holders of Common Stock whose shares were purchased pursuant to such Permitted
Offer; and (iii) the form of consideration being offered to the remaining holders of Common Stock
pursuant to such transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by this subsection (d),
all Rights hereunder shall expire.



     14. ADDITIONAL COVENANTS.



     (a) The Company covenants and agrees that after the Distribution Date it shall not (i)
consolidate with; (ii) merge with or into; or (iii) sell or transfer, or permit a subsidiary to
sell or transfer, to any other Person, in one or more transactions, assets, cash flow or earning
power aggregating more than fifty percent (50%) of the assets or earning power of the Company and
its subsidiaries taken as a whole, if at the time of or after such consolidation, merger or sale
there are any charter or by-law provisions or any rights, warrants or other instruments outstanding
or any other action taken which would diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. The Company agrees that the Principal Party shall take all such actions as
may be necessary to enable the Principal Party to issue the securities purchasable upon exercise of
the Rights.



26









 





     (b) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 24 or Section 27 hereof, take any action the purpose or effect of which is to
diminish or otherwise eliminate the benefits intended to be afforded by the Rights.



     15. 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(n), or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid 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 the purposes of this Section 15(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, 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 National Market
or such other system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board of Directors. 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 reasonably and with good faith to the holders of Rights by the Board of Directors shall
be used and shall be binding on the Rights Agent.



     (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). Fractions of shares of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares of Preferred Stock represented by such depositary receipts. 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 15(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 one of the transactions or events specified in Section 11 or
Section 13 giving rise to the right to receive common stock equivalents (other than Preferred
Stock) or other securities upon the exercise of a Right, the Company shall not be required to issue
fractions of shares or units of such common stock equivalents or other securities
upon exercise of the Rights or to distribute certificates which evidence fractional shares of such



27









 




common stock equivalents or other securities. In lieu of fractional shares or units of such common
stock equivalents or other securities, 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 a share or unit of such common stock equivalent or
other securities. For purposes of this Section 15(c), the current market value shall be determined
in the manner set forth in Section 11(d) hereof for the Trading Day immediately prior to the date
of such exercise and, if such common stock equivalent is not traded, each such common stock
equivalent shall have the value of one one-thousandth of a share of Preferred Stock.




     (d) Except as otherwise expressly provided herein, the holder of a Right by the acceptance of
the Right expressly waives such holder’s right to receive any fractional Rights or any fractional
shares (other than, in the case of Preferred Stock, fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of a Right.



     16. RIGHTS OF ACTION. All rights of action in respect of this Agreement, except those rights
of action vested in the Rights Agent pursuant to Section 21, 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
such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such
holder’s 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 of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this Agreement. Holders
of Rights shall be entitled to recover the reasonable costs and expenses, including attorneys’
fees, incurred by them in any action to enforce the provisions of this Agreement.



     17. 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 of the Rights
Agent, duly endorsed or accompanied by a proper instrument of transfer; and




     (c) the Company and the Rights Agent may deem and treat the Person in whose name 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



28









 




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 shall be affected by any notice to the contrary.



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




     18. 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 shares of Preferred Stock, Common Stock or any other securities of the Company which may at any
time be issuable upon 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 thereof.



     19. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross negligence or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom, directly or indirectly.
The indemnification provided for hereunder shall survive the expiration of the Rights and the
termination of this Agreement. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.



     The Rights Agent may conclusively rely upon and shall be protected against and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights Certificate or certificate
for Common Stock or for other securities of the Company, instrument of assignment or transfer,



29









 




power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged by the proper Person or Persons.




     20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. Any corporation into which the
Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust or
stockholder services business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of Section 22 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 the 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.



     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.



     21. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and obligations imposed by
this Agreement (and no implied duties or obligations shall be read into this Agreement against the
Rights Agent) 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) Before the Rights Agent acts or refrains from acting, it may consult with legal
counsel selected by it (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such opinion.




     (b) Whenever in the performance of its duties under this Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (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 or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof shall be



30









 







herein specifically prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, any Vice Chairman of the Board, the
President, the Chief Operating Officer, 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 authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.




     (c) The Rights Agent shall be liable hereunder only for its own gross negligence or
willful misconduct.




     (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 (except as to the
fact that it has countersigned the Rights Certificates) or be required to verify the same,
but all such statements and recitals are and shall be deemed to have been made by the
Company only.




