exv4w1



 





Exhibit 4.1



 




ADMINISTAFF, INC.




and




MELLON INVESTOR SERVICES LLC,




As Rights Agent




 






Rights Agreement




Dated as of November 13, 2007



 





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Section 1.
	 	Certain Definitions	 	 	2	 
	Section 2.
	 	Appointment of Rights Agent	 	 	8	 
	Section 3.
	 	Issue of Rights Certificates	 	 	8	 
	Section 4.
	 	Form of Rights Certificates	 	 	11	 
	Section 5.
	 	Countersignature and Registration	 	 	11	 
	Section 6.
	 	Transfer, Split-Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates	 	 	12	 
	Section 7.
	 	Exercise of Rights; Purchase Price	 	 	13	 
	Section 8.
	 	Cancellation and Destruction of Rights Certificates	 	 	15	 
	Section 9.
	 	Reservation and Availability of Capital Stock	 	 	15	 
	Section 10.
	 	Preferred Stock Record Date	 	 	17	 
	Section 11.
	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	 	 	17	 
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Shares	 	 	24	 
	Section 13.
	 	Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power	 	 	25	 
	Section 14.
	 	Fractional Rights and Fractional Shares	 	 	27	 
	Section 15.
	 	Rights of Action	 	 	28	 
	Section 16.
	 	Agreement of Rights Holders	 	 	29	 
	Section 17.
	 	Rights Certificate Holder Not Deemed a Stockholder	 	 	29	 
	Section 18.
	 	Concerning the Rights Agent	 	 	30
	 
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	 	31	 
	Section 20.
	 	Duties of Rights Agent	 	 	31
	 
	Section 21.
	 	Change of Rights Agent	 	 	34	 
	Section 22.
	 	Issuance of New Rights Certificates	 	 	34
	 
	Section 23.
	 	Redemption and Termination	 	 	35
	 
	Section 24.
	 	Exchange	 	 	36
	 
	Section 25.
	 	Notice of Certain Events	 	 	37
	 
	Section 26.
	 	Notices	 	 	38	 
	Section 27.
	 	Supplements and Amendments	 	 	38
	 
	Section 28.
	 	Successors	 	 	39	 
	Section 29.
	 	Determinations and Actions by the Board of Directors, etc	 	 	39
	 






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	Section 30.
	 	Benefits of this Agreement	 	 	39	 
	Section 31.
	 	Severability	 	 	40	 
	Section 32.
	 	Governing Law	 	 	40	 
	Section 33.
	 	Counterparts	 	 	40	 
	Section 34.
	 	Force Majeure	 	 	40	 
	Section 35.
	 	Descriptive Headings	 	 	40	 
	 
	 	 	 	 	 	 
	Exhibit A
	 	Form of Certificate of Designations of Series A Junior Participating Preferred Stock	 	 	 	 
	Exhibit B
	 	Form of Rights Certificate	 	 	 	 
	Exhibit C
	 	Summary of Rights	 	 	 	 







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RIGHTS AGREEMENT




          This Rights Agreement, dated as of November 13, 2007 (the “Agreement”), between Administaff,
Inc., a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey
limited liability company, as rights agent (the “Rights Agent”),




W I T N E S S E T H:




          WHEREAS, on January 20, 1998, (the “Rights Dividend Declaration Date”), the Board of Directors
of the Company authorized and declared a dividend of one Right for each share of common stock, par
value $0.01 per share, of the Company (the “Common Stock”) outstanding at the close of business on
February 9, 1998 (the “Record Date”), and authorized the issuance of one Right for each share of
Common Stock of the Company issued (whether originally issued or delivered from the Company’s
treasury) between the Record Date and the earlier of the Distribution Date (as hereinafter defined)
and the Expiration Date (as hereinafter defined), and, in certain circumstances provided for in
Section 22 hereof, after the Distribution Date, each Right initially representing the right to
purchase one Fractional Share (as hereinafter defined) of Series A Junior Participating Preferred
Stock of the Company, upon the terms and subject to the conditions hereinafter set forth (the
“Rights”); and




          WHEREAS, the Company entered into a Rights Agreement dated as of February 4, 1998, which
agreement was amended and restated effective as of April 19, 2003 (such agreement, as subsequently
amended, the “Original Agreement”); and




          WHEREAS, in October 2000, the Company effected a two-for-one stock split of the then
outstanding Common Stock, effected by means of a stock dividend (the “Stock Split”); and




          WHEREAS, pursuant to the terms of the Original Agreement, as a consequence of the Stock Split,
the number of Rights associated with each share of Common Stock was adjusted to be one-half of one
Right for each share of Common Stock then outstanding or that shall become outstanding between the
Record Date and the Expiration Date; and




          WHEREAS, the Company wishes to make certain amendments to the terms of the Original Agreement
pursuant to Section 27 thereof and to restate the Original Agreement in its entirety to, among
other things, extend the Final Expiration Date, amend the Purchase Price and amend the Rights so
that each share of Common Stock that is currently outstanding or that shall become outstanding
between the Record Date and the Expiration Date shall have one Right attached thereto rather than
one-half of one Right;




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          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereby agree that each one-half Right that is associated with each share of Common
Stock issued and outstanding on the date hereof is hereby amended to hereinafter equal one Right
(subject to adjustment as provided in Section 11 hereof), and further agree as follows:




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




          “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include any Exempt Person; provided, however, that a Person
shall not be or become an Acquiring Person if such Person, together with its Affiliates and
Associates, shall become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding solely as a result of a reduction in the number of shares of Common Stock outstanding
due to the repurchase of Common Stock by the Company, unless and until such time as such Person
together with its Affiliates and Associates shall purchase or otherwise become the Beneficial Owner
of additional shares of Common Stock constituting 1% or more of the then outstanding shares of
Common Stock or any other Person (or Persons) who is (or collectively are) the Beneficial Owner of
shares of Common Stock constituting 1% or more of the then outstanding shares of Common Stock shall
become an Affiliate or Associate of such Person, unless, in either such case, such Person, together
with all Affiliates and Associates of such Person, is not then the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding; and provided, further, that if the Board of
Directors, with the concurrence of a majority of the members of the Board of Directors who are not,
and are not representatives, nominees, Affiliates or Associates of, such Person or an Acquiring
Person, determines in good faith that a Person that would otherwise be an “Acquiring Person” has
become such inadvertently (including, without limitation, because (i) such Person was unaware that
it beneficially owned a percentage of Common Stock that would otherwise cause such Person to be an
“Acquiring Person” or (ii) such Person was aware of the extent of its Beneficial Ownership of
Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing control of the Company, and if such Person as
promptly as practicable divested or divests itself of Beneficial Ownership of a sufficient number
of shares of Common Stock so that such Person would no longer be an “Acquiring Person,” then such
Person shall not be deemed to be or to have become an “Acquiring Person” for any purposes of this
Agreement.




          Notwithstanding anything in this definition of “Acquiring Person” to the contrary, if, as of
the date hereof, any Person, together with all Affiliates or Associates of such Person, is the
Beneficial Owner of a number of shares of Common Stock that would otherwise cause such Person to be
an Acquiring Person, such Person shall not be or become an Acquiring Person unless and until such
time as such Person or any Affiliate or Associate of such Person shall purchase or otherwise become
the Beneficial Owner of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or any other Person (or Persons) who is (or collectively are)
the Beneficial Owner of shares of Common Stock constituting 1% or more of the then outstanding
shares of Common Stock shall become an
Affiliate or Associate of such Person unless, in either such case, such Person, together with
all



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Affiliates and Associates of such Person, is not then the Beneficial Owner of a number of
shares that would otherwise cause such Person to be an Acquiring Person.




          At any time that the Rights are redeemable, the Board of Directors may, generally or with
respect to any specified Person or Persons, determine to increase to a specified percentage or
amount greater than that set forth herein or decrease to a specified percentage or amount lower
than that set forth herein or determine a number of shares to be (but in no event less than or
equal to the percentage or number of shares of Common Stock then beneficially owned by such
Person), the level of Beneficial Ownership of Common Stock at which a Person or such Person or
Persons becomes an Acquiring Person.




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




          “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.




          “Associate” shall mean, with reference to any Person, (1) any corporation, firm, partnership,
limited liability company, association, unincorporated organization or other entity (other than the
Company or a Subsidiary of the Company) of which such Person is an officer or general partner (or
officer or general partner of a general partner) or is, directly or indirectly, the Beneficial
Owner of 10% or more of any class of equity securities, (2) any trust or other estate in which such
Person has a substantial beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity and (3) any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person.




