exv4w1



 






Exhibit 4.1










SOVEREIGN BANCORP, INC.




AND




MELLON INVESTOR SERVICES LLC




Rights Agent










SECOND AMENDED AND RESTATED RIGHTS AGREEMENT




Dated as of January 19, 2005











 









 








Table of Contents




	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	1.
	 	Certain Definitions	 	 	2	 
	2.
	 	Appointment of Rights Agent	 	 	6	 
	3.
	 	Issue of Rights Certificates	 	 	6	 
	4.
	 	Form of Rights Certificates	 	 	9	 
	5.
	 	Countersignature and Registration	 	 	10	 
	6.
	 	Transfer, Split Up, Combination, or Exchange of Rights Certificates; Mutilated, Destroyed, Lost,	 	 	 	 
	 
	 	or Stolen Rights Certificates	 	 	11	 
	7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	 	12	 
	8.
	 	Cancellation and Destruction of Rights Certificates	 	 	14	 
	9.
	 	Reservation and Availability of Capital Stock	 	 	15	 
	10.
	 	Preferred Stock Record Date	 	 	17	 
	11.
	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	 	 	17	 
	12.
	 	Certificate of Adjusted Purchase Price or Number of Shares	 	 	29	 
	13.
	 	Consolidation, Merger, or Sale or Transfer of Assets or Earning Power	 	 	30	 
	14.
	 	Fractional Rights and Fractional Shares	 	 	33	 
	15.
	 	Rights of Action	 	 	35	 
	16.
	 	Agreement of Rights Holders	 	 	35	 
	17.
	 	Rights Certificate Holder Not Deemed a Stockholder	 	 	36	 
	18.
	 	Concerning the Rights Agent	 	 	37	 
	19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	 	37	 
	20.
	 	Duties of Rights Agent	 	 	38	 
	21.
	 	Change of Rights Agent	 	 	41	 
	22.
	 	Issuance of New Rights Certificates	 	 	42	 
	23.
	 	Redemption and Termination	 	 	43	 
	24.
	 	Exchange	 	 	44	 
	25.
	 	Notice of Certain Events	 	 	46	 
	26.
	 	Notices	 	 	47	 
	27.
	 	Supplements and Amendments	 	 	48	 
	28.
	 	Successors	 	 	48	 
	29.
	 	Determinations and Actions by the Board of Directors; No Waiver	 	 	48	 
	30.
	 	Benefits of this Agreement	 	 	49	 
	31.
	 	Severability	 	 	49	 
	32.
	 	Governing Law	 	 	50	 
	33.
	 	Counterparts	 	 	50	 






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	Section	 	 	Page	 
	34.
	 	Descriptive Headings	 	 	50	 






	 	 	 
	Exhibit A

	 	Terms of Series A Junior Participating Preferred Securities of
Sovereign Bancorp, Inc.
	 
	 	 
	Exhibit B

	 	Form of Rights Certificate
	 
	 	 
	Exhibit C

	 	Summary of Rights to Purchase Preferred Stock







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SECOND AMENDED AND RESTATED RIGHTS AGREEMENT




          SECOND
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of January 19, 2005 (this “Agreement”),
between SOVEREIGN BANCORP, INC., a Pennsylvania business corporation (the “Company”), and MELLON
INVESTOR SERVICES LLC, a New Jersey limited liability company (the “Rights Agent”).



W I T N E S S E T H




          WHEREAS, on September 19, 1989 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of common stock, par value $1.00 per share, of the Company (the
“Common Stock”) outstanding at the close of business on October 2, 1989 (the “Record Date”), and
authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(p) hereof) for each share of Common Stock issued between the Record Date
(whether originally issued or delivered from the Company’s treasury) and the Distribution Date,
each Right initially representing the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company having the rights, powers, and preferences set
forth in a Rights Agreement (the “Rights Agreement”) dated September 19, 1989 between the Company
and Harris Trust Company of New York, upon the terms and subject to the conditions set forth
therein (the “Rights”);



          WHEREAS, on September 27, 1995, the Board of Directors of the Company, desiring to modify the
terms and conditions of the Rights, amended the Rights Agreement pursuant to an Amendment to Rights
Agreement (the “First Amendment”), dated as of September 27, 1995, between the Company and Chemical
Bank, as successor to Harris Trust Company of New York;



          WHEREAS, on June 21, 2001, the Board of Directors of the Company, desiring to modify the terms
and conditions of the Rights, amended the Rights Agreement, as amended pursuant to the First
Amendment, and restated the terms of the Rights as set forth in the Amended and Restated Rights
Agreement (the “Amended and Restated Rights Agreement”), dated as of June 21, 2001, between the
Company and Mellon Investor Services LLC, as successor to Chemical Bank; and



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          WHEREAS, on January 19, 2005, the Board of Directors of the Company, desiring to further
modify the terms and conditions of the Rights, amended the Rights Agreement, as amended pursuant to
the First Amendment and amended and restated pursuant to the Amended and Restated Rights Agreement,
and desire to restate the terms of the Rights herein as so amended.



AGREEMENT:




          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereto, intending to be legally bound, hereby agree as follows:



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



               (a) “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of (i) 9.9% or more of the shares of
Common Stock or (ii) Voting Securities that in the aggregate represent 9.9% or more of the Total
Voting Power, but shall not include the Company, any Subsidiary of the Company, any employee stock
option plan or other employee benefit plan of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed, or established by the Company for or pursuant to the
terms of any such plan.



               (b) [INTENTIONALLY OMITTED.]



               (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 September
19, 1989.



               (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, 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



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pursuant to a tender offer or exchange offer made by such Person or any of such Person’s Affiliates
or Associates until such tendered securities are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering
Event, 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 or pursuant to Section 3(a) or Section 22 hereof (the
“Original Rights”) or pursuant to Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;



                    (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote (without regard to any regulatory restrictions or restrictions
included in the Company’s Articles of Incorporation) or dispose of or has “beneficial ownership” of
(as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement, or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own,” any security under this subparagraph (ii) as a result of an agreement,
arrangement, or understanding to vote such security if such agreement, arrangement, or
understanding (A) arises solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act and (B) is not also then 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;
provided, however, that nothing in this paragraph (c) shall cause a person engaged in
business as an underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,”
any securities acquired through such person’s participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such acquisition.



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



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



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



               (h) “Common stock equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.



               (i) [INTENTIONALLY OMITTED.]



               (j) “Current market price” shall have the meaning set forth in Section 11(d)(i) hereof.