     (e) The Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof), nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to Section 7(e))
except with respect to the exercise of Rights evidenced by Rights Certificates after actual
notice of such change; 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 adjustment required under the provisions of Section 11 or 13 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 receipt of a certificate pursuant
to Section 12 describing any such adjustment); nor shall it be responsible for any
determination by the Board of Directors of the current market value of the Rights or
Preferred Stock or Common Stock pursuant to the provisions of Section 15 hereof; 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 Preferred Stock or other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock or other securities 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 and certificates delivered pursuant to
any provision hereof from the Chairman of the Board, any Vice Chairman of the



31









 







Board, the
President, the Chief Operating Officer, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and is authorized to
apply to such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of 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 or omitted by the Rights Agent with respect to its
duties or obligations under this Rights Agreement and the date on and/or after which such
action shall be taken or omitted and the Rights Agent shall not be liable for any action
taken or omitted 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 actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking or omitting any such
action, the Rights Agent has received written instructions in response to such application
specifying the action to be taken or omitted.




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




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




     (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 there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably 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 l and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting with the
Company.



     22. 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’



32









 




notice in writing mailed to
the Company and to each transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and at the expense of the Company, to the holders of the Rights Certificates by
first-class mail. In the event the transfer agency relationship in effect between the Company and
the Rights Agent terminates, the Rights Agent will be deemed to resign automatically on the
effective date of such termination; and any required notice will be sent by the Company. 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 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 such holder’s Rights Certificate for
inspection by the Company), then the 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 corporation organized
and doing business under the laws of the United States or of the State of New York or the State of
Illinois (or of any other state of the United States so long as such corporation is authorized to
do business as a banking institution in the State of New York or the State of Illinois), in good
standing, having a principal office in the State of New York or the State of Illinois, which is
authorized under such laws to exercise corporate trust or stockholder services powers and is
subject to supervision or examination by federal or state authority and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least $50,000,000.00, or (b)
an affiliate of a corporation 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 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 mail
notice thereof in writing to the predecessor Rights Agent and each transfer agent of the Common
Stock and Preferred Stock, and mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this Section 22, 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.




     23. 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 per share 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 otherwise under any employee plan or
arrangement, which plan or arrangement is existing as of the Distribution Date,



33









 




or upon the
exercise, conversion or exchange of any other securities issued by the Company on or prior to the
Distribution Date, and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors, issue Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights Certificates 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 Certificates would be issued, and (ii) no such Rights Certificates shall be issued if, and
to the extent that appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.




     24. REDEMPTION, TERMINATION AND EXCHANGE.



     (a) (i) The Board of Directors may, at its option, at any time prior to the earlier of (A) the
close of business on the tenth (10th) Business Day following the Stock Acquisition Date, or (B) 5
P.M., Central time, on the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, 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.



     (ii) In addition, and notwithstanding the provisions of Section 24(a)(i), the Board of
Directors may redeem all, but not less than all, of the then outstanding Rights at the Redemption
Price following the Stock Acquisition Date, but prior to a Section 13(a) Event, either (A) in
connection with a Section 13(a) Event in which all holders of Common Stock are treated alike and
not involving (other than as a holder of Common Stock being treated like all other such holders) an
Acquiring Person or an Affiliate or Associate thereof or any other Person in which such Acquiring
Person or Affiliate or Associate thereof has any interest, or any other Person acting directly or
indirectly on behalf of or in association with any such Acquiring Person or Affiliate or Associate
thereof, or (B) following the occurrence of a Section 11(a)(ii) Event, if and for as long as any
Acquiring Person having triggered such event is not thereafter the Beneficial Owner of securities
representing twenty percent (20%) or more of the outstanding shares of Common Stock, and at the
time of redemption there are no other Persons who are Acquiring Persons.



