Filed by Bowne Pure Compliance





Exhibit 4.1




 





RIGHTS AGREEMENT




BY AND BETWEEN




HAMPSHIRE GROUP, LIMITED




and




MELLON INVESTOR SERVICES LLC, as RIGHTS AGENT




Dated as of August 13, 2008




 






 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page Number	 
	 
	 	 	 	 
	Section 1. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 2. APPOINTMENT OF RIGHTS AGENT
	 	 	5	 
	 
	 	 	 	 
	Section 3. ISSUE OF RIGHT CERTIFICATES
	 	 	6	 
	 
	 	 	 	 
	Section 4. FORM OF RIGHT CERTIFICATES
	 	 	7	 
	 
	 	 	 	 
	Section 5. COUNTERSIGNATURE AND REGISTRATION
	 	 	8	 
	 
	 	 	 	 
	Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES
	 	 	8	 
	 
	 	 	 	 
	Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS
	 	 	9	 
	 
	 	 	 	 
	Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES
	 	 	10	 
	 
	 	 	 	 
	Section 9. AVAILABILITY OF PREFERRED SHARES
	 	 	11	 
	 
	 	 	 	 
	Section 10. PREFERRED SHARES RECORD DATE
	 	 	11	 
	 
	 	 	 	 
	Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS
	 	 	11	 
	 
	 	 	 	 
	Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES
	 	 	18	 
	 
	 	 	 	 
	Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER
	 	 	18	 
	 
	 	 	 	 
	Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
	 	 	19	 
	 
	 	 	 	 
	Section 15. RIGHTS OF ACTION
	 	 	21	 
	 
	 	 	 	 
	Section 16. AGREEMENT OF RIGHT HOLDERS
	 	 	21	 
	 
	 	 	 	 
	Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER
	 	 	21	 
	 
	 	 	 	 
	Section 18. CONCERNING THE RIGHTS AGENT
	 	 	22	 






 


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	 	 	Page Number	 
	 
	 	 	 	 
	Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
	 	 	22	 
	 
	 	 	 	 
	Section 20. RIGHTS AND DUTIES OF RIGHTS AGENT
	 	 	23	 
	 
	 	 	 	 
	Section 21. CHANGE OF RIGHTS AGENT
	 	 	25	 
	 
	 	 	 	 
	Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES
	 	 	26	 
	 
	 	 	 	 
	Section 23. REDEMPTION
	 	 	26	 
	 
	 	 	 	 
	Section 24. EXCHANGE
	 	 	27	 
	 
	 	 	 	 
	Section 25. NOTICE OF CERTAIN EVENTS
	 	 	28	 
	 
	 	 	 	 
	Section 26. NOTICES
	 	 	29	 
	 
	 	 	 	 
	Section 27. SUPPLEMENTS AND AMENDMENTS
	 	 	29	 
	 
	 	 	 	 
	Section 28. SUCCESSORS
	 	 	30	 
	 
	 	 	 	 
	Section 29. BENEFITS OF THIS AGREEMENT
	 	 	30	 
	 
	 	 	 	 
	Section 30. SEVERABILITY
	 	 	30	 
	 
	 	 	 	 
	Section 31. GOVERNING LAW
	 	 	30	 
	 
	 	 	 	 
	Section 32. COUNTERPARTS
	 	 	31	 
	 
	 	 	 	 
	Section 33. DESCRIPTIVE HEADINGS
	 	 	31	 
	 
	 	 	 	 
	Section 34. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS
	 	 	31	 






	 	 	 	 	 
	Exhibit A — Certificate of Designation
	 	 	 	 
	 
	 	 	 	 
	Exhibit B — Form of Right Certificate
	 	 	 	 
	 
	 	 	 	 
	Exhibit C — Summary of Rights to Purchase Preferred Shares
	 	 	 	 






 


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RIGHTS AGREEMENT (this “AGREEMENT”), dated as of August 13, 2008, between Hampshire Group,
Limited, a Delaware corporation (the “COMPANY”), and Mellon Investor Services LLC, a New Jersey
limited liability company, as rights agent (the “RIGHTS AGENT”).



WHEREAS, the Board of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a “RIGHT”) for each Common Share (as hereinafter defined) of the
Company outstanding at 5:00 P.M., Eastern time, August 25, 2008 (the “RECORD DATE”), each Right
representing the right to purchase one one-thousandth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date (as such terms are hereinafter defined).



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



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



(a) “ACQUIRING PERSON” shall mean any Person (as hereinafter defined) who or which, together
with all Affiliates and Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as hereinafter defined) of 15% or more of the Common Shares of the Company
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary (as hereinafter
defined) of the Company, (iii) any employee benefit plan of the Company or any Subsidiary of the
Company, (iv) any Person holding Common Shares for or pursuant to the terms of any such plan, or
(v) any Person Beneficially Owning as of the date hereof 15% or more of the Common Shares of the
Company outstanding as of the date hereof and any Affiliate or Associate of any such Person,
provided that such Person or such Person’s Associate or Affiliate has filed, on or before the date
hereof, a Schedule 13G under the Exchange Act with respect to Common Shares of the Company (such
Person, an “EXISTING HOLDER”); PROVIDED, HOWEVER, that if an Existing Holder together with all
Affiliates and Associates of such Existing Holder, collectively, become the Beneficial Owners of
20% or more of the Common Shares of the Company then outstanding, then each of them shall be deemed
to be an Acquiring Person. Notwithstanding the foregoing, no Person shall become an Acquiring
Person as the result of an acquisition of Common Shares by the Company which, by reducing the
number of Common Shares of the Company outstanding, increases the proportionate number of Common
Shares of the Company Beneficially Owned by such Person to 15% (or such other percentage as would
otherwise result in such Person becoming an Acquiring Person) or more of the Common Shares of the
Company then outstanding; PROVIDED, HOWEVER, that, if a Person shall become the Beneficial Owner of
15% (or such other percentage) or more of the Common Shares of the Company then outstanding by
reason of acquisitions of Common Shares by the Company and shall, after such acquisitions by the
Company, become the Beneficial Owner of any additional Common Shares of the Company, then such
Person shall be deemed to be an Acquiring Person.



 


 









 






Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would otherwise be an Acquiring
Person,
as defined pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and (i) such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph (a), or (ii), in the case of shares deemed Beneficially
Owned pursuant to Section 1(e)(iv) hereof, such Person terminates the subject derivative
transaction or transactions or disposes of the subject derivative security or securities, or
establishes to the satisfaction of the Board of Directors of the Company that such Common Shares
are not held with any intention of changing or influencing control of the Company, then such Person
shall not be deemed to be or have ever been an Acquiring Person for any purposes of this Agreement
as a result of having Beneficially Owned the shares or subject derivative securities so divested,
or, in the case of a terminated derivative transaction, as a result of having been a party to such
transaction.



