exv4w1






Exhibit 4.1




Local.com Corporation




and




Computershare Trust Company, N.A.




Rights Agent




PREFERRED STOCK RIGHTS AGREEMENT




Dated as of October 15, 2008



















 











TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	1. Certain Definitions

	 	 	1	 
	2. Appointment of Rights Agent

	 	 	6	 
	3. Issuance of Rights Certificates

	 	 	7	 
	4. Form of Rights Certificates

	 	 	8	 
	5. Countersignature and Registration

	 	 	9	 
	6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates

	 	 	10	 
	7. Exercise of Rights; Exercise Price; Expiration Date of Rights

	 	 	10	 
	8. Cancellation and Destruction of Rights Certificates

	 	 	12	 
	9. Reservation and Availability of Preferred Shares

	 	 	13	 
	10. Record Date

	 	 	14	 
	11. Adjustment of Exercise Price, Number of Shares or Number of Rights

	 	 	14	 
	12. Certificate of Adjusted Exercise Price or Number of Shares

	 	 	21	 
	13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power

	 	 	21	 
	14. Fractional Rights and Fractional Shares

	 	 	25	 
	15. Rights of Action

	 	 	26	 
	16. Agreement of Rights Holders

	 	 	26	 
	17. Rights Certificate Holder Not Deemed a Stockholder

	 	 	26	 
	18. Concerning the Rights Agent

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

	 	 	27	 
	20. Duties of Rights Agent

	 	 	28	 
	21. Change of Rights Agent

	 	 	30	 
	22. Issuance of New Rights Certificates

	 	 	31	 
	23. Redemption

	 	 	31	 






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	 	 	Page
	24. Exchange
	 	 	32	 
	25. Notice of Certain Events

	 	 	34	 
	26. Notices

	 	 	34	 
	27. Supplements and Amendments

	 	 	35	 
	28. Successors

	 	 	35	 
	29. Determinations and Actions by the Board of Directors, Etc.

	 	 	35	 
	30. Benefits of this Agreement

	 	 	36	 
	31. Severability

	 	 	36	 
	32. Governing Law

	 	 	36	 
	33. Counterparts

	 	 	36	 
	34. Descriptive Headings

	 	 	37	 
	35. Force Majeure
	 	 	37	 






	 	 	 
	Exhibits     
	 	 
	 
	 	 
	Exhibit A

	 	Form of Certificate of Designation
	Exhibit B

	 	Form of Rights Certificate
	Exhibit C

	 	Summary of Rights







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PREFERRED STOCK RIGHTS AGREEMENT




     This Preferred Stock Rights Agreement is dated as of October 15, 2008 between Local.com
Corporation, a Delaware corporation (the “Company”), and Computershare Trust Company, N.A.,
a federally chartered trust company.



     On October 14, 2008 (the “Rights Dividend Declaration Date”), the Board of Directors
of the Company authorized and declared a dividend of one Preferred Share Purchase Right (a
“Right”) for each Common Share (as hereinafter defined) of the Company outstanding as of
the Close of Business (as hereinafter defined) on October 15, 2008 (the “Record Date”),
each Right representing the right to purchase one one-thousandth (0.001) of a share of Series A
Participating Preferred Stock (as such number may be adjusted pursuant to the provisions of this
Agreement), having the rights, preferences and privileges set forth in the form of Certificate of
Designations of Rights, Preferences and Privileges of Series A Participating Preferred Stock
attached hereto as Exhibit A, upon the terms and subject to the conditions herein set
forth, and further authorized and directed the issuance of one Right (as such number may be
adjusted pursuant to the provisions of this Agreement) with respect to each Common Share that shall
become outstanding between the Record Date and the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined), and in certain circumstances after the
Distribution Date.



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




			
	1.	 	Certain Definitions.





     For purposes of this Agreement, the following terms have the meanings indicated:



     (a) “Acquiring Person” shall mean any Person, who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the
Common Shares then outstanding, but shall not include the Company, any Subsidiary of the Company or
any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall be deemed to be an Acquiring Person as the result of an acquisition of Common Shares
by the Company which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the Beneficial Owner of
15% or more of the Common Shares of the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company (other than pursuant to a dividend or distribution paid
or made by the Company on the outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person shall be deemed to be an Acquiring
Person unless upon becoming the Beneficial Owner of such additional Common Shares of the Company
such Person does not beneficially own 15% or more of the Common Shares of the Company then
outstanding. Notwithstanding the foregoing, (i) if the Company’s Board of Directors determines in
good faith that a Person who would otherwise be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), has become such













 







inadvertently (including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of the Common Shares that would otherwise cause such Person to be
an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), or
(B) such Person was aware of the extent of the Common Shares it beneficially owned but had no
actual knowledge of the consequences of such beneficial ownership under this Agreement) and without
any intention of changing or influencing control of the Company, and if such Person divested or
divests as promptly as practicable a sufficient number of Common Shares so that such Person would
no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or to have become an “Acquiring Person”
for any purposes of this Agreement; and (ii) if, as of the date hereof, any Person is the
Beneficial Owner of 15% or more of the Common Shares outstanding, such Person shall not be or
become an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph
(a), unless and until such time as such Person shall become the Beneficial Owner of additional
Common Shares (other than pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or subdivision of the outstanding
Common Shares), unless, upon becoming the Beneficial Owner of such additional Common Shares, such
Person is not then the Beneficial Owner of 15% or more of the Common Shares then outstanding.



     (b) “Adjustment Fraction” shall have the meaning set forth in Section 11(a)(i)
hereof.



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



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




     (i) which such Person or any of such Person’s Affiliates or Associates beneficially
owns, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Rule
13d-3 thereunder (or any comparable or successor law or regulation);




     (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 the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed pursuant to this Section 1(d)(ii)(A) to
be the Beneficial Owner of, or to beneficially own, (1) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for purchase or
exchange, or (2) securities which a Person or any of such Person’s Affiliates or Associates
may be deemed to have the right to acquire pursuant to any merger or other acquisition
agreement between the Company and such Person (or one or more of its Affiliates or
Associates) if such agreement has been approved by the Board of Directors of the Company
prior to there being an Acquiring Person; or (B) the right to vote



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pursuant to any agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security
under this Section 1(d)(ii)(B) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent given to such Person
in response to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or successor report);
or




     (iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding, whether or not in writing (other
than customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section 1(d)(ii)(B)
hereof) or disposing of any securities of the Company; provided, however, that in no case
shall an officer or director of the Company be deemed (x) the Beneficial Owner of any
securities beneficially owned by another officer or director of the Company solely by reason
of actions undertaken by such persons in their capacity as officers or directors of the
Company or (y) the Beneficial Owner of securities held of record by the trustee of any
employee benefit plan of the Company or any Subsidiary of the Company for the benefit of any
employee of the Company or any Subsidiary of the Company, other than the officer or
director, by reason of any influence that such officer or director may have over the voting
of the securities held in the plan.



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



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



     (g) “Common Shares” when used with reference to the Company shall mean the shares of
Common Stock of the Company, par value $0.00001 per share. Common Shares when used with reference
to any Person other than the Company shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first-mentioned Person.



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



     (i) “Company” shall mean Local.com Corporation, a Delaware corporation, subject to the
terms of Section 13(a)(iii)(C) hereof.



