EX-4.1



 









Exhibit 4.1



PHH CORPORATION




and




THE BANK OF NEW YORK




Rights Agent




Rights Agreement




Dated as of January 28, 2005




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 1.
	 	Certain Definitions

	 	 	1	 
	Section 2.
	 	Appointment of Rights Agent

	 	 	5	 
	Section 3.
	 	Issuance of Rights Certificates

	 	 	6	 
	Section 4.
	 	Form of Rights Certificates

	 	 	7	 
	Section 5.
	 	Countersignature and Registration

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

	 	 	9	 
	Section 7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights

	 	 	10	 
	Section 8.
	 	Cancellation and Destruction of Rights Certificates

	 	 	12	 
	Section 9.
	 	Reservation and Availability of Capital Stock

	 	 	12	 
	Section 10.
	 	Preferred Stock Record Date

	 	 	14	 
	Section 11.
	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights

	 	 	14	 
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Shares

	 	 	22	 
	Section 13.
	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power

	 	 	22	 
	Section 14.
	 	Fractional Rights and Fractional Shares

	 	 	25	 
	Section 15.
	 	Rights of Action

	 	 	26	 
	Section 16.
	 	Agreement of Rights Holders

	 	 	26	 
	Section 17.
	 	Rights Certificate Holder Not Deemed a Stockholder

	 	 	27	 
	Section 18.
	 	Concerning the Rights Agent

	 	 	27	 
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent

	 	 	28	 
	Section 20.
	 	Duties of Rights Agent

	 	 	28	 
	Section 21.
	 	Change of Rights Agent

	 	 	30	 
	Section 22.
	 	Issuance of New Rights Certificates

	 	 	31	 
	Section 23.
	 	Redemption and Termination

	 	 	32	 
	Section 24.
	 	Exchange

	 	 	32	 
	Section 25.
	 	Notice of Certain Events

	 	 	34	 
	Section 26.
	 	Notices

	 	 	34	 
	Section 27.
	 	Supplements and Amendments

	 	 	35	 
	Section 28.
	 	Successors

	 	 	36	 






i 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 29.
	 	Determinations and Actions by the Board of Directors

	 	 	36	 
	Section 30.
	 	Benefits of this Agreement

	 	 	37	 
	Section 31.
	 	Severability

	 	 	37	 
	Section 32.
	 	Governing Law

	 	 	37	 
	Section 33.
	 	Counterparts

	 	 	37	 
	Section 34.
	 	Descriptive Headings

	 	 	37	 







ii 









 








RIGHTS AGREEMENT



RIGHTS AGREEMENT, dated as of January 28, 2005 (the “Agreement”), between PHH Corporation, a
Maryland corporation (the “Company”), and the Bank of New
York, a New York banking corporation (the “Rights Agent”).



W I T N E S S E T H



WHEREAS, on January 27, 2005 (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 $0.01 per share, of the Company (the “Common
Stock”) outstanding immediately following the completion on January 31, 2005, of the distribution
by Cendant Corporation (“Cendant”) to its stockholders of all of the outstanding shares of Common
Stock (such time and date, the “Record Date”), and has authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock of the Company issued between the Record Date (whether originally issued
or delivered from the Company’s treasury) and the Distribution Date (as hereinafter defined), each
Right initially representing the right to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock of the Company (the “Preferred Stock”) having the rights, powers and
preferences set forth in the form of Articles Supplementary attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth (the “Rights”);


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


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


(a)     “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company, or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to the terms of any
such plan, (iv) any Person who becomes the Beneficial Owner of fifteen percent (15%) or more of the
shares of Common Stock then outstanding as a result of a reduction in the number of shares of
Common Stock outstanding due to the repurchase of shares of Common Stock by the Company unless and
until such Person, after becoming aware that such Person has become the Beneficial Owner of fifteen
percent (15%) or more of the then outstanding shares of Common Stock, acquires beneficial ownership
of additional shares of Common Stock representing one percent (1%) or more of the shares of Common
Stock then



 