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




(c) “AGREEMENT” shall have the meaning set forth in the preamble hereof.



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



(e) A Person shall be deemed the “BENEFICIAL OWNER” of and shall be deemed to “BENEFICIALLY
OWN” or have “BENEFICIAL OWNERSHIP” of any securities:




(i) which such Person or any of such Person’s Affiliates or Associates beneficially
owns, directly or indirectly (as determined pursuant to Rules 13d-3 and 13d-5(b)(1) of the
General Rules and Regulations under the Exchange Act as in effect on the date of this
Agreement);




(ii) which such Person or any of such Person’s Affiliates or Associates has (A) the
right to acquire or direct the acquisition of (whether such right is exercisable immediately
or only after the passage of time or the satisfaction of one or more conditions) pursuant to
any agreement, arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide public offering
of securities), or upon the exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, or have Beneficial Ownership
of, 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) the right to vote or direct the voting of, whether
pursuant to any agreement, arrangement or understanding or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, or have
Beneficial Ownership of, any security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report);


 


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(iii) which are Beneficially Owned, directly or indirectly, by any other Person with
which such Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to
Section 1(e)(ii)(B) hereof) or disposing of any securities of the Company; or




(iv) which are the subject of a derivative transaction entered into by a Person to
which the Company is not a party, or a derivative security not issued by the Company
acquired by a Person, which gives such Person the economic equivalent of ownership of Common
Shares due to the fact that the value of the derivative is explicitly determined by
reference to the price or value of such Common Shares, without regard to whether (A) such
derivative conveys any voting rights in Common Shares to such Person, (B) the derivative is
required to be, or capable of being, settled through delivery of Common Shares, or (C) such
Person may have entered into other transactions that hedge the economic effect of such
derivative, with the number of Common Shares deemed Beneficially Owned being the notional or
other number of Common Shares specified in the documentation evidencing the derivative
position as being subject to be acquired upon the exercise or settlement of the applicable
right or as the basis upon which the value or settlement amount of such right, or the
opportunity of the holder of such right to profit or share in any profit, is to be
calculated in whole or in part or, if no such number of Common Shares is specified in such
documentation, as determined by the Board of Directors of the Company in good faith to be
the number of Common Shares to which the derivative position relates.



Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” when used with reference to a Person who is a Beneficial Owner of or who
Beneficially Owns or a Person’s Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number of such securities
not then actually issued and outstanding which such Person would be deemed to Beneficially Own
hereunder.



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



(g) “CLOSE OF BUSINESS” on any given date shall mean 5:00 P.M., 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.


 


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(h) “COMMON SHARES” when used with reference to the Company shall mean the shares of common
stock, par value $0.10 per share, of the Company. “Common Shares” when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.



(i) “COMMON STOCK EQUIVALENTS” shall have the meaning set forth in Section 11(a)(iii) hereof.



(j) “COMPANY” shall have the meaning set forth in the preamble hereof.



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



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



(m) “EQUIVALENT PREFERRED SHARES” shall have the meaning set forth in Section 11(b) hereof.



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



(o) “EXCHANGE RATIO” shall have the meaning set forth in Section 24(a) hereof.



(p) “FINAL EXPIRATION DATE” shall have the meaning set forth in Section 7(a) hereof.



(q) “NASDAQ” shall mean the National Association of Securities Dealers, Inc. Automated
Quotation System.



(r) “PERSON” shall mean any individual, firm, corporation, limited liability company,
partnership, trust or other entity, and shall include any successor (by merger or otherwise)
thereof or thereto.



(s) “PREFERRED SHARES” shall mean shares of Series A Junior Participating Preferred Stock, par
value $0.10 per share, of the Company having the rights and preferences set forth in the
Certificate of Designation attached to this Agreement as Exhibit A.



(t) “PURCHASE PRICE” shall have the meaning set forth in Section 4 hereof.



(u) “RECORD DATE” shall have the meaning set forth in the recitals hereof.



(v) “REDEMPTION DATE” shall have the meaning set forth in Section 7(a) hereof.


 


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(w) “REDEMPTION PRICE” shall have the meaning set forth in Section 23(a) hereof.



(x) “REDUCED THRESHOLD” shall have the meaning set forth in Section 27 hereof.



(y) “RIGHT” shall have the meaning set forth in the recitals hereof.



(z) “RIGHT CERTIFICATE” shall have the meaning set forth in Section 3(a) hereof.



(aa) “RIGHTS AGENT” shall have the meaning set forth in the preamble hereof.



(bb) “SECTION 11(a)(ii) TRIGGER DATE” shall have the meaning set forth in Section 11(a)(iii)
hereof.



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



(dd) “SHARES ACQUISITION DATE” shall mean the earlier of (i) the first date of public
announcement by the Company or a Person that an Acquiring Person has become such or (ii) the date
on which the Company first has notice, direct or indirect, or otherwise determines that a Person
has become an Acquiring Person.



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



(ff) “SUBSIDIARY” of any Person shall mean any Person of which a majority of the voting power
of the voting equity securities or equity interest is owned, directly or indirectly, by the former
mentioned Person.



(gg) “SUBSTITUTION PERIOD” shall have the meaning set forth in Section 11(a)(iii) hereof.



(hh) “SUMMARY OF RIGHTS” shall have the meaning set forth in Section 3(b) hereof.



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



Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights Agent to act
as rights 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 in no event shall be liable for, the acts or omissions of any such co-Rights Agent.


 


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Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the earlier of (i) the Close of Business on
the tenth day after the Shares Acquisition Date or (ii) the Close of Business
on the tenth Business Day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person becomes an Acquiring Person) after the
date of the commencement by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or any Person holding
Common Shares for or pursuant to the terms of any such plan) of, or of the first public
announcement of the intention of any Person (other than any of the Persons referred to in the
preceding parenthetical) to commence, a tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of Common Shares aggregating 15% or more of the
then outstanding Common Shares (including any such date which is after the date of this Agreement
and prior to the issuance of the Rights; the earlier of such dates being herein referred to as the
“DISTRIBUTION DATE”), (x) the Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates other than for purposes of this Section
3 and any provision of this Agreement referring to the issuance or distribution of Right
Certificates) and not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common Shares. As soon
as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if
requested and provided with all necessary information, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the Company or the
transfer agent or registrar for the Common Shares, a Right Certificate, in substantially the form
of Exhibit B hereto (a “RIGHT CERTIFICATE”), evidencing one Right for each Common Share so held
(subject to adjustment as provided in this Agreement). As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.



