ex4-9_1



 


Exhibit 4.9.1



AMENDED AND RESTATED



RIGHTS AGREEMENT











HEARx Ltd.



and



THE BANK OF NEW YORK



Rights Agent











Dated as of December 14, 1999



Amended and Restated as
of___________   ___, 2002



 






 





INDEX



	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	Section 1.	 	
Certain Definitions
	 	 	1	 
	 
	Section 2.	 	
Appointment of Rights Agent
	 	 	5	 
	 
	Section 3.	 	
Issue of Right Certificates
	 	 	5	 
	 
	Section 4.	 	
Form of Right Certificates
	 	 	7	 
	 
	Section 5.	 	
Countersignature and Registration
	 	 	8	 
	 
	Section 6.	 	
Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates
	 	 	9	 
	 
	Section 7.	 	
Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	9	 
	 
	Section 8.	 	
Cancellation and Destruction of Right Certificates
	 	 	11	 
	 
	Section 9.	 	
Reservation and Availability of Shares of Preferred Stock
	 	 	11	 
	 
	Section 10.	 	
Preferred Stock Record Date
	 	 	12	 
	 
	Section 11.	 	
Adjustment of Purchase Price, Number of Shares or Number of Rights
	 	 	12	 
	 
	Section 12.	 	
Certificate of Adjusted Purchase Price or Number of Shares
	 	 	19	 
	 
	Section 13.	 	
Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	19	 
	 
	Section 14.	 	
Fractional Rights and Fractional Shares
	 	 	21	 
	 
	Section 15.	 	
Rights of Action
	 	 	22	 
	 
	Section 16.	 	
Agreement of Right Holders
	 	 	23	 
	 
	Section 17.	 	
Right Certificate Holder Not Deemed a Stockholder
	 	 	23	 
	 
	Section 18.	 	
Concerning the Rights Agent
	 	 	23	 
	 
	Section 19.	 	
Merger or Consolidation or Change of Name of Rights Agent
	 	 	24	 
	 
	Section 20.	 	
Duties of Rights Agent
	 	 	24	 
	 
	Section 21.	 	
Change of Rights Agent
	 	 	26	 
	 
	Section 22.	 	
Issuance of New Right Certificates
	 	 	27	 
	 
	Section 23.	 	
Redemption and Termination
	 	 	28	 



i






 




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	Section 24.	 	
Exchange
	 	 	28	 
	 
	Section 25.	 	
Notice of Proposed Actions
	 	 	29	 
	 
	Section 26.	 	
Notices
	 	 	30	 
	 
	Section 27.	 	
Supplements and Amendments
	 	 	31	 
	 
	Section 28.	 	
Successors
	 	 	32	 
	 
	Section 29.	 	
Benefits of This Rights Agreement
	 	 	32	 
	 
	Section 30.	 	
Severability
	 	 	32	 
	 
	Section 31.	 	
Governing Law
	 	 	32	 
	 
	Section 32.	 	
Counterparts
	 	 	32	 
	 
	Section 33.	 	
Descriptive Headings
	 	 	32	 



Exhibit A —  Form of Amended Certificate of Designations for

                
                     
Series H Junior Participating

                
                     
Preferred Stock

Exhibit B —  Form of Right Certificate


ii






 


AMENDED AND RESTATED RIGHTS AGREEMENT



     This Amended and Restated Rights Agreement, dated as of December 14, 1999
and amended and restated as of               
     , 2002
(the “Rights Agreement”), is entered into
between HEARx Ltd., a Delaware corporation (the “Company”), and The Bank of New
York, a New York banking corporation (the “Rights Agent”).


W I T N E S S E T H


     WHEREAS, on December 14, 1999, the Board of Directors of the Company
declared a dividend of one right (a “Right”) for each share of Common Stock,
par value $0.10 per share, of the Company outstanding at the close of business
on December 31, 1999 (the “Record Date”), and authorized the issuance of one
Right in respect of each share of Common Stock of the Company issued between
the Record Date (whether originally issued or issued from the Company’s
treasury) and the Distribution Date (as such term is defined in Section 3
hereof), each Right initially representing the right to purchase one
one-hundredth of a share of Series H Junior Participating Preferred Stock of
the Company upon the terms and subject to the conditions hereinafter set forth;


     WHEREAS, the Board of Directors of the Company has determined it is in the
best interests of the Company and the holders of the Common Stock of the
Company to amend the Rights Agreement to, among other things, give effect to
the issuance of exchangeable shares (the “Exchangeable Shares”) in the capital
of HEARx Canada Inc. (“Exchangeco”) pursuant to the terms of a Merger Agreement
(the “Original Merger Agreement”) dated July 27, 2001 between the Company and
Helix Hearing Care of America Corp. (“Helix”), and to the terms of the Amended
and Restated Merger Agreement, made and executed as of November 6, 2001,
between the Company and Helix (as further amended from time to time, the
“Restated Merger Agreement”) and the consummation of the transactions
contemplated by such agreements (the “Permitted Merger Events”);


     WHEREAS, the Company intends to change its name to “HearUSA, Inc.” in
connection with the Permitted Merger Events; and


     WHEREAS, Section 27 of the Rights Agreement as originally adopted provided
that the Rights Agreement may be amended from time to time in any manner which
the Company may deem necessary or desirable prior to a person becoming an
Acquiring Person (as hereinafter defined); and


     WHEREAS, the Company hereby amends and restates the Rights Agreement, as
follows.