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     (j) “Current Per Share Market Price” of any security (a “Security” for
purposes of this definition), for all computations other than those made pursuant to
Section 11(a)(iii) hereof, shall mean the average of the daily closing prices per share of
such Security for the thirty (30) consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Per Share
Market Price of any Security on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the ten (10) consecutive Trading Days immediately prior to
such date; provided, however, that in the event that the Current Per Share Market Price of the
Security is determined during a period following the announcement by the issuer of such Security of
(i) a dividend or distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of the applicable thirty (30) Trading Day or ten (10) Trading
Day period, 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 Per
Share Market Price shall be appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities exchange, the last
sale price or, if such last sale price is not reported, 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 the Board of Directors of the Company. If on any such date no market maker is making a
market in the Security, the fair value of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. If the Preferred Shares are not publicly
traded, the Current Per Share Market Price of the Preferred Shares shall be conclusively deemed to
be (x) the Current Per Share Market Price of the Common Shares as determined pursuant to this
Section 1(j), as appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof, multiplied by (y) 1,000. If the Security is
not publicly held or so listed or traded, Current Per Share Market Price shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be conclusive for all
purposes.



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



     (l) “Distribution Date” shall mean the earlier of (i) the Close of Business on the
tenth (10th) day (or such later date as may be determined by action of the Company’s Board of
Directors) after the Shares Acquisition Date (or, if the tenth (10th) day after the Shares
Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (ii)
the Close of Business on the tenth (10th) Business Day (or such later date as may be determined by
action of the Company’s Board of Directors) after the date that a tender or



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exchange offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms of any such plan)
is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if, assuming the successful consummation thereof, such Person
would be an Acquiring Person.



     (m) “Equivalent Shares” shall mean Preferred Shares and any other class or series of
capital stock of the Company which is entitled to the same rights, privileges and preferences as
the Preferred Shares.



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



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



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



     (q) “Expiration Date” shall mean the earliest to occur of: (i) the Close of Business
on the Final Expiration Date, (ii) the Redemption Date, or (iii) the time at which the Board of
Directors orders the exchange of the Rights as provided in Section 24 hereof.



     (r) “Final Expiration Date” shall mean October 15, 2018.



     (s) “Nasdaq” shall mean The Nasdaq Stock Market, Inc.



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



     (u) “Post-Event Transferee” shall have the meaning set forth in Section 7(e)
hereof.



     (v) “Preferred Shares” shall mean shares of Series A Participating Preferred Stock,
par value $0.00001 per share, of the Company.



     (w) “Pre-Event Transferee” shall have the meaning set forth in Section 7(e)
hereof.



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



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



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



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



     (bb) “Rights Agent” shall mean (i) Computershare Trust Company, N.A., (ii) its
successor or replacement as provided in Sections 19 and 21 hereof or (iii) any additional
Person appointed pursuant to Section 2 hereof.



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     (cc) “Rights Certificate” shall mean a certificate substantially in the form attached
hereto as Exhibit B.



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



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



     (ff) “Section 13 Event” shall mean any event described in clause (i), (ii) or (iii) of
Section 13(a) hereof.



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



     (hh) “Shares Acquisition Date” shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a report filed pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such; provided that, if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a) hereof, then no Shares Acquisition Date shall be deemed to
have occurred.



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



     (jj) “Subsidiary” of any Person shall mean any corporation or other entity of which an
amount of voting securities sufficient to elect a majority of the directors or Persons having
similar authority of such corporation or other entity is beneficially owned, directly or
indirectly, by such Person, or any corporation or other entity otherwise controlled by such Person.



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



     (ll) “Summary of Rights” shall mean a summary of this Agreement substantially in the
form attached hereto as Exhibit C.



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



     (nn) “Trading Day” shall mean a day on which the principal national securities
exchange on which a referenced security is listed or admitted to trading is open for the
transaction of business or, if a referenced security is not listed or admitted to trading on any
national securities exchange, a Business Day.



     (oo) A “Triggering Event” shall be deemed to have occurred upon any Person becoming an
Acquiring Person.




			
	2.	 	Appointment of Rights Agent.





     The Company hereby appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may



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deem necessary or desirable, upon ten (10) days’ prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any co-Rights Agent.




			
	3.	 	Issuance of Rights Certificates.





     (a) Until the Distribution Date, (i) the Rights will be evidenced (subject to the provisions
of Sections 3(b) and 3(c) hereof) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be deemed to be Rights Certificates)
and not by separate Rights Certificates, and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of Common Shares. Until the earlier of the
Distribution Date or the Expiration Date, the surrender for transfer of certificates for Common
Shares shall also constitute the surrender for transfer of the Rights associated with the Common
Shares represented thereby. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested, send) by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Distribution Date, at the address
of such holder shown on the records of the Company, a Rights Certificate evidencing one Right for
each Common Share so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to Section 11
hereof, then at the time of distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid
in lieu of any fractional Rights (in accordance with Section 14(a) hereof). As of the
Distribution Date, the Rights will be evidenced solely by such Rights Certificates and may be
transferred by the transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of Common Shares, and the holders of such Rights Certificates as listed in the
records of the Company or any transfer agent or registrar for the Rights shall be the record
holders thereof.



     (b) On the Record Date or as soon as practicable thereafter, the Company will send a copy of
the Summary of Rights by first-class, postage-prepaid mail, to each record holder of Common Shares
as of the Close of Business on the Record Date, at the address of such holder shown on the records
of the Company’s transfer agent and registrar. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with the Summary of
Rights.



     (c) Unless the Board of Directors by resolution adopted at or before the time of the issuance
of any Common Shares after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date (or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date) specifies to the contrary, Rights shall be issued in respect of all Common
Shares that are so issued, and Certificates representing such Common Shares shall also be deemed to
be certificates for Rights, and shall bear the following legend:




THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS
SET FORTH IN A RIGHTS



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AGREEMENT BETWEEN LOCAL.COM CORPORATION AND COMPUTERSHARE TRUST COMPANY, N.A., AS
THE RIGHTS AGENT, DATED AS OF OCTOBER 15, 2008, (THE “RIGHTS AGREEMENT”),
THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF LOCAL.COM CORPORATION. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE
EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. LOCAL.COM CORPORATION WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A
COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST
THEREFOR ADDRESSED TO THE CORPORATE SECRETARY AT LOCAL.COM CORPORATION’S PRINCIPAL
EXECUTIVE OFFICES. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON
OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.



     With respect to such certificates containing the foregoing legend, until the earlier of the
Distribution Date or the Expiration Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the surrender for transfer
of any such certificate shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.



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




			
	4.	 	Form of Rights Certificates.





     (a) The Rights Certificates (and the forms of election to purchase Common Shares and of
assignment to be printed on the reverse thereof) shall be substantially in the form of
Exhibit B hereto and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or a national market system, on which the Rights may from time to time be
listed or included, or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date (or in the case of Rights issued with respect to Common Shares issued by the Company
after the Record Date, as of the date of issuance of such Common Shares) and on their face shall
entitle the holders thereof to purchase such number of one-thousandths (0.001) of a Preferred



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Share as shall be set forth therein at the price set forth therein (such exercise price per
one one-thousandth (0.001) of a Preferred Share being hereinafter referred to as the “Exercise
Price” and the aggregate Exercise Price of all Preferred Shares issuable upon exercise of one
Right being hereinafter referred to as the “Total Exercise Price”), but the number and type
of securities purchasable upon the exercise of each Right and the Exercise Price shall be subject
to adjustment as provided herein.



     (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a Post-Event Transferee, (iii) a Pre-Event Transferee, or
(iv) any subsequent transferee receiving transferred Rights from a Post-Event Transferee or a
Pre-Event Transferee, either directly or through one or more intermediate transferees, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:




THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.




			
	5.	 	Countersignature and Registration.





     (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its Chief Financial Officer, its President or any Vice
President, either manually or by facsimile signature, and by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature, and shall have affixed thereto
the Company’s seal (if any) or a facsimile thereof. The Rights Certificates shall be countersigned,
either manually or by facsimile signature, by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company with the same force
and effect as though the person who signed such Rights Certificates on behalf of the Company had
not ceased to be such officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.



