exv4w1






Exhibit 4.1




THE TALBOTS, INC.




and



COMPUTERSHARE TRUST COMPANY, N.A.



as Rights Agent



 





Rights Agreement



 









 





TABLE OF CONTENTS




	 	 	 	 

	Section 1. Certain Definitions
	 	1	 
	 
	 	 	 
	Section 2. Appointment of Rights Agent
	 	7	 
	 
	 	 	 
	Section 3. Issue of Right Certificates
	 	7	 
	 
	 	 	 
	Section 4. Form of Right Certificates
	 	9	 
	 
	 	 	 
	Section 5. Countersignature and Registration
	 	10	 
	 
	 	 	 
	Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates
	 	10	 
	 
	 	 	 
	Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	11	 
	 
	 	 	 
	Section 8. Cancellation and Destruction of Right Certificates
	 	13	 
	 
	 	 	 
	Section 9. Availability of Common Shares
	 	13	 
	 
	 	 	 
	Section 10. Common Shares Record Date
	 	14	 
	 
	 	 	 
	Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights
	 	14	 
	 
	 	 	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	21	 
	 
	 	 	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	21	 
	 
	 	 	 
	Section 14. Fractional Rights and Fractional Shares
	 	23	 
	 
	 	 	 
	Section 15. Rights of Action
	 	24	 
	 
	 	 	 
	Section 16. Agreement of Right Holders
	 	24	 
	 
	 	 	 
	Section 17. Right Certificate Holder Not Deemed a Stockholder
	 	25	 
	 
	 	 	 
	Section 18. Concerning the Rights Agent
	 	25	 
	 
	 	 	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	26	 
	 
	 	 	 
	Section 20. Duties of Rights Agent
	 	26	 
	 
	 	 	 
	Section 21. Change of Rights Agent
	 	28	 
	 
	 	 	 
	Section 22. Issuance of New Right Certificates
	 	29	 
	 
	 	 	 
	Section 23. Redemption
	 	29	 






i









 






	 	 	 	 	 

	Section 24. Exchange
	 	 	30	 
	 
	 	 	 	 
	Section 25. Notice of Certain Events
	 	 	31	 
	 
	 	 	 	 
	Section 26. Notices
	 	 	32	 
	 
	 	 	 	 
	Section 27. Supplements and Amendments
	 	 	33	 
	 
	 	 	 	 
	Section 28. Successors
	 	 	33	 
	 
	 	 	 	 
	Section 29. Determinations and Actions by the Board of Directors
	 	 	33	 
	 
	 	 	 	 
	Section 30. Benefits of this Rights Agreement
	 	 	34	 
	 
	 	 	 	 
	Section 31. Severability
	 	 	34	 
	 
	 	 	 	 
	Section 32. Governing Law
	 	 	34	 
	 
	 	 	 	 
	Section 33. Counterparts
	 	 	34	 
	 
	 	 	 	 
	Section 34. Descriptive Headings
	 	 	34	 
	 
	 	 	 	 
	Section 35. Force Majeure
	 	 	34	 
	 
	 	 	 	 
	Exhibit A —  Form of Right Certificate
	 	 	 	 
	 
	 	 	 	 
	Exhibit B —  Summary of Rights to Purchase Common Shares
	 	 	 	 








ii









 








RIGHTS AGREEMENT




          Rights Agreement (this “Rights Agreement”), dated as of August 1, 2011, by and between
The Talbots, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company,
N.A. (the “Rights Agent”).




          WHEREAS, on August 1, 2011, the Board of Directors of the Company (the “Board of
Directors”) has (i) authorized and directed the issuance, and declared a dividend, of one
common share purchase right (a “Right”) for each Common Share (as such term is hereinafter
defined) outstanding as of the close of business on August 12, 2011 (the “Record Date”)
with each Right initially representing the right to purchase one Common Share (subject to
adjustment as provided herein) and (ii) further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date
and the Expiration Date (as such terms are hereinafter defined).




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




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




          (a) “Acquiring Person” shall mean any Person who or which, together with its
Affiliates and Associates, shall be the Beneficial Owner of 10% or more of the Common Shares then
outstanding, but shall not include:





     (i) the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan;




     (ii) any Person who or which becomes the Beneficial Owner of 10% or more of the Common
Shares then outstanding solely as the result of a reduction in the outstanding Common
Shares resulting from an acquisition of Common Shares by the Company approved by the Board
of Directors, unless and until (A) such Person becomes the Beneficial Owner of any
additional Common Shares, other than pursuant to a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Common Shares are treated
equally or (B) any other Person who is a Beneficial Owner of Common Shares thereafter
becomes an Affiliate or Associate of such Person;




     (iii) any Person who or which the Board of Directors determines, in good faith, became
an Acquiring Person inadvertently (including, without limitation, by reason of being
unaware of the consequences of such Person’s actions under this Rights Agreement) and
without any intention of changing or influencing control of the Company, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that such Person
would no



 









 







longer be an Acquiring Person (or, in the case of Derivative Common Shares, such
Person terminates the subject Derivative Transaction(s), disposes of the subject derivative
security or establishes to the satisfaction of the Board of Directors that such Derivative
Common Shares are not held with any intention of changing or influencing control of the
Company); provided, however, that if such Person shall again become the Beneficial Owner of
10% or more of the Common Shares then outstanding, such Person shall be deemed to be an
Acquiring Person, subject to the exceptions set forth in this Section 1(a); or




     (iv) any Exempt Person.



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




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




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





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




     (ii) which such Person or any of such Person’s Affiliates or Associates has, directly
or indirectly, (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time, compliance with regulatory requirements, fulfillment of a
condition or otherwise) pursuant to any agreement, arrangement, understanding or
relationship, whether or not in writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; provided, however, that, for purposes of
this clause (A) only, a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange or (B) the right to vote or dispose of, or
direct the voting or disposal of, pursuant to any agreement, arrangement, understanding or
relationship, whether or not in writing; provided, however, that, for purposes of this
clause (B) only, a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security if the agreement, arrangement, understanding or relationship
to vote such security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made to more than ten holders
of Common Shares and pursuant to, and in accordance with, the applicable rules and



2









 







regulations promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report);




     (iii) which are beneficially owned, directly or indirectly, by any other Person (or
any of its Affiliates or Associates) with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement, understanding or relationship,
whether or not in writing (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of securities) (A)
for the purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(d)(ii)(B) hereof) or disposing of any securities of the
Company or (B) to cooperate in obtaining, changing or influencing the control of the
Company (except to the extent contemplated by the proviso to Section 1(d)(ii)(B)
hereof); provided, however, that for purposes of determining Beneficial Ownership of
securities under this Rights Agreement, officers and directors of the Company solely by
reason of their status as such shall not constitute a group (notwithstanding that they may
be Associates of one another or may be deemed to constitute a group for purposes of Section
13(d) of the Exchange Act) and shall not be deemed to own shares owned by another officer
or director of the Company; or




     (iv) which are the subject of (or synthetically owned pursuant to) (A) a Derivative
Transaction entered into by such Person or such Person’s Affiliates or Associates or (B) a
derivative security acquired, directly or indirectly, by such Person or such Person’s
Affiliates or Associates.