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


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


     (a)  “Acquiring Person” shall mean any Person (as hereinafter defined) who
or which, together with all Affiliates (as hereinafter defined) and Associates
(as hereinafter defined)


 






 


of such Person, without the Prior Written Approval of the Company (as
hereinafter defined), shall be the Beneficial Owner (as hereinafter defined) of
securities of the Company constituting 15% or more of the Voting Power (as
hereinafter defined) of the Company or was such a Beneficial Owner at any time
after the date hereof, whether or not such Person continues to be the
Beneficial Owner of securities representing 15% or more of the Voting Power of
the Company, but shall not include (i) the Company, any Subsidiary of the
Company, any employee benefit plan or compensation arrangement of the Company
or any Subsidiary of the Company, or any entity holding securities of the
Company to the extent organized, appointed or established by the Company or any
Subsidiary of the Company for or pursuant to the terms of any such employee
benefit plan or compensation arrangement, (ii) any Person who or which,
together with all Affiliates and Associates of such Person, inadvertently may
become the Beneficial Owner of securities of the Company representing 15% or
more of the Voting Power of the Company or otherwise becomes such a Beneficial
Owner without a plan or intention to acquire control of the Company, so long as
such Person, individually or together with the Affiliates and Associates of
such Person, promptly enters into, and delivers to the Company, an irrevocable
commitment promptly to divest, and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect to such
securities), sufficient securities of the Company so that such Person, together
with all Affiliates and Associates of such Person, ceases to be the Beneficial
Owner of 15% or more of the Voting Power of the Company, or (iii) the holder of
the Special Voting Stock pursuant to the Voting and Exchange Trust Agreement
(as hereinafter defined). Notwithstanding the foregoing, no Person shall
become an “Acquiring Person” as a result of the Permitted Merger Events or an
acquisition of voting securities of the Company by the Company which, by
reducing the amount of such securities outstanding, increases the proportionate
voting power of such securities beneficially owned by such Person to 15% or
more of the Voting Power; provided, however, that if a Person becomes the
Beneficial Owner of securities constituting 15% or more of the Voting Power of
the Company by reason of purchases by the Company and shall, after such
purchases by the Company, become the Beneficial Owner of any additional voting
securities of the Company without the Prior Written Approval of the Company,
then such Person shall be deemed to be an Acquiring Person.


     (b)  “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.


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



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




		
	 	        (ii) which such Person or any of such Person’s Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than these
Rights or the Exchangeable Share Rights (as hereinafter defined)),
warrants or options, or otherwise, including, without limitation,



2






 






		
	 	shares of Common Stock of the Company issuable upon the exchange of
Exchangeable Shares, provided, however, that a Person shall not be deemed
the “Beneficial Owner” of securities tendered pursuant to a tender or
exchange offer (or a takeover bid under Canadian securities laws) made by
or on behalf of such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for payment or
exchange; or (B) the right to vote pursuant to any agreement, arrangement
or understanding, provided, however, that a Person shall not be deemed
the “Beneficial Owner” of any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act and (2) is
not also then reportable by such person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or




		
	 	        (iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for
the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy or consent as described in clause (B) of subparagraph (ii) of this
paragraph (c)) or disposing of any securities of the Company.



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


     (d)  “Board of Directors” shall mean the Board of Directors of the Company
as constituted from time to time.


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


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


     (g)  “Common Stock” shall mean the Common Stock, par value $0.10 per share,
of the Company, except that “Common Stock” when used with reference to any
Person other than the Company shall mean the capital stock with the greatest
Voting Power of such Person or the equity securities or other equity interest
having power to control or direct the management of such Person or, if such
Person is a Subsidiary (as hereinafter defined) of another Person, of the
Person which ultimately controls such first-mentioned Person and which has
issued and outstanding such capital stock, equity securities or equity
interests.


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


3






 



     (i)  “Exchangeable Share Rights” shall mean the right to purchase
Exchangeable Shares as provided in the Exchangeco Rights Agreement.


     (j)  “Exchangeco Rights Agreement” shall mean the Rights Agreement, dated
______, 2002 between Exchangeco and [ComputerShare Trust Company of
Canada], as rights agent, as amended from time to time.


     (k)  “Exchangeco” shall have the meaning set forth in the Recitals to this
Rights Agreement.


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


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


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


     (o)  “Original Merger Agreement” shall have the meaning set forth in the
Recitals to the Rights Agreement.


     (p)  “Person” shall mean any individual, firm, corporation, partnership,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of any such entity.


     (q)  “Preferred Stock” shall mean the Series H Junior Participating
Preferred Stock, par value $1.00 per share, of the Company.


     (r)  “Prior Written Approval of the Company” shall mean prior express
written consent of the Company to the actions in question, executed on behalf
of the Company by a duly authorized officer of the Company following express
approval by action of at least a majority of the members of the Board of
Directors then in office.


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


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


     (u)  “Section 11(b) Event” shall have the meaning set forth in Section
11(b) hereof.


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


     (w) “Special Voting Stock” shall mean the share of special voting stock,
$0.01 par value of the Company, held by ComputerShare Trust Company of Canada,
as Trustee, pursuant to the Voting and Exchange Trust Agreement.


4






 


     (x)  “Stock Acquisition Date” shall mean the earlier of (i) the first date
of public announcement by the Company or a Person that an Acquiring Person has
become an Acquiring Person, or (ii) the date on which the Company first has
notice, direct or indirect, or otherwise determines that a Person has become an
Acquiring Person.


     (y)  “Subsidiary” shall mean, with respect to any Person, any other Person
of which securities or other ownership interests having ordinary Voting Power,
in the absence of contingencies, to elect a majority of the board of directors
(or other persons performing similar functions) of such other Person are at the
time directly or indirectly owned by such Person or one or more of such
Person’s Subsidiaries, except that “Subsidiary” when used with reference to the
Company shall mean any Person of which either a majority of the Voting Power of
the voting equity securities or a majority of the equity interests is owned,
directly or indirectly, by the Company.


     (z)  “Voting and Exchange Trust Agreement” shall mean the Voting and
Exchange Trust Agreement, dated as of _________, 2002, among the Company, ComputerShare
Trust Company of Canada, as Trustee, HEARx Acquisition ULC and Exchangeco, as
amended from time to time.