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



-9-









 







holders of the Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the date of each of the Rights Certificates.




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





     (a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Rights Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one-thousandths (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such Rights Certificate
and shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign
and deliver to the person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment from the registered holder of a sum
sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.



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




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





     (a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein)
in whole or in part at any time after the Distribution Date and prior to the Close of Business on
the Expiration Date by surrender of the Rights Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Exercise Price for each



-10-









 







one-thousandth (0.001) of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets as the case may be) as to which the Rights are exercised.



     (b) The Exercise Price for each one-thousandth (0.001) of a Preferred Share issuable pursuant
to the exercise of a Right shall initially be Ten Dollars ($10.00), 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 Rights Certificate representing exercisable Rights, with the form of
election to purchase duly executed, accompanied by payment of the Exercise Price for the number of
one-thousandths (0.001) of a Preferred Share (or, following a Triggering Event, other securities,
cash or other assets as the case may be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Rights Certificate in accordance with
Section 9(e) hereof, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent for the Preferred Shares) a certificate or
certificates for the number of one-thousandths (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be) to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply with all such requests or
(B) if the Company shall have elected to deposit the total number of one-thousandths (0.001) of a
Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the
case may be) issuable upon exercise of the Rights hereunder with a depository agent, requisition
from the depository agent depository receipts representing such number of one-thousandths (0.001)
of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as
the case may be) as are to be purchased (in which case certificates for the Preferred Shares (or,
following a Triggering Event, other securities, cash or other assets as the case may be)
represented by such receipts shall be deposited by the transfer agent with the depository agent)
and the Company hereby directs the depository agent to comply with such request, (ii) 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, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names as may be designated
by such holder, and (iv) when appropriate, after receipt thereof, deliver such cash to or upon the
order of the registered holder of such Rights Certificate. The payment of the Exercise Price (as
such amount may be reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and
an amount equal to any applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e) hereof, may be made in cash or by certified
bank check, cashier’s check or bank draft payable to the order of the Company. In the event that
the Company is obligated to issue securities of the Company other than Preferred Shares, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate.



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



-11-









 





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



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




			
	8.	 	Cancellation and Destruction of Rights Certificates.





     All Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or 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 Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any
Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate evidencing the destruction thereof to the Company.



-12-









 






			
	9.	 	Reservation and Availability of Preferred Shares.





     (a) The Company covenants and agrees that it will use its best efforts to cause to be reserved
and kept available out of its authorized and unissued Preferred Shares not reserved for another
purpose (and, following the occurrence of a Triggering Event, out of its authorized and unissued
Common Shares and/or other securities), the number of Preferred Shares (and, following the
occurrence of the Triggering Event, Common Shares and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights.



     (b) If the Company shall hereafter list any of its Preferred Shares on a national securities
exchange, then so long as the Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) issuable and deliverable upon exercise of the Rights
may be listed on such exchange, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.



     (c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Triggering Event in which the consideration to be
delivered by the Company upon exercise of the Rights is described in Section 11(a)(ii) or
Section 11(a)(iii) hereof, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under 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 earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the date of expiration of the Rights. The Company
may temporarily suspend, for a period not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating, and notify the Rights
Agent, that the exercisability of the Rights has been temporarily suspended, as well as a public
announcement and notification to the Rights Agent at such time as the suspension is no longer in
effect. The Company will also take such action as may be appropriate under, or to ensure compliance
with, the securities or “blue sky” laws of the various states in connection with the exercisability
of the Rights. Notwithstanding any provision of this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction, unless the requisite qualification in such jurisdiction
shall have been obtained, or an exemption therefrom shall be available, and until a registration
statement has been declared and remains effective.



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




-13-











 





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



10. Record Date.




     Each Person in whose name any certificate for a number of one-thousandths (0.001) of a
Preferred Share (or other securities of the Company) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of Preferred Shares (or other
securities of the Company) represented thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the
Total Exercise Price with respect to which the Rights have been exercised (and any applicable
transfer taxes) was made; provided, however, that if the date of such surrender and payment is a
date upon which the 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 transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any
rights of a holder of Preferred Shares (or other securities of the Company) 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.



11. Adjustment of Exercise Price, Number of Shares or Number of Rights.




     The Exercise Price, the number and kind of shares or other property covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as provided in this
Section 11.




(a) (i) Anything in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares (by reverse stock split or otherwise)
into a smaller number of Preferred Shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such event, except as otherwise provided in this
Section 11 and Section 7(e) hereof: (1) the Exercise Price in effect at the
time of the record date for such dividend or of the effective date of such subdivision,



-14-









 







combination or reclassification shall be adjusted so that the Exercise Price thereafter
shall equal the result obtained by dividing the Exercise Price in effect immediately prior
to such time by a fraction (the “Adjustment Fraction”), the numerator of which shall
be the total number of Preferred Shares (or shares of capital stock issued in such
reclassification of the Preferred Shares) outstanding immediately following such time and
the denominator of which shall be the total number of Preferred Shares outstanding
immediately prior to such time; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of such Right; and (2) the number of
one-thousandths (0.001) of a Preferred Share (or share of such other capital stock) issuable
upon the exercise of each Right shall equal the number of one-thousandths (0.001) of a
Preferred Share (or share of such other capital stock) as was issuable upon exercise of a
Right immediately prior to the occurrence of the event described in clauses (A)-(D) of this
Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however, that, no
such adjustment shall be made pursuant to this Section 11(a)(i) to the extent that
there shall have simultaneously occurred an event described in clause (i), (ii), (iii) or
(iv) of subsection (n) of this Section 11 with a proportionate adjustment being made
thereunder. Each Common Share that shall become outstanding after an adjustment has been
made pursuant to this Section 11(a)(i) shall have associated with it the number of
Rights, exercisable at the Exercise Price and for the number of one-thousandths (0.001) of a
Preferred Share (or shares of such other capital stock) as one Common Share has associated
with it immediately following the adjustment made pursuant to this Section 11(a)(i).




     (ii) Subject to Section 24 of this Agreement, in the event that a Triggering
Event shall have occurred, then promptly following such Triggering Event each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the right to
receive for each Right, upon exercise thereof in accordance with the terms of this Agreement
and payment of the Exercise Price in effect immediately prior to the occurrence of the
Triggering Event, in lieu of a number of one-thousandths (0.001) of a Preferred Share, such
number of Common Shares of the Company as shall equal the quotient obtained by dividing (A)
the product obtained by multiplying (1) the Exercise Price in effect immediately prior to
the occurrence of the Triggering Event by (2) the number of one-thousandths (0.001) of a
Preferred Share for which a Right was exercisable (or would have been exercisable if the
Distribution Date had occurred) immediately prior to the first occurrence of a Triggering
Event, by (B) fifty percent (50%) of the Current Per Share Market Price for Common Shares on
the date of occurrence of the Triggering Event; provided, however, that the Exercise Price
and the number of Common Shares of the Company so receivable upon exercise of a Right shall
be subject to further adjustment as appropriate in accordance with Section 11(e)
hereof to reflect any events occurring in respect of the Common Shares of the Company after
the occurrence of the Triggering Event.