The Company shall promptly notify the Rights Agent in writing upon the occurrence of the
Distribution Date and, if such notification is given orally, the Company shall confirm same in
writing on or prior to the Business Day next following. Until such notice is received by the
Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date
has not occurred.



(b) On the Record Date, or as soon as practicable thereafter, the Company will send a copy of
a Summary of Rights to Purchase Preferred Shares, in substantially the form of Exhibit C hereto
(the “SUMMARY OF RIGHTS”), by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Record Date, at the address of such holder shown on the
records of the Company or the transfer agent or registrar for the Common Shares. With respect to
certificates for Common Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the holders thereof.
Until the Close of Business on the Distribution Date (or the earlier of the Redemption Date or the
Close of Business on the Final Expiration Date), the surrender for transfer of any certificate for
Common Shares of the Company outstanding on the Record Date shall also constitute the transfer of
the Rights associated with the Common Shares of the Company represented thereby.


 


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(c) Certificates for Common Shares that become outstanding (including, without limitation,
reacquired Common Shares referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Close of Business on the Distribution Date, the Redemption
Date or the Close of Business on the Final Expiration Date shall have impressed on, printed on,
written on or otherwise affixed to them a legend in substantially the following form:




This certificate also evidences and entitles the holder hereof to
certain rights as set forth in an Agreement between Hampshire Group,
Limited and Mellon Investor Services LLC, as Rights Agent, dated as
of August 13, 2008, as it may be amended from time to time (the
“Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of Hampshire Group, Limited. Under certain circumstances,
as set forth in the Agreement, such Rights (as defined in the
Agreement) will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Hampshire Group, Limited
will mail to the holder of this certificate a copy of the Agreement
without charge after receipt of a written request therefor. As set
forth in the Agreement, Rights beneficially owned by any Person (as
defined in the Agreement) who becomes an Acquiring Person (as
defined in the Agreement) become null and void.



With respect to such certificates containing the foregoing legend, until the Close of Business on
the Distribution Date, the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares
shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.



Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the forms of election to
purchase Preferred Shares and of assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit B hereto, and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the Company may deem
appropriate (but which do not affect the rights, duties or responsibilities of the Rights Agent)
and as are not inconsistent with the provisions of this Agreement, or as may be required to comply
with any applicable law or with any applicable rule or regulation made pursuant thereto or with any
applicable rule or regulation of any stock exchange or inter-dealer electronic quotation and
trading system on which the Rights may from time to time be listed or to conform to usage. Subject
to the other provisions of this Agreement, the Right Certificates shall entitle the holders thereof
to purchase such number of one one-thousandths of a Preferred Share as shall be set forth therein
at the price per one one-thousandth of a Preferred Share set forth therein (the “PURCHASE PRICE”),
but the number of such one one-thousandths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.


 


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Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President, any of its Vice-Presidents, its
Chief Executive Officer, its Treasurer or Assistant Treasurer, either manually or by facsimile
signature, and shall be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Agent shall countersign the Right Certificates,
either manually or by facsimile signature, and the Right Certificates shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company with the same force
and effect as though the individual who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of the Company by any
individual who, at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of the execution of
this Agreement any such individual was not such an officer.



Following the Distribution Date, receipt by the Rights Agent of notice to that effect and all
other relevant information referred to in Section 3(a), the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.



Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject to the provisions of Section 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 earlier of the Redemption Date or the Final Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing Rights that have become null and
void pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24
hereof) may be transferred, split up, combined or exchanged for another Right Certificate or Right
Certificates entitling the registered holder to purchase a like number of one one-thousandths of a
Preferred Share as the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such purpose. The Right
Certificates are transferable only on the registry books of the Rights Agent. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Right Certificate or Certificates until the registered holder thereof shall
have (i) properly completed and signed the certificate contained in the form of assignment set
forth on the reverse side of each such Right Certificate, (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights
evidenced thereby and the Affiliates and Associates of such Beneficial Owner (or former Beneficial
Owner) as the Company or the Rights Agent shall reasonably request, and (iii) paid a sum sufficient
to cover any tax or charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates as required by Section 9 hereof.



 


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Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested, registered in such name or
names as may be designated by the surrendering registered holder. The Rights Agent shall promptly
forward any such sum collected by it to the Company or to such Persons as the Company shall specify
by written notice. The Rights Agent shall have no duty or obligation under any Section of this
Agreement which requires the payment of taxes or charges unless and until it is satisfied that all
such taxes and/or charges have been paid.



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



Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS. (a) The registered
holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided in this Agreement), in whole or in part, at any time after the Distribution Date, upon
surrender of the Right Certificate, with the form of election to purchase on the reverse side
thereof duly and properly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request, together with payment of the Purchase
Price for each one one-thousandth of a Preferred Share as to which the Rights are exercised, and an
amount equal to any tax or charge required to be paid under Section 9 hereof, by certified check,
cashier’s check, bank draft or money order payable to the order of the Company, at or prior to the
earliest of (i) the Close of Business on August 23, 2013 (the “FINAL EXPIRATION DATE”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the “REDEMPTION DATE”) or
(iii) the time at which such Rights are exchanged as provided in Section 24 hereof. Except for
those provisions herein which expressly survive the termination of this Agreement, this Agreement
shall terminate at such time as the Rights are no longer exercisable hereunder.



(b) The Purchase Price for each one one-thousandth of a Preferred Share purchasable pursuant
to the exercise of a Right shall initially be $33.00, and shall be subject to adjustment from time
to time as provided in Section 11 or 13 hereof, and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.



(c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase duly and properly executed, accompanied by payment of the Purchase Price for
the shares to be purchased and an amount equal to any applicable transfer tax and or governmental
charge required to be paid by the holder of such Right Certificate in accordance with Section 9
hereof by certified check, cashier’s check, bank draft or money order payable to the order of the
Company, subject to Section 20(h) hereof, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares certificates
for the number of Preferred Shares to be purchased and the Company hereby irrevocably
authorizes any such transfer agent to comply with all such requests, or



 


-9-









 






(B) requisition from the
depositary agent depositary receipts representing such number of one one-thousandths of a Preferred
Share as are to be purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent of the Preferred Shares with such depositary
agent) and the Company hereby directs such depositary agent to comply with such request; (ii) when
necessary to comply with this Agreement, requisition from the Company the amount of cash to be paid
in lieu of issuance of fractional shares in accordance with Section 14 hereof; (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such name or names as may
be designated by such holder; and (iv) when necessary to comply with this Agreement, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such Right Certificate.



(d) In case the registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder’s duly authorized assigns, subject to the provisions of Sections 6
and 14 hereof.



(e) 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
Rights or other securities upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) properly completed and signed the
certificate following the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights evidenced
thereby and of the Affiliates and Associates of such Beneficial Owner (or former Beneficial Owner)
thereof as the Company or the Rights Agent shall reasonably request.