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





     (i) that such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, is the “beneficial owner” of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the date of this
Agreement) or otherwise has the right to vote or dispose of, including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided, however, that
a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” any
security under this subparagraph (i) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or understanding: (A)
arises solely from a revocable proxy or consent given in response to a public (i.e., not
including a solicitation exempted by Rule 14a-2(b)(2) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement) proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act , (B) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor report) and
(C) does not constitute a trust, proxy, power of attorney or other device with the purpose
or effect of allowing two or more persons, acting in concert, to avoid being deemed
“beneficial owners” of such security or otherwise avoid the status of
“Acquiring Person” under the terms of this Agreement or as part of a plan or scheme to



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evade the reporting requirements under Schedule 13D or Sections 13(d) or 13(g) of the
Exchange Act;




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




     (iii) that are beneficially owned, directly or indirectly, by (A) any other Person (or
any Affiliate or Associate thereof) with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy
or consent as described in the proviso to subparagraph (i) of this definition) or disposing
of any voting securities of the Company or (B) any group (as that term is used in Rule
13d-5(b) of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement) of which such Person is a member;


provided, however, that nothing in this definition shall cause a Person engaged in business as an
underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,” any securities
acquired through such Person’s participation in good faith in a firm commitment underwriting
(including, without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M promulgated under the Exchange Act, or
to cover overallotments created in connection with a public offering) until the expiration of forty
days after the date of such acquisition. For purposes of this Agreement, “voting” a security shall
include voting, granting a proxy, acting by consent, making a request or demand relating to
corporate action (including, without limitation, calling a stockholder meeting), entering into a
voting trust or voting agreement or otherwise giving an authorization (within the meaning of
Section 14(a) of the Exchange Act, as in effect on the date of this Agreement) in respect of such
security.




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




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          “close of business” on any given date shall mean 5:00 p.m., New York, New York time, on such
date; provided, however, that if such date is not a Business Day, it shall mean 5:00 p.m., New
York, New York time, on the next succeeding Business Day.




          “Closing Price” of a security for any day shall mean the last sales price, regular way, on
such day or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, on such day, in either case as reported in the principal transaction reporting
system with respect to securities listed or admitted to trading on the New York Stock Exchange, or,
if such security is not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is listed or admitted to trading, or,
if such security is not listed or admitted to trading on any national securities exchange but sales
price information is reported for such security, as reported by such self-regulatory organization
or registered securities information processor (as such terms are used under the Exchange Act) that
then reports information concerning such security, or, if sales price information is not so
reported, the average of the high bid and low asked prices in the over-the-counter market on such
day, as reported by such entity, or, if on such day such security is not quoted by any such entity,
the average of the closing bid and asked prices as furnished by a professional market maker making
a market in such security selected by the Board of Directors of the Company. If on such day no
market maker is making a market in such security, the fair value of such security on such day as
determined in good faith by the Board of Directors of the Company shall be used.




          “Common Stock” shall mean the common stock, par value $0.01 per share, of the Company, except
that “Common Stock” when used with reference to equity interests issued by any Person other than
the Company shall mean the capital stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the management, of
such Person.




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




          “Company” shall mean the Person named as the “Company” in the preamble of this Agreement until
a successor Person shall have become such or until a Principal Party shall assume, and thereafter
be liable for, all obligations and duties of the Company hereunder, pursuant to the applicable
provisions of this Agreement, and thereafter “Company” shall mean such successor Person or
Principal Party.




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




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




          “Distribution Date” shall mean the earlier of (i) the close of business on the tenth day (or,
if such Stock Acquisition Date results from the consummation of a Permitted Offer, such later date
as may be determined by the Company’s Board of Directors as set forth below before the Distribution
Date occurs) after the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business on the Record Date) or (ii) the close of
business on the tenth Business Day (or such later date as may be determined by the



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Company’s Board of Directors as set forth below before the Distribution Date occurs) after the
date that a tender offer or exchange offer by any Person (other than any Exempt Person) is first
published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act as then in effect, if upon consummation thereof, such Person would be an
Acquiring Person, other than a tender or exchange offer that is determined before the Distribution
Date occurs to be a Permitted Offer. The Board of Directors of the Company may, to the extent set
forth in the preceding sentence, defer the date set forth in clause (i) or (ii) of the preceding
sentence to a specified later date or to an unspecified later date to be determined by a subsequent
action or event (but in no event to a date later than the close of business on the tenth day after
the first occurrence of a Triggering Event).




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




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




          “Exchange Ratio” shall have the meaning set forth in Section 24 hereof.




          “Exempt Person” shall mean the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, and any Person organized, appointed or
established by the Company for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the Company or any
Subsidiary of the Company.




          “Expiration Date” shall mean the earliest of (i) the Final Expiration Date, (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof, (iii) the time at which the Rights
expire pursuant to Section 13(d) hereof and (iv) the time at which all Rights then outstanding and
exercisable are exchanged pursuant to Section 24 hereof.




          “Final Expiration Date” shall mean the close of business on November 13, 2017.




          “Flip-In Event” shall mean an event described in Section 11(a)(ii) hereof.




          “Flip-In Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof.




          “Flip-Over Event” shall mean any event described in clause (x), (y) or (z) of Section 13(a)
hereof, but excluding any transaction described in Section 13(d) hereof that causes the Rights to
expire.




          “Fractional Share” with respect to the Preferred Stock shall mean one one-hundredth of a share
of Preferred Stock.




          “Original Rights” shall have the meaning set forth in the definition of “Beneficial Owner.”




          “Permitted Offer” shall mean a tender offer or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined, prior to the time the



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Person making the offer or any Affiliate or Associate thereof is an Acquiring Person, by at
least a majority of the members of the Board of Directors who are not, and are not representatives,
nominees, Affiliates or Associates of, an Acquiring Person or the person making the offer, after
receiving advice from one or more investment banking firms, to be (a) at a price and on terms that
are fair to stockholders (taking into account all factors that such members of the Board deem
relevant including, without limitation, prices that could reasonably be achieved if the Company or
its assets were sold on an orderly basis designed to realize maximum value) and (b) otherwise in
the best interests of the Company and its stockholders.




          “Person” shall mean any individual, firm, corporation, partnership, limited liability company,
association, trust, unincorporated organization or other entity or any group of Persons acting in
concert, and shall include any successor (by merger or otherwise) of such entity.




          “Preferred Stock” shall mean shares of Series A Junior Participating Preferred Stock, par
value $0.01 per share, of the Company having the rights, powers and preferences set forth in the
form of Certificate of Designations attached hereto as Exhibit A and, to the extent that there is
not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of Preferred Stock, par value $0.01 per
share, of the Company designated for such purpose containing terms substantially similar to the
terms of the Series A Junior Participating Preferred Stock.




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




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




          “Record Date” shall have the meaning set forth in the recitals clause at the beginning of this
Agreement.




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




          “Rights” shall have the meaning set forth in the recitals clause at the beginning of this
Agreement.




          “Rights Agent” shall mean the Person named as the “Rights Agent” in the preamble of this
Agreement until a successor Rights Agent shall have become such pursuant to the applicable
provisions hereof, and thereafter “Rights Agent” shall mean such successor Rights Agent.




          “Rights Certificates” shall mean the certificates evidencing the Rights.




          “Rights Dividend Declaration Date” shall have the meaning set forth in the recitals clause at
the beginning of this Agreement.




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




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




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          “Stock Acquisition Date” shall mean the first date of public announcement (which, for purposes
of this definition and Section 23, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.




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




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




          “Summary of Rights” shall mean the Summary of Rights sent pursuant to Section 3(b) hereof.




          “Trading Day” with respect to a security shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is open for the
transaction of business, or, if such security is not listed or admitted to trading on any national
securities exchange but is quoted by a self-regulatory organization or registered securities
information processor (as such terms are used under the Exchange Act), a day on which such entity
reports trades, or, if such security is not so quoted, a Business Day.




          “Triggering Event” shall mean any Flip-In Event or any Flip-Over Event.




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




          Section 3. Issue of Rights Certificates.




          (a) Until the Distribution Date, (x) the Rights will be evidenced (subject to the provisions
of paragraph (b) of this Section 3) by the certificates for Common Stock registered in the names of
the holders of the Common Stock or, for Common Stock held in book-entry accounts through the direct
registration service of the Company’s transfer agent, by such book-entry accounts (together with a
direct registration transaction advice with respect to such shares) and not by separate
certificates, and (y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Company will prepare and execute, and the Rights Agent will
countersign, and the Company will send or cause of be sent (and the Rights Agent will, if requested
and provided with all the necessary information, at the expense of the Company, send) by
first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Distribution Date (other than any Person
referred to in the first sentence of Section 7(e)), at the address of such holder shown on the
records of the Company, one or more Rights Certificates, evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein, or shall credit the book-entry



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account of such holder with such Rights and shall send a direct registration transaction advice
with respect to such Rights to such holder. In the event that an adjustment in the number of
Rights per share of Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates or such credits to the book-entry accounts, the Company
shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights are distributed, or
only whole numbers of Rights are credited to book-entry accounts, and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates or such book-entry credits and related direct registration transaction
advices. In the event the Company elects to distribute any Rights by crediting book-entry
accounts, the provisions in this Agreement that reference Rights Certificates shall be interpreted
to reflect that the Rights are credits to the book-entry accounts, that separate Rights
Certificates are not issued with respect to some or all of the Rights, and that any legend required
on a Rights Certificate may be placed on the direct registration transaction advice with respect to
certain Rights. The Company will promptly notify the Rights Agent in writing upon the occurrence
of a Distribution Date. Until such notice is received by the Rights Agent, the Rights Agent may
presume conclusively for all purposes that a Distribution Date has not occurred.