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



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



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



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



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



               (p) “Person” shall mean any individual, firm,
corporation, partnership, or other entity.



               (q) “Preferred Stock” shall mean shares of Series A Junior Participating Preferred Stock,
without par value, of the Company, and, to the extent that there are not a



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sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit
the full exercise of the Rights, any other series of preferred stock, without par value, of the
Company designated for such purpose containing terms substantially similar to the terms of the
Series A Junior Participating Preferred Stock.



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



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



               (t) “Record Date” shall have the meaning set forth in the WHEREAS clause in the recital to
this Agreement.



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



               (v) “Rights” shall have the meaning set forth in the WHEREAS clause in the recital to this
Agreement.



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



               (x) “Rights Dividend Declaration Date” shall have the meaning set forth in the WHEREAS clause
in the recital to this Agreement.



               (y) “Section 11(a)(ii) Event” shall mean any event described in clauses (A) or (B) of Section
11(a)(ii) hereof.



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



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



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



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



               (dd) “Stock Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed



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pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.



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



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



               (gg) “Total Voting Power” on any given date shall mean the total number of votes eligible to
be cast in a general election of directors of the Company.



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



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



               (jj) “Voting Securities” shall mean any class or classes of capital stock of the Company
entitled to vote generally in the election of directors.



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



          Section 3. Issue of Rights Certificates.



               (a) Until the earliest of (i) the close of business on the tenth Business Day after the Stock
Acquisition Date or (ii) the close of business on the tenth Business Day (or such later date as may
be determined by the Board of Directors) after the date that a tender offer or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee stock option plan
or other employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed, or established by the Company



6









 







for or pursuant to the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if, upon
consummation thereof, such Person would be the Beneficial Owner of (x) 9.9% or more of the shares
of Common Stock then outstanding or (y) Voting Securities representing 9.9% or more of the Total
Voting Power (the earliest of (i) and (ii) being herein referred to as the “Distribution Date”),
(x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders of such Common Stock
(which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable only in connection with the transfer
of the underlying shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit B hereto (the “Rights Certificates”),
evidencing one Right for each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.



               (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary of
Rights”), by first-class, postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for shares of Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such certificates for shares of
Common Stock and the registered holders of shares of Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the Distribution Date or the Expiration
Date, the transfer of any certificates representing shares of Common Stock in respect of



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which Rights have been issued shall also constitute the transfer of the Rights associated with such
shares of Common Stock.



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




     This certificate also evidences and
entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between
Sovereign Bancorp, Inc. (the “Company”) and
Mellon Investor Services LLC, as successor to
The Chase Manhattan Bank, as successor to
Chemical Bank (the “Rights Agent”), dated as of
September 19, 1989 as amended (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 will
be evidenced by separate certificates and will no
longer be evidenced by this certificate. The
Company or the Rights Agent will mail to the
holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a
written request therefor. Under certain
circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is,
was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether
currently held by or on behalf of such Person or
by any subsequent holder, may become null and void.



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



8









 








          Section 4. Form of Rights Certificates.



               (a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substantially in the form set forth on Exhibit B
hereto and may have such marks of identification or designation and such legends, summaries, or
endorsements printed thereon as the Company may deem appropriate (but which do not affect the
rights, duties or responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one one-hundredth of a share, the
“Purchase Price”), but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment as provided herein.



               (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after such Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement, or understanding regarding the transferred Rights or (B) a
transfer that the Board of Directors of the Company has determined is part of an agreement,
arrangement, or understanding which has as a primary purpose or effect avoidance of Section 7(e)
hereof, and provided that the Company shall have notified the Rights Agent that this Section 4(b)
applies, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement, or adjustment of any other Rights Certificate referred to in this



9









 







sentence, shall contain (to the extent feasible) the following legend:




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



          Section 5. Countersignature and Registration.



               (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, Chief Executive Officer, President, or any Vice Chairman or Executive 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
manually by the Rights Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Rights Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the Company; and any
Rights Certificates may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights Agreement any such person
was not such an officer.



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



10









 





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



               (a) Subject to the provisions of Section 4(b), Section 7(e), Section 14, and Section 24
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 may be transferred, split up,
combined, or exchanged for another Rights Certificate entitling the registered holder to purchase a
like number of one one-hundredths of a share of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash, or other assets, as the case may be) as the Rights
Certificate surrendered then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine, or exchange any Rights
Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate to be transferred, split up, combined, or exchanged at the principal office
or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have properly completed and signed
the certificate contained in the form of assignment on the reverse side of such Rights Certificate
and shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), and
Section 14 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate 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. The Rights Agent shall have no duty to take any action under any Section of
this Agreement which requires the payment by a Rights holder of applicable taxes and governmental
charges unless and until the Rights Agent is satisfied that all such taxes and/or charges have been
paid.



               (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction, or mutilation of a Rights Certificate, and, in case of loss,
theft, or destruction, of indemnity or security satisfactory to them, and reimbursement to the
Company and the



11









 







Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed, or mutilated.



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



               (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii), and
Section 23(a) hereof) in whole or in part at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to purchase and the certificate on the reverse
side thereof duly executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price with respect to the total
number of one-hundredths of a share (or other securities, cash, or other assets, as the case may
be) as to which such surrendered Rights are then exercisable, at or prior to the earliest of (i)
the close of business on June 30, 2007 (the “Final Expiration Date”),(ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and (ii) being herein
referred to as the “Expiration Date”), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.



               (b) The Purchase Price for each one-hundredth of a share of Preferred Stock pursuant to the
exercise of a Right shall be $40.00, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c)
below.



               (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate on the reverse side thereof duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per one one-hundredth of a
share of Preferred Stock (or other shares, securities, cash, or other assets, as the case may be)
to be purchased as set forth below and an amount equal to any applicable tax or charge, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the



12









 







shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one one-hundredths of a share of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition
from the depositary agent depositary receipts representing such number of one one-hundredths of a
share of Preferred Stock as are to be purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by such holder, and (iv)
after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of
such Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant
to Section 11(a)(iii) hereof) shall be made in cash or by certified bank check or bank draft
payable to the order of the Company. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash, and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such
other securities, cash, and/or other property are available for distribution by the Rights Agent,
if and when necessary to comply with this Agreement. The Company reserves the right to require
prior to the occurrence of a Triggering Event that, upon any exercise of Rights, a number of Rights
be exercised so that only whole shares of Preferred Stock would be issued.



