EX-4.1






Exhibit 4.1




ALLIED HEALTHCARE INTERNATIONAL INC.




and




COMPUTERSHARE TRUST COMPANY, N.A.




as Rights Agent




RIGHTS AGREEMENT




Dated as
of April 2, 2009




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	Section 1.

	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.

	 	Appointment of Rights Agent
	 	 	7	 
	 
	 	 	 	 	 	 
	Section 3.

	 	Issuance of Rights Certificates
	 	 	7	 
	 
	 	 	 	 	 	 
	Section 4.

	 	Form of Rights Certificates
	 	 	9	 
	 
	 	 	 	 	 	 
	Section 5.

	 	Countersignature and Registration
	 	 	10	 
	 
	 	 	 	 	 	 
	Section 6.

	 	Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates
	 	 	11	 
	 
	 	 	 	 	 	 
	Section 7.

	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	12	 
	 
	 	 	 	 	 	 
	Section 8.

	 	Cancellation and Destruction of Rights Certificates
	 	 	14	 
	 
	 	 	 	 	 	 
	Section 9.

	 	Reservation and Availability of Capital Stock
	 	 	14	 
	 
	 	 	 	 	 	 
	Section 10.

	 	Preferred Stock Record Date
	 	 	15	 
	 
	 	 	 	 	 	 
	Section 11.

	 	Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights
	 	 	16	 
	 
	 	 	 	 	 	 
	Section 12.

	 	Certificate of Adjusted Purchase Price or Number of Shares
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 13.

	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 14.

	 	Fractional Rights and Fractional Shares
	 	 	27	 
	 
	 	 	 	 	 	 
	Section 15.

	 	Rights of Action
	 	 	28	 
	 
	 	 	 	 	 	 
	Section 16.

	 	Agreement of Rights Holders
	 	 	28	 
	 
	 	 	 	 	 	 
	Section 17.

	 	Rights Certificate Holder Not Deemed a Shareholder
	 	 	29	 
	 
	 	 	 	 	 	 
	Section 18.

	 	Concerning the Rights Agent
	 	 	29	 
	 
	 	 	 	 	 	 
	Section 19.

	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	30	 
	 
	 	 	 	 	 	 
	Section 20.

	 	Duties of Rights Agent
	 	 	30	 
	 
	 	 	 	 	 	 
	Section 21.

	 	Change of Rights Agent
	 	 	32	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	Section 22.

	 	Issuance of New Rights Certificates
	 	 	33	 
	 
	 	 	 	 	 	 
	Section 23.

	 	Redemption and Termination
	 	 	33	 
	 
	 	 	 	 	 	 
	Section 24.

	 	Exchange
	 	 	34	 
	 
	 	 	 	 	 	 
	Section 25.

	 	Notice of Certain Events
	 	 	35	 
	 
	 	 	 	 	 	 
	Section 26.

	 	Notices
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 27.

	 	Supplements and Amendments
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 28.

	 	Successors
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 29.

	 	Determinations and Actions by the Board, etc.
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 30.

	 	Independent Director Evaluation
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 31.

	 	Benefits of this Agreement
	 	 	39	 
	 
	 	 	 	 	 	 
	Section 32.

	 	Severability
	 	 	39	 
	 
	 	 	 	 	 	 
	Section 33.

	 	Governing Law
	 	 	39	 
	 
	 	 	 	 	 	 
	Section 34.

	 	Counterparts
	 	 	39	 
	 
	 	 	 	 	 	 
	Section 35.

	 	Descriptive Headings
	 	 	39	 
	 
	 	 	 	 	 	 
	Section 36.

	 	Force Majeure
	 	 	39	 
	 
	 	 	 	 	 	 
	Exhibit A

	 	Form of Certificate of Amendment of the Certificate of Incorporation	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit B

	 	Form of Rights Certificate	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit C

	 	Summary of Rights to Purchase Series A Preferred Stock	 	 	 	 







-ii-












 





RIGHTS AGREEMENT




          RIGHTS
AGREEMENT dated as of April 2, 2009, between Allied Healthcare International Inc., a
New York corporation (the “Company”), and Computershare Trust Company, N.A., a federally
chartered trust company, as Rights Agent (the “Rights Agent”).




WITNESSETH




          WHEREAS, on March 23, 2009 (the “Rights Dividend Declaration Date”), the Board
authorized and declared a dividend distribution of one (1) preferred share purchase right (a
“Right”) for each share of Common Stock (as hereinafter defined) of the Company outstanding
at the close of business on April 2, 2009 (the “Record Date”), and has authorized the
issuance of one (1) Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(i) hereof) for each share of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company’s treasury) and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (each as hereinafter defined)
and in certain circumstances after the Distribution Date, each Right initially representing the
right to purchase one one-ten thousandth (0.0001) of a share of Preferred Stock (as hereinafter
defined) having the rights, powers and preferences set forth in the form of the Certificate of
Amendment to the Certificate of Incorporation attached hereto as Exhibit A, upon the terms
and subject to the conditions hereinafter set forth;




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




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



          (a) “Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person shall be the Beneficial Owner of twenty percent (20%) or
more of the shares of Common Stock of the Company then outstanding, but shall not include an Exempt
Person.




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




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




          (d) “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act as in effect on the date hereof.




          (e) “Agreement” shall mean this Rights Agreement as originally executed or as it may
from time to time be supplemented, amended, renewed, restated or extended pursuant to the
applicable provisions hereof.




          (f) “Associate” shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act as in effect on the date hereof.




 









 








          (g) 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, directly or
indirectly, owns or has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants, options
or otherwise; provided, however, that a Person shall not be deemed the “Beneficial
Owner” of, or to “beneficially own,” (A) 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, (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event or (C) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event which Rights are Original
Rights or securities issued pursuant to Section 11(i) hereof in connection with an adjustment made
with respect to any Original Rights;



               (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” any security under this Section 1(g)(ii) as a result of an agreement,
arrangement or understanding (whether or not in writing) to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy or consent given in response
to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act and (B) is not also then
reportable by such Person 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
Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates or
Associates) has any agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause
(A) of the proviso to Section 1(g)(ii) above) or disposing of any voting securities of the Company;
or



               (iv) in respect of which such Person or any of such Person’s Affiliates or Associates has a
Synthetic Long Position;


provided, however, that nothing in this Section 1(g) shall cause a Person engaged
in business as an underwriter of securities to be the “Beneficial Owner” of, or to be deemed to
“beneficially own,” any securities acquired, or which that Person has the right to acquire, through
such Person’s participation in good faith in a firm commitment underwriting until the expiration of
forty (40) days after the date of such acquisition, and then only if such securities continue to be
owned by such Person at such expiration of forty (40) days; provided further that
in no case shall an officer or director of the Company or any Subsidiary of the Company be deemed
(x) the Beneficial Owner of any securities beneficially owned by another officer or director of the


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Company or any Subsidiary of the Company solely by reason of actions undertaken by such persons in
their capacity as officers or directors of the Company or any Subsidiary of the Company or (y) the
Beneficial Owner of securities held of record by the trustee of any employee benefit plan of the
Company or any Subsidiary of the Company for the benefit of any employee of the Company or any
Subsidiary of the Company, other than the officer or director, by reason of any influence that such
officer or director may have over the voting of the securities held in the plan.




          (h) “Board” shall mean the Board of Directors of the Company.




          (i) “Business Day” shall mean any day other than a Saturday, 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.




          (j) “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.




          (k) “Common Stock”, when used in reference to the Company, shall mean the common
stock, par value $.01 per share, of the Company or any other shares of capital stock of the Company
into which such stock shall be reclassified or changed. “Common Stock” when used with reference to
any Person other than the Company organized in corporate form shall mean (i) the capital stock or
other equity interest in such Person with the greatest voting power, (ii) the equity securities or
other equity interest having power to control or direct the management of such Person or (iii) if
such Person is a Subsidiary of another Person, the capital stock, equity securities of, or other
equity interest in, the Person or Persons which ultimately control such first-mentioned Person and
which has issued any such outstanding capital stock, equity securities or equity interest. “Common
Stock” when used with reference to any Person not organized in corporate form shall mean units of
beneficial interest which (x) represent the right to participate generally in the profits and
losses of such Person (including without limitation any flow-through tax benefits resulting from an
ownership interest in such Person) and (y) are entitled to exercise the greatest voting power of
such Person or, in the case of a limited partnership, have the power to remove the general partner
or partners.




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




          (m) “Company” shall have the meaning set forth in the preamble of this Agreement,
until a successor corporation or entity shall have become such or until a Principal Party shall
assume, and thereafter be liable for, all obligations and duties of the Company hereunder pursuant
to the applicable provisions of this Agreement and, thereafter, “Company” shall mean such successor
or Principal Party, respectively.




          (n) “Current Market Price” shall have the meaning set forth in Section 11(d) hereof.




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




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




          (q) “Equivalent Preference Stock” shall have the meaning set forth in Section 11(b)
hereof.




