exv4w1






Exhibit 4.1




BREEZE-EASTERN CORPORATION




and



COMPUTERSHARE TRUST COMPANY, N.A.



as Rights Agent



RIGHTS AGREEMENT



effective  as of July 18, 2011



 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	Section 1. Certain Definitions
	 	 	1	 
	Section 2. Appointment of Rights Agent
	 	 	8	 
	Section 3. Issue of Rights Certificates
	 	 	8	 
	Section 4. Form of Rights Certificate
	 	 	11	 
	Section 5. Countersignature and Registration
	 	 	12	 
	Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	12	 
	Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	13	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	15	 
	Section 9. Reservation and Availability of Capital Stock
	 	 	15	 
	Section 10. Preferred Stock Record Date
	 	 	17	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	18	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	26	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	26	 
	Section 14. Fractional Rights; Fractional Shares; Waiver
	 	 	30	 
	Section 15. Rights of Action
	 	 	31	 
	Section 16. Agreement of Rights Holders
	 	 	32	 
	Section 17. Rights Certificate Holder Not Deemed a Stockholder
	 	 	33	 
	Section 18. Duties of Rights Agent
	 	 	33	 
	Section 19. Concerning the Rights Agent
	 	 	35	 
	Section 20. Merger or Consolidation or Change of Name of Rights Agent
	 	 	36	 
	Section 21. Change of Rights Agent
	 	 	36	 
	Section 22. Issuance of New Rights Certificates
	 	 	37	 
	Section 23. Redemption
	 	 	37	 
	Section 24. Exchange
	 	 	38	 
	Section 25. Notice of Certain Events
	 	 	40	 
	Section 26. Notices
	 	 	41	 
	Section 27. Supplements and Amendments
	 	 	42	 
	Section 28. Successors
	 	 	43	 
	Section 29. Determinations and Actions by the Board
	 	 	43	 
	Section 30. Benefits of this Agreement
	 	 	43	 
	Section 31. Severability
	 	 	43	 
	Section 32. Governing Law
	 	 	44	 
	Section 33. Counterparts
	 	 	44	 
	Section 34. Descriptive Headings
	 	 	44	 






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EXHIBITS




	 	 	 

	Exhibit A

	 	Certificate of Designation of Series A Junior Participating
Preferred Stock of Breeze-Eastern Corporation
	 
	 	 
	Exhibit B

	 	Summary of Rights
	 
	 	 
	Exhibit C

	 	Form of Rights Certificate






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RIGHTS AGREEMENT




          RIGHTS AGREEMENT, dated as of July 19, 2011 and effective as of July 18, 2011 (this “Agreement”), by and between Breeze-Eastern
Corporation, a Delaware corporation (the “Company”), and Computershare Trust Company, N.A., as
rights agent (the “Rights Agent”);




          WHEREAS, on July 18, 2011 (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 share of Common Stock (as hereinafter defined) of the Company outstanding at the Close of
Business (as hereinafter defined) on the Record Date (as hereinafter defined), each Right initially
representing the right to purchase one one-thousandth (subject to adjustment) of one share of
Preferred Stock (as hereinafter defined), upon the terms and subject to the conditions herein set
forth, and further authorized and directed the issuance of one Right (subject to adjustment) with
respect to each share of Common Stock of the Company 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); provided, however, that Rights may be issued with respect to
shares of Common Stock that shall become outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22 hereof;




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




Section 1. Certain Definitions.




          For purposes of this 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 10% or more of
the shares of Common Stock of the Company then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company
or any Subsidiary of the Company, or any Person holding shares of Common Stock for or
pursuant to the terms of any such plan to the extent, and only to the extent, of such shares
of Common Stock so held, or (iv) an Exempted Person. Notwithstanding anything in this
definition of “Acquiring Person” to the contrary:




     (i) no Person shall become an “Acquiring Person” as the result of an
acquisition of shares of Common Stock by the Company which, by reducing the number
of shares of Common Stock outstanding, increases the percentage of the shares of
Common Stock beneficially owned by such Person, together with all Affiliates and
Associates of such Person, to 10% or more of the shares of Common Stock of the
Company then outstanding; provided, however, that if a Person,
together with all Affiliates and Associates of such Person, shall become the
Beneficial Owner of 10% or more of the shares of Common Stock of the Company then
outstanding by reason of share acquisitions by the Company and shall, after such
share acquisitions by the Company, become the Beneficial Owner













 






of any additional shares of Common Stock of the Company (other than pursuant to
a dividend or distribution paid or made by the Company on the outstanding Common
Stock or pursuant to a split or subdivision of the outstanding Common Stock), then
such Person shall be deemed to be an “Acquiring Person” unless, upon becoming the
Beneficial Owner of such additional shares of Common Stock, such Person, together
with all Affiliates and Associates of such Person, does not beneficially own 10% or
more of the Common Stock then outstanding;




     (ii) if the Board determines 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 then outstanding Common
Stock that would otherwise cause such Person to be an “Acquiring Person” or (B) such
Person was aware of the extent of its Beneficial Ownership of Common Stock but had
no actual knowledge of the consequences of such Beneficial Ownership under this
Agreement), and such Person divests as promptly as practicable a sufficient number
of shares of Common Stock 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 as a result of such inadvertent acquisition unless
and until such Person shall again become an “Acquiring Person”;




     (iii) if, as of the date hereof or prior to the first public announcement of
the adoption of this Agreement, any Person is or becomes the Beneficial Owner of 10%
or more of the shares of Common Stock outstanding, such Person shall not be deemed
to be or to become an “Acquiring Person” unless and until such time as such Person
shall, after the first public announcement of the adoption of this Agreement, become
the Beneficial Owner of additional shares of Common Stock (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common Stock
or pursuant to a split or subdivision of the outstanding Common Stock), unless upon
becoming the Beneficial Owner of such additional shares of Common Stock, such Person
is not then the Beneficial Owner of 10% or more of the shares of Common Stock then
outstanding; and




     (iv) no Person shall become an “Acquiring Person” solely as a result of any
unilateral grant of any security by the Company, or through the exercise of any
options, warrants, rights or similar interests (including restricted stock) granted
by the Company to its directors, officers and employees; provided,
however, that if a Person, who or which together with all Affiliates and
Associates, shall become the Beneficial Owner of 10% or more of the shares of Common
Stock of the Company then outstanding by reason of a unilateral grant of a security
by the Company, or through the exercise of any options, warrants, rights or similar
interests (including restricted stock) granted by the Company to its directors,
officers and employees, such Person shall nevertheless be deemed to



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be an “Acquiring Person” if, subject to Section 1(a)(ii), such Person, together
with all Affiliates and Associates, thereafter becomes the Beneficial Owner of any
additional shares of Common Stock (unless upon becoming the Beneficial Owner of
additional shares of Common Stock, such Person, together with all Affiliates and
Associates, does not beneficially own 10% or more of the Common Stock then
outstanding), except as a result of (y) a dividend or distribution paid or made by
the Company on the outstanding Common Stock or a split or subdivision of the
outstanding Common Stock; or (z) the unilateral grant of a security by the Company,
or through the exercise of any options, warrants, rights or similar interest
(including restricted stock) granted by the Company to its directors, officers and
employees.