     (iii) (A) In the event the Company, not earlier than sixty (60) Business Days nor later than
eighty (80) Business Days following the commencement of a Qualified Offer which has not been
terminated prior thereto and which continues to be a Qualified Offer, receives a written notice
complying with the terms of this Section 24(a)(iii) (“Special Meeting Notice”) that is properly
executed by the holders of record (or their duly authorized proxy) of not less than ten percent
(10%) of the shares of Common Stock then outstanding (other than shares of Common
Stock held by the offering Person or its Affiliates and Associates), directing the Board of
Directors to submit to a vote of stockholders at a special meeting of the stockholders of the
Company (“Special Meeting”) a resolution authorizing the redemption of all, but not less than all,
of the then outstanding Rights at the Redemption Price (the “Resolution”), then the Board of
Directors shall take such actions as are necessary or desirable to cause the Resolution to be so



34









 




submitted to a vote of stockholders, by including a proposal relating to adoption of the Resolution
in the proxy materials of the Company for the Special Meeting; provided, however, that in any
twelve (12) month period, the Company shall not be required to submit more than one Resolution to a
vote of stockholders with respect to Qualified Offers from any given potential Acquiring Person
(including any Affiliates or Associates). The Board of Directors shall set a date for determining
the stockholders of record entitled to notice of and to vote at the Special Meeting in accordance
with the Company’s Certificate of Incorporation, Bylaws and applicable law.




          (B) Any Special Meeting Notice must be delivered to the Secretary of the Company at the
principal executive offices of the Company and must set forth as to the stockholders of record
executing the request (1) the name and address of such stockholders, as they appear on the
Company’s books and records, (2) the number of shares of Common Stock which are owned of record by
each such stockholders, and (3) in the case of shares of Common Stock that are owned beneficially
by another Person, an executed certification by the holder of record that such holder has executed
such Special Meeting Notice only after obtaining instructions to do so from such beneficial owner.




          (C) Subject to the requirements of applicable law, the Board of Directors may take a position
in favor of or opposed to the adoption of the Resolution, or no position with respect to the
Resolution, as it determines to be appropriate in the exercise of its duties. At the request of
the offering Person, the Company shall include in any proxy soliciting material submitted by it in
connection with the Special Meeting relevant proxy soliciting materials reasonably pertinent and
appropriate to the subject matter submitted by the offering Person; provided, however, that the
offering Person, by written agreement with the Company contained in or delivered with such request
shall (1) have indemnified the Company against any and all liabilities resulting from any
statements found to be defamatory, misstatements, misleading statements or omissions contained in
or omitted from the proxy soliciting materials from the offering Person, and (2) have agreed to pay
the Company’s incremental costs incurred as a result of including such material in the Company’s
proxy soliciting material. Notwithstanding anything to the contrary contained in this Agreement,
if the Board of Directors determines that it is in the best interests of stockholders to seek an
alternative transaction so as to obtain greater value for stockholders than that provided by any
Qualified Offer, the Company shall be entitled to include in the proxy soliciting material prepared
by it in connection with any Special Meeting information relating to such alternative transaction
and to recommend that the Resolution not be adopted.




          (D) If no Person has become an Acquiring Person prior to the redemption date referred to in
this Section 24(a)(iii), and the Qualified Offer continues to be a Qualified Offer, and either (1)
the Special Meeting is not held on or prior to the 90th Business Days following receipt of the
Special Meeting Notice (unless the failure to hold such meeting is the result of failure to obtain
clearance by the Securities and Exchange Commission (“SEC”) of the proxy
statement after reasonable efforts by the Company, in which case, such ninety (90) Business Day
period shall be extended by the number of Business Days it takes to receive SEC clearance) (the
“Outside Date”), or (2) at the Special Meeting, the holders of at least two-thirds (2/3) of the
shares of Common Stock outstanding and entitled to vote on the Resolution at the Special Meeting
(not giving effect to any affirmative votes cast by the offering Person or any of its




35









 







Affiliates or
Associates) shall vote in favor of the Resolution (and the results of the vote are certified as
official by the appointed inspector of election for the Special Meeting), then (x) all of the
Rights shall be deemed redeemed by such failure to hold the Special Meeting or as a result of such
stockholder action, as the case may be, at the Redemption Price, or (y) the Board of Directors
shall take such other action as would prevent the existence of the Rights from interfering with the
consummation of the Qualified Offer, effective immediately prior to the consummation of the
Qualified Offer, if, and only if, the Qualified Offer is consummated within sixty (60) Business
Days after either the earlier of the date of the Special Meeting or the Outside Date.