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




          (e) “Board of Directors” shall have the meaning set forth in the recitals hereof.




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




          (g) “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.




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





3









 








          (i) “Common Shares” shall mean the shares of common stock, par value $0.01 per share,
of the Company, except that “Common Shares” when used with reference to any Person other
than the Company, shall mean the class of capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.




          (j) “Company” shall have the meaning set forth in the preamble hereof.




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




          (l) “current per share market price” shall have the meaning set forth in Section
11(d) hereof.




          (m) “Derivative Common Share” shall mean any Common Share that is deemed to be
Beneficially Owned pursuant to the operation of Section 1(d)(iv) hereof.




          (n) “Derivative Transaction” by a Person or such Person’s Affiliates or Associates
shall mean any direct or indirect (i) transaction or series of transactions in, or agreement,
arrangement, understanding or relationship with respect to, any option, warrant, convertible or
exchangeable security, stock appreciation right or right similar to any of the foregoing with an
exercise, conversion or exchange privilege, or settlement payment or mechanism, related to any
security of the Company, or similar instrument with a value derived in whole or in part from the
value of any security of the Company, (ii) transaction or series of transactions, arrangement,
agreement, proxy, understanding or relationship which included or includes an opportunity for such
Person or such Person’s Affiliates or Associates, directly or indirectly, to profit or share in any
profit derived from any increase or decrease in the value of any security of the Company, to
receive or share in the receipt of dividends payable on any security of the Company separate or
separable from the underlying shares, to mitigate any loss or manage any risk associated with any
increase or decrease in the value of any security of the Company or to increase or decrease the
number of securities of the Company which such Person or such Person’s Affiliates or Associates
was, is or will be entitled to vote, in each case under clauses (i) and (ii)
hereof, including, without limitation, any put or call arrangement, short position, borrowed shares
or swap or similar arrangement and (iii) transaction or series of transactions, agreement,
arrangement, understanding or relationship with respect to the borrowing or lending of securities
of the Company or any interest therein, in each case under clauses (i), (ii) and
(iii) hereof, without regard to whether (A) such derivative security conveys any voting
rights in any security of the Company, (B) the derivative security is required to be, or capable of
being, settled through delivery of any security of the Company or (C) such Person or such Person’s
Affiliates or Associates may have entered into other transactions that hedge the economic effect of
such derivative security.




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





4









 








          (p) “equivalent common shares” shall have the meaning set forth in Section
11(b) hereof.




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




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




          (s) “Exempt Person” shall mean each Person that Beneficially Owns upon the adoption of
the Rights Agreement a number of Common Shares representing more than 10% of the Common Shares then
outstanding; provided, that each such Person shall be considered an Exempt Person
only if and for so long as the Common Shares Beneficially Owned by such Person do not exceed (A)
the number of shares which are Beneficially Owned by such Person upon the adoption of the Rights
Agreement, plus (B) any additional Common Shares representing not more than: (x) 1% of the Common
Shares then outstanding, if such Person is an institution that Beneficially Owns upon the adoption
of the Rights Agreement less than 11% of the Common Shares then outstanding and reports its
ownership of Common Shares to the Securities and Exchange Commission on Schedule 13G pursuant to
Rule 13d-1(b)(1) or advises the Company in writing of its intention, and demonstrates its
eligibility, to do so or (y) if otherwise, one Common Share; provided, further,
that any such Person shall cease to be an Exempt Person immediately at such time as such
Person ceases to be the Beneficial Owner of more than 10% of the Common Shares then outstanding.




          (t) “Expiration Date” shall mean the time that is the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the Close of Business on the Redemption Date and (iii)
the time at which the Rights are exchanged as provided in Section 24 hereof.




          (u) “Final Expiration Date” shall mean the Close of Business on August 1, 2021.




          (v) “NYSE” shall mean the New York Stock Exchange.




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




          (x) “Purchase Price” shall initially be $24.00 for each Common Share purchasable
pursuant to the exercise of a Right, and shall be subject to adjustment from time to time as
provided in Section 11 or 13 hereof.




          (y) “Record Date” shall have the meaning set forth in the recitals hereof.







5









 








          (z) “Redemption Date” shall mean the time at which the Rights are redeemed as provided
in Section 23 hereof.




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




          (bb) “Right” shall have the meaning set forth in the recitals hereof.




          (cc) “Right Certificate” shall have the meaning set forth in Section 3(a)
hereof.




          (dd) “Rights Agent” shall have the meaning set forth in the preamble hereof.




          (ee) “Rights Agreement” shall have the meaning set forth in the preamble hereof.




          (ff) “Security” shall have the meaning set forth in Section 11(d)(i) hereof.




          (gg) “Section 11(a)(ii) Event” shall mean an event described in the first clause of
Section 11(a)(ii).




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




          (ii) “Stock Acquisition Date” shall mean the first date of public announcement
(including, without limitation, by a filing under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become, or that discloses information that reveals the
existence of, an Acquiring Person or such earlier date as a majority of the Board of Directors
shall become aware of the existence of an Acquiring Person.




          (jj) “Subsidiary” of any Person shall mean any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest is owned or
otherwise controlled, directly or indirectly, by such Person.




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




          (ll) “Trading Day” shall have the meaning set forth in Section 11(d)(i)
hereof.




          (mm) “Trust” shall have the meaning set forth in Section 24(a) hereof.




          (nn) “Trust Agreement” shall have the meaning set forth in Section 24(a)
hereof.







6









 








          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
Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such co-Rights Agent.




          Section 3. Issue of Right Certificates.