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




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




     (i) that such Person or any of such Person’s Affiliates or Associates
beneficially owns, directly or indirectly (as determined pursuant to Rule 13d-3 of
the Exchange Act Regulations as in effect on the date of this Agreement);
provided, however, that a Person shall not be deemed the “Beneficial
Owner” of, or to “beneficially own” or to have “beneficial ownership” of, any
security under this subparagraph (i) as a result of an agreement, arrangement or
understanding to vote such security that would otherwise render such Person the
Beneficial Owner of such security, if such agreement, arrangement or understanding
(A) 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 provisions of the Exchange Act Regulations and (B) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or successor
report);




     (ii) that such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, 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 (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own” or to have “beneficial ownership”
of, (x) securities tendered pursuant to a tender or exchange offer made in
accordance with the Exchange Act Regulations 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 (y) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or (z) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering Event if such



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Rights were acquired by such Person or any of such Person’s Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
“Original Rights”) or pursuant to Section 11(a) hereof in connection with an
adjustment made with respect to any Original Rights; or (B) the right to vote
pursuant to any agreement, arrangement, or understanding (except to the extent
contemplated by the proviso to subparagraph (i) of this paragraph (c)); or




     (iii) that are beneficially owned, directly or indirectly, by any other Person
(or any Affiliate or Associate of such Person) with which such Person (or any of
such Person’s Affiliates or Associates) has any agreement, arrangement, or
understanding (whether or not in writing), for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to subparagraph (i) of this
paragraph (c)) or disposing of any such securities;




provided, however, that nothing in this paragraph (c) shall cause a Person
engaged in business as an underwriter of securities to be the “Beneficial Owner” of, or to
“beneficially own,” or have “beneficial ownership” of, any securities acquired through such
Person’s participation in good faith in a firm commitment underwriting until the expiration
of forty (40) days after the date of such acquisition; provided further,
however, that no Person who is an officer, director or employee of the Company or
any Subsidiary of the Company shall be deemed, solely by reason of such Person’s status or
authority as such, to be the “Beneficial Owner” of, or to “beneficially own,” any securities
that are “beneficially owned” (as defined in this paragraph (c)), including, without
limitation, in a fiduciary capacity, by the Company or any Subsidiary of the Company, or by
any other such officer, director or employee of the Company or any Subsidiary of the
Company.




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




     (d) “Board” shall mean the Board of Directors of the Company or any duly
authorized committee thereof.




     (e) “Book Entry” shall mean an uncertificated book entry for the Common Stock.




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




     (g) “Certificate of Incorporation” shall mean the Certificate of Incorporation
of the Company, as amended, as filed with the Office of the Secretary of State of the State
of Delaware (the “Secretary of State”), and together with the Certificate of



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Designation of
the Preferred Stock of the Company adopted contemporaneously with the approval of this
Agreement and attached hereto as Exhibit A (the “Certificate of Designation”), as
the same may hereafter be amended or restated.




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




     (i) “Common Stock” when used with reference to the Company shall mean Common
Stock, par value $0.01 per share, of the Company. “Common Stock” when used with reference
to any Person other than the Company shall mean the class or series of capital stock (or
equity interest) with the greatest voting power (in relation to any other classes or series
of capital stock (or equity interest)) of such other Person or if such other Person is a
Subsidiary of another Person, the Person who ultimately controls such first mentioned
Person.




     (j) “Distribution Date” shall mean the earlier of (i) the Close of Business on
the tenth Business Day after the Stock Acquisition Date (or, if the tenth Business Day after
the Stock Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date) and (ii) the Close of Business on the tenth Business Day (or, if such tenth
Business Day occurs before the Record Date, the Close of Business on the Record Date), or
such later date as may be determined by action of the Board prior to such time as any Person
becomes an Acquiring Person, after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company or any employee benefit plan of the Company or of
any Subsidiary of the Company or any Person holding shares of Common Stock for or pursuant
to the terms of any such plan) of, or of the first public announcement of the intention of
any Person (other than any of the Persons referred to in the preceding parenthetical) to
commence, a tender or exchange offer the consummation of which would result in such Person
becoming the Beneficial Owner of 10% or more of the outstanding shares of Common Stock.




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




     (l) “Exchange Act Regulations” shall mean the General Rules and Regulations
under the Exchange Act.




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




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




          (o) “Exempted Person” shall mean (i) the Company, (ii) any Subsidiary
(as hereinafter defined) of the Company, (iii) any employee benefit plan of the
Company or any of its Subsidiaries, or any entity holding shares of Common Stock
which was organized, appointed or established by the Company or any Subsidiary of
the Company for or pursuant to the terms of any such plan;



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[provided,
however, that, after the date of this Agreement, any Persons in clauses (i)
 — (iii) above shall cease to be an Exempted Person and shall become an Acquiring
Person if they, in the aggregate, acquire Beneficial Ownership of an additional 2%
or more of the outstanding Common Stock of the Company in excess of the amount
beneficially owned as of the date hereof;




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




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




     (r) “Person” shall mean any individual, firm, corporation, partnership (general
or limited), limited liability company, limited liability partnership, association,
unincorporated organization, trust or other legal entity and also (i) any syndicate or group
deemed to be a Person under Section 13(d)(3) of the Exchange Act and Rule 13d-5(b)
thereunder and (iii) any successor (by merger or otherwise) of any such firm, corporation,
partnership (general or limited), limited liability company, limited liability partnership,
association, unincorporated organization, trust, or other group or entity.




     (s) “Preferred Stock” shall mean the Series A Junior Participating Preferred
Stock, par value $0.01 per share, of the Company, having the voting rights, powers,
designations, preferences and relative, participating, optional or other special rights and
qualifications, limitations and restrictions set forth in the Certificate of Designation.




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




     (u) “Purchase Price” shall have the meaning set forth in Sections 4(a),
11(a)(ii) and 13(a) hereof.




     (v) “Record Date” shall mean the Close of Business on August 1, 2011.




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




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




     (y) “Right” and “Rights” shall have the meaning set forth in the
Preamble hereof.




     (z) “Rights Certificate” shall have the meaning set forth in Section 3(d)
hereof.




     (aa) “Rights Dividend Declaration Date” shall have the meaning set forth in the
Preamble hereof.



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     (bb) “Section 11(a)(ii) Event” shall mean any event described in Section
11(a)(ii) hereof.




     (cc) “Section 13 Event” shall mean any event described in clause (x), (y) or
(z) of Section 13(a) hereof.




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




     (ee) “Stock Acquisition Date” shall mean the first date of public announcement
(including, without limitation, the filing of any report pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.




     (ff) “Subsidiary” shall mean, with reference to any Person, any other Person of
which (1) a majority of the voting power of the voting securities or equity interests is
beneficially owned, directly or indirectly, by such first-mentioned Person or otherwise
controlled by such first-mentioned Person, or (2) an amount of voting securities or equity
interests sufficient to elect at least a majority of the directors or equivalent governing
body of such other Person is beneficially owned, directly or indirectly, by such
first-mentioned Person, or otherwise controlled by such first-mentioned Person.




     (gg) “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section
13 Event.




     (hh)“Trust” has the meaning set forth in Section 24(d) hereof.




     (ii)“Trust Agreement” has the meaning set forth in Section 24(d) hereof.



Section 2. Appointment of Rights Agent.




          The Company hereby appoints the Rights Agent to act as agent for the Company  in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable, upon ten (10) days’ prior written notice to the Agent.
The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such co-Rights Agent.




Section 3. Issue of Rights Certificates.




          (a) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights to Purchase Preferred Stock, in substantially the form attached hereto as
Exhibit B and which may be appended to certificates that represent shares of Common Stock
(hereinafter referred to as the “Summary of Rights”), to each record holder of Common Stock as of
the Close of Business on the Record Date, at the address of such holder shown on the records of the
Company.





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               With respect to certificates representing shares of Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for
shares of Common Stock registered in the names of the holders thereof, and not by separate Rights
Certificates, and with respect to Book Entry shares of Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by the balances indicated in the
Book Entry account system of the transfer agent for the Common Stock, or in the case of
certificated shares, by such certificates registered in the names of the holders thereof. Until
the earlier of the Distribution Date or the Expiration Date, the transfer of any shares of Common
Stock outstanding on the Record Date (whether represented by certificate(s) or evidenced by the
balances indicated in the Book Entry account system of the transfer agent for the Common Stock,
and, in either case, regardless of whether a copy of the Summary of Rights is submitted with the
surrender or request for transfer), also shall constitute the transfer of the Rights associated
with such shares of Common Stock.