          (E) Nothing in this subparagraph (iii) shall be construed as limiting or prohibiting the
Company or any offering Person from proposing or engaging in any acquisition, disposition or other
transfer of any securities of the Company, any merger or consolidation involving the Company, any
sale or other transfer of assets of the Company, any liquidation, dissolution or winding-up of the
Company, or any other business combination or other transaction, or any other action by the Company
or such offering Person; provided, however, that the holders of Rights shall have the rights set
forth in this Agreement with respect to any such acquisition, disposition, transfer, merger,
consolidation, sale, liquidation, dissolution, winding-up, business combination, transaction or
action.




     (b) In the case of a redemption permitted under Section 24(a)(i) or (ii), immediately upon the
action of the Board of Directors 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. In the case of a redemption
permitted under Section 24(a)(iii), upon effectiveness of the redemption of the Rights pursuant to
failure to hold the Special Meeting or stockholder adoption of the Resolution, as the case may be,
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. Within ten (10) Business Days after the action of the Board of
Directors or stockholders, as applicable, ordering any such 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 the Rights Agent and to all such holders at their last addresses
as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Stock. Any notice 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. The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the current market price, as defined in Section 11(d) hereof, of the Common Stock at the
time of redemption), or any other form of consideration deemed appropriate by the Board of
Directors.



     In the case of a redemption permitted under Section 24(a)(i), (ii) or (iii), the Company may,
at its option, discharge all of its obligations with respect to the Rights by (i) issuing a press
release announcing the manner of redemption of the Rights, and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of



36









 




the transfer agent of the Common Stock, and upon such action, all outstanding Rights Certificates
shall be null and void without any further action by the Company.




     (c) (i) Subject to the limitations of applicable law, the Board of Directors 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 (A) shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (the “Exchange Shares”), or (B)
Substitute Consideration (as that term is defined below). The Board of Directors may determine, in
its sole discretion, whether to deliver Exchange Shares or Substitute Consideration.
Notwithstanding the foregoing, the Board of Directors 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 fifty percent (50%) or more of the Common Stock then
outstanding.



     (ii) In the event the Board of Directors shall determine to deliver Substitute Consideration
in exchange for Rights, the Company shall (A) determine the value of the Exchange Shares (the
“Exchange Value”), and (B) with respect to each Right to be exchanged, make adequate provision to
substitute for Exchange Shares the following (the “Substitute Consideration”): (1) cash, (2) Common
Stock or common stock equivalents (as that term is defined in Section 11(a)(iii) hereof) or
Preferred Stock or equivalent preferred stock (as that term is defined in Section 11(b) hereof),
(3) debt securities of the Company, (4) other assets, or (5) any combination of the foregoing,
having an aggregate value equal to the Exchange Value, where such aggregate value has been
determined by the Board of Directors based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors. For purposes of this Section 24(c), the value of
a share of Common Stock shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the day that is 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 24(a) expires; and the value of any common stock equivalent shall be deemed to have the
same value as the Common Stock on such date.



     (iii) Immediately upon the action of the Board of Directors ordering the exchange of any
Rights pursuant to this Section 24(c), 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 Exchange Shares or Substitute Consideration for each Right exchanged by
such holder. The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last address 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 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



37









 




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.




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



     (v) 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, the Company shall pay 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 Section 24(c)(v), 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 Section 11(d) hereof) for the Trading Day immediately prior to the date of exchange pursuant to
this Section 24(c).



     25. NOTICE OF CERTAIN EVENTS. In case the Company shall propose (a) 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 (b) 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 (c) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (d) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more of its subsidiaries
to effect any sale or other transfer), in one or more transactions, of more than fifty percent
(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, or (e) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give 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 (a) or (b) 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.



     In case any Triggering Event shall occur, then, in any such case, the Company or the Principal
Party, as the case may be, shall as soon as practicable thereafter give to each holder of a Rights
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such



38









 




event, which
shall specify the event and the consequences of the event to holders of Rights under Sections
11(a)(ii) or 13(a) hereof, as the case may be.




     The failure to give notice required by this Section 25 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote upon any such action.



     26. NOTICES. 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 with the Rights Agent) as follows:


LodgeNet Entertainment Corporation

3900 West Innovation Street

Sioux Falls, SD 57107

Attention: James G. Naro, General Counsel



Subject to the provisions of Section 22, 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 sent by registered or certified mail (and shall be deemed given upon receipt) addressed
(until another address is filed in writing with the Company) as follows:



Computershare Investor Services, LLC

2 North LaSalle Street – 3rd Fl

Chicago, IL 60602

Attention: Relationship Management



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 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.