          (b) Promptly following the Record Date, the Company sent a copy of a Summary of Rights, in
substantially the form attached to the Original Agreement as Exhibit C, by first-class, postage
prepaid mail, to each record holder of Common Stock as of the close of business on the Record Date,
at the address of such holder shown on the records of the Company. With respect to Common Stock
outstanding as of the Record Date, until the Distribution Date or the earlier surrender for
transfer thereof or the Expiration Date, the Rights associated with the shares of Common Stock
represented by such certificates or held in such book-entry accounts shall be evidenced by such
certificates for Common Stock or such book-entry accounts (together with the direct registration
transaction advice with respect to such shares) together with the Summary of Rights, and the
registered holders of the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date, the transfer of any
Common Stock outstanding on the Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common Stock.




          (c) Rights have been and shall be issued in respect of all shares of Common Stock that have
been or are issued (whether originally issued or delivered from the Company’s treasury) after the
Record Date but prior to the earlier of the Distribution Date or the Expiration Date or, in certain
circumstances provided in Section 22 hereof, after the Distribution Date. Certificates issued
representing such shares of Common Stock that shall so become outstanding or shall be transferred
or exchanged after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date shall also be deemed to be certificates for Rights, and shall bear the legend set
forth in Section 3(c) of the Original Agreement or in Section 3(c) of other prior versions of this
Agreement, or a legend in substantially the following form:





     This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Administaff, Inc. (the
“Company”) and Mellon Investor Services LLC (the “Rights Agent”) dated as of



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November 13, 2007 as it may from time to time be supplemented or amended (the
“Rights Agreement”), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may be exchanged, may expire or may be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights beneficially
owned by or transferred to any Person who is, was or becomes an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), and certain transferees thereof, will become null and void and will no
longer be transferable.


Each book-entry account for such shares of Common Stock that shall so become outstanding or shall
be transferred or exchanged after the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date shall also be deemed to include the associated Rights, and the direct
registration transaction advice with respect to such shares shall bear a legend in substantially
the following form:





     Each security covered by this Advice includes certain rights to purchase Series
A Junior Participating Preferred Stock of Administaff, Inc.(the “Company”) and
entitles the holder thereof to certain Rights as set forth in the Rights Agreement
between the Company and Mellon Investor Services LLC (the “Rights Agent”) dated as
of November 13, 2007, as amended and restated as of December 8, 2000, as it may from
time to time be further supplemented or amended (the “Rights Agreement”), the terms
of which are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights may be redeemed, may be exchanged, may expire
or may be evidenced by separate certificates or be covered by separate book-entry
credits and will no longer be covered by this Advice or be evidenced by a
certificate representing a security covered by this Advice. The Company will mail
to the holder of the security covered by this Advice a copy of the Rights Agreement,
as in effect on the date of mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights beneficially owned by or transferred to any Person who is, was or
becomes an Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), and certain transferees thereof, will become null
and void and will no longer be transferable.


With respect to such shares of Common Stock described in this Section 3(c), until the earlier of
the Distribution Date or the Expiration Date, the Rights associated with the Common Stock
represented by such certificates or held in such book-entry accounts shall be evidenced by such
certificates or such book-entry accounts (together with the direct registration transaction advice
with respect to such shares) alone, and registered holders of Common Stock shall also be the


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registered holders of the associated Rights, and the transfer of any of shares of Common Stock,
whether by transfer or physical certificates or book-entry transfer, shall also constitute the
transfer of the Rights associated with the Common Stock.




          Section 4. Form of Rights Certificates.




          (a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which
do not affect the rights, immunities, duties or responsibilities of the Rights Agent) and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or quotation system on which the Rights may from time to time be listed or
quoted, or to conform to usage. Subject to the provisions of Section 11, Section 13 and Section 22
hereof, the Rights Certificates, whenever issued, shall be dated as of the Record Date and on their
face shall entitle the holders thereof to purchase such number of Fractional Shares of Preferred
Stock as shall be set forth therein at the price set forth therein (such exercise price per
Fractional Share (or, as set forth in this Agreement, for other securities), the “Purchase Price”),
but the amount and type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.




          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by a Person described in the first sentence of Section 7(e),
and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any such Rights, shall contain (to the extent feasible) a
legend in substantially the following form, modified as applicable to apply to such Person:





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


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




          Section 5. Countersignature and Registration.




          (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company’s seal or a facsimile thereof,
which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually
or by facsimile signature. The Rights Certificates shall be manually



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




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




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




          (a) Subject to the provisions of Section 4(b), Section 7(e), Section 13(d), Section 14 and
Section 24 hereof, at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number of Fractional Shares
of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Rights Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at
the office of the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof or of the Affiliates or Associates thereof as the Company or the Rights
Agent shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 13(d), Section 14 and Section 24 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment by the holder of 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. The Rights Agent shall have no duty or obligation under any Section of this
Agreement which requires the payment by a Rights holder of applicable taxes and charges unless and
until it satisfied that all such taxes and/or charges have been paid.




-12-









 








          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will, subject
to Section 4(b), Section 7(e), Section 13(d), Section 14 and Section 24, execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.




          Section 7. Exercise of Rights; Purchase Price.




          (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23(a) hereof) in whole or in part at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to purchase and the certificate on the reverse
side thereof properly completed and duly executed, to the Rights Agent at the office of the Rights
Agent designated for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of Fractional Shares of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or
prior to the Expiration Date.




          (b) The Purchase Price for each Fractional Share of Preferred Stock pursuant to the exercise
of a Right shall initially be $170, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c)
below.




          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate on the reverse side thereof duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per Fractional Share of
Preferred Stock (or other securities, cash or other assets, as the case may be) to be purchased as
set forth below and an amount equal to any applicable tax or charge required to be paid by the
holder of such Rights Certificate in accordance with Section 9 hereof, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i)(A) requisition from any transfer agent of
the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for
such shares) certificates for the total number of Fractional Shares of Preferred
Stock to be purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion, shall have elected to
deposit the shares of Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts representing interests
in such number of Fractional Shares of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) when necessary to comply with this Agreement, requisition from the
Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same
to



-13-









 






be delivered to or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder and (iv) when necessary to
comply with this Agreement, after receipt thereof, deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in cash or by certified
check, cashier’s or official bank check or bank draft payable to the order of the Company. In the
event that the Company is obligated to issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other property pursuant to Section 11(a) or Section 13(a)
hereof, the Company will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require prior to the occurrence of a Triggering Event that, upon
exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock
would be issued.




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




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



-14-









 






Acquiring
Person, Associate or Affiliate, or the nominee of any of the foregoing unless and until it has
received such notice.




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




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




          Section 9. Reservation and Availability of Capital Stock.




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




          (b) So long as any shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and deliverable upon the
exercise of the Rights are listed on any national securities exchange or quoted on any trading
system, the Company shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed on such exchange, or quoted
on such system, upon official notice of issuance upon such exercise. Following the occurrence of a
Triggering Event, the Company will use its best efforts to list (or continue the listing of) the
Rights and the securities issuable and deliverable upon the exercise of the Rights on one or more
national securities exchanges or to cause the Rights and the securities purchasable upon exercise
of the Rights to be reported by such transaction reporting system then in use.




          (c) The Company shall use its best efforts to (i) prepare and file, as soon as practicable
following the first occurrence of a Flip-In Event or, if applicable, as soon as



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practicable
following the earliest date after the first occurrence of a Flip-In Event on which the
consideration to be delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section 11(a)(iii) hereof), a registration
statement on an appropriate form under the Securities Act with respect to the securities
purchasable upon exercise of the Rights, (ii) cause such registration statement to become effective
upon filing or as soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various
states in connection with the exercisability of the Rights. The Company may temporarily suspend,
for a period of time not to exceed 90 days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. In addition, if the Company shall
determine that the Securities Act requires an effective registration statement under the Securities
Act following the Distribution Date, the Company may temporarily suspend the exercisability of the
Rights until such time as such a registration statement has been declared or becomes effective.
Upon any such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect (with a copy of such announcement to the Rights
Agent). Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law or any required
registration statement shall not have been declared effective.