          (a) Until the earlier of (i) the Close of Business on the tenth (10th) Business Day
following the Stock Acquisition Date or (ii) the Close of Business on the tenth (10th)
Business Day (or such later date, if any, as the Board of Directors may determine prior to such
time as any Person becomes an Acquiring Person) after the date 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 entity holding Common Shares for or pursuant to the terms of any
such plan) commences, or of the first public announcement of the intention of 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 entity holding Common Shares for or pursuant to the terms of any
such plan) to commence, a tender or exchange offer the consummation of which would result in any
Person becoming the Beneficial Owner of 10% or more of the then outstanding Common Shares, in each
case, including any such date which is after the date of this Rights Agreement and prior to the
issuance of the Rights (the earlier of such dates being herein referred to as the “Distribution
Date”), (A) the Rights will be evidenced (subject to the provisions of Section 3(c)
hereof) by the certificates for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by separate Right Certificates,
and Rights associated with any uncertificated Common Shares will be evidenced (subject to the
provisions of Section 3(c) hereof) by the registration of such Common Shares in the
Company’s share register in the names of the holders thereof (which registration shall also be
deemed to be registration of ownership of the associated Rights) and not by separate Right
Certificates and (B) the right to receive Right Certificates will be transferable only in
connection with the transfer of Common Shares. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign, and the Company will send
or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit A hereto (a “Right Certificate”),
evidencing one Right for each Common Share so held (subject to adjustment as provided herein). As
of the Distribution Date, the Rights will be evidenced solely by such Right Certificates.




          (b) The Company will make available, or cause to be made available, as promptly as practicable
on or following the Record Date, a Summary of Rights to Purchase Common Shares, in substantially
the form of Exhibit B hereto, to any holder of




7









 







Rights who may so request from time to time prior to the Expiration Date. With respect to
certificates for Common Shares outstanding as of the Close of Business on the Record Date, until
the Distribution Date (or the earlier Expiration Date), the Rights will be evidenced by such
certificates and the registered holders of the Common Shares shall also be the registered holders
of the associated Rights. With respect to uncertificated Common Shares outstanding as of the Close
of Business on the Record Date, until the Distribution Date (or the earlier Expiration Date), the
Rights (other than Rights that have been exchanged pursuant to Section 24 hereof) will be
evidenced by the registration of such Common Shares in the Company’s share register in the names of
the holders thereof. Until the Distribution Date (or the earlier Expiration Date), the surrender
for transfer of any certificate for Common Shares in respect of which Rights have been issued shall
also constitute the transfer of the Rights associated with such Common Shares, and the registration
of transfer of ownership of any uncertificated Common Shares in respect of which Rights have been
issued shall also constitute the transfer of the Rights associated with the Common Shares the
ownership of which is so transferred.




          (c) Rights shall be issued in respect of all Common Shares which are issued (whether
originally issued or from the Company’s treasury, or in connection with a transfer or exchange of
Common Shares) after the Record Date but prior to the Distribution Date (or the earlier Expiration
Date). Certificates representing such Common Shares shall bear the following legend:





This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement dated as of
August 1, 2011, by and between The Talbots, Inc. (the
“Company”) and the Rights Agent thereunder (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 offices of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, rights issued to any person who becomes an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement), including such
rights held by a subsequent holder, may become null and void and
may no longer be transferable.


In the case of the initial transaction statement or subsequent periodic statements with respect to
uncertificated Common Shares, such statements shall bear the following legend:




8









 









The registration in the share register of The Talbots, Inc. (the
“Company”) of the shares of common stock to which this
initial transaction or subsequent periodic statement relates also
evidences and entitles the registered holder of such shares to
certain rights as set forth in a Rights Agreement, dated as of
August 1, 2011, by and between the Company and the Rights Agent
thereunder (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 offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such rights
will be evidenced by separate certificates and will no longer be
evidenced by such registration. The Company will mail to the
registered holder of such shares a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under
certain circumstances, as set forth in the Rights Agreement,
rights issued to any person who becomes an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement), including such rights held by a
subsequent holder, may become null and void and may no longer be
transferable.


In the event that the Company purchases or acquires any Common Shares after the Record Date but
prior to the Distribution Date (and with respect to any such Common Shares), any Rights associated
with such Common Shares shall be deemed cancelled and retired such that the Company shall not be
entitled to exercise any Rights associated with the Common Shares which are no longer outstanding.
Notwithstanding this Section 3(c), the omission of a legend shall not affect the
enforceability of any part of this Rights Agreement or the rights of any holder of the Rights.




          Section 4. Form of Right Certificates. The Right Certificates (and the forms of
election to purchase Common Shares and of assignment to be printed on the reverse thereof) shall be
substantially in the same form of Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange or automated quotation
system on which the Rights may from time to time be listed or quoted, or to conform to usage.
Subject to the provisions of this Rights Agreement, the Right Certificates, whenever issued, shall
be dated as of the Record Date, and shall show the date of countersignature by the Rights Agent,
and on their face shall entitle the holders thereof to purchase such number of Common Shares as
shall be set forth therein at the Purchase Price set forth therein, but




9









 







the number of Common Shares and the Purchase Price shall be subject to adjustment as provided
herein.




          Section 5. Countersignature and Registration.




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




          (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office, books for the registration and registration of transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates,
the certificate number of each of the Right Certificates and the date of each of the Right
Certificates.




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




          (a) Subject to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on the Final Expiration
Date, any Right Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates entitling the registered holder to
purchase a like number of Common Shares (subject to adjustment as provided herein) as the Right
Certificate or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. The Right Certificates are transferable
only on the registry





10









 







books of the Rights Agent. Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to
the transfer of any such surrendered Right Certificates until such registered holder shall, in
addition to having complied with any other applicable provisions hereof, have (i) duly completed
and signed the certificate contained in the form of assignment set forth on the reverse side of
such Right Certificate(s), and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof, or of any other
Person with which such Beneficial Owner or any of such Beneficial Owner’s Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities of the Company as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 7(e), 14
and 24 hereof, countersign and deliver to the Person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates. The Rights Agent shall have no
duty or obligation to take any action under any section of this Rights Agreement which requires the
payment by a Rights holder of applicable taxes and/or governmental charges unless and until it is
reasonably satisfied that all such taxes and/or governmental charges have been paid.




          (b) At any time after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Final Expiration Date, upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate (other than Right Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24
hereof), and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will prepare and execute, the
Rights Agent will countersign and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) a new Right Certificate of like tenor to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.




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




          (a) Except as otherwise provided herein, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby, in whole or in part, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof properly completed
and duly executed, to the Rights Agent at the principal office of the Rights Agent, together with
payment of the Purchase Price for each Common Share as to which the Rights are exercised, at any
time after the Close of Business on the Distribution Date and at or prior to the time that is the
earliest of (i) the





11









 







Close of Business on the Final Expiration Date or (ii) the time at which such Rights are
exchanged as provided in Section 24 hereof.




          (b) The Purchase Price shall be payable in lawful money of the United States of America in
accordance with Section 7(c) hereof.