     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 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 (a) to
cure any ambiguity, (b) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (c) to shorten or lengthen any time
period hereunder, or (d) 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, an
Adverse Person or an Affiliate or Associate of an Acquiring Person or an Adverse 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 unless the Rights Agent shall have determined in good faith
that such supplement or amendment would adversely



39









 




affect its interests under this Agreement. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Stock.




     28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.



     (a) For all purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock or any other securities 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 as in effect on the date of this
Agreement. Except as otherwise provided herein, the Board of Directors shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors, or 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 (B) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith, shall (A) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the Rights Certificates and
all other parties, and (B) not subject the Board of Directors to any liability to the holders of
the Rights Certificates.



     (b) Notwithstanding any other provision of this Agreement, the “TIDE Committee” of the Board
of Directors shall meet not less than once every three (3) years to review the terms and conditions
of this Agreement, including whether the termination or modification of this Agreement is in the
best interest of the Company and its stockholders, and to make a recommendation based on such
review to the Board of Directors. The first meeting of the TIDE Committee shall take place no
later than February 28, 2010. The TIDE Committee, when reviewing the terms and conditions of this
Agreement, shall have the power to set its own agenda and to retain at the expense of the Company
such legal counsel, investment bankers and other advisors as such Committee deems appropriate in
carrying out its foregoing responsibilities under this Agreement. The TIDE Committee, when
reviewing the terms and conditions of this Agreement, shall have the authority to review all
information of the Company and to consider any and all factors it deems relevant to any such
review. The TIDE Committee shall be comprised solely of members of the Board of Directors selected
by the Board of Directors who are “Independent Directors” as that term is defined in the rules of
The Nasdaq Stock Market LLC.



     (c) Without limiting the foregoing, nothing contained herein shall be construed to suggest or
imply that the Board of Directors shall not be entitled to reject any Qualified Offer or any other
tender offer or other acquisition proposal, or to recommend that the holders of Common Stock reject
any Qualified Offer or any other tender offer or other acquisition proposal, or to take any other
action (including, without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other proposals) with respect
to any Qualified Offer or any other tender offer or other acquisition



40









 




proposal that the Board of
Directors believes is necessary or appropriate in the exercise of such fiduciary duty.




     29. 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.



     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, 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, the Common Stock).



     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.



     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 Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such state applicable to
contracts to be made and to be performed entirely within such state.



     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.



     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.



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



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



41









 





	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	LODGENET ENTERTAINMENT CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 


	 	 
	 	 	 	 

Scott C. Petersen
	 	 
	Title:

	 	 	 	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:	 	 	 	COMPUTERSHARE INVESTOR

SERVICES, LLC,	 	 
	 	 	 	 	as Rights Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 


	 	 
	 	 	 	 

	 	 
	Title:

	 	 	 	 	 	Title:	 	 







42










 





EXHIBIT A




[Form of Rights Certificate]




			
	 	 	 
	Certificate No. R-                    
	 	                     Rights          







NOT EXERCISABLE AFTER FEBRUARY 28, 2016, OR EARLIER IF TERMINATED BY THE COMPANY OR
IF REDEMPTION OR EXCHANGE OCCURS AS PROVIDED IN THE RIGHTS AGREEMENT. THE RIGHTS
ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE
ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*



Rights Certificate




LODGENET ENTERTAINMENT 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 Amended and Restated Rights Agreement dated as of February
28, 2007 (the “Rights Agreement”) between LodgeNet Entertainment Corporation, a Delaware
corporation (the “Company”), and Computershare Investor Services, LLC, a Delaware Limited Liability
Company (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5 P.M. (Central time) on February
28, 2015, at the office of the Rights Agent designated for such purpose, one one-thousandth of a
fully paid, nonassessable share of Series A Participating Preferred Stock (the “Preferred Stock”)
of the Company, at a purchase price of $60.00 per one one-thousandth of a share (the “Purchase
Price”), upon presentation and surrender of this Rights Certificate with the appropriate Form of
Election to Purchase and 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, and the Purchase Price set forth above, are
the number and Purchase Price as of the close of business on the record date relating to the
initial distribution of the Rights, based on the Preferred Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number 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.





 




			
	*	 	The portion of the legend in brackets shall be inserted only if applicable.




A-1









 










     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. Copies of the Rights
Agreement are on file at the principal office of the Company and are also available upon written
request to the Company.