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




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




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




          (u) “Exempt Person” shall mean (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan or employee stock plan of the Company or of any Subsidiary of the
Company, (iv) any Person or entity organized, appointed, established or holding Common Stock of the
Company by, for or pursuant to the terms of any employee benefit plan or employee stock plan, (v) a
Person who, together with its Affiliates and Associates, becomes the Beneficial Owner of twenty
percent (20%) or more of the shares of Common Stock of the Company then outstanding solely as a
result of a reduction in the number of shares of Common Stock of the Company outstanding due to the
repurchase of shares of Common Stock of the Company by the Company, unless and until such time as
such Person shall purchase or otherwise become (as a result of actions taken by such Person or its
Affiliates or Associates) the Beneficial Owner of any additional shares of Common Stock of the
Company, (vi) any Person who the Board in good faith determines has inadvertently become the
Beneficial Owner of twenty percent (20%) or more of the shares of Common Stock then outstanding, so
long as such Person divests as promptly as practicable a sufficient number of shares of Common
Stock so that such Person would no longer be the Beneficial Owner of twenty percent (20%) or more
of the then outstanding shares of Common Stock of the Company, and (vii) any Person who, on the
date of execution of this Agreement, is the Beneficial Owner of twenty percent (20%) or more of the
shares of Common Stock of the Company then outstanding, unless and until such Person, together with
its Affiliates and Associates, while remaining the Beneficial Owner of twenty percent (20%) or more
of the shares of Common Stock of the Company then outstanding, acquires beneficial ownership of
additional shares of Common Stock of the Company representing half a percent (0.5%) or more of the
shares of Common Stock of the Company then outstanding.




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




          (w)
“Final Expiration Date” shall mean the Close of
Business on (i) April 1, 2019, if this Agreement is
approved at the 2010 annual meeting of shareholders by the
affirmative vote of the holders of a majority of the voting power of
the shares of stock of the Company who are present or represented by
proxy and entitled to vote on the matter at a meeting of the
shareholders held in accordance with applicable law, or (ii) on
the Business Day after the 2010 annual meeting of shareholders, if
this Agreement is not so approved at the 2010 annual meeting of
shareholders, in each case, unless the Rights are previously
redeemed, exchanged or terminated or a Distribution Date has
occurred.



          (x) “Independent Director” shall mean a director of the Company who shall have been
determined by the Board to be independent under Nasdaq listing standards, or, if the shares of
Common Stock are listed on another national exchange, such national exchange’s listing standards.




          (y) “Nasdaq” shall mean The NASDAQ Stock Market LLC.




-4-









 








          (z) “Original Rights” shall mean Rights acquired by a Person or such Person’s
Associates or Affiliates prior to the Distribution Date or issued pursuant to Section 3(a) or
Section 22 hereof.




          (aa) “Person” shall mean any individual, firm, corporation, partnership, limited
liability company, limited liability partnership, association, trust, syndicate or other entity,
and includes without limitation an unincorporated group of individuals who, by formal or informal
agreement or arrangement (whether or not in writing), have embarked on a common purpose or act.




          (bb) “Preferred Stock” shall mean shares of Series A Preferred Stock, par value $.01
per share, of the Company, and, to the extent that there is not a sufficient number of shares of
Series A Preferred Stock authorized to permit the full exercise of the Rights, any other series of
preferred stock of the Company designated for such purpose containing terms substantially similar
to the terms of the Series A Preferred Stock.




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




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




          (ee) “Qualifying Offer” shall have the meaning set forth in Section 11(a)(ii) hereof.




          (ff) “Record Date” shall have the meaning set forth in the “WHEREAS” clause at the
beginning of this Agreement.




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




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




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




          (jj) “Right” shall have the meaning set forth in the “WHEREAS” clause at the beginning
of this Agreement.




          (kk) “Rights Agent” shall mean the Person named as the “Rights Agent” in the preamble
of this Agreement until a successor Rights Agent shall have become such pursuant to the applicable
provisions hereof, and thereafter “Rights Agent” shall mean such successor Rights Agent. If at any
time there is more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, “Rights Agent” shall mean and include each such Person.




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




-5-









 








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




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




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




          (pp) “Section 13 Event” shall have the meaning set forth in Section 13(a) hereof.




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




          (rr) “Stock Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, a report filed pursuant to the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such.




          (ss) “Subsidiary” shall mean, with reference to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting power sufficient, in
the absence of contingencies, to elect at least a majority of the board of directors or other
persons performing similar functions of such corporation or other entity are at the time directly
or indirectly beneficially owned or otherwise controlled by such Person and any Affiliate or
Associate of such Person.




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




          (uu) “Summary of Rights” shall have the meaning set forth in Section 3(b) hereof.




          (vv) “Synthetic Long Position” shall mean any option, warrant, convertible security,
stock appreciation right or other contractual right, whether or not presently exercisable, which
has an exercise or conversion privilege or a settlement payment or mechanism at a price related to
shares of Common Stock of the Company or a value determined in whole or part with reference to, or
derived in whole or in part from, the market price or value of shares of Common Stock of the
Company, whether or not such right is subject to settlement in whole or in part in shares of Common
Stock of the Company, and which increases in value as the value of a share of Common Stock of the
Company increases or which provides to the holder of such right an opportunity, directly or
indirectly, to profit or share in any profit derived from any increase in the value of a share of
Common Stock of the Company, but shall not include:




               (i) rights of a pledgee under a bona fide pledge of shares of Common Stock of the Company;



               (ii) rights of all holders of shares of Common Stock of the Company to receive shares of
Common Stock of the Company pro rata, or obligations to dispose of shares of



-6-









 







Common Stock of the Company, as a result of a merger, exchange offer, or consolidation
involving the Company;



               (iii) rights or obligations to surrender shares of Common Stock of the Company, or have shares
of Common Stock of the Company withheld, upon the receipt or exercise of a derivative security or
the receipt or vesting of equity securities, in order to satisfy the exercise price or the tax
withholding consequences of receipt, exercise or vesting;



               (iv) interests in broad-based index options, broad-based index futures, and broad-based
publicly traded market baskets of stocks approved for trading by the appropriate federal
governmental authority;



               (v) interests or rights to participate in employee benefit plans of the Company held by
employees or former employees of the Company; or



               (vi) options granted to an underwriter in a registered public offering for the purpose of
satisfying over-allotments in such offering.


The number of shares of Common Stock of the Company in respect of which a Person has a Synthetic
Long Position shall be the notional or other number of shares of Common Stock of the Company
specified in a filing by such Person or any of such Person’s Affiliates or Associates with the
Securities and Exchange Commission pursuant to Regulation 13D-G or Regulation 14D under the
Exchange Act in respect of which shares of Common Stock are the subject security or in the
documentation evidencing the Synthetic Long Position as being subject to be acquired upon the
exercise or settlement of the applicable right or as the basis upon which the value or settlement
amount of such right, or the opportunity of the holder of such right to profit or share in any
profit, is to be calculated in whole or in part or, if no such filing is made or required to be
made pursuant to Regulation 13D-G or Regulation 14D under the Exchange Act or if no such number of
shares of Common Stock is specified in such filing or documentation, as determined by the Board of
Directors of the Company in good faith to be the number of shares of Common Stock of the Company to
which the Synthetic Long Position relates.




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




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




     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 of this Agreement, 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 not duty to supervise, and shall in no event be
liable for, the acts or omissions of any such co-Rights Agent. Unless otherwise determined by the
Company, any actions which may be taken by the Rights Agent pursuant to the terms of this Agreement
may be taken by any such co-Rights Agent.



     Section 3. Issuance of Rights Certificates.



-7-









 





          (a) Until the earlier of:




               (i) the Close of Business on the tenth (10th) Business Day (or such specified or unspecified
later date as may be determined by the Board before the occurrence of a Distribution Date) after
the Stock Acquisition Date (or, if the tenth (10th) Business Day (or such later date) after the
Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and



               (ii) the Close of Business on the tenth (10th) Business Day (or such specified or unspecified
later date as may be determined by the Board before the occurrence of a Distribution Date) after
the date that a tender or exchange offer by any Person is first published or sent or given within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof such Person would become an Acquiring Person made at a time when the Rights
are redeemable hereof (the earlier of (i) and (ii) being herein referred to as the
“Distribution Date”),


(x) the Rights will be evidenced (subject to the provisions of Section 3(b) and Section 3(c))
by the certificates for the Common Stock of the Company registered in the names of the holders
thereof (which certificates for Common Stock shall be deemed also to be certificates for Rights)
and not by separate certificates and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to the Company). As
soon as practicable after the Distribution Date, the Company shall prepare and execute, the Rights
Agent shall countersign and the Company shall send or cause to be sent (and the Rights Agent shall,
if requested, send) by first-class, insured, postage-prepaid mail, to each record holder of the
Common Stock of the Company as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a rights certificate substantially in the form
attached hereto as Exhibit B (each, a “Rights Certificate”), evidencing one (1)
Right for each share of Common Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of Common Stock has been made pursuant
to Section 11 hereof, at the time of distribution of the Rights Certificates, the Company shall not
be required to issue Rights Certificates evidencing fractional Rights, but may, in lieu thereof,
make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are distributed and cash is
paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.




          (b) As promptly as practicable following the Record Date, the Company will make available a
copy of a summary of Rights (a “Summary of Rights”) substantially in the form attached
hereto as Exhibit C to any holder of the Rights who may so request from time to time prior
to the Expiration Date. With respect to certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for the
Common Stock and the registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date and the Expiration Date, the
transfer of any certificates representing shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with such shares of Common
Stock.




