Exhibit
4.2


FORM
 
 of
 
 CERTIFICATE
OF DESIGNATION
 
 of
  SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK
 
 of
 
 SCOLR,
INC.
 
 ____________________________________________________
 
 (Pursuant
to Section 151 of the Delaware General Corporation Law)
 
 ____________________________________________________
 
 
 
 SCOLR,
Inc., a corporation organized and existing under the
 General
Corporation Law of the State of Delaware (hereinafter called the
 "Corporation"),
hereby certifies that the following resolution was adopted by
 the Board
of Directors of the Corporation as required by Section 151 of the
 General
Corporation Law at a meeting duly called and held on November 1,
2002:
 
 RESOLVED,
that pursuant to the authority granted to and vested in
 the Board
of Directors of this Corporation (hereinafter called the "Board of
 Directors"
or the "Board") in accordance with the provisions of the
Certificate
 of
Incorporation of the Corporation (the "Certificate of Incorporation"),
the
 Board of
Directors hereby creates a series of Preferred Stock, par value
$0.01
 per share
(the "Preferred Stock"), of the Corporation and hereby states the
 designation
and number of shares, and fixes the relative rights, preferences,
 and
limitations thereof as follows:
 
 Section
1. Designation and Amount. The shares of this series
 shall be
designated as "Series A Junior Participating Preferred Stock" (the
 "Series A
Preferred Stock") and the number of shares constituting the Series
A
 Preferred
Stock shall be 30,000. Such number of shares may be increased or
 decreased
by resolution of the Board of Directors; provided, that no decrease
 shall
reduce the number of shares of Series A Preferred Stock to a number
less
 than the
number of shares then outstanding plus the number of shares
reserved
 for
 
 
 
 A-1
  
 
 issuance
upon the exercise of outstanding options, rights or warrants or
 upon the
conversion of any outstanding securities issued by the Corporation
 convertible
into Series A Preferred Stock.
 
 Section
2. Dividends and Distributions.
 
 (A)
Subject to the rights of the holders of any shares of
 any
series of Preferred Stock (or any other stock) ranking prior and superior
to
 the
Series A Preferred Stock with respect to dividends, the holders of shares
of
 Series A
Preferred Stock shall be entitled to receive, when, as and if
declared
 by the
Board of Directors out of funds legally available for the purpose,
 quarterly
dividends payable in cash on the last day of March, June, September
 and
December in each year (each such date being referred to herein as a
 "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
 Payment
Date after the first issuance of a share or fraction of a share of
 Series A
Preferred Stock, in an amount (if any) per share (rounded to the
 nearest
cent), subject to the provision for adjustment hereinafter set
forth,
 equal to
1000 times the aggregate per share amount of all cash dividends,
and
 1000
times the aggregate per share amount (payable in kind) of all
non-cash
 dividends
or other distributions, other than a dividend payable in shares of
 Common
Stock, par value $0.001 per share (the "Common Stock"), of the
 Corporation
or a subdivision of the outstanding shares of Common Stock (by
 reclassification
or otherwise), declared on the Common Stock since the
 immediately
preceding Quarterly Dividend Payment Date or, with respect to the
 first
Quarterly Dividend Payment Date, since the first issuance of any share
or
 fraction
of a share of Series A Preferred Stock. In the event the
Corporation
 shall at
any time declare or pay any dividend on the Common Stock payable in
 shares of
Common Stock, or effect a subdivision or combination or
consolidation
 of the
outstanding shares of Common Stock (by reclassification or otherwise
than
 by
payment of a dividend in shares of Common Stock) into a greater or
lesser
 number of
shares of Common Stock, then in each such case the amount to which
 holders
of shares of Series A Preferred Stock were entitled immediately prior
to
 such
event under the preceding sentence shall be adjusted by multiplying
such
 amount by
a fraction, the numerator of which is the number of shares of
Common
 Stock
outstanding immediately after such event and the denominator of which
is
 the
number of shares of Common Stock that were outstanding immediately prior
to
 such
event.
 
 (B)
The Corporation shall declare a dividend or
 distribution
on the Series A Preferred Stock as provided in paragraph (A) of
 this
Section immediately after it declares a dividend or distribution on
the
 Common
Stock (other than a dividend payable in shares of Common Stock).
 