               (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of,
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.



               (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a



13









 







Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person, or an Associate
or Affiliate of an Acquiring Person, (ii) a direct or indirect transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a direct or indirect transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement, or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of an agreement, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall notify the Rights Agent when
this Section 7(e) applies and shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its failure to make any determinations
with respect to an Acquiring Person or any of its Affiliates, Associates, or transferees hereunder.



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



          Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up, combination, or exchange
shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in



14









 







lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.



          Section 9. Reservation and Availability of Capital Stock.



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



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



               (c) The Company shall use its best efforts to (i) file, as soon as practicable following the
first occurrence of a Section 11(a)(ii) Event, or, if applicable, 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 on an appropriate form under
the Securities Act, with respect to the securities purchasable upon exercise of the Rights, (ii)
cause such registration statement to become effective as soon as



15









 







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 Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the suspension is no longer
in effect. In addition, if the Company shall determine that a registration statement is required
following the Distribution Date, the Company may by issuing a public announcement temporarily
suspend (and shall give the Rights Agent prompt notice thereof) the exercisability of the Rights
until such time as a registration statement has been declared effective. The Company shall
promptly provide the Rights Agent with copies of such announcements. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the exercise thereof
shall not be permitted under applicable law, or a registration statement shall not have been
declared effective.



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



               (e) The Company further covenants and agrees that it will pay when due and payable any and
all taxes and governmental charges which may be payable in respect of the issuance or delivery of
the Rights Certificates and of any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall



16









 







not, however, be required to pay any tax or charge which may be payable in respect of any transfer
or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number
of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as
the case may be) in respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for
a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of surrender) or until it has been

established to the Company’s satisfaction that no such tax or charge is due.



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



          Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right and the number



17









 







of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.



               (a) (i) In the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination, or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. If
an event occurs that would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.



                    (ii) Subject to Section 24 of this Agreement, in the event:



                         (A) any Person shall at any time after the Rights Dividend Declaration Date become an
Acquiring Person, unless the event causing such Person to become an Acquiring Person (I) is a
transaction set forth in Section 13(a) hereof, or (II) is an acquisition of shares of Common Stock
and/or Voting Securities pursuant to a tender offer or an exchange offer for all outstanding shares
of Common Stock and other Voting Securities, if any, at a price and on terms determined by at least
a majority of the members of the Board of Directors of the Company who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person, after receiving advice from one or more
investment banking firms, to be (x) at a



18









 







price which is fair to stockholders (taking into account all factors which the Board of Directors
deems 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) and (y)
otherwise in the best interests of the Company and its stockholders; or



                         (B) [INTENTIONALLY OMITTED.]



                         (C) any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any time
after the date of this Agreement, directly or indirectly, (1) shall merge into the Company or
otherwise combine with the Company and the Company shall be the continuing or surviving corporation
of such merger or combination and the Voting Securities of the Company shall remain outstanding and
unchanged, (2) shall, in one transaction or a series of transactions, other than in connection with
the exercise of the Rights or the exercise or conversion of securities exercisable or convertible
into capital stock of the Company or any of its Subsidiaries, transfer any assets to the Company or
to any of its Subsidiaries in exchange (in whole or in part) for shares of Voting Securities, for
shares of other equity securities of the Company, or for securities exercisable for or convertible
into shares of equity securities of the Company (Common Stock or otherwise) or otherwise obtain
from the Company, with or without consideration, any additional shares of such equity securities or
securities exercisable for or convertible into shares of such equity securities (other than
pursuant to a pro rata distribution to all holders of Common Stock), (3) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer, or otherwise acquire or dispose of, in one transaction
or a series of transactions, to, from, with, or of (as the case may be) the Company or any of its
Subsidiaries, assets on terms and conditions less favorable to the Company than the Company would
be able to obtain in arm’s-length negotiation with an unaffiliated third party, other than pursuant
to a transaction set forth in Section 13(a) hereof, (4) shall receive any compensation from the
Company or any of the Company’s Subsidiaries other than compensation for services as a director or
for full-time employment as a regular employee at rates in accordance with the Company’s (or its
Subsidiaries’) past practices, or (5) shall receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from a requirement of law or governmental
regulation), of any loans, advances, guarantees, pledges, or other financial assistance or any tax
credits or other tax advantage provided by the Company or any of its Subsidiaries; or



19









 





                         (D) during such time as there is an Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or recapitalization of the Company, or any merger
or consolidation of the Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries, other than a transaction or
transactions to which the provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person) which has the effect, directly or indirectly, of
increasing by more than 1% the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of any Acquiring Person;



then, promptly following the first occurrence of a Section 11(a)(ii) Event, proper provision shall
be made so that each holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one one-hundredths of a share
of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the “Purchase Price” for each Right and
for all purposes of this Agreement) by 50% of the lowest closing price (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) per share of Common Stock on any Trading Day (as
defined in Section 11(d)(i) hereof) occurring within the twelve-month period immediately preceding
the date of such first occurrence (such number of shares, the “Adjustment Shares”).



                    (iii) In the event that (a) the number of shares of Common Stock which are authorized by the
Company’s Articles of Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), or (b) the quotient (the
“Quotient”) obtained by dividing the Purchase Price by the number of Adjustment Shares issuable
upon exercise of a Right is less than the then par



20









 







value per share of the Common Stock, the Company shall, to the extent permitted by applicable law
and regulation and subject to such limitations as are necessary to prevent a default under any
agreement to which the Company is a party: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the “Current Value”) over (2) the Purchase
Price (such excess, the “Spread”), and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon 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 which the Board of
Directors of the Company has deemed to have the same value as shares of Common Stock (such shares
of preferred stock, “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, where such aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within 30 days following the later of (x)
the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as
the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have
an aggregate value equal to the Spread. If the Board of Directors of the Company shall determine
in good faith that it is likely that (a) sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights or (b) a reduction in the par value per
share of Common Stock to an amount that is equal to or less than the Quotient could be authorized,
the 30 day period set forth above may be extended to the extent necessary, but not more than 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 or for the reduction of such par value, as
the case may be (such period, as it may be extended, the “Substitution Period”). To the extent
that the Company determines that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to



21









 







all outstanding Rights, and (y) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of additional shares or reduction in
par value and/or to decide the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of the Common Stock shall be the
current market price (as determined pursuant to Section 11(d) hereof) per share of the Common Stock
on the Section 11(a)(ii) Trigger Date and the value of any “common stock equivalent” shall be
deemed to have the same value as the Common Stock on such date.



