Exhibit 4.1


 




 





 


NEENAH PAPER, INC.


 


and


 


 


EQUISERVE TRUST COMPANY, N.A.


 


Rights Agent


 


 


Rights Agreement


 


Dated as of November 30, 2004


 




 





 





















 


Table of Contents


 


	
  Section 1. Certain
  Definitions

  	
   

  
	
   

  	
   

  
	
  Section 2.
  Appointment of Rights Agent

  	
   

  
	
   

  	
   

  
	
  Section 3.
  Issue of Rights Certificates.

  	
   

  
	
   

  	
   

  
	
  Section 4.
  Form of Rights Certificates.

  	
   

  
	
   

  	
   

  
	
  Section 5.
  Countersignature and Registration.

  	
   

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

  
	
  Section 8.
  Cancellation and Destruction of Rights Certificates

  	
   

  
	
   

  	
   

  
	
  Section 9.
  Reservation and Availability of Capital Stock

  	
   

  
	
   

  	
   

  
	
  Section 10.
  Preferred Stock Record Date

  	
   

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

  
	
  Section 14.
  Fractional Rights and Fractional Shares.

  	
   

  
	
   

  	
   

  
	
  Section 15. Rights
  of Action

  	
   

  
	
   

  	
   

  
	
  Section 16.
  Agreement of Rights Holders

  	
   

  
	
   

  	
   

  
	
  Section 17.
  Rights Certificate Holder Not Deemed a Stockholder

  	
   

  
	
   

  	
   

  
	
  Section 18.
  Concerning the Rights Agent.

  	
   

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

  
	
  Section 20. Duties of
  Rights Agent

  	
   

  
	
   

  	
   

  
	
  Section 21.
  Change of Rights Agent

  	
   

  
	
   

  	
   

  
	
  Section 22.
  Issuance of New Rights Certificates

  	
   

  



 


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  Section 23.
  Redemption and Termination.

  	
   

  
	
   

  	
   

  
	
  Section 24.
  Exchange.

  	
   

  
	
   

  	
   

  
	
  Section 25.
  Notice of Certain Events.

  	
   

  
	
   

  	
   

  
	
  Section 26.
  Notices

  	
   

  
	
   

  	
   

  
	
  Section 27.
  Supplements and Amendments

  	
   

  
	
   

  	
   

  
	
  Section 28.
  Successors

  	
   

  
	
   

  	
   

  
	
  Section 29.
  Determination and Actions by the Board of Directors, etc

  	
   

  
	
   

  	
   

  
	
  Section 30.
  Benefits of this Agreement

  	
   

  
	
   

  	
   

  
	
  Section 31.
  Severability

  	
   

  
	
   

  	
   

  
	
  Section 32.
  Governing Law

  	
   

  
	
   

  	
   

  
	
  Section 33.
  Counterparts

  	
   

  
	
   

  	
   

  
	
  Section 34.
  Descriptive Headings

  	
   

  



 


 


	
  Exhibit A

  	
  -

  	
  Certificate
  of Designations

  
	
  Exhibit B

  	
  -

  	
  Form of
  Rights Certificate

  
	
  Exhibit C

  	
  -

  	
  Summary of
  Rights to Purchase Preferred Stock

  



 


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RIGHTS AGREEMENT


 


RIGHTS AGREEMENT, dated as of November 30, 2004
(the “Agreement”), between Neenah Paper, Inc., a Delaware corporation (the “Company”),
and EquiServe Trust Company, N.A., a nationally chartered trust company,
organized and existing under the laws of the United States (the “Rights Agent”).


 


W I T N E S S E T H:


 


WHEREAS, on November 15, 2004 (the “Rights Dividend
Declaration Date”), the Board of Directors of the Company authorized and
declared a dividend distribution of one Right (as hereinafter defined) for each
share of Common Stock (as hereinafter defined) of the Company outstanding at
the Close of Business on November 30, 2004, after giving effect to the
distribution of shares of Common Stock by Kimberly-Clark Corporation to its
stockholders (the “Record Date”), each Right initially representing the right
to purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Company having the rights, powers and preferences set
forth in the form of the Certificate of Designation attached hereto as
Exhibit A, upon the terms and subject to the conditions hereinafter set
forth (the “Rights”), and has further authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant to the provisions of Section 11(p))
for each share of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company’s treasury) and the
earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined) or, in certain circumstances provided in Section 22,
after the Distribution Date;


 


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


 


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


 


(a)  “Acquiring Person” shall mean any Person who
or which, together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, or (iv) any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan.  Notwithstanding the foregoing, no Person
shall become an “Acquiring Person” as the result of an acquisition of shares of
Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the shares of Common Stock then outstanding; provided,
however, that if a Person, other than those Persons excepted in clauses
(i), (ii), (iii) or (iv) of the preceding sentence, shall become the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding by reason
of purchases of Common Stock by the Company and shall, after such purchases by
the Company, become the Beneficial Owner of any additional shares of Common
Stock (other than pursuant to a dividend or


 





















 


distribution paid
or made by the Company on the outstanding Common Stock or pursuant to a split
or subdivision of the outstanding Common Stock), then such Person shall be
deemed to be an “Acquiring Person”. 
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an “Acquiring
Person” (as defined pursuant to the foregoing provisions of this paragraph (a))
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an “Acquiring Person” (as defined pursuant to the foregoing
provisions of this paragraph (a)), then such Person shall not be deemed to be
an “Acquiring Person” for any purposes of this Agreement.