 (C)
Dividends due pursuant to paragraph (A) of this
 Section
shall begin to accrue and be cumulative on outstanding shares of
Series
 A
Preferred Stock from the Quarterly Dividend Payment Date next preceding
the
 date of
issue of such shares, unless the date of issue of such shares is
prior
 to the
record date for the first Quarterly Dividend Payment Date, in which
case
 dividends
on such shares shall begin to accrue from the date of issue of such
 shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is
a
 date
after the record date for the determination of holders of shares of
Series
 A
Preferred Stock entitled to receive a quarterly dividend and before
such
 Quarterly
Dividend Payment Date, in either of which events such dividends
shall
 begin to
accrue and be cumulative from such Quarterly Dividend Payment Date.
 Accrued
but unpaid dividends shall not bear interest. Dividends paid
 
 
 
 A-2
  
 
 on the
shares of Series A Preferred Stock in an amount less than the total
 amount of
such dividends at the time accrued and payable on such shares shall
be
 allocated
pro rata on a share-by-share basis among all such shares at the
time
 outstanding.
The Board of Directors may fix a record date for the determination
 of
holders of shares of Series A Preferred Stock entitled to receive payment
of
 a
dividend or distribution declared thereon, which record date shall be not
more
 than 60
days prior to the date fixed for the payment thereof.
 
 Section
3. Voting Rights. The holders of shares of Series A
 Preferred
Stock shall have the following voting rights:
 
 (A)
Subject to the provision for adjustment hereinafter
 set
forth, each share of Series A Preferred Stock shall entitle the
holder
 thereof
to 1000 votes on all matters submitted to a vote of the stockholders
of
 the
Corporation. In the event the Corporation shall at any time declare or
pay
 any
dividend on the Common Stock payable in shares of Common Stock, or effect
a
 subdivision
or combination or consolidation of the outstanding shares of Common
 Stock (by
reclassification or otherwise than by payment of a dividend in
shares
 of Common
Stock) into a greater or lesser number of shares of Common Stock,
then
 in each
such case the number of votes per share to which holders of shares
of
 Series A
Preferred Stock were entitled immediately prior to such event shall
be
 adjusted
by multiplying such number by a fraction, the numerator of which is
the
 number of
shares of Common Stock outstanding immediately after such event and
 the
denominator of which is the number of shares of Common Stock that
were
 outstanding
immediately prior to such event.
 
 (B)
Except as otherwise provided in the Certificate of
 Incorporation,
including any other Certificate of Designations creating a series
 of
Preferred Stock or any similar stock, or by law, the holders of shares
of
 Series A
Preferred Stock and the holders of shares of Common Stock and any
other
 capital
stock of the Corporation having general voting rights shall vote
 together
as one class on all matters submitted to a vote of stockholders of
the
 Corporation.
 
 (C)
Except as set forth herein, or as otherwise required
 by law,
holders of Series A Preferred Stock shall have no special voting
rights
 and their
consent shall not be required (except to the extent they are
entitled
 to vote
with holders of Common Stock as set forth herein) for taking any
 corporate
action.
 
 Section
4. Certain Restrictions.
 
 (A)
Whenever quarterly dividends or other dividends or
 distributions
payable on the Series A Preferred Stock as provided in Section 2
 are in
arrears, thereafter and until all accrued and unpaid dividends and
 distributions,
whether or not declared, on shares of Series A Preferred Stock
 outstanding
shall have been paid in full, the Corporation shall not:
 
 (i)
declare or pay dividends, or make any other
 distributions,
on any shares of stock ranking junior (either as to dividends or
 upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
 
 (ii)
declare or pay dividends, or make any other
 distributions,
on any shares of stock ranking on a parity (either as to
 dividends
or upon liquidation, dissolution or winding up) with the Series A
 Preferred
Stock, except dividends paid ratably on the Series A
 
 
 
 A-3
  
 
 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 shares of any stock ranking junior (either as to dividends
or
 upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock,
 provided
that the Corporation may at any time redeem, purchase or otherwise
 acquire
shares of any such junior stock in exchange for shares of any stock
of
 the
Corporation ranking junior (as to dividends and upon dissolution,
 liquidation
or winding up) to the Series A Preferred Stock.
 
 (B)
The Corporation shall not permit any subsidiary of the
 Corporation
to purchase or otherwise acquire for consideration any shares of
 stock of
the Corporation unless the Corporation could, under paragraph (A)
of
 this
Section 4, purchase or otherwise acquire such shares at such time and
in
 such
manner.
 