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



22









 







as determined in good faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and
the holders of the Rights. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the event that such rights
or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.



                    (c) In case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Company is the continuing corporation) of 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) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the cash, assets, or
evidences of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.



                    (d) (i) For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the “current market price” per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of such Common Stock
for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such
date, and for purposes of



23









 







computations made pursuant to Section 11(a)(iii) hereof, the “current market price” per share of
Common Stock on any date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the 10 consecutive Trading Days immediately following such date;
provided, however, that in the event that the current market price per share of the Common
Stock is determined during a period following the announcement by the issuer of such Common Stock
of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination, or reclassification of such Common Stock, and the ex-dividend date for
such dividend or distribution, or the record date for such subdivision, combination or
reclassification shall not have occurred prior to the commencement of the requisite 30 Trading Day
or 10 Trading Day period, as set forth above, then, and in each such case, the “current market
price” shall be properly adjusted to take into account ex-dividend trading. The closing price for
each day shall be the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed
or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System (“NASDAQ”) or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. 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 in good faith
by the Board of Directors of the Company shall be used. The term “Trading Day” shall mean a day on
which the principal national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities



24









 







exchange, a Business Day. If the Common Stock is not publicly held or not so listed or traded,
“current market price” per share shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.



                    (ii) For the purpose of any computation hereunder, the “current market price” per share of
Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in
clause (i) of this Section 11(d) (other than the last sentence thereof). If the current market
price per share of Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the “current market price” per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events
as stock splits, stock dividends, and recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or
traded, “current market price” per share of the Preferred Stock shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For
all purposes of this Agreement, the “current market price” of one one-hundredth of a share of
Preferred Stock shall be equal to the “current market price” of one share of Preferred Stock
divided by 100.



               (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 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) 3 years from
the date of the transaction which mandates such adjustment, or (ii) the Expiration Date.



25









 





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



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



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



               (i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of one one-hundredths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-ten-thousandth) obtained by



26









 







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, and
shall promptly give the Rights Agent a copy of such announcement. 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 10 days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed, and countersigned
in the manner provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.



               (j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-hundredths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the Purchase Price per one
one-hundredth of a share and the number of one one-hundredths of a share which were expressed in
the initial Rights Certificates issued hereunder.



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



27









 





               (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
(and shall give prompt written notice of such election to the Rights Agent) until the occurrence of
such event the issuance to the holder of any Right exercised after such record date the number of
one one-hundredths of a share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a
share of Preferred Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder’s right to receive such additional shares (fractional
or otherwise) or securities upon the occurrence of the event requiring such adjustment.



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



               (n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof),
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more transactions each of which



28









 







complies with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger, or sale there are any rights, warrants, or, other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with, or immediately after
such consolidation, merger, or sale, the stockholders of the Person who constitutes, or would
constitute, the “Principal Party” for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates and Associates.



               (o) The Company covenants and agrees that, after the Distribution Date, it will not, except
as permitted by Section 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.



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



               (q) [INTENTIONALLY OMITTED.]



          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 and Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the computations and
facts accounting for such



29









 







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 (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any adjustment therein
contained and shall have no duty with respect to, and shall not be deemed to have any knowledge of,
such adjustment unless and until it shall have received such certificate.



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



               (a) In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation of such consolidation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing
or surviving corporation of such consolidation or merger and, in connection with such consolidation
or merger, all or part of the outstanding shares of Voting Securities shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which complies with Section 11(o) hereof); then, and in
each such case (except as may be contemplated by Section 13(d) hereof), proper provision shall be
made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable, and freely tradeable shares of Common Stock of the Principal Party (as such
term is hereinafter defined), not subject to any liens, encumbrances, rights of first refusal, or
other adverse claims, as shall be equal to the result obtained by (1) multiplying the



30









 







then current Purchase Price by the number of one one-hundredths of a share of Preferred Stock for
which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or,
if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-hundredths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and dividing that product (which, following the
first occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each Right
and for all purposes of this Agreement) by (2) 50% of the current market price (determined pursuant
to Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.



               (b) “Principal Party” shall mean (i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger or consolidation and if no
securities are so issued, the Person that is the other party to such merger or consolidation and
(ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a),
the Person that is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions; provided, however, that in any
such case described in the foregoing clause (i) or (ii) of this Section 13(b), (1) if the Common
Stock of such Person is not at such time and has not been continuously over the preceding 12 month
period registered under Section 12 of the Exchange Act,



31









 







and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, “Principal Party” shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stock of
two or more of which are and have been so registered, “Principal Party” shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest aggregate market value.



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



                    (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, and will
use its best efforts to cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and



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



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



               (d) Notwithstanding anything in this Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a



32









 







Person or Persons (or a wholly-owned subsidiary of any such Person or Persons) who acquired shares
of Common Stock pursuant to a tender offer or exchange offer for all outstanding shares of Common
Stock at a price and on terms determined to be in accordance with Section 11(a)(ii)(A) hereof, (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 shares of Common Stock whose shares were purchased
pursuant to such tender offer or exchange offer, and (iii) the form of consideration being offered
to the remaining holders of shares of Common Stock pursuant to such transaction is the same as the
form of consideration paid pursuant to such tender offer or exchange offer. Upon consummation of
any such transaction contemplated by this Section 13(d), all Rights hereunder shall expire.



          Section 14. Fractional Rights and Fractional Shares.



               (a) The Company shall not be required to issue fractional Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates that
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 purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to Securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on 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



33









 







market in the Rights selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be used.



               (b) The Company shall not be required to issue fractional shares of Preferred Stock (other
than fractions which are integral multiples of one one-hundredth 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-hundredth of a share
of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-hundredth 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-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of one one-hundredth
of a share of Preferred Stock shall be one one-hundredth of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.



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



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



               (e) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Corporation shall (i) promptly prepare and deliver to the Rights Agent a certificate
setting forth in reasonable detail the facts



34









 







related to such payments and the prices and/or formulas utilized in calculating such payments, and
(ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make
such payments. The Rights Agent shall be fully protected in relying upon such a certificate and
shall have no duty with respect to, and shall not be deemed to have knowledge of, any payment for
fractional Rights or fractional shares under any Section of this Agreement relating to the payment
of fractional Rights or fractional shares unless and until the Rights Agent shall have received
such a certificate and sufficient monies.



          Section 15. Rights of Action. All rights of action in respect of this Agreement are
vested in the respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action, or proceeding against the Company to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach 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.