     (iii) In lieu of issuing Common Shares in accordance with subsection (a)(ii) of this
Section 11, the Company may, if the Company’s Board of Directors determines that
such action is necessary or appropriate and not contrary to the interest of holders of
Rights and, in the event that the number of Common Shares which are authorized by the



-15-









 







Company’s Certificate of Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not sufficient to permit the exercise in
full of the Rights, or if any necessary regulatory approval for such issuance has not been
obtained by the Company, the Company shall: (A) determine the excess of (i) the value of the
Common Shares issuable upon the exercise of a Right (the “Current Value”) over (ii)
the Exercise Price (such excess, the “Spread”) and (B) with respect to each Right,
make adequate provision to substitute for such Common Shares, upon exercise of the Rights,
(1) cash, (2) a reduction in the Exercise Price, (3) other equity securities of the Company
(including, without limitation, shares or units of shares of any series of preferred stock
which the Company’s Board of Directors has deemed to have the same value as Common Shares
(such shares or units of shares of preferred stock are herein called “Common Stock
Equivalents”)), except to the extent that the Company has not obtained any necessary
stockholder or regulatory approval for such issuance, (4) debt securities of the Company,
except to the extent that the Company has not obtained any necessary stockholder or
regulatory approval for such issuance, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Company’s Board of Directors based upon the advice of a
nationally recognized investment banking firm selected by the Company’s Board of Directors;
provided, however, that if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the later of (x) the
first occurrence of a Triggering Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the “Section 11(a)(ii) Trigger Date”), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without requiring
payment of the Exercise Price, Common Shares (to the extent available), except to the extent
that the Company has not obtained any necessary stockholder or regulatory approval for such
issuance, and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Company’s Board of Directors shall determine in good faith that
it is likely that sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights or that any necessary regulatory approval for such issuance
will be obtained, the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the authorization of such
additional shares or take action to obtain such regulatory approval (such period, as it may
be extended, the “Substitution Period”). To the extent that the Company determines
that some action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights and (y) may suspend
the exercisability of the Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Shares shall be



-16-









 







the Current Per Share Market Price of the Common Shares on the Section 11(a)(ii)
Trigger Date and the value of any Common Stock Equivalent shall be deemed to have the same
value as the Common Shares on such date.



     (b) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the issuance of rights, options or warrants to all holders of Preferred Shares entitling such
holders (for a period expiring within forty-five (45) calendar days after such record date) to
subscribe for or purchase Preferred Shares or Equivalent Shares or securities convertible into
Preferred Shares or Equivalent Shares at a price per share (or having a conversion price per share,
if a security convertible into Preferred Shares or Equivalent Shares) less than the then Current
Per Share Market Price of the Preferred Shares or Equivalent Shares on such record date, then, in
each such case, the Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of Preferred Shares or Equivalent Shares, as the
case may be, which the aggregate offering price of the total number of Preferred Shares or
Equivalent Shares, as the case may be, to be offered or issued (and/or the aggregate initial
conversion price of the convertible securities to be offered or issued) would purchase at such
current market price, and the denominator of which shall be the number of Preferred Shares and
Equivalent Shares (if any) outstanding on such record date, plus the number of additional Preferred
Shares or Equivalent Shares, as the case may be, to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as determined in good
faith by the Company’s Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights.
Preferred Shares and Equivalent Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.



     (c) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the making of a distribution to all holders of the Preferred Shares or of any class or series
of Equivalent Shares (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any, or a dividend payable
in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in
Section 11(b)), then, in each such case, the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current Per Share Market Price
of a Preferred Share or an Equivalent Share on such record date, less the fair market value per
Preferred Share or Equivalent Share (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the Rights



-17-









 







Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a Preferred Share or Equivalent Share, as the
case may be, and the denominator of which shall be such Current Per Share Market Price of a
Preferred Share or Equivalent Share on such record date; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Exercise Price shall be adjusted to be the Exercise Price which
would have been in effect if such record date had not been fixed.



     (d) Anything herein to the contrary notwithstanding, no adjustment in the Exercise Price shall
be required unless such adjustment would require an increase or decrease of at least one percent
(1. 0%) of the Exercise Price; provided, however, that any adjustments which by reason of this
Section 11(d) 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 (0.0001) of a Common Share or other share or one
hundred-thousandth (0.00001) of a Preferred Share, as the case may be. Notwithstanding the first
sentence of this Section 11(d), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date of the transaction which
requires such adjustment and (ii) the Expiration Date.



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



     (f) All Rights originally issued by the Company subsequent to any adjustment made to the
Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the
number of one-thousandths (0.001) of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.



     (g) Unless the Company shall have exercised its election as provided in subsection (h) of this
Section 11, upon each adjustment of the Exercise Price as a result of the calculations made
in subsections (b) and (c) of this Section 11, each Right outstanding immediately prior to
the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of Preferred Shares (calculated to the nearest one hundred-thousandth
(0.00001) of a share) obtained by (i) multiplying (x) the number of Preferred Shares covered by a
Right immediately prior to this adjustment by (y) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price, and (ii) dividing the product so obtained by the Exercise
Price in effect immediately after such adjustment of the Exercise Price.



     (h) The Company may elect on or after the date of any adjustment of the Exercise Price as a
result of the calculations made in subsection (b) or (c) of this Section 11 to adjust the



-18-









 







number of Rights, in substitution for any adjustment in the number of Preferred Shares
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-thousandths (0.001) of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth (0.00001)) obtained by dividing the Exercise
Price in effect immediately prior to adjustment of the Exercise Price by the Exercise Price in
effect immediately after adjustment of the Exercise 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 Exercise Price is adjusted or any day thereafter, but, if any Rights
Certificates have been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this subsection (h) of this Section 11, the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Exercise Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date specified in the public
announcement.



     (i) Irrespective of any adjustment or change in the Exercise Price or the number of Preferred
Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Exercise Price per one one-thousandth (0.001) of a Preferred
Share and the number of one-thousandths (0.001) of a Preferred Share which were expressed in the
initial Rights Certificates issued hereunder.



     (j) Before taking any action that would cause an adjustment reducing the Exercise Price below
the par or stated value, if any, of the number of one-thousandths (0.001) of a Preferred Share
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 as
fully paid and nonassessable shares such number of one-thousandths (0.001) of a Preferred Share at
such adjusted Exercise Price.



     (k) In any case in which this Section 11 shall require that an adjustment in the
Exercise 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 of the number of one-thousandths (0.001) of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise over and above the number
of one-thousandths (0.001) of a Preferred Share and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to
such adjustment; provided, however, that the Company shall deliver to such holder a due



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bill or other appropriate instrument evidencing such holder’s right to receive such additional
shares (fractional or otherwise) upon the occurrence of the event requiring such adjustment.



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



     (m) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Sections 23, 24 or 27 hereof, take (or permit to be taken) any action if at
the time such action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the Rights.



     (n) In the event that the Company shall at any time after the date of this Agreement (i)
declare a dividend on the Common Shares payable in Common Shares, (ii) subdivide the outstanding
Common Shares, (iii) combine the outstanding Common Shares (by reverse stock split or otherwise)
into a smaller number of Common Shares, or (iv) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), then, in
each such event, except as otherwise provided in this Section 11(a) and
Section 7(e) hereof: (A) each Common Share (or shares of capital stock issued in such
reclassification of the Common Shares) outstanding immediately following such time shall have
associated with it the number of Rights as were associated with one Common Share immediately prior
to the occurrence of the event described in clauses (i)-(iv) above; (B) the Exercise Price in
effect at the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that the Exercise Price
thereafter shall equal the result obtained by multiplying the Exercise Price in effect immediately
prior to such time by a fraction, the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the event described in clauses (i)-(iv) above, and the denominator
of which shall be the total number of Common Shares outstanding immediately after such event;
provided, however, that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (C) the number of one-thousandths (0.001) of a Preferred Share (or
shares of such other capital stock) issuable upon the exercise of each Right outstanding after such
event shall equal the number of one-thousandths (0.001) of a Preferred Share (or shares of such
other capital stock) as were issuable with respect to one Right immediately prior to such event.
Each Common Share that shall become outstanding after an adjustment has been made pursuant to this
Section 11(n) shall have associated with it the number of Rights, exercisable at the
Exercise Price and for the number of one-thousandths (0.001) of a Preferred Share (or shares of
such other capital stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(n). If an event occurs which would require an



-20-









 







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



12. Certificate of Adjusted Exercise Price or Number of Shares.




     Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company
shall promptly (i) prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (ii) file with the Rights Agent and with each transfer agent
for the Preferred Shares a copy of such certificate, and (iii) mail a brief summary thereof to each
holder of a Rights Certificate in accordance with Section 26 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to make such certification or give such notice shall
not affect the validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on any
adjustment contained therein and shall not be deemed to have knowledge of such adjustment unless
and until it shall have received such certificate.