 Section
5. Reacquired Shares. Any shares of Series A Preferred
 Stock
purchased or otherwise acquired by the Corporation in any manner
 whatsoever
shall be retired and 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 subject to the conditions and restrictions on issuance set
forth
 herein or
in the Certificate of Incorporation, including any Certificate of
 Designations
creating a series of Preferred Stock or any similar stock, or as
 otherwise
required by law.
 
 Section
6. Liquidation, Dissolution or Winding Up. Upon any
 liquidation,
dissolution or winding up of the Corporation the holders of shares
 of Series
A Preferred Stock shall be entitled to receive an aggregate amount
per
 share,
subject to the provision for adjustment hereinafter set forth, equal
to
 1000
times the aggregate amount to be distributed per share to holders of
shares
 of Common
Stock plus an amount equal to any accrued and unpaid dividends. In
the
 event the
Corporation shall at any time declare or pay any dividend on the
 Common
Stock payable in shares of Common Stock, or effect a subdivision or
 combination
or consolidation of the outstanding shares of Common Stock (by
 reclassification
or otherwise than by payment of a dividend in shares of Common
 Stock)
into a greater or lesser number of shares of Common Stock, then in
each
 such case
the aggregate amount to which holders of shares of Series A
Preferred
 Stock
were entitled immediately prior to such event under the preceding
sentence
 shall be
adjusted by multiplying such amount by a fraction the numerator of
 which is
the number of shares of Common Stock outstanding immediately after
such
 event and
the denominator of which is the number of shares of Common Stock
that
 were
outstanding immediately prior to such event.
 
 Section
7. Consolidation, Merger, Etc. In case the Corporation
 shall
enter into any consolidation, merger, combination or other transaction
in
 which the
shares of Common Stock are exchanged for or changed into other
stock
 or
securities, cash and/or any other property, then in any such case each
share
 of Series
A Preferred Stock shall at the same time be similarly exchanged or
 changed
into an amount per share, subject to the provision for adjustment
 hereinafter
set forth, equal to 1000 times the aggregate amount of stock,
 securities,
cash and/or any other property (payable in kind), as the case may
 be, into
which or for which each share of Common Stock is changed or
exchanged.
 In the
event the Corporation shall at any time declare
 
 
 
 A-4
  
 
 or pay
any dividend on the Common Stock payable in shares of Common Stock,
or
 effect a
subdivision or combination or consolidation of the outstanding
shares
 of Common
Stock (by reclassification or otherwise than by payment of a
dividend
 in shares
of Common Stock) into a greater or lesser number of shares of
Common
 Stock,
then in each such case the amount set forth in the preceding
sentence
 with
respect to the exchange or change of shares of Series A Preferred
Stock
 shall be
adjusted by multiplying such amount by a fraction, the numerator of
 which is
the number of shares of Common Stock outstanding immediately after
such
 event and
the denominator of which is the number of shares of Common Stock
that
 were
outstanding immediately prior to such event.
 
 Section
8. Amendment. The Certificate of Incorporation shall not
 be
amended in any manner, including in a merger or consolidation, which
would
 alter,
change, or repeal the powers, preferences or special rights of the
Series
 A
Preferred Stock so as to affect them adversely without the affirmative vote
of
 the
holders of at least two-thirds of the outstanding shares of Series
A
 Preferred
Stock, voting together as a single class.
 
 Section
9. Rank. The Series A Preferred Stock shall rank, with
 respect
to the payment of dividends and upon liquidation, dissolution and
 winding
up, junior to all series of Preferred Stock.
 
 IN
WITNESS WHEREOF, this Certificate of Designation is executed
 on behalf
of the Corporation by its duly authorized officer this 1st day of
 November,
2002.
 
 SCOLR,
INC.
 
 
 
 By:  _______________________________
 Name:  David
T. Howard
 Title:
President,
 Chief
Executive Officer
 
 
 
 A-5
  
 
 EXHIBIT
B
 
 Form
of Right Certificate
 
 Certificate
No.
R-_______                                           _____
Rights
 
 
 NOT
EXERCISABLE AFTER NOVEMBER 1, 2012 OR EARLIER IF REDEMPTION OR
 EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER
 RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
 UNDER
CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR WERE ACQUIRED OR
 BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR
 AFFILIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
 OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
 