          (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase and certification properly completed and duly executed, accompanied by payment
of the Purchase Price for the total number of Common Shares to be purchased and an amount equal to
any applicable transfer tax or governmental charge required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof in cash or by certified check, cashier’s
check or money order payable to the order of the Company, the Rights Agent shall thereupon
promptly: (i) (A) requisition from any transfer agent of the Common Share certificates for the
number of Common Shares to be purchased and the Company hereby irrevocably authorizes any such
transfer agent to comply with all such requests or, in the case of uncertificated Common Shares,
requisition from any transfer agent therefor a notice setting forth such number of Common Shares to
be purchased for which registration will be made in the Company’s share register and the Company
hereby irrevocably authorizes any such transfer agent to comply with all such requests, or (B) if
the Company shall have elected to deposit the total number of Common Shares issuable upon exercise
of the Rights hereunder with a depository agent, requisition from the depositary agent depositary
receipts representing interests in such number of Common Shares as are to be purchased (in which
case certificates for the Common Shares represented by such receipts shall be deposited by the
transfer agent of the Common Shares with such depository agent) and the Company hereby directs such
depository agent to comply with such request; (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof or otherwise in accordance with Section 11(a)(iii) hereof; (iii)
promptly after receipt of such certificates or depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder; and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other securities of the Company, pay cash and/or
distribute other assets of the Company pursuant to Section 11(a)(iii) hereof, the Company
will make all arrangements necessary so that such other securities, cash and/or other assets are
available for distribution by the Rights Agent, if and when necessary to comply with this Rights
Agreement.




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




          (e) Notwithstanding anything in this Rights Agreement to the contrary, (i) the Rights shall
not in any event become exercisable pursuant to any






12









 







provision of this Rights Agreement prior to the Distribution Date and (ii) neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported exercise as set forth in this Section
7 unless such registered holder shall, in addition to having complied with the requirements of
Section 7(a) hereof, have (A) duly and properly completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (B) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof, or of any
other Person with which such Beneficial Owner or any of such Beneficial Owner’s Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of any securities of the Company as the Company
shall reasonably request.




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




          Section 9. Availability of Common Shares.




          (a) The Company covenants and agrees that it will use its reasonable efforts to cause to be
reserved and kept available out of its authorized and unissued Common Shares or any Common Shares
held in its treasury, the number of Common Shares that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with Section 7 hereof. The Company covenants
and agrees that it will take all such action as may be necessary to ensure that all securities
delivered (or evidenced by registration in the Company’s share register) upon exercise of Rights
shall, at the time of delivery of the certificates for (or the registration of) such securities
(subject to payment of the Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable.




          (b) The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and governmental charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Common Shares (or, if such securities are
uncertificated, the registration of such securities in the Company’s share register) upon the
exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or
the issuance or





13









 







delivery of certificates or depositary receipts for (or the registration of) the Common Shares
in a name other than that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or depositary receipts for
Common Shares 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 Right Certificate at the time of
surrender) or until it has been established to the Company’s reasonable satisfaction that no such
tax or charge is due.




          (c) The Company will use its best efforts to ensure that any securities issued pursuant hereto
are issued in compliance with all applicable laws.




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




          Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The
Purchase Price, the number of Common Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this Section 11.




          (a) (i) In the event the Company shall at any time after the date of this Rights Agreement (A)
declare and pay a dividend on the Common Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding Common Shares into a smaller number of
Common Shares or (D) issue any shares of its capital stock in a reclassification of the Common
Shares (including any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), 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 of capital stock issuable upon the exercise of each Right, shall be
proportionately adjusted so that the holder of one Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the Common




14









 







Share transfer books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; 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. If an event occurs which 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,
the adjustment required pursuant to Section 11(a)(ii) hereof.




               (ii) Subject to Section 7 and Section 24 hereof, at any time after the date of
this Rights Agreement, in the event any Person becomes an Acquiring Person, then, from and after
the first occurrence of such event, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price per Right equal to the then current Purchase Price
multiplied by the number of Common Shares for which a Right is then exercisable (without giving
effect to this Section 11(a)(ii)), in accordance with the terms of this Rights Agreement,
such number of Common Shares (the “Adjustment Shares”) as shall equal the result obtained
by (A) multiplying the then current Purchase Price by the number of Common Shares for which a Right
is then exercisable (without giving effect to this Section 11(a)(ii)) and dividing that
product by (B) 50% of the then current per share market price of the Common Shares (determined
pursuant to Section 11(d) hereof) on the date of the occurrence of, or the date of the
first public announcement of, such event; provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the provisions of Section
13 hereof, then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii). In the event that any Person shall
become an Acquiring Person and the Rights shall then be outstanding, the Company shall not take any
action that would eliminate or diminish the benefits intended to be afforded by the Rights.
Notwithstanding anything in this Rights Agreement to the contrary, in the event any Person becomes
an Acquiring Person, from and after the occurrence of such event, any Rights that are or were
acquired or Beneficially Owned by (1) any Acquiring Person (or any Associate or Affiliate of such
Acquiring Person), (2) a transferee of any Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes an Acquiring Person or (3) 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 an Acquiring Person and who receives such Rights
pursuant to either (I) 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 such Associate or
Affiliate) has any continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (II) a transfer which the Board of Directors has determined is
part of a plan, arrangement or understanding (whether or not in writing) which has as a primary
purpose or effect the avoidance of this Section 11(a)(ii), shall be void and any holder of
such Rights (whether or not such holder is an Acquiring Person or an Associate or Affiliate of an
Acquiring Person) shall thereafter have no right to exercise such Rights under any



15









 




provision of this Rights Agreement or otherwise. No Right Certificate shall be issued
pursuant to Section 3, 6, 7(d) or 11(i) hereof that represents
Rights that are or have become null and void pursuant to the provisions of this paragraph and any
Right Certificate delivered to the Rights Agent that represents Rights that are or have become null
and void pursuant to the provisions of this paragraph shall be cancelled.




               (iii) If the number of Common Shares that are authorized by the Company’s certificate of
incorporation, as amended, but not outstanding or reserved for issuance other than upon exercise of
the Rights is not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company, with respect to each Right and to the extent necessary and
permitted by applicable law and any agreements or instruments in effect on the date of this Rights
Agreement to which it is a party, shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the “Current Value”) over (2) the
Purchase Price (such excess, the “Spread”), and (B) with respect to each Right (other than
Rights that have become void pursuant to Section 11(a)(ii) hereof or exchanged pursuant to
Section 24 hereof), make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) a reduction in the Purchase Price payable with
respect to such Right or a reduction in the number of Common Shares issuable upon exercise of such
Right, (2) Common Shares (to the extent available), (3) equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock which the Board of
Directors has deemed to have the same value as the Common Shares (such shares of preferred stock,
hereinafter referred to as “Common Share Equivalents”)), (4) debt securities of the
Company, (5) cash, (6) other assets (including, without limitation, securities of a Subsidiary of
the Company) or (7) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board of Directors based upon
the advice of a nationally recognized investment banking firm selected by the Board of Directors;
provided, however, that if the Company shall not have made adequate provision to substitute for the
Adjustment Shares pursuant to clause (B) above within 30 calendar days following the first
occurrence of a Section 11(a)(ii) Event, then the Company shall be obligated to deliver, to the
extent necessary and permitted by applicable law and any agreements or instruments in effect on the
date of this Agreement to which it is a party, upon the surrender for exercise of a Right and
without requiring payment of any portion of the Purchase Price, (1) Common Shares (to the extent
available) and then (2) (to the extent available) Common Share Equivalents and then, if necessary,
(3) other equity or debt securities of the Company, cash or other assets or any combination of the
foregoing, in any case having an aggregate value (as determined by the Board of Directors based
upon the advice of a nationally recognized investment banking firm selected by the Board of
Directors) equal to the Spread. If the Board of Directors shall determine in good faith that it is
likely that sufficient additional Common Shares could be authorized for issuance upon exercise in
full of the Rights, the 30-calendar-day period set forth above (such period, as it may be extended,
being referred to herein as the “Substitution Period”) may be extended to the extent
necessary, but not more than 120 calendar days following the first occurrence of a Section
11(a)(ii) Event, in order that the Company may seek stockholder approval for the authorization of
such additional shares. To the extent that