          (b) Rights shall be issued, without any further action, in respect of all shares of Common
Stock that become outstanding (whether originally issued or delivered from the Company’s treasury)
after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date;
provided, however, that Rights also shall be issued to the extent provided in
Section 22 hereof. Confirmation and account statements sent to holders of Common Stock for Book
Entry form or, in the case of certificated shares, certificates, representing such shares of Common
Stock, issued after the Record Date shall bear a legend substantially in the following form:




“This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Breeze-Eastern Corporation
(the “Company”) and Computershare Trust Company, N.A. (the “Rights
Agent”) dated as of July 18, 2011 as the same may be amended from time to
time (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 the Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights shall be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the Rights
Agreement as in effect on the date of mailing without charge after receipt
of a written request therefor.




Under certain circumstances, as set forth in the Rights Agreement, Rights
that are Beneficially Owned by any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such capitalized
terms are defined in the Rights Agreement), or specified transferees of such
Acquiring Person (or Affiliate or Associate thereof) may become null and
void.”



          With respect to all certificates representing shares of Common Stock containing the foregoing
legend, until the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date, the Rights associated with the Common Stock represented by such



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certificates shall be evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer of any such
certificate shall also constitute the transfer of the Rights associated with the shares of Common
Stock represented by such certificates.




          With respect to Common Stock in Book Entry form for which there has been sent a confirmation
or account statement containing the foregoing legend, until the earliest of the Distribution Date,
the Redemption Date and the Expiration Date, the Rights associated with the Common Stock shall be
evidenced by such Common Stock alone and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any such Common Stock shall also
constitute the transfer of the Rights associated with such shares of Common Stock.



          Notwithstanding this paragraph (b), the omission of the legend or the failure to send, deliver
or provide the registered owner of shares of Common Stock, a copy of the Summary of Rights shall
not affect the enforceability of any part of this Agreement or the rights of any holder of the
Rights.



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



          (c) Until the Distribution Date, the Rights shall be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a transfer to the Company).



          (d) 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, if so requested, will send) by first-class, insured, postage-prepaid mail, to each record
holder of shares of Common Stock as of the Close of Business on the Distribution Date (other than
any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the address of such
holder shown on the records of the Company, one or more rights certificates, in substantially the
form of Exhibit C hereto (the “Rights Certificate”), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to Section 11 hereof, 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. As of and after the Distribution Date, the Rights shall be evidenced solely
by such Rights Certificates.



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Section 4. Form of Rights Certificate.




          (a) The Rights Certificates (and the forms of election to purchase and of assignment and the
certificate to be printed on the reverse thereof) shall be substantially in the form set forth in
Exhibit C 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 any rule or regulation thereunder or with any rule or regulation of any stock
exchange upon which the Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of this Agreement, the Rights Certificates, whenever distributed, shall be dated as
of the Distribution Date and on their face shall entitle the holders thereof to purchase such
number of one one-thousandths of a share of Preferred Stock as shall be set forth therein at the
price set forth therein (such exercise price per one one-thousandth of a share, the “Purchase
Price”), but the amount and type of securities, cash, or other assets that may be acquired upon the
exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided
herein.



          (b) Any Rights Certificate issued pursuant hereto that represents Rights beneficially owned by
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) that becomes a transferee after the
Acquiring Person becomes such ,or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and that receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of
equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person
with whom such Acquiring Person (or any such Associate or Affiliate) has any continuing written or
oral plan, agreement, arrangement, or understanding regarding the transferred Rights, shares of
Common Stock, or the Company or (B) a transfer that the Board has determined in good faith to be
part of a plan, agreement, arrangement, or understanding that has as a primary purpose or effect
the avoidance of Section 7(e) hereof (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 upon the written direction of the Board
(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 dated as of July 18, 2011 by and between Breeze-Eastern
Corporation and Computershare Trust Company, N.A. (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.”



          The Company shall instruct the Rights Agent in writing of the Rights which should be so
legended.



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Section 5. Countersignature and Registration.




          (a) The Rights Certificates shall be executed on behalf of the Company by its Chief Executive
Officer, President, Chief Financial Officer or any Senior Vice President and by its Secretary or
Assistant Secretary, shall have affixed thereto the Company’s corporate seal (or a facsimile
thereof), and shall be attested by the Company’s Secretary or one of its Assistant Secretaries.
The signature of any of these officers on the Rights Certificates may be manual or by facsimile.
Rights Certificates bearing the manual or facsimile signatures of the individuals who were at any
time the proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the countersigning of such
Rights Certificates by the Rights Agent or did not hold such offices at the date of such Rights
Certificates. No Rights Certificate shall be entitled to any benefit under this Agreement or be
valid for any purpose unless there appears on such Rights Certificate a countersignature duly
executed by the Rights Agent by manual or facsimile signature of an authorized officer, and such
countersignature upon any Rights Certificate shall be conclusive evidence, and the only evidence,
that such Rights Certificate has been duly countersigned as required hereunder.



          (b) Following the Distribution Date, the Rights Agent shall keep or cause to be kept, at its
office designated for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such books shall show the
name and address of each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate, and the date of each Rights Certificate.



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



          (a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that have become null and void pursuant to Section 7(e) hereof, that have been
redeemed pursuant to Section 23 hereof, or that have been exchanged pursuant to Section 24 hereof)
may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of one one-thousandths of a share of
Preferred Stock (or following a Triggering Event, Common Stock, other securities, cash, or other
assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange
any Rights Certificate or Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or 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 properly
completed and executed the certificate set forth 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) of the Rights represented by such
Rights Certificate or Affiliates or Associates thereof as the Company



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shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of Sections 4(b), 7(e) and 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates,
as the case may be, as so requested. The Company may require payment by the holder of the Rights
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) If a Rights Certificate shall be mutilated, lost, stolen, or destroyed, upon request by
the registered holder of the Rights represented thereby and upon payment to the Company and the
Rights Agent of all reasonable expenses incident thereto, there shall be issued, in exchange for
and upon cancellation of the mutilated Rights Certificate, or in substitution for the lost, stolen,
or destroyed Rights Certificate, a new Rights Certificate, in substantially the form of the prior
Rights Certificate, of like tenor and representing the equivalent number of Rights, but, in the
case of loss, theft, or destruction, only upon receipt of evidence satisfactory to the Company and
the Rights Agent of such loss, theft or destruction of such Rights Certificate and, if requested by
the Company or the Rights Agent, indemnity also satisfactory to it.



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




          (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, in the restrictions on exercisability set forth in Sections 9(c), 11(a)(iii) and 23(a)
hereof) in whole or in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-thousandth of a share of Preferred
Stock (or Common Stock, other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, at or prior to the earliest of (i) the Close of Business on July 18, 2014
(the “Final Expiration Date”), (ii) the time at which the Rights are redeemed (the “Redemption
Date”) as provided in Section 23 hereof, (iii) the time at which the Rights are exchanged (the
“Exchange Date”) as provided in Section 24 hereof, or (iv) the first anniversary of the Record Date
if this Rights Agreement has yet to be approved by the stockholders of the Company (the earliest of
(i), (ii) and (iii) being herein referred to as the “Expiration Date”).



          (b) Each Right shall entitle the registered holder thereof to purchase one one-thousandth of a
share of Preferred Stock. The Purchase Price for each one one-thousandth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $14.00, and 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 in accordance with paragraph (c) of this Section 7.



          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly and properly executed, accompanied by payment, with
respect to each Right so exercised, of the Purchase Price per one one-thousandth of a share of
Preferred Stock (or Common Stock, other securities, cash or other assets, as the case may be) to be
purchased and an amount equal to any applicable tax or charge in cash, or by



-12-









 




certified check or
cashier’s check payable to the order of the Company, the Rights Agent shall, subject to Section
18(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Stock
certificates representing such number of one one-thousandths of a share of Preferred Stock (or
fractions of shares that are integral multiples of one one-thousandth of a share of Preferred
Stock) as are to be purchased and the Company shall direct its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition
from the depositary agent depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the transfer agent with the
depositary agent), and the Company shall direct the depositary to comply with all such requests,
(ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or such
depositary 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) after receipt thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. In the event that the Company is obligated to issue Common
Stock or other securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company shall make all arrangements necessary so that such Common Stock,
other securities, cash and/or other property are available for distribution by the Rights Agent, if
and when necessary to comply with this Agreement. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof) may be made in cash or by certified or bank
check or money order payable to the order of the Company.