 Right
Certificate
 SCOLR,
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 1, 2002 (the "Rights Agreement"), between
SCOLR,
 Inc., a
Delaware corporation (the "Company"), and OTR, Inc. (the "Rights
 Agent"),
to purchase from the Company at any time after the Distribution
Date
 (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M.,
 eastern
time, on November 1, 2012, at the principal office of the Rights
Agent,
 or at the
office of its successor as Rights Agent, one one-thousandth of a
fully
 paid
non-assessable share of Series A Junior Participating Preferred Stock,
par
 value
$0.01 per share (the "Preferred Shares"), of the Company, at a
purchase
 price of
$15.00 per one one-thousandth of a Preferred Share (the "Purchase
 Price"),
upon presentation and surrender of this Right Certificate with the
 certification
and the Form of Election to Purchase duly executed. The number of
 Rights
evidenced by this Right Certificate (and the number of one
 one-thousandths
of a Preferred Share which may be purchased upon exercise
 hereof)
set forth above, and the Purchase Price set forth above, are the
number
 and
Purchase Price as of November 12, 2002, based on the Preferred Shares
as
 constituted
at such date. As provided in the Rights Agreement, the Purchase
 Price and
the number of one one-thousandths of a Preferred Share which may be
 purchased
upon the exercise of the Rights evidenced by this Right Certificate
 are
subject to modification and adjustment upon the happening of certain
events.
 
 From
and after the occurrence of an event described in Section
 11(a)(ii)
of the Rights Agreement, if the Rights evidenced by this Right
 Certificate
are or were at any time on or after the earlier of (x) the date of
 such
event and (y) the Distribution Date (as such term is defined in the
Rights
 Agreement)
acquired or beneficially owned by an Acquiring Person or an
 
 
 
 B-1
  
 
 Associate
or Affiliate of an Acquiring Person (as such terms are defined in
the
 Rights
Agreement), such Rights shall become void, and any holder of such
Rights
 shall
thereafter have no right to exercise such Rights.
 
 This
Right Certificate is subject to all of the terms, provisions
 and
conditions of the 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 Right Certificates. Copies
of
 the
Rights Agreement are on file at the principal executive offices of
the
 Company
and the offices of the Rights Agent.
 
 This
Right Certificate, with or without other Right Certificates,
 upon
surrender at the principal office of the Rights Agent, may be exchanged
for
 another
Right Certificate or Right Certificates of like tenor and date
 evidencing
Rights entitling the holder to purchase a like aggregate number of
 Preferred
Shares as the Rights evidenced by the Right Certificate or Right
 Certificates
surrendered shall have entitled such holder to purchase. If this
 Right
Certificate shall be exercised in part, the holder shall be entitled
to
 receive
upon surrender hereof another Right Certificate or Right
Certificates
 for the
number of whole Rights not exercised.
 
 Subject
to the provisions of the Rights Agreement, at the
 Company's
option, the Rights evidenced by this Certificate (i) may be
redeemed
 by the
Company at a redemption price of $0.001 per Right or (ii) may be
 exchanged
in whole or in part for shares of the Company's Common Stock, par
 value
$0.001 per share, or Preferred Shares.
 
 No
fractional Preferred Shares will be issued upon the exercise
 of any
Right or Rights evidenced hereby (other than fractions which are
integral
 multiples
of one one-thousandth of a Preferred Share, which may, at the
election
 of the
Company, be evidenced by depositary receipts), but in lieu thereof a
cash
 payment
will be made, as provided in the Rights Agreement.
 
 No
holder of this Right Certificate shall be entitled to vote or
 receive
dividends or be deemed for any purpose the holder of the Preferred
 Shares or
of any other securities of the Company which may at any time be
 issuable
on the exercise hereof, nor shall anything contained in the 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 Right
 Certificate
shall have been exercised as provided in the Rights Agreement.
 
 This
Right Certificate shall not be valid or obligatory for any
 purpose
until it shall have been countersigned by the Rights Agent.
 
 WITNESS
the facsimile signature of the proper officers of the
 Company
and its corporate seal. Dated as of ____________, _____.
 
 
 
 B-2
  
 
 
 Attest:                                      SCOLR,
INC.
 
 
 ________________________________             By:   _____________________________
 
 Countersigned:
 
 OTR,
Inc.,
 Rights
Agent
 
 
 By:   __________________________
 Authorized
Signature
 
 
 
 B-3
  
 
 
 Form
of Reverse Side of Right Certificate
 
 FORM
OF ASSIGNMENT
 (To
be executed by the registered holder if such holder desires
 to
transfer the Right Certificate.)
 