(f) Neither the Company nor the Rights Agent shall have any liability to any holder of Rights
or any other Person as a result of the Company’s failure to make any determination under this
Section 7 or any other section with respect to an Acquiring Person or an Affiliate or Associate of
an Acquiring Person or transferees hereunder.



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


 


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Section 9. AVAILABILITY OF PREFERRED SHARES. The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury the number of Preferred Shares that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance herewith. The Company
covenants and agrees that it will take all such action as may be necessary to ensure that all
Preferred Shares delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.



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



Section 10. PREFERRED SHARES RECORD DATE. Each Person in whose name any certificate for
Preferred Shares is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes and governmental
charges) was duly made; PROVIDED, HOWEVER, that, if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Shares transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not
be entitled to any rights of a holder of Preferred 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 OF SHARES OR NUMBER OF RIGHTS. The Purchase
Price, the number of Preferred Shares covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.


 


-11-









 





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




(ii) Subject to the following paragraph of this subparagraph (ii) and to Section 24
hereof, in the event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share
for which a Right is then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of Common Shares as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable and dividing that product by (B) 50%
of the then current per share market price of the Common Shares (determined pursuant to
Section 11(d) hereof) on the date of the occurrence of such event. In the event that any
Person shall become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the benefits intended to
be afforded by the Rights.



From and after the occurrence of such event, any Rights that are or were acquired or
Beneficially Owned by any Acquiring Person (or any Associate or Affiliate of such Acquiring Person)
on or after the earlier of (x) the date of such event and (y) the Distribution Date shall be null
and void, and any holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Right Certificate shall be issued pursuant to Section 3
hereof that represents Rights Beneficially Owned by an Acquiring Person or any Associate or
Affiliate thereof whose Rights would be null and void pursuant to the preceding sentence; no Right
Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring Person or
any Associate or Affiliate thereof whose Rights would be null and void pursuant to the preceding
sentence or to any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person whose Rights would be
null and void pursuant to the preceding sentence or any Associate or Affiliate thereof shall be
cancelled. The Company shall give the Rights Agent written notice of the identity of any such
Acquiring Person, Associate or Affiliate, or the nominee of any of the foregoing, and the Rights
Agent may rely on such notice in carrying out its duties under this Agreement and shall be deemed
not to have any knowledge of the identity of any such Acquiring Person, Associate or Affiliate, or
the nominee of any of the foregoing, unless and until it shall have received such notice.


 


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(iii) In the event that the number of Common Shares which are authorized by the
Company’s certificate of incorporation and not outstanding or subscribed for, or reserved or
otherwise committed for issuance for purposes other than upon exercise of the Rights, are
not sufficient to permit the holder of each Right to purchase the number of Common Shares to
which he would be entitled upon the exercise in full of the Rights in accordance with
subparagraph (ii) of paragraph (a) of this Section 11, or should the Board of Directors of
the Company so elect, the Company shall: (A) determine the excess of (1) the value of the
Common Shares issuable upon the exercise of a Right (calculated as provided in the last
sentence of this subparagraph (iii)) pursuant to Section 11(a)(ii) hereof (the “CURRENT
VALUE”) over (2) the Purchase Price (such excess, the “SPREAD”), and (B) with respect to
each Right, make adequate provision to substitute for such Common Shares, upon payment of
the applicable Purchase Price, any one or more of the following having an aggregate value
determined by the Board of Directors of the Company to be equal to the Current Value: (1)
cash; (2) a reduction in the Purchase Price; (3) Preferred Shares or other equity securities
of the Company (including, without limitation, shares, or units or fractions of shares, of
preferred stock which the Board of Directors of the Company has determined to have the same
value as the Common Shares (such shares of preferred stock, “COMMON STOCK EQUIVALENTS”));
(4) debt securities of the Company; or (5) other assets; 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 first occurrence of an event triggering the rights to
purchase Common Shares described in Section 11(a)(ii) (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, Common Shares (to the extent
available) and then, if necessary, cash, which shares and cash have an aggregate value equal
to the Spread. If the Board of Directors of the Company shall determine in good faith that
it is likely that sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above may be extended
to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the authorization
of such additional shares (such period, as it may be extended, the “SUBSTITUTION PERIOD”).
To the extent that the Company determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof and the last paragraph of Section 11(a)(ii) hereof, that such
action shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall make a public announcement, and shall
promptly deliver to the Rights Agent a statement, stating that the exercisability of the
Rights has been temporarily suspended. At such time as the suspension is no longer in
effect, the Company shall make another public announcement, and promptly deliver to the
Rights Agent a statement, so stating. For purposes of this Section 11(a)(iii), the value of
the Common Shares shall be the current per share market price (as determined pursuant to
Section 11(d)(i) hereof) of the Common Shares on the Section 11(a)(ii) Trigger Date and the
value of any Common Stock Equivalent shall be deemed to have the same value as the
Common Shares on such date.


 


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(b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred Shares (or shares
having the same rights, privileges and preferences as the Preferred Shares (“EQUIVALENT PREFERRED
SHARES”)) or securities convertible into Preferred Shares or Equivalent Preferred Shares at a price
per Preferred Share or Equivalent Preferred Share (or having a conversion price per share, if a
security convertible into Preferred Shares or Equivalent Preferred Shares) less than the then
current per share market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total number of Preferred
Shares and/or Equivalent Preferred Shares 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 Preferred Shares outstanding on such record
date plus the number of additional Preferred Shares and/or Equivalent Preferred Shares to be
offered for subscription or purchase (or into which the convertible securities so to be offered are
initially convertible); PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value of such
consideration shall be 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 holders of the Rights. Preferred Shares 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, options 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 the making of a distribution to all
holders of the Preferred Shares (including, without limitation, any such distribution made in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular quarterly cash dividend
or a dividend payable in Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then-current per share market price of the
Preferred Shares 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 binding on the Rights Agent and holders of the Rights) of the
portion of the assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the denominator of which shall be such
then-current per share market price
of the Preferred Shares on such record date; PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed; and, in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.