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



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



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



35









 





               (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may
deem and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e) hereof, shall be required to be affected by any notice
to the contrary; and



               (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory, or administrative agency or commission, or any statute, rule,
regulation, or executive order promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree, or ruling (whether interlocutory or final)
lifted or otherwise overturned as soon as possible.



          Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends, or be deemed for any
purpose the holder of the number of one one-hundredths of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as provided in Section
25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance with the provisions
hereof.



36









 





          Section 18. Concerning the Rights Agent.



               (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in the preparation,
execution, delivery, amendment, administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith, or willful misconduct on the part of the Rights Agent (each as determined by
a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction) for
any action taken, suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including, without limitation, the costs and expenses of
defending against any claim of liability in the premises. The costs and expenses incurred in
enforcing this right of indemnification shall be paid by the Company. The provisions of this
Section 18 and Section 20 below shall survive the termination of this Agreement, the exercise or
expiration of the Rights and the resignation or removal of the Rights Agent.



               (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered, or omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20. The Rights
Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice
thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for
failing to take any action in connection therewith unless and until it has received such notice in
writing.



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



               (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be



37









 







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



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



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



               (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent, and the Rights Agent shall incur no liability for, or in respect
of, any action taken, suffered or omitted by it and in accordance with such advice or opinion.



38









 





               (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of “current market price”) be proved or established
by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by the Chairman of the Board, the
President, any Vice Chairman or Executive Vice President, the Chief Financial Officer, or the
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, suffered or omitted to be taken 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, bad faith,
or willful misconduct (each as determined by a final, non-appealable order, judgment, decree or
ruling of a court of competent jurisdiction). Anything to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental
loss or damage of any kinds whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage. Any liability of the
Rights Agent under this Rights Agreement will be limited to the amount of fees paid by the Company
to the Rights Agent.



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



               (e) The Rights Agent shall not be under any responsibility or have any liability in respect
of the validity of this Agreement or the execution and delivery hereof (except the due execution
and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights (including the
Rights becoming null



39









 







and void pursuant to Section 7(e)) or any adjustment required under the provisions of Section 11 or
Section 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 actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or
Preferred Stock will, when so issued, be validly authorized and issued, fully paid and
nonassessable.



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



               (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the President, any Vice
Chairman or Executive Vice President, the Chief Financial Officer, or the Secretary of the Company,
and to apply to such officers for advice or instructions in connection with its duties, and such
instructions shall be full authorization and protection to the Rights Agent and it shall not be
liable for any action taken, suffered or omitted to be taken by it in accordance with instructions
of any such officer or for any delay in acting while waiting for such instructions.



               (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 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, default, neglect, or misconduct of
any



40









 







such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect, or misconduct absent gross negligence, bad faith or willful misconduct (each as determined
by a final, non-appealable order, judgment, or decree of a court of competent jurisdiction) 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 1
and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.



          Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders, if any, of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon 10 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. 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 10 days after giving notice of such removal, or within a period of 30 days after
it has been notified in writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), as the case may be, then any registered holder
of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation or



41









 







other entity organized and doing business under the laws of the United States or of any state of
the United States so long as such corporation or entity is either (i) authorized under such laws to
exercise corporate trust or stock transfer 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 or the performance of which is guaranteed by a
corporation with a combined capital and surplus of at least $50,000,000 or (ii) an affiliate of
such corporation or entity. 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 file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock. The
Company shall also notify the registered holders of the Rights Certificates of such appointment by
any reasonable means, including without limitation, by means of including information on such
appointment in a filing under the Exchange Act. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of, the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.



          Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the number, kind, or class
of shares or other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or arrangement,
granted or awarded on or prior to the Distribution Date, or upon the exercise, conversion, or
exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the



42









 







Company, issue Rights Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued if,
and to the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.




          Section 23. Redemption and Termination.



               (a) The Board of Directors of the Company, by the affirmative vote of at least a majority of
the members of the Board of Directors in addition to any other vote required by law or by the
articles of incorporation or bylaws of the Company, may, at its option, at any time prior to the
earlier of (i) the close of business on the tenth Business Day following notice to the Board of
Directors of the occurrence of the Stock Acquisition Date (or such later date as may be determined
by a majority of the members of the Board of Directors; provided, however, that such date shall not
be extended at such time as the Rights are not then redeemable), or (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption price of $.001 per
Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend, or
similar transaction occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption Price”); provided, however, that if, following the occurrence of the
Stock Acquisition Date and following the expiration of the right of redemption hereunder but prior
to any Triggering Event, (i) a Person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one transaction or series of
transactions, not directly or indirectly involving the Company or any of its Subsidiaries, such
that such Person is thereafter a Beneficial Owner of less than 9.9% of the outstanding shares of
Common Stock or Voting Securities representing less than 9.9% of Total Voting Power, and (ii) there
are not other Persons, immediately following the occurrence of the event described in clause (i),
who are Acquiring Persons, then the right of redemption shall be reinstated and thereafter be
subject to the provisions of this Section 23. 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



43









 







expired. 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)(i) hereof, of the Common Stock at
the time of redemption), or any other form of consideration deemed appropriate by the Board of
Directors.



               (b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights (by the affirmative vote of at least a majority of the members of the
Board of Directors), 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. The Company shall promptly give public notice
of such redemption and prompt written notice to the Rights Agent; provided, however, the failure to
give, or any defect in, any such notice shall not affect the validity of such redemption. Within
10 days after such action of the Board of Directors ordering the redemption of the Rights, the
Company shall mail a notice to all holders of the then outstanding Rights at each holder’s last
address as it appears upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the Redemption Price
will be made.



          Section 24. Exchange.



                    (a) The Board of Directors of the Company may, at its option, at any time and from time to
time after the first occurrence of a Section 11(a)(ii) Event, 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 shares of Common Stock or common stock equivalents
(as defined in Section 11(a)(iii) hereof), or any combination thereof, at an exchange ratio of one
share of Common Stock, or such number of common stock equivalents or units representing fractions
thereof as would be deemed to have the same value as one share of Common Stock, per Right,
appropriately adjusted to reflect any stock split, stock dividend, or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).



                    (b) Immediately upon the action of the Board of Directors of the Company ordering the
exchange of any Rights



44









 







pursuant to subsection (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock and/or common stock
equivalents equal to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock and/or common stock equivalents for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.