          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such name or names as may be designated by such holder,
subject to the provisions of Sections 6 and 14 hereof.



          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) 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, or (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 who
receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any such Associate or Affiliate) to holders of equity interests in such
Acquiring Person (or any such Associate or Affiliate) or to any Person
with whom the Acquiring Person (or any such Associate or Affiliate) has any continuing written or
oral plan, agreement, arrangement or understanding regarding the transferred Rights, shares of
Common Stock or the Company or (B) a transfer that the Board has determined in good faith to be
part of a plan, agreement, arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall be null and void without any further action, and any holder
of such Rights thereafter shall have no rights or preferences whatsoever with respect



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to such
Rights, whether under any provision of this Agreement, the Rights Certificates or otherwise
(including, without limitation, rights and preferences pursuant to Sections 7, 11, 13, 23 and 24
hereof). The Company shall use reasonable efforts to ensure compliance with the provisions of this
Section 7(e) and Section 4(b) hereof, but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights or any other Person as a result of the Company’s failure to make
any determination with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.




          (f) Notwithstanding anything in this Agreement or any Rights Certificate 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 by
such registered holder unless such registered holder shall have (i) properly completed and executed
the certificate following 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) of the Rights represented by such
Rights Certificate or Affiliates or Associates thereof as the Company shall reasonably request.



Section 8. Cancellation and Destruction of Rights Certificates.




          All Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by 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
Certificates acquired by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.



Section 9. Reservation and Availability of Capital Stock.




          (a) The Company shall cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock (and following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of its authorized and
issued shares held in its treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and/or other securities) that, as provided
in this Agreement, including Section 11(a)(iii) hereof, shall be
sufficient to permit the exercise in full of all outstanding Rights. Upon the occurrence of any
events resulting in an increase in the aggregate number of shares of Preferred Stock (or Common
Stock and/or other equity securities of the Company) issuable upon exercise of all outstanding
Rights above the number then reserved, the Company shall make appropriate increases in the number
of shares so reserved.



-14-









 





          (b) So long as the shares of Preferred Stock (and following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable upon the exercise of the Rights may be listed
or admitted to trading on any national securities exchange, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed or admitted to trading on such exchange upon official notice of issuance upon
such exercise.



          (c) The Company shall use its reasonable best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights has been determined in
accordance with this Agreement, or as soon as is required by law following the Distribution Date,
as the case may be, a registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights; (ii) cause such registration
statement to become effective as soon as practicable after such filing; and (iii) cause such
registration statement to remain effective (and to include a prospectus at all times complying with
the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights
are no longer exercisable for the securities covered by such registration statement, and (B) the
Expiration Date. The Company shall also take such action as may be appropriate under, or to ensure
compliance with, the securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period of time not to
exceed 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 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, in each
case with simultaneous written notice to the Rights Agent. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction (x) if the
requisite qualification in such jurisdiction shall not have been obtained and until a registration
statement has been declared effective or (y) if the exercise thereof shall not be permitted under
applicable law.



          (d) The Company shall take such action as may be necessary to ensure that all one
one-thousandths of a share of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities that may be delivered upon exercise of Rights) shall be, at
the time of delivery of the certificates or depositary receipts for such securities (subject to
payment of the Purchase Price), duly and validly authorized and issued, fully paid and
non-assessable.



          (e) The Company shall pay when due and payable any and all documentary, stamp, or transfer
tax, or other tax or charge, that is payable in respect of the issuance and delivery of the Rights
Certificates or the issuance and delivery of any certificates or depository receipts or entries in
the Book Entry account system of the transfer agent for the Preferred Stock for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or other equity securities of
the Company that may be delivered upon exercise of the Rights) upon the exercise of Rights;
provided,however, the Company shall not be required to pay any such tax or charge
that may be payable in connection with the issuance or delivery of any of any



-15-









 




certificates or
depositary receipts or entries in the Book Entry account system of the transfer agent for the
Preferred Stock for a number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other equity securities of the Company as the case may be) to any Person other than the
registered holder of the Rights Certificates evidencing the Rights surrendered for exercise. The
Company shall not be required to issue or deliver any certificates or depositary receipts or
entries in the Book Entry account system of the transfer agent for the Preferred Stock (or Common
Stock and/or other equity securities of the Company as the case may be) to, or in a name other than
that of, the registered holder upon the exercise of any Rights until any such tax or charge shall
have been paid (any such tax or charge 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 or charge is due.




Section 10. Preferred Stock Record Date.




          Each Person in whose name any certificate or entry in the Book Entry account system of the
transfer agent for the Preferred Stock for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate or entry in the Book Entry account system of the transfer agent
for the Preferred Stock shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes
and charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other securities as the
case may be) transfer books of the Company are closed, such Person shall be deemed to have become
the record holder of such securities (fractional or otherwise) on, and such certificate or entry in
the Book Entry account system of the transfer agent for the Preferred Stock shall be dated, the
next succeeding Business Day on which the Preferred Stock (or Common Stock and/or other securities
as the case may be) transfer books of the Company are open and, provided further, that if
delivery of a number of one one-thousandths of a share of Preferred Stock is delayed pursuant to
Section 9(c) hereof, such Persons shall be deemed to have become the record holders of such number
of one one-thousandths of a share of Preferred Stock only when such Preferred Stock first become
deliverable. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder of the Company with respect to the
securities for which the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.



Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.



          The Purchase Price, the number and kind of securities covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in this Section 11.



-16-









 





          (a) (i) In the event the Company shall at any time after the Rights Dividend Declaration Date
(A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide
the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number
of shares or (D) issue any shares of its capital stock in a reclassification of Preferred Stock
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the number and kind of
shares (or fractions thereof) of Preferred Stock or capital stock, as the case may be, issuable on
such date upon exercise of the Rights, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares (or fractions thereof) of Preferred Stock
or capital stock, as the case may be, which, if such Right had been exercised immediately prior to
such date, such holder would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares (or fractions thereof) of capital stock of the Company issuable
upon exercise of one Right. If an event occurs that would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.



               (ii) Subject to Section 23 and Section 24 hereof, in the event that 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 organized, appointed or established by the Company for or
pursuant to the terms of any such plan), alone or together with its Affiliates and Associates,
shall become an Acquiring Person, unless the event causing such Person to become an Acquiring
Person is a transaction set forth in Section 13(a) hereof, then proper provision shall be made so
that promptly following the Redemption Period (as defined in Section 23(a) hereof), each holder of
a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof and payment of an amount equal to the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one one-thousandths of a share
of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock
for which a Right was or would have been exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, whether or not such Right was then exercisable, and (y) dividing that
product (which, following such first occurrence, shall thereafter be referred to as the “Purchase
Price” for each Right and for all purposes of this Agreement except to the extent set forth in
Section 13 hereof) by 25% of the current per share market price of Common Stock (as determined
pursuant to Section 11(d) hereof) on the date of such first occurrence (such number of shares, the
“Adjustment Shares”).



               (iii) The Company at its option may substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of
shares of Preferred Stock having an aggregate market value equal to



-17-









 




the current per share market
price of one share of Common Stock. In the event that the number of shares of Common Stock which
is authorized by the Certificate of Incorporation, but not outstanding, or reserved for issuance
for purposes other than upon exercise of the Rights, is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the Board shall, to the
extent permitted by applicable law and by any agreements or instruments then in effect to which the
Company is a party, (A) determine the excess of (x) the value of the Adjustment Shares issuable
upon the exercise of a Right (the “Current Value”) over (y) the Purchase Price (such excess being
the “Spread”), and (B) with respect to each Right (subject to Section 7(e) hereof), make adequate
provision to substitute for some or all of the Adjustment Shares, upon exercise of a Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
shares (or fractions of a share) of Preferred Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of Preferred Stock which the Board has
deemed to have the same value as shares of Common Stock) (such shares of equity securities being
herein called “common stock equivalents”), (4) debt securities of the Company, (5) other assets or
(6) any combination of the foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board based upon the advice of an investment
banking firm selected by the Board; provided, however, 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 Section 11(a)(ii) Event and (y) the date on
which the Company’s right of redemption pursuant to Section 23(a) hereof 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 Purchase Price, shares of Common Stock (to the extent available), and then, if necessary
such number of fractions of shares of Preferred Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the Spread.