 


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(d) (i) For the purpose of any computation hereunder, the “current per share market price” of
any security (a “SECURITY” for the purpose of this Section 11(d)(i)) on any date shall be deemed to
be the average of the daily closing prices per share of such Security for the 30 consecutive
Trading Days (as hereinafter defined) immediately prior to, but not including, such date; PROVIDED,
HOWEVER, that, in the event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such Security and prior to
the expiration of 30 Trading Days after, but not including, the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, reported at or prior to 4:00 P.M. Eastern time or,
in case no such sale takes place on such day, the average of the bid and asked prices, regular way,
reported as of 4:00 P.M. Eastern time, in either case, as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the NASDAQ
Global Market or, if the Security is not listed or admitted to trading on the NASDAQ Global Market,
as reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price reported at or prior to 4:00 P.M. Eastern time or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter market, as
reported as of 4:00 P.M. Eastern time by NASDAQ or such other system then in use, or, if on any
such date the Security is 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 Security selected
in good faith by the Board of Directors of the Company. If on any such date no professional market
maker is making a market in the Security, the fair value of such Security on such date as
determined in good faith by the Board of Directors of the Company shall be used. The term “TRADING
DAY” shall mean a day on which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business, or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business Day.




(ii) For the purpose of any computation hereunder, the “current per share market price”
of the Preferred Shares shall be determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Shares are not publicly traded, the “current per share
market price” of the Preferred Shares shall be conclusively deemed to be the current per
share market price of the Common Shares as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one thousand. If neither the
Common Shares nor the Preferred Shares are publicly held or so listed or traded,
“current per share market price” shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent.


 


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(e) No adjustment in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the Purchase Price; PROVIDED, HOWEVER, that
any adjustments which by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one ten-millionth of a Preferred Share or
one ten-thousandth of any other share or security, 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 requires such
adjustment or (ii) the date of the expiration of the right to exercise any Rights.



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



(g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a Preferred Share 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) hereof,
upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b)
and (c) hereof, each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a Preferred Share (calculated to the nearest one ten-millionth of a Preferred
Share) obtained by (A) multiplying (x) the number of one one-thousandths of a share covered by a
Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (B) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.


 


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(i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights in substitution for any adjustment in the number of one one-thousandths
of a Preferred Share purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the nearest one millionth)
obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 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 Right
Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein, and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in the public
announcement.



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



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



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


 


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



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



Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES. Whenever an
adjustment is made as provided in Section 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief, reasonably detailed statement of the facts,
computations and methodology accounting for such adjustment, (b) file with the Rights Agent and
with each transfer agent for the Common Shares or the Preferred Shares a copy of such certificate
and (c) if such adjustment occurs at any time after the Distribution Date, mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any adjustment or
statement therein contained and shall have no duty or liability with respect to, and shall not be
deemed to have knowledge of, any adjustment unless and until it shall have received such a
certificate.



Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER. In the
event, directly or indirectly, at any time after a Person has become an Acquiring Person, (a) the
Company shall consolidate with, or merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such merger, all or part
of the Common Shares shall be changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, or (c) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person other than the Company or one
or more of its wholly-owned Subsidiaries, then, and in each such case, proper provision shall be
made so that (i) each
holder of a Right (except as otherwise provided herein) shall thereafter have the right to
receive,



 


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upon the exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of Common
Shares of such other Person (including the Company as successor thereto or as the surviving
corporation) as shall equal the result obtained by (A) multiplying the then current Purchase Price
by the number of one one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of the Common Shares of
such other Person (determined pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term “Company” shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be,
in relation to the Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer unless, prior
thereto, the Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the benefits intended
to be afforded by the Rights. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. For purposes hereof, the
“earning power” of the Company and its Subsidiaries shall be determined in good faith by the Board
of Directors of the Company on the basis of the operating earnings of each business operated by the
Company and its Subsidiaries during the three (3) fiscal years preceding the date of such
determination (or, in the case of any business not operated by the Company or any Subsidiary during
three (3) full fiscal years preceding such date, during the period such business was operated by
the Company or any Subsidiary).



Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid and 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 NASDAQ Global Market or, if the
Rights are not listed or admitted to trading on the NASDAQ Global Market, as reported in the
principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a 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.


 


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(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it; PROVIDED that such agreement shall provide
that the holders of such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Right
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 Preferred Share as the fraction of one
Preferred Share that such holder would otherwise receive upon the exercise of the aggregate number
of Rights exercised by such holder. For the purposes of this Section 14(b), the current market
value of a Preferred Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date
of such exercise multiplied by 1,000.



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



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


 


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Section 15. RIGHTS OF ACTION. All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent hereunder, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent
or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common
Shares), 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 Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any breach of this Agreement,
and will be entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject to, this
Agreement.



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



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



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



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



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



Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as such, of any
Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such,
any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting 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 Right Certificate shall have been exercised in accordance with the provisions
hereof.


 


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Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the Rights Agent for all
services rendered by it hereunder, and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the preparation, delivery,
acceptance, administration and execution and amendment 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, damages, judgment, fine, penalty, claim,
demand, settlement, cost or expense (including, without limitation, the reasonable fees and
expenses of legal counsel), incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent (which each must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction), for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance, administration, exercise and
performance of its duties under this Agreement. The costs and expenses incurred in enforcing this
right of indemnification by the Rights Agent shall be paid by the Company to the extent that the
Rights Agent is entitled to indemnification under this Section 18. The provisions of this Section
18 and Section 20 below shall survive the termination of this Agreement, the exercise or expiration
of the Rights and the resignation, replacement or removal of the Rights Agent.



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



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


 


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



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



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



(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
an Acquiring Person and the determination of the current per share market price of any security) be
proved or established by the Company prior to taking, suffering or omitting to take any action
hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice-President,
the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by
it under the provisions of this Agreement in reliance upon such certificate.



(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct (which each must be determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction).
Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage. Any liability of the Rights Agent under this Agreement
will be limited to four (4) times the amount of annual fees paid by the Company to the Rights
Agent.


 


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



(e) The Rights Agent shall not be liable for, nor be under any responsibility in respect of
the validity of, this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it have any liability for nor be responsible for
any breach by the Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it have any liability for, nor be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void pursuant to Section
11(a)(ii) hereof) or any change or adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of the certificate described in
Section 12 hereof, upon which the Rights Agent may rely); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether
any Preferred Shares 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 any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice-President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection with its duties,
and such instructions shall be full authorization and protection to the Rights Agent and the Rights
Agent shall not be liable for or in respect of any action taken, suffered or omitted by it in
accordance with instructions of any such officer or for any delay in acting while waiting for those
instructions. The Rights Agent shall be fully authorized and protected in relying upon the most
recent instructions received by any such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken, suffered or omitted by the Rights Agent under this Agreement and the
date on and/or after which such action shall be taken or suffered or such omission shall be
effective. The Rights Agent shall not be liable for any action taken or suffered by, or omission
of, the Rights Agent in accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five (5) Business Days after
the date that any officer of the Company actually receives such application) unless, prior to
taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or omitted.


 


-24-









 





(h) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or form of election to purchase set
forth on the reverse thereof, as the case may be, has not been completed, the Rights Agent shall
not take any further action with respect to such requested exercise or transfer without first
consulting with the Company.