 




outstanding, or (v) any such Person who has reported or is required to report such ownership
(but less than 20%) on Schedule 13G under the Exchange Act (or any comparable or successor report)
or on Schedule 13D under the Exchange Act (or any comparable or successor report) which Schedule
13D does not state any intention to or reserve the right to control or influence the management or
policies of the Company or engage in any of the actions specified in Item 4 of such schedule (other
than the disposition of the Common Stock) and, within 10 Business Days of being requested by the
Company to advise it regarding the same, certifies to the Company that such Person acquired shares
of Common Stock in excess of 14.9% inadvertently or without knowledge of the terms of the Rights
and who or which, together with all Affiliates and Associates, thereafter does not acquire
additional shares of Common Stock while the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding; provided, however, that if the Person requested to so
certify fails to do so within 10 Business Days, then such Person shall become an Acquiring Person
immediately after such 10 Business Day period. Notwithstanding anything to the contrary contained
anywhere in this Agreement, in no event shall Cendant or any Affiliate of Cendant be deemed to be
an Acquiring Person solely as a result of their beneficial ownership of any shares of Common Stock
at any time prior to the Record Date.


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


(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.


(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, owns or 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
pursuant to a tender or exchange offer made by or on behalf of 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 (as hereinafter
defined), or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person or any
of such Person’s Affiliates or Associates prior to the Distribution Date (as
hereinafter defined) or pursuant to Section 3(a) or Section 22 hereof (the
“Original Rights”) or pursuant to Section 11(i) or Section 11(p) hereof in
connection with an adjustment made with respect to any Original Rights;



 









 





(ii)      which such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding (whether or not in writing) to vote such
security if such agreement, arrangement or understanding: (A) arises solely from
a revocable proxy (as such term is defined in Regulation 14A under the Exchange
Act) given in response to a public proxy solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, including the requirements of Schedule 14A thereunder, 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 of
the Company; provided, however, that nothing in this paragraph (d)
shall cause a Person engaged in business as an underwriter of securities to be the
“Beneficial Owner” of, or to “beneficially own,” any securities acquired or which
such Person has the right to acquire through such Person’s participation in good
faith in a firm commitment underwriting until the expiration of forty days after
the date of such acquisition, and then only if such securities continue to be
owned by such Person at such expiration of forty days.


(e)     “Business Day” shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York 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 City time, on such
date; provided, however, that if such date is not a Business Day, it shall mean 5:00 P.M., New York
City time, on the next succeeding Business Day.


(g)     “Common Stock” shall mean the common stock, par value $0.01 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 interests 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)     “Current Market Price” shall have the meaning set forth in Section 11(d)(i) hereof.


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


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


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


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


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


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


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


(q)     “Person” shall mean any individual, firm, corporation, partnership, limited liability
company, limited liability partnership, trust, syndicate or other entity.


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


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


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


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



 









 




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


(w)     “Rights Agent” shall have the meaning set forth in the parties clause at the beginning of
this Agreement.


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


(y)     “Rights Dividend Declaration Date” shall have the meaning set forth in the preamble of
this Agreement.


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


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


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


(cc)     “Stock Acquisition Date” shall mean the first date of public announcement (which for
purposes of this definition, shall include, without limitation, a report filed or amended pursuant
to Section 13(d) under the Exchange Act) by the Company that an Acquiring Person has become such.


(dd)     “Subsidiary” shall mean, with reference to any Person, any corporation or other entity of
which an amount of voting securities (or other ownership interests having ordinary voting power)
sufficient to elect at least a majority of the directors (or other persons performing similar
functions) of such corporation or other entity is beneficially owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.


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


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


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


Section 2.      Appointment of Rights Agent. The Company hereby appoints the Rights Agent
to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem necessary or desirable.
The Rights Agent



 









 






shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of
any such co-rights agents.


Section 3.      Issuance of Rights Certificates.