16









 




the Company determines that some action is to be taken pursuant to the first and/or second
sentence of this Section 11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii), 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 and value of any
consideration to be delivered as referred to in such first and/or second sentence. If any such
suspension occurs, the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of
the Common Shares shall be the current per share market price of Common Shares (as determined
pursuant to Section 11(d)) on the date of the first occurrence of a Section 11(a)(ii)
Event; the value of any Common Share Equivalent shall be deemed to have the same value as the
Common Shares on such date; and the value of other securities or assets shall be determined
pursuant to Section 11(d)(ii).




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






17









 







issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.




          (c) In case the Company shall fix a record date for the making of a distribution to all
holders of the Common Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend
payable in Common Shares), convertible securities or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the then current per share market
price of the Common Shares on such record date, less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and holders of the Rights) of the portion
of the assets, evidences of indebtedness or convertible securities so to be distributed or of such
subscription rights or warrants applicable to one Common Share and the denominator of which shall
be such current per share market price of the Common Shares; 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 again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.




          (d) (i) For the purpose of any computation hereunder, the “current per share market
price” of any security (a “Security” for the purpose of this Section 11(d)(i))
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 immediately prior to such date; provided,
however, that in the event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such Security and prior to
the expiration of thirty (30) Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or reclassification, then, and
in each such case, the current per share market price shall be appropriately adjusted to reflect
the current market price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, recorded at or prior to 4:00 p.m., New York City time,
or, in case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, reported at or prior to 4:00 p.m., New York City time, in either case, as reported in
the principal consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, if the Security is not listed or admitted to trading on the
NYSE, 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





18









 







trading on any national securities exchange, the last quoted price at or prior to 4:00 p.m.,
New York City time, or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported at or prior to 4:00 p.m., New York City time, by the National
Association of Securities Dealers Automated Quotations (“NASDAQ”) or such other system then
in use, or, if on any such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices reported at or prior to 4:00 p.m., New York City time, as
furnished by a professional market maker making a market in the Security selected by the Board of
Directors. If on any such date no such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the Board of Directors shall be
used. The term “Trading Day” shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any national securities
exchange, a Business Day.




               (ii) For the purpose of any computation hereunder, the “current per share market price” of the
Common Shares shall be determined in accordance with the method set forth in Section
11(d)(i) hereof. If the Common Shares are not publicly traded, or if on any such date the
Common Shares are not so quoted and no such market maker is making a market in the Common Shares,
“current per share market price” shall mean the fair value per share as determined in good faith by
the Board of Directors, whose determination shall be described in a statement filed with the Rights
Agent.



          (e) No adjustment in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(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 Common
Share or other share or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which requires such adjustment
or (ii) the date of the expiration of the right to exercise any Rights.




          (f) If, as a result of an adjustment made pursuant to Section 11(a) hereof, the holder
of any Right thereafter exercised shall become entitled to receive any shares of capital stock of
the Company other than Common Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common Shares contained in
Sections 11(a) through (c) hereof, inclusive, Sections 11(e),
11(h), 11(i), and 11(m) hereof and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Common Shares 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 Common Shares purchasable from time to






19









 







time hereunder upon exercise of the Rights, all subject to further adjustment as provided
herein.




          (h) Unless the Company shall have exercised its election as provided in Section 11(i)
hereof, upon each adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and 11(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 Common Shares (calculated to the nearest ten-thousandth of a share) obtained
by (i) multiplying (A) the number of shares covered by a Right immediately prior to this adjustment
by (B) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.




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





20











 





          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then par value, if any, of the Common Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable Common Shares 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 issuing to the holder of any Right exercised after
such record date of the Common Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder’s right to receive such additional
shares upon the occurrence of the event requiring such adjustment.




          (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that, it, in its sole discretion, shall
determine to be advisable in order that any consolidation or subdivision of the Common Shares,
issuance wholly for cash of any Common Shares at less than the current market price, issuance
wholly for cash of Common Shares or securities which by their terms are convertible into or
exchangeable for Common Shares, dividends on Common Shares payable in Common Shares or issuance of
rights, options or warrants referred to in Section 11(b) hereof, hereafter made by the
Company to holders of its Common Shares shall not be taxable to such holders.




          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Sections 11 or 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the
facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent
for the Common Shares a copy of such certificate and (c) if a Distribution Date has occurred, mail
a brief summary thereof to each holder of a Right Certificate in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force or effect of the
requirement for such adjustment. Any adjustment to be made pursuant to Sections 11 or
13 hereof shall be effective as of the date of the event giving rise to such adjustment.




          Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. In
the event, directly or indirectly, at any time after a Person has become an Acquiring Person, (a)
the Company shall consolidate with, or merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company, and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such merger, all or part
of the Common Shares shall be changed into or exchanged for stock or other securities of any other
Person (or the




21









 







Company) or cash or any other property or (c) the Company shall sell, exchange, mortgage or
otherwise transfer (or one or more of its Subsidiaries shall sell, exchange, mortgage or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person
other than the Company or one or more of its wholly owned Subsidiaries, then, and in each such
case, proper provision shall be made so that:





     (i) each holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon the exercise thereof at a price per Right equal to the
then-current Purchase Price multiplied by the number of Common Shares for which a Right is
then exercisable, in accordance with the terms of this Rights Agreement, such number of
validly issued, fully paid, nonassessable and freely tradable Common Shares of such other
Person (including the Company as successor thereto or as the surviving corporation) not
subject to any liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by (A) multiplying the then current Purchase Price by the
number of Common Shares for which a Right is then exercisable and dividing that product by
(B) 50% of the then current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; provided, however, that the price per Right
so payable and the number of Common Shares so receivable upon exercise of a Right shall
thereafter be subject to further adjustment as appropriate in accordance with Section
11(f) hereof to reflect any events covered thereby occurring in respect of such Common
Shares of such other Person after the occurrence of such merger, consolidation, sale,
exchange, mortgage or other transfer;




     (ii) the issuer of such Common Shares shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale, exchange, mortgage or other
transfer, all the obligations and duties of the Company pursuant to this Rights Agreement;




     (iii) the term “Company” shall thereafter be deemed to refer to such issuer; and




     (iv) such issuer shall take such steps (including, but not limited to, the reservation
of a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to the Common
Shares thereafter deliverable upon the exercise of the Rights.