-8-









 








          (c) Rights shall be issued in respect of all shares of Common Stock which are issued (whether
originally issued or from the Company’s treasury) after the Record Date but prior to the earlier of
the Close of Business on the Distribution Date and the Expiration Date and, to the extent provided
in Section 22 hereof, in respect of shares of Common Stock of the Company issued after the
Distribution Date and prior to the Expiration Date. Certificates representing such shares of Common
Stock of the Company shall also be deemed to be certificates for Rights, and shall, as promptly as
practicable following the Record Date, bear the following legend:





This certificate also evidences and entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between Allied Healthcare International Inc. (the
“Company”) and the Rights Agent thereunder, dated as
of April 2, 2009, as
the same may be amended, restated, renewed or extended 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, as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights beneficially owned (as such term is defined in the Rights
Agreement) by any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void. The Rights shall not be exercisable,
and shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.


With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated Rights, and the
transfer of any such certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates. Notwithstanding this Section 3(c), the omission
of a legend shall not affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.




     Section 4. Form of Rights Certificates.



          (a) The Rights Certificates (and the forms of election to purchase, assignment and certificate
contained therein to be printed on the reverse thereof) shall each be substantially in the form
attached hereto as Exhibit B and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be required to comply with
any applicable law or with any rule or regulation made pursuant thereto



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or with any rule or regulation of any stock exchange on which the Rights may from time to time
be listed, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof,
the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their
face shall entitle the holders thereof to purchase such number of one one-ten thousandths of a
share of Preferred Stock as shall be set forth therein at the exercise price set forth therein
(such exercise price per one one-ten thousandth (0.0001) of a share, as adjusted from time to time
hereunder, the “Purchase Price”), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein, including as provided in Section 11(a)(ii) hereof.




          (b) Any Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22 hereof
that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person; (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such; or (iii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board, in its sole discretion, has determined is
part of a plan, arrangement or understanding which has as a primary purpose or effect avoidance of
the provisions of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible) the following
legend:





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



     Section 5. Countersignature and Registration.



          (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, any Vice President or its Chief Financial
Officer, either manually or by facsimile signature, and attested to by the Secretary or any
Assistant Secretary, either manually or by facsimile or other reproduced signature. The Rights
Certificates shall be countersigned by an authorized signatory of the Rights Agent, either manually
or by facsimile or other reproduced 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 Rights
Certificates shall cease to be such officer of the Company before countersignature by an authorized
signatory of the Rights Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by an authorized signatory of the Rights Agent and issued and
delivered by the Company with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any



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Rights Certificate may be signed on behalf of the Company by any person who, at the actual
date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, although at the date of the execution of this Agreement any such person
was not such an officer.




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




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



          (a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the Close of Business on
the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined
or exchanged for another Rights Certificate or Rights Certificates entitling the registered holder
to purchase a like number of one one-ten thousandths of a share of Preferred Stock (or, following
the occurrence of a Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Rights Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate
or Rights Certificates to be transferred, split up, combined or exchanged, with the forms of
assignment and certificate contained therein duly executed, at the office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate
or Rights Certificates until the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights Certificate or Rights
Certificates and shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon, the Rights Agent shall, subject to Section 4(b), Section 7(e) and
Section 14, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require payment from the holder
of a Rights Certificate of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of Rights Certificates.
The Rights Agent shall have no duty or obligation under this Section 6 unless and until it is
satisfied that all such taxes and/or charges have been paid in full.




          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a valid Rights Certificate and, in case of
loss, theft or destruction, of indemnity or security satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the



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Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.




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



          (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23(a) hereof) in whole or in part at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to purchase and the certificate contained therein
duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to the total number of
one one-ten thousandths of a share of Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock, other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are exercisable, at or prior to the earliest of (i) the Final Expiration Date,
(ii) the time at which all of the Rights are redeemed as provided in Section 23 hereof (the
“Redemption Date”) and (iii) the time at which all of the Rights are exchanged as provided
in Section 24 hereof (the “Exchange Date”) (the earliest of (i), (ii) and (iii) being
herein referred to as the “Expiration Date”).




          (b) The Purchase Price for each one one-ten thousandth (0.0001) of a share of Preferred Stock
pursuant to the exercise of a Right shall initially be Twenty Dollars ($20.00), shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with Section 7(c) below.




          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate contained therein duly executed, accompanied by payment,
with respect to each Right so exercised, of the Purchase Price, as such amount may be reduced
pursuant to Section 11(a)(iii) hereof, per one one-ten thousandth (0.0001) of a share of Preferred
Stock (or, following the occurrence of a Triggering Event, for Common Stock, other securities, cash
or other assets, as the case may be) to be purchased (as set forth below) and an amount equal to
any applicable tax or governmental charge, the Rights Agent shall, subject to Sections 7(f) and
20(k) hereof, thereupon promptly (i)(A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-ten thousandths of a share of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition
from the depositary agent depositary receipts representing such number of one one-ten thousandths
of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the transfer agent with the
depositary agent to comply with such request), (ii) 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 Rights Certificate, registered in such name or names as may be designated by such holder,
(iii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof and (iv) after receipt thereof, deliver such cash, if
any, to, or upon the order of, the registered holder of such Rights Certificate, registered



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in such name or names as may be designated by such holder. The payment of the Purchase Price
(as such amount may be reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by
certified check, cashier’s check or bank draft payable to the order of the Company. In the event
that the Company is obligated to issue other securities (including Common Stock) of the Company,
pay cash and/or distribute other property pursuant to this Section 7(c) or Section 11(a) hereof,
the Company will make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when necessary to comply with
this Agreement. The Company reserves the right to require, prior to the occurrence of a Triggering
Event, that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued.




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




          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee of any such Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after such Acquiring Person becomes
such or (iii) a transferee of any such Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with such Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration) from such
Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board has determined is part
of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of
this Section 7(e), shall become null and void without any further action, and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights Certificates or other Person as a result of the Company’s failure
to make any determinations with respect to an Acquiring Person or any of its Affiliates, Associates
or transferees hereunder.




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



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Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.




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



     Section 9. Reservation and Availability of Capital Stock.



          (a) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock (and, following the occurrence of a
Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities
or out of its authorized and issued shares held in its treasury), the number of shares of Preferred
Stock (and, following the occurrence of a Triggering Event, the amount of Common Stock and/or other
securities) that, as provided in this Agreement (including Section 11(a)(iii) hereof) will be
sufficient to permit the exercise in full of all outstanding Rights.




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




          (c) The Company shall use reasonable efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Triggering Event in which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in accordance with this
Agreement, or as soon as required by law following the Distribution Date, as the case may be, a
registration statement under the Act on an appropriate form with respect to the Common Stock of the
Company or other securities purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities and (B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or “Blue Sky” laws of the various
states in connection with the exercisability of the Rights. The Company may, acting by resolution
of the Board, temporarily suspend, for a period of time not to exceed ninety (90) days after the
date set forth in clause (i) of the first sentence (1st) of this Section 9(c), the exercisability
of the Rights in order to prepare and file such registration



-14-









 






statement and permit it to become effective. In the event of any such suspension, the Company
shall promptly notify the Rights Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and shall issue a public announcement
(with prompt notice thereof to the Rights Agent) at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a registration statement is required in
other circumstances following the Distribution Date, the Company may similarly temporarily suspend
the exercisability of the Rights until such time as a registration statement has been declared
effective. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained or the exercise thereof shall not otherwise be permitted under applicable law or a
registration statement shall not have been declared effective.




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




          (e) The Company further covenants and agrees that, except as set forth in Section 6(a) hereof
and this Section 9(e), it will pay when due and payable any and all taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of any certificates
for a number of one one-ten thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any tax or charge which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a number of one one-ten
thousandths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may
be) in respect of a name other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates for a number of one one-ten thousandths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax or charge shall have been paid (any such tax
or charge being payable by the holder of such Rights Certificate at the time of surrender) or until
it has been established to the Company’s satisfaction that no such tax or charge is due.




     Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for
a number of one one-ten thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby, and such certificate shall
be dated the date upon which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable taxes or charges) was made; provided,
however, that if the date of such surrender and payment is a date upon which the transfer
books for the Preferred Stock (or Common Stock and/or other securities, as the case may be) are
closed, such Person shall be deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding Business



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Day on which the transfer books for the Preferred Stock (or Common Stock and/or other
securities, as the case may be) are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate, as such, shall not be entitled to any rights of a shareholder
of the Company (or the Principal Party) with respect to shares for which the Rights shall be
exercisable, including without limitation the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company (or the Principal Party), except as provided herein.



     Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares (or fractions thereof) purchasable
upon exercise of 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 that the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide or
split the outstanding Preferred Stock, (C) combine or consolidate the outstanding Preferred Stock
into a smaller number of shares or (D) issue any shares of its capital stock in a reclassification
of the Preferred Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), then, except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such subdivision, split, combination,
consolidation or reclassification, and the number and kind of shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date, whether or not such Right was then exercisable, and at a time when
the transfer books for the Preferred Stock (or other capital stock, as the case may be) of the
Company were open, such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, split, combination, consolidation or reclassification;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one (1) Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one (1) 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, any adjustment
required pursuant to Section 11(a)(ii) hereof.




          (ii) Subject to Sections 23 and 24 of this Agreement, in the event (a “Section 11(a)(ii)
Event”) that any Person shall, at any time after the Rights Dividend Declaration Date, become
an Acquiring Person, unless the event causing such Person to become an Acquiring Person is a
Section 13 Event or is an acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the Independent Directors of the Company, after receiving advice from one or
more investment banking firms, to be (a) at a price which is fair to shareholders (taking into
account all factors which such members of the Board deem relevant, including, without limitation,
prices which could reasonably be achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b)



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otherwise in the best interests of the Company and its shareholders (hereinafter a
“Qualifying Offer”), proper provision shall be made so that promptly after the date of
occurrence of such Section 11(a)(ii) Event, each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one
one-ten thousandths of a share of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-ten thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event (whether or not
such Right was then issued or exercisable) and (y) dividing that product (which following such
first occurrence shall thereafter be referred to as the “Purchase Price” for each Right and
for all purposes of this Agreement) by fifty percent (50%) of the Current Market Price per share of
Common Stock of the Company on the date of such first occurrence (such number of shares being
referred to as the “Adjustment Shares”).