     This Rights Certificate, with or without other Rights Certificates, upon surrender at the
office 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 shares 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 (other than pursuant to Section 11(a)(ii) of the Rights
Agreement) 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. If this Rights
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights
Agreement, the holder shall be entitled to receive this Rights Certificate duly marked to indicate
that such exercise has occurred as set forth in the Rights Agreement.



     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate may be redeemed by the Company at its option at a redemption price of $.01 per Right.
Subject to the provisions of the Rights Agreement, the Company, at its option, may elect to mail
payment of the redemption price to the registered holder of the Right at the time of redemption, in
which event this Rights Certificate may become void without any further action by the Company.



     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.



     No holder of this Rights Certificate, as such, 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 or withhold consent to
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.



A-2









 





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



Dated: ____________, 20___.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	LODGENET ENTERTAINMENT CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	 	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Countersigned:	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	COMPUTERSHARE,

as Rights Agent	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 





A-3









 





[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:                     , 20___.




	 	 	 	 	 
	 	 	 
	 	Signature	 
	 	 	 
	 	 	 
	 



Signature Guaranteed:




A-4









 








CERTIFICATE





     The undersigned hereby certifies by checking the appropriate boxes that:



     (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are 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 in the Rights Agreement); and



     (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:                     , 20___.




	 	 	 	 	 
	 	 	 
	 	Signature
	 
	 	 	 
	 	 	 
	 



NOTICE





     The signature to the foregoing Assignment 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.



A-5









 





FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to

exercise the Rights Certificate pursuant to

Section 11(a)(ii) of the Rights Agreement.)




To: LODGENET ENTERTAINMENT CORPORATION




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



 




(Please insert social security or other identifying number)




 




(Please print name and address)




 





     The Rights Certificate indicating the balance, if any, of such Rights which may still be
exercised pursuant to Section 11(a)(ii) of the Rights Agreement shall be returned to the
undersigned unless such Person requests that the Rights Certificate be registered in the name of
and delivered to:



 





Please insert social security or other identifying number (complete only if Rights Certificate is
to be registered in a name other than the undersigned)




 




(Please print name and address)



 





Dated:                     , 20___







Signature



Signature Guaranteed:




A-6









 








CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



     (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are 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 in the Rights Agreement); and



     (2) 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 in the Rights Agreement); and



     (3) 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:                     , 20___.



	 	 	 	 	 
	 	 	 
	 	Signature	 
	 	 	 
	 	 	 
	 



NOTICE





     The signature to the foregoing Election to Purchase 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.



A-7









 





FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise

the Rights Certificate other than pursuant to

Section 11(a)(ii) of the Rights Agreement.)




TO: LODGENET ENTERTAINMENT CORPORATION




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



 




(Please insert social security or other identifying number)




 




(Please print name and address)




     The Rights Certificate indicating the balance, if any, of such Rights which may still be
exercised pursuant to Section 11(a)(ii) of the Rights Agreement shall be returned to the
undersigned unless such Person requests that the Rights Certificate be registered in the name of
and delivered to:



 





Please insert social security or other identifying number (complete only if Rights Certificate is
to be registered in a name other than the undersigned)




 




(Please print name and address)




 





     Dated:                     , 20___.



	 	 	 	 	 
	 

	 	 

Signature
	 	 






Signature Guaranteed:




A-8









 








CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



     (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are 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 in the Rights Agreement); and



     (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:                     , 20___.




	 	 	 	 	 
	 

	 	 

Signature
	 	 






NOTICE




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




A-9









 