(a)     Until the earlier of (i) the close of business on the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs before the Record
Date, the close of business on the Record Date), or (ii) the close of business on the tenth
Business Day (or such later date as the Board shall determine) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the Company, any benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act, if upon consummation thereof, such Person would become an Acquiring Person
(the earlier of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the Rights
will be evidenced (subject to the provisions of paragraphs (b) and (c) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable only in connection with the transfer
of the underlying shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the 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
right certificates, substantially in 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(i) or Section 11(p) hereof, at the time of distribution
of the Rights Certificates, the Company shall not be required to issue Rights Certificates
evidencing fractional rights, but may, in lieu thereof, 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 set forth in paragraph (a) above, with respect to certificates for the Common Stock
outstanding as of the Record Date, or issued subsequent to the Record Date, unless and until the
Distribution Date shall occur, the Rights will be evidenced by such certificates for the Common
Stock and the registered holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the Expiration Date, the transfer
of any certificates representing shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such shares of Common Stock.



 









 




(c)     Rights shall be issued in respect of all shares of Common Stock which are issued (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, and to the extent provided in Section 22 hereof, in
respect of shares of Common Stock issued after the Distribution Date and prior to the Expiration
Date. Certificates representing such shares of Common Stock shall also be deemed to be
certificates for Rights, and shall, as promptly as practicable following the Record Date, bear the
following legend:



This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between PHH Corporation (the
“Company”) and the Rights Agent thereunder (the “Rights Agent”), dated as of
January 28, 2005, as the same may be amended, restated, renewed or extended from
time to time (the “Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal 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 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 beneficially owned 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 of such certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates.


Section 4.      Form of Rights Certificates.


(a)     The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substantially in the form attached hereto as
Exhibit B and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange 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, as adjusted from time to time hereunder, the “Purchase Price”), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.


(b)     Any Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22 hereof
that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board of Directors of the
Company, in its sole discretion, has determined is part of a plan, arrangement or understanding
(whether or not in writing) which has as a primary purpose or effect the avoidance of the
provisions of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent 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 of
an Acquiring Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby may become
null and void in the circumstances specified in Section 7(e) of the Rights
Agreement.


Section 5.      Countersignature and Registration.


(a)     The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company’s seal or a facsimile thereof which
shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by an authorized signatory of
the Rights Agent, either manually or by facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before countersignature by an
authorized signatory of 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 Agreement any such person was not such an officer.


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


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


(a)     Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that may have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a share of Preferred Stock
(or, following the occurrence of a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitles
such holder (or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged, with the forms of
assignment and certificate contained therein duly executed, 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 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 shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 14 hereof and Section 24 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates,
as the case may be, as so requested. The Company may require payment from a holder of a Rights
Certificate 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.


(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 reasonably satisfactory to them, and reimbursement
to the Company and the Rights



 









 






Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate, if mutilated, the Company will, subject to Sections
4(b), 7(e), 14 and 24, execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate
so lost, stolen, destroyed or mutilated.


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


(a)     Subject to Section 7(e) hereof, at any time after the Distribution Date the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii), Section 23 and Section 24(a) hereof) in whole or in part upon
surrender of the Rights Certificate, with the form of election to purchase and the certificate
contained therein duly executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price
with respect to the total number of one one-hundredths of a share of Preferred Stock (or following
the occurrence of a Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at or prior to the earlier
of (i) 5:00 P.M., New York City time, on January 31, 2015 (such time and date, as it may be
extended by the Board, the “Final Expiration Date”), or (ii) the time at which all of the Rights
are redeemed or exchanged as provided in Section 23 or Section 24 hereof, respectively (the earlier
of (i) and (ii) being herein referred to as the “Expiration Date”).


(b)     The Purchase Price for each one one-hundredth of a share of Preferred Stock pursuant to
the exercise of a Right shall initially be $75.00, shall be subject to adjustment from time to time
as provided in Section 11 and Section 13(a) hereof and shall be payable in accordance with
paragraph (c) below.


(c)     Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed and properly completed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) per one one-hundredth of a share of Preferred Stock
(or Common Stock, other securities, cash or other assets, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer tax, the Rights Agent shall, subject
to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one one-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 appropriate. The Company reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock would be issued.


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


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


(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 of a Rights Certificate upon the occurrence of any purported
assignment or 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 assignment or
election to purchase set forth on the reverse side of the Rights Certificate surrendered for such
assignment or 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
shall reasonably request.


Section 8.      Cancellation and Destruction of Rights Certificates.


All Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so 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,
as the case may be) 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, as the case may be) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities exchange or quoted on the Nasdaq
Stock Market, the Company shall use its reasonable best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance or quoted on the Nasdaq Stock Market, as the case may be,
upon their exercise.