          (iii) In the event that the number of shares of Common Stock which are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii), the Company, acting by resolution of the Board, 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 attributable to each Right and (B)
with respect to all or a portion of each Right (subject to Section 7(e) hereof), make adequate
provision to substitute for the Adjustment Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities, if any, of the Company other than Common Stock (including, without
limitation, shares or units of shares of Preferred Stock, which the Board has deemed to have the
same value or economic rights as shares of Common Stock (such shares of Preferred Stock being
referred to herein as “Common Stock Equivalents”)), (4) debt securities of the Company, (5)
other assets or (6) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board based upon the advice of
a nationally recognized investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of redemption
pursuant to Section 23(a) hereof, as such date may be extended pursuant to Section 23(a) hereof or
amended pursuant to Section 27 hereof, expires (the later of (x) and (y) being referred to herein
as the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. For purposes of the preceding sentence, the term
“Spread” shall mean the excess of (i) the Current Value over (ii) the Purchase Price. If
the Board shall determine in good faith that it is likely that sufficient additional shares of
Common Stock of the Company could be authorized for issuance upon exercise in full of the Rights,
the 30-day period set forth above may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period, as it may be extended, being
referred to herein as the “Substitution Period”). To the



-17-









 






extent that the Company determines that some action need be taken pursuant to the first (1st)
and/or third (3rd) sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights until the expiration of the Substitution Period in order
to seek any authorization of additional shares or to decide the appropriate form of distribution to
be made pursuant to such first (1st) sentence and to determine the value thereof. In the event of
any such suspension, the Company shall promptly notify the Rights Agent thereof and issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended and a
public announcement (with prompt notice thereof to the Rights Agent) at such time as the suspension
is no longer in effect. For purposes of this Section 11(a)(iii), the value of the Common Stock of
the Company shall be the Current Market Price per share of the Common Stock on the Section
11(a)(ii) Trigger Date, and the value of any Common Stock Equivalent shall be deemed to be equal to
the value of the Common Stock on such date.




          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty five (45) calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of Preferred Stock (such
shares being referred to herein as the “Equivalent Preference Stock”)) or securities
convertible into Preferred Stock or Equivalent Preference Stock at a price per share of Preferred
Stock or per share of Equivalent Preference Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preference Stock) less than the Current
Market Price per share of Common Stock on such record date, except as otherwise provided in Section
11(a) and Section 7(e) 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 sum of (i) the number of shares of Preferred Stock
outstanding on such record date and (ii) the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or Equivalent
Preference Stock so to be offered (or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price, and the denominator of
which shall be the sum of (i) the number of shares of Preferred Stock outstanding on such record
date and (ii) the number of additional shares of Preferred Stock and/or Equivalent Preference Stock
to be offered for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one (1) Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one (1) Right. In case such
subscription price may be paid by delivery of consideration, part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in good faith by the Board,
which determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.




          (c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or



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merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including
any dividend payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), except as otherwise provided in Section
11(a) and Section 7(e) hereof, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price per share of Preferred Stock on
such record date, less the fair market value (as determined in good faith by the Board, which
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and
the denominator of which shall be such Current Market Price per share of Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one (1) Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one (1) Right. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such
record date had not been fixed.




          (d) (i) For the purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the “Current Market Price” per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such Common Stock for
the thirty (30) consecutive Trading Days immediately prior to, but not including, such date, and
for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price
per share of Common Stock on any date shall be deemed to be the average of the daily closing prices
per share of such Common Stock for the 10 consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per share of the
Common Stock is determined during a period following the announcement by the issuer of such Common
Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock
or securities convertible into shares of such Common Stock (other than the Rights) or (B) any
subdivision, combination, consolidation, reverse stock split or reclassification of such Common
Stock, and prior to the expiration of the requisite 30-Trading Day or 10-Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination, consolidation, reverse stock split or reclassification, then, and in
each such case, the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case, as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the
shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of Common Stock are listed
or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by Nasdaq or



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such other system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares of Common Stock selected by the Board. If
on any such date the Common Stock is not publicly held or is not so listed, admitted to trading or
quoted, and no market maker is making a market in such Common Stock, Current Market Price shall
mean the fair value of such shares on such date as determined in good faith by the Board, which
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes. The term “Trading Day” shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day.




               (ii) For the purpose of any computation hereunder, the “Current Market Price” per
share of Preferred Stock shall be determined in the same manner as set forth above for the Common
Stock in Section 11(d)(i) hereof (other than the last sentence thereof). If the Current Market
Price per share of Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described in Section 11(d)(i)
hereof, the Current Market Price per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 10,000 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the
date of this Agreement) multiplied by the Current Market Price per share of the Common Stock. If
neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, Current
Market Price per share of the Preferred Stock shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all purposes of this Agreement, the
Current Market Price of one one-ten thousandth (0.0001) of a share of Preferred Stock shall be
equal to the Current Market Price of one share of Preferred Stock divided by 10,000.



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




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




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7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock of the Company shall apply on
like terms to any such other shares.




          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-ten thousandths of a share of Preferred Stock purchasable from time to 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 (c) hereof, each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one
one-ten thousandths of a share of Preferred Stock (calculated to the nearest one-millionth of a
share) obtained by (i) multiplying (x) the number of one one-ten thousandths of a share of
Preferred Stock covered by a Right immediately prior to this adjustment by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase
Price.




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




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          (j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-ten thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price
per one one-ten thousandth (0.0001) of a share of Preferred Stock and the number of one one-ten
thousandths of a share of Preferred Stock which were expressed in the initial Rights Certificates
issued hereunder.




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the par value, if any, of the number of one one-ten thousandths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall use all reasonable efforts to 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, such number of one one-ten thousandths
of a share of Preferred Stock at such adjusted Purchase Price.




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




          (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled
to make such adjustments in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in its good faith judgment the Board shall determine
to be advisable in order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any shares of Preferred Stock at less than the Current Market Price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock, shall not be taxable to such shareholders.




          (n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof)
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than fifty percent (50%)
of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), if (x) at the time of or



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immediately after such consolidation, merger, sale or transfer there are any rights, warrants
or other instruments or securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, sale or transfer, the
shareholders of the Person who constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously owned by such
Person or any of its Associates or Affiliates.




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




          (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common Stock immediately prior to such event by
a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the occurrence of such event.




     Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the facts and
computations accounting for such adjustment, (b) promptly file with the Rights Agent, and with each
transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate and (c) if
a Distribution Date has occurred, mail or cause the Rights Agent to mail a brief summary thereof to
each record holder of a Rights Certificate (or, if prior to the Distribution Date, to each record
holder of a certificate representing shares of Common Stock) in accordance with Section 26 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to prepare such certificate or
statement or make such filings or mailings shall not affect the validity of, or the force or effect
of, the requirement for such adjustment. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall have no duty with respect to
and shall not be deemed to have knowledge of any such adjustment unless and until it shall have
received such certificate.



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



          (a) In the event (a “Section 13 Event”) that, at any time after a Person becomes an
Acquiring Person, directly or indirectly, (x) the Company shall consolidate or



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otherwise combine with, or merge with or into, any other Person or Persons (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o) hereof) and the
Company shall not be the continuing or surviving corporation of such consolidation, combination or
merger, (y) any Person or Persons (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate or otherwise combine with, or merge with or
into, the Company, and the Company shall be the continuing or surviving corporation of such
consolidation, combination or merger and, in connection with such consolidation, combination or
merger, all or part of the outstanding shares of Common Stock of the Company shall be changed into
or exchanged for stock or other securities of any other Person or Persons or cash or any other
property or the shares of Common Stock held by shareholders of the Company immediately prior to the
consummation of the transaction which remain outstanding shall constitute less than fifty percent
(50%) of the total number of shares of Common Stock outstanding immediately following consummation
of the transaction, or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets, earning power or cash flow aggregating more than fifty percent (50%) of the
assets, earning power or cash flow of the Company and its Subsidiaries (taken as a whole and
calculated on the basis of the Company’s most recent regularly prepared financial statements) to
any Person or Persons (other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof), then, and in each such case (except
as may be contemplated by Section 13(d) hereof), proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e) hereof, shall, on or after the later of (A)
the date of the first occurrence of any such Section 13 Event or (B) the expiration of the
Redemption Period, thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one
one-ten thousandths of a share of Preferred Stock, such number of validly authorized and issued,
fully paid, nonassessable and freely tradeable shares of Common Stock of the Principal Party, not
subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (1) multiplying the then current Purchase Price by the number of
one one-ten thousandths of a share of Preferred Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of one one-ten
thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior
to such first occurrence), and (2) dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by fifty percent (50%) of the Current Market Price per share of the
Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) the
shares of Common Stock of such Principal Party received by each holder of a Right upon exercise of
that Right shall be fully paid and nonassessable; (iii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iv) the term “Company” shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (v)
such Principal Party shall take such steps (including without limitation the reservation of a
sufficient number of shares of its Common Stock) in connection with the consummation of




-24-









 







any such transaction as may be necessary to assure that the provisions hereof shall thereafter
be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (vi) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.