The Company shall not consummate any such consolidation, merger, sale or transfer unless prior
thereto the Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction




22









 







there are any rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would eliminate or
diminish in any material respect the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or consolidations
or sales or other transfers.




          Section 14. Fractional Rights and Fractional Shares.




          (a) The Company shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Right Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way reported at or prior to 4:00 p.m., New
York City time, or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way reported at or prior to 4:00 p.m., New York City time, in either
case, as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if the Rights are not listed or admitted
to trading on the NYSE 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, if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price reported at or prior to 4:00 p.m., New York
City time, or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported at or prior to 4:00 p.m., New York City time, by NASDAQ or
such other system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices reported at or prior to 4:00 p.m.,
New York City time, as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors. If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in good faith by the Board of
Directors shall be used.




          (b) The Company shall not be required hereunder to issue fractions of Common Shares (other
than fractions which are integral multiples of one one-half of a Common Share) upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares or to register
fractional Common Shares in the Company’s share register (other than fractions which are integral
multiples of one one-half of a Common Share). Fractions of Common Shares in integral multiples of
one one-half of a Common Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it;
provided, however, that such agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they are entitled as Beneficial
Owners of the Common Shares represented by such depositary




23









 







receipts. In lieu of fractional Common Shares that are not integral multiples of one one-half
of a Common Share, the Company shall pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one Common Share. For the purposes of this Section 14(b), the
current market value of a Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.




          (c) 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
expressly provided above).




          Section 15. Rights of Action. All rights of action in respect of this Rights
Agreement, except the rights of action given to the Rights Agent under Section 18 hereof,
are vested in the respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent
of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in such holder’s own behalf and for such holder’s own benefit,
enforce, and may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Rights Agreement. Notwithstanding anything in this Rights Agreement
to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of
a Right or other Person as a result of the Company’s or the Rights Agent’s inability to perform any
of their respective obligations under this Rights Agreement by reason of any preliminary or
permanent injunction or other order, judgment decree or ruling (whether interlocutory or final)
issued by a court or a governmental, regulatory, self-regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such obligation.




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




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







24









 








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




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




          Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of
any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Common Shares or any other securities of the Company which may at any time be
issuable on the exercise or exchange of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised or exchanged in accordance with the provisions hereof.




          Section 18. Concerning the Rights Agent.




          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration and execution of
this Rights Agreement and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or
expense incurred without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Rights Agreement, including the costs and expenses of defending against
any claim of liability in the premises.




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






25









 







Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20
hereof.




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




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




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




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




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




          (b) Whenever in the performance of its duties under this Rights Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein






26









 







specifically prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors, the President, the Chief
Executive Officer, any Vice President, the Treasurer, the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Rights Agreement in reliance upon such certificate.




          (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct.




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




          (e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Rights Agreement or the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the Rights becoming
void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3, 11,
13, 23 or 24 hereof, 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 Right Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Shares to be issued pursuant to this Rights Agreement or
any Right Certificate or as to whether any Common Shares will, when issued, be validly authorized
and issued, fully paid and nonassessable.




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




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






27









 







in accordance with instructions of any such officer or for any delay in acting while waiting
for those instructions.




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




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




          Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Rights Agreement upon 30-days’ notice in
writing mailed to the Company and, in the event that the Rights Agent or one of its Affiliates is
not also the transfer agent for the Company, to each transfer agent of the Common Shares by
registered or certified 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 30-days’ notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares by registered or certified mail, and to the holders of the Right
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 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 Right Certificate (who or which
shall, with such notice, submit such holder’s Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation or trust company organized and
doing business under the laws of the United States or of any state of the United States (so long as
such corporation or trust company is authorized to do business as a banking institution in such
state), in good standing, which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent, including its Affiliates, a combined
capital and surplus of






28









 







at least $50 million. 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 Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.




          Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions
of this Rights Agreement or of the Rights to the contrary, the Company may, at its option, issue
new Right Certificates evidencing Rights in such form as may be approved by the Board of Directors
to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares
or other securities or property purchasable under the Right Certificates made in accordance with
the provisions of this Rights Agreement.




          Section 23. Redemption.




          (a) The Board of Directors may, at its option, at any time prior to the Distribution Date,
redeem all but not less than all the then outstanding Rights at a redemption price of $0.01 per
Right, appropriately adjusted to reflect any stock split, stock combination, stock dividend or
similar transaction (such redemption price being hereinafter referred to as the “Redemption
Price”). The redemption of the Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of Directors, in its sole discretion, may
establish. Notwithstanding anything to the contrary in this Rights Agreement, the Rights shall not
be exercisable after the first occurrence of the event described in Section 11(a)(ii)
hereof until such time as the Company’s right of redemption hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash, Common Shares (based on the current market
value at the time of redemption) or any other form of consideration deemed appropriate by the Board
of Directors. For the purposes of this paragraph (a), the current market value of a Common Share
shall be the closing price of a Common Share (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of redemption
pursuant to this Section 23.




          (b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights pursuant to Section 23(a) hereof, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that 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 of Directors ordering the redemption of the Rights, the Company shall mail a
notice of redemption to






29









 







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




          Section 24. Exchange.




          (a) The Board of Directors may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any adjustment in the number of Rights pursuant to Section 11(i) hereof
(such exchange ratio being hereinafter referred to as the “Exchange Ratio”).
Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Shares
for or pursuant to the terms of any such plan, or any Exempt Person), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Shares
then outstanding. The exchange of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors in its sole discretion
may establish. Prior to effecting an exchange pursuant to this Section 24, the Board of
Directors may direct the Company to enter into a Trust Agreement in such form and with such terms
as the Board of Directors shall then approve (the “Trust Agreement”). If the Board of
Directors so directs, the Company shall enter into the Trust Agreement and shall issue to the trust
created by such agreement (the “Trust”) all of the Common Shares issuable pursuant to the
exchange, and all Persons entitled to receive Common Shares pursuant to the exchange shall be
entitled to receive such Common Shares (and any dividends or distributions made thereon after the
date on which such Common Shares are deposited in the Trust) only from the Trust and solely upon
compliance with the relevant terms and provisions of the Trust Agreement.