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




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




-16-









 








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




          Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. The Purchase Price, the number and kind of shares or other securities subject to purchase upon
exercise of each Right and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.





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



-17-









 






     (ii) Subject to Sections 23 and 24 of this Agreement, in the event any Person shall, at
any time after the Rights Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is (1) a Flip-Over Event or (2) an
acquisition of shares of Common Stock pursuant to a Permitted Offer (provided that this
clause (2) shall cease to apply if such Acquiring Person thereafter becomes the Beneficial
Owner of any additional shares of Common Stock other than pursuant to such Permitted Offer
or a transaction set forth in Section 13(a) or 13(d) hereof), then, (x) the Purchase Price
shall be adjusted to be the Purchase Price immediately prior to the first occurrence of a
Flip-In Event multiplied by the number of Fractional Shares of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence and (y) each holder of a
Right (except as provided below in Section 11(a)(iii) and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at a price equal to the Purchase
Price in accordance with the terms of this Agreement, in lieu of the shares of Preferred
Stock otherwise purchasable thereunder, such number of shares of Common Stock of the Company
as shall equal the result obtained by dividing the Purchase Price by 50% of the Current
Market Price per share of Common Stock on the date of such first occurrence (such number of
shares, the “Adjustment Shares”); provided that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of such first occurrence.




     (iii) In the event that the number of shares of Common Stock that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a),
the Company shall, to the extent permitted by applicable law and regulation, (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right
(computed using the Current Market Price used to determine the number of Adjustment Shares)
(the “Current Value”) over (2) the Purchase Price (such excess is herein referred to as the
“Spread”), and (B) with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon the exercise of the Rights and payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock (including, without
limitation, the Preferred Stock) that the Board of Directors of the Company has determined
to have the same value as shares of Common Stock (such shares of preferred stock are herein
referred to as “Common Stock Equivalents”)), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board of Directors of
the Company based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent that shall be binding on the Rights Agent and
holders of Rights; provided, however, if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within 30 days following the later of (x) the
first occurrence of a Flip-In Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the “Flip-In Trigger Date”), then the



-18-









 







Company shall be obligated to deliver, upon
the surrender for exercise of a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the Rights, the
30-day period set forth above may be extended to the extent necessary, but not more than 90
days after the Flip-In 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 or the Board of Directors determines
that some action need be taken pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to 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 issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension (with prompt written notice of each such
announcement to the Rights Agent) is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market Price per share of the
Common Stock on the Flip-In Trigger Date and the value of any Common Stock Equivalent shall
be deemed to have the same value as the Common Stock on such date.



          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within 45 calendar days after such record date) Preferred Stock (or shares having
substantially the same rights, privileges and preferences as the shares of Preferred Stock
(“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price per share of Preferred Stock on
such record date, the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock that the aggregate offering price of the total
number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred
Stock and/or Equivalent Preferred Stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible). In case such subscription
price may be paid by delivery of consideration, part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the Rights.



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Shares of
Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price that would then be in effect if such record date
had not been fixed.




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




          (d) (i) For the purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the “Current Market Price” per share of Common Stock of a Person on any
date shall be deemed to be the average of the daily Closing Prices per share of such Common Stock
for the 30 consecutive Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share of
Common Stock on any date shall be deemed to be the average of the daily Closing Prices per share of
such Common Stock for the 10 consecutive
Trading Days immediately following such date; provided, however, that in the event that the
Current Market Price per share of Common Stock is determined during a period following the
announcement of (A) a dividend or distribution on such Common Stock other than a regular quarterly
cash dividend or the dividend of the Rights, or (B) any subdivision, combination or
reclassification of such Common Stock, and the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification, shall not have occurred
prior to the commencement of the requisite 30 Trading Day or 10 Trading Day period, as set forth
above, then, and in each such case, the Current Market Price shall be properly adjusted to take
into account ex-dividend trading. If the Common Stock is not publicly held or not so listed or
traded, “Current Market Price” per share shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.




          (ii) For the purpose of any computation hereunder, the “Current Market Price” per share (or
Fractional Share) of Preferred Stock shall be determined in the same manner as set

-20-









 








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




          (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments that by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share of Common Stock or other share or to the nearest ten-thousandth
of a Fractional Share of Preferred Stock, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.




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




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




          (h) Unless the Company shall have exercised its election as provided in Section 11(i) 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
Fractional Shares of Preferred Stock (calculated to the nearest one ten-thousandth of a Fractional
Share) obtained by (i) multiplying (x) the number of Fractional Shares of



-21-









 






Preferred Stock covered
by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase Price.




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




          (j) Irrespective of any adjustment or change in the Purchase Price or the number of Fractional
Shares of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price per Fractional Share
and the number of Fractional Shares that were expressed in the initial Rights Certificates issued
hereunder.




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then par value, if any, or the stated capital of the number of Fractional Shares of Preferred
Stock or of the number of shares of Common Stock or other securities issuable upon exercise of a
Right, the Company shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and nonassessable such
number of Fractional Shares of Preferred Stock or such number of shares of Common Stock or other
securities at such adjusted Purchase Price.




-22-









 








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




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




          (n) The Company covenants and agrees that it shall not, at any time that there is an Acquiring
Person, (i) consolidate with any other Person, (ii) merge with or into any other Person or (iii)
sell, lease or transfer (or permit one or more Subsidiaries to sell, lease or transfer), in one
transaction or a series of related transactions, assets, earning power or cash flow aggregating
more than 50% of the assets, earning power or cash flow of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons, if (x) at the time of or immediately after such
consolidation, merger, sale, lease or transfer there are any rights, warrants or other instruments
or securities of the Company or any other Person outstanding or agreements, arrangements or
understandings in effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (y) prior to,
simultaneously with or immediately after such consolidation, merger, sale, lease or transfer,
the stockholders or other equity owners of the Person who constitutes, or would constitute, the
“Principal Party” for purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates, or (z) the identity, form
or nature of organization of the Principal Party (including, without limitation, the selection of
the Person that will be the Principal Party as a result of the Company’s entering into one or more
consolidations, mergers, sales, leases or transfers with more than one party) would preclude or
limit the exercise of Rights or otherwise diminish substantially or eliminate the benefits intended
to be afforded by the Rights.




          (o) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 23, Section 24 or Section 27 hereof, take (or permit any Subsidiary to take)
any action if the purpose of such action is to, or if at the time such action is



-23-









 






 taken it is
reasonably foreseeable that such action will, diminish substantially or eliminate the benefits
intended to be afforded by the Rights.




          (p) Notwithstanding Section 3(c) hereof or any other provision of this Agreement to the
contrary, in the event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller number of shares or (iv)
otherwise reclassify the outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), the number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter with Rights, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction (the “Adjustment Fraction”), the numerator of which
shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. In lieu of such adjustment in the
number of Rights associated with one share of Common Stock, the Company may elect to adjust the
number of Fractional Shares of Preferred Stock purchasable, and the amount payable. upon the
exercise of one Right. If the Company makes such election, the number of Rights associated with
one share of Common Stock shall remain unchanged, and the number of Fractional Shares of Preferred
Stock purchasable upon exercise of one Right and the portion of the Purchase Price payable upon
exercise of one Right shall be proportionately adjusted so that (i) the number of Fractional Shares
of Preferred Stock purchasable upon exercise of a Right following such adjustment shall equal the
product of the number of Fractional Shares of Preferred Stock purchasable upon exercise of a Right
immediately prior to such adjustment multiplied by the Adjustment Fraction and (ii) the Purchase
Price per Fractional Share of Preferred Stock following such adjustment shall remain unchanged,
with the effect that the amount payable to exercise each Right will be changed to be equal the
product of the Purchase Price immediately prior to such adjustment multiplied by the Adjustment
Fraction.




          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall
(a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts
and computations accounting for such adjustment, (b) promptly file with the Rights Agent, and with
each transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate and
(c) mail a brief summary thereof to each registered holder of a Rights Certificate (or, if prior to
the Distribution Date, to each registered holder of a certificate representing shares of Common
Stock) in accordance with Section 26 hereof. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained and shall have no duty or liability
with respect thereto. The Rights Agent shall not be obligated to or responsible for calculating
any adjustment nor shall it deemed to have knowledge of such adjustment unless and until it shall
have received such certificate.