          If, upon the occurrence of a Section 11(a)(ii) Event, the Board shall determine in good faith
that it is likely that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, then if the Board so elects, the thirty-day period
set forth above may be extended to the extent necessary, but not more than (ninety) 90 days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be extended, the “Substitution
Period”). To the extent that action is to be taken pursuant to the preceding provisions of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be made pursuant to the
second sentence of this Section 11(a)(iii) 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 Stock shall be the current market price (as determined pursuant to Section 11(d) hereof) per
share of the Common Stock 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 Stock on such date. The Board
may, but shall not be required to, establish procedures to allocate the




-18-











 




right to receive shares of Common Stock upon the exercise of the Rights among holders of
Rights pursuant to this Section 11(a)(iii).




          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period expiring within forty-five
(45) days after such record date) to subscribe for or purchase Preferred Stock (or shares having
the same rights, privileges and preferences as the shares of Preferred Stock (“equivalent preferred
stock”)) or securities convertible into Preferred Stock or equivalent preferred stock at a price
per share of Preferred Stock or per share of equivalent preferred stock (or having a conversion
price per share, if a security convertible into Preferred Stock or equivalent preferred stock) less
than the current per share market price of the Preferred Stock (as determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the number of shares of Preferred Stock or equivalent
preferred stock outstanding on such record date, plus the number of shares of Preferred Stock or
equivalent preferred stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of Preferred Stock or
equivalent preferred stock outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible);
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 by
delivery of consideration all or part of which may be in a form other than cash, the value of such
consideration shall be as determined by the Board, 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. Shares of Preferred Stock or equivalent preferred stock owned by or held for the
account of the Company or any Subsidiary shall not be deemed outstanding for the purpose of such
computation. Such adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect if such record date had not been
fixed.




          (c) In case the Company shall fix a record date for a distribution to all holders of shares of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation), evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Preferred Stock, but including any
dividend payable in stock other than Preferred Stock), or subscription rights, options or warrants
(excluding those referred to in Section 11(b) hereof), then, in each case, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which shall be the current
per share market price (as determined pursuant to Section 11(d)hereof) of the Preferred Stock on such record date minus the fair market value (as






-19-









 







determined in
good faith by the Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding and conclusive for all purposes on the Rights Agent and the
holder of the Rights) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants distributable in respect of a share of
Preferred Stock, and the denominator of which shall be such current per share market price (as
determined pursuant to Section 11(d) hereof) of the Preferred Stock 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 Purchase
Price shall be adjusted to be the Purchase Price that would have been in effect if such record date
had not been fixed.




          (d) (i) For the purpose of any computation under this Agreement, the “current per share
market price” of any security, including the Common Stock, on any date shall be deemed to be the
average of the daily closing prices per share of such security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to, but not including, such
date; provided, however, that in the event that the current per share market price
of the security is determined during a period following the announcement by the issuer of such
security of (i) a dividend or distribution on such security payable in shares of such security or
securities convertible into such shares (other than the Rights), or (ii) any subdivision,
combination or reclassification of such security, and prior to the expiration of the requisite 30
Trading Day period, as set forth above, 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 take
into account ex-dividend trading. 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, NASDAQ or, if the security is not listed or admitted to trading on the New York Stock
Exchange or NASDAQ, as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on which the security is
listed or admitted to trading or, if the security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by any system then in use or,
if not so quoted, the average of the closing bid and asked price furnished by a professional market
maker making a market in the security selected by the Board.




          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 shall be used. If the security is not
publicly held or not listed or traded, “current market price” shall mean the fair value per share
as determined in good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. The term “Trading Day” shall
mean, if the security is listed or admitted to trading on any national securities exchange, a day on which the principal national securities exchange on which such






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security is listed or admitted to trading is open for the transaction of business or, if such
security is not so listed or admitted, a Business Day.




               (ii) For the purpose of any computation under this Agreement, the “current per share market
price” of the Preferred Stock shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the
current per share market price of the Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the “current per share market price” of the Preferred Stock shall
be conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted
for such events as stock splits, reverse stock splits, stock dividends or any similar transaction
with respect to the Common Stock occurring after the date of this Agreement) multiplied by the
current per share market price of the Common Stock. If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, the “current per share market price” of the
Preferred Stock shall mean the fair value per share as determined in good faith by the Board, 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. For all purposes of this Agreement, the “current
per share market price” of one one-thousandth of a share of Preferred Stock shall be equal to the
“current per share market price” of one share of Preferred Stock divided by 1,000.



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




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




          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a share of Preferred Stock (or other securities or amount of cash or combination thereof) that may be acquired from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.








-21-









 








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




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




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




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then-par value, if any, of the number of one one-thousandths of a share




-22-









 







of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate action that may, in the
opinion of its counsel, be necessary in order that the Company may validly and legally issue, such
fully paid and non-assessable, number of one one-thousandths of a share of Preferred Stock at such
adjusted Purchase Price.




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




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




          (n) The Company shall not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a direct or indirect, wholly-owned Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a direct or indirect, wholly-owned Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its direct or indirect,
wholly-owned Subsidiaries in one or more transactions, each of which complies with Section 11(o)
hereof), if (x) at the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or agreements in effect that
would substantially diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders or other Persons holding an equity
interest in such Person that constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(a) hereof shall have received a distribution of, or otherwise have transferred to
them, the Rights previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to






-23-









 







consolidate with, merge with or into, or sell or transfer assets or
earning power to, any other Subsidiary of the Company.




          (o) After the Distribution Date and so long as any Rights shall then be outstanding (other
than Rights that have become null and void pursuant to Section 7(e) hereof), the Company shall not,
except as permitted by Sections 23, 24, and 27 hereof, take (or permit any Subsidiary of the
Company to take) 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.




          (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company,
at any time after the Rights Dividend Declaration Date and prior to the Distribution Date, shall
(i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide any outstanding shares of Common Stock, (iii) combine any of the outstanding shares
of Common Stock into a smaller number of shares or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation) the number
of Rights associated with each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number
of Rights thereafter associated with each share of Common Stock following any such event shall
equal the result obtained by multiplying the number of Rights associated with each share of Common
Stock immediately prior to such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event. The adjustments provided for in this Section
11(p) shall be made successively whenever such a dividend is declared or paid or such a
subdivision, combination, or reclassification is effected. If an event occurs that would require
an adjustment under Section 11(a)(ii) and this Section 11(p), the adjustments provided for in this
Section 11(p) shall be in addition and prior to any adjustment required pursuant to Section
11(a)(ii).




Section 12. Certificate of Adjusted Purchase Price or Number of Shares.




          Whenever an adjustment is made as provided in Section 11 or Section 13 hereof, the Company
shall (a) promptly prepare a certificate setting forth such adjustment, and a brief statement of
the facts and computations accounting for such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Preferred Stock and the Common Stock, a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, each registered holder of shares of Common Stock) in accordance
with Section 26 hereof. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment or statement therein contained and shall not be
deemed to have knowledge of any adjustment or any such event unless and until it shall have
received such a certificate.