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





(a) In the event that, following a Triggering Event, directly or indirectly:




     (i) the Company shall consolidate with, or merge with and into, any other Person (other
than a wholly-owned Subsidiary of the Company in a transaction the principal purpose of
which is to change the state of incorporation of the Company and which complies with
Section 11(m) hereof);




     (ii) any Person shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such consolidation or
merger and, in connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other person (or the
Company); or




     (iii) 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 fifty percent (50%) or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company
or one or more of its wholly owned Subsidiaries in one or more transactions, each of which
individually (and together) complies with Section 11(m) hereof), then, concurrent
with and in each such case,




     (A) each holder of a Right (except as provided in Section 7(e) hereof)
shall thereafter have the right to receive, upon the exercise thereof at a price
equal to the Total Exercise Price applicable immediately prior to the occurrence of
the Section 13 Event in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradeable Common Shares of the Principal Party, free of any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by dividing such Total Exercise Price by an amount equal to fifty percent
(50%) of



-21-









 







the Current Per Share Market Price of the Common Shares of such Principal Party
on the date of consummation of such Section 13 Event, provided, however,
that the Exercise Price and the number of Common Shares of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(e) hereof;




     (B) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement;




     (C) the term “Company” shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event;




     (D) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to ensure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise of the
Rights;




     (E) upon the subsequent occurrence of any consolidation, merger, sale or
transfer of assets or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon exercise
of a Right and payment of the Total Exercise Price as provided in this
Section 13(a), such cash, shares, rights, warrants and other property which
such holder would have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party receivable upon the
exercise of such Right pursuant to this Section 13(a), and such Principal
Party shall take such steps (including, but not limited to, reservation of shares of
stock) as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and other
property; and




     (F) For purposes hereof, the “earning power” of the Company and its
Subsidiaries shall be determined in good faith by the Company’s Board of Directors
on the basis of the operating income of each business operated by the Company and
its Subsidiaries during the three fiscal years preceding the date of such
determination (or, in the case of any business not operated by the Company or any
Subsidiary during three full fiscal years preceding such date, during the period
such business was operated by the Company or any Subsidiary).



     (b) For purposes of this Agreement, the term “Principal Party” shall mean:




     (i) in the case of any transaction described in clause (i) or (ii) of
Section 13(a) hereof: (A) the Person that is the issuer of the securities into which
the Common Shares



-22-









 







are converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer the Common Shares of which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (x) the Person that is the other
party to the merger, if such Person survives said merger, or, if there is more than one such
Person, the Person the Common Shares of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other party to the merger does not
survive the merger, the Person that does survive the merger (including the Company if it
survives) or (z) the Person resulting from the consolidation; and




     (ii) in the case of any transaction described in clause (iii) 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, or, if more than one Person
that is a party to such transaction or transactions receives the same portion of the assets
or earning power so transferred and each such portion would, were it not for the other equal
portions, constitute the greatest portion of the assets or earning power so transferred, or
if the Person receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons is the issuer of Common Shares having the greatest
aggregate market value of shares outstanding; provided, however, that in any such case
described in the foregoing clause (b)(i) or (b)(ii), if the Common Shares of such Person are
not at such time or have not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, then (A) if such Person is a direct or
indirect Subsidiary of another Person the Common Shares of which are and have been so
registered, the term “Principal Party” shall refer to such other Person, or (B) if
such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common
Shares of which are and have been so registered, the term “Principal Party” shall
refer to whichever of such Persons is the issuer of Common Shares having the greatest
aggregate market value of shares outstanding, or (C) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not owned, directly or
indirectly by the same Person, the rules set forth in clauses (A) and (B) above shall apply
to each of the owners having an interest in the venture as if the Person owned by the joint
venture was a Subsidiary of both or all of such joint venturers, and the Principal Party in
each such case shall bear the obligations set forth in this Section 13 in the same
ratio as its interest in such Person bears to the total of such interests.



     (c) The Company shall not consummate any Section 13 Event unless the Principal Party
shall have a sufficient number of authorized Common Shares that have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such Principal Party shall,
upon consummation of such Section 13 Event, assume this Agreement in accordance with
Sections 13(a) and 13(b) hereof, that all rights of first refusal or preemptive rights in
respect of the issuance of Common Shares of such Principal Party upon exercise of outstanding
Rights have been waived, that there are no rights, warrants, instruments or securities outstanding
or any agreements or arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the Rights and that
such transaction shall not result in a default by such Principal Party under this Agreement, and



-23-









 







further providing that, as soon as practicable after the date of such Section 13
Event, such 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, use its best efforts to cause such registration statement to become effective as soon
as practicable after such filing and 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, and similarly comply with applicable state
securities laws;




     (ii) use its best efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on a national securities exchange or to
meet the eligibility requirements for quotation on Nasdaq and list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights on Nasdaq; and




     (iii) deliver to holders of the Rights historical financial statements for such
Principal Party which comply in all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act. In the event that at any time after the
occurrence of a Triggering Event some or all of the Rights shall not have been exercised at
the time of a transaction described in this Section 13, the Rights which have not
theretofore been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).



     (d) In case the “Principal Party” for purposes of Section 13(b) hereof has provision
in any of its authorized securities or in its certificate of incorporation or bylaws or other
instrument governing its corporate affairs, which provision would have the effect of (i) causing
such Principal Party to issue (other than to holders of Rights pursuant to Section 13
hereof), in connection with, or as a consequence of, the consummation of a Section 13
Event, Common Shares or Equivalent Shares of such Principal Party at less than the then Current Per
Share Market Price thereof or securities exercisable for, or convertible into, Common Shares or
Equivalent Shares of such Principal Party at less than such then Current Per Share Market Price, or
(ii) providing for any special payment, tax or similar provision in connection with the issuance of
the Common Shares of such Principal Party pursuant to the provisions of Section 13 hereof,
then, in such event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived or amended, or that
the authorized securities shall be redeemed, so that the applicable provision will have no effect
in connection with or as a consequence of, the consummation of the proposed transaction.



     (e) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, effect or permit to occur any Section 13 Event, if (i) at the time or immediately
after such Section 13 Event 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, (ii) prior to, simultaneously with or



-24-









 







immediately after such Section 13 Event, the stockholders of the Person who
constitutes, or would constitute, the “Principal Party” for purposes of Section 13(b)
hereof shall have received a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates, or (iii) the form or nature of organization of the Principal Party would
preclude or limit the exercisability of the Rights.



     (f) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.



14. Fractional Rights and Fractional Shares.




     (a) The Company shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the 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, as determined
pursuant to the second sentence of Section 1(j) hereof.



     (b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-thousandth (0.001) of a Preferred Share) upon
exercise of the Rights or to distribute certificates which evidence fractional Preferred Shares
(other than fractions that are integral multiples of one one-thousandth (0.001) of a Preferred
Share). Interests in fractions of Preferred Shares in integral multiples of one one-thousandth
(0.001) of a Preferred Share may, at the election of the Company, be evidenced by depository
receipts, pursuant to an appropriate agreement between the Company and a depository selected by it;
provided, however, that such agreement shall provide that the holders of such depository receipts
shall have all the rights, privileges and preferences to which they are entitled as beneficial
owners of the Preferred Shares represented by such depository receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-thousandth (0.001) of a Preferred
Share, the Company shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same fraction of the current
market value of a Preferred Share. For purposes of this Section 14(b), the current market
value of a Preferred Share shall be (x) one thousand (1,000) multiplied by (y) the closing price of
a Common Share (as determined pursuant to the second sentence of Section 1(j) hereof) for
the Trading Day immediately prior to the date of such exercise.