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



(j) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself (through its directors, officers and employees) or by
or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the
Company or any other Person resulting from any such act, default, neglect or misconduct, absent
gross negligence, bad faith or willful misconduct in the selection and continued employment thereof
(which each must be determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction).



(k) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if it reasonably believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it; PROVIDED, HOWEVER,
that the Rights Agent promptly notifies the Company in writing of such belief. The Company shall
have the right to provide to the Rights Agent evidence that indemnification against such risk or
liability is reasonably assured, and the Rights Agent shall have the obligation to reassess its
belief in good faith in the context of the evidence provided.



Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon 30 days’ notice in writing mailed to
the Company and to each transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Preferred Shares by registered or certified mail, and to the holders of the Right
Certificates in accordance with the applicable provisions of Section 26 hereof. 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.



 


-25-









 






If the Company shall fail to make such appointment within
a period of 30 days after giving notice of such removal or after it has been notified in writing of
such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (which holder shall, with such notice, submit such holder’s Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a Person 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 stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50 million or (b) an
Affiliate of such a Person. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares and Preferred Shares, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.



Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by the Board of Directors of the
Company to reflect any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and prior to the earlier of the Redemption
Date and the Close of Business on the Final Expiration Date, the Company may with respect to Common
Shares so issued or sold pursuant to (i) the exercise of stock options, (ii) under any employment
plan or arrangement, (iii) upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company or (iv) a contractual obligation of the Company, in each case
existing prior to the Distribution Date, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale.



Section 23. REDEMPTION. (a) The Board of Directors of the Company may, at its option, at any
time prior to such time as any Person becomes an Acquiring Person, redeem all but not less than all
the then outstanding Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the “REDEMPTION PRICE”). The redemption of
the Rights by the Board of Directors of the Company may be made effective at such time, on such
basis and with such conditions as the Board of Directors of the Company, in its sole discretion,
may establish. The Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the market price thereof, as determined by the Board of Directors of the Company) or
other form of consideration deemed appropriate by the Board of Directors of the Company.


 


-26-









 





(b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, 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. The Company shall
promptly give public notice of any such redemption (with prompt written notice thereof to the
Rights Agent); PROVIDED, HOWEVER, that the failure to give, or any defect in, any such notice shall
not affect the legality or validity of such redemption. Within 10 days after such action of the
Board of Directors of the Company ordering the redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. 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. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.



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 null and void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any adjustment in the number of Rights pursuant to
Section 11(i) (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 Person holding
Common Shares 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 Shares then
outstanding.



(b) Immediately upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (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 Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange (with prompt written notice thereof to the Rights Agent);
PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice shall not affect the
legality or 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 Shares 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 null and void pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.


 


-27-









 





(c) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary to authorize such additional
Common Shares, the Company shall substitute, for each Common Share that would otherwise be issuable
upon exchange of a Right, a number of Preferred Shares or fraction thereof such that the current
per share market price of one Preferred Share multiplied by such number or fraction is equal to the
current per share market price of one Common Share as of the date of issuance of such Preferred
Shares or fraction thereof.



(d) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. In lieu of such fractional Common Shares,
the Company shall pay to the registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this paragraph (d), the
current market value of a whole Common Share shall be the closing price of a Common Share (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, at any time after the
Distribution Date, propose (i) to pay any dividend payable in stock of any class to the holders of
the Preferred Shares or to make any other distribution to the holders of the Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the holders of the Preferred
Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares
of stock of any class or any other securities, rights or options, (iii) to effect any
reclassification of the Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company or (vi) to declare or pay any
dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends
in Common Shares), then, in each such case, the Company shall give to the Rights Agent and to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed
action which shall specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, 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 10 days prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and, in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein by the holders of
the Common Shares and/or Preferred Shares, whichever shall be the earlier.


 


-28-









 





(b) In case the event set forth in Section 11(a)(ii) hereof shall occur, then the Company
shall, as soon as practicable thereafter, give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which
notice shall describe such event and the consequences of such event to holders of Rights under
Section 11(a)(ii) hereof.



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




Hampshire Group, Limited

114 W. 41st Street, 8th Floor

New York, NY 10036

Attention: Corporate Secretary



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




Mellon Investor Services LLC

480 Washington Boulevard

29th Floor

Jersey City, NJ 07310

Attention: Stephen R. Jones




with a copy to:




Mellon Investor Services LLC

480 Washington Boulevard

Jersey City, NJ 07606

Attention: General Counsel



Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate shall be sufficiently given or made if published by
press release, which promptly thereafter shall be filed with the United States Securities and
Exchange Commission on a Form 8-K under the Exchange Act, or 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. The Company may from time to time supplement or amend
this Agreement without the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any change to or delete any provision
hereof or to adopt any other provisions with respect to the Rights which the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent;


 


-29-









 





PROVIDED, HOWEVER, that, from and after such time as any Person becomes an Acquiring Person,
this Agreement shall not be amended or supplemented in any manner which would adversely affect the
interests of the holders of Rights (other than an Acquiring Person and its Affiliates and
Associates). Without limiting the foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower the thresholds set forth in
Sections 1(a) and 3(a) hereof to not less than 10% (the “REDUCED THRESHOLD”); PROVIDED, HOWEVER,
that no Person who beneficially owns a number of Common Shares equal to or greater than the Reduced
Threshold shall become an Acquiring Person unless such Person shall, after the public announcement
of the Reduced Threshold, increase its beneficial ownership of the then outstanding Common Shares
(other than as a result of an acquisition of Common Shares by the Company) to an amount equal to or
greater than the greater of (x) the Reduced Threshold or (y) the sum of (i) the lowest beneficial
ownership of such Person as a percentage of the outstanding Common Shares as of any date on or
after the date of the public announcement of such Reduced Threshold plus (ii) .001%. Upon delivery
of a certificate from an appropriate officer of the Company and, if requested by the Rights Agent,
an opinion of counsel, that states that the proposed supplement or amendment complies with this
Section 27, the Rights Agent shall execute such supplement or amendment. Notwithstanding anything
contained in this Agreement to the contrary, the Rights Agent may, but shall not be obligated to,
enter into any supplement or amendment that affects the Rights Agent’s own rights, duties,
obligations or immunities under this Agreement. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the holders of Common
Shares.



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



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



Section 30. 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, null, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated.



Section 31. GOVERNING LAW. This Agreement and each Right Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; PROVIDED, HOWEVER, that all provisions regarding
the rights, duties, obligations and immunities 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.


 


-30-









 





Section 32. 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 33. 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.