(c)     The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, a registration statement on an appropriate form under the Act, with
respect to the Common Stock or



 









 






other securities purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities, and (B) the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws
of the various states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company similarly may temporarily
suspend the exercisability of the Rights until such time as a registration statement has been
declared effective. Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction
shall not have been obtained, or 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, as the case may be) 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
federal and state transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for a number of one one-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 not, however, be required to pay any transfer tax 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 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 shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax is due.



 









 




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 transfer taxes) 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 any 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, or fractions thereof, purchasable
upon exercise of each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.


(a)      (i) In the event the Company shall at any time after the Record Date (A) declare a
dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide or
split the outstanding Preferred Stock, (C) combine or consolidate 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, split, combination, consolidation or reclassification,
and the number and kind of shares of Preferred Stock (or other 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 (whether or not such Right was then exercisable) and at a time when the transfer
books for the Preferred Stock (or other capital stock, as the case may be) of the Company
were open, such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, split, combination, consolidation or
reclassification. If an event occurs which would require an



 









 




adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.



(i)      In the event any Person becomes an Acquiring Person, unless the event
causing such Person to become an Acquiring Person is a transaction set forth in
Section 13(a) hereof then, promptly following the occurrence of such event, proper
provision shall be made so that each holder of a Right (except as provided below
and in Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one one-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 (whether or not such Right was then issued or exercisable), and
(y) dividing that product (which, following such first occurrence, shall
thereafter be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the “Adjustment Shares”).



(ii)      In the event that the number of shares of Common Stock which are
authorized by the Company’s charter, but which are not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights, is not sufficient to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company, acting by resolution of the
Board, shall (A) determine the value of the Adjustment Shares issuable upon the
exercise of a Right (the “Current Value”), and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate provision to substitute for the
Adjustment Shares, upon the exercise of such Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock
or other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock, such as the Preferred Stock, which the
Board has deemed to have essentially the same value or economic rights as shares
of Common Stock (such shares of preferred stock being referred to as “Common Stock
Equivalents”)), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board based upon the
advice of a nationally recognized investment banking firm selected by the Board;
provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Section



 









 





11(a)(ii) Event and (y) the date on which the Company’s right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the “Section 11(a)(ii) Trigger Date”), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. For purposes of the preceding sentence, the
term “Spread” shall mean the excess of (i) the Current Value over (ii) the
Purchase Price. If the Board determines in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such thirty (30) day
period, as it may be extended, is herein called the “Substitution Period”). To
the extent that action is to be taken pursuant to the first and/or third sentences
of this Section 11(a)(iii), the Company (1) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and (2)
may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek such shareholder approval for such
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of each
Adjustment Share shall be the Current Market Price per share of the Common Stock
on the Section 11(a)(ii) Trigger Date and the per share or per unit value of any
Common Stock Equivalent shall be deemed to equal the Current Market Price per
share of the Common Stock on such date.


(b)     In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of Preferred Stock
(“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which
the aggregate subscription or offering price of the total number of shares of



 









 






Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would purchase at such
Current Market Price, and the denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such subscription
price may be paid by delivery of consideration, part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect if such record date
had not been fixed.


(c)     In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular
periodic 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 of subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price (as determined pursuant to Section 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 and shall be conclusive for all purposes) of the portion of
the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to a share of Preferred Stock, and the denominator of which shall be such
Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase
Price which would have been in effect if such record date had not been fixed.


(d)      (i) For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices per share of such
Common Stock for the thirty (30) consecutive Trading Days immediately prior to such date,
and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current
Market Price per share of Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of such Common Stock for the ten (10) consecutive



 









 




Trading Days immediately following 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, consolidation,
combination, reverse stock split or reclassification shall not have occurred prior to the
commencement of the requisite thirty (30) Trading Day or ten (10) Trading Day period, as
set forth above, then, and in each such case, the Current Market Price shall be properly
adjusted to take into account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are
not listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system or as quoted by the Nasdaq Stock Market
with respect to securities listed or admitted to trading on another national securities
exchange or quoted by the Nasdaq Stock Market, respectively, or if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange or quoted
by the Nasdaq Stock Market, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by The Nasdaq
Stock Market or such other quotation system then in use, or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the Common
Stock selected by the Board. If on any such date the Common Stock is not publicly held and
is not so listed, admitted to trading or quoted, and no market maker is making a market in
the Common Stock, Current Market Price shall mean the fair value of such shares on such
date as determined in good faith by the Board, which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes. The term
“Trading Day” shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day.