     (c) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares upon the exercise or exchange of Rights. In
lieu of such fractional Common Shares, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of a Common Share. For purposes of this
Section 14(c), the current market value of a Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 1(j) hereof) for the
Trading Day immediately prior to the date of such exercise.



-25-









 





     (d) The holder of a Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares (other than fractions that are integral
multiples of one one-thousandth (0.001) of a Preferred Share) upon exercise of a Right.



15. Rights of Action.




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



16. Agreement of Rights Holders.




     Every holder of a Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:



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



     (b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed; and



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



17. Rights Certificate Holder Not Deemed a Stockholder.




     No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose to be the holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to confer upon the



-26-









 







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



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 Agreement and the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent and its affiliates, directors, officers and other employees
(collectively, the “Indemnitees”) for, and to hold them harmless against, any loss,
liability, damage, cost or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Indemnitees, for anything done or omitted by the Indemnitees in
connection with the acceptance and administration of this Agreement, including the reasonable costs
and expenses of defending against any claim of liability in the premises. In no event will the
Indemnitees be liable for special, indirect, incidental, punitive or consequential loss or damage
of any kind whatsoever, even if the Indemnitees have been advised of the possibility of such loss
or damage.



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



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 business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto; provided, however, that such
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 Agreement, any of the Rights 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 Rights Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been



-27-









 







countersigned, any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.



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



20. Duties of Rights Agent.




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



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



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



     (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross 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 Agreement or in the Rights 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
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any



-28-









 







covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13,
23 or 24, or the ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to Section 12 describing
such change or adjustment); nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Preferred Shares 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 Agreement.



     (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or
any Assistant Secretary 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 by it in
good faith in accordance with instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Rights Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such application (which date
shall not be less than five (5) Business Days after the date on which any officer of the Company
actually receives such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.



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



-29-









 





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



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



21. Change of Rights Agent.




     The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days’ notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. In the event the transfer agency
relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will
be deemed to have resigned automatically and be discharged from its duties under this Agreement as
of the effective date of such termination, and the Company shall be responsible for sending any
required notice. The Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within
a period of thirty (30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Rights Certificate (who shall, with such notice, submit his or her Rights Certificate
for inspection by the Company), then the registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a corporation organized and
doing business under the laws of the United States or of any state of the United States, in good
standing, which is authorized under such laws to exercise corporate trust or stockholder services
powers and is subject to supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent, along with its Affiliates a combined capital and
surplus of at least $50,000,000. 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 Preferred Shares and the Common Shares, and
mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to
give any notice provided for in this Section 21, however, or any defect therein, shall



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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.



22. Issuance of New Rights Certificates.




     Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the Exercise Price and
the number or kind or class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to Common Shares so
issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement
or upon the exercise, conversion or exchange of other securities of the Company outstanding at the
date hereof or upon the exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued and this sentence shall be null and void ab initio if, and to the extent that, such
issuance or this sentence would create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would be issued or would
create a significant risk of or result in such options’ or employee plans’ or arrangements’ failing
to qualify for otherwise available special tax treatment, and (ii) no such Rights Certificate shall
be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.



23. Redemption.




     (a) The Company may, at its option and with the approval of the Board of Directors, at any
time prior to the Close of Business on the earlier of (i) the fifth (5th) day following the Shares
Acquisition Date (or such later date as may be determined by action of the Company’s Board of
Directors and publicly announced by the Company), and (ii) the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being herein referred to as the “Redemption
Price”) and the Company may, at its option, pay the Redemption Price either in Common Shares
(based on the Current Per Share Market Price thereof at the time of redemption) or cash. Such
redemption of the Rights by the Company 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. The date on which
the Board of Directors elects to make the redemption effective shall be referred to as the
“Redemption Date.”



     (b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided, however, that



-31-









 







the failure to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten (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 Rights Agent and 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 Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the Redemption Price will
be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.



24. Exchange.




     (a) Subject to applicable laws, rules and regulations, and subject to subsection (c) of this
Section 24, the Company may, at its option, by action of the Board of Directors, at any
time after the occurrence of a Triggering Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for Common Shares at an exchange ratio of one (1) Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred to as the
“Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any
entity holding Common Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty percent (50%) or
more of the Common Shares then outstanding.



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



     (c) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in



-32-









 







accordance with subsection (a) of this Section 24, the Company shall either take such
action as may be necessary to authorize additional Common Shares for issuance upon exchange of the
Rights or alternatively, at the option of a majority of the Board of Directors, with respect to
each Right (i) pay cash in an amount equal to the Current Value (as hereinafter defined), in lieu
of issuing Common Shares in exchange therefor, or (ii) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value, in lieu of issuing Common Shares in
exchange for each such Right, where the value of such securities shall be determined by a
nationally recognized investment banking firm selected by majority vote of the Board of Directors,
or (iii) deliver any combination of cash, property, Common Shares and/or other securities having a
value equal to the Current Value in exchange for each Right. For purposes of this
Section 24(c) only, the Current Value shall mean the product of the Current Per Share
Market Price of Common Shares on the date of the occurrence of the event described above in
subsection (a), multiplied by the number of Common Shares for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent that the Company determines
that some action need be taken pursuant to clauses (i), (ii) or (iii) of this
Section 24(c), the Board of Directors may temporarily suspend the exercisability of the
Rights for a period of up to sixty (60) days following the date on which the event described in
subs (a) of Section 24 shall have occurred, in order to seek any authorization of
additional Common Shares and/or to decide the appropriate form of distribution to be made pursuant
to the above provision 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.



     (d) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. In lieu of such fractional Common Shares,
there shall be paid to the registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Common Share (as determined pursuant to the second sentence
of Section 1(j) hereof).



     (e) The Company may, at its option, by majority vote of the Board of Directors, at any time
before any Person has become an Acquiring Person, exchange all or part of the then outstanding
Rights for rights of substantially equivalent value, as determined reasonably and with good faith
by the Board of Directors based upon the advice of one or more nationally recognized investment
banking firms.



     (f) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection (e) 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 rights in exchange therefor as has been
determined by the Board of Directors in accordance with subsection (e) of this Section 24.
The Company 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
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 transfer agent for the Common Shares of the
Company. Any notice which is mailed in the manner herein provided shall be deemed given,



-33-









 







whether or not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Rights will be effected.



25. Notice of Certain Events.




     (a) In case the Company shall propose to effect or permit to occur any Triggering Event or
Section 13 Event, the Company shall give notice thereof to each holder of Rights in
accordance with Section 26 hereof at least twenty (20) days prior to occurrence of such
Triggering Event or such Section 13 Event.



     (b) In case any Triggering Event or Section 13 Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each holder of a Rights
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
Sections 11(a)(ii) and 13 hereof.



26. Notices.




     Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by
the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, sent by facsimile transmission (which is confirmed) or
sent by an overnight courier service such as Federal Express, addressed (until another address is
filed in writing with the Rights Agent) as follows:


Local.com Corporation

One Technology Drive, Building G

Irvine, CA 92618

Attention: Chief Financial Officer

Facsimile No.: (949) 341-5396



with a copy to:



Rutan & Tucker LLP

611 Anton Blvd, 14th Floor

Costa Mesa, CA 92626

Attention: Derek D. Dundas

Facsimile No.: (714) 546-9035




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


Computershare Trust Company, N.A.