-24-











 





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




          (a) In the event that, from and after the time an Acquiring Person has become such, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person,
and the Company shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or merger, and, in
connection with such consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of the Company or any other Person
or cash or any other property, or (z) the Company shall sell, lease or otherwise transfer (or one
or more of its Subsidiaries shall sell, lease or otherwise transfer), in one transaction or a
series of related transactions, assets, cash flow or earning power aggregating more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any wholly owned Subsidiary of the Company or any
combination thereof in one or more transactions each of which complies (and all of which together
comply) with Section 11(o) hereof), then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that: (i) the Purchase Price shall be
adjusted to be the Purchase Price immediately prior to the first occurrence of a Triggering Event
multiplied by the number of Fractional Shares of Preferred Stock for which a Right was exercisable
immediately prior to such first occurrence; (ii) on and after the Distribution Date, each holder of
a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the Purchase Price in accordance with the terms of this Agreement, in
lieu of shares of Preferred Stock or Common Stock of the Company, such number of validly authorized
and issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained by dividing the
Purchase Price by 50% of the Current Market Price per share of the Common Stock of such Principal
Party on the date of consummation of such Flip-Over Event; provided that the Purchase Price and the
number of shares of Common Stock of such Principal Party issuable upon exercise of each Right shall
be further adjusted as provided in this Agreement to reflect any events occurring after the date of
such first occurrence of a Triggering Event or after the date of such Flip-Over Event, as
applicable; (iii) such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Flip-Over Event, all the obligations and duties of the Company pursuant to this Agreement;
(iv) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Flip-Over Event; (v) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be,
in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and (vi) the provisions of Section 11(a)(ii) hereof shall be of no effect following the occurrence
of any Flip-Over Event
..




-25-









 








          (b) “Principal Party” shall mean





     (i) in the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a), (A) the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the Common Stock of which has the greatest aggregate
market value, or (B) if no securities are so issued, (x) the Person that survives such
consolidation or is the other party to the merger and survives such merger, or, if there is
more than one such Person, the Person the Common Stock of which has the greatest aggregate
market value or (y) if the Person that is the other party to the merger does not survive the
merger, the Person that does survive the merger (including the Company if it survives); and




     (ii) in the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of the assets,
cash flow or earning power transferred pursuant to such transaction or transactions, or, if
each Person that is a party to such transaction or transactions receives the same portion of
the assets, cash flow or earning power so transferred, or if the Person receiving the
greatest portion of the assets, cash flow or earning power cannot be determined, the Person
the Common Stock of which has the greatest aggregate market value;


provided, however, that in any such case, if the Common Stock of such Person is not at such time
and has not been continuously over the preceding twelve-month period registered under Section 12 of
the Exchange Act, and if (1) such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, “Principal Party” shall refer to such other
Person; (2) such Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of all of which are and have been so registered, “Principal Party” shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market
value; and (3) such Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in
(1) and (2) above shall apply to each of the chains of ownership having an interest in such joint
venture as if such party were a “Subsidiary” of both or all of such joint venturers and the
Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the total of such
interests.




          (c) The Company shall not consummate any Flip-Over Event unless each Principal Party (or
Person that may become a Principal Party as a result of such Flip-Over Event) shall have a
sufficient number of authorized shares of its Common Stock that have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and each such Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after the date of such
Flip-Over Event, the Principal Party at its own expense will





     (i) prepare and file a registration statement under the Securities Act with respect to
the Rights and the securities purchasable upon exercise of the Rights on an



-26-









 







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




     (ii) use its best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the “blue sky” laws of such jurisdictions as
may be necessary or appropriate;




     (iii) use its best efforts, if the Common Stock of the Principal Party is or shall
become listed on a national securities exchange, to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on such securities
exchange and, if the Common Stock of the Principal Party shall not be listed on a national
securities exchange, to cause the Rights and the securities purchasable upon exercise of the
Rights to be reported by such transaction reporting system then in use; and




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


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




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




          Section 14. Fractional Rights and Fractional Shares.




          (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates or
scrip evidencing fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the Closing Price of one
Right for the Trading Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable.




          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than, except as provided in Section 7(c) hereof, fractions that are integral




-27-









 







multiples of a
Fractional Share of Preferred Stock) upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Preferred Stock (other than, except as provided in
Section 7(c) hereof, fractions that are integral multiples of a Fractional Share of Preferred
Stock). Interests in fractions of shares of Preferred Stock in integral multiples of a Fractional
Share of Preferred Stock may, at the election of the Company in its sole discretion, be evidenced
by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares of Preferred Stock represented by such depositary receipts. In lieu
of fractional shares of Preferred Stock that are not integral multiples of a Fractional Share of
Preferred Stock, the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same fraction of one
one-hundredth of the Closing Price of a share of Preferred Stock for the Trading Day immediately
prior to the date of such exercise.




          (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the Closing Price of
one share of Common Stock for the Trading Day immediately prior to the date of such exercise.




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




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




          Section 15. Rights of Action. All rights of action in respect of this Agreement, other than rights of action vested in the
Rights Agent pursuant to Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common
Stock) and, where applicable, the Company; and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or
of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by




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such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach by the Company of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against actual or
threatened violations by the Company of the obligations hereunder of any Person subject to this
Agreement. After a Triggering Event, holders of Rights shall be entitled to recover the reasonable
costs and expenses, including attorneys’ fees, incurred by them in any action to enforce the
provisions of this Agreement.




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




          (a) prior to the Distribution Date, the Rights will not be evidenced by Rights Certificates
and will be transferable only in connection with the transfer of Common Stock;




          (b) after the Distribution Date, the Rights Certificates will be transferable only on the
registry books of the Rights Agent if surrendered at the principal office of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof and the certificate contained
therein properly completed and duly executed;




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




          (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction 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; provided, however, the Company must use its best efforts to have
any such order, decree or ruling lifted or otherwise overturned as soon as possible.




          Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the number of Fractional Shares of Preferred Stock or any
other securities of the Company that may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed



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to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the
provisions hereof.




          Section 18. Concerning the Rights Agent.




          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in the administration,
preparation, delivery, amendment and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, expense, damage, judgment, fine, penalty, claim, demand,
settlement, or cost (including, without limitation, the reasonable fees and expenses of counsel),
incurred without gross negligence, bad faith or willful misconduct (each as determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent jurisdiction) on the part
of the Rights Agent, for action taken, suffered or omitted by the Rights Agent in connection with
the acceptance, administration, exercise and performance of this Agreement, including, without
limitation, the costs and expenses of defending against any claim of liability and appealing any
claim of liability arising therefrom, directly or indirectly. The costs and expenses incurred in
enforcing this right of indemnification shall be paid by the Company, unless it is determined by a
final, non-appealable order, judgment, decree or ruling by a court of competent jurisdiction that
the Rights Agent is not entitled to indemnification due to the Rights Agent’s gross negligence, bad
faith or willful misconduct. The provisions of this Section 18 and Section 20 below shall survive
the termination of this Agreement, the exercise, termination or expiration of the Rights and the
replacement, resignation or removal of the Rights Agent.




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




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




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




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




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




          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company
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 in the absence of bad
faith 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
any Acquiring Person and the determination of “Current Market Price”) be proved or established by
the Company prior to taking, suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full and complete authorization and





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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 in the absence of bad faith by it under the provisions
of this Agreement in reliance upon such certificate.




          (c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or
willful misconduct (each as determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction). Anything to the contrary notwithstanding, in no event shall
the Rights Agent be liable for special, indirect, punitive, incidental or consequential 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 and regardless of the form of action.
Any liability of the Rights Agent until this Agreement will be limited to the amount of annual fees
paid by the Company to the Rights Agent.




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




          (e) The Rights Agent shall not be under any responsibility for or have any liability in
respect of the validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights (including the
Rights becoming void in accordance with Section 11(a)(ii) hereof) or any adjustment in the terms
of the Rights (including under the provisions of Section 11 or Section 13 hereof), or responsible
for the manner, method or amount of any such change or adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt by the Rights Agent of a certificate
furnished pursuant to Section 12 hereof describing such change or adjustment 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 shares of Preferred Stock or Common Stock or other
securities to be issued pursuant to this Agreement or any Rights Certificate or as to whether any
shares of Preferred Stock or Common Stock or other securities will, when so issued, be validly
authorized and issued, fully paid and nonassessable.




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




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and such instructions shall be full
authorization and protection to the Rights Agent, and the Rights Agent shall not be liable for or




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in respect of any action taken, suffered or omitted to be taken by it in accordance with
instructions of any such officer, or for any delay in acting while waiting for 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 or omitted by the Rights Agent under this Agreement and the date on
and/or after which such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken 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 Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking 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.




          (h) The Rights Agent and any member, 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 it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent or any such
member, stockholder, affiliate, director, officer or employee from acting in any other capacity for
the Company or for any other Person.




          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself (through its directors, officer and employees) or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, omission, default, neglect or misconduct.




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




          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.