               (c) In the event that the number of shares of Common Stock which are authorized by the
Company’s Articles of Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights are not sufficient to permit an exchange of Rights as contemplated
in accordance with this Section 24, the Company may, at its option, take all such action as may be
necessary to authorize additional shares of Common Stock for issuance upon exchange of the Rights.



               (d) The Company shall not be required to issue fractional 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 Rights 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 value of a whole share of Common Stock. For purposes of
this Section 24, the value of a whole share of Common Stock shall be the closing price (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24, and the value of any common
stock equivalent shall be deemed to have the same value as the Common Stock on such date.



45









 





          Section 25. Notice of Certain Events.



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



               (b) In case any Section 11(a)(ii) Event shall occur, then, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify
the



46









 







event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof, and
(ii) all references in the preceding paragraph to Preferred Stock shall be deemed thereafter to
refer to Common Stock and/or, if appropriate, other securities.



          Section 26. Notices. 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) or by facsimile transmission as follows:



	 	 	 	 	 
	 	 	Sovereign Bancorp, Inc.
	 	 	1130 Berkshire Boulevard
	 	 	Wyomissing, PA 19610
	 
	 	 	 	 
	

	 	Attention:
	 	David A. Silverman, Esq.
	

	 	 	 	Corporate Secretary
	 	 	Facsimile No.: (610) 736-1452







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



	 	 	 
	

	 	Mellon Investor Services LLC
	

	 	One Mellon Center
	

	 	Suite 2122
	

	 	500 Grant Street
	

	 	Pittsburgh, PA 15258-001
	 
	 	 
	

	 	Attention: Relationship Manager

	

	 	Facsimile No.: (412) 236-8161
	 
	 	 
	

	 	with a copy to:
	 
	 	 
	

	 	Mellon Investor Services
	

	 	85 Challenger Road
	

	 	Ridgefield Park, New Jersey 07660
	 
	 	 
	

	 	Attention: General Counsel
	

	 	Facsimile No.: (201) 296-4004






47









 






     Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.



          Section 27. Supplements and Amendments. Prior to the Distribution Date and subject
to the last sentence of this Section 27, the Company, by the affirmative vote of at least a
majority of the members of the Board of Directors in addition to any other vote required by law or
by the articles of incorporation or bylaws of the Company, may, and the Rights Agent shall, if the
Company so directs but subject to the other provisions of this Section, supplement or amend any
provision of this Agreement without the approval of any holders of certificates representing shares
of Common Stock. From and after the Distribution Date and subject to the last sentence of this
Section 27, the Company, by the affirmative vote of at least a majority of the members of the Board
of Directors in addition to any other vote required by law or by the articles of incorporation or
bylaws of the Company, and, the Rights Agent shall, if the Company so directs but subject to the
other provisions of this Section, supplement or amend this Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any other provisions
herein, or (iii) 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. 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, and provided such supplement or amendment does not change or increase the Rights
Agent’s rights, duties, liabilities or obligations, the Rights Agent shall execute such supplement
or amendment.



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



          Section 29. Determinations and Actions by the Board of Directors; No Waiver. For all
purposes of this Agreement, any calculation of the number of shares of Voting Securities



48









 







outstanding at any particular time, including for purposes of determining the particular percentage
of such outstanding shares of Voting 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 hereof. The Board of Directors of the
Company shall have the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board of Directors or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this Agreement (including
(i) a determination as to the identity of the Affiliates and Associates of any person, (ii) a
determination as to the extent of the Beneficial Ownership of any Person, and (iii) a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations, and determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board of Directors in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject any member of the Board of Directors of the
Company to any liability to the holders of the Rights. Nothing contained herein shall be deemed to
waive or abrogate the provisions of any statute, regulation or other provision of law applicable to
the Company. The Rights Agent shall always be entitled to assume that the Company’s Board of
Directors acted in good faith and shall be fully protected and incur no liability in reliance
thereon.



          Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent, and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock)
any legal or equitable right, remedy, or claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent, and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common
Stock).



          Section 31. Severability. If any term, provision, covenant, or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, or
unenforceable, the remainder of the terms, provisions,



49









 







covenants, and restrictions of this Agreement shall remain in full force and effect and shall in no
way be affected, impaired, or invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void, or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the close of business on the tenth
day following the date of such determination by the Board of Directors. Without limiting the
foregoing, if any provision requiring that a determination be made by less than the entire Board is
held by a court of competent jurisdiction or other authority to be invalid, void, or unenforceable,
such determination shall then be made by the entire Board.



          Section 32. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and construed in accordance with the laws of
the Commonwealth applicable to contracts made and to be performed entirely within the Commonwealth;
provided, however, that all provisions regarding the rights, duties and obligations of the Rights
Agent shall be governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State.



          Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.



          Section 34. Descriptive Headings. Descriptive headings of the several Sections of
this Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.



50









 





          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.



	 	 	 
	

	 	SOVEREIGN BANCORP, INC.
	 
	 	 
	

	 	By
/s/ Mark R.
McCollom



	 
	 	Mark R.
McCollom

Executive Vice President

	 
	 	 
	

	 	Attest:/s/
John R. Merva


	 
	 	John R.
Merva

Assistant Secretary

	 
	 	 
	

	 	MELLON INVESTOR SERVICES LLC
	 
	 	 
	

	 	By
/s/ Cynthia M. Pacolay


	 
	 	Cynthia M.
Pacolay

Client Services Manger

	 
	 	 
	

	 	Attest:/s/
Mitzi Brinkman


	 
	 	Mitzi
Brinkman

Client Services Manager







51









 






Exhibit A




TERMS OF




SERIES A JUNIOR PARTICIPATING PREFERRED STOCK




OF




SOVEREIGN BANCORP, INC.




          RESOLVED that, pursuant to the authority vested in the Board of Directors of the Corporation
by the Articles of Incorporation, the Board of Directors does hereby provide for the issue of a
series of Preferred Stock, without par value, of the Corporation, to be designated “Series A Junior
Participating Preferred Stock” (hereinafter referred to as the “Series A Preferred Stock” or “this
Series”), initially consisting of 25,000 shares, and to the extent that the designations, powers,
preferences and relative and other special rights and the qualifications, limitations and
restrictions of the Series A Preferred Stock are not stated and expressed in the Articles of
Incorporation, does hereby fix and herein state and express such designations, powers, preferences
and relative and other special rights and the qualifications, limitations and restrictions thereof,
as follows (all terms used herein which are defined in the Articles of Incorporation shall be
deemed to have the meanings provided therein):



     1. Designation and Amount. The designation of the series of Preferred Stock created
by this resolution shall be “Series A Junior Participating Preferred Stock” and the number of
shares constituting such Series is Twenty-Five Thousand (25,000). Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities of the Corporation
convertible into shares of this Series.