 FOR
VALUE RECEIVED ___________________________________ hereby
 sells,
assigns and transfers unto
___________________________________________
 __________________________________________________________________
 (Please
print name and address of transferee)
 
 this
Right Certificate, together with all right, title and interest therein,
and
 does
hereby irrevocably constitute and appoint
_______________________________,
 Attorney,
to transfer the within Right Certificate on the books of the
 within-named
Company, with full power of substitution.
 
 Date:
______________ __, _______
 
 
 __________________________________
 Signature
 
 Signature
Guaranteed:
 
 Signatures
should be guaranteed by an eligible guarantor
 institution
(bank, stock broker or savings and loan association with membership
 in an
approved signature medallion program).
 
 _________________________________________________
 
 
 The
undersigned hereby certifies that the Rights evidenced by
 this
Right Certificate are not beneficially owned by an Acquiring Person or
an
 Affiliate
or Associate thereof (as defined in the Rights Agreement).
 
 __________________________________
 Signature
 
 _________________________________________________
 
 
 
 B-4
  
 
 
 Form
of Reverse Side of Right Certificate -- continued
 
 FORM
OF ELECTION TO PURCHASE
 (To
be executed if holder desires to exercise the Right Certificate.)
 
 To:  SCOLR,
INC.:
 
 The
undersigned hereby irrevocably elects to exercise
 _______________
Rights represented by this Right Certificate to purchase the
 Preferred
Shares issuable upon the exercise of such Rights and requests that
 certificates
for such Preferred Shares be issued in the name of:
 
 Please
insert social security
 or other
identifying number
 
 
 _______________________________________________________________________________
 (Please
print name and address)
 
 _______________________________________________________________________________
 
 If such
number of Rights shall not be all the Rights evidenced by this
Right
 Certificate,
a new Right Certificate for the balance remaining of such Rights
 shall be
registered in the name of and delivered to:
 
 Please
insert social security
 or other
identifying number
 
 
 _______________________________________________________________________________
 (Please
print name and address)
 
 _______________________________________________________________________________
 
 
 
 Dated:
_____________ __, ______
 
 ________________________________
 Signature
 
 Signature
Guaranteed:
 
 Signatures
should be guaranteed by an eligible guarantor
 institution
(bank, stock broker or savings and loan association with membership
 in an
approved signature medallion program).
 
 
 
 B-5
  
 
 
 Form
of Reverse Side of Right Certificate -- continued
 
 _______________________________
 
 The
undersigned hereby certifies that the Rights evidenced by
 this
Right Certificate are not beneficially owned by an Acquiring Person or
an
 Affiliate
or Associate thereof (as defined in the Rights Agreement).
 
 ______________________________
 Signature
 
 ________________________________
 
 NOTICE
 
 The
signature in the foregoing Forms of Assignment and Election
 must
conform to the name as written upon the face of this Right Certificate
in
 every
particular, without alteration or enlargement or any change
whatsoever.
 
 In
the event the certification set forth above in the Form of
 Assignment
or the Form of Election to Purchase, as the case may be, is not
 completed,
the Company and the Rights Agent will deem the beneficial owner of
 the
Rights evidenced by this Right Certificate to be an Acquiring Person or
an
 Affiliate
or Associate thereof (as defined in the Rights Agreement) and such
 Assignment
or Election to Purchase will not be honored.
 
 
 
 
 B-6
  
 
 EXHIBIT
C
 
 SUMMARY
OF RIGHTS TO PURCHASE
 PREFERRED
SHARES
 
 On
November 1, 2002, the Board of Directors of SCOLR, Inc.
 (the
"Company") declared a dividend of one preferred share purchase right
(a
 "Right")
for each outstanding share of Common Stock, par value $0.001 per
share
 (the
"Common Shares") outstanding on November 12, 2002 (the "Record
Date")
 to the
stockholders of record on that date. Each Right entitles the
registered
 holder to
purchase from the Company one one-thousandth of a share of Series A
 Junior
Participating Preferred Stock, par value $0.01 per share (the
"Preferred
 Shares"),
of the Company, at a price of $15.00 per one one-thousandth of a
 Preferred
Share (the "Purchase Price"), subject to adjustment. The
description
 and terms
of the Rights are set forth in a Rights Agreement (the "Rights
 Agreement")
between the Company and OTR, Inc., as Rights Agent (the "Rights
 Agent").
 