(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
penultimate 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 admitted to trading or quoted 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 admitted to trading or quoted, Current
Market Price per share of the Preferred Stock shall mean the fair value per share
as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. 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 in the Purchase Price of
at least one percent (1%); provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share or one-millionth of
a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.


(f)     If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of
capital stock other than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect
to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the provisions of Sections 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 pursuant to Section 11(h) hereof.
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 of a Right) obtained by dividing the Purchase Price in effect immediately prior
to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at
least ten (10) 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 use reasonable best efforts to 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.


(l)     In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date of 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 adjustments in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in its 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, cash flow or earning power aggregating 50% or more of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer 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, sale or transfer, the
shareholders 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 23 or 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 Record Date and prior to the Distribution Date (i) declare or pay 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 or consolidate 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 (or issued or delivered on or after the Distribution Date pursuant to Section
22), shall be proportionately adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the occurrence of such event.


Section 12.      Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) if a Distribution Date
has occurred, mail a brief summary thereof to each holder of a Rights Certificate in accordance
with Section 25 hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.


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


(a)     In the event that, on or after the Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person or Persons (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of



 









 






its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets, cash flow or earning power aggregating 50% or more of the assets, cash flow
or earning power of the Company and its Subsidiaries (taken as a whole and calculated on the basis
of the Company’s most recent regularly prepared financial statements) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case, proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have
the right to receive, upon the exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-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 of a Section 11(a)(ii) Event), and (2) dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as the “Purchase Price”
for each Right and for all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such 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 with respect to events occurring at any time 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, changed or
exchanged in such merger or consolidation, or if no securities are so issued, the
Person that is the other party to such merger or consolidation; and



 









 





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


provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is a direct
or indirect Subsidiary of another Person the Common Stock of which is and has been so
registered, “Principal Party” shall refer to such other Person; and (2) if the Common Stock
of such Person is not and has not been so registered and such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Stocks 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 Section 13 Event 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 confirming that the requirements of Section
13(a) and Section 13(b) hereof shall promptly be performed in accordance with their terms and
further providing that, as soon as practicable after the date of any such Section 13 Event, the
Principal Party will



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



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



(iii)      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 (or any successor form) under the
Exchange Act.



 









 




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


Section 14.      Fractional Rights and Fractional Shares.


(a)     The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(i) and Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of any 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 Trading 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 or the Nasdaq Stock Market with respect to securities
listed on another national securities exchange or quoted by the Nasdaq Stock Market, respectively,
or if the Rights are not listed or admitted to trading on any national securities exchange or
quoted by the Nasdaq Stock Market, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by The Nasdaq Stock
Market or such other quotation system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights, selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board of Directors of the Company
shall be used.


(b)     The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock
which may, at the option of the Company, be evidenced by depositary receipts) 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 or, if unavailable, the appropriate alternative price (in each
case, as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.


(c)     Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of this Section 14(c), the current market
value of one share of Common Stock shall be the closing price of one share of Common Stock (or, if
unavailable, the appropriate alternative price (in each case, 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 that Right expressly waives such holder’s right
to receive any fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.


Section 15.      Rights of Action. All rights of action in respect of this Agreement,
other than rights of action vested in the Rights Agent pursuant to Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of the Common Stock); and any registered holder of any Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise
act in respect of, such holder’s right to exercise the Rights evidenced by such Rights Certificate
in the manner provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and injunctive relief
against actual or threatened violations of the obligations hereunder of any Person subject to this
Agreement.


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 shares 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
contained therein duly executed;


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


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


Section 17.      Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of the number of one one-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.


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, reimbursement for
its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful
misconduct



 









 






on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.


(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, or any 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.