Section 34. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS. The Board of Directors of
the Company (or its designees) shall have the sole power and authority to administer this Agreement
and to exercise the rights and powers granted to the Board of Directors of the Company or to the
Company hereunder. All such actions, calculations, interpretations and determinations that are
done or made by the Board of Directors of the Company (or its designees) shall be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights, as such, and all other
applicable Persons. The Rights Agent is entitled always to assume the Board of Directors of the
Company acted in good faith and shall be fully protected and incur no liability in reliance
thereon.



[Signature page follows]



 


-31-









 





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



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	HAMPSHIRE GROUP, LIMITED
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Maura Langley	 	 	 	By:	 	/s/ Heath L. Golden	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Maura Langley
	 	 	 	 	 	Name:
	 	Heath L. Golden	 	 
	 

	 	Title:
	 	Vice President
Accounting & 

Reporting
& Assistant Secretary
	 	 	 	 	 	Title:
	 	Vice President, General Counsel
and Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	MELLON INVESTOR SERVICES LLC, as

 Rights Agent
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Kayur Patel	 	 	 	By:	 	/s/ Stephen R. Jones	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Kayur Patel
	 	 	 	 	 	Name:
	 	Stephen R. Jones	 	 
	 

	 	Title:
	 	Assistant Treasurer
	 	 	 	 	 	Title:
	 	Assistant Vice President	 	 





 


 









 





EXHIBIT A




CERTIFICATE OF DESIGNATION




of




SERIES A JUNIOR PARTICIPATING PREFERRED STOCK




of




HAMPSHIRE GROUP, LIMITED




(Pursuant to Section 151 of the

Delaware General Corporation Law)




 





Hampshire Group, Limited, a corporation organized and existing under the General Corporation
Law of the State of Delaware (hereinafter called the “Corporation”), hereby certifies that, as
required by Section 151 of the General Corporation Law, the following resolution was adopted on
August 13, 2008, by the Board of Directors of the Corporation at a meeting duly held on August 13,
2008:



RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
this Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with
the provisions of the Restated Certificate of Incorporation of the Corporation (as amended, the
“Certificate of Incorporation”), the Board of Directors hereby creates a series of Preferred Stock,
par value $.10 per share, of the Corporation (the “Preferred Stock”), and hereby states the
designation and number of shares, and fixes the relative rights, preferences, and limitations
thereof as follows:




Series A Junior Participating Preferred Stock:



Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as “Series A
Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares
constituting the Series A Preferred Stock shall be 10,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors; PROVIDED, that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.


 


 









 






Section 2. DIVIDENDS AND DISTRIBUTIONS.




(A) Subject to the rights of the holders of any shares of any series of Preferred Stock
(or any similar stock) ranking prior and superior to the Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, par value $.10 per share (the “Common Stock”), of the
Corporation, and of any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for such purpose,
quarterly dividends payable in cash on the last 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 Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock 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 Preferred Stock. In the event the Corporation
shall at any time 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 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 Preferred
Stock as provided in paragraph (A) of this Section immediately after it declares a dividend
or distribution on the Common Stock (other than a dividend payable in 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 $10.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.




(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of
such shares, 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 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 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 Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the date fixed
for the payment thereof.


 


A-2









 





Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred Stock shall have the
following voting rights:




(A) Subject to the provision for adjustment hereinafter set forth, each share of Series
A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the stockholders of the Corporation. In the event the Corporation shall at any
time 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 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, in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock, or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.




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



Section 4. CERTAIN RESTRICTIONS.




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




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




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


 


A-3









 






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




(iv) redeem or purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with the Series
A Preferred Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the 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 Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after
the acquisition thereof. The Corporation shall take all such actions as are necessary to cause all
such shares to become authorized but unissued shares of Preferred Stock that may be reissued as
part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise required by law.



Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation, dissolution or
winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received $1,000 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,



 


A-4









 






except distributions made ratably on the Series A Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in 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 aggregate amount to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event under the proviso in
clause (1) 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.



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 each share of Series A Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time 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 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 Preferred Stock shall not be redeemable.



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



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


 


A-5









 





IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the Corporation
by its duly authorized officer this 13th day of August, 2008.



	 	 	 	 	 
	 	HAMPSHIRE GROUP, LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 


A-6









 







EXHIBIT B




Form of Right Certificate




			
	 	 	 
	Certificate No. R-
	 	
 _____ 

Rights





NOT EXERCISABLE AFTER AUGUST 23, 2013 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION
AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR WERE ACQUIRED OR
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID.




Right Certificate




HAMPSHIRE GROUP, LIMITED




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 August 13, 2008 (the “Agreement”),
between Hampshire Group, Limited, a Delaware corporation (the “Company”), and Mellon Investor
Services LLC, a New Jersey limited liability company, as rights agent (the “Rights Agent”), to
purchase from the Company at any time after the Distribution Date (as such term is defined in the
Agreement) and prior to 5:00 P.M., New York City time, on August 23, 2013 at the office of the
Rights Agent designated for such purpose, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $.10 per share, of the Company (the “Preferred Shares”), at a purchase price of
$33.00 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of August 25, 2008, based on the
Preferred Shares as constituted at such date. As provided in the Agreement, the Purchase Price and
the number of one one-thousandths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.



From and after the occurrence of an event described in Section 11(a)(ii) of the Rights
Agreement, if the Rights are or were at any time on or after the earlier of (x) the date of such
event and (y) the Distribution Date (as such term is defined in the Rights Agreement) acquired or
beneficially owned by an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as
such terms are defined in the Rights Agreement), such Rights shall become void, and any holder of
such Rights shall thereafter have no right to exercise such Rights.


 


 









 





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



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



Subject to the provisions of the Agreement, the Rights evidenced by this Right Certificate (i)
may be redeemed by the Company at a redemption price of $.01 per Right or (ii) may be exchanged in
whole or in part for Preferred Shares or shares of the Company’s Common Stock, par value $.10 per
share.



No fractional Preferred Shares will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a
Preferred Share, 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 Agreement.



No holder of this Right Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the Preferred Shares 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
Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders (except as
provided in the Agreement), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the
Agreement.



This Right 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. Dated as of
                    ,           .



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	HAMPSHIRE GROUP, LIMITED
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	Title:	 	 	 	 
	 	 	Countersigned:	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MELLON INVESTOR SERVICES LLC, as 

RIGHTS AGENT	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 	 	 	 	 






 


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Form of Reverse Side of Right Certificate




FORM OF ASSIGNMENT




(To be executed by the registered holder if such

holder desires to transfer the Right Certificate.)





FOR VALUE RECEIVED,                      hereby sells, assigns and transfers unto



 




(Please print name and address of transferee)




 





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



Dated:                                         




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature
	 	 






Signature Guaranteed:



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



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



	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature
	 	 






Form of Reverse Side of Right Certificate - continued




 


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FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise

Rights represented by the Right Certificate.)