     (aa)  “Voting Power” shall mean the voting power of all securities of a
Person then outstanding generally entitled to vote for the election of
directors of the Person (or, where appropriate, for the election of persons
performing similar functions); provided that Exchangeable Shares shall be
deemed to have the voting power of the Common Stock of the Company issuable
upon exchange of such Exchangeable Shares, as determined pursuant to the
Special Voting Stock and the Voting and Exchange Trust Agreement. For purposes
of determining the number of shares of Common Stock of the Company outstanding
at any time, such number shall be the sum of the shares of Common Stock of the
Company plus the number of shares of Common Stock of the Company issuable upon
exchange of the then outstanding Exchangeable Shares; provided that shares of
Common Stock of the Company held by the Company or any Subsidiary of the
Company and Shares of Common Stock of the Company issuable upon exchange of
Exchangeable Shares held by the Company or any Subsidiary of the Company shall
be deemed not to be outstanding.


     Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Common
Stock) 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. In the event the
Company appoints one or more Co-Rights Agents, the respective duties of the
Rights Agents and any Co-Rights Agents shall be as the Company shall determine.


     Section 3. Issue of Right Certificates.


     (a)  Until the earlier of (i) the close of business on the tenth Business
Day after the Stock Acquisition Date or (ii) the close of business on the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors but in no event later than the tenth Business Day after such time as
any Person becomes an Acquiring Person) after the date that a

5






 




tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan or compensation
arrangement of the Company or of any Subsidiary of the Company, or any entity
holding securities of the Company to the extent organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan or compensation arrangement) 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 (or any successor rule) or
after the date that a takeover bid by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan or compensation
arrangement of the Company or of any Subsidiary of the Company, or any entity
holding securities of the Company to the extent organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan or compensation arrangement) is
first made or delivered under Canadian securities laws, in either case, without
the Prior Written Approval of the Company, which tender or exchange offer or
takeover bid would result in any Person becoming the Beneficial Owner of Voting
Power aggregating 15% or more of the outstanding Voting Power (including any
such date which is after the date of this Rights Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the “Distribution Date”), (y) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be Right Certificates)
and not by separate Right Certificates, as more fully set forth below, and (z)
the Rights (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the underlying shares of
Common Stock, as more fully set forth below. As soon as practicable after the
Company has notified the Rights Agent of the occurrence of the Distribution
Date, the Company shall prepare and execute, and the Rights Agent shall
countersign and send, by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a right certificate, in substantially the form of Exhibit B hereto
(the “Right Certificate”), evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.


     (b)  With respect to certificates for the Common Stock outstanding as of
the Record Date, until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the Rights will be evidenced by such
certificates for the Common Stock registered in the names of the holders of the
Common Stock and the registered holders of the Common Stock shall also be
registered holders of the associated Rights. Until the Distribution Date (or
the earlier redemption, expiration or termination of the Rights), the surrender
for transfer of any of the certificates for the Common Stock outstanding in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.


     (c)  Certificates for the Common Stock issued after the Record Date but
prior to the earlier of the Distribution Date or the redemption, expiration or
termination of the Rights shall be deemed also to be certificates for Rights
and shall have impressed, printed or written on, or otherwise affixed to them a
legend substantially to the following effect:



		
	 	This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between HEARx
Ltd. (the “Company”) and The



6






 





		
	 	Bank of New York, as Rights Agent (the “Rights Agreement”), as it
may from time to time be supplemented or amended, the terms of
which are incorporated herein by reference and a copy of which is
on file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights may expire or may be redeemed, exchanged or be evidenced by
separate certificates and no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly
after receipt of a written request therefor. Under certain
circumstances, Rights issued to or held by Acquiring Persons or
their Affiliates or Associates (as defined in the Rights Agreement)
and any subsequent holder of such Rights may become null and void.



With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock of the Company represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock of the Company
represented by such certificates.


     In the event that the Company purchases or acquires any Common Stock of
the Company or Exchangeable Shares after the Record Date but prior to the
Distribution Date, any Rights or Exchangeable Share Rights associated with such
Common Stock shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights or Exchangeable Share Rights associated with
shares of Common Stock of the Company or Exchangeable Shares which are no
longer outstanding.


     Section 4. Form of Right Certificates.


     (a)  The Right Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall be in
substantially the same form as 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 and as are not inconsistent
with the provisions of this Rights Agreement, or as may be required to comply
with any applicable law, rule or regulation or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to customary usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Right 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 one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price per one one-hundredth of a share as set
forth therein (the “Purchase Price”), but the number and identity of such
shares and the Purchase Price shall be and remain subject to adjustment as
provided in Sections 11, 13 and 22 hereof.


     (b)  Any Right Certificate issued pursuant hereto that represents Rights
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and which receives such Rights pursuant

7






 




to either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Board of Directors has determined to be part
of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of Section 7(e), and any Right Certificate issued pursuant
to Section 6 hereof, Section 11 hereof or Section 22 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:



		
	 	The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an Acquiring Person.
Accordingly, this Right Certificate and the Rights represented
hereby are void in the circumstances specified in Section 7(e) of
the Rights Agreement.



The failure to print the foregoing legend on any such Right Certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.


      Section 5.  Countersignature and Registration.


     (a)  The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board and Chief Executive Officer, President, Vice
President — Finance and Chief Financial Officer 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 Right Certificates shall be countersigned manually or by
facsimile signature by the Rights Agent or the registrar or co-registrar for
the Common Stock (the “Registrar”) and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company whose manual or
facsimile signature is affixed to the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent or the
Registrar and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent or the Registrar, issued
and delivered with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company. Any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.


     (b)  Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its stockholder services office or such other office designated
for such purpose, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights

8






 




evidenced on its face by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.


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


     (a)  Subject to the provisions of Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to the close of
business on the Expiration Date (as such term is defined in Section 7(a)
hereof), any Right Certificate or Right Certificates may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of
Preferred Stock as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the stockholder services office of the Rights Agent or such office
designated for such purpose. Thereupon, the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.