          (l) The Rights Agent shall not be required to take notice or be deemed to have notice of any
fact, event or determination (including, without limitation, any dates or events
defined in this Agreement or the designation of any Person as an Acquiring Person, Affiliate,
Associate or Subsidiary) under this Agreement unless and until the Rights Agent shall be
specifically notified in writing by the Company of such fact, event or determination.




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          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, at the expense of
the Company, to each transfer agent of the Common Stock and the Preferred Stock known to the Rights
Agent, by registered or certified mail, and to the registered holders, if any, of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) 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 Stock and the
Preferred Stock, by registered or certified mail, and to the registered holders of the Rights
Certificates, if any, by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 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 registered holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for inspection by the Company), then the
Rights Agent or the registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a Person organized and doing business
under the laws of the United States or any state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust, or stock transfer or shareholder services
powers and which has at the time of its appointment as Rights Agent a combined capital and surplus
of at least $50,000,000 or (b) an affiliate of a Person described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock and the Preferred Stock, and mail a notice thereof in
writing to the registered holders, if any, of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.




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




-34-









 







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




          Section 23. Redemption and Termination.




          (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (i) the close of business on the tenth day following the first date of public announcement of
the occurrence of a Flip-In Event (or, if such date shall have occurred prior to the Record Date,
the close of business on the tenth day following the Record Date) (in either event, subject to
acceleration to such earlier date as may be determined by the Company’s Board of Directors as set
forth below) and (ii) the Expiration Date, cause the Company to redeem all but not less than all
the then outstanding Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted, if necessary, to reflect any stock split, stock dividend or similar
transaction occurring after the Rights Dividend Declaration Date (such redemption price being
hereinafter referred to as the “Redemption Price”); provided, however, that the Rights may not be
redeemed following any merger to which the Company is a party that (i) occurs when there is an
Acquiring Person and (ii) was not approved (x) prior to the time such Person became an Acquiring
Person by the Board of Directors of the Company and (y) prior to such merger by the stockholders of
the Company at a stockholders’ meeting (and not by written consent). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Flip-In Event until such time as the Company’s right of redemption hereunder has
expired. The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the Current Market Price of the Common Stock at the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors. The Board of Directors of the
Company may, to the extent set forth in the first sentence of this Section 23(a), irrevocably
accelerate the time set forth in clause (i) of such sentence to a specified earlier time or to an
unspecified earlier time to be determined by a subsequent action or event (but in no event to a
time later than the time otherwise specified in clause (i)), in which event the Rights shall not be
redeemable from and after such specified time.




          (b) Immediately upon the effectiveness of the action of the Board of Directors of the Company
ordering the redemption of the Rights (the effectiveness of which action may be conditioned on the
occurrence of one or more events or on the existence of one or more facts or may be effective at
some future time), evidence of which shall be filed with the Rights Agent and
without any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the effectiveness of the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the registered holders of the then outstanding Rights by mailing such
notice to all such holders at each holder’s last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent
[?] for the Common Stock. Any notice that is mailed in the manner herein provided shall be deemed
given,



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whether or not the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made.




          Section 24. Exchange.




          (a) The Board of Directors of the Company may, at its option, at any time and from time to
time after the occurrence of a Flip-In Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock or Common Stock Equivalents or any combination
thereof, at an exchange ratio of one share of Common Stock, or such number of Common Stock
Equivalents or units representing fractions thereof as would be deemed to have the same value as
one share of Common Stock, per Right, appropriately adjusted, if necessary, to reflect any stock
split, stock dividend or similar transaction occurring after the Rights Dividend Declaration Date
(such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the
foregoing, the Board of Directors may not effect such exchange at any time after (i) any Person
(other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the shares of Common Stock then outstanding or (ii) the
occurrence of a Flip-Over Event.




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




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




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          (d) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates or scrip evidencing fractional shares of Common Stock upon exchange of the
Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the value of a whole share of Common
Stock. For purposes of this Section 24, the value of a whole share of Common Stock shall be the
Closing Price per share of Common Stock for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Stock on such date.




          Section 25. Notice of Certain Events.




          (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a wholly owned Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), or to effect any sale, lease or other
transfer of all or substantially all the Company’s assets, cash flow or earning power to any other
Person or Persons (other than a wholly owned Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of record of a Rights
Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, lease, transfer, liquidation, dissolution or winding up is to take place and the date
of participation therein by the holders of the shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at least 20 days prior
to the date of the taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action.




          (b) In case any Flip-In Event or Flip-Over Event shall occur, then (i) the Company shall as
soon as practicable thereafter give to the Rights Agent and each registered holder of a Rights
Certificate (or if occurring prior to the Distribution Date, the registered holders of Common
Stock), in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13(a) hereof, and (ii) all references in the preceding paragraph




-37-









 







to Preferred Stock shall
be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities.




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



Administaff, Inc.

19001 Crescent Springs Drive

Kingwood, Texas 77339

Attention: General Counsel



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



Mellon Investor Services LLC

600 N. Pearl Street, Suite 1010

Dallas, Texas 75201

Attention: Relationship Manager



with a copy to:



Mellon Investor Services LLC

Newport Officer Center VII

480 Washington Boulevard

Jersey City, New Jersey 07310

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




          Section 27. Supplements and Amendments. Except as provided in the last sentence of this Section 27, at any time when the Rights are then
redeemable, the Company may in its sole and absolute discretion and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement in any respect without the
approval of any holders of Rights or holders of Common Stock. At any time when the Rights are not
redeemable, except as provided in the last sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein that may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or desirable;




-38-









 







provided that
no such amendment or supplement shall materially adversely affect the interests of the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person); and
further provided that this Agreement may not be supplemented or amended pursuant to this sentence
to lengthen (A) a time period relating to when the Rights may be redeemed or (B) any other time
period unless the lengthening of such other time period is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights (other than any
Acquiring Person and its Affiliates and Associates). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or
amendment; provided, however, that the Rights Agent may, but shall not be obligated to, enter into
any such supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or
immunities under this Agreement and it shall not be bound by any such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment
shall be made that decreases the Redemption Price.




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




          Section 29. Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company (or, as set forth herein, certain specified members thereof) shall have
the exclusive power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this Agreement and
(ii) make all determinations deemed necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not redeem the Rights or to amend this
Agreement). All such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors of the Company in good faith, shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights, as such, and all other parties, and
(y) not subject the Board of Directors to any liability to the holders of the Rights. The Rights
Agent shall always be entitled to assume that the Company’s Board of Directors acted in good faith
and shall be fully protected and incur no liability in reliance thereon.




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




-39-









 







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




          Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors of the Company determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of this Agreement, then,
unless there has occurred a merger referred to in the proviso to the first sentence of Section
23(a), the right of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such determination by the
Board of Directors of the Company or, if earlier, immediately prior to any such merger. Without
limiting the foregoing, if any provision requiring that a determination be made by less than the
entire Board of Directors of the Company is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination shall then be made by the entire
Board of Directors of the Company.




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




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




          Section 34. Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable
for any delays or failures in performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or
malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power
failures or mechanical difficulties with information storage or retrieval systems, labor
difficulties, war, or civil unrest.




          Section 35. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the provisions hereof.




-40-









 








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




	 	 	 	 	 
	 	ADMINISTAFF, INC.

 	 
	 	By  	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 
	 
	 	MELLON INVESTOR SERVICES LLC,

as Rights Agent

 	 
	 	By  	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 
	 




-41-









 








Exhibit A




FORM OF

CERTIFICATE OF DESIGNATIONS

of

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

ADMINISTAFF, INC.




Pursuant to Section 151 of the General Corporation Law

of the State of Delaware




          ADMINISTAFF, INC., a corporation organized and existing under the General Corporation Law of
the State of Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:




          That pursuant to the authority vested in the Board of Directors in accordance with the
provisions of the Certificate of Incorporation of the said Corporation, the said Board of Directors
on November 13, 2007 adopted the following resolution creating a series of 600,000 shares of
Preferred Stock designated as “Series A Junior Participating Preferred Stock”:




          RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of the Certificate of
Incorporation, a series of Preferred Stock, par value $0.01 per share, of the
Corporation be and hereby is created, and that the designation and number of shares
thereof and the voting and other powers, preferences and relative, participating,
optional or other rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:




Series A Junior Participating Preferred Stock




          1. Designation and Amount. There shall be a series of Preferred Stock that shall be designated as “Series A Junior
Participating Preferred Stock,” and the number of shares constituting such series shall be 600,000.
Such number of shares may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of Series A Junior
Participating Preferred Stock to less than the number of shares then issued and outstanding plus
the number of shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.