EXHIBIT B




SUMMARY OF RIGHTS




     On February 28, 1997, the Board of Directors of LodgeNet Entertainment Corporation (the
“Company”) declared a dividend distribution of one “Right” for each outstanding share of common
stock, par value $.01 per share (the “Common Stock”), of the Company to stockholders of record at
the close of business on March 10, 1997 (the “Record Date”), and effective February 28, 2007, the
Board of Directors of the Company (the “Board of Directors”) approved amending the Company’s
outstanding Rights on each outstanding share of Common Stock. Except as set forth below, each
Right, as amended, when exercisable, entitles the registered holder to purchase from the Company
one one-thousandth of a share of a new series of preferred stock, designated as Series A
Participating Preferred Stock, par value $.01 per share (the “Preferred Stock”), at a price of
$60.00 (the “Purchase Price”), subject to adjustment. The description and terms of the Rights are
set forth in an Amended and Restated Rights Agreement (the “Rights Agreement”), dated February 28,
2007, between the Company and Computershare Investor Services, LLC as the “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. The Rights will
separate from the Common Stock and a “Distribution Date” will occur upon the earliest of (i) ten
Business Days after a public announcement that a person, entity or group of affiliated or
associated persons and/or entities (an “Acquiring Person”) has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding shares of Common Stock, other than
as a result of repurchases of stock by the Company or certain inadvertent actions by institutional
or certain other stockholders, or (ii) ten Business Days (unless such date is extended by the Board
of Directors) following the commencement of a tender offer or exchange offer which would result in
any person, entity or group of affiliated or associated persons and/or entities becoming an
Acquiring Person.



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



B-1









 





     The Rights are not exercisable until the Distribution Date. The Rights will expire on the
earliest of (i) February 28, 2016, (ii) the consummation of a merger transaction with a Person or
group who acquired Common Stock pursuant to a Permitted Offer (as defined below), and is offering
in the merger the same price per share and form of consideration paid in the Permitted Offer, (iii)
redemption or exchange of the Rights by the Company as described below, (iv) one year from the date
of the Rights Agreement, or February 28, 2008, if the Rights Agreement is not approved by the
holders of a majority of shares of Common Stock present and entitled to vote at a meeting of the
stockholders of the Company, or (v) a decision of the Board of Directors to terminate the Rights
Agreement upon the recommendation of the TIDE Committee.



     The number of Rights associated with each share of Common Stock shall be proportionately
adjusted to prevent dilution in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock. The Purchase Price payable, and the number of shares 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) upon the grant to holders
of the Preferred Stock of certain rights or warrants to subscribe for Preferred Stock, certain
convertible securities or securities having the same or more favorable rights, privileges and
preferences as the Preferred Stock 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 out of earnings or retained earnings) or of
subscription rights or warrants (other than those referred to above). With certain exceptions, no
adjustments in the Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.



     In the event that a Person becomes the beneficial owner of 20% or more of the outstanding
shares of Common Stock (unless pursuant to a tender offer or exchange offer for all outstanding
shares of Common Stock at a price and on terms determined by at least a majority of the members of
the Board of Directors who are not officers of the Company and are not representatives or nominees
of Acquiring Persons or Affiliates or Associates thereof to be both adequate and otherwise in the
best interests of the Company and its stockholders, after receiving advice from at least one
nationally recognized investment banking firm to be at a price which is fair and not inadequate to
the Company’s stockholders (a “Permitted Offer”)), then proper provision shall be made so that each
holder of a Right will (subject to extension under certain circumstances) thereafter have the right
to receive upon exercise that number of shares of Common Stock (or, at the election of the Company,
which election may be obligatory if sufficient authorized shares of Common Stock are not available,
a combination of Common Stock, property, other securities (e.g., Preferred Stock) and/or a
reduction in the exercise price of the Right) having a market value of two times the Purchase Price
(such right being called the “Subscription Right”). Notwithstanding the foregoing, upon the
occurrence of any of the events giving rise to the exercisability of the Merger Right or the
Subscription Right, any Rights that are or were at any time after the Distribution Date owned by an
Acquiring Person shall immediately become null and void.



     In the event that, after the first date of public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such, the Company is involved in a



B-2









 







merger or other business combination transaction (whether or not the Company is the surviving
corporation) or 50% or more of the Company’s assets or earning power are sold (in one transaction
or a series of transactions), proper provision shall be made so that, following the Distribution
Date, each holder of a Right (other than an Acquiring Person) shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price, that number of shares of
common stock of either the Company, in the event that it is the surviving corporation of a merger
or consolidation, or the acquiring company (or, in the event there is more than one acquiring
company, the acquiring company receiving the greatest portion of the assets or earning power
transferred) which at the time of such transaction would have a market value of two times the
Purchase Price.