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


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


     (a)  The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the stockholder services office of the Rights
Agent or such office designated for such purpose, together with payment of the
Purchase Price for each one-one hundredth of a share of Preferred Stock as to
which the Rights are exercised, at or prior to the close of business on the
Expiration Date. The “Expiration Date”, as used in this Rights Agreement,
shall be the earliest of (i) the Final Expiration Date (as defined below), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof, or
(iii) the time at which the Rights are exchanged as provided in Section 24
hereof. The “Final Expiration Date”, as used in this Rights Agreement, shall
be December 14, 2009.


9






 



     (b)  The Purchase Price for each one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $28, shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.


     (c)  Upon receipt of a Right Certificate, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for each
one one-hundredth of a share of Preferred Stock to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of the
Rights pursuant hereto in accordance with Section 9 hereof by certified check,
bank draft or money order payable to the order of the Company or the Rights
Agent, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) either (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes any such 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 into a depositary, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company hereby directs
such depositary agent to comply with all such requests, (ii) promptly after
receipt of such certificates or depositary receipts cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, (iii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iv) after receipt of any such cash, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate, (v) when
appropriate, requisition from the Company the amount of cash or securities
issuable upon exercise of a Right pursuant to the adjustment provisions of
Section 11 or the exchange provisions of Section 24, and (vi) after receipt of
any such cash or securities, promptly deliver such cash or securities to or
upon the order of the registered holder of such Right Certificate, of any such
cash or securities.


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


     (e)  Notwithstanding anything in this Rights Agreement to the contrary,
upon the first occurrence of a Section 11(b) Event or a Section 13 Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or any such Associate or Affiliate) to holders of
equity interests in such Acquiring Person (or any such Associate or Affiliate)
or to any Person with whom such Acquiring Person (or such Associate or
Affiliate) has


10






 


any continuing agreement, arrangement or understanding regarding the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Board of Directors has determined to be part
of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall be null and void without any
further action, and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of
its failure to make any determination under this Section 7(e) or Section 4(b)
with respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.


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


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


      Section 9.  Reservation and Availability of Shares of Preferred
Stock.


     (a)  The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
its authorized and issued shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the occurrence of a
Section 11(b) Event or a Section 13 Event, shall so reserve and keep available
a sufficient number of shares of Preferred Stock, Common Stock and/or other
securities which may be required to permit the exercise in full of the Rights
pursuant to this Rights Agreement.



     (b)  The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other

11






 



securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares or securities.


     (c)  The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of an event which would establish
the Distribution Date, a registration statement under the Securities Act of
1933, as amended (the “Securities Act”), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date. The Company will also take such action as may be
appropriate under the “blue sky laws” of the various states.


     (d)  The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock and/or other securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates or
depositary receipts for Preferred Stock and/or other securities in a name other
than that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates or depositary receipts for shares of Preferred Stock and/or
other securities upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right Certificate
at the time of surrender) or until it has been established to the Company’s
satisfaction that no such tax is due.


      Section 10.
Preferred Stock Record Date. Each person (other than the Company) in whose name any
certificate for shares of Preferred Stock (or other securities) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Stock (or other securities) represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or other securities) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Stock (or other securities) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a 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 of Shares or Number of
Rights. The Purchase Price, the number and identity of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.


12






 


     (a)  In the event the Company shall at any time after the date of this
Rights Agreement (i) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (ii) subdivide the outstanding Preferred Stock,
(iii) combine the outstanding Preferred Stock into a smaller number of shares
or (iv) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11, the Purchase
Price in effect at the time of the record date for such dividend or the time of
the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock, including Preferred Stock,
issuable upon exercise of a Right, shall be proportionately adjusted so that
the holder of any Right exercised after such time, upon payment of the
aggregate consideration such holder would have had to pay to exercise such
Right prior to such time, shall be entitled to receive the aggregate number and
kind of shares of capital stock, including Preferred Stock, which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification.


     (b)  In the event any Person becomes an Acquiring Person (“Section 11(b)
Event”), then proper provision shall be made so that each holder of a Right,
subject to Section 7(e) and Section 24 hereof and except as provided below,
shall after the later of the occurrence of such event and the effective date of
an appropriate registration statement pursuant to Section 9 hereof, have a
right to receive, upon exercise thereof at the then current Purchase Price,
multiplied by the then number of one-one hundredths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms of
this Rights Agreement, in lieu of shares of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (y)
multiplying the then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (z) 50% of the current market price
per one share of Common Stock (determined pursuant to Section 11(f) hereof on
the date of the occurrence of the Section 11(b) Event) (such number of shares
being referred to as the “number of Adjustment Shares”).


     (c)  In the event that there shall not be sufficient Treasury shares or
authorized but unissued shares of Common Stock to permit the exercise in full
of the Rights in accordance with the foregoing Section 11(b), and the Rights
become so exercisable, notwithstanding any other provision of this Rights
Agreement, to the extent necessary and permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, each
Right shall thereafter represent the right to receive, upon exercise thereof at
the then current Purchase Price, multiplied by the then number of one-one
hundredths of a share of Preferred Stock for which a Right is then exercisable,
in accordance with the terms of this Rights Agreement, a number of shares, or
units of shares, of (y) Common Stock, and (z) preferred stock (or other equity
securities) of the Company, including, but not limited to Preferred Stock,
equal in the aggregate to the number of Adjustment Shares where the Board of
Directors shall have in good faith deemed such shares or units, other than the
shares of Common Stock, to have at least the same value and voting rights as
the Common Stock (a “common stock equivalent”); provided, however, if there are
unavailable sufficient shares (or fractions of shares) of Common Stock and/or
common stock equivalents, then the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock or common stock
equivalents for