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


(a)     Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto; but only if such Person would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21 hereof. If 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)     If 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 the duties and
obligations imposed by this Agreement 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 opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with
such opinion.


(b)     Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of Current Market Price) be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary
or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such certificate.


(c)     The Rights Agent shall be liable hereunder only for its own gross negligence or
willful misconduct, provided, however, that the
Rights Agent shall under no circumstances be liable for indirect,
consequential, special or punitive damages hereunder.


(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, nor shall it 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 in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11, Section 13, Section 23
or Section 24 hereof or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after actual notice of any such
adjustment); 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 Chief Executive
Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.


(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 Person.


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


(j)     No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
(other than internal costs incurred by the Rights Agent in providing services to the Company in the
ordinary course of its business as Rights Agent) 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 thirty (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, if such resignation occurs after the Distribution Date, to
the registered holders of the Rights



 









 






Certificates by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail, and, if such removal occurs after the Distribution Date, to
the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a) a legal business entity organized
and doing business under the laws of the United States or of any state of the United States, in
good standing, which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by a 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 (b) an
Affiliate of a legal business entity described in clause (a) of this sentence. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and shall execute and deliver any further assurance,
conveyance, act or deed necessary for that purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock and the Preferred Stock, and, if such appointment occurs
after the Distribution Date, mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be.


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



 









 






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


Section 23.      Redemption and Termination.


(a)     The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (i) the close of business on the tenth day following the Stock Acquisition Date (or, if the
Stock Acquisition Date shall have occurred prior to the Record Date, the close of business on the
tenth day following the Record Date), or (ii) the Final Expiration Date, authorize the Company to
redeem all but not less than all of the then outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption Price”). Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company’s right of redemption hereunder has expired. The Company may,
at its 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 authorizing the
Company to make the redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights shall be to receive
the Redemption Price for each Right so held. Promptly after the action of the Board of Directors
authorizing the Company to make the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to each such holder at such 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 after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions of Section 7(e)
hereof) for Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split,



 









 






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


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


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


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


(e)     The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the current market value of a whole share
of Common Stock. For the



 









 






purposes of this subsection (e), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.


Section 25.      Notice of Certain Events.


(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 periodic 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 or split 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 50% or more of the assets, cash flow or earning power of the
Company and/or 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, to the
extent feasible and in accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of participation therein by
the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least twenty (20) days prior
to the date of the taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever shall be the earlier.


(b)     In case any Section 11(a)(ii) Event shall occur, then, in any such case, (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 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 by the
Company) as follows:


PHH Corporation

3000 Leadenhall Road

Mt. Laurel, New Jersey 08054

Attention: Corporate Secretary


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



The Bank of
New York

101
Barclay Street, 11 East

New York, New York 10286

Attention: Stock Transfer Administration


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 any certificate representing shares of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.


Section 27.      Supplements and Amendments. Prior to the Distribution Date, the Company
and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this
Agreement (including, without limitation, any increase in the Purchase Price and any extension of
the Final Expiration Date) without the approval of any holders of certificates representing shares
of Common Stock. From and after the Distribution Date, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person). Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement
or amendment. Notwithstanding anything herein to the contrary, this Agreement may not be amended
(other than pursuant to clauses (i) or (ii) of the second sentence of this Section 27) at a



 









 






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


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


Section 29.      Determinations and Actions by the Board of Directors. For all purposes of
this Agreement, any calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers specifically granted
to the Board or to the Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not redeem the Rights or
to amend this Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the
Board or any of the directors on the Board to any liability to the holders of the Rights.


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


Section 31.      Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire



 









 






until the close of business on the tenth Business Day following the date of such determination
by the Board of Directors.


Section 32.      Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the State of Maryland and
for all purposes shall be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State, except 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. The parties agree that
all actions and proceedings arising out of this Agreement or any of
the transactions contemplated hereby shall be brought in the U.S.
District Court in the Southern District of New York or in a New York
State Court in the County of New York and that, in connection with
any such action or proceeding, submit to the jurisdiction of, and
venue in, such court.


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.