1745 Gardena Avenue

Glendale, CA 91204-2991

Attention: Client Services

Facsimile No.: (818) 504-0674




-34-









 





     Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Rights Certificate 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.



27. Supplements and Amendments.




     Prior to the occurrence of a Distribution Date, the Company may supplement or amend this
Agreement in any respect without the approval of any holders of Rights and the Rights Agent shall,
if the Company so directs, execute such supplement or amendment. From and after the occurrence of a
Distribution Date, the Company and the Rights Agent may from time to time supplement or amend this
Agreement without the approval of any holders of Rights in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or inconsistent with
any other provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv) to change
or supplement the provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a 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 Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the delivery of a
certificate from an appropriate officer of the Company that states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment, provided that such supplement or amendment does not adversely
affect the rights, duties or obligations of the Rights Agent under this Agreement. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares.



28. Successors.




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



29. Determinations and Actions by the Board of Directors, Etc.




     For all purposes of this Agreement, any calculation of the number of Common Shares outstanding
at any particular time, including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers



-35-









 







specifically granted to the Board, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and power (i) to
interpret the provisions of this Agreement, and (ii) to make all determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (B) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (A) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights Certificates and all other
parties, and (B) not subject the Board to any liability to the holders of the Rights.



30. Benefits of this Agreement.




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



31. Severability.




     If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors of the Company determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire
until the Close of Business on the tenth (10th) day following the date of such determination by the
Board of Directors.



32. Governing Law.




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



33. Counterparts.




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



-36-









 





34. Descriptive Headings.




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



35. Force Majeure.




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



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



	 	 	 	 	 	 	 
	“COMPANY”	 	LOCAL.COM CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Douglas S. Norman
 

Douglas S. Norman
	 	 
	 

	 	Title:
	 	Chief Financial Officer and Secretarty	 	 
	 
	 	 	 	 	 	 
	“RIGHTS AGENT”	 	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Kellie Gwinn
 

Kellie Gwinn
	 	 
	 

	 	Title:
	 	Vice President	 	 







-37-









 








EXHIBIT A

CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES

OF SERIES A PARTICIPATING PREFERRED STOCK




OF




LOCAL.COM CORPORATION,

a Delaware corporation




Pursuant to Section 151 of the

Delaware General Corporation Law




     The undersigned, Douglas S. Norman, does hereby certify that:



     1. He is the duly elected and acting Secretary of Local.com Corporation, a Delaware
corporation (the “Corporation”).



     2. Pursuant to the authority conferred upon the Board of Directors by the Certificate of
Incorporation of the Corporation, the Board of Directors of the Corporation on October 14, 2008
adopted the following resolutions creating a series of Preferred Stock designated as Series A
Participating Preferred Stock:




     “RESOLVED: That pursuant to the authority vested in the Board of Directors by
the Certificate of Incorporation, the Board of Directors does hereby provide for the
issue of a series of Preferred Stock, and does hereby fix and herein state and
express the powers, designations, privileges, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions, of such series of Preferred Stock as follows:




     1. Designation and Amount. The shares of such series shall be
designated as “Series A Participating Preferred Stock.” The Series A Participating
Preferred Stock shall have a par value $0.00001 per share, and the number of shares
constituting such series shall be 30,000.




     2. Proportional Adjustment. In the event that the Corporation shall at
any time after the issuance of any share or shares of Series A Participating
Preferred Stock (i) declare any dividend on Common Stock of the Corporation
(“Common Stock”) payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Corporation shall
simultaneously effect a proportional adjustment to the number of outstanding shares
of Series A Participating Preferred Stock.




     3. Dividends and Distributions.




     (a) Subject to the prior and superior right of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the













 





EXHIBIT A





shares of Series A Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Participating Preferred Stock
shall be entitled to receive when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July and
October in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of Series A Participating Preferred Stock.




     (b) The Corporation shall declare a dividend or distribution on the
Series A Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).




     (c) Dividends shall begin to accrue on outstanding shares of Series A
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Participating
Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders of
shares of Series A Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Participating Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
shares of Series A Participating Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
no more than 30 days prior to the date fixed for the payment thereof.



A-2









 






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




     (a) Each share of Series A Participating Preferred Stock shall entitle
the holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation.




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




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




     5. Certain Restrictions.




     (a) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a share
or fraction of a share of Series A Participating Preferred Stock unless
concurrently therewith it shall declare a dividend on the Series A
Participating Preferred Stock as required by Section 3 hereof.




     (b) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Participating Preferred Stock as provided in
Section 3 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Participating Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:




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




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



A-3









 






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




     (iv) purchase or otherwise acquire for consideration any shares
of Series A Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.




     (c) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of this
Section 5, purchase or otherwise acquire such shares at such time
and in such manner.




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




     7. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Participating Preferred Stock shall be entitled to receive an aggregate amount per
share equal to 1,000 times the aggregate amount to be distributed per share to
holders of shares of Common Stock plus an amount equal to any accrued and unpaid
dividends on such shares of Series A Participating Preferred Stock.




     8. Consolidation, Merger, Etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A



A-4









 







Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged.




     9. No Redemption. The shares of Series A Participating Preferred Stock
shall not be redeemable.




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




     11. Amendment. If any shares of Series A Participating Preferred Stock
have not been issued, the Certificate of Incorporation of the Corporation shall not
be further amended in any manner which would materially alter or change the powers,
preferences, privileges or relative, participating, optional or other special
rights, or the qualifications, limitations or restrictions, of the Series A
Participating Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of a majority of the outstanding shares of Series A
Participating Preferred Stock, voting separately as a series.




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




     RESOLVED FURTHER, that the Chief Executive Officer, President, any Vice
President, the Secretary or any Assisting Secretary of the Corporation (each, an
“Authorized Officer”) or any persons authorized by an Authorized Officer
(together with the Authorized Officers, the “Authorized Persons”) be, and
each of them hereby is, authorized and directed on behalf of the Corporation to
prepare and file a Certificate of Designation of Rights, Preferences and Privileges
of Series A Participating Preferred Stock of the Corporation in accordance with the
foregoing resolution and the applicable provisions of Delaware law, and to take such
actions as they may deem necessary or appropriate to carry out the intent of the
foregoing resolution.”



     I further declare under penalty of perjury that the matters set forth in the foregoing
Certificate of Designation are true and correct of my own knowledge.



     Executed at Irvine, California, on October 15, 2008.



	 	 	 	 	 
	 	 	 
	 	                                              /s/ Douglas S. Norman
 	 
	 	Douglas S. Norman, Secretary 	 
	 	 	 
	 




A-5









 








EXHIBIT B




FORM OF RIGHTS CERTIFICATE




			
	 	 	 
	Certificate No. R- ___
	 	                     Rights






     NOT EXERCISABLE AFTER THE EARLIER OF (i) OCTOBER 15, 2008, (ii) THE DATE TERMINATED BY THE
COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $___PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS
AGREEMENT.]1



RIGHTS CERTIFICATE




 






     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 Preferred Stock Rights Agreement dated as of October
15, 2008, (the “Rights Agreement”), between Local.com Corporation, a Delaware corporation
(the “Company”), and Computershare Trust Company, N.A. ( 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., New York time, on                                          at the office
of the Rights Agent designated for such purpose, or at the office of its successor as Rights Agent,
one one-thousandth (0.001) of a fully paid and non-assessable share of Series A Participating
Preferred Stock, par value $0.00001 per share (the “Preferred Shares”), of the Company, at
an Exercise Price of Ten Dollars ($10.00) per one-thousandth (0.001) of a Preferred Share (the
“Exercise Price”), upon presentation and surrender of this Rights Certificate with the Form
of Election to Purchase and related Certificate duly executed. The number of Rights evidenced by
this Rights Certificate (and the number of one-thousandths (0.001) of a Preferred Share which may
be purchased upon exercise hereof) set forth





 




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




 









 










EXHIBIT B



above are the number and Exercise Price as of October 15, 2008 based on the Preferred Shares
as constituted at such date. As provided in the Rights Agreement, the Exercise Price and the number
and kind of Preferred Shares or other securities which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the
happening of certain events.