 Until
the earlier to occur of (i) 10 days following a public
 announcement
that a person or group of affiliated or associated persons (an
 "Acquiring
Person") has acquired beneficial ownership of 15% or more of the
 outstanding
Common Shares or (ii) 10 business days (or such later date as may
be
 determined
by action of the Board of Directors prior to such time as any
Person
 becomes
an Acquiring Person) following the commencement of, or announcement
of
 an
intention to make, a tender offer or exchange offer the consummation of
which
 would
result in the beneficial ownership by a person or group of 15% or more
of
 the
outstanding Common Shares (the earlier of such dates being called
the
 "Distribution
Date"), the Rights will be evidenced, with respect to any of the
 Common
Share certificates outstanding as of the Record Date, by such
Common
 Share
certificate with a copy of this Summary of Rights attached thereto.
 
 The
Rights Agreement provides that, until the Distribution Date,
 the
Rights will be transferred with and only with the Common Shares. Until
the
 Distribution
Date (or earlier redemption or expiration of the Rights), new
 Common
Share certificates issued after the Record Date or upon transfer or
new
 issuance
of Common Shares will contain a notation incorporating the Rights
 Agreement
by reference. Until the Distribution Date (or earlier redemption or
 expiration
of the Rights), the surrender for transfer of any certificates for
 Common
Shares outstanding as of the Record Date, even without such notation or
a
 copy of
this Summary of Rights being attached thereto, will also constitute
the
 transfer
of the Rights associated with the Common Shares represented by such
 certificate.
As soon as practicable following the Distribution Date, separate
 certificates
evidencing the Rights ("Right Certificates") will be mailed to
 holders
of record of the Common Shares as of the Close of Business on the
 Distribution
Date and such separate Right Certificates alone will evidence the
 Rights.
 
 The
Rights are not exercisable until the Distribution Date. The
 Rights
will expire on November 1, 2012 (the "Final Expiration Date"),
 unless
the Final Expiration Date is extended or unless the Rights are
earlier
 redeemed
by the Company, in each case, as described below.
 
 
 
 
 C-1
  
 
 
 The
Purchase Price payable, and the number of Preferred Shares or
 other
securities or property issuable, upon exercise of the Rights are
subject
 to
adjustment from time to time to prevent dilution (i) in the event of a
stock
 dividend
on, or a subdivision, combination or reclassification of, the
Preferred
 Shares,
(ii) upon the grant to holders of the Preferred Shares of certain
rights
 or
warrants to subscribe for or purchase Preferred Shares at a price,
or
 securities
convertible into Preferred Shares with a conversion price, less
than
 the then
current market price of the Preferred Shares or (iii) upon the
 distribution
to holders of the Preferred Shares of evidences of indebtedness or
 assets
(excluding regular periodic cash dividends paid out of earnings or
 retained
earnings or dividends payable in Preferred Shares) or of
subscription
 rights or
warrants (other than those referred to above).
 
 The
number of outstanding Rights and the number of one
 one-thousandths
of a Preferred Share issuable upon exercise of each Right are
 also
subject to adjustment in the event of a stock split of the Common Shares
or
 a stock
dividend on the Common Shares payable in Common Shares or
subdivisions,
 consolidations
or combinations of the Common Shares occurring, in any such case,
 prior to
the Distribution Date.
 
 Preferred
Shares purchasable upon exercise of the Rights will not
 be
redeemable. Each Preferred Share will be entitled to a quarterly
dividend
 payment
of 1000 times the dividend declared per Common Share. In the event
of
 liquidation,
the holders of the Preferred Shares will be entitled to an
 aggregate
payment of 1000 times the aggregate payment made per Common Share.
 Each
Preferred Share will have 1000 votes, voting together with the
Common
 Shares.
In the event of any merger, consolidation or other transaction in
which
 Common
Shares are exchanged, each Preferred Share will be entitled to
receive
 1000
times the amount received per Common Share. These rights are protected
by
 customary
antidilution provisions.
 
 Because
of the nature of the Preferred Shares' dividend,
 liquidation
and voting rights, the value of the one one-thousandth interest in
a
 Preferred
Share purchasable upon exercise of each Right should approximate
the
 value of
one Common Share.
 