 









 





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




	 	 	 	 	 	 	 
	Attest:	 	 	 	PHH CORPORATION
	 
	 	 	 	 	 	 
	By

	 	/s/ Lynn A. Feldman	 	By	 	/s/ William F. Brown
	

	 	 
	 	 	 	 
	Name:

	 	Lynn A. Feldman	 	Name:
	 	William F. Brown
	Title:

	 	Vice President and Assistant
Secretary	 	Title:
	 	Senior Vice President, Legal and
Assistant Secretary






 









 





	 	 	 	 	 	 	 
	Attest:	 	 	 	THE BANK OF NEW YORK
	 
	 	 	 	 	 	 
	By

	 	/s/  James Dimino	 	By	 	/s/  Kevin M. Brennan
	

	 	 
	 	 	 	 
	Name:

	 	James Dimino	 	Name:	 	Kevin M. Brennan
	Title:

	 	Vice President	 	Title:	 	Managing Director







 










 






Exhibit A



PHH CORPORATION

FORM OF ARTICLES SUPPLEMENTARY

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK



PHH Corporation, a Maryland corporation (the “Corporation”), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:


FIRST: Pursuant to the authority conferred upon the Board of Directors by Article VI of the
Articles of Amendment and Restatement (the “Charter”) of the Corporation, the Board of Directors of
the Corporation by unanimous written consent dated January    , 2005, reclassified and designated
1,000,000 shares of Preferred Stock, $0.01 par value per share, of the Corporation as shares of
Series A Junior Participating Preferred Stock, with the following voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, and terms and conditions of
redemption, which upon any restatement of the Charter shall become part of Article VI of the
Charter, with any necessary or appropriate renumbering or relettering of the sections or
subsections hereof.


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


Section 2.      Dividends and Distributions.


(A)     Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to herein as a “Quarterly
Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 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 shares of common stock, par value
$0.01 per share, of the Corporation (the “Common Stock”) or a subdivision of the outstanding shares
of 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 Series A
Junior Participating Preferred Stock. In the event the Corporation shall at any



 









 






time after the completion on January 31, 2005, of the distribution by Cendant Corporation to
its stockholders of all of the outstanding shares of Common Stock (such time and date, the “Record
Date”) declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.


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


(C)     Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Junior Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared thereon, which record date
shall be not more than 30 days prior to the date fixed for the payment thereof.


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



 









 




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


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


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


(ii)      During any default period, such voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that such voting
right shall not be exercised unless the holders of ten percent (10%) in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by the holders of
Preferred Stock of such voting right. At any meeting at which the holders of Preferred
Stock shall exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect directors to fill such vacancies, if any,
in the Board of Directors as may then exist up to two (2) directors or, if such right is
exercised at an annual meeting, to elect two (2) directors. If the number which may be so
elected at any special meeting does not amount to the required number, the holders of the



 









 




Preferred Stock shall have the right to make such increase in the number of directors
as shall be necessary to permit the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their right to elect directors in any
default period and during the continuance of such period, the number of directors shall not
be increased or decreased except by vote of the holders of Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking senior to or
pari passu with the Series A Junior Participating Preferred Stock.


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


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


(v)      Immediately upon the expiration of a default period, (x) the right of the holders
of Preferred Stock as a class to elect directors shall cease, (y) the term of any directors
elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of
directors shall be such number as may be



 









 




provided for in the Charter or by-laws irrespective of any increase made pursuant to
the provisions of Paragraph (C)(ii) of this Section 3 (such number being subject, however,
to change thereafter in any manner provided by law or in the Charter or by-laws). Any
vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the remaining directors.


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


Section 4.      Certain Restrictions.


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


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


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


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


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



 









 




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


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


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


Section 6.      Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be
made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received
an amount equal to $100.00 per share of Series A Participating Preferred Stock, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment (the “Series A Liquidation Preference”). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”)
equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in
clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number
to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.


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



 









 






available to permit payment in full of the Common Adjustment, then such remaining assets shall
be distributed ratably to the holders of Common Stock.


(C)     In the event the Corporation shall at any time after the Record Date declare any dividend
on Common Stock payable in shares of Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately
prior to such event.


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


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


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


Section 10.      Amendment. At any time when any shares of Series A Junior Participating
Preferred Stock are outstanding, neither the Charter nor these Articles Supplementary shall be
amended in any manner which would materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders



 









 






of a majority or more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.