13






 




issuance upon exercise of the Rights, including the calling of a meeting
of stockholders; and provided, further, that if the Company is unable to cause
sufficient shares of Common Stock and/or common stock equivalents to be
available for issuance upon exercise in full of the Rights, then the Company,
to the extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date thereof to which it is a party, shall make
provision to pay an amount in cash equal to twice the Purchase Price (as
adjusted pursuant to this Section 11), in lieu of issuing shares of Common
Stock and/or common stock equivalents. To the extent that the Company
determines that some action needs to be taken pursuant to this Section 11(c),
the Board of Directors by action of at least a majority of its members then in
office may suspend the exercisability of the Rights for a period of up to sixty
(60) days following the date on which the Section 11(b) Event shall have
occurred, in order to decide the appropriate form of distribution to be made
pursuant to this Section 11(c) 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.
The Board of Directors may, but shall not be required to, establish procedures
to allocate the right to receive Common Stock and common stock equivalents upon
exercise of the Rights among holders of Rights, which such allocation may be,
but is not required to be, pro-rata.


     (d)  If the Company shall fix a record date for the issuance of rights or
warrants to all holders of Preferred Stock entitling them (for a period
expiring within 90 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or securities having the same or more favorable
rights, privileges and preferences as the 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 or exercise price per share,
as the case may be, less than the current market price per share of Preferred
Stock (as defined in Section 11(f) hereof) 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 date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock or
equivalent preferred stock 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 in a consideration, part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith
by a majority of the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent. Shares of Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.


     (e)  If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a


14






 


consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness, cash (other than a regular
periodic cash dividend out of 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 convertible
securities, subscription rights or warrants (excluding those referred to in
Section 11(d) 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 for one share of Preferred Stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such
current market price for one 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 again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.



		
	 	        (f) (i) For the purpose of any computation hereunder, the “current
market price” of any security (a “Security” for purposes of this Section
11(f)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading
Days (as hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current market price per share of
such Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible
into shares of such Security or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution
or the record date for such subdivision, combination or reclassification,
then, and in each such case, the “current market price” shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the American Stock Exchange or, if the Security is not listed or
admitted to trading on the American Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the principal national
securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any
national securities exchange, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System (“Nasdaq”) National
Market System, or if the Security is not listed or admitted to trading on
any national securities exchange or included in the Nasdaq National
Market System, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then
in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by a majority of the Board of Directors. If on any such date no
market maker is making a market in the Security, the fair value of such
Security



15






 





		
	 	on such date as determined in good faith by a majority of the Board
of Directors shall be used. The term “Trading Day” shall mean a day on
which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or,
if the Security is not listed or admitted to trading on any national
securities exchange a day on which the Nasdaq National Market System is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange or included in
the Nasdaq National Market System, a Business Day. If the Security is
not publicly held or not so listed or traded, “current market price”
shall mean the fair value as det
ermined in good faith by a majority of
the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent.




		
	 	        (ii) For the purpose of any computation hereunder, the “current
market price” per share (or one one-hundredth of a share) of Preferred
Stock shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(f) (other than the last
sentence thereof). If the current market price per share (or one
one-hundredth of a 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(f), 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 Rights Agreement) multiplied by the current market price
per share of the Common Stock and the “current market price” per one
one-hundredth of a share of Preferred Stock shall be equal to the current
market price per share of the Common Stock (as appropriately adjusted).
If neither the Common Stock nor the Preferred Stock is publicly held or
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,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.



     (g)  No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(g) 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,
as the case may be. Notwithstanding the first sentence of this Section 11(g),
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.


     (h) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of Preferred Stock, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the shares of Preferred Stock shall apply on
like terms to any such other shares.


16






 


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


     (j)  Unless the Company shall have exercised its election as provided in
Section 11(k) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(d) and (e) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Preferred Stock (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (A) the number of one
one-hundredths of a share of Preferred Stock covered by a Right immediately
prior to the adjustment by (B) 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.


     (k)  The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which such 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. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(k), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
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 Right Certificates on
the record date specified in the public announcement.


     (l) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of shares which were expressed in the
initial Right Certificates issued hereunder.


17






 


     (m)  Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Common Stock
or other securities and below one one-hundredth of the then par value, if any,
of the Preferred Stock, issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of such Preferred Stock, Common Stock or other
securities at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and common stock
equivalents, a portion of the consideration paid upon such exercise, equal to
at least the then par value of a share of Common Stock of the Company, shall be
allocated as the payment for each share of Common Stock of the Company so
received.


     (n)  In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the shares
of Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the 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 upon the occurrence of the event requiring such
adjustment.


     (o)  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 a majority of the Board of
Directors shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
Preferred Stock at less than the then current market price, (iii) issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred
Stock, shall not be taxable to such stockholders.


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

18






 



made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.


     (q)  The Company covenants and agrees that it shall not, at any time after
the Distribution Date and so long as the Rights have not been redeemed pursuant
to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i)
consolidate with, (ii) merge with or into, or (iii) sell or transfer, in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, if at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.


     (r)  The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Sections 23 and 24 hereof, take any
action the purpose or effect of which is to diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.


      Section 12.
Certificate of Adjusted Purchase Price or Number of Shares. Whenever
an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and the Common Stock a copy of such certificate and (c) include a brief summary
thereof in a mailing to each holder of a Right Certificate in accordance with
Section 26 hereof, or prior to the Distribution Date, disclose a brief summary
in a filing under the Exchange Act. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustments therein contained.