-24-









 








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




          (a) Subject to Section 23 hereof, at any time after a Person has become an Acquiring Person,
in the event that, directly or indirectly,





     (x) the Company shall consolidate with, or merge with and into, any other
Person (other than a direct or indirect, wholly-owned Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), and the Company shall not be
the continuing or surviving entity of such consolidation or merger,




     (y) any Person (other than a direct or indirect, wholly-owned Subsidiary of the
Company in a transaction that complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the continuing or
surviving entity of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock shall
be converted into or exchanged for stock or other securities of any other Person (or
the Company) or cash or any other property, or




     (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer) to any Person or Persons (other than
the Company or any of its direct or indirect, wholly-owned Subsidiaries in one or
more transactions, each of which complies with Section 11(o) hereof), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole),


(any such event described in (x), (y), or (z) being herein referred to as a “Section 13
Event”), then, and in each such case, proper provision shall be made so that:





     (i) each holder of a Right, except as provided in Section 7(e) hereof, shall,
upon the expiration of the Redemption Period (as defined in Section 23(a) hereof),
thereafter have the right to receive, upon the exercise of the Right at the then
current Purchase Price in accordance with the terms of this Agreement, and in lieu
of a number of one one-thousandth shares of Preferred Stock, such number of validly
authorized and issued, fully paid, non-assessable and freely tradable shares of
Common Stock of the Principal Party (as hereinafter defined), which shares shall not
be subject to any liens, encumbrances, rights of first refusal, transfer
restrictions or other adverse claims, as shall be equal to the result obtained by




     (1) multiplying such then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which such Right is
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence
of a Section 13 Event, multiplying the number of one one-



-25-









 






thousandths of a
share of Preferred Stock for which a Right would be exercisable hereunder
but for the first occurrence of such Section 11(a)(ii) Event by the Purchase
Price that would be in effect hereunder but for such first occurrence), and




     (2) dividing that product (which, following the first occurrence of a
Section 13 Event, shall be the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the then current per share market
price (as determined pursuant to Section 11(d) hereof) of the shares of
Common Stock of such Principal Party on the date of consummation of such
Section 13 Event (or the fair market value on such date of other securities
or property of the Principal Party, as provided for herein);




     (ii) 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;




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




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




     (v) the provisions of Section 11(a)(ii) hereof shall be of no further effect
following the first occurrence of any Section 13 Event, and the Rights that have not
theretofore been exercised shall thereafter become exercisable in the manner
described in this Section 13.



          (b) “Principal Party” shall mean





     (i) in the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a) hereof, (A) the Person (including the Company as successor
thereto or as the surviving entity) that is the issuer of any securities or other
equity interests into which shares of Common Stock of the Company are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer of Common Stock that has the highest aggregate current market
price (as determined pursuant to Section 11(d) hereof) and (B) if no securities or
other equity interests are so issued, the Person (including the Company as successor
thereto or as the surviving entity) that is the other constituent party to



-26-









 






such
merger or consolidation, or, if there is more than one such Person, the Person that
is a constituent party to such merger or consolidation, the Common Stock of which
has the highest aggregate current market price (as determined pursuant to Section
11(d) hereof); and




     (ii) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a) hereof, the Person that is the party receiving the largest
portion of the assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the largest portion of
the assets or earning power cannot be determined, whichever Person that has received
assets or earning power pursuant to such transaction or transactions, the Common
Stock of which has the highest aggregate current market price (as determined
pursuant to Section 11(d) hereof);


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




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





     (i) (A) prepare and file on an appropriate form a registration statement under
the Securities Act, with respect to the Rights and the securities that may be
acquired upon exercise of the Rights on an appropriate form, (B) use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and remain effective (and to include a prospectus at



-27-









 






all times complying with the requirements of the Securities Act) until the
Expiration Date, and (C) take such action as may be required to ensure that any
acquisition of such securities that may be acquired upon exercise of the Rights
complies with any applicable state security or “Blue Sky” laws as soon as
practicable following the execution of such agreement;




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




     (iii) use its best efforts to obtain any and all necessary regulatory approvals
as may be required with respect to the securities that may be acquired upon exercise
of the Rights; and




     (iv) use its best efforts, if such Common Stock of the Principal Party shall be
listed or admitted to trading on the New York Stock Exchange, NASDAQ or on another
national securities exchange, to list or admit to trading (or continue the listing
of) the Rights and the securities that may be acquired upon exercise of the Rights
on the New York Stock Exchange, NASDAQ or on such securities exchange, or if the
securities of the Principal Party that may be acquired upon exercise of the Rights
shall not be listed or admitted to trading on the New York Stock Exchange, NASDAQ or
a national securities exchange, to cause the Rights and the securities that may be
acquired upon exercise of the Rights to be authorized for quotation on any other
system then in use.



          (d) In case the Principal Party that is to be a party to a transaction referred to in this
Section 13 has at the time of such transaction, or immediately following such transaction shall
have, a provision in any of its authorized securities or in its certificate or articles of
incorporation or by-laws or other instrument governing its affairs, or any other agreements or
arrangements, which provision would have the effect of (i) causing such Principal Party to issue,
in connection with, or as a consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the then current per share
market price (as determined pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such then current per share
market price (other than to holders of Rights pursuant to this Section 13), (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of the Common Stock of
such Principal Party pursuant to the provisions of this Section 13 or (iii) otherwise eliminating
or substantially diminishing the benefits intended to be afforded by the Rights in
connection with, or as a consequence of, the consummation of a transaction referred to in this
Section 13, then, in such event, the Company 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 cancelled, 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 such transaction.





-28-












 





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




Section 14. Fractional Rights; Fractional Shares; Waiver.




          (a) The Company shall not be required to issue fractions of Rights except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates that
evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the Persons
to which such fractional Rights would otherwise be issuable, an amount in cash equal to such
fraction of the market value of a whole Right. For purposes of this Section 14(a), the market
value of a whole Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date that such fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale price, or, in case no such sale takes place
on such day, the average of the high bid and low asked prices, in either case as reported by the
New York Stock Exchange or, if the Rights are 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 Rights are listed
or admitted to trading, or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board. If on any such date
no such market maker is making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board shall be used. In the event the Rights are listed or
admitted to trading on a national securities exchange, the closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day, the average of the
high bid and low asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to the national securities exchange on which
the Rights are listed or admitted to trading.




          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of one one-thousandth of a
share of Preferred Stock. For purposes of this Section 14(b), the current market value of one
one-thousandth of a share of Preferred Stock shall be one one-thousandth of the closing price of a
share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.







-29-









 








          (c) Following the occurrence of one of the events specified in Section 11 hereof giving rise
to the right to receive Common Stock, common stock equivalents or other securities upon the
exercise of a Right, the Company shall not be required to issue fractions of shares of Common
Stock, common stock equivalents or other securities upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock, common stock equivalents or other
securities. In lieu of fractional shares of Common Stock, common stock equivalents or other
securities, the Company may pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same fraction of the current
market value of one share of Common Stock, common stock equivalents or other securities. For
purposes of this Section 14(c), the current market value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.




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




Section 15. Rights of Action.




          All rights of action in respect of this Agreement, other than the rights of action vested in
the Rights Agent pursuant to Sections 18 and 19 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of
shares of the Common Stock); and any registered holder of a Rights Certificate (or, prior to the
Distribution Date, any registered holder of shares of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date,
any registered holder of shares of the Common Stock), may, in such holder’s own behalf and for such
holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company or any other Person to enforce, or otherwise act in respect of, such holder’s
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 shall be entitled to specific
performance of the obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.




Section 16. Agreement of Rights Holders.




          Every holder of a Right, by accepting such Right, 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 evidenced by the balances indicated in
the Book Entry account system of the transfer agent for the Common Stock registered in the names of
the holders of Common Stock (which Common Stock shall also be
deemed to represent certificates for Rights) or, in the case of certificated shares, the
certificates



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for the Common Stock registered in the names of the holders of the Common Stock (which
certificates for shares of Common Stock shall also constitute certificates for Rights) and each
Right shall be transferable only in connection with the transfer of the Common Stock;




          (b) after the Distribution Date, the Rights Certificates shall be transferable only on the
registry books of the Rights Agent if surrendered at the office 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 duly completed and executed;




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




          (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or any other Person as a result of
its inability to perform any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree, judgment or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company shall use its best efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as promptly as practicable.




Section 17. Rights Certificate Holder Not Deemed a Stockholder.