          2. Dividends and Distributions.




          (A) Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A Junior Participating
Preferred Stock with respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock, in preference to the holders of shares of any class or series of
stock of the Corporation ranking junior to the Series A Junior Participating Preferred Stock, shall
be entitled




A-1









 







to receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (1) quarterly dividends payable in cash on March 15, June 15, September
15 and December 15 in each year (each such date being referred to herein as a “Quarterly Dividend
Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of
a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 and (b) the Adjustment Number
(as defined below) times the aggregate per share amount of all cash dividends, and (2) the
Adjustment Number times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common
Stock, par value $0.01 per share, of the Corporation (the “Common Stock”) since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. The “Adjustment Number” shall initially be 100. In the event the Corporation
shall at any time after November 13, 2007 (the “Rights Declaration Date”) (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying
such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.




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




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





A-2









 







or distribution declared thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.




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




          (A) Each share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number on all matters submitted to a vote of
the stockholders of the Corporation.




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




          (C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a “default period”) that shall
extend until such time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been declared and paid or set apart for
payment. During each default period, (1) the number of Directors shall be increased by two,
effective as of the time of election of such Directors as herein provided, and (2) the holders of
Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) upon which
these or like voting rights have been conferred and are exercisable (the “Voting Preferred Stock”)
with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such two Directors.




          (ii) During any default period, such voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at
annual meetings of stockholders, provided that such voting right shall not be exercised unless the
holders of at least one-third in number of the shares of Voting Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Voting Preferred Stock of such voting right.




          (iii) Unless the holders of Voting Preferred Stock shall, during an existing default period,
have previously exercised their right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten percent of the total number
of shares of Voting Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of Voting Preferred Stock, which
meeting shall thereupon be called by the Chairman of the Board, the Chief Executive Officer, the
President, a Vice President or the Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Voting Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Voting Preferred Stock by




A-3









 







mailing a
copy of such notice to him at his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after
such order or request or, in default of the calling of such meeting within 60 days after such order
or request, such meeting may be called on similar notice by any stockholder or stockholders owning
in the aggregate not less than ten percent of the total number of shares of Voting Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting
shall be called during the period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.




          (iv) In any default period, after the holders of Voting Preferred Stock shall have exercised
their right to elect Directors voting as a class, (x) the Directors so elected by the holders of
Voting Preferred Stock shall continue in office until their successors shall have been elected by
such holders or until the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors theretofore elected by the
holders of the class or classes of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of a particular class
or classes of stock shall include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.




          (v) Immediately upon the expiration of a default period, (x) the right of the holders of
Voting Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Certificate of Incorporation or
By-Laws irrespective of any increase made pursuant to the provisions of paragraph (C) of this
Section 3 (such number being subject, however, to change thereafter in any manner provided by law
or in the Certificate of Incorporation or By-Laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.




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




          4. Certain Restrictions.




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






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



A-4









 






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




          (iii) redeem or purchase or otherwise acquire for consideration any shares of Series A
Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the
Series A Junior Participating Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to all holders
of Series A Junior Participating Preferred Stock, or to all such holders and the holders of
any such shares ranking on a parity therewith, 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.




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




          6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation,
no distribution shall be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the “Series A Junior Participating Preferred Stock Liquidation Preference”).
Following the payment of the full amount of the Series A Junior Participating Preferred Stock
Liquidation Preference, no additional distributions shall be made to the holders of shares of
Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the
quotient obtained by dividing (i) the Series A Junior Participating Preferred Stock Liquidation
Preference by (ii) the Adjustment Number. Following the payment of the full amount of the Series A
Junior Participating Preferred Stock Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of
Common Stock shall, subject to the prior rights of all




A-5









 







other series of Preferred Stock, if any,
ranking prior thereto, receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such Series A Junior
Participating Preferred Stock and Common Stock, on a per share basis, respectively.




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




          (C) Neither the merger or consolidation of the Corporation into or with another corporation
nor the merger or consolidation of any other corporation into or with the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this
Section 6, but the sale, lease or conveyance of all or substantially all the Corporation’s assets
shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.




          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 Junior
Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount
per share equal to the Adjustment Number 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.




          8. Redemption. (A) The Corporation, at its option, may redeem shares of the Series A Junior Participating
Preferred Stock in whole at any time and in part from time to time, at a redemption price equal to
the Adjustment Number times the current per share market price (as such term is hereinafter
defined) of the Common Stock on the date of the mailing of the notice of redemption, together with
unpaid accumulated dividends to the date of such redemption. The “current per share market price”
on any date shall be deemed to be the average of the closing price per share of such Common Stock
for the ten consecutive Trading Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that in the event that the current per share market price of the
Common Stock is determined during a period following the announcement of (A) a dividend or
distribution on the Common Stock other than a regular quarterly cash dividend or (B) any
subdivision, combination or reclassification of such Common Stock and the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination or reclassification,
shall not have occurred prior to the commencement of such ten Trading Day period, then, and in each
such case, the current per share market price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sales 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




A-6









 







reported in the principal transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange, or, if the Common Stock
is not listed or admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by such self-regulatory organization or
registered securities information processor (as such terms are used under the Securities Exchange
Act of 1934, as amended) that then reports information concerning the Common Stock, or, if sales
price information is not so reported, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by such entity, or, if on any such date the Common
Stock is not quoted by any such entity, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock selected by the Board
of Directors of the Corporation. If on any such date no such market maker is making a market in
the Common Stock, the fair value of the Common Stock on such date as determined in good faith by
the Board of Directors of the Corporation shall be used. The term “Trading Day” shall mean a day
on which the principal national securities exchange on which the Common Stock is listed or admitted
to trading is open for the transaction of business, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange but is quoted by such a self-regulatory
organization or registered securities information processor, a day on which such entity reports
trades, or, if the Common Stock is not so quoted, a Monday, Tuesday, Wednesday, Thursday or Friday
on which banking institutions in the State of New York are not authorized or obligated by law or
executive order to close.




          (B) In the event that fewer than all the outstanding shares of the Series A Junior
Participating Preferred Stock are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be redeemed shall be determined by lot or
pro rata as may be determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.




          (C) Notice of any such redemption shall be given by mailing to the holders of the shares of
Series A Junior Participating Preferred Stock to be redeemed a notice of such redemption, first
class postage prepaid, not later than the fifteenth day and not earlier than the sixtieth day
before the date fixed for redemption, at their last address as the same shall appear
upon the books of the Corporation. Each such notice shall state: (i) the redemption date;
(ii) the number of shares to be redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption
price; (iv) the place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to
accrue on the close of business on such redemption date. Any notice that is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether or not the
stockholder received such notice, and failure duly to give such notice by mail, or any defect in
such notice, to any holder of Series A Junior Participating Preferred Stock shall not affect the
validity of the proceedings for the redemption of any other shares of Series A Junior Participating
Preferred Stock that are to be redeemed. On or after the date fixed for redemption as stated in
such notice, each holder of the shares called for redemption shall surrender the certificate
evidencing such shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the redemption price. If fewer than all the shares
represented by any such




A-7









 







surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.



The shares of Series A Junior Participating Preferred Stock shall not be subject to the operation
of any purchase, retirement or sinking fund.




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




          10. Amendment. At any time that any shares of Series A Junior Participating Preferred Stock are outstanding,
the Certificate of Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.




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




          IN WITNESS WHEREOF, the undersigned has executed this Certificate and does affirm the
foregoing as true this ___ day of ___, 200_.




	 	 	 
	 

	 	 
	 

	 	[Vice] President







A-8









 








Exhibit B




[Form of Rights Certificate]




			
	 	 	 
	Certificate No. R-
	 	___Rights





NOT EXERCISABLE AFTER NOVEMBER 13, 2017 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.




Rights Certificate




ADMINISTAFF, INC.




          This certifies that ___, or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of November 13, 2007 as it may
from time to time be supplemented or amended (the “Rights Agreement”), between Administaff, Inc., a
Delaware corporation (the “Company”), and Mellon Investor Services LLC, as rights agent (the
“Rights Agent”), to purchase from the Company at any time prior to 5:00 p.m. (New York, New York
time) on November 13, 2017 at the office of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, nonassessable share (a “Fractional
Share”) of Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred
Stock”), of the Company, at a purchase price of $170 per one one-hundredth of a share (the
“Purchase Price”), upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate set forth on the reverse hereof duly executed. The
Purchase Price may be paid in cash or by certified check, cashier’s or official bank check or bank
draft payable to the order of the Company. The number of Rights evidenced by this Rights
Certificate (and the number of shares that may be purchased upon exercise thereof) set forth above,
and the Purchase Price per Fractional Share set forth above, are the number and Purchase Price as
of November 13, 2007, based on the Preferred Stock as constituted at such date. The Company
reserves the right to require prior to the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement) that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.




          From and after the first occurrence of a Triggering Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by or
transferred to (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the




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Rights Agreement, a transferee of a person who, concurrently with or after such transfer,
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person, such Rights shall,
with certain exceptions, become null and void in the circumstances set forth in the Rights
Agreement, and no holder hereof shall have any rights whatsoever with respect to such Rights from
and after the occurrence of such Triggering Event.