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


     (a)  In the event that, directly or indirectly, at any time after a Person
has become an Acquiring Person, (x) the Company shall consolidate with, or
merge with and into, any other Person, (y) any Person shall consolidate with or
merge with and into the Company, and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all
or part of the Common Stock shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other
property, or (z) the Company shall sell, or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than to the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right, subject to Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price multiplied by the then number of one-one hundredths of a
share of Preferred Stock for which a Right is then exercisable (or if a Section
11(b) Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-hundredths of a share for which a Right
was exercisable immediately prior to the first

19






 




occurrence of a Section 11(b) Event by the Purchase Price in effect
immediately prior to such first occurrence) in accordance with the terms of
this Rights Agreement, in lieu of Preferred Stock, such number of shares of
freely tradable Common Stock of the Principal Party (as hereinafter defined),
free and clear of liens, rights of call or first refusal, encumbrances or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable (or if a Section 11(b)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-hundredths of a share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(b)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product by (B) 50% of the current market price
per share of the Common Stock of such Principal Party (determined in the manner
described in Section 11(f) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Rights Agreement; (iii) the term “Company” shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof, except for the provisions of 11(b), shall
apply to such Principal Party; and (iv) such Principal Party shall take such
steps (including, but not limited to, the authorization and reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) in connection with
such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.


     (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) hereof, the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person, including the Company, that is the other party to the
merger or consolidation; and




		
	 	        (ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; provided, however, that in
any case described in clause (i) or (ii) in this Section 13(b), (x) if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section
12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary or Affiliate of another Person, “Principal Party” shall refer
to such other Person; (y) in case such Person is a Subsidiary, directly
or indirectly, or Affiliate 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 (z) in case such Person
is, or is owned directly or indirectly by, a partnership or joint venture
formed by two or more Persons that are not owned, directly or indirectly,
by the same Person, the rules set forth in (x) and (y) 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



20






 





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



		
	 	        (i) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, will use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and will use its best efforts to cause such
registration statement to 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; and




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



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


      Section 14.  Fractional Rights and Fractional Shares.


     (a)  The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price for any day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the American
Stock Exchange or, if the Rights are not

21






 




listed or admitted to trading on the American Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, as reported by the Nasdaq National Market System or, if the Rights
are not listed or admitted to trading on any national securities exchange or
included in the Nasdaq National Market System, the last quoted price, or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by a majority of the Board
of Directors. If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in good
faith by a majority of the Board of Directors shall be used.


     (b)  The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of the shares of Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of Preferred
Stock, the Company may pay to the registered holders of Right Certificates at
the time such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of one
one-hundredths of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-hundredth of a share of Preferred
Stock shall be one one-hundredth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(f)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.


     (c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive common stock
equivalents (other than Preferred Stock) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, the Company may pay
to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of a share or unit of such common stock equivalent or
other securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(f) hereof for the
Trading Day immediately prior to the date of such exercise and, if such common
stock equivalent is not traded, each such common stock equivalent shall have
the value of one one-hundredth of a share of Preferred Stock.


22






 


     (d)  Except as otherwise expressly provided in this Section 14, the holder
of a Right by the acceptance of the Right expressly waives such holder’s right
to receive any fractional Rights or any fractional share upon exercise of
Rights.


      Section 15.  Rights of Action. All rights of
action in respect of this Rights Agreement, except for rights of action given
to the Rights Agent under Section 18 or Section 20 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of Common Stock of the Company); and
any registered holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock of the Company), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock of the Company), may, in such holder’s
own behalf and for such holder’s own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder’s right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement. 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 Rights Agreement.


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


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


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


     (c)  the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock Certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common 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.


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

23






 



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


      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 other
disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the costs and expenses of
defending against any claim of liability.


     (b)  The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for Preferred Stock, Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.


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


     (a)  Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust powers or business or the stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation 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 Rights Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the

24






 



successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this Rights
Agreement.


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


      Section 20.
Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Rights
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:


     (a)  The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.


     (b)  Whenever in the performance of its duties under this Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board and Chief
Executive Officer, President, Vice President — Finance and Chief Financial
Officer or any Vice President and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Rights Agreement in reliance upon such certificate.


     (c)  The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.


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


     (e)  The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect


25






 


to the exercise of Rights evidenced by Right Certificates after actual
notice to the Rights Agent of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock or other securities
will, when 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 Rights 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 and Chief Executive Officer, President, Vice President -
Finance and Chief Financial Officer, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions.


     (h)  The Rights Agent and any stockholder, director, officer, employee,
agent or representative 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 the Rights Agent under this Rights Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.


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


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


     (k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1, clause 2
and/or, in the case of the certificate attached to the form of election to
purchase, clause 3 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.


26






 


      Section 21.  Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Rights Agreement upon 30 days’ notice in writing
mailed to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail or, prior to the Distribution Date, through any filing made by the Company
pursuant to the Exchange Act. 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 such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (which
holder shall, with such notice, submit such holder’s Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation or other entity organized and doing
business under the laws of the United States or of any state, in good standing,
having an office in the States of New York or Florida, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority, or (b) an
affiliate of a corporation or other entity described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and 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 Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates or, prior to the
Distribution Date, through any filing made by the Company pursuant to the
Exchange Act. Failure to give any notice provided for this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.


      Section 22.  Issuance of New Right Certificates.


     (a)  Notwithstanding any of the provisions of this Rights Agreement or of
the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by a majority of
the Board of Directors then in office to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares of stock or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement.


     (b)  In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the redemption, exchange or
expiration of the Rights, the Company (a) shall with respect to shares of
Common Stock so issued or sold pursuant

27






 




to the exercise of stock options or under any employee benefit plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Right Certificates 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 Right Certificates would be issued,
and (ii) no Right 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)  A majority of the Board of Directors then in office may, at its
option, at any time prior to the earlier of (i) the close of business on the
Stock Acquisition Date or (ii) the close of business on the Final Expiration
Date, elect to redeem all but not less than all of the then outstanding Rights
at a redemption price of $0.01 per Right, as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the “Redemption
Price”). The redemption of the Rights by the Board of Directors 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.


     (b)  Immediately upon the action of a majority of the Board of Directors
then in office electing to redeem the Rights, evidence of which shall be
promptly filed with the Rights Agent, or, when appropriate, immediately upon
the time or satisfaction of such conditions as the Board of Directors may have
established, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public disclosure of any such redemption; provided, however, that
the failure to give, or any defect in, any such disclosure shall not affect the
validity of such redemption. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing
such notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.