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






30









 







all of the holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.




          (c) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall use its reasonable efforts to authorize additional Common
Shares for issuance upon exchange of the Rights or make adequate provision to substitute (1) Common
Shares (to the extent available), (2) Common Share Equivalents, (3) debt securities of the Company,
(4) cash, (5) other assets (including, without limitation, securities of a Subsidiary of the
Company) or (6) any combination of the foregoing, having an aggregate value equal to the current
per share market price of the Common Shares that would otherwise be issuable in such exchange, all
as determined by the Board of Directors (which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive and binding on the Rights Agent, the holders of
the Rights and all other Persons). To the extent that the Company determines that some action need
be taken pursuant to Section 24(a), the Board of Directors may temporarily suspend the
exercisability of the Rights for a period of up to 120 days following the date on which the event
described in Section 24(a) shall have occurred, in order to seek any authorization of
additional Common Shares and/or to decide the appropriate form of distribution to be made pursuant
to the above provision and to determine the value thereof. If any such suspension occurs, 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.




          (d) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. In lieu of such fractional Common Shares,
the Company shall pay to the registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this paragraph (d), the
current market value of a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.




          Section 25. Notice of Certain Events.




          (a) In case the Company, at any time after the Distribution Date, shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Common Shares or to make any other
distribution to the holders of its Common Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Common






31









 







Shares rights or warrants to subscribe for or to purchase any additional Common Shares or
shares of stock of any class or any other securities, rights or options, (iii) to effect any
reclassification of its Common Shares (other than a reclassification involving only the subdivision
of outstanding Common Shares), (iv) to effect or permit any consolidation or merger into or with,
or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any dividend on
the Common Shares payable in Common Shares or to effect a subdivision, combination or consolidation
of the Common Shares (by reclassification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation therein by the holders of
the Common Shares, 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 Common Shares 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 Common Shares, whichever
shall be the earlier.




          (b) In case the event set forth in Section 11(a)(ii) hereof shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to holders of Rights under Section
11(a)(ii) hereof.




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



The Talbots, Inc.

One Talbots Drive

Hingham, Massachusetts 02043

Attention: Richard T. O’Connell, Jr.

Executive Vice President, Real Estate, Legal, Store Planning & Design and Construction and Secretary




     Subject to the provisions of Section 21 hereof, any notice or demand authorized by
this Rights Agreement to be given or made by the Company or by the holder of any Right Certificate
to or on the Rights Agent shall be sufficiently given or made if sent by



32









 




overnight delivery service or first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:



Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

Attention: Client Services




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



          Section 27. Supplements and Amendments. The Board of Directors may from time to time
supplement or amend this Rights Agreement without the approval of any holders of Right Certificates
in order to cure any ambiguity, to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, shorten or lengthen any time period
hereunder, or to make any other provisions with respect to the Rights which the Board of Directors
may deem necessary or desirable, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent, provided, however, from and after the Distribution
Date, this Rights Agreement shall not be amended in any manner which would adversely affect the
interests of the holders of Rights (other than an Acquiring Person or Affiliate or Associate
thereof).




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




          Section 29. Determinations and Actions by the Board of Directors.




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







33









 








          (b) A determination, approval, consent or other action of the Board of Directors shall require
approval or consent of a majority of the Board of Directors of the Company.




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




          Section 31. Severability. If any term, provision, covenant or restriction of this
Rights Agreement is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this
Rights Agreement shall remain in full force and effect and shall in no way be affected, impaired or
invalidated.




          Section 32. Governing Law. This Rights Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.




          Section 33. Counterparts. This Rights Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument. A signature to
this Agreement transmitted electronically shall have the same authority, effect, and enforceability
as an original signature.




          Section 34. Descriptive Headings. Descriptive headings of the several Sections of
this Rights Agreement are inserted for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.




          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.









34









 








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




	 	 	 	 	 
	 	THE TALBOTS, INC.

 	 
	 	By:  	/s/ Richard T. O’Connell, Jr.
 	 
	 	 	Name:  	Richard T. O’Connell, Jr. 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	COMPUTERSHARE TRUST COMPANY, N.A.

 	 
	 	By:  	/s/ Dennis V. Moccia
 	 
	 	 	Name:  	Dennis V. Moccia 	 
	 	 	Title:  	Manager, Contract Administration 	 



 









 






	 	 	 	 	 



Exhibit A




Form of Right Certificate



Certificate No. R-



_________ Rights



NOT EXERCISABLE AFTER AUGUST 1, 2021 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.




Right Certificate

The Talbots, Inc.




          This certifies that ____, or registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement, dated as of August 1, 2011 (the “Rights
Agreement”), between The Talbots, Inc., a Delaware corporation (the “Company”), and
Computershare Trust Company, N.A. (the “Rights Agent”), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m., New York City time, on August 1, 2021 at the principal office of the Rights Agent, or at
the office of its successor as Rights Agent, one fully paid non-assessable share of Common Stock of
the Company, par value $0.01 per share (the “Common Shares”), at a purchase price of $24.00
per Common Share (the “Purchase Price”), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of Rights evidenced by
this Right Certificate (and the number of Common Shares which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price
as of August 1, 2011, based on the Common Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of Common Shares which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.




          This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are
on file at the principal executive offices of the Company and the offices of the Rights Agent.




          This Right Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder






A-1 









 







to purchase. If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.




          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Right
Certificate (i) may be redeemed by the Company at a redemption price of $24.00 per Right or (ii)
may be exchanged, in whole or in part, for Common Shares.




          No fractional Common Shares will be issued upon the exercise of any Right or Rights evidenced
hereby (other than fractions which are integral multiples of one one-half of a Common Share, which
may, at the election of the Company, be evidenced by depositary receipts), but in, lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.




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




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









A-2 









 








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



Dated as of _______ __, 2011.




	 	 	 	 	 
	 	THE TALBOTS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 


COUNTERSIGNED:




	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






A-3 









 






[Form of Reverse Side of Right Certificate]



FORM OF ASSIGNMENT



(To be executed by the registered holder if such



holder desires to transfer the Right Certificate.)



          FOR VALUE RECEIVED



 



 

hereby sells, assigns and transfers unto                    




 




(Please print name and address of transferee)



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



Dated:                     



Signature:                     



Signature Guaranteed:




          Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on the date hereof.




          The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).



Dated:                     



Signature:                     



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







A-4 









 








FORM OF ELECTION TO PURCHASE



(To be executed if holder desires to exercise Rights

represented by the Right Certificate.)