To: HAMPSHIRE GROUP, LIMITED




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



Please insert social security

or other identifying number



 




(Please print name and address)




 





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



 




(Please print name and address)




 





Dated:                                         




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature
	 	 






Signature Guaranteed:



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



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



	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature
	 	 






 


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NOTICE




The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.



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


 


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EXHIBIT C




SUMMARY OF RIGHTS TO PURCHASE

PREFERRED SHARES




INTRODUCTION




On August 13, 2008, the Board of Directors of our Company (the “Board”), Hampshire Group,
Limited, a Delaware corporation, declared a dividend of one preferred share purchase right (a
“Right”) for each outstanding share of common stock, par value $.10 per share. The dividend is
payable on August 25, 2008 to the stockholders of record at 5:00 p.m., Eastern time, on August 25,
2008.



Our Board has adopted this Rights Agreement to protect stockholders from coercive or otherwise
unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any
person or group which acquires beneficial ownership of 15% or more of our outstanding common stock
without the approval of our Board, except for stockholders who, together with their affiliates and
associates, already have beneficial ownership of more than 15% of our outstanding common stock,
provided, among other limitations, that such stockholders do not become the beneficial owners of
more than 20% of our outstanding common stock. The Rights Agreement should not interfere with any
merger or other business combination approved by our Board.



For those interested in the specific terms of the Rights Agreement as made between our Company
and Mellon Investor Services LLC, as the Rights Agent, on August 13, 2008, we provide the following
summary description. Please note, however, that this description is only a summary, and is not
complete, and should be read together with the entire Rights Agreement, which has been filed with
the Securities and Exchange Commission as an exhibit to the Registration Statement on Form 8-A of
our Company and is incorporated herein by reference. A copy of the agreement is available free of
charge from our Company.



THE RIGHTS. Our Board authorized the issuance of a Right with respect to each outstanding
share of common stock on August 25, 2008. The Rights will initially trade with, and will be
inseparable from, the common stock. The Rights are evidenced only by the certificates that
represent the shares of common stock. New Rights will accompany any new shares of common stock we
issue after August 25, 2008 until the Distribution Date described below.



EXERCISE PRICE. Each Right will allow its holder to purchase from our Company one
one-thousandth of a share of Series A Junior Participating Preferred Stock (“Preferred Share”) for
$33.00, once the Rights become exercisable. This portion of a Preferred Share will give the
stockholder approximately the same dividend, voting, and liquidation rights as would one share of
common stock. Prior to exercise, the Right does not give its holder any dividend, voting, or
liquidation rights.


 


 









 





EXERCISABILITY. The Rights will not be exercisable until




	•	 	10 days after the public announcement that a person or group has become an “Acquiring
Person” by obtaining beneficial ownership of 15% (or such other percentage as would
otherwise result in such person becoming an Acquiring Person) or more of our outstanding common
stock, or, if earlier,
	 
	•	 	10 business days (or a later date determined by our Board before any person or group
becomes an Acquiring Person) after a person or group begins a tender or exchange offer which,
if completed, would result in that person or group becoming an Acquiring Person.





We refer to the date when the Rights become exercisable as the “Distribution Date.” Until
that date, the common stock certificates will also evidence the Rights, and any transfer of shares
of common stock will constitute a transfer of Rights. After that date, the Rights will separate
from the common stock and be evidenced by book-entry credits or by Rights certificates that we will
mail to all eligible holders of common stock. Any Rights held by an Acquiring Person are null and
void and may not be exercised.



Our Board may reduce the threshold at which a person or group becomes an Acquiring Person from
15% to not less than 10% of the outstanding common stock.



CONSEQUENCES OF A PERSON OR GROUP BECOMING AN ACQUIRING PERSON.




	•	 	FLIP IN. If a person or group becomes an Acquiring Person, all holders of Rights except
the Acquiring Person may, for $33.00, purchase shares of our common stock with a market value
of $66.00, based on the market price of the common stock prior to such acquisition.
	 
	•	 	FLIP OVER. If our Company is later acquired in a merger or similar transaction after the
Distribution Date, all holders of Rights except the Acquiring Person may, for $33.00, purchase
 shares of the acquiring or surviving corporation with a market value of $66.00, based on the
market price of the acquiring or surviving corporation’s stock, prior to such merger.





PREFERRED SHARE PROVISIONS.



Each one one-thousandth of a Preferred Share, if issued:




	•	 	will not be redeemable.
	 
	•	 	will entitle holders to quarterly dividend payments of $.01, or an amount equal to the
dividend paid on one share of common stock, whichever is greater.
	 
	•	 	will entitle holders upon liquidation either to receive $1.00 or an amount equal to the
payment made on one share of common stock, whichever is greater.
	 
	•	 	will have the same voting power as one share of common stock.
	 
	•	 	if shares of our common stock are exchanged via merger, consolidation, or a similar
transaction, will entitle holders to a per share payment equal to the payment made on one
share of common stock.




 


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The value of one one-thousandth interest in a Preferred Share should approximate the value of one
share of common stock and is subject to anti-dilution adjustments as described below.



EXPIRATION. The Rights will expire on August 23, 2013.



REDEMPTION. Our Board may redeem the Rights for $.01 per Right at any time before any person
or group becomes an Acquiring Person. If our Board redeems any Rights, it must redeem all of the
Rights. Once the Rights are redeemed, the only right of the holders of Rights will be to receive
the redemption price of $.01 per Right. The redemption price will be adjusted if we have a stock
split or stock dividends of our common stock.



EXCHANGE. After a person or group becomes an Acquiring Person, but before an Acquiring Person
owns 50% or more of our outstanding common stock, our Board may extinguish the Rights by exchanging
one share of common stock or an equivalent security for each Right, other than Rights held by the
Acquiring Person.



ANTI-DILUTION PROVISIONS. Our Board may adjust the purchase price of the Preferred Shares,
the number of Preferred Shares issuable or the number of outstanding Rights to prevent dilution
that may occur from a stock dividend, a stock split or a reclassification of the Preferred Shares
or common stock, or certain other changes or events.



AMENDMENTS. The terms of the Rights Agreement may be amended by our Board without the consent
of the holders of the Rights. However, our Board may not amend the Rights Agreement to lower the
threshold at which a person or group becomes an Acquiring Person to not less than 10% of our
outstanding common stock. In addition, the Board may not cause a person or group to become an
Acquiring Person by lowering this threshold below the percentage interest that such person or group
already owns. After a person or group becomes an Acquiring Person, our Board may not amend the
agreement in a way that adversely affects holders of the Rights (other than an Acquiring Person and
its Affiliates and Associates).



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




 


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