          (b) “Principal Party” shall mean:




               (i) in the case of any transaction described in clause (x) or (y) of the first (1st) sentence
of Section 13(a) hereof, (A) the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted, changed or exchanged in such merger, consolidation or
combination (or, if there is more than one such issuer, the issuer the Common Stock of which has
the greatest market value) or (B) if no securities are so issued, the Person that is the other
party to such merger (and survives the merger), consolidation or combination (or, if there is more
than one such Person, the Person the Common Stock of which has the greatest market value), or if
the other party to the merger does not survive the merger, the Person that does survive the merger
(including the Company, if it survives); and



               (ii) in the case of any transaction described in clause (z) of the first (1st) sentence of
Section 13(a) hereof, the Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions or, if each Person that is a
party to such transaction or transactions receives the same portion of the assets or earning power
so transferred or if the Person receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons is the issuer of Common Stock having the greatest
market value; provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so registered, “Principal Party” shall
refer to such other Person; (2) if the Common Stock of such Person is not and has not been so
registered and such Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of two or more of which are and have been so registered, “Principal Party” shall
refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate
market value; and (3) if the Common Stock of such Person is not and has not been so registered and
such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules set forth in (1) and (2) above
shall apply to each of the chains of ownership having an interest in such joint venture as if such
party were a Subsidiary of both or all of such joint venturers, and the Principal Parties in each
such chain shall bear the obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such interests.



          (c) The Company shall not consummate any Section 13 Event unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance with this Section
13 and unless prior thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that the requirements of Section 13(a) and
Section 13(b) hereof shall promptly be performed in accordance with their terms, that all rights of
first refusal or preemptive rights in respect of the



-25-









 






issuance of Common Stock of such Principal Party upon exercise of outstanding Rights have been
waived, that there are no rights, warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights and that such Section 13
Event shall not result in a default by the Principal Party under this Agreement as the same shall
have been assumed by the Principal Party pursuant to Section 13(a) and Section 13(b) hereof and
further providing that, as soon as practicable after the date of any such Section 13 Event, the
Principal Party will:




               (i) prepare and file a registration statement under the Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, and use its best efforts
to cause such registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the requirements of the
Act) until the Expiration Date, and to similarly comply with applicable state securities laws;



               (ii) use its best efforts to list or obtain quotation of (or continue the listing or quotation
of) the Rights and the securities purchasable upon exercise of the Rights on a national securities
exchange or by an automated quotation service; and



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


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




          (d) Notwithstanding anything in this Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons (or a wholly-owned Subsidiary of any such
Person or Persons) who acquired shares of Common Stock pursuant to a Qualifying Offer, (ii) the
price per share of Common Stock offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose shares were purchased pursuant to
such tender offer or exchange offer and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder shall expire.




          (e) The Company covenants and agrees not to consummate a transaction constituting a Section 13
Event unless a Distribution Date shall have occurred as a result of the actions described in
clauses (i) or (ii) of Section 3(a) hereof or unless the Board takes all actions that may be
necessary to cause Rights Certificates to be distributed as contemplated by clause (iii) of Section
3(a) hereof.




-26-









 








     Section 14. Fractional Rights and Fractional Shares.



          (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Sections 11(i) and (p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of any such fractional Rights, there shall
be paid to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable an amount in cash equal to the same fraction of the current
market value of a whole Right. For 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 of the
Rights for any Trading Day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights selected by the
Board. If on any such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board, whose determination will be
described in a statement filed with the Rights Agent, shall be used.




          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-ten thousandth (0.0001) of a share of
Preferred Stock, unless, at the Company’s option, the Company issues depositary receipts therefor)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock, unless, at the Company’s option, the Company issues depositary receipts therefor.
In lieu of issuing fractional shares of Preferred Stock, the Company may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an appropriate agreement between the
Company and a depositary selected by it provided that the holders of such depositary receipts shall
have all of the rights, privileges and preferences to which they would be entitled as beneficial
owners of Preferred Stock. With respect to fractional shares that are not integral multiples of one
one-ten thousandth (0.0001) of a share of Preferred Stock, if the Company does not issue such
fractional shares or depositary receipts in lieu thereof, there shall be paid to the registered
holders of Rights Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one one-ten thousandth (0.0001)
of a share of Preferred Stock. For purposes of this Section 14(b), the “current market value of one
one-ten thousandth (0.0001) of a share of Preferred Stock” shall be one one-ten thousandth (0.0001)
of the closing price of a share of Preferred Stock (or, if unavailable, the appropriate alternative
price (in each case, as determined pursuant to Section 11(d)(ii) hereof)) for the Trading Day
immediately prior to the date of such exercise.




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          (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of this Section 14(c), the “current market
value of one (1) share of Common Stock” shall be the closing price of one (1) share of Common
Stock, or if unavailable, the appropriate alternative price (in each case, as determined pursuant
to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise.




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




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



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



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




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




          (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem
and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated certificate for Common Stock) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership



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or writing on the Rights Certificate or the associated certificate for Common Stock made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be
required to be affected by any notice to the contrary; and




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




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



     Section 18. Concerning the Rights Agent.



          (a) The Company agrees to pay to the Rights Agent such compensation as shall be agreed in
writing between the Company and the Rights Agent for all services rendered by the Rights Agent
hereunder and, from time to time, on demand of the Rights Agent, reimbursement for its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability demand, judgment, fine, penalty, claim, settlement, cost or expense incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights Agent for any action
taken, suffered or omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending against any claim of liability in
the premises.




          (b) The Rights Agent shall be authorized to rely on, shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in good faith in
connection with its administration of this Agreement in reliance upon, any Rights Certificate or
certificate for Common Stock or for other securities of the Company or upon any instrument



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of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement or other paper or document reasonably believed by it to
be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.




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



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




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




     Section 20. Duties of Rights Agent. The Rights Agent undertakes only the duties and
obligations expressly imposed by this Agreement (and no implied duties or obligations) upon the
following terms and conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:



          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith and in accordance with such advice or
opinion.




          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including without limitation the identity of any
Acquiring Person and the determination of Current Market Price) be proved or established by the
Company prior to taking or suffering any action hereunder, such



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fact or matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full authorization and
protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted in good faith by it under the provisions of this Agreement in
reliance upon such certificate.




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




          (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates, nor shall it be required to
verify the same (except as to its countersignature on such Rights Certificates). All such
statements and recitals are and shall be deemed to have been made by the Company only.




          (e) The Rights Agent shall not have any liability for nor be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereon); nor shall it be liable or responsible for any
breach by the Company of any covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be liable or responsible for any adjustment required under the provisions
of Sections 11, 13 or 24 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates after receipt of a
certificate describing any such adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any shares of Common Stock
or Preferred Stock of the Company to be issued pursuant to this Agreement or any Rights Certificate
or as to whether any shares of Common Stock or Preferred Stock of the Company will, when so issued,
be validly authorized and issued, fully paid and nonassessable.




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




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and the Rights Agent shall incur
no liability for or in respect of any action taken, suffered or omitted to be taken by it in good
faith in accordance with the advice or instructions of any such officer.




-31-









 








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




          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be liable, answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company, any holders or Rights or
any other Person resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct on the part of the Rights Agent in the selection and
continued employment thereof.




          (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
(other than internal costs incurred by the Rights Agent in providing services to the Company in the
ordinary course of its business as Rights Agent) or in the exercise of its rights if it believes
that repayment of such funds or adequate indemnification against such risk or liability is not
assured to it.




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




     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in
writing mailed to the Company and to each transfer agent of the Common Stock and Preferred Stock of
the Company, by registered or certified mail, and to the holders of the Rights Certificates, if
any, by first-class mail. In the event the transfer agency relationship in effect between the
Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned
automatically and be discharged from its duties under this Agreement as of the effective date of
such termination, and the Company shall be responsible for sending any required notice. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in
writing mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock of the Company, by registered or certified
mail, and to the holders of the Rights Certificates, if any, by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within
a period of thirty (30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of any



-32-









 







Rights Certificate may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent appointed by the Company or by such a court shall be
(a) a Person organized and doing business under the laws of the United States, the State of
Delaware or of any other state of the United States so long as such Person is in good standing, is
authorized to do business in such state, is authorized under such laws to exercise shareholder
services powers, is subject to supervision or examination by federal or state authority and has at
the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000
or (b) an Affiliate of a Person described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder and shall execute and deliver, if applicable, any further assurance, conveyance,
act or deed necessary for that purpose. Not later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock of the Company and shall mail a notice
thereof in writing to the registered holders of the Rights Certificates, if any. 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 Rights Certificates. Notwithstanding any of the provisions
of this Agreement or of the Rights Certificates to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock of the Company following the Distribution Date and prior to the redemption, exchange
or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock of the
Company so issued or sold pursuant to the exercise of stock options or under any employee plan or
arrangement or upon the exercise, conversion or exchange of securities hereafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board, issue
Rights Certificates representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued if
and to the extent that the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued and (ii) no such Rights Certificate shall be issued if and to
the extent that appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.



     Section 23. Redemption and Termination.



          (a) The Board may, at its option, at any time prior to the earlier of (i) the Close of
Business on the tenth (10th) Business Day (or such specified or unspecified later date as may be
determined by the Board before the Rights cease being redeemable) following the Stock Acquisition
Date (or, if the Stock Acquisition Date shall have occurred prior to the Record Date, the Close of
Business on the tenth (10th) Business Day following the Record Date) and (ii) the Final Expiration
Date (the “Redemption Period”), direct the Company to, and if directed, the



-33-









 






Company shall, redeem all but not less than all of the then outstanding Rights at a redemption
price of $.001 per Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”). The Company may, at its option, pay the
Redemption Price in shares of Common Stock of the Company (based on the Current Market Price of the
Common Stock of the Company at the time of redemption), cash or any other form of consideration
deemed appropriate by the Board. The redemption of the Rights by the Board pursuant to this Section
23(a) may be made effective at such time, on such basis and with such conditions as the Board in
its sole discretion may establish. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company’s right of redemption hereunder has expired.




          (b) Immediately upon the action of the Board directing the Company to make the redemption of
the Rights, evidence of which shall have been filed with the Rights Agent, and without any further
action and without any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board directing the Company to make the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to each such holder at such holder’s last address as
it appears upon the registry books of the Rights Agent, or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the Redemption Price will be
made, unless notice is mailed together with such payment.




     Section 24. Exchange.



          (a) The Board may, at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e) hereof) for Common Stock
at an exchange ratio of one (1) share of Common Stock per Right (or at such other exchange ratio as
the Board may determine), appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred
to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board 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 Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty percent (50%) or
more of the Common Stock then outstanding. The exchange of the Rights by the Board pursuant may be
made effective at such time, on such basis and with such conditions as the Board in its sole
discretion may establish.




          (b) Immediately upon the action of the Board ordering the exchange of any Rights pursuant to
Section 24(a) of this Agreement and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the



-34-









 






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 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
Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become null and void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.




          (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute
Preferred Stock (or Equivalent Preference Stock) for Common Stock exchangeable for Rights, at the
initial rate of one one-ten thousandth (0.0001) of a share of Preferred Stock (or Equivalent
Preference Stock) for each share of Common Stock, as appropriately adjusted to reflect stock
splits, stock dividends and other similar transactions after the date hereof.




          (d) In the event that (i) the number of shares of Common Stock which are authorized by the
Company’s Certificate of Incorporation, but which are not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights, is not sufficient to permit any exchange of Rights
as contemplated in accordance with this Section 24 and (ii) the Board determines to exchange shares
of Common Stock for Rights pursuant to this Section 24, then the Board shall take all such action
as may be necessary to authorize additional shares of Common Stock for issuance upon exchange of
the Rights.




          (e) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market value of a whole share
of Common Stock. For the purposes of this Section 24(e), the “current market value of a whole share
of Common Stock” shall be the closing price of a share of Common Stock (as determined pursuant to
the second (2nd) 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 shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular periodic cash dividend out of
earnings or retained earnings of the Company), (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, (iii) to effect any
reclassification of the Preferred Stock (other than a reclassification involving only the
subdivision or split of outstanding shares of Preferred Stock), (iv) to effect any consolidation,



-35-









 






combination or merger into or with any other Person or Persons (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in
one transaction or a series of related transactions, of fifty percent (50%) or more of the assets,
earning power or cash flow of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof) or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of
such proposed action which shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification, consolidation,
combination, merger, sale, transfer, liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of the shares of Preferred Stock of the Company,
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 twenty (20) days prior to the record date for
determining holders of the shares of Preferred Stock of the Company for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of the shares of
Preferred Stock of the Company, whichever shall be the earlier.




          (b) In case a Section 11(a)(ii) Event shall occur, then (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the extent feasible, and to
the Rights Agent, in accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in Section 25(a) above to Preferred Stock of the
Company shall be deemed thereafter to refer to Common Stock and/or, if appropriate, to other
securities.




          (c) The failure of the Company to give any notice provided for in this Section 25, or any
defect therein, shall not (i) relieve the Company of any of its other obligations under this
Agreement or (ii) affect the legality or validity of the action for which such notice was hereby
required.




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


Allied Healthcare International Inc.

245 Park Avenue

New York, New York 10167

Attention: Sandy Young

                 Chief Executive Officer




with a copy to:




-36-









 







WolfBlock LLP

250 Park Avenue

New York, New York 10177

Attention: Leslie Levinson, Esq.



Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by 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, Massachusetts 02021

Attention: Client Services



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




     Section 27. Supplements and Amendments.



          (a) Prior to the Distribution Date, and subject to the penultimate sentence of this Section
27(a), the Rights Agent shall, if the Company so directs, supplement or amend any provision of this
Agreement (including, without limitation, any extension of the period in which the Rights may be
redeemed, any increase in the Purchase Price and any extension of the Final Expiration Date), so
long as the duties, liabilities and indemnification of the Rights Agent are not affected, without
the approval of any holders of certificates representing shares of Common Stock. From and after the
Distribution Date, and subject to the penultimate sentence of this Section 27(a), the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this Agreement, so long as
the duties, liabilities and indemnification of the Rights Agent are not affected, without the
approval of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder (including the redemption
period prior to the Rights becoming non-redeemable), or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and which shall not
materially adversely affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided,
however, that this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed, or to
modify the ability (or inability) of the Board to redeem the Rights, in either case at such time as
the Rights are not then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders
of Rights (other than an Acquiring Person or any Affiliate or Associate of an Acquiring Person).
Notwithstanding anything



-37-









 






contained in this Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price or the number of one one-ten thousandths of a share of Preferred Stock
for which a Right is exercisable. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common Stock.




          (b) Upon the delivery of a certificate from an appropriate officer of the Company which states
that the proposed supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment.




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



     Section 29. Determinations and Actions by the Board, etc. For all purposes of this
Agreement, any calculation of the number of shares of Common Stock of the Company outstanding at
any particular time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of the Company of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically granted to the Board
or to the Company, or as may be necessary or advisable in the administration of this Agreement,
including without limitation the right and power to (a) interpret the provisions of this Agreement
and (b) make all determinations deemed necessary or advisable for the administration of this
Agreement (including without limitation a determination to redeem or not redeem the Rights or to
amend this Agreement). All such actions, calculations, interpretations and determinations
(including without limitation for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board or the Company in good faith, 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 to any liability to the holders of the Rights or otherwise
and the Rights Agent may assume that any such actions, calculations, interpretations and
determinations made by the Board or the Company, were made in good faith, without the need to
inquire or investigate such action whatsoever.



     Section 30. Independent Director Evaluation. A committee of the Board shall
review this Agreement in order to consider whether the maintenance of this Agreement continues to
be in the best interests of the Company and its shareholders. Such committee shall conduct such
review periodically when, as and in such manner as the committee deems appropriate, after giving
due regard to all relevant circumstances; provided, however, that the committee
shall take such action at least annually. Following each
such review, such committee will report its conclusions to the full Board, including any
recommendation in light thereof as to whether this Agreement should be modified or the Rights
should be redeemed. Such committee shall be comprised only of Independent Directors of the Company.
Such committee is authorized to retain, at the expense of the Company, such legal counsel,
financial advisors and other advisors as the committee deems appropriate in order to assist the
committee in carrying out its foregoing responsibilities under this Agreement. Such committee shall
initially be the Nominating Committee of the Board, provided that the Board may, at
its discretion, delegate this review to another



-38-









 







committee of Independent Directors (whether such committee be a permanent committee of the
Board or ad hoc) pursuant to this Section 30.



     Section 31. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock of
the Company) any legal or equitable right, remedy or claim under this Agreement; this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock of the Company).



     Section 32. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth (10th) Business Day following the date of such
determination by the Board. Without limiting the foregoing, if any provision of this Agreement
requiring that a determination be made by less than the entire Board (or at a time or with the
concurrence of a group of directors consisting of less than the entire Board) is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, such determination
shall then be made by the entire Board in accordance with applicable law and the certificate of
incorporation and bylaws of the Company, each as then in effect.



     Section 33. Governing Law. The validity, enforceability, interpretation and
performance of this Agreement, each Right and each Rights Certificate issued hereunder shall be
governed by and construed in accordance with the laws of the State of New York, applicable to
contracts made and to be performed entirely within such state.



     Section 34. Counterparts. This Agreement may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute one and the same instrument.



     Section 35. Descriptive Headings. Descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.



     Section 36. 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 (but only if beyond the reasonable
control of the Rights Agent), acts of God, terrorist acts, shortage of supply, breakdowns or
malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power



-39-









 







failures or mechanical difficulties with information storage or retrieval systems, labor
difficulties, war, or civil unrest.



[The remainder of this page has intentionally been left blank.]




-40-









 









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




	 	 	 	 	 
	 	ALLIED HEALTHCARE INTERNATIONAL INC.

 	 
	 	By  	/s/ Sandy Young 	 
	 	 	Name:  	Alexander S. Young 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	COMPUTERSHARE TRUST COMPANY,

N.A., as Rights Agent

 	 
	 	By  	/s/ Michael Lang 	 
	 	 	Name:  	Michael Lang 	 
	 	 	Title:  	Senior Vice President 	 



-41-









 






	 	 	 	 	 



Exhibit A




CERTIFICATE OF AMENDMENT




of the




CERTIFICATE OF INCORPORATION




of




ALLIED HEALTHCARE INTERNATIONAL INC.




(Under Section 805 of the Business Corporation Law)




          It is hereby certified that:




          FIRST: The name of the Corporation is “Allied Healthcare International Inc.”




          The name under which the Corporation was formed is United States Home Health Care Corp.




          SECOND: The date that the Certificate of Incorporation of the Corporation was filed with the
Department of State is November 30, 1981.




          THIRD: The amendment of the Certificate of Incorporation of the Corporation effected by this
Certificate of Amendment is to designate up to five thousand (5,000) shares of the authorized ten
million (10,000,000) shares of preferred stock as Series A Preferred Stock.




          FOURTH: Section I of Article FOURTH of the Certificate of Incorporation, relating to the
preferred stock which the Corporation shall have the authority to issue, is hereby amended by
adding the following provisions at the end thereof:




“SERIES A PREFERRED STOCK






     The Board of Directors has authorized a series of Preferred Stock which series
shall be designated as Series A Preferred Stock, $.01 par value per share (the
“Series A Preferred Stock”), and the number of shares constituting such
series shall be Five Thousand (5,000). Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares of Series A Preferred
Stock then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A Preferred
Stock.




     (a) Subject to the prior and superior rights of the holders of any shares of
any series of Preferred Stock, if any, ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the holders of shares of Series



A-1









 







A Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for that purpose, quarterly
dividends payable in cash on the 15th day of March, June, September and December in
each year (each such date being referred to herein as a “Quarterly Dividend
Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of (x) $.01
($.04 per annum) and (y) subject to the provision for adjustment hereinafter set
forth, 10,000 times the aggregate per share amount of all cash dividends, and 10,000
times the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of common stock (the
“Common Stock”) or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series A Preferred Stock. In the event the Corporation shall at any
time after April 2, 2009 (the “Rights Declaration Date”) (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
 shares of Series A Preferred Stock were entitled immediately prior to such event
under clause (y) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to such event.




     The Corporation shall declare a dividend or distribution on the Series A
Preferred Stock as provided in the above paragraph immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in
 shares of Common Stock); provided, however, that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $.01 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.




     Dividends shall accrue and be deemed to accrue from day to day whether or not
declared and shall begin to accrue and be cumulative on outstanding shares of Series
A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either



A-2









 







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




     (b) Subject to the provision for adjustment hereinafter set forth, each share
of Series A Preferred Stock shall entitle the holder thereof to 10,000 votes on all
matters submitted to a vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.




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




     (c) Whenever quarterly dividends or other dividends or distributions payable on
the Series A Preferred Stock as provided in Section 5(a) of this Article Four are in
arrears, thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:




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




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



A-3









 






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




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




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




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




     (e) Upon any liquidation (voluntary or otherwise), dissolution or winding up of
the Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment (the “Series A Liquidation Preference”). Following
the payment of the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the “Common Adjustment”) equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 10,000 (as appropriately
adjusted as set forth in the paragraph below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the “Adjustment Number”). Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in respect
of all



A-4









 







outstanding shares of Series A Preferred Stock and Common Stock, respectively,
holders of Series A Preferred Stock and holders of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively. In the event, however, that there are not
sufficient assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred Stock,
if any, which rank on a parity with the Series A Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity shares
in proportion to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.




     In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately prior to
such event.




     (f) In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or any other property, then
in any such case the shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 10,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged. In
the event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of Series
A Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.




     (g) The shares of Series A Preferred Stock shall not be redeemable.




     (h) Series A Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder’s fractional shares, to



A-5









 







exercise voting rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A Preferred Stock.




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




     (j) Holders of Series A Preferred Stock will have no preemptive rights to
subscribe for or purchase additional shares of any class of stock or other security
of the Corporation.




     (k) The shares of Series A Preferred Stock shall not be convertible into or
exchangeable for shares of any other class.




     (l) This Certificate of Incorporation shall not be further amended in any
manner which would alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely in a material manner without
the affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Preferred Stock, voting separately as a class.”



          FIFTH: The foregoing amendment of the Certificate of Incorporation of the Corporation was
authorized by a vote of the Board of Directors of the Corporation. Under Section 502 of the
Business Corporation Law, shareholder approval was not required to approve the foregoing amendment
to the Certificate of Incorporation.




[Remainder of Page Intentionally Blank]




A-6









 








          IN WITNESS WHEREOF, we have executed and subscribed this Certificate of Amendment on the date
set forth below and do hereby affirm, under the penalties of perjury, that the statements contained
herein have been examined by us and are true and correct.




Dated:
April      , 2009




	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



A-7









 






	 	 	 	 	 



Exhibit B




[Form of Rights Certificate]




			
	Certificate No. R-
	 	                     Rights





          NOT
EXERCISABLE AFTER THE FINAL EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW),
SUBJECT TO EARLIER REDEMPTION OR EXPIRATION OR EXCHANGE
PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. THE RIGHTS EVIDENCED BY
THIS CERTIFICATE SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY
JURISDICTION WHERE THE REQUISITE QUALIFICATION FOR THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY
SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO IS, WAS OR BECAME AN ACQUIRING PERSON OR
AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF SUCH RIGHTS AGREEMENT.]*



RIGHTS CERTIFICATE



ALLIED HEALTHCARE INTERNATIONAL 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 April 2, 2009, as amended,
restated, renewed or extended from time to time (the “Rights Agreement”), between Allied
Healthcare International Inc., a New York corporation (the “Company”), and Computershare
Trust Company, N.A., a federally chartered trust company, as Rights Agent (the “Rights
Agent”), to purchase from the Company at any time prior to
5:00 P.M., New York time, on the Final Expiration Date (as defined in
the Rights Agreement) (unless the Rights evidenced hereby shall have
been previously redeemed by the Company or exchanged) at the office
or offices of the Rights Agent, or its successor as




 




			
	*	 	The portion of the legend in brackets shall be inserted
only if applicable, shall be modified to apply to an Acquiring Person, an
Associate or Affiliate of an Acquiring Person and certain transferees of the
foregoing, as applicable, and shall replace the preceding sentence.



B-1








 









Rights Agent, designated for such purpose, one one-ten thousandth (0.0001) of a fully paid,
nonassessable share of Series A Preferred Stock of the Company, par value $0.01 per share (the
“Preferred Stock”), at a purchase price of $20.00 per one one-ten thousandth of a share
(the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and included Certificate duly completed and executed. The number of
Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of April 2, 2009, based on the Preferred Stock as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering Event (as such term
is defined in the Rights Agreement) that a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued. The holder of the Rights evidenced hereby consents and agrees
that, subject to the terms of the Rights Agreement, the Company and the Rights Agent may deem and
treat the Person in whose name this Rights Certificate is registered as the absolute owner hereof
and of the Rights evidenced hereby (notwithstanding any notations of ownership or writing on this
Rights 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 required to be affected by any
notice to the contrary.




          As more fully set forth in the Rights Agreement, from and after the first occurrence of a
Triggering Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of
such Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after such
Acquiring Person becomes such, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of such Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with such Acquiring Person becoming such, such Rights
shall become null and void without any further action, and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Triggering Event, whether under
the Rights Agreement or otherwise.




          As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities, which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate, are subject to modification and adjustment upon the happening
of certain events, including Triggering Events (as defined in the Rights Agreement).




          This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Reference is also made to the Rights Agreement for
definitions of capitalized terms used and not defined herein. Copies of the Rights Agreement are on
file at the principal office of the Rights Agent and are also available upon written request to the
Rights Agent.




B-2









 








          This Rights Certificate, with or without other Rights Certificates, upon surrender at the
office or offices of the Rights Agent designated for such purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one one-ten thousandths of a share of Preferred Stock
(or such other securities which may be issuable upon the exercise of the Rights) as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.




          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $.001 per Right at any time
prior to the earlier of (i) the Close of Business on the tenth (10th) Business Day following the
Stock Acquisition Date (as such time period may be extended pursuant to the Rights Agreement) and
(ii) the Final Expiration Date (as defined in the Rights Agreement). In addition, under certain
circumstances following the Stock Acquisition Date, the Rights may be exchanged, in whole or in
part, for shares of the Common Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such shares. Immediately upon the action of the
Board of Directors of the Company authorizing any such redemption or exchange, and without any
further action or any notice, the Rights (other than, in the case of an exchange, Rights which are
not subject to such exchange) will terminate and the Rights will only enable holders to receive the
redemption price or the shares issuable upon such exchange, respectively.




          If the Company so determines, no fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples
of one one-ten thousandths of a share of Preferred Stock, 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 Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose to be the holder of shares of Common Stock, Preferred Stock or of any
other securities of the Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or
other distributions or to exercise any preemptive or subscription rights, or otherwise, until the
Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the
Rights Agreement.




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




[Remainder of page intentionally left blank]




B-3









 








          WITNESS the facsimile signature of the proper officers of the Company.




Dated as of                     , 20   




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	ATTEST:

	
	 	 	ALLIED HEALTHCARE INTERNATIONAL INC.
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	By	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 
	 	 
	 

	 	Name:
	 	 	 	 	 	Name:	 	 
	 

	 	Title:
	 	
	 	 	 	Title:	 	 






Countersigned:




	 	 	 	 	 
	COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent

 	 	 
	By  	 	 	 
	 	Authorized Signature 	 	 
	 	 	 	 



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[Form of Reverse Side of Rights Certificate]




ASSIGNMENT




(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)



FOR VALUE RECEIVED  




hereby sells, assigns and transfers unto  






 




(Please print name and address of transferee)





 




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




Dated:                                         ,                     




	 	 	 	 	 
	 	 	 
	 	Signature	 
	 	 	 


Signature Medallion Guaranteed:




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Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




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




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




Dated:                                         ,                     




	 	 	 	 	 
	 	 	 
	 	Signature	 
	 	 	 



Signature Medallion Guaranteed:




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NOTICE




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




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FORM OF ELECTION TO PURCHASE


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



To: Allied Healthcare International Inc.




          The undersigned hereby irrevocably elects to exercise                      Rights represented by this
Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other Person which may be issuable or
such other assets which may be deliverable upon the exercise of the Rights) and requests that
certificates for any such shares or securities be issued in the name of and delivered to:



Please insert social security

or other identifying number                                         




 





(Please print name and address)




 




If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new
Rights Certificate for the balance 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:




B-8









 








Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




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




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




Dated:                                         ,                     




	 	 	 	 	 
	 	 	 
	 	Signature	 
	 	 	 



Signature Guaranteed:




B-9









 








NOTICE




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





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Exhibit C



SUMMARY OF RIGHTS TO PURCHASE

SERIES A PREFERRED STOCK



          On March 23, 2009, the Board of Directors of Allied Healthcare International Inc., a New York
corporation (the “Company”), declared a dividend distribution of one right (a
“Right”) for each outstanding share of the Company’s common stock, par value $.01 per share
(the “Common Stock”), to shareholders of record at the close of business on April 2, 2009
(the “Record Date”). The description and terms of the Rights are set forth in a Rights
Agreement (the “Rights Agreement”), dated as of April 2, 2009, between the Company and
Computershare Trust Company, N.A., as Rights Agent.



          Initially, the Rights will be attached to all Common Stock certificates representing shares
then outstanding, and no separate Rights certificates (the “Rights Certificates”) will be
distributed. Subject to certain exceptions specified in the Rights Agreement, the Rights will
separate from the Common Stock and a distribution date (a “Distribution Date”) will occur
upon the earlier to occur of (1) the tenth (10th) business day following the date (the “Stock
Acquisition Date”) of the first public announcement by the Company or an Acquiring Person (as
defined below) that any person or entity (a “Person”) or group (other than an Exempt Person
(as defined below) has become the beneficial owner of twenty percent (20%) or more of the Common
Stock then outstanding (an “Acquiring Person”) and (2) the tenth (10th) business day
following the commencement of a tender or exchange offer by a Person, if upon its consummation,
such Person would become an Acquiring Person.



          An “Exempt Person” means (i) the Company, (ii) any subsidiary of the Company, (iii)
any employee benefit plan of the Company or any of its subsidiaries, (iv) any Person organized,
appointed, established or holding Common Stock by, for or pursuant to the terms of any employee
benefit plan, (v) a Person who becomes the beneficial owner of twenty percent (20%) or more of the
Common Stock then outstanding as a result of a reduction in the Common Stock outstanding due to
repurchases of stock by the Company, (vi) a Person who the Board of Directors determines
inadvertently became the beneficial owner of twenty percent (20%) or more of the Common Stock then
outstanding so long as such Person as promptly as practicable divests a sufficient number of shares
of Common Stock so as to no longer own shares at or above the twenty percent (20%) ownership
threshold, and (vii) a Person who, on the date of the Rights Agreement, beneficially owned twenty
percent (20%) or more of the Common Stock then outstanding so long as such Person, while the
beneficial owner of twenty percent (20%) or more of the Common Stock then outstanding, does not
acquire more than one-half of one percent (0.5%) or more of the Common Stock then outstanding.




          Until the Distribution Date, (1) the Rights will be evidenced by the Common Stock certificates
and will be transferred with and only with such Common Stock certificates, (2) new Common Stock
certificates issued after the Record Date will contain a notation incorporating the Rights
Agreement by reference and (3) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. Pursuant to the Rights Agreement, the Company reserves the right
to require prior to the occurrence of a Triggering



C-1









 





Event (as defined below) that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.



          The Rights are not exercisable until the Distribution Date and, if no Distribution Date occurs, will expire on the Close of Business on (i) April 1, 2019, if the
Rights Agreement is approved at the 2010 annual meeting of shareholders by the affirmative vote of
the holders of a majority of the voting power of the shares of stock of the Company who are present
or represented by proxy and entitled to vote on the matter at a meeting of the shareholders held in
accordance with applicable law, or (ii) on the business day after the 2010 annual meeting of
shareholders, if the Rights Agreement is not so approved at the 2010 annual meeting of
shareholders, in each case, unless the Rights are previously redeemed, exchanged or terminated. Each Right entitles the registered holder to purchase from the Company one one-ten
thousandth (0.0001) of a share of the Company’s Series A Preferred Stock, par value $.01 per share
(the “Series A Preferred Stock”), at a purchase price of $20.00 per one one-ten thousandth
(0.0001) of a share. The amount and type of securities that may be purchased upon exercise of a
Right is subject to adjustment, as described below. Because of the nature of the dividend,
liquidation and voting rights of the Series A Preferred Stock, the value of the one one-ten
thousandth (0.0001) of a share of Series A Preferred Stock purchasable upon exercise of a right is
intended to approximate the value of one (1) share of Common Stock.



          As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of the Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent the Rights. Except for shares
issued upon the exercise of stock options or as otherwise determined by the Board of Directors,
only shares of Common Stock issued prior to the close of business on the Distribution Date will be
issued with Rights.



          In the event that a Person becomes an Acquiring Person, each holder of a Right will thereafter
have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two (2) times the exercise
price of the Right. The foregoing will not apply, however, to an acquisition of shares of Common
Stock pursuant to a tender or exchange offer for all outstanding shares of the Company, at a price
and on terms determined by a majority of the independent directors of the Company, after receiving
advice from an investment banking firm, to be fair and otherwise in the best interest of the
Company and its shareholders (a “Qualifying Offer”). In addition, following the occurrence
of the event set forth in the first (1st) sentence of this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were, beneficially owned by an
Acquiring Person will be null and void.



          For example, at an exercise price of $20.00 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following an event set forth in first (1st) sentence of the
preceding paragraph would entitle its holder to purchase $40.00 worth of Common Stock (or other
consideration, as noted above) for $20.00. Assuming that the Common Stock had a per share value of
$5.00 at such time, the holder of each valid Right would be entitled to purchase eight shares of
Common Stock for $20.00.



          In the event that, after a Person becomes an Acquiring Person, (i) the Company is acquired in
a merger or other business combination transaction (x) in which the Company is not the surviving
entity (other than a merger consummated pursuant to a Qualifying Offer), or (y) in which the
Company is the surviving entity and the Common Stock is changed or exchanged or the Common Stock
remains outstanding but constitutes less than fifty percent (50%) of the shares outstanding
immediately following the merger, or (ii) fifty percent (50%) or more of the Company’s assets,
earning power or cash flow is sold or transferred, each holder of a Right



C-2








 







(except Rights which have previously been voided as set forth above) shall thereafter have the
right to receive, upon exercise, common stock of the acquiring company having a value equal to two
(2) times the exercise price of the Right. However, the right to purchase common shares of the
acquiring company will not apply to a transaction described in clause (i) of the first (1st)
sentence of this paragraph which is a Qualifying Offer and which meet certain other conditions set
forth in the Rights Agreement. The events set forth in the first (1st) sentence of this paragraph
and in the first (1st) sentence of the seventh (7th) paragraph of this summary are referred to as
the “Triggering Events.”




          At any time until ten (10) business days following the Stock Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors). Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the redemption price.




          At any time after a Person becomes an Acquiring Person and prior to the acquisition by a
Person and its affiliates (other than a Person of the type described in clauses (i), (ii), (iii) or
(iv) in the third (3rd) paragraph of this summary) of fifty percent (50%) or more of the
outstanding Common Stock, the Board of Directors may exchange the Rights (other than Rights which
have become null and void), in whole or in part, at an exchange ratio of one (1) share of Common
Stock (or at such other exchange ratio as the Board of Directors shall determine), or one one-ten
thousandth (0.0001) of a share of Preferred Stock (or of a share of a class or series of the
Company’s preferred stock having equivalent rights, preferences and privileges), per Right (subject
to adjustment). Immediately upon the action of the Board of Directors ordering exchange of any of
the Rights, such Rights will terminate and the only right of the holders of such Rights will be to
receive the exchange shares.




          Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder
of the Company, including, without limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for common stock of an
acquiring company or in the event of the redemption of the Rights.




          Any of the provisions of the Rights Agreement may be amended by the Board of Directors prior
to the Distribution Date, with certain exceptions. After the Distribution Date, the provisions of
the Rights Agreement may be amended by the Board of Directors, with certain exceptions, in order to
cure any ambiguity, to shorten or lengthen any time period under the Rights Agreement or to make
changes which do not materially adversely affect the interests of holders of Rights (other than an
Acquiring Person or its affiliates).




          The
Rights Agreement provides that is shall be reviewed annually by a committee of independent directors of the Company in order to consider whether the
maintenance of this Agreement continues to be in the best interests of the Company and its
shareholders. Following its review, the committee of independent directors will



C-3









 






report its conclusions to the full Board of Directors, including any recommendation as to
whether the Rights Agreement should be modified or the Rights should be redeemed.




          The term “beneficial ownership” is defined in the Rights Agreement and includes, among other
things, certain derivative or synthetic arrangements having characteristics of a long position in
shares of Common Stock.




          A copy of the Rights Agreement is being filed with the Securities and Exchange Commission as
an exhibit to a current report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is incorporated herein by
reference.




C-4