     2. Dividends.



          (A) Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of this Series with respect to dividends,
the holders of shares of this Series shall



A-1









 





be entitled to receive, when and as declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on April 1, July 1, October 1, and
January 1 of each year (each such date being referred to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of this Series, in an amount per share (rounded to the nearest cent) equal
to the greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in Common Stock or a subdivision of the outstanding Common Stock (by
reclassification or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of this Series. In the event the
Company shall at any time after September 19, 1989 (the “Rights Declaration Date”) declare any
dividend on the Common Stock payable in Common Stock, subdivide the outstanding Common Stock, or
combine the outstanding Common Stock into a smaller number of shares, then in each such case the
amount to which holders of shares of this Series were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of Common Stock outstanding immediately after such
event and the denominator of which is the number of Common Stock that were outstanding immediately
prior to such event.



          (B) The Company shall declare a dividend or distribution on the Series A Preferred Stock
as provided in paragraph (A) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $10.00 per share on Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.



          (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of this Series, unless the date of issue of such shares is prior to the record date for the
first



A-2









 







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



     3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the
following voting rights:



          (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of
the shareholders of the Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in Common Stock, or effect a subdivision or combination or
consolidation of the outstanding Common Stock (by reclassification or otherwise than by payment of
a dividend in Common Stock) into a greater or lesser number of Common Stock, then in each such case
the number of votes per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of Common Stock outstanding immediately after such event and the
denominator of which is the number of Common Stock that were outstanding immediately prior to such
event.



          (B) Except as otherwise provided herein, in any other resolutions creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock
and the holders of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a vote of stockholders
of the Corporation.



A-3









 





          (C) Except as set forth herein, or as otherwise provided by law, holders of Series A
Preferred Stock shall have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.



     4. Certain Restrictions.



          (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:



               (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;



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



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



               (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A
Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights and preferences of
the



A-4









 







respective series and classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.



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



     5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the Articles of
Incorporation, or in any other resolutions creating a series of Preferred Stock or any similar
stock or as otherwise required by law.



     6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or
winding up of the Corporation, no distribution shall be made (A) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received $100.00 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of Common Stock, or (B) to the holders of
shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock payable in Common
Stock, or effect a subdivision or combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock) into a greater or
lesser number of Common Stock, then in each such case the aggregate amount to



A-5









 







which holders of shares of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (A) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of Common Stock outstanding immediately
after such event and the denominator of which is the number of Common Stock that were outstanding
immediately prior to such event.



     7. Consolidation, Merger, Etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the Common Shares are exchanged
for or changed into other stock or securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in Common Stock, or effect a subdivision or combination or consolidation of
the outstanding Common Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock) into a greater or lesser number of Common Stock, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which
is the number of Common Stock outstanding immediately after such event and the denominator of which
is the number of Common Stock that were outstanding immediately prior to such event.



     8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.



     9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other class of the
Corporation’s Preferred Stock.



     10. Amendment. The Articles of Incorporation of the Corporation shall not be amended
in any manner which would materially alter or change the powers, preferences or special rights of
the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.




A-6









 








Exhibit B




[Form of Rights Certificate)




	 	 	 
	Certificate No. R-

	 	___ Rights






NOT EXERCISABLE AFTER _________, ___, OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID UNDER THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.](1)



Rights Certificate




SOVEREIGN BANCORP, INC.




          This certifies that _________, or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Second Amended and Restated Rights Agreement, dated as of
January 19, 2005 (the “Rights Agreement”), between Sovereign Bancorp, Inc., a Pennsylvania
corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey limited liability
company (the “Rights Agent ), to purchase from the Company at any time prior to 5:00 P.M. (New York
City time) on June 30, 2007, at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-hundredth of a fully paid, nonassessable share
of Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the Company, at a
purchase price of $40.00 per one one-hundredth of









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




B-1









 










a share (the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof)
set forth above, and the Purchase Price per share set forth above, are the number and Purchase
Price as of January 19, 2005, based on the Preferred Stock as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering Event (as defined in
the Rights Agreement) that a number of Rights be exercised so that only whole shares of Preferred
Stock will be issued.



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



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



          This Rights Certificate is subject to all of the terms, provisions, and conditions of the
Rights Agreement, which terms, provisions, and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties, and immunities hereunder of
the Rights Agent, the Company, and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written request to the
Rights Agent.



B-2









 





          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 one one-hundredths of a share of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.



          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at its option at a redemption price of $.001 per Right at any
time prior to the earlier of the close of business on (a) the tenth business day following notice
to the Board of Directors of the occurrence of the Stock Acquisition Date (as such time period may
be extended pursuant to the Rights Agreement), and (b) the Final Expiration Date.



          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-hundredth 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 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 shareholder of the Company or any right to vote for the election of directors or upon
any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting shareholders (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.



B-3









 





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



          WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of _________, 20___



	 	 	 	 	 
	

	 	SOVEREIGN BANCORP, INC.
	 
	 	 	 
	

	 	By	

	

	 	Title:
	 
	 	 	 
	

	 	Attest:	

	

	 	Secretary
	 
	 	 
	Countersigned:
	 	 
	 
	 	 
	
	 	 
	 
	 	 
	By
	
	 	 
	Authorized Signature	 	 






B-4









 






[Form of Reverse Side of Rights Certificate]




FORM OF ASSIGNMENT




(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)




FOR VALUE RECEIVED                                                              hereby sells, assigns and transfers unto
                                                            

                                                            
                                                            
                                                            

 (Please print name and address of transferee)

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



Dated:___________________, 20__




	 	 	 
	

	 	

	

	 	Signature






Signature Guaranteed:                                                             




          Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.



B-5









 





Certificate




               The undersigned hereby certifies by checking the appropriate boxes that:



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



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



	 	 	 
	Dated: ______, 20___

	 	

	

	 	Signature






Signature Guaranteed:




NOTICE




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



B-6









 





FORM OF ELECTION TO PURCHASE




                    (To be executed if holder desires to exercise Rights represented by the Rights Certificate.)



To: SOVEREIGN BANCORP, INC.:




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



Please insert social security

or other identifying number







(Please print name and address)








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



Please insert social security

or other identifying number







(Please print name and address)









Dated: ________________, 20__




	 	 	 
	

	 	

	

	 	Signature






Signature Guaranteed: __________________________




     Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a



B-7









 







commercial bank or trust company having an office or correspondent in the United States.