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



     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate (i) may be redeemed by the Company, at its option, at a redemption price of $0.01 per
Right or (ii) may be exchanged by the Company in whole or in part for Common Shares, substantially
equivalent rights or other consideration as determined by the Company.



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



     No fractional portion of less than one one-thousandth (0.001) of a Preferred Share will be
issued upon the exercise of any Right or Rights evidenced hereby but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.



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



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



B-2









 





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



	 	 	 	 	 	 	 	 	 
	Dated as of                                         , ___.
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ATTEST:	 	LOCAL.COM CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Countersigned:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 	 	as Rights Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 






B-3









 





FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE




FORM OF ASSIGNMENT




(To be executed by the registered holder if such holder desires to transfer the Rights Certificate)




     FOR VALUE RECEIVED                                          hereby sells, assigns and transfers unto



 





 





(Please print name and address of transferee)



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




	 	 	 	 	 
	Dated:                                         , ___

	 	 

	 	 
	 

	 	Signature	 	 






Signature Guaranteed:




     Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
Exchange Act of 1934, as amended.



B-4









 





CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



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



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



	 	 	 	 	 
	Dated:                                         , ___

	 	 

	 	 
	 

	 	Signature	 	 






Signature Guaranteed:




     Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
Exchange Act of 1934, as amended.



B-5









 





FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE – CONTINUED




FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise the Rights Certificate)




	 	 	 	 	 
	To:
	 	 	 	 
	 

	 	 

	 	 






     The undersigned hereby irrevocably elects to exercise                                                         Rights
represented by this Rights Certificate to purchase the number of one-thousandths (0.001) of a
Preferred Share issuable upon the exercise of such Rights and requests that certificates for such
number of one-thousandths (0.001) of a Preferred Share issued in the name of:



Please insert social security or other identifying number




 






(Please print name and address)




 



 





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




Please insert social security or other identifying number




 






(Please print name and address)




 



 






	 	 	 	 	 
	Dated:                                         , ___

	 	 

	 	 
	 

	 	Signature	 	 






Signature Guaranteed:




     Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
Exchange Act of 1934, as amended.



B-6









 





CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



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



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



	 	 	 	 	 
	Dated:                                         , ___

	 	 


	 	 
	 	 	 

Signature
	 	 






Signature Guaranteed:




     Signatures must be guaranteed by an “Eligible Guarantor Institution” (with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
Exchange Act of 1934, as amended.



B-7









 





FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE – CONTINUED




NOTICE




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



B-8









 





EXHIBIT C




STOCKHOLDER RIGHTS PLAN




 






SUMMARY OF RIGHTS




	 	 	 
	Distribution and Transfer of
Rights; Rights Certificate:

	 	The Board of Directors has declared a
dividend of one (1) Right for each share of
Common Stock of Local.com Corporation (the
“Company”) outstanding. Prior to the
Distribution Date referred to below, the
Rights will be evidenced by and trade with
the certificates for the Common Stock.
After the Distribution Date, the Company
will mail Rights certificates to the
Company’s stockholders and the Rights will
become transferable apart from the Common
Stock.
	 
	 	 
	Distribution Date:

	 	Rights will separate from the Common Stock
and become exercisable following (a) the
tenth (10th) day (or such later date as may
be determined by the Company’s Board of
Directors) after a person or group acquires
beneficial ownership of 15% or more of the
Company’s Common Stock or (b) the tenth
(10th) business day (or such later date as
may be determined by the Company’s Board of
Directors) after a person or group
announces a tender or exchange offer, the
consummation of which would result in
ownership by a person or group of 15% or
more of the Company’s Common Stock.
	 
	 	 
	Preferred Stock Purchasable 

Upon Exercise or Rights:

	 	After the Distribution Date, each Right
will entitle the holder to purchase for
$10.00 (the “Exercise Price”), a fraction
of a share of the Company’s Preferred Stock
with economic terms similar to that of one
share of the Company’s Common Stock.
	 
	 	 
	Flip-In:

	 	If an acquiror (an “Acquiring Person”)
obtains 15% or more of the Company’s Common
Stock, then each Right (other than Rights
owned by an Acquiring Person or its
affiliates) will entitle the holder thereof
to purchase, for the Exercise Price, a
number of shares of the Company’s Common
Stock having a then-current market value of
twice the Exercise Price.
	 
	 	 
	Flip-Over:

	 	If, after an Acquiring Person obtains 15%
or more of the Company’s Common Stock, (a)
the Company merges into another entity, (b)
an acquiring entity merges into the
Company, or (c) the Company sells more than
50% of the Company’s






 









 





Exhibit C




	 	 	 
	 

	 	assets or earning
power, then each Right (other than Rights
owned by an Acquiring Person or its
affiliates) will entitle the holder thereof
to purchase, for the Exercise Price, a
number of shares of Common Stock of the
person engaging in the transaction having a
then current market value of twice the
Exercise Price.
	 
	 	 
	Exchange Provision:

	 	At any time after the date on which an
Acquiring Person obtains 15% or more of the
Company’s Common Stock and prior to the
acquisition by the Acquiring Person of 50%
of the outstanding Common Stock, the Board
of Directors of the Company may exchange
the Rights (other than Rights owned by the
Acquiring Person or its affiliates), in
whole or in part, for shares of Common
Stock of the Company at an exchange ratio
of one share of Common Stock per Right
(subject to adjustment).
	 
	 	 
	Redemption of the Rights:

	 	Rights will be redeemable at the Company’s
option for $0.01 per Right at any time on
or prior to the fifth day (or such later
date as may be determined by the Company’s
Board of Directors) after public
announcement that a Person has acquired
beneficial ownership of 15% or more of the
Company’s Common Stock (the “Shares
Acquisition Date”).
	 
	 	 
	Expiration of the Rights:

	 	The Rights expire on the earlier to occur
of (a) October 15, 2018 or (b) exchange or
redemption of the Rights as described
above.
	 
	 	 
	Amendment of Terms of
Rights:

	 	The terms of the Rights and the Rights
Agreement may be amended in any respect
without the consent of the Rights holders
prior to the Distribution Date. From and
after the Distribution Date, the terms of
the Rights and the Rights Agreement may be
amended without the consent of the Rights
holders in order to cure any ambiguities or
to make changes which do not adversely
affect the interests of Rights holders
(other than the Acquiring Person).
	 
	 	 
	Voting Rights:

	 	Rights will not have any voting rights.
	 
	 	 
	Anti-Dilution Provisions:

	 	Rights will have the benefit of certain
customary anti-dilution provisions.
	 
	 	 
	Taxes:

	 	The Rights distribution should not be
taxable for federal income tax purposes.
However, following an event which renders
the Rights exercisable or upon redemption
of the Rights, stockholders may recognize
taxable income.






The foregoing is a summary of certain principal terms of the Rights Plan only and is qualified in
its entirety by reference to the Preferred Stock Rights Agreement dated as of October 15, 2008



C-2









 







between the Company and Computershare Trust Company, N.A. as Rights Agent (the “Rights
Agreement”). The Rights Agreement may be amended from time to time. A copy of the Rights
Agreement was filed with the Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated October 15, 2008. A copy of the Rights Agreement is available free of
charge from the Company.




C-3