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


SECOND: The Series A Junior Participating Preferred Stock have been classified and designated
by the Board of Directors under the authority contained in the Charter.


THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner
and by the vote required by law.


FOURTH: The undersigned Chief Executive Officer of the Corporation acknowledges these Articles
Supplementary to be the corporate act of the Corporation and, as to all matters or facts required
to be verified under oath, the undersigned Chief Executive Officer acknowledges that, to the best
of his knowledge, information and belief, these matters and facts are true in all material respects
and that this statement is made under the penalties of perjury.


IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in
its name and on its behalf by its Chief Executive Officer and attested to by its Secretary on this
   day of January, 2005.


                                                                 

Chief Executive Officer


Attest:



                                                                 

Secretary




 









 








Exhibit B



[Form of Rights Certificate]





			
	Certificate No. R-
	 	          Rights





NOT EXERCISABLE AFTER JANUARY 31, 2015, SUBJECT TO EARLIER REDEMPTION OR EXPIRATION
PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF ANY SUCH 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 IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.] *



Rights Certificate




PHH CORPORATION



This certifies that                   , or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of January [ ], 2005 (the
“Rights Agreement”), between PHH Corporation, a Maryland corporation (the “Company”), and [                  
] (the “Rights Agent”), to purchase from the Company at any time prior to
5:00 P.M. (New York City time) on January 31, 2015 (unless such date is extended prior thereto by
the Board of Directors) at the office or offices of the Rights Agent or its successors as Rights
Agent, designated for such purpose, one one-hundredth of a fully paid, non-assessable share of
Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the Company, at a purchase
price of $75.00 per one one-hundredth of a share (the “Purchase Price”), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and related










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





 









 









Certificate duly completed and executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase Price as of January 31,
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 such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.


As more fully set forth in the Rights Agreement, from and after the first occurrence of a
Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of such Acquiring Person (or of any
such Affiliate or Associate who becomes a transferee prior to or concurrently with such Acquiring
Person becoming such), such Rights shall become null and void without any further action, and no
holder hereof shall have any right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.


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


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


This Rights Certificate, with or without other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-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
may be redeemed by the Company at its option at a redemption price of $.01 per Right at any time
prior to the earlier of the close of business on (i) the tenth day following the Stock Acquisition
Date, and (ii) the Final Expiration Date. In addition, under certain circumstances following the
Stock Acquisition Date, the Rights may be exchanged, in whole or in part, for shares of the Common
Stock, or shares of preferred stock of the Company having essentially the same value or economic
rights as such shares. Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any notice, the Rights (other than
Rights which are not subject to such exchange) will terminate and the Rights will only enable
holders to receive the shares issuable upon such exchange.


If the Company so determines, 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. The Company, at its election, may require that a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.


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


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



 









 




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



Dated as of _________ __,



	 	 	 	 	 
	ATTEST:	 	PHH CORPORATION
	

	 	By	 	 
	 

	 	 	 	 
	Secretary

	 	Title:	 	 
	Countersigned:
	 	 	 	 
	[                 ]
	 	 	 	 
	By
	 	 	 	 
	 
	 	 	 	 
	    Authorized Signature
	 	 	 	 






 









 





[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 herein, and does hereby
irrevocably constitute and appoint                                  Attorney, to transfer the within Rights
Certificate on the books of the within named Company, with full power of substitution.



Dated: __________________,__


                                                                 

Signature


Signature Medallion Guaranteed:




 









 








Certificate



The undersigned hereby certifies by checking the appropriate boxes that:


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


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






Dated: ______________,__







__________________________

Signature







Signature Medallion Guaranteed:




 









 








NOTICE



The signature(s) 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.




 









 








FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise Rights

represented by the Rights Certificate.)



To PHH CORPORATION:


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




 



(Please print name and address)




 




Please insert social security

or other identifying number:_____________________


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 print name and address)




 




Please insert social security

or other identifying number:____________________



Dated: _______________, __



                                                                 

Signature


Signature Medallion Guaranteed:




 









 








Certificate



The undersigned hereby certifies by checking the appropriate boxes that:


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


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






Dated: ______________,__







__________________________

Signature







Signature Medallion 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.