B-8









 





Certificate




     The undersigned hereby certifies by checking the appropriate boxes that:



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



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



	 	 	 
	Dated: _________, 20___

	 	

	

	 	Signature






Signature Guaranteed:




NOTICE




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




B-9









 








Exhibit C




SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK




          On September 19, 1989, the Board of Directors of Sovereign Bancorp, Inc. (the “Company”)
declared a dividend distribution of one Right for each outstanding share of the Company’s Common
Stock, par value $1.00 per share (the “Common Stock”), to shareholders of record at the close of
business on October 2, 1989. The Board of Directors amended the terms and conditions of the Rights
on September 27, 1995, on June 21, 2001, and on January 19, 2005. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, without par value (the “Preferred Stock”), at a Purchase Price of
$40.00, subject to adjustment. The description and terms of the Rights are set forth in the Second
Amended and Restated Rights Agreement (the “Rights Agreement”) between the Company and Mellon
Investor Services LLC, as Rights Agent.



          Initially, the Rights will be evidenced by 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 earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or associated persons (an
“Acquiring Person”) has acquired, or obtained the right to acquire, 9.9% or more of the outstanding
shares of Common Stock or voting securities representing 9.9% or more of the total voting power of
the Company (the “Stock Acquisition Date”) or (ii) 10 business days (or such later date as the
Board of Directors shall determine) following the commencement of a tender offer or exchange offer
that would result in a person or group acquiring 9.9% or more of such outstanding shares of Common
Stock or total voting power.



          Until the Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates
and will be transferred with and only with such Common Stock certificates, (ii) new Common Stock
certificates issued after October 2, 1989, will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of any certificate for Common Stock
outstanding will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.



C-1









 





          The Rights are not exercisable until the Distribution Date and will expire at the close of
business on June 30, 2007, unless earlier redeemed as described below. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event
(as defined below) that, upon any exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock will be issued.



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



          In the event that (i) a person becomes an Acquiring Person (except pursuant to an offer for
all outstanding shares of the Company’s voting securities which at least a majority of the members
of the Board of Directors of the Company who are not a representative or an affiliate of the
Acquiring Person determines to be fair to and otherwise in the best interests of the Company and
its shareholders), (ii) an Acquiring Person engages in one or more “self-dealing” transactions as
defined in the Rights Agreement, (iii) the Company is the surviving corporation in a merger with an
Acquiring Person, or (iv) during such time that there exists an Acquiring Person, a
recapitalization or reverse stock split occurs which results in such Acquiring Person’s
proportionate ownership interest being increased by more than 1% (any of the foregoing, a “Flip-in
Event”), each holder of a Right will thereafter have the right to receive, upon exercise, Common
Stock (or, in certain circumstances, cash, property, or other securities of the Company) having a
value (based on the lowest closing price of the Common Stock during the twelve-month period
preceding the Flip-in Event) equal to two times the exercise price of the Right. Notwithstanding
the foregoing, following the occurrence of a Flip-in Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person
(or by certain related parties) will be null and void. Rights are not exercisable following the
occurrence of a Flip-in Event, however, until such time as the Rights are no longer redeemable by
the Company as set forth below.



C-2









 





          For example, at an exercise price of $40.00 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following a Flip-in Event would entitle its holder to
purchase $80.00 worth of Common Stock based on the lowest closing price of the Common Stock during
the twelve-month period preceding the Flip-in Event (or other consideration, as noted above) for
$40.00. Assuming that the lowest closing price of the Common Stock during such period was $20.00,
the holder of each valid Right would be entitled to purchase four shares of Common Stock for
$40.00.



          In the event that, at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction in which the Company is not the
surviving corporation (other than a merger which follows an offer for all outstanding voting
securities of the Company, which at least a majority of the members of the Board of Directors of
the Company determines to be fair to and otherwise in the best interests of the Company and its
shareholders, and the merger price is not less than, and the form of consideration is the same as,
that paid in the tender or exchange offer) or (ii) 50% or more of the Company’s assets or earning
power is sold or transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the exercise price of the Right. The
events set forth in this paragraph and in the second preceding paragraph are referred to as
“Triggering Events.”



          The Purchase Price payable and the amount of Preferred Stock or other securities or property
issuable upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination, or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).



          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No fractional shares of Preferred Stock
will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price
of the



C-3









 







Preferred Stock on the last trading date prior to the date of exercise.



          At any time until ten business days following notice to the Board of Directors of the
occurrence of the Stock Acquisition Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (payable in cash, Common Stock, or other consideration deemed
appropriate as determined by the Board of Directors). At any time prior to the date the Rights
would otherwise become nonredeemable, a majority of the members of the Board of Directors of the
Company may extend the period for redemption. The Company’s right of redemption may be reinstated
if an Acquiring Person reduces such Person’s beneficial ownership to less than 9.9% of the
outstanding shares of Common Stock or total voting power in a transaction or series of transactions
not involving the Company and there is then no other Acquiring Person. Immediately upon the action
of the Board of Directors ordering redemption of the Rights, the Rights will terminate and the only
right of the holders of the Rights will be to receive the $.001 redemption price.



          At any time after the occurrence of a Flip-in Event, the Board of Directors may exchange the
Rights (other than Rights owned by an Acquiring Person or an affiliate or an associate of any such
person, which have become void), in whole or in part, at an exchange ratio of one share of Common
Stock, and/or other equity securities deemed to have the equivalent value, per Right, subject to
adjustment.



          Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder
of the Company, including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not be taxable to shareholders or to the Company, shareholders
may, depending upon the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for common stock of the
acquiring company as set forth above, or are exchanged as provided in the preceding paragraph.



          Other than those provisions relating to the principal economic terms of the Rights, any of the
provisions of the Rights Agreement may be amended by the Board of Directors of the Company prior to
the Distribution Date. After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which do not adversely affect
the interests of holders of Rights



C-4









 






(excluding the interests of any Acquiring Person or an affiliate or associate of any such person),
or to shorten or lengthen any time period under the Rights Agreement; however, no amendment to
adjust the time period governing redemption shall be made at such time as the Rights are not
redeemable.



          A copy of the Rights Agreement will be filed with the Securities and Exchange Commission as an
Exhibit to the Company’s Current
Report on Form 8-K/A (Amendment No. 3), dated January 24,
2005. 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.




C-5