     (c)  Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23, Section 24 hereof
and other than in connection with the purchase of Common Stock prior to the
Distribution Date.


      Section 24.  Exchange.


     (a)  The Board of Directors may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of


28






 




 Section 7(e) hereof) for Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect adjustments in the
number of Rights pursuant to Section 11 of this Rights Agreement (such exchange
ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan or compensation arrangement of the
Company or any such Subsidiary, or any entity holding securities of the Company
to the extent organized, appointed or established by the Company or any such
Subsidiary for or pursuant to the terms of any such employee benefit plan or
compensation arrangement), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Voting Power of the
Company.


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


     (c)  In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or equivalent preferred stock, as such
term is defined in Section 11(d) hereof) for Common Stock exchangeable for
Rights, at the initial rate of one one-hundredth of a share of Preferred Stock
(or equivalent preferred stock) for each share of Common Stock, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, so that the fraction of a share
of Preferred Stock delivered in lieu of each share of Common Stock shall have
the same voting rights as one share of Common Stock.


     (d)  In the event that there shall not be sufficient shares of Common Stock
or Preferred Stock (or equivalent preferred stock) issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as may
be necessary to authorize additional shares of Common Stock or Preferred Stock
(or equivalent preferred stock) for issuance upon exchange of the Rights.


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

29






 




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


      Section 25.  Notice of Proposed Actions.


     (a)  In case the Company shall propose at any time after the Distribution
Date (a) to pay any dividend payable in stock of any class to the holders of
the Preferred Stock or to make any other distribution to the holders of the
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), (b) to offer to the holders of the Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any other class or any other
securities, rights or options, (c) to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding shares of Preferred Stock), (d) to effect any consolidation or
merger into or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sales or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, (e) to effect the
liquidation, dissolution or winding up of the Company, or (f) to declare or pay
any dividend on the Common Stock payable in Common Stock or to effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Right, in
accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Stock and/or Preferred Stock, if any such date is to be fixed. Such
notice shall be so given in the case of any action covered by clauses (a) or
(b) above at least ten days prior to the record date for determining holders of
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten days prior to the date of the taking of such
proposed action or the date of participation therein by the holders 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 a Section 11(b) Event shall occur, then the Company shall as
soon as practicable thereafter give to each holder of a Right Certificate, 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(b) hereof.


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


               HEARx Ltd.


30






 



	 	1250 Northpoint Parkway

West Palm Beach, Florida 33407

Attention: Chief Executive Officer



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



	 	The Bank of New York

101 Barclay Street

New York, New York 10286

Attention: Corporate Trust Department



Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.


      Section 27.  Supplements and Amendments. The Company may from time to time supplement or amend this Rights
Agreement without the approval of any holders of Right Certificates in order
(a) to cure any ambiguity, (b) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(c) to shorten or lengthen any time period hereunder (including without
limitation to extend the Final Expiration Date), (d) increase or decrease the
Purchase Price, or (e) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable; provided, however,
that from and after such time as any Person becomes an Acquiring Person, this
Rights Agreement shall not be amended in any manner which would adversely
affect the interests of the holders of Rights; provided further that this
Rights Agreement may not be supplemented or amended to lengthen pursuant to
clause (c) of this sentence, (A) the time period relating to when the Rights
may be redeemed at such time as the Rights are not then redeemable, or (B) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
the Rights; provided further that the Company shall have the right to make
unilaterally any changes necessary to facilitate the appointment of a successor
Rights Agent, which such changes shall be set forth in a writing by the Company
or by the Company and such successor Rights Agent. Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Rights Agreement to lower the thresholds set
forth in Sections 1(a) and 3(a) hereof from 15% to not less than the greater of
(i) any percentage greater than the largest percentage of the Voting Power of
the Company then known by the Company to be beneficially owned by any Person
(other than the Company, any Subsidiary of the Company, or any employee benefit
plan or compensation arrangement of the Company or any Subsidiary of the
Company, and any entity holding securities of the Company to the extent
organized, appointed or established by the Company or any such Subsidiary for
or pursuant to the terms of any such employee benefit plan or compensation
arrangement) together with all Affiliates and Associates of such Person and
(ii) 10%. Upon the

31






 




delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding the foregoing, upon the effectiveness of the
amendment to the Restated Certificate of Incorporation of the Company in
connection with the Permitted Merger Events, this Agreement shall
automatically, without any further action required on the part of the Company
or the Rights Agent, be deemed to be amended to reflect the change in the name
of the Company contained in such amendment to the Company’s Restated
Certificate of Incorporation.


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


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


      Section 30.  Severability. If any term,
provision, covenant or restriction of this Rights 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 Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. It is the intent of the
parties hereto to enforce the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement to the maximum extent permitted by law.


      Section 31.  Governing Law. This Rights
Agreement and each Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.


      Section 32.  Counterparts. This Rights Agreement
may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.


      Section 33.  Descriptive Headings.
Descriptive headings of the several Sections of this Rights Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.


32






 


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



	 	 	 
	Attest:	 	
HEARx LTD.
	By_____________________	 	
By_________________________
	Name:__________________	 	
Name:______________________
	Title:___________________	 	
Title:_______________________
	 

	Attest:	 	
THE BANK OF NEW YORK
	 

	By_____________________	 	
By_________________________
	Name:__________________	 	
Name:________________________
	Title:___________________	 	
Title:________________________



33






 



Exhibit A


AMENDMENT

TO

CERTIFICATE OF DESIGNATION

OF

SERIES H JUNIOR PARTICIPATING PREFERRED STOCK

OF

HEARx LTD.