 


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


 


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


 


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


 


(i)  which such Person or any of such Person’s
Affiliates or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,”  (A) securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any such Person’s Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22
(the “Original Rights”) or pursuant to Section 11(i) in connection with an
adjustment made with respect to any Original Rights;


 


(ii)  which such Person or any of such Person’s
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has “beneficial ownership” of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” any security under this
subparagraph (ii) as a result of an agreement, arrangement or


 


2





















 


understanding
to vote such security if such agreement, arrangement or understanding:  (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or


 


(iii)  which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person’s Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (d)) or
disposing of any voting securities of the Company;


 


provided,
however, that nothing in this paragraph (d) shall cause a Person engaged
in business as an underwriter of securities to be the “Beneficial Owner” of, or
to “beneficially own,” any securities acquired through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.


 


(e)  “Business Day” shall mean any day other than
a Saturday, Sunday or a day on which banking institutions in the Commonwealth
of Massachusetts 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., Eastern Standard time, on such date, provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M., Easter
Standard time, on the next succeeding Business Day.


 


(g)  “Common Stock” shall mean the common stock,
par value $0.01 per share, of the Company, except that “Common Stock” when used
with reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or the equity securities
or other equity interest having power to control or direct the management, of
such Person.


 


(h)  “Exchange Act” shall mean the Securities and
Exchange Act of 1934.


 


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


 


(j)  “Preferred Stock” shall mean shares of Series
A Junior Participating Preferred Stock, par value $.01 per share, of the
Company, and, to the extent that there is not a sufficient number of shares of
Series A Junior Participating Preferred Stock authorized to permit the full
exercise of the Rights, any other series of preferred stock, par value $.01


 


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per share, of the
Company designated for such purpose containing terms substantially similar to
the terms of the Series A Junior Participating Preferred Stock.


 


(k)  “Section 11(a)(ii) Event” shall mean the
event described in Section 11(a)(ii).


 


(l)  “Stock Acquisition Date” shall mean the first
date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.


 


(m)  “Subsidiary” shall mean, with reference to
any Person, any corporation or other entity of which an amount of voting
securities sufficient to elect at least a majority of the directors of such
corporation or other entity is beneficially owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.


 


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


 


In addition, for purposes of this Agreement, the
following terms have the meanings indicated in specified sections of this
Agreement:  (i) “Adjustment Shares” shall
have the meaning set forth in Section 11(a)(ii); (ii) “common stock
equivalents” shall have the meaning set forth in Section 11(a)(iii); (iii)
“current market price” shall have the meaning set forth in Section 11(d)(i);
(iv) “Current Value” shall have the meaning set forth in Section 11(a)(iii);
(v) “Distribution Date” shall have the meaning set forth in Section 3(a);
(vi) “equivalent preferred stock” shall have the meaning set forth in Section 11(b);
(vii) “Exchange Ratio” shall have the meaning set forth in Section 24(a);
(viii) “Expiration Date” shall have the meaning set forth in Section 7(a);
(ix) “Final Expiration Date” shall have the meaning set forth in Section 7(a);
(x) “Nasdaq” shall have the meaning set forth in Section 11(d)(i); (xi) “Principal
Party” shall have the meaning set forth in Section 13(b); (xii) “Purchase
Price” shall have the meaning set forth in Section 4(a)(ii); (xiii) “Record
Date” shall have the meaning set forth in the recitals of this Agreement; (xiv)
“Redemption Price” shall have the meaning set forth in Section 23(a); (xv)
“Rights” shall have the meaning set forth in the recitals of this Agreement;
(xvi) “Rights Agent” shall have the meaning set forth in the parties clause of
this Agreement; (xvii) “Rights Certificates” shall have the meaning set forth
in Section 3(a); (xviii) “Rights Dividend Declaration Date” shall have the
meaning set forth in the first recital of this Agreement; (xix) “Section 11(a)(ii)
Trigger Date” shall have the meaning set forth in Section 11(a)(iii); (xx)
“Section 13 Event” shall have the meaning set forth in Section 13;
(xxi) “Spread” shall have the meaning set forth in Section 11(a)(iii);
(xxii) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii);
(xxiii) “Summary of Rights” shall have the meaning set forth in Section 3(b);
and (xxiv) “Trading Day” shall have the meaning set forth in Section 11(d)(i).