          No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the shares of Preferred Stock or any other securities of
the Company that 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 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, except as provided in Section
25 hereof, to receive notice of meetings or other actions affecting stockholders, 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.




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Section 18. Duties of Rights Agent.




          The Rights Agent undertakes only 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 advice or opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to, and the Rights Agent shall incur no liability for or in
respect of, any action taken, suffered or omitted by the Rights Agent in good faith and in
accordance with such advice or opinion.




          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
an Acquiring Person and the determination of “current per share market price”) be proved or
established by the Company prior to the Rights Agent taking, suffering or omitting to take any
action hereunder, such fact or matter (unless other evidence in respect thereof be specified
herein) may be deemed to be conclusively proved and established by a certificate signed by any one
of the Chief Executive Officer, President, Chief Financial Officer or any Senior Vice President of
the Company and delivered to the Rights Agent, and such certificate shall be full authorization to
the Rights Agent, and the Rights Agent shall incur no liability, for or in respect of any action
taken, suffered or omitted 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 or 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 or be required to verify the
same (except as to its countersignature thereof), 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 have any responsibility for the validity of this Agreement or
the execution and delivery hereof (except the due execution and delivery hereof by the Rights
Agent) or for the validity or execution of any Rights Certificate (except its countersignature
thereon); nor shall it be responsible for any breach by the Company of any covenant or failure by
the Company to satisfy conditions contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any change in the exercisability of the Rights (including Rights
becoming void pursuant to Section 7(e) hereof) or any adjustment in the terms of the Rights
required under the provisions of Sections 11, 13, 23, or 24 hereof or for the manner, method, or
amount of any such change or adjustment or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt by the Rights Agent of the certificate describing
any such adjustment contemplated by Section 12); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of any shares of the
Common Stock, the Preferred Stock or any other securities to be issued pursuant to





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this Agreement
or any Rights Certificate or as to whether any shares of Preferred Stock or any other securities
will, when so issued, be validly authorized and issued, fully paid and non-assessable.




          (f) The Company shall perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further acts, instruments and assurances as may
reasonably be required by the Rights Agent for the performance by the Rights Agent of its duties
under 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 Chief Executive Officer, President,
Chief Financial Officer or any Senior Vice President of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and such instructions shall be full
authorization to the Rights Agent, and the Rights Agent shall not be liable for or in respect of
any action taken, suffered, or omitted by it in good faith in accordance with instructions of any
such officer.




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




          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself 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, however, that the Rights Agent exercised
reasonable care in the selection and continued employment thereof.




          (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 hereunder if the Rights Agent shall have 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 not been properly completed, has not been signed 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.




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Section 19. Concerning the Rights Agent.




          (a) The Company agrees to pay to the Rights Agent such compensation as shall be agreed in
writing between the Company and the Rights Agent for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and
expenses 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, its officers, employees, agents and directors for, and to hold each of them harmless
against, any loss, liability or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for any action taken, suffered or omitted by the Rights
Agent or such other indemnified party in connection with the acceptance and administration of this
Agreement and the exercise of its duties hereunder, including, but not limited to, the costs and
expenses of defending against any claim (whether asserted by the Company, a holder of Rights, or
any other Person) of liability hereunder. The indemnity provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement.




          (b) The Rights Agent shall be authorized and protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its administration of
this Agreement or the exercise of its duties hereunder in reliance upon any Rights Certificate or
certificate for shares of Preferred Stock or any balance indicated in the Book Entry account system
of the transfer agent or for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be signed and executed by
the proper person or persons.




Section 20. Merger or Consolidation or Change of Name of Rights Agent.




          (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stockholder services businesses 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 document or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor 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.





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




Section 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’ prior notice in
writing mailed to the Company, and in the event that the Right Agent
or one of its Affiliates is not also the transfer agent for the company, to
each transfer agent of the Preferred Stock and the Common Stock, by registered or certified mail,
in which case the Company shall give or cause to be given written notice to the registered 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’ prior notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and
the Preferred Stock by registered or certified mail, and to the registered holders of the Rights
Certificates 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 Rights Certificate for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a Person organized and doing business under the laws of the United
States or any state of the United States, in good standing, is authorized under such laws to
exercise corporate trust, stock transfer, or stockholder services powers, is subject to
supervision or examination by federal or state authorities, and has at the time of its appointment
as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a
Person described in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock
and the Preferred Stock, and mail a notice thereof in writing to the registered holders of the
Rights Certificates by first-class mail. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent.



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Section 22. Issuance of New Rights Certificates.




          Notwithstanding any of the provisions of this Agreement or the Rights Certificates to the
contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by the Board to reflect any adjustment or change made in accordance with
the provisions of this Agreement in the Purchase Price or the number or kind or class of shares or
other securities or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Common Stock following the Distribution Date
(other than upon exercise of a Right) and prior to the redemption or the Expiration Date, the
Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, 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, 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 if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.




Section 23. Redemption.




          (a) The Board may, within its sole discretion, at any time during the period commencing on the
Rights Dividend Declaration Date and ending on the earlier of (i) the Close of Business on the
tenth Business Day following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth Business Day following
the Record Date), or (ii) the Close of Business on the Final Expiration Date (the “Redemption
Period”), cause the Company to redeem all, but not less than all, of the then outstanding Rights at
a redemption price of $[0.01] per Right, as such amount may be appropriately adjusted to reflect
any stock split, reverse stock split, stock dividend or similar transaction occurring after the
date hereof (such redemption price, as adjusted, being hereinafter referred to as the “Redemption
Price”); provided, however, that, if the Board authorizes redemption of the Rights
on or after the time a Person becomes an Acquiring Person, then such authorization shall require
the concurrence of two-thirds of the authorized number of members of the Board. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) Event or a Section 13 Event until such time as the
Company’s right of redemption hereunder has expired. The redemption of the Rights by the Board
pursuant to this paragraph (a) may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the current per share market price
(as determined pursuant to Section 11(d)
hereof) of the Common Stock at the time of redemption) or any other form of consideration deemed
appropriate by the Board.




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          (b) Immediately upon the action of the Board ordering the redemption of the Rights, pursuant
to paragraph (a) of this Section 23 (or such later time as the Board may establish for the
effectiveness of such redemption), and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price for each Right held. The Company shall promptly give (i)
written notice to the Rights Agent of any such redemption and (ii) public notice of any such
redemption; provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within ten (10) days after such action of
the Board ordering the redemption of the Rights, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice that 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, or other than in connection with the purchase of shares of Common Stock or the
conversion or redemption of shares of Common Stock in accordance with the applicable provisions of
the Certificate of Incorporation prior to the Distribution Date.




Section 24. Exchange.




          (a) The Board may, at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e) hereof) for shares of
Common Stock at an exchange ratio of one share of Common Stock per each outstanding Right, as
appropriately adjusted to reflect any stock split, reverse 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 shall not be empowered to effect
such exchange at any time after any Acquiring Person, together with all Affiliates and Associates
of such Acquiring Person, becomes the Beneficial Owner of 50% or more of the shares of Common Stock
then outstanding. The exchange of the Rights by the Board may be made effective at such time, on
such basis and with such conditions as the Board in its sole discretion may establish. From and
after the occurrence of an event specified in Section 13(a) hereof, any Rights that theretofore
have not been exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section 24(a).




          (b) Immediately upon the action of the Board ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give (i) written notice to the Rights Agent of any such exchange and (ii) public notice of
any such exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company promptly shall mail a
notice





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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 that is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of Common Stock for Rights will
be effected and, in the event of any partial exchange, the number of Rights that will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights
that have become null and void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.




          (c) If there are not sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights. If the Company, after good faith
effort, is unable to take all such action as may be necessary to authorize such additional shares
of Common Stock, the Company shall substitute common stock equivalents (as defined in Section
11(a)(iii) hereof) for shares of Common Stock for Common Stock exchangeable for Rights, at the
initial rate of one common stock equivalent for each share of Common Stock, as appropriately
adjusted to reflect stock splits, reverse stock splits, reverse stock split, stock dividends, and
other similar transactions after the date hereof.