To:                     




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




Please insert social security

or other identifying number:_____________________________




_____________________

(Please print name and address)



______________________



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




Please insert social security

or other identifying number:_____________________________




______________________

(Please print name and address)



______________________



Dated:                     



Signature:                     



Signature Guaranteed:




          Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect as of the date hereof.







A-5 









 








          The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).



Dated:                     



Signature:                     




          The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.




          In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.










A-6 









 








Exhibit B




SUMMARY OF RIGHTS TO PURCHASE

COMMON SHARES




     On August 1, 2011, the Board of Directors (the “Board”) of The Talbots, Inc. (the
“Company”) authorized and directed the issuance, and declared a dividend of one common
share purchase right (a “Right”) for each outstanding share of common stock, par value
$0.01 per share (the “Common Shares”), of the Company outstanding as of the close of
business on August 12, 2011 (the “Record Date”). In addition, one Right will automatically
attach to each share of Common Stock (subject to adjustment) that will become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (each, as defined below). The description and terms of the Rights are set forth in
the Rights Agreement, dated August 1, 2011 (the “Rights Agreement”), between the Company
and Computershare Trust Company, N.A. as Rights Agent (the “Rights Agent”).



Distribution Date; Exercisability; Expiration; Issuance of Rights Certificates




     Initially, the Rights will be represented by the Company’s Common Share certificates or by the
registration of uncertificated Common Shares in the Company’s share register, if any, and no
separate certificates evidencing the Rights (the “Right Certificates”) will be issued.
Separate Right Certificates will be mailed to holders of record of the Common Shares as of the
close of business on the earlier to occur of (i) the tenth business day following a public
announcement or disclosure indicating that a person or group of affiliated or associated persons
(an “Acquiring Person”) has acquired beneficial ownership of 10% or more of the outstanding
Common Shares or such earlier date as a majority of the Board became aware of such acquisition or
(ii) the tenth business day (or such later date as the Board may determine prior to such time as
any person or group becomes an Acquiring Person) following the commencement of, or first public
announcement of an intention to commence, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group of 10% or more of the then
outstanding Common Shares (the earlier of such dates being the “Distribution Date”). After
the Distribution Date, but prior to the time a person becomes an Acquiring Person, each Right will
entitle the registered holder to purchase from the Company one Common Share at a purchase price of
$24.00 per Common Share (the “Purchase Price”), subject to adjustment. An Acquiring Person will
not include, among other things, any person who or which would otherwise be deemed an Acquiring
Person upon the adoption of the Rights Agreement.



     The Rights Agreement provides that, until the Distribution Date, (i) the Rights will be
transferred with and only with the Common Shares, (ii) new Common Share certificates issued after
the Record Date upon transfer or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference, and the initial transaction statement or
subsequent periodic statements with respect to uncertificated Common Shares, if any, that are
registered after the Record Date upon transfer or new issuance of such Common Shares will also
contain a notation incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of



B-1 









 




any certificates for Common Shares, or the registration of transfer of ownership in the Company’s
share register with respect to uncertificated Common Shares, outstanding as of the Record Date will
also constitute the transfer of the Rights associated with the Common Shares represented by such
certificate or registration.




     The Rights are not exercisable until the Distribution Date. The Rights will expire on August
1, 2021 (the “Final Expiration Date”), unless the Final Expiration Date is amended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described
below.



     As soon as practicable after the Distribution Date, Right Certificates will be mailed to
holders of record of the Common Shares as of the close of business on the Distribution Date, and
thereafter, the separate Right Certificates alone will represent the Rights.



Flip-In




     If a person or group becomes an Acquiring Person at any time after the date of the Rights
Agreement (with certain limited exceptions), each holder of a Right will thereafter have the right
to receive, upon exercise, Common Shares (or, in certain circumstances, other similar securities of
the Company, cash, or assets of the Company) having a value equal to two times the Purchase Price
of the Right. Notwithstanding any of the foregoing, following the existence of an Acquiring
Person, all Rights that are, or were, beneficially owned by any Acquiring Person will be null and
void.



Flip-Over




     In the event at any time after a person becomes an Acquiring Person that (i) the Company
consolidates or merges with any other person, (ii) any person engages in a consolidation or merger
with the Company where the outstanding Common Shares are exchanged for securities, cash or property
of the other person and the Company is the surviving corporation or (iii) 50% or more of the
Company’s assets or earning power is sold or transferred, proper provision will be made so that
each holder of a Right shall thereafter have the right to receive, upon exercise, common stock of
the acquiring company having a value equal to two times the Purchase Price of the Right.



Exchange




     At any time after any person or group becomes an Acquiring Person and prior to the acquisition
by such person or group of 50% or more of the outstanding Common Shares, the Board may exchange the
Rights (other than Rights owned by such person or group which will have become void), in whole or
in part, at an exchange ratio of one Common Share per Right (subject to adjustment).



Redemption







B-2 









 








     At any time prior to the Distribution Date, the Board may redeem the Rights, in whole but not
in part, at a price of $0.01 per Right (the “Redemption Price”). The redemption of the
Rights may be made effective at such time (the “Redemption Date”) on such basis with such
conditions as the Board, in its sole discretion, may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.



No Stockholders’ Rights Prior to Exercise




     Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends.



Amendment of the Rights Agreement




     The Board may amend the Rights Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any provision which may be
defective or inconsistent with any other provisions in the Rights Agreement, shorten or lengthen
any time period referenced in the Rights Agreement, or to make any other provisions with respect to
the Rights which the Board may deem necessary or desirable. However, after the Distribution Date,
the Rights Agreement may not be amended in a manner which would adversely affect the interests of
the holders of Rights (other than an Acquiring Person or its affiliates or associates).



Adjustment




     The number of outstanding Rights and the number of Common Shares issuable upon exercise of
each Right are subject to adjustment under certain circumstances.



Certain Anti-Takeover Effects




     The Rights are not intended to prevent a takeover of the Company and will not do so; however
the Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a
person or group that attempts to acquire the Company on terms not approved by the Board and without
conditioning the offer on a substantial number of Rights being redeemed. Accordingly, the
existence of the Rights may deter certain acquirers from making takeover proposals or tender
offers. However, the Rights help ensure that the Company’s shareholders receive fair and equal
treatment in the event of any proposed takeover of the Company. The execution of the Rights
Agreement by the Company is not in response to any specific takeover threat or proposal, but is a
precaution taken to protect the rights of the Company’s stockholders.



B-3 









 





Further Information




     A copy of the Rights Agreement is attached as an exhibit hereto. A copy of the Rights
Agreement is available free of charge from the Company. The summary description of the Rights set
forth herein does not purport to be complete and is qualified in its entirety by reference to all
of the provisions of the Rights Agreement, including the exhibits thereto and definitions contained
therein, which is hereby incorporated herein by reference.




B-4