     At any time prior to the earlier to occur of (i) ten Business Days after a Person becomes an
Acquiring Person, or (ii) the expiration of the Rights, the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (the “Redemption Price”), which redemption shall be
effective upon the action of the Board of Directors. Additionally, the Company may thereafter
redeem the then outstanding Rights in whole, but not in part, at the Redemption Price (i) if such
redemption is incidental to a merger or other business combination transaction or series of
transactions involving the Company but not involving an Acquiring Person or certain related Persons
or (ii) following an event giving rise to, the Subscription Right if and for as long as the
Acquiring Person triggering the Subscription Right beneficially owns securities representing less
than 20% of the outstanding shares of Common Stock and at the time of redemption there are no other
Acquiring Persons. The redemption of Rights described in the preceding sentence shall be effective
only as of such time when the Subscription Right is not exercisable, and in any event, only after
ten Business Days’ prior notice.



     In the event the Company receives a Qualified Offer, the Rights may be redeemed by way of
stockholder action taken at a special meeting of stockholders called by the Board of Directors upon
the written notice of the holders of at least 10% of the shares of Common Stock then outstanding
(other than shares of Common Stock held by the offering Person or its Affiliates and Associates)
for the purpose of voting on a resolution accepting the Qualified Offer and authorizing the
redemption of the Rights pursuant to the provisions of the Rights Agreement. The written notice
must be received by the Company not earlier than 60, nor more than 80, Business Days following the
commencement of a Qualified Offer that has not been terminated prior thereto and that continues to
be a Qualified Offer. The special meeting must be held on or prior to the 90th Business Day
following the Company’s receipt of such notice. Such an action by stockholders requires the
affirmative vote of two-thirds of all shares of Common Stock and any other stock entitled to vote
on such issue (excluding shares held by an offering Person and its Affiliates and Associates). If
either (A) the special meeting is not held on or prior to the 90th Business Day following receipt
of the special meeting notice, or (B) at the special meeting, the requisite holders of shares of
Common Stock vote in favor of the redemption resolution, then all of the Rights will be deemed
redeemed by such failure to hold the special meeting or as a result of such stockholder action, as
the case may be, at the Redemption Price, or the Board of Directors shall take such other action as
would prevent the existence of the Rights from interfering with the consummation of the Qualified
Offer, effective immediately prior to the consummation of the Qualified Offer if, and only if, the
Qualified Offer is consummated within 60 Business Days after either (x) the close of business on
the 90th Business Day following



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receipt of the special meeting notice if a special meeting is not held on or prior to such date, or
(y) the date on which the results of the vote on the redemption resolution at the special meeting
are certified as official, as the case may be. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.



     In the determination of the fairness of any offer, the Board of Directors retains the
authority to reject, advise the stockholders to reject, or take other action in response to any
offer (including a Qualified Offer) necessary to the exercise of its fiduciary duties.



     Subject to applicable law, the Board of Directors, at its option, may at any time after a
Person becomes an Acquiring Person (but not after the acquisition by such Person of 50% or more of
the outstanding Common Stock), exchange all or part of the then outstanding and exercisable Rights
(except for Rights which have become void) for shares of Common Stock at a rate of one share of
Common Stock per Right or, alternatively, for substitute consideration consisting of cash,
securities of the Company or other assets (or any combination thereof).



     The Preferred Stock purchasable upon exercise of the Rights will be nonredeemable and junior
to any other series of preferred stock the Company may issue (unless otherwise provided in the
terms of such stock). Each share of Preferred Stock will have a preferential quarterly dividend in
an amount equal to 1,000 times the dividend declared on each share of Common Stock, but in no event
less than $25.00. In the event of liquidation, the holders of shares of Preferred Stock will
receive a preferred liquidation payment equal to the greater of $1,000.00 or 1,000 times the
payment made per each share of Common Stock. Each share of Preferred Stock will have 1,000 votes,
voting together with the shares of Common Stock. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged, each share of Preferred Stock will
be entitled to receive 1,000 times the amount and type of consideration received per share of
Common Stock. The rights of the Preferred Stock as to dividends, liquidation and voting, and in
the event of mergers and consolidations, are protected by customary antidilution provisions.
Fractional shares of Preferred Stock will be issuable; however, (i) the Company may elect to
distribute depositary receipts in lieu of such fractional shares and (ii) in lieu of fractional
shares other than fractions that are multiples of one one-thousandth of a share, 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.



     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. The
Company and the Rights Agent retain broad authority to amend the Rights Agreement; however,
following any Distribution Date any amendment may not adversely affect the interests of holders of
Rights.



     A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A/A. A copy of the Rights Agreement is available
free of charge from the Company. 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.




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