          (d) Upon declaring an exchange pursuant to this Section 24, or as promptly as reasonably
practicable thereafter, the Company may implement such procedures as it deems appropriate, in its
sole discretion, for the purpose of ensuring that the Common Stock (or such other consideration)
issuable upon an exchange pursuant to this Section 24 is not received by holders of Rights that
have become null and void pursuant to Section 7(e). Before effecting an exchange pursuant to this
Section 24, the Board may direct the Company to enter into a Trust Agreement in such form and with
such terms as the Board shall then approve (the “Trust Agreement”). If the Board so
directs, the Company shall enter into the Trust Agreement and the Company shall issue to the trust
created by the Trust Agreement (the “Trust”) all or a portion (as designated by the Board)
of the shares of Common Stock and other securities, if any, distributable pursuant to the Exchange,
and all stockholders entitled to distribution of such shares or other securities (and any dividends
or distributions made thereon after the date on which such shares or other securities are deposited
in the Trust) shall be entitled to receive a distribution of such shares or other securities (and
any dividends or distributions made thereon after the date on which such shares or other securities
are deposited in the Trust) only from the Trust and solely upon compliance with all relevant terms
and provisions of the Trust Agreement. Prior to effecting an exchange and registering shares of
Common Stock (or other such securities) in any Person’s name, including any nominee or transferee
of a Person, the Company may require (or cause the trustee of the Trust to require), as a condition
thereof, that any holder of Rights provide evidence, including, without limitation, the identity of
the Beneficial Owners thereof and their Affiliates and Associates (or former Beneficial Owners
thereof and their Affiliates and
Associates) as the Company shall reasonably request in order to determine if such Rights are null
and void. If any Person shall fail to comply with such request, the Company shall be entitled
conclusively to deem the Rights formerly held by such Person to be null and void pursuant to
Section 7(e) and not transferable or exerciseable or exchangeable in connection herewith. Any
shares of Common Stock or other securities issued at the direction of the Board





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in connection herewith shall be validly issued, fully paid, and nonassessable shares of Common
Stock or of such other securities (as the case may be), and the Company shall be deemed to have
received as consideration for such issuance a benefit having a value that is at least equal to the
aggregate par value of the shares so issued.




Section 25. Notice of Certain Events.




          (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class or series to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the Company); (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock
or shares of stock of any class or any other securities, rights or options; (iii) to effect any
reclassification of Preferred Stock (other than a reclassification involving only the subdivision
of outstanding shares of Preferred Stock); (iv) to effect any consolidation or merger into or with
any other Person (other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than 50%
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 and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof); or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company shall give to each
registered holder of a Rights Certificate, to the extent feasible, and to the Rights Agent in
accordance with Section 26 hereof, a written notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein by the holders of
the shares of Preferred Stock if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least ten (10) days prior to the
record date for determining holders of the shares of Preferred Stock for purposes of such action
and, in the case of any such other action, at least ten (10) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of the shares of
Preferred Stock, whichever shall be the earlier; provided,however, that no such
action shall be taken pursuant to this Section 25(a) that will or would conflict with any provision
of the Certificate of Incorporation; provided further, that no such notice shall be
required pursuant to this Section 25 if any Subsidiary of the Company effects a consolidation or
merger with or into, or effects a sale or other transfer of assets or earning power to, any other
Subsidiary of the Company.




          (b) In case any Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company
shall, as soon as practicable thereafter, give to each registered holder of a Rights Certificate,
to the extent feasible, and to the Rights Agent in accordance with Section 26 hereof, a written
notice of the occurrence of such event, which notice shall describe such event and the consequences
of such event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in
paragraph (a) of this Section 25 to Preferred Stock shall be deemed thereafter to






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refer to Common Stock and/or, if appropriate, to any other securities that may be acquired upon
exercise of a Right.




          (c) In case any Section 13 Event shall occur, then the Company shall, as soon as practicable
thereafter, give to each registered holder of a Rights Certificate, to the extent feasible, and to
the Rights Agent in accordance with Section 26 hereof, a written notice of the occurrence of such
event, which notice shall describe such event and the consequences of such event to holders of
Rights under Section 13(a) hereof.




Section 26. Notices.




          All notices and other communications provided for hereunder shall, unless otherwise stated
herein, be in writing and shall be sufficiently given or made if sent
by overnignt delivery service or first class mail, postage prepaid,
addressed (until another address is fild in writing with the other
party),
if to the Company, at its address at:



Breeze-Eastern Corporation

35 Melanie Lane

Whippany, New Jersey 07981

Attention: Chief Executive Officer



With a copy to:



Fox Rothschild LLP

997 Lenox Drive, Building 3

Lawrenceville, NJ 08543



And if to the Rights Agent, at its address at:



Computershare Trust Company, N.A.

250 Rovall Street

canton, Massachusetts 02021

Attention: Client Services


Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, the
registered holder of any shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company or the Rights Agent, as the case may be.




Section 27. Supplements and Amendments.




          Except as otherwise provided in this Section 27, the Company, by action of the Board, may from
time to time and in its sole and absolute discretion, and the Rights Agent shall if the Company so
directs, supplement or amend this Agreement in any respect without the approval of any holders of
Rights, including, without limitation, in order to (a) cure any ambiguity, (b) correct or
supplement any provision contained herein that may be defective or inconsistent with any other
provisions herein, (c) shorten or lengthen any time period hereunder,






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(d) otherwise change, amend, or supplement any provisions hereunder in any manner that the Company
may deem necessary or desirable; provided, however, that from and after such time
as any Person becomes an Acquiring Person, this Agreement shall not be supplemented or amended in
any manner that would adversely affect the interests of the holders of Rights (other than Rights
that have become null and void pursuant to Section 7(e) hereof) as such or cause this Agreement to
become amendable other than in accordance with this Section 27. Without limiting the foregoing,
the Company, by action of the Board, may at any time before any Person becomes an Acquiring Person
amend this Agreement to make the provisions of this Agreement inapplicable to a particular
transaction by which a Person might otherwise become an Acquiring Person or to otherwise alter the
terms and conditions of this Agreement as they may apply with respect to any such transaction.
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.




          Notwithstanding anything contained in this Agreement to the contrary, the Rights Agent may,
but shall not be obligated to, enter into any supplement or amendment that affects the Rights
Agent’s own rights, duties, obligations or immunities under this Agreement.




          Prior to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.




Section 28. Successors.




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




Section 29. Determinations and Actions by the Board.




          Except as otherwise specifically provided herein, the Board shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers specifically granted
to the Board or to the Company hereunder, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power (a) to interpret the
provisions of this Agreement, and (b) to make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a determination to redeem or
not redeem the Rights in accordance with Section 23, to exchange or not exchange the rights in
accordance with Section 24, to amend or not amend this Agreement in accordance with Section 27).
All such actions, calculations, interpretations, and determinations (including, for purposes of
clause (ii) below, all omissions with respect to the foregoing) that are done or made by the Board
shall (i) be final, conclusive, and binding on the Company, the Rights Agent, the holders of the
Rights, and all other parties, and (ii) not subject the Board or any member thereof to any
liability to the holders of the Rights.







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Section 30. Benefits of this Agreement.




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




Section 31. Severability.




          If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided, however,
that notwithstanding anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid, void or unenforceable and
the Board determines in its good faith judgment that severing the invalid language from this
Agreement would materially and 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 Business Day following the date of such determination by the Board.




Section 32. Governing Law.




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




Section 33. Counterparts.




          This Agreement may be executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same instrument.
A signature to this Agreement transmitted electronically shall have the same authority, effect, and enforceability as an original signature.




Section 34. Descriptive Headings.




          The headings contained in this Agreement are for descriptive purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.



Section
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.







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[Signature Page To Follow On Next Page]






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




	 	 	 	 	 
	 	Breeze-Eastern Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	COMPUTER SHARE TRUST COMPANY, NA

 as Rights Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: