Exhibit 4.1


AMENDED AND RESTATED


SHAREHOLDER PROTECTION RIGHTS AGREEMENT


BETWEEN


NORTH VALLEY BANCORP 


AND


MELLON INVESTOR SERVICES LLC


Dated as of March 26, 2009






TABLE OF CONTENTS


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 SECTION
 1.

 	
 

 	
 DEFINITIONS

 	
 

 	
 1

 
	
 SECTION
 2.

 	
 

 	
 APPOINTMENT
 OF RIGHTS AGENT

 	
 

 	
 4

 
	
 SECTION
 3.

 	
 

 	
 ISSUE
 OF RIGHTS CERTIFICATES

 	
 

 	
 4

 
	
 SECTION
 4.

 	
 

 	
 FORM
 OF RIGHTS CERTIFICATES

 	
 

 	
 6

 
	
 SECTION
 5.

 	
 

 	
 COUNTERSIGNATURE
 AND REGISTRATION

 	
 

 	
 6

 
	
 SECTION
 6.

 	
 

 	
 TRANSFER,
 SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED,
 DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES

 	
 

 	
 7

 
	
 SECTION
 7.

 	
 

 	
 EXERCISE
 OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS

 	
 

 	
 8

 
	
 SECTION
 8.

 	
 

 	
 CANCELLATION
 AND DESTRUCTION OF RIGHTS CERTIFICATES

 	
 

 	
 9

 
	
 SECTION
 9.

 	
 

 	
 AVAILABILITY
 OF PREFERRED SHARES

 	
 

 	
 10

 
	
 SECTION 10.

 	
 

 	
 PREFERRED SHARES RECORD DATE

 	
 

 	
 10

 
	
 SECTION 11.

 	
 

 	
 ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS

 	
 

 	
 11

 
	
 SECTION 12.

 	
 

 	
 CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES

 	
 

 	
 12

 
	
 SECTION 13.

 	
 

 	
 CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER

 	
 

 	
 19

 
	
 SECTION 14.

 	
 

 	
 FRACTIONAL RIGHTS AND FRACTIONAL SHARES

 	
 

 	
 22

 
	
 SECTION 15.

 	
 

 	
 RIGHTS OF ACTION

 	
 

 	
 23

 
	
 SECTION 16.

 	
 

 	
 AGREEMENT OF RIGHTS HOLDERS

 	
 

 	
 24

 
	
 SECTION 17.

 	
 

 	
 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

 	
 

 	
 24

 
	
 SECTION 18.

 	
 

 	
 FEES, EXPENSES AND LIABILITIES OF THE RIGHTS AGENT

 	
 

 	
 25

 
	
 SECTION 19.

 	
 

 	
 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

 	
 

 	
 25

 
	
 SECTION 20.

 	
 

 	
 DUTIES OF RIGHTS AGENT

 	
 

 	
 26

 
	
 SECTION 21.

 	
 

 	
 CHANGE OF RIGHTS AGENT

 	
 

 	
 28

 
	
 SECTION 22.

 	
 

 	
 ISSUANCE OF NEW RIGHTS CERTIFICATES

 	
 

 	
 29

 
	
 SECTION 23.

 	
 

 	
 REDEMPTION

 	
 

 	
 29

 
	
 SECTION 24.

 	
 

 	
 EXCHANGE

 	
 

 	
 30

 


-i-






TABLE OF CONTENTS
(continued)


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 SECTION 25.

 	
 

 	
 NOTICE OF CERTAIN EVENTS

 	
 

 	
 31

 
	
 SECTION 26.

 	
 

 	
 NOTICES

 	
 

 	
 32

 
	
 SECTION 27.

 	
 

 	
 SUPPLEMENTS AND AMENDMENTS

 	
 

 	
 35

 
	
 SECTION 28.

 	
 

 	
 REGISTRATION OF SECURITIES

 	
 

 	
 34

 
	
 SECTION 29.

 	
 

 	
 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS

 	
 

 	
 34

 
	
 SECTION 30.

 	
 

 	
 SUCCESSORS

 	
 

 	
 34

 
	
 SECTION 31.

 	
 

 	
 BENEFITS OF THIS AGREEMENT

 	
 

 	
 34

 
	
 SECTION 32.

 	
 

 	
 SEVERABILITY

 	
 

 	
 35

 
	
 SECTION 33.

 	
 

 	
 GOVERNING LAW

 	
 

 	
 35

 
	
 SECTION 34.

 	
 

 	
 COUNTERPARTS

 	
 

 	
 35

 
	
 SECTION 35.

 	
 

 	
 DESCRIPTIVE HEADINGS

 	
 

 	
 35

 
	
 EXHIBIT A – Certificate of Determination (§ 1(m))

 	
 

 	
 A-1

 
	
 EXHIBIT B – Form of Rights Certificate (§ 3(a)(2); § 4)

 	
 

 	
 B-1

 
	
 EXHIBIT C – Summary of Rights (Letter to Shareholders) (§ 3(b))

 	
 

 	
 C-1

 


-ii-






NORTH VALLEY BANCORP


AMENDED AND RESTATED


SHAREHOLDER PROTECTION RIGHTS AGREEMENT


          THIS
AMENDED AND RESTATED SHAREHOLDER PROTECTION RIGHTS AGREEMENT (the “Agreement”),
dated as of March 26, 2009, is made between North Valley Bancorp, a California
corporation (the “Company”), and Mellon Investor Services LLC (the “Rights
Agent”), and amends, restates, supersedes and replaces the Shareholder
Protection Rights Agreement dated as of September 9, 1999. 


          Pursuant
to this Agreement, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a “Right”) for each
Common Share (as hereinafter defined) of the Company outstanding on September
23, 1999 (the “Record Date”), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined). 


          Accordingly,
in consideration of the premises and the mutual agreements herein set forth,
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 (as such term is hereinafter defined) who or
which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such
term is hereinafter defined) of 10% or more of the Common Shares of the Company
then outstanding, but shall not include the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, any employee benefit plan of the
Company (including without limitation the Employee Plans) or of any Subsidiary
of the Company, or of any entity holding Common Shares for or pursuant to the
terms of any such plan, provided, however, that any Person who first obtains
the written approval of a majority of the Board of Directors of the Company for
the acquisition of 10% or more of the Common Shares of the Company and
thereafter accumulates at least 10% of the Common Shares, but not more than the
percentage of the Common Shares of the Company specified in such written
approval, shall not be an “Acquiring Person.” 


          Notwithstanding
the preceding paragraph, no Person shall become an “Acquiring Person” as the
result of an acquisition of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 10% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 10% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
“Acquiring Person”. 






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


          (c)          “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), as in effect on the date of this
Agreement. 


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


                        (i)          Which
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly; 


                        (ii)          Which
such Person or any of such Person’s Affiliates or Associates has: 


                                       (A)          The
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person’s Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or 


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



                        (iii)          Which
are beneficially owned, directly or indirectly, by any other Person with which
such Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso in Section l(d)(ii)(B)) or disposing
of any securities of the Company; provided, however, that in no case shall an
officer or director of the Company be deemed the Beneficial Owner of securities
held of record by the trustee of any employee benefit plan of the Company
(including without limitation the Employee Plans) or any Subsidiary of the
Company for the benefit of any employee (other than the officer or director) of
the Company or any Subsidiary of the Company, by reason of any influence that
such officer or director may have over the voting of the securities held in the
plan. 


2






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


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


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


          (g)          “Common
Shares” when used with reference to the Company shall mean the shares of common
stock, no par value, of the Company. “Common Shares when used with reference to
any Person other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person. 


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


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


          (j)          “Employee
Plans” shall mean the North Valley Bancorp 1989 Director Stock Option Plan, the
North Valley Bancorp 1998 Employee Stock Incentive Plan, the North Valley
Bancorp 1999 Director Stock Option Plan, the North Valley Bancorp 2008 Stock
Incentive Plan, the North Valley Bancorp Employee Stock Ownership Plan and any
other tax-qualified employee benefit plan of the Company or any Subsidiary, or
any of them, and any successor plan to any of them. 


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


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


          (m)          “Preferred
Shares” shall mean shares of Series A Junior Participating Preferred Stock, no
par value, of the Company having the rights and preferences set forth in the
Certificate of Determination for Series A Junior Participating Preferred Stock
attached hereto as Exhibit A. 


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


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


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


3






          (q)          “Registered
Common Shares” shall have the meaning set forth in Section 13(b)(ii)(A) hereof.



          (r)          “Shares
Acquisition Date” shall mean the date of first public announcement (which, for
purposes of this definition, shall include, without limitation, the date of
filing of a report filed pursuant to Section 13(d) of the Exchange Act) by an
Acquiring Person that an Acquiring Person has become an Acquiring Person, or
such earlier date as a majority of the directors of the Company shall become
aware of the existence of an Acquiring Person. 


          (s)          “Spread”
shall have the meaning set forth in Section 11(a)(iv) hereof 


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


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


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


          (w)          A
“Trigger Event” shall be deemed to have occurred when any Person, together with
all Affiliates and Associates of such Person, becomes an Acquiring Person. 


SECTION 2.

APPOINTMENT OF RIGHTS AGENT


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


SECTION 3.

ISSUE OF RIGHTS CERTIFICATES


          (a)          Except
as provided in subsections (i) and (ii) below, the Rights shall at all times be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates, and the right to receive Rights Certificates will
be transferable only in connection with the transfer of Common Shares. 


                        (i)          After
the Close of Business on the earlier of (A) the tenth day after the Shares
Acquisition Date, or (B) the tenth Business Day (or such later date as may be
determined by action of the Company’s Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date when any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company, including without limitation the Employee Plans, or of any
Subsidiary of the Company or of any entity holding Common Shares for or
pursuant to the terms of any such plan) commences, or first publicly announces
an intention to commence, a tender or exchange offer which would result in such
Person becoming the Beneficial Owner of Common Shares aggregating 10% or more
of the then outstanding Common Shares (the earliest of such dates being herein
referred to as the “Distribution Date”), the Company shall distribute Rights
Certificates in accordance with subsection (ii). The provisions of this Section
3(a) shall control regardless of whether any Common Shares are actually
purchased pursuant to such offer, and the Distribution Date may include any
date which is after the date of this Agreement and prior to the issuance of the
Rights. 


4






                        (ii)          As
soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will if requested and if provided with all
necessary information send) by first-class, insured, postage-prepaid mail, to
each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate, in substantially the form of Exhibit B hereto (a
“Rights Certificate”), evidencing one Right for each Common Share so held. As
of the Distribution Date, the Rights will be evidenced solely by such Rights Certificates,
and the Rights will be transferable only separately from the transfer of Common
Shares. 


          The
Company shall promptly notify the Rights Agent in writing upon the occurrence
of the Distribution Date and, if such notification is given orally, the Company
shall confirm the same in writing on or prior to the Business Day next
following. Until such notice is received by the Rights Agent, the Rights Agent
may presume conclusively for all purposes that the Distribution Date has not
occurred. 


          (b)          On
the Record Date, or as soon as practicable thereafter, the Company will send a
copy of a Summary of Rights to Purchase Preferred Shares, in substantially the
form of Exhibit C hereto (the “Summary of Rights”), by first- class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof regardless of
whether a copy of the Summary of Rights is attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. 


          (c)          Certificates
for Common Shares (including, without limitation, reacquired Common Shares
referred to in the last sentence of this paragraph (c)) which become
outstanding after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them a legend in substantially
the following form: 


This
certificate also evidences and entitles the holder hereof to certain rights as
set forth in a Shareholder Protection Rights Agreement dated as of September 9,
1999, as amended and restated by an Amended and Restated Shareholder Protection
Rights Agreement between North Valley Bancorp and Mellon Investor Services LLC
dated as of March 26, 2009 (the “Rights Agreement”), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of North Valley Bancorp. 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. North Valley Bancorp will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring Person (as defined in the
Rights Agreement) may become null and void. 


5






          With
respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, the Company shall not be
entitled to exercise any Rights associated with such Common Shares while they
are not outstanding. 


SECTION 4.

FORM OF RIGHTS CERTIFICATES


          The
Rights Certificates (and the forms of election to purchase Preferred Shares and
of assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate (but which do not affect the rights, duties or
responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or other organization on which the
Rights may from time to time be listed or quoted, or to conform to usage.
Subject to the provisions of Section 22 hereof, the Rights Certificates shall
entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Share as shall be set forth therein at the price per one
one-hundredth of a Preferred Share set forth therein (the “Purchase Price”),
but the number of such one one-hundredths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein. 


SECTION 5.

COUNTERSIGNATURE AND REGISTRATION


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


6






          Following
the Distribution Date and receipt by the Rights Agent of any and all relevant~information, the Rights Agent will keep or cause to be kept, at its office
designated for such purpose, 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


          Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Rights
Certificate or Rights Certificates, other than Rights Certificates representing
Rights that have become null and void pursuant to Section 11(a)(ii) hereof or
that have been exchanged pursuant to Section 24 hereof, may be transferred,
split up, combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Rights Certificate or Rights
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the
designated office of the Rights Agent. The Right Certificates are transferable
only on the registry books of the Rights Agent. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificate or Certificates until
the registered holder thereof shall have (i) properly completed and duly signed
the certificate contained in the form of assignment set forth on the reverse
side of each such Right Certificate, (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) thereof and
of the Rights evidenced thereby and the Affiliates and Associates of such
Beneficial Owner (or former Beneficial Owner) as the Company or the Rights
Agent shall reasonably request, and (iii) the Rights Agent has been paid a sum
sufficient to cover any tax or charge that may be imposed in connection with
any transfer, split up, combination or exchange of Right Certificates as
required by Section 9(e) hereof. Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, so requested, registered in such name or
names as may be designated by such registered holder. The Rights Agent shall
promptly forward any such sum collected by it to the Company or to such Persons
as the Company shall specify by written notice. The Rights Agent shall have no
duty or obligation to take any action under any Section of this Agreement which
requires the payment by a Rights holder of applicable taxes and governmental
charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid. 


7






          Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security
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
make and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated. 


SECTION 7.

EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS


          (a)          The
registered holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase on the reverse side thereof properly completed and
duly executed, to the Rights Agent at the designated office of the Rights
Agent, together with payment of the Purchase Price for each one one-hundredth
of a Preferred Share as to which the Rights are exercised, and an amount equal
to any tax or charge required to be paid under Section 9(e) hereof, by
certified check, cashier’s check, bank draft or money order payable to the
order of the Company, at or prior to the earliest of (i) the Close of Business
on September 9, 2019 (the “Final Expiration Date”), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”),
or (iii) the time at which such Rights are exchanged as provided in Section 24
hereof. Except for those provisions herein which expressly survive the
termination of this Agreement, this Agreement shall terminate at such time as
the Rights are no longer exercisable hereunder. 


          (b)          The
Purchase Price for each one one-hundredth of a Preferred Share pursuant to the
exercise of a Right shall initially be $45.00, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with paragraph
(c) below. 


          (c)          Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Purchase
Price for the Preferred Shares to be purchased and an amount equal to any
applicable tax or governmental charge required to be paid by the holder of such
Rights Certificate in accordance with Section 9 hereof by cash, certified
check, cashier’s check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly: 


                        (i)          Requisition
(A) from any transfer agent of the Preferred Shares, certificates for the number
of Preferred Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent of the Preferred Shares to comply with all such
requests, or (B) from the depository agent, depository receipts representing
such number of one one-hundredths of a Preferred Share as are to be purchased
(in which case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depository agent)
and the Company hereby directs the depository agent to comply with such
request; 


8






                        (ii)          When
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof; 


                        (iii)          After
receipt of such certificates or depository receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder; and 


                        (iv)          When
appropriate, after receipt of such cash from the Company, deliver such cash to
or upon the order of the registered holder of such Rights Certificate. 


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


          (e)          The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any Preferred
Shares held in its treasury the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights in
accordance with this Section 7. 


          (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 Rights or other securities upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) properly completed and duly signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof and of the Rights evidenced thereby and of the Affiliates and
Associates of such Beneficial Owner (or former Beneficial Owner) 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 to
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of Destruction thereof to the Company. 


9






SECTION 9.

AVAILABILITY OF PREFERRED SHARES


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


          The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state taxes and charges which may be payable in respect of
the issuance or delivery of the Rights Certificates or of any Preferred Shares
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
certificates or depository receipts for the Preferred Shares in a name other
than that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depository receipts for Preferred Shares upon the exercise of any Rights until
any such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company’s or the Rights Agent’s reasonable
satisfaction that no such tax or charge is due. 


SECTION 10.

PREFERRED SHARES RECORD DATE


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


10






SECTION 11.

ADJUSTMENT OF PURCHASE PRICE,

NUMBER OF SHARES OR NUMBER OF RIGHTS


          (a)          The
Purchase Price, the number of Preferred Shares covered by each Right and the
number of Rights outstanding shall be subject to adjustment from time to time
as provided in this Section 11. 


                             (i)          In
the event the Company shall at any time after the date of this Agreement: 


                                            (A)          Declare
a dividend on the Preferred Shares payable in Preferred Shares; 


                                            (B)          Subdivide the
outstanding Preferred Shares; 


                                            (C)          Combine the
outstanding Preferred Shares into a smaller number of Preferred Shares; or 


                                            (D)          issue any shares
of its capital stock in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Rights exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Rights had
been exercised immediately prior to such date and at a time when the Preferred
Shares transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. 


                             (ii)          Subject
to Section 24 of this Agreement, in the event: 


                                            
(A)          A Trigger Event
shall have occurred (other than through an acquisition described in
subparagraph (iii) of this paragraph (a)); or 


                                            
(B)          During such time
as there is an Acquiring Person, there shall be. any reclassification of
securities (including any reverse stock split), or recapitalization or
reorganization of the Company or other transaction or series of transactions
involving the Company which has the effect, directly or indirectly, of
increasing by more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its Subsidiaries
beneficially owned by any Acquiring Person or any Affiliate or Associate
thereof,

each holder of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a Right is
then exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company (such number of
shares being referred to herein as the “Adjustment Shares”) as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, and dividing that product by (y) 50% of the then current per share
market price of the Company’s Common Shares (determined pursuant to Section
11(d) hereof) on the date of the occurrence of the earliest of the events
described in clauses (A) and (B) above. 


11






          From
and after the occurrence of the earliest of the events described in clauses (A)
and (B) above, any Rights that are or were acquired or are or were beneficially
owned by any Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be null and void and any holder of such Bights (including any
subsequent transferee) shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Rights Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an Acquiring
Person whose Rights would be null and void pursuant to the preceding sentence
or any Associate or Affiliate thereof, no Rights Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring Person whose Rights
would be null and void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Rights Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be null and void pursuant to
the preceding sentence shall be canceled. 


          The
Company shall give the Rights Agent written notice of the identity of any such
Acquiring Person, Associate or Affiliate, or the nominee of any of the
foregoing, and the Rights Agent may rely on such notice in carrying out its
duties under this Agreement and shall be deemed not to have any knowledge of
the identity of any such Acquiring Person, Associate or Affiliate, or the
nominee of any of the foregoing unless and until it shall have received such
notice. 


                        (iii)          The
right to buy Common Shares of the Company pursuant to subparagraph (ii) of this
paragraph (a) shall not arise as a result of any Person becoming an Acquiring
Person through a purchase of Common Shares pursuant to a tender offer made in
the manner prescribed by Section 14(d) of the Exchange Act and the rules and
regulations promulgated thereunder; provided, however, that such tender offer
shall provide for the acquisition of all of the outstanding Common Shares held
by any Person other than such Acquiring Person and its Affiliates or Associates
at a price and on terms determined by at least a majority of the members of the
Board of Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring Person,
after receiving advice from one or more investment or financial advisers, to be
(A) 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) otherwise in the best
interests of the Company and its shareholders, employees, customers and
communities in which the Company does business. 


12






                        (iv)          In
the event that there shall not be sufficient Common Shares authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall: 


                                        (A)          Determine
the excess of (1) the value of the Adjustment Shares issuable upon the exercise
of a Right (the “Current Value”), over (2) the Purchase Price (such excess
being hereinafter referred to as the “Spread”); and 


                                        (B)          With
respect to each Right, make adequate provision to substitute for such
unavailable Adjustment Shares either (1) cash, (2) a reduction in the Purchase
Price, (3) other equity securities of the Company, including without
limitation, Preferred Shares, (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing having, together with the
Adjustment Shares issued upon exercise of such Right, an aggregate value equal
to the Current Value, where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a reputable
investment banking firm selected by the Board of Directors of the Company. 


          Notwithstanding
the provisions of the preceding paragraph, if, within 30 days following the
date of the occurrence of the earliest of the events described in clauses (A)
and (B) of Section 11(a)(ii) above, the Company shall have not made adequate
provision to deliver value pursuant to clause (B) above, then the Company shall
be obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the extent such
shares are available) and then, if necessary, cash or Preferred Shares, which
shares and/or cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights, the 30-day period set forth above may be
extended to the extent necessary, but not more than 120 days following the date
of the occurrence of the earliest of the events described in clauses (A) and
(B) of Section 11(a)(ii) above, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period, as it
may be extended, hereinafter referred to as the “Substitution Period”). 


          To
the extent that the Company determines that action needs be taken pursuant to
the first and/or second sentences of this Section 11(a)(iv), the Company (x)
shall provide, subject to Section 11(a)(ii) hereof, that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect (with prompt written notice
thereof to the Rights Agent). For purposes of this Section 11(a)(iv), the value
of the Common Shares shall be the current per share market price (as determined
pursuant to Section 11(d) hereof) per Common Share on the date of the
occurrence of the earliest of the events described in clauses (A) and (B) of
Section 11(a)(ii) above. 


13






          (b)          In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights privileges and
preferences as the Preferred Shares (“equivalent preferred shares”) or
securities convertible into Preferred Shares or equivalent preferred shares at
a price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the then current per share market price
(as defined in Section 11(d)) of the Preferred Shares on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). 


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


14






          (d)          For
the purpose of any computation hereunder: 



                        (i)          The
“current per share market price” of any security (a “Security” for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 20 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to but not
including such date. In the event that the current per share market price of
the Security is determined: 


                                       (A)          During
a period following the announcement by the issuer of such Security of: 


                                                      (1)          A
dividend or distribution on such Security payable in shares of such Security or
securities convertible into such shares; or 


                                                     
(2)          Any subdivision,
combination or reclassification of such Security, and 


                                       (B)          Prior
to the expiration of 20 Trading Days after but not including the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, 


then, and in
each such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale price or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last reported trade in the
over-the-counter market, as reported by the Nasdaq Stock Market (“Nasdaq”) or
such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board of Directors of
the Company shall be used. 


          The
term “Trading Day” shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of Business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day. 


                        (ii)          For
the purpose of any computation hereunder, the “current per share market price”
of the Preferred Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Shares are not publicly traded, the
“current per share market price” of the Preferred Shares shall be conclusively
deemed to be the current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof),
multiplied by one hundred. If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, “current per share market
price” shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. 


15






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


          (f)          If
as a result of an adjustment made pursuant to Section 11(a) hereof, the holder
of any Rights thereafter exercised shall become entitled to receive any shares
of capital stock of the Company other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of any 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 Shares contained
in this Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Shares shall apply on like terms to any such other
shares. 


          (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-hundredths of a Preferred Share
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)
below, upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of
a Preferred Share (calculated to the nearest one one-hundredth of a Preferred
Share) obtained by (1) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price. 


          (i)          The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in substitution for any adjustment in the
number of one one-hundredths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
one-hundredth) 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 written 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. 


16






          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 delivered by the Company and countersigned and
delivered by the Rights Agent in the manner provided for herein and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement. 


          (j)          Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-hundredths of a Preferred Share issuable upon the exercise of the Rights,
the Rights Certificates previously and thereafter issued may continue to
express the Purchase Price and the number of one one-hundredths of a Preferred
Share that were expressed in the initial Rights Certificates issued hereunder. 


          (k)          Before
taking any action that would cause an adjustment reducing the Purchase Price
below one one-hundredth of the then par value, If any, of the Preferred Shares
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Preferred
Shares at such adjusted Purchase Price. 


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


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


17






          (n)          The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (1) consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(o)), (ii) permit or cause any Person to consolidate with the
Company, or merge with and into the Company (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o)), or (iii) sell or
otherwise transfer (or permit any Subsidiary to sell or transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)), if at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights. 


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


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


SECTION 12.

CERTIFICATE OF ADJUSTED

PURCHASE PRICE OR NUMBER OF SHARES


          Whenever
an adjustment is made or any event affecting the Rights or their exercisability
(including without limitation an event which causes Rights to become null and
void) occurs as provided in Section 11 or 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment or describing such
event, and a brief, reasonably detailed statement of the facts, computations
and methodology accounting for any adjustment, (b) file with the Rights Agent
and with each transfer agent for the Common Shares or the Preferred Shares a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate in accordance with Section 25 and Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment or statement therein contained and shall have no duty or
liability with respect to, and shall not be deemed to have knowledge of, any
adjustment or any such event unless and until it shall have received such a
certificate. 


18






SECTION 13.

CONSOLIDATION, MERGER OR SALE OR

TRANSFER OF ASSETS OR EARNING POWER 


          (a)          If,
following the Distribution Date, directly or indirectly: 


                        (i)            The
Company shall consolidate with, or merge with and into, any other Person and
the Company shall not be the continuing or surviving corporation of such
consolidation or merger; 


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


                        (iii)          Any
Person shall acquire all or a majority of the Common Shares pursuant to a
statutory plan of exchange; or 


                        (iv)          The
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person other than
the Company or one or more of its wholly-owned Subsidiaries, 


then, and in
each such case, proper provision shall be made so that: 


                                        (A)          Each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon the exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of Common
Shares of the Principal Party (as hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
equal the result obtained by (1) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (2) 50% of the then current per share
market price of the Common Shares (determined pursuant to Section 11(d) hereof)
of such Principal Party on the date of consummation of such consolidation,
merger, sale or transfer; 


19






                                        (B)          Such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; 


                                        (C)          The
term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 shall apply only
to such Principal Party after the first occurrence of an event described in
this Section 13(a); 


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


                                        (E)          The
provisions of Section 11(a)(ii) shall be of no further effect following the
first occurrence of any event described in this Section 13(a). 


          (b)          “Principal
Party” shall mean: 


                        (i)            In
the case of any transaction described in clause (i), (ii) or (iii) of Section
13(a): 


                                        (A)          The
Person that is the issuer of any securities into which Common Shares of the
Company are converted in such merger, consolidation or for which they are exchanged
in such statutory plan of exchange, or, if there is more than one such issuer,
the issuer of Common Shares that has the highest aggregate current market price
(determined in accordance with Section 11(d)); and 


                                        (B)          If
no securities are so issued, the Person that is the other party to such merger,
consolidation or statutory plan of exchange, or, if there is more than one such
Person, the Person whose Common Shares have the highest aggregate current
market price (determined in accordance with Section 11(d)); and 


                        (ii)           in
the case of any transaction described in clause (iv) of Section 13(a), the
Person that is the party receiving the largest portion of the assets or earning
power transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the same
portion of the assets or earning power transferred pursuant to such transaction
or transactions or if the Person receiving the largest portion of the assets or
earning power cannot be determined, whichever Person whose Common Shares have
the highest aggregate current market price (determined in accordance with
Section 11(d)); provided, however, that in any such case: 


                                        (A)          If
the Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve-month period registered under Section 12
of the Exchange Act (“Registered Common Shares”), or such Person is not a
corporation, and such Person is a direct or indirect Subsidiary of another
Person that has Registered Common Shares outstanding, “Principal Party” shall
refer to such other Person; 


20






                                        (B)          If
the Common Shares of such Person are not Registered Common Shares or such
Person is not a corporation, and such Person is a direct or indirect Subsidiary
of another Person but is not a direct or indirect Subsidiary of another Person
which has Registered Common Shares outstanding, ‘Principal Party” shall refer
to the ultimate parent entity of such first-mentioned Person; 


                                        (C)          If
the Common Shares of such Person are not Registered Common Shares or such
Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and one or more of such other Persons has
Registered Common Shares outstanding, “Principal Party” shall refer to
whichever of such other Persons is the issuer of the Registered Common Shares having
the highest aggregate current per share market price (determined in accordance
with Section 11(d)); and 


                                        (D)          If
the Common Shares of such Person are not Registered Common Shares or such
Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and none of such other Persons have
Registered Common Shares outstanding, “Principal Party” shall refer to
whichever ultimate parent entity is the corporation having the greatest shareholders’
equity or, if no such ultimate parent entity is a corporation, shall refer to
whichever ultimate parent entity is the entity having the greatest net assets. 


          (c)          The
Company shall not consummate any such consolidation, merger, statutory plan of
exchange, sale or transfer unless prior thereto the Company and the Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement confirming that: 


                        (i)           Such
Principal Party shall, upon consummation of such consolidation, merger,
statutory plan of exchange or sale or transfer of assets or earning power,
assume this Agreement in accordance with Section 13; 


                        (ii)           All
rights of first refusal or preemptive rights in respect of the issuance of
Common Shares of such Principal Party upon exercise of outstanding Rights have
been waived; 


                        (iii)          Any
provision of the authorized securities of such Principal Party or of its
charter, bylaws or other instruments governing its corporate affairs which
would obligate such Principal Party to issue in connection with, or as a
consequence of, the consummation of a transaction referred to in Section 13(a),
Common Shares of such Principal Party at less than the then-current per share
market price (determined in accordance with Section 11(d)(i)) or securities
exercisable for, or convertible into, such Common Shares at less than such
then- current per share market price (other than to the holders of rights
pursuant to this Section 13) have been waived or canceled; and 


                        (iv)          Such
transaction shall not result in a default by such Principal Party under this
Agreement, and further providing that, as soon as practicable after the date of
any consolidation, merger, statutory plan of exchange or sale or transfer of
assets or earning power referred to in Section 13(a), such Principal Party
will: 


                                        (A)          Prepare
and file a registration statement under the Securities Act of 1933, as amended,
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act until
the Final Expiration Date of the Rights, and similarly comply with applicable
state securities laws; 


21






                                        (B)          Use
its best efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights or to meet the eligibility
requirements for quotation of the Rights and such securities on Nasdaq or other
system then in use; and 


                                        (C)          Deliver
to holders of the Rights historical financial statements for such Principal
Party which comply in all respects with the requirements for registration on
Form 10 (or any successor form) under the Exchange Act. 


          In
the event that at any time after the occurrence of an event described in
Section 11(a)(ii) hereof some or all of the Rights shall not have then been
exercised at the time of the occurrence of an event described in Section 13(a)
hereof, the Rights which have not theretofore been exercised shall thereafter
be exercisable in the manner described in Section 13(a) (without taking into
account any prior adjustment required by Section 11(a)(ii)). 


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


          (e)          Notwithstanding
anything in this Agreement to the contrary, this Section 13 shall not be
applicable to a transaction described in Section 13(a)(i), (ii) or (iii) if:
(i) such transaction is consummated with a Person or Persons who acquired
Common Shares pursuant to a tender offer described in Section 11(a)(iii) (or with
a wholly-owned Subsidiary of any such Person or Persons), (ii) the price per
Common Share offered in such transaction is not less than the price per Common
Share paid to all holders of Common Shares whose shares were purchased pursuant
to such tender or exchange offer, and (iii) the form of consideration being
offered to the remaining holders of Common Shares pursuant to such transaction
is the same as the form of consideration paid pursuant to such tender offer.
Upon consummation of any such transaction contemplated by this Section 13(e),
all Rights shall expire. 


SECTION 14.

FRACTIONAL RIGHTS AND FRACTIONAL SHARES


          (a)          The
Company shall not be required to issue fractions of rights or to distribute
Rights Certificates which evidence Fractional Rights. In lieu of such
Fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such Fractional Rights would otherwise be
issuable, an amount in cash equal to the same Fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such Fractional Right would
have been otherwise issuable. The closing price for any day shall be the last
sale price, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, 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 reported
trade 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 of Directors of the Company. If on any such date no such market maker is
making a market in the Security, the fair value of the security on such date as
determined in good faith by the Board of Directors of the Company shall be
used. 


22






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


          (c)          The
holder of a Right by the acceptance of the Right expressly waives his right to
receive any Fractional Rights or any fractional shares upon exercise of a Right
(except as provided above). The Rights Agent shall have no duty or obligation
under this Section (and any other Section of this Agreement relating to
Fractional shares) unless and until it has received specific instructions from
the Company with respect to its duties and obligations under such Sections and
the Company has provided or caused to be provided to the Rights Agent
sufficient depository receipts or cash necessary to satisfy the Company’s
obligations with respect to fractional shares. 


SECTION 15.

RIGHTS OF ACTION


          All
rights of action in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares); and any registered holder
of any Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common Shares),
may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his 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 by the Company of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations by the
Company of the obligations of any Person subject to, this Agreement. 


23






          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, judgment,
decree or ruling (whether interlocutory or final) issued by a court or by a
governmental, regulatory, self-regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use
all reasonable efforts to have any such injunction, order, judgment, decree or
ruling lifted or otherwise overturned as soon as possible. 


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 the Common Shares; 


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


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


SECTION 17.

RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER 


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


24






SECTION 18.

FEES, EXPENSES AND LIABILITIES OF THE RIGHTS AGENT 


          The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the negotiation, administration, preparation, execution, delivery
and amendment 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, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense (including, without limitation, the
reasonable fees and expenses of legal counsel), incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent (as
determined by a final, non-appealable judgment of a court of competent
jurisdiction), for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance, exercise, performance and administration of
this Agreement, including the costs and expenses of Defending against any claim
of liability in the premises. The indemnity provided herein shall survive the
termination of this Agreement, the exercise or expiration of the Rights and the
resignation, replacement or removal of the Rights Agent. 


          The
Rights Agent shall be authorized and protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its acceptance and administration of this Agreement and the exercise and
performance of its duties hereunder in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person
or Persons, or otherwise upon the advice of counsel as set forth in Section 20
hereof. The Rights Agent shall not be deemed to have knowledge of any event of
which it was supposed to receive notice thereof hereunder, and the Rights Agent
shall be fully protected and shall incur no liability for failing to take
action in connection therewith unless and until it has received such notice. 


SECTION 19.

MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT 


          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 that such
Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement. 


25






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


SECTION 20.

DUTIES OF RIGHTS AGENT


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


          (a)          The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company or an employee of the Rights Agent), 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 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 Per Share Market Price) be proved or established by the Company prior
to taking or suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the President and
Chief Executive Officer, any Executive Vice President, or the Secretary or an
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate 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, omitted or suffered by it under the provisions of this
Agreement in reliance upon such certificate. 


          (c)          The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own gross negligence, bad faith or willful misconduct, (each as
determined by a final, non-appealable judgment of a court of competent
jurisdiction). Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect, punitive,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Rights Agent has been advised of
the likelihood of such loss or damage and regardless of the form of action. Any
liability of the Rights Agent under this Rights Agreement will be limited to
the amount of fees paid by the Company to the Rights Agent. 


26






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


          (e)          The
Rights Agent shall not have any liability for or be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 11(a)(ii)
hereof) or any change or adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections 3, 11, 13, 23 or 24,
or the ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights evidenced
by Rights Certificates after actual notice pursuant to Section 12, upon which
the Rights Agent may rely, that such change or adjustment is required); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any Preferred
Shares will, when issued, be duly and validly authorized and issued, fully paid
and nonassessable. 


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


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


27






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


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


          (j)          The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself (through its directors,
officers and employees) or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company or any other Person resulting from any such act, default, neglect or
misconduct, absent gross negligence, bad faith or willful misconduct (as
determined by a final, non-appealable judgment of a court of competent
jurisdiction) in the selection and continued employment thereof. 


SECTION 21.

CHANGE OF RIGHTS AGENT 


          The
Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days’ prior notice in writing mailed to
the Company and to each transfer agent of the Common Shares or Preferred Shares
known to the Rights Agent by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days’ prior notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 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 the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. 


28






          Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a Person (or an affiliate of a such Person) organized and doing business
under the laws of the United States or any state of the United States so long
as such Person is in good standing, is authorized under such laws to exercise
stock transfer powers and 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 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. 


          Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall 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 to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the 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. 


SECTION 23.

REDEMPTION


          (a)          The
Board of Directors of the Company may, at its option, at any time prior to such
time as any Person becomes an Acquiring Person, redeem all but not less than
all the then outstanding Rights at a redemption price of $0.001 per Right,
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”); provided, however, that if
following the occurrence of a Shares Acquisition Date and following the
expiration of the right of redemption hereunder but prior to any event
described in clause (B) of Section 11(a)(ii) or clauses (i), (ii), (iii) or
(iv) of Section 13(a) hereof: 


                        (i)          A
Person who is an Acquiring Person shall have transferred or otherwise disposed
of a number of shares of Common Shares in one transaction or series of
transactions, not directly or indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of an event described in
clause (B) of Section 11(a)(ii) or clauses (i), (ii), (iii) or (iv) of Section
13(a) hereof such that such Person is thereafter a Beneficial Owner of less
than 10% of the outstanding Common Shares; and 


29






                        (ii)          There
are no other Persons, immediately following the occurrence of the event
described in clause (i), who are Acquiring Persons, then the right of
redemption shall be reinstated and thereafter be subject to the provisions of
this Section 23. The redemption of the Rights by the Board of Directors may be
made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish. The Company may, in
its discretion, round up the redemption price to be paid to any holder of
Rights to the nearest whole cent. 


          (b)          Immediately
upon the action of the Board of Directors of the Company ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of rights
shall be to receive the Redemption Price. The Company shall promptly give
public notice of any such redemption (with prompt written notice thereof to the
Rights Agent); provided, however, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption. Within 10
days after such action of the Board of Directors ordering the redemption of the
Rights, the Company shall mail a notice of redemption to the Rights Agent and
to all the holders of the then outstanding Rights at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made. 


SECTION 24.

EXCHANGE


          (a)          The
Board of Directors of the Company 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 11(a)(ii) hereof)
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the ‘Exchange Ratio”). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company, including without
limitation the Employee Plans, or of any such Subsidiary, or of any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding. 


          (b)          Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of holders of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange (with prompt written notice thereof to the
Rights Agent); 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 Shares
for Rights will be effected and, in the event of any partial exchange, the
number of rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of rights (other than Rights which have
become null and void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights. 


30






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


          (d)          In
the event that there shall not be sufficient Common Shares or Preferred Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
use its best efforts to cause all such action to be taken as may be necessary
to authorize additional Common Shares or Preferred Shares for issuance upon
exchange of the Rights. 


          (e)          The
Company shall not be required to issue Fractions of Common Shares or to
distribute certificates which evidence Fractional Common Shares. In lieu of
such Fractional Common Shares, the Company shall pay to the registered holders
of the Rights Certificates with regard to which such Fractional Common Shares
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to Section 11(d)
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 to: 


                        (i)            Pay
any dividend payable in stock of any class to the holders of its Preferred
Shares or to make any other distribution to the holders of its Preferred Shares
(other than a regular quarterly cash dividend); 


                        (ii)           Offer
to the holders of its Preferred Shares rights or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of stock of any class or
any other securities, rights or options; 


                        (iii)          Effect
any reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares); 


31






                        (iv)          Effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person; 


                        (v)           Effect
the liquidation, dissolution or winding up of the Company; or 


                        (vi)          Declare
or pay any dividend on the Common Shares payable in Common Shares or effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares); 


then, in each
such case, the Company shall give to the Rights Agent and to each holder of a
Rights Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of Participation
therein by the holders of the Common Shares and/or Preferred Shares, If any
such date is to be fixed. Such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days prior to the record
date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of Participation therein
by the holders of the Common Shares and/or Preferred Shares, whichever shall be
the earlier. 


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


SECTION 26.

NOTICES


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


          North
Valley Bancorp

          300 Park Marina
Circle

          Redding, CA 96001

          Attn: Chairman of
the Board 


32






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


          Mellon
Investor Services LLC 

          235 Montgomery
Street, 23rd Floor

          San Francisco, CA
94104

          Attn: Relationship
Manager 


          with
a copy to: 


          Mellon
Investor Services LLC

          Newport Office
Center VII

           480 Washington
Boulevard

          Jersey City, New
Jersey 07310

          Attention: General
Counsel 


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


SECTION 27.

SUPPLEMENTS AND AMENDMENTS 


          The
Company may from time to time supplement or amend this Agreement without the
approval of any holders of rights Certificates in order to cure any ambiguity,
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, but none of which shall change or increase the Rights Agent’s
duties, liabilities or obligations (without the Rights Agent’s consent), any
such supplement or amendment to be evidenced by a writing signed by the Company
and the Rights Agent; provided, however, that from and after such time as any
Person becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
Without limiting the foregoing, the Company at any time prior to such time as
any Person becomes an Acquiring Person may amend this Agreement to raise or
lower the thresholds set forth in Sections 1(a) and 3(a), provided the
threshold may not be lowered to less than the greater of (i) any percentage
greater than the largest percentage of the outstanding Common Shares then known
by the Company to be beneficially owned by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan or a person excluded from the definition
of “Acquiring Person” by such definition), and (ii) 10%. Upon delivery of a
certificate from an appropriate officer of the Company and, if requested by the
Rights Agent, an opinion of counsel, that states that the proposed supplement
or amendment complies with this Section 27, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything in this Agreement to the
contrary, the Rights Agent may, but shall not be obligated to, enter into any
supplement or amendment that affects the Rights Agent’s own rights, duties,
obligations or immunities under this Agreement. 


33






SECTION 28.

REGISTRATION OF SECURITIES 


          The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days, the exercisability of the Rights in order to prepare and file, if deemed
necessary by the Company, such registration statements and other filings under
the Securities Act and the securities or “blue sky’ laws of any state, with
respect to any securities purchasable upon the exercise of the Rights, and to
permit the same to become effective. Upon any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time
as the suspension is no longer in effect (with prompt written notice thereof to
the Rights Agent). Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction has been obtained. 


SECTION 29.

DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS 


          The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers 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 (i) interpret the provisions of this Agreement, and (ii) make all
determinations, calculations or valuations required pursuant to the provisions
hereof or deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or to not redeem the Rights or
to amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board 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. The Rights Agent shall always be
entitled to assume that the Company’s Board of Directors acted in good faith
and shall be fully protected and incur no liability in reliance thereon. 


SECTION 30.

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 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, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Shares). 


34






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 if such
excluded provision shall effect the rights, immunities, duties or obligations
of the Rights Agent, the Rights Agent shall be entitled to resign immediately. 


SECTION 33.

GOVERNING LAW


          This
Agreement and each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of California and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State;
provided, however, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of new York applicable to contract made
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 but 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, acts of God, terrorist acts,
shortage of supply, breakdowns or malfunctions, interruptions or malfunctions
of computer facilities, or loss of data due to power failures or mechanical
difficulties with information storage or retrieval systems, labor difficulties,
war or civil unrest. 


35






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


	
  

 	
  

 	
  

 
	
  

 	
 NORTH VALLEY BANCORP

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ J.M. (“Mike”) Wells, Jr.  

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
 Name: J.M. (“Mike”) Wells, Jr.

 
	
  

 	
  

 	
 Title:
 Chairman of the Board

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Michael J. Cushman 

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
 Name:
 Michael J. Cushman

 
	
  

 	
  

 	
 Title:
 President and Chief Executive Officer

 
	
  

 	
  

 	
  

 
	
  

 	
 MELLON INVESTOR SERVICES LLC,

 
	
  

 	
 as Rights
 Agent

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Asa Drew  

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
 Name: Asa Drew

 
	
  

 	
  

 	
 Title:
 Assistant Vice President

 









EXHIBIT A


CERTIFICATE OF DETERMINATION


SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

NORTH VALLEY BANCORP


          Pursuant
to Section 401 of the California Corporations Code of the State of California:


          We,
Michael J. Cushman, President and Chief Executive Officer, and Leo J. Graham,
Secretary, of North Valley Bancorp, a corporation organized and existing under
the laws of California (hereinafter called the “Corporation”), do hereby
certify as follows:


          1.          On
September 9, 1999, the Board of Directors of the Corporation adopted a
resolution designating 125,000 shares of Preferred Stock as Series A Junior
Participating Preferred Stock.


          2.          No
shares of Series A Junior Participating Preferred Stock have been issued.


          3.          Pursuant
to the authority conferred upon the Board of Directors by the Articles of
Incorporation of the Corporation, the following resolution was duly adopted by
the Board of Directors on September 9, 1999, and ratified and confirmed by the
Board of Directors on March 26, 2009, creating the series of Preferred Stock
designated as Series A Junior Participating Preferred Stock:


	
  

 	
  

 
	
  

 	
             RESOLVED
 FURTHER, That the Board of Directors, to implement the Rights, pursuant to
 the authority vested in the Board of Directors of this Corporation in
 accordance with the provisions of its Articles of Incorporation, a series of
 Preferred Stock of the Corporation be and hereby is created, and that the
 determination and amount thereof and the voting powers, preferences and
 relative, participating, optional and other special rights of the shares of
 such series, and the qualifications, limitations or restrictions thereof are
 as follows:

 


 “Series A Junior Participating Preferred
Stock”


	
  

 	
  

 
	
  

 	
             Paragraph
 1. Designation and Amount. The shares of such series shall be
 designated as “Series A Junior Participating Preferred Stock” (the “Series A
 Preferred Stock”) and the number of shares constituting the Series A
 Preferred Stock shall be One Hundred Twenty Five Thousand (125,000). Such
 number of shares may be increased or decreased by resolution of the Board of
 Directors; provided, that no decrease shall reduce the number of shares of
 Series A Preferred Stock to a number less than the number of shares 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-1









	
  

 	
  

 
	
  

 	
           Paragraph
 2. Dividends and Distributions.

 
	
  

 	
  

 
	
  

 	
           (A)          Subject
 to the rights of the holders of any shares of any series of Preferred Stock
 (or any similar stock) ranking prior and superior to the Series A Preferred
 Stock with respect to dividends, the holders of shares of Series A Preferred
 Stock, in preference to the holders of Common Stock, no par value (the
 “Common Stock”), of the Corporation, and of any other junior stock, shall be
 entitled to receive, when, as and if declared by the Board of Directors out
 of funds legally available for the purpose, dividends payable in cash (each
 payment date determined by the Board of Directors being referred to herein as
 a “Dividend Payment Date”), commencing on the first 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 (subject to the provision for
 adjustment hereinafter set forth) equal to 100 times the aggregate per share
 amount of all cash dividends, and 100 times the aggregate per share amount
 (payable in kind) of all non-cash dividends or other distributions, other
 than a dividend payable in shares of Common Stock or a subdivision of the
 outstanding shares of the Common Stock (by reclassification or otherwise),
 declared on the Common Stock since the immediately preceding Dividend Payment
 Date or, with respect to the first 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 declare or pay any dividend on
 the Common Stock payable in shares of Common Stock, or effect a subdivision
 or combination or consolidation of the outstanding shares of Common Stock (by
 reclassification or otherwise than by payment of a dividend in shares of
 Common Stock) into a greater or lesser number of shares of Common Stock, 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 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.

 
	
  

 	
  

 
	
  

 	
           (B)          The
 Corporation shall declare a dividend or distribution on the Series A
 Preferred Stock as provided in paragraph (A) of this Paragraph 2 immediately
 after it declares a dividend or distribution on the Common Stock (other than
 a dividend payable in shares of Common Stock).

 
	
  

 	
  

 
	
  

 	
           (C)          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 not more than 60
 days prior to the date fixed for the payment thereof.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (A)          Subject
 to the provision for adjustment hereinafter set forth, each share of Series A
 Preferred Stock shall entitle the holder thereof to 100 votes on all matters
 submitted to a vote of the shareholders of the Corporation. In the event the
 Corporation shall at any time declare or pay any dividend on the Common Stock
 payable in shares of Common Stock, or effect a subdivision or combination or
 consolidation of the outstanding shares of Common Stock (by reclassification
 or otherwise than by payment of a dividend in shares of Common Stock) into a
 greater or lesser number of shares of Common Stock, 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 an 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.

 


A-2









	
  

 	
  

 
	
  

 	
           (B)          Except
 as otherwise provided herein, in any other Certificate of Amendment to the
 Articles of incorporation or Certificate of Determination creating a series
 of Preferred Stock or any similar stock, or by law, the holders of shares of
 Series A Preferred Stock and the holders of shares of Common Stock and any
 other capital stock of the Corporation having general voting rights shall
 vote together as one class on all matters submitted to a vote of shareholders
 of the Corporation.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           Paragraph
 4. Reacquired Shares. Any shares of Series A Preferred Stock purchased
 or otherwise acquired by the Corporation in any manner whatsoever shall be
 retired and canceled promptly after the acquisition thereof All such shares
 shall upon their cancellation become authorized but unissued shares of
 Preferred Stock and may be reissued as part of a new series of Preferred
 Stock subject to the conditions and restrictions on issuance set forth
 herein, in the Articles of Incorporation, or in any other Certificate of
 Amendment to the Articles of incorporation or Certificate of Determination
 creating a series of Preferred Stock or any similar stock or as otherwise
 required by law.

 
	
  

 	
  

 
	
  

 	
           Paragraph
 5. Liquidation, Dissolution or WindingUp. Upon any liquidation,
 dissolution or winding up of the Corporation, no distribution shall be made
 (1) 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 a minimum of $100.00 per share, plus an amount
 equal to declared and unpaid dividends and distributions thereon, whether or
 not declared, to the date of such payment, provided that the holders of
 shares of Series A Preferred Stock shall be entitled to receive an aggregate
 amount per share, subject to the provision for adjustment hereinafter set
 forth, equal to 100 times the aggregate amount to be distributed per share to
 holders of shares of Common Stock, or (2) to the holders of 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 distributions made
 ratably on the Series A Preferred Stock and all such parity stock in
 proportion to the total amounts to which the holders of all such shares are
 entitled upon such liquidation, dissolution or winding up. In the event the
 Corporation shall at any time declare or pay any dividend on the Common Stock
 payable in shares of Common Stock, or effect a subdivision or combination or
 consolidation of the outstanding shares of Common Stock (by reclassification
 or otherwise than by payment of a dividend in shares of Common Stock) into a
 greater or lesser number of shares of Common Stock, then in each such case
 the aggregate amount to which holders of shares of Series A Preferred Stock
 were entitled immediately prior to such event under the proviso in clause (1)
 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.

 


A-3









	
  

 	
  

 
	
  

 	
           Paragraph
 6. Consolidation, Merger, etc. In case the Corporation shall enter
 into any consolidation, merger, combination or other transaction in which the
 shares of Common Stock are exchanged for or changed into other stock or
 securities, cash and/or any other property, then in any such case each share
 of Series A Preferred Stock shall at the same time be similarly exchanged or
 changed into an amount per share, subject to the provision for adjustment
 hereinafter set forth, equal to 100 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 declare or pay any
 dividend on the Common Stock payable in shares of Common Stock, or effect a
 subdivision or combination or consolidation of the outstanding shares of
 Common Stock (by reclassification or otherwise than by payment of a dividend
 in shares of Common Stock into a greater or lesser number of shares of Common
 Stock), 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.

 
	
  

 	
  

 
	
  

 	
           Paragraph
 7. No Redemption. The shares of Series A Preferred Stock shall not be
 redeemable.

 
	
  

 	
  

 
	
  

 	
           Paragraph
 8. Rank. The Series A Preferred Stock shall rank, with respect to the
 payment of dividends and the distribution of assets, junior to all other
 series of the Corporation’s Preferred Stock.

 
	
  

 	
  

 
	
  

 	
           Paragraph
 9. Amendment. The Articles of Incorporation shall not be amended in
 any manner which would materially alter or change the powers, preferences or
 special rights of the Series A Preferred Stock so as to affect them adversely
 without, in addition to any other vote of shareholders required by law, the
 affirmative vote of the holders of at least a majority of the outstanding
 shares of Series A Preferred Stock, voting together as a single class.

 
	
  

 	
  

 
	
  

 	
           Paragraph
 10. Fractional Shares. The 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 exercise voting rights, receive dividends,
 participate in distributions and to have the benefit of all other rights of holders
 of the Series A Preferred Stock.”

 


A-4









	
  

 	
  

 
	
  

 	
           4.          We
 further declare under penalty of Perjury under the laws of the State of
 California that the matters set forth in this certificate are true and
 correct of our own knowledge

 
	
  

 	
  

 
	
  

 	
           Executed
 on March 26, 2009, at Redding, California.

 






	
  

 	
  

 
	
  

 	
           /s/
 Michael J. Cushman

 
	
  

 	 

 
	
  

 	
 Michael J.
 Cushman

 
	
  

 	
 President
 and Chief Executive Officer

 
	
  

 	
  

 
	
  

 	
           /s/
 Leo J. Graham

 
	
  

 	 

 
	
  

 	
 Leo J.
 Graham

 
	
  

 	
 Secretary

 


A-5






EXHIBIT B


FORM OF RIGHTS CERTIFICATE


	
  

 	
  

 
	
 Certificate
 No. R-

 	
 ______ Rights

 






	
  

 	
  

 	
  

 
	
  

 	
 NOT EXERCISABLE AFTER SEPTEMBER 9, 2009, OR EARLIER IF REDEMPTION OR
 EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND
 TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

 	
  

 


RIGHTS CERTIFICATE


NORTH VALLEY BANCORP


          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 Shareholder Protection
Rights Agreement, dated as of September 9, 1999, as amended and restated by the
Amended and Restated Shareholder Protection Rights Agreement dated as of March
26, 2009 (the “Rights Agreement”), between North Valley Bancorp, a California
corporation (the “Company”), and Mellon Investor Services LLC (the “Rights
Agent”), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M., Pacific
time, on September 9, 2009, at the designated office of the Rights Agent, or at
the office of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock (the
“Preferred Shares”), of the Company, at a purchase price of $45.00 per one
one-hundredth of a Preferred Share (the “Purchase Price”), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of rights evidenced by this Right Certificate (and
the number of one one-hundredths of a Preferred Share which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of September 23, 1999, based on the
Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.


          This
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. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.


B-1






          This
Rights Certificate, with or without other Rights Certificates, upon surrender
at the designated office of the Rights Agent, 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 Preferred
Shares 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 (i) may be redeemed by the Company at a redemption price of $.001
per Right or (ii) may be exchanged in whole or in part for Preferred Shares or
shares of the Company’s Common Stock, no par value.


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


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


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


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ATTEST:

 	
  

 	
 NORTH VALLEY BANCORP

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 COUNTERSIGNED:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 MELLON INVESTOR SERVICES LLC

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 	
  

 	
  

 
	
  

 	 

 	
  

 	
  

 	
  

 
	
  

 	
      Authorized
 Signature

 	
  

 	
  

 	
  

 


B-2






Form of reverse Side of rights Certificate


FORM OF ASSIGNMENT


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


          FOR
VALUE RECEIVED ___________________ hereby sells,
assigns and transfers unto _____________________
__________________________________________________________________________________________________________________
             
                 
         (please print
name and address of transferee) ____________________________________________________________________________________________________

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


	
  

 	
  

 
	
 Date:
 ______________________

 	
  

 
	
  

 	
 Signature

 



Signature
Guaranteed:


          Signatures
must be guaranteed by a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or
a commercial bank or trust company having an office or correspondent in the
United States.


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


	
  

 	
  

 
	
  

 	
 Signature

 


B-3






Form of
reverse Side of rights Certificate — continued


FORM OF ELECTION TO PURCHASE


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


	
  

 	
  

 
	
 TO:

 	
 NORTH VALLEY
 BANCORP

 



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


Please insert
social security or other identifying number


	
  

 
	 

 
	
 (Please print name and address)

 
	
  

 
	
  

 
	 

 



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


	
  

 
	 

 
	
  

 
	
  

 
	
  

 
	 

 
	
 Please insert social security or other identifying number

 
	
  

 
	
  

 
	 

 
	
  

 
	
 (Please print name and address)

 
	
  

 
	
  

 
	 

 
	
  

 






	
  

 	
  

 
	
 Date:
 ______________________

 	
  

 
	
  

 	
 Signature

 


B-4






Signature
Guaranteed:


          Signatures
must be guaranteed by a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or
a commercial bank or trust company having an office or correspondent in the
United States.


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


	
  

 	
  

 
	
  

 	
 Signature

 


B-5






NOTICE


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


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


B-6






EXHIBIT C


Dear
Shareholder of North Valley Bancorp:


          As
part of its overall effort to enhance shareholder value, the Board of Directors
on September 9, 1999, adopted a shareholder rights plan set forth in a
Shareholder Protection Rights Agreement under which the Company’s common shareholders
as of the record date of September 23, 1999, will receive Rights to purchase
shares of preferred stock. The Shareholder Protection Rights Agreement was
amended and restated pursuant to an Amended and Restated Shareholder Protection
Rights Agreement dated as of March 26, 2009. Our purpose in writing this letter
is to describe the Board’s reasons for adopting the Rights Agreement and to
briefly explain how the Rights Agreement works. Please note that this
description of the Rights is only a summary and is qualified in its entirety by
reference to the Rights Agreement. A copy of the Rights Agreement has been
filed with the Securities and Exchange Commission and is available to
shareholders free of charge from the Company.


          The
purpose of the Rights Agreement is to provide additional protections to you as
a shareholder of the Company in the event of an unsolicited attempt to acquire
the Company in a manner or on terms that the Board does not believe are fair to
you or in your best interests. The Board believes certain takeover tactics are
a serious potential problem and are not in the best interests of shareholders.
They could deprive the Board of any real opportunity to participate in the
determination of the Company’s destiny. Many other companies have adopted
shareholder rights plans to protect shareholders against these tactics.


          The
Board was aware when it adopted the Rights Agreement of arguments that
securities of the sort being issued by the Company may deter legitimate
acquisition proposals. The Board has found no evidence that this has occurred.
The Rights Agreement is not intended to and will not prevent an acquisition of
the Company or substantial investments on terms that are favorable and fair to
all shareholders. It will not interfere with a merger or other business
combination transaction approved by the Board. Its purpose is to require that a
potential acquiring company or person negotiate terms directly with your
elected Board of Directors.


          The
Board did not adopt the Rights Agreement in response to any specific proposal.
However, the Board concluded that the Rights Agreement should be adopted now so
it would be in place to protect your interests in the future. Issuance of the
Rights does not in any way weaken the financial strength of the Company and has
no dilutive effect on the value of your shares, although the ultimate effect of
the Rights, if they are exercised, would be to dilute substantially the value
of shares acquired by an unfriendly or hostile acquiror. The Rights will only
be exercisable if and when a situation arises which they were created to
address. The Rights work in the following manner.


          One
Right will be distributed as a dividend on each outstanding share of common
stock to shareholders of record as of the record date of September 23, 1999.
Each Right will entitle the registered holder, when and if certain specified
takeover activity occurs, to purchase from the Company one one-hundredth of a
share of Series A Junior Participating Preferred Stock, no par value (the
“Preferred Shares”), at a price of $45.00. Generally, each one one-hundredth of
a Preferred Share will have the same economic and voting rights as one share of
common stock, and in fact the Rights will entitle the holder to purchase shares
of common stock rather than preferred stock, at the reduced price of one-half
the then current market price of the common stock.


C-1






          Initially,
no separate Rights Certificates will be issued. Instead, the Rights will be
attached to all outstanding common stock certificates, including certificates
issued after the record date of the distribution of the Rights, regardless of
whether any such certificate actually indicates that Rights are attached. The
Rights will separate from the common stock if a person or group of persons
acquires or announces that it intends to acquire 10 percent or more of the
outstanding common stock of the Company without Board approval. Such a person
or group of Persons is called an “Acquiring Person.” After and if any person or
group becomes an Acquiring Person, separate Rights Certificates will be mailed
to shareholders of record of the common stock. After that time, Right
certificates alone will evidence the Rights, and the Rights may be traded and
transferred independently.


          The
Rights are not exercisable unless and until there is an Acquiring Person. If
there is an Acquiring Person, all shareholders other than the Acquiring Person
will have the right to receive upon exercise of a Right the number of shares of
common stock having a market value of two times the exercise price of the
Right. In other words, each Right will allow its holder to purchase $90.00
worth of common stock (or equivalent securities) for $45.00, unless the holder
is an Acquiring Person. The Rights Agreement also has provisions for forms of
cashless exercise of Rights and for the direct exchange of rights for common or
preferred shares. Until exercised, a Right confers no voting or other
shareholder rights. The Rights will expire on September 9, 2019. The Board may
redeem the Rights before then at a price of $0.00l per Right at any time before
a person becomes an Acquiring Person.


          At
present, there is no need for shareholders to exchange their share
certificates. Because the Rights are not currently exercisable and will not be
exercisable until there is an Acquiring Person, there is no need for
shareholders to make any decisions regarding the exercise of the Rights or take
other action at this time. Because of the dilutive effect this process would
have on the shares of an Acquiring Person, the Board does not expect that the
Rights will actually separate from the common stock or actually become
exercisable; their deterrent effect on aggressive investors is their primary purpose.


          In
adopting the Rights Agreement, we have expressed our confidence in the
Company’s future and our determination that you, as a shareholder, be given
every opportunity to participate fully in that future.




	
  

 	
  

 
	
  

 	 

 
	
  

 	
 J.M.
 (“Mike”) Wells, Jr.

 
	
  

 	
 Chairman of
 the Board of Directors

 
	
  

 	
  

 
	
  

 	 

 
	
  

 	
 Michael J.
 Cushman

 
	
  

 	
 President
 and Chief Executive Officer

 


C-2