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




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




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




          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at its option at a redemption price of $.01 per Right, payable,
at the election of the Company, in cash or shares of Common Stock or such other consideration as
the Board of Directors may determine, at any time prior to the earlier of the close of business on
(a) the tenth day following the first public announcement of the occurrence of a Flip-In Event (as
such time period may be extended or shortened pursuant to the Rights Agreement) and (b) the
Expiration Date (as such term is defined in the Rights Agreement) or (ii) may be exchanged in whole
or in part for shares of Common Stock and/or other equity securities of the Company deemed to have
the same value as shares of Common Stock, at any time prior to a person’s becoming the beneficial
owner of 50% or more of the shares of Common Stock outstanding or the occurrence of a Flip-Over
Event.




          No fractional shares of Preferred Stock are required to be issued upon the exercise of any
Right or Rights evidenced hereby (other than, except as set forth above, fractions that are
integral multiples of a Fractional Share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.




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




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




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



Dated as of February 9, 1998




	 	 	 	 	 	 	 
	ATTEST:	 	ADMINISTAFF, INC.
	 
	 

	 	 	 	By:	 	 
	 	 	 	 	 
	Secretary	 	 	 	Title:
	 
	 	 	 	 	 	 
	Countersigned:	 	 	 	 
	 
	 	 	 	 	 	 
	MELLON INVESTOR SERVICES LLC 

as Rights Agent	 	 	 	 
	 
	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Authorized Signature	 	 	 	 






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[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires

to transfer any Rights evidenced by the Rights Certificate.)




FOR VALUE RECEIVED                                                             
hereby sells, assigns and transfers unto                                                               



 



(Please print name and address of transferee)




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



Dated:                                         , 20          




	 	 	 
	 

	 	 
	 

	 	Signature





Signature Guaranteed:



Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).




B-4









 








Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




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




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




	 	 	 
	Dated:                                         , 20     

	 	 
	 

	 	Signature





Signature Guaranteed:



Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).




NOTICE




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




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FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise

Rights represented by the Rights Certificate.)



To: ADMINISTAFF, INC.




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



Please insert social security

or other identifying number



 



(Please print name and address)



 




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



Please insert social security

or other identifying number



 



(Please print name and address)



 



Dated:                     , 20     




	 	 	 
	 

	 	 
	 

	 	Signature





Signature Guaranteed:



Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).




B-6









 








Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




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




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




	 	 	 
	Dated:                                         , 20     

	 	 
	 

	 	Signature





Signature Guaranteed:



Signatures must be guaranteed by a member firm of a national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or another eligible guarantor institution (as defined
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).




NOTICE




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





B-7









 








Exhibit C



Under certain circumstances set forth in the Rights Agreement, Rights beneficially owned by or
transferred to any Person who is, was or becomes an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), and certain transferees thereof, will
become null and void and will no longer be transferable.




SUMMARY OF RIGHTS




          On January 20, 1998, the Board of Directors of Administaff, Inc. (the “Company”) declared a
dividend of one right (“Right”) for each outstanding share of the Company’s Common Stock, par value
$0.01 per share (“Common Stock”), to stockholders of record at the close of business on February 9,
1998. Each Right entitles the registered holder to purchase from the Company a unit consisting of
one one-hundredth of a share (a “Fractional Share”) of Series A Junior Participating Preferred
Stock, par value $0.01 per share (the “Preferred Stock”), at a purchase price of $170 per
Fractional Share, subject to adjustment (the “Purchase Price”). The description and terms of the
Rights are set forth in a Rights Agreement dated as of November 13, 2007 as it may from time to
time be supplemented or amended (the “Rights Agreement”) between the Company and Mellon Investor
Services LLC, as Rights Agent.




          Initially, the Rights will be attached to all certificates representing outstanding shares of
Common Stock, and no separate certificates for the Rights (“Rights Certificates”) will be
distributed. The Rights will separate from the Common Stock and a “Distribution Date” will occur,
with certain exceptions, upon the earlier of (i) ten days following a public announcement that a
person or group of affiliated or associated persons (an “Acquiring Person”) has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the date of the announcement being the “Stock Acquisition Date”), or (ii) ten
business days following the commencement of a tender offer or exchange offer that would result in a
person’s becoming an Acquiring Person. In certain circumstances, the Distribution Date may be
deferred by the Board of Directors. Certain inadvertent acquisitions will not result in a person’s
becoming an Acquiring Person if the person promptly divests itself of sufficient Common Stock.
Until the Distribution Date, Until the Distribution Date, the Rights (a) will be evidenced by the
certificates for Common Stock or, for shares held in book-entry accounts through the direct
registration service of the Company’s transfer agent, by such book-entry accounts and not by
separate certificates, and (b) will be transferred with and only with such Common Stock and the
transfer of any Common Stock will also constitute the transfer of the Rights associated with the
Common Stock.




          The Rights are not exercisable until the Distribution Date and will expire at the close of
business on November 13, 2017, unless earlier redeemed or exchanged by the Company as described
below.




          As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of Common Stock as of the close of business on the Distribution Date and, from
and after the Distribution Date, the separate Rights Certificates alone will represent the Rights.
All shares of Common Stock issued prior to the Distribution Date will be issued with Rights.
Shares of Common Stock issued after the Distribution Date in connection




C-1









 







with certain employee benefit plans or upon conversion of certain securities will be issued
with Rights. Except as otherwise determined by the Board of Directors, no other shares of Common
Stock issued after the Distribution Date will be issued with Rights.




          In the event (a “Flip-In Event”) that a person becomes an Acquiring Person (except pursuant to
a tender or exchange offer for all outstanding shares of Common Stock at a price and on terms that
a majority of the independent directors of the Company determines to be fair to and otherwise in
the best interests of the Company and its stockholders (a “Permitted Offer”)), each holder of a
Right will thereafter have the right to receive, upon exercise of such Right, a number of shares of
Common Stock (or, in certain circumstances, cash, property or other securities of the Company)
having a Current Market Price (as defined in the Rights Agreement) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the occurrence of any Triggering
Event, all Rights that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by or transferred to an Acquiring Person (or by certain related parties)
will be null and void in the circumstances set forth in the Rights Agreement. However, Rights are
not exercisable following the occurrence of any Flip-In Event until such time as the Rights are no
longer redeemable by the Company as set forth below.




          In the event (a “Flip-Over Event”) that, at any time from and after the time an Acquiring
Person becomes such, (i) the Company is acquired in a merger or other business combination
transaction (other than certain mergers that follow a Permitted Offer), or (ii) 50% or more of the
Company’s assets, cash flow or earning power is sold or transferred, each holder of a Right (except
Rights that are voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a Current Market Price
equal to two times the exercise price of the Right. Flip-In Events and Flip-Over Events are
collectively referred to as “Triggering Events.”




          The number of outstanding Rights associated with a share of Common Stock, or the number of
Fractional Shares of Preferred Stock issuable upon exercise of a Right and the Purchase Price, are
subject to adjustment in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock occurring prior to the Distribution Date. The Purchase Price
payable, and the number of Fractional Shares of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution in the event of certain transactions affecting the Preferred Stock.




          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No fractional shares of Preferred Stock
that are not integral multiples of a Fractional Share are required to be issued upon exercise of
Rights and, in lieu thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event
that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.




          At any time until ten days following the first date of public announcement of the occurrence
of a Flip-In Event, the Company may redeem the Rights in whole, but not in part, at a




C-2









 







price of $.01 per Right, payable, at the option of the Company, in cash, shares of Common
Stock or such other consideration as the Board of Directors may determine. Immediately upon the
effectiveness of the action of the Board of Directors ordering redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to receive the $.01 redemption
price.




          At any time after the occurrence of a Flip-In Event and prior to a person’s becoming the
beneficial owner of 50% or more of the shares of Common Stock then outstanding or the occurrence of
a Flip-Over Event, the Company may exchange the Rights (other than Rights owned by an Acquiring
Person or an affiliate or an associate of an Acquiring Person, which will have become void), in
whole or in part, at an exchange ratio of one share of Common Stock, and/or other equity securities
deemed to have the same value as one share of Common Stock, per Right, subject to adjustment.




          Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights should 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 the
common stock of the acquiring company as set forth above or are exchanged as provided in the
preceding paragraph.




          Other than the redemption price, any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company as long as the Rights are redeemable. Thereafter, the
provisions of the Rights Agreement other than the redemption price may be amended by the Board of
Directors in order to cure any ambiguity, defect or inconsistency, to make changes that do not
materially adversely affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to lengthen the time period governing redemption shall be made at such
time as the Rights are not redeemable.




          A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an exhibit to a Current Report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Company and the Rights Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which
is incorporated herein by reference.





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