Pursuant to Section 151(g) of the General Corporation Law

of the State of Delaware



     We, Paul A. Brown, Chairman and Chief Executive Officer, and Barbara
Bachman, Secretary, of HEARx Ltd., a corporation organized and existing under
the General Corporation Law of the state of Delaware (the “DGCL”), in
accordance with the provisions of Section 151(g) thereof, DO HEREBY CERTIFY:


     A.     That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the Company, the said
Board of Directors on December 14, 1999, adopted a resolution creating a series
of Two Hundred Thousand (200,000) shares of Preferred Stock designated as
Series H Junior Participating Preferred Stock (the “Series H Preferred Stock”);
and


     B.     That the rights, privileges, preferences and restrictions of the Series
H Preferred Stock were set forth in the Certificate of Designation of Series H
Junior Participating Preferred Stock filed on December 22, 1999, in the office
of the Secretary of State of the State of Delaware (the “Certificate of
Designation”); and


     C.     That no shares of the Series H Preferred Stock have been issued; and


     D.     That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the Company, and
Section 151(g) of the DGCL, the said Board of Directors on _________ ___, 2002,
adopted the following resolution increasing the number of shares of Series H
Preferred Stock:


     RESOLVED, that the number of shares constituting the Series H Junior
Participating Preferred Stock, par value $1.00 per share, shall be increased to
500,000.


     E.     That except as otherwise amended hereby, the terms of the Certificate
of Designation remain in full force and effect.


 






 



     IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this ____ day of ________________, 2002.



	 	 
	 	By:________________________

Name: Paul A. Brown

Title:   Chairman and Chief Executive Officer



Attest



	 	 
	By:__________________________

Name: Barbara Bachman

Title:   Secretary	 



2






 



Exhibit B



[Form of Right Certificate]



Certificate No. R-___________                         
            ____ Rights



NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT THE

OPTION OF THE COMPANY, THE RIGHTS ARE SUBJECT TO

REDEMPTION AT $0.01 PER RIGHT OR EXCHANGE FOR COMMON

STOCK, UNDER THE CIRCUMSTANCES AND ON THE TERMS SET

FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN

CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN

ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN

ACQUIRING PERSON AND ANY SUBSEQUENT HOLDER OF SUCH

RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS

REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A

PERSON WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR

AN ASSOCIATE OF AN ACQUIRING PERSON. THIS RIGHT

CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE VOID

IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE

RIGHTS AGREEMENT.]*


Right Certificate



HEARx LTD.



     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 ________, 1999, and amended and restated as of
________, 2002 (as amended from time to time the “Rights Agreement”) between HEARx
Ltd., a Delaware corporation (the “Company”), and The Bank of New York, an New
York banking corporation (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. West Palm Beach, Florida time on the
Expiration Date, as that term is defined in the Rights Agreement, at the
stockholder services office (or such office designated for such purpose) of the
Rights Agent, or its successor as Rights Agent, one one-hundredth of a fully
paid, nonassessable share of the Series H Junior Participating Preferred Stock,
par value $1.00 per share (“Preferred Stock”), of the Company, at a purchase
price of $_______ per one one-hundredth of a share (the “Purchase Price”) upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise of
each Right) and the Purchase Price set forth above, are the number and Purchase
Price as of _________, ____based on the shares of Preferred Stock of the
Company as constituted at such date.







	*	 	The portion of the legend in brackets shall be inserted only if applicable.


 






 






     The Purchase Price and the number of shares of Preferred Stock which may
be purchased upon the exercise of each of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events as provided in the Rights Agreement.



     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 Company and the above-mentioned office
of the Rights Agent and are also available upon written request to the Company.


     This Right Certificate, with or without other Right Certificates, upon
surrender at the stockholder services office (or such office designated for
such purpose) 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 shares of Preferred
Stock 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, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per Right on or prior to the Stock Acquisition Date (as defined
in the Rights Agreement). In addition, subject to the provisions of the Rights
Agreement, each Right evidenced by this Certificate may be exchanged by the
Company at its option for one share of Common Stock following the Stock
Acquisition Date and prior to the time an Acquiring Person, as that term is
defined in the Rights Agreement, owns 50% or more of the Voting Power, as that
term is defined in the Rights Agreement, of the Company.


     No fractional shares of Preferred Stock will be issued upon the exercise
of any Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts). In lieu of
fractions of a share, 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 shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give 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 Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.


2






 


     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 _________, ___.



	 	 	 
	Attest:	 	
HEARx LTD.
	By______________________	 	
By_____________________
	Name:___________________	 	
Name:__________________
	Title:____________________	 	
Title:___________________



Countersigned:


THE BANK OF NEW YORK


By:______________________________

Authorized signature


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.


Dated:__________________



	 	 
	 	______________________________
	 	Signature



(Signature must conform in all respects to

name of holder as specified on the face of

this Right Certificate)



Signature Guaranteed:


     Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.


4






 


CERTIFICATE



     The undersigned hereby certifies by checking the appropriate boxes that:


     (1)  this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
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 Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.



	 	 	 
	Dated:__________________	 	
______________________________

Signature


(Signature must conform in all respects to

name of holder as specified on the face of

this Right Certificate)



5






 



FORM OF ELECTION TO PURCHASE



(To be executed if holder desires to

exercise the Right Certificate.)



To HEARx Ltd.:


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


 
	 	Name:____________________

Address:__________________

               __________________





	 	Social security

or taxpayer identification

number:__________________



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:



	 	Name:____________________

Address:__________________

               __________________





	 	Social security

or taxpayer identification

number:__________________



Dated:__________________



	 	 
	 	______________________________

Signature


(Signature must conform in all respects to

name of holder as specified on the face of

this Right Certificate)



Signature Guaranteed:


     Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.


6






 


CERTIFICATE



     The undersigned hereby certifies by checking the appropriate boxes that:


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


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


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


Dated:____________________



	 	 
	 	______________________________

Signature


(Signature must conform in all respects to

name of holder as specified on the face of

this Right Certificate)



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 as described in Section 7(e) of the
Rights Agreement.



7