 From
and after the time any Person becomes an Acquiring Person,
 if the
Rights evidenced by this Right Certificate are or were at any time on
or
 after the
earlier of (x) the date of such event and (y) the Distribution Date
 (as such
term is defined in the Rights Agreement) acquired or beneficially
owned
 by an
Acquiring Person or an Associate or Affiliate of an Acquiring Person
(as
 such
terms are defined in the Rights Agreement), such Rights shall become
void,
 and any
holder of such Rights shall thereafter have no right to exercise
such
 Rights.
 
 In
the event that, at any time after a Person becomes an
 Acquiring
Person, the Company is acquired in a merger or other business
 combination
transaction or 50% or more of its consolidated assets or earning
 power are
sold, proper provision will be made so that each holder of a Right
 will
thereafter have the right to receive, upon the exercise thereof at the
then
 current
exercise price of the Right, that number of shares of common stock
of
 the
acquiring company which at the time of such transaction will have a
market
 value of
two times the exercise price of the Right. In the event that any
person
 becomes
an Acquiring Person, proper provision shall be made so that each
holder
 of a
Right, other than Rights beneficially owned by the Acquiring Person and
its
 Affiliates
and Associates (which will thereafter be void), will thereafter
have
 the right
to receive upon exercise that number of Common Shares having a
market
 value
of
 
 
 
 C-2
 
 
 two times
the exercise price of the Right. If the Company does not have
 sufficient
Common Shares to satisfy such obligation to issue Common Shares, or
 if the
Board of Directors so elects, the Company shall deliver upon payment
of
 the
exercise price of a Right an amount of cash or securities equivalent
in
 value to
the Common Shares issuable upon exercise of a Right; provided that,
if
 the
Company fails to meet such obligation within 30 days following the date
a
 Person
becomes an Acquiring Person, the Company must deliver, upon exercise of
a
 Right but
without requiring payment of the exercise price then in effect,
Common
 Shares
(to the extent available) and cash equal in value to the difference
 between
the value of the Common Shares otherwise issuable upon the exercise of
a
 Right and
the exercise price then in effect. The Board of Directors may
extend
 the
30-day period described above for up to an additional 60 days to permit
the
 taking of
action that may be necessary to authorize sufficient additional
Common
 Shares to
permit the issuance of Common Shares upon the exercise in full of
the
 Rights.
 
 At
any time after any Person becomes an Acquiring Person and
 prior to
the acquisition by any person or group of a majority of the
outstanding
 Common
Shares, the Board of Directors of the Company may exchange the
Rights
 (other
than Rights owned by such person or group which have become void),
in
 whole or
in part, at an exchange ratio of one Common Share per Right (subject
to
 adjustment).
 
 With
certain exceptions, no adjustment in the Purchase Price will
 be
required until cumulative adjustments require an adjustment of at least 1%
in
 such
Purchase Price. No fractional Preferred Shares will be issued (other
than
 fractions
which are integral multiples of one one-thousandth of a Preferred
 Share,
which may, at the election of the Company, be evidenced by
depositary
 receipts)
and in lieu thereof, an adjustment in cash will be made based on
the
 market
price of the Preferred Shares on the last trading day prior to the
date
 of
exercise.
 
 At
any time prior to the time any Person becomes an Acquiring
 Person,
the Board of Directors of the Company may redeem the Rights in
whole,
 but not
in part, at a price of $0.001 per Right (the "Redemption Price").
The
 redemption
of the Rights may be made effective at such time, on such basis and
 with such
conditions as the Board of Directors in its sole discretion may
 establish.
Immediately upon any redemption of the Rights, the right to
exercise
 the
Rights will terminate and the only right of the holders of Rights will be
to
 receive
the Redemption Price.
 
 The
terms of the Rights may be amended by the Board of Directors
 of the
Company without the consent of the holders of the Rights, except
that
 from and
after such time as any person becomes an Acquiring Person no such
 amendment
may adversely affect the interests of the holders of the Rights
(other
 than the
Acquiring Person and its Affiliates and Associates).
 
 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.
 
 A
copy of the Rights Agreement has been filed with the Securities
 and
Exchange Commission as an Exhibit to a Registration Statement on Form
8-A
 dated
November 6, 2002. A copy of the Rights Agreement is available free
of
 charge
from the Company. This summary
 
 C-3
  
 
 
 description
of the Rights does not purport to be complete and is qualified in
 its
entirety by reference to the Rights Agreement, which is hereby
incorporated
 herein by
reference.
 
 
 C-4