 


Section 2. 
Appointment of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and conditions of this Agreement, and the Rights Agent hereby accepts
such appointment.  The Company may from
time to time appoint such co-Rights Agents


 


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


 


Section 3. 
Issue of Rights Certificates.


 


(a)  Until the earlier of (i) the Close of
Business on the tenth day after the Stock Acquisition Date (or, if the tenth
day after the Stock Acquisition Date occurs before the Record Date, the Close
of Business on the Record Date) or (ii) the Close of Business on the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a)
of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would become an Acquiring Person (the earlier
of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3)
by the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company).  The Company must promptly notify the Rights
Agent of a Distribution Date and request its transfer agent to give the Rights
Agent a stockholder list together with all other relevant information.  As soon as practicable after the Rights Agent
is notified of the Distribution Date and receives such information, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of the Company, one or
more Rights certificates, in substantially the form of Exhibit B (the “Rights
Certificates”), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. 
In the event that any adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11, at the time of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a)) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.


 


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


 


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(c)  Rights shall be issued in respect of all
shares of Common Stock which are issued (whether originally issued or from the
Company’s treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or, in certain circumstances provided
in Section 22, after the Distribution Date.  Certificates representing such shares of
Common Stock shall also be deemed to be certificates for Rights, and shall bear
a legend substantially in the following form:


 


This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the Rights Agreement between
Neenah Paper, Inc. (the “Company”) and EquiServe Trust Company, N.A. (the “Rights
Agent”) dated as of November 30, 2004, as the same may be amended from
time to time (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal offices of the Company.  Under
certain circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced by this
certificate.  The Company will mail to
the holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written request
therefor.  Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or any Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement), whether currently held by
or on behalf of such Person or by any subsequent holder, may become null and
void.


 


With respect to such certificates containing the
foregoing legend, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such certificates.  In the event the Company purchases or
acquires any shares of its Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such shares shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with shares of Common Stock that are not outstanding.


 


Section 4. 
Form of Rights Certificates.


 


(a)  The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage.  Subject to the provisions of Section 11
and Section 22, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date or, in the case of Rights with respect to shares of
Common Stock issued or becoming outstanding after the Record Date, the same
date as the date


 


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of the stock certificate
evidencing such shares, and on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-thousandth of a share, the “Purchase Price”), but the amount and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a).


 


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


 


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


 


The absence of the foregoing legend on any Rights
Certificate shall in no way affect any of the other provisions of this
Agreement, including, without limitation, the provisions of Section 7(e).


 


Section 5. 
Countersignature and Registration.


 


(a)  The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its Chief Executive
Officer, its President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company’s seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature.  The Rights Certificates shall be
countersigned manually or by facsimile signature by the Rights Agent and shall
not be valid for any purpose unless so countersigned.  In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights


 


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


 


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


 


Section 6. 
Transfer, Split
Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates. 
(a)  Subject to the provisions of Section 4(b),
Section 7(e) and Section 14, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Certificates (other than Rights
Certificates representing Rights that have become null and void pursuant to Section 7(e)
or that have been exchanged pursuant to Section 24) may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or, following a Triggering
Event, Common Stock, other securities, cash or other assets, as the case may
be) as the Rights Certificate or Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose.  Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Rights Certificate until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request. 
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e),
Section 14 and Section 24, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested.  The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.


 


(b) 
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental


 


8





















 


thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificates if
mutilated, the Company will execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.


 


Section 7. 
Exercise of Rights;
Purchase Price; Expiration Date of Rights.  (a) 
Subject to Section 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a))
in whole or in part at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights Agent at
the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of one one-thousandths of a share of Preferred Stock (or
Common Stock, other securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercisable, at or prior to the earliest
of (i) the Close of Business on  November 30,
2014 (the “Final Expiration Date”), (ii) the time at which the Rights are
redeemed as provided in Section 23 or (iii) the time at which such Rights
are exchanged pursuant to Section 24 (the earliest of (i), (ii) and (iii)
being herein referred to as the “Expiration Date”).


 


(b) 
The Purchase Price for each one one-thousandth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $100, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
and shall be payable in accordance with paragraph (c) below.


 


(c) 
Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the
Purchase Price per one one-thousandth of a share of Preferred Stock (or other
shares, securities, cash or other assets, as the case may be) to be purchased
as set forth below and an amount equal to any applicable transfer tax required
to be paid by the holder of the Rights Certificate in accordance with Section 9(e),
the Rights Agent shall, subject to Section 20(k), thereupon promptly (i)
(A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-thousandths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock represented
by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the


 


9





















 


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


 


(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 and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14.


 


(e) 
Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a) (ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person (or
any Affiliate or Associate thereof) to holders of equity interests in such
Acquiring Person (or any Affiliate or Associate thereof) or to any Person with
whom the Acquiring Person (or any Affiliate or Associate thereof) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of an agreement, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become
null and void without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. 
The Company shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) are complied with, but neither the
Company nor the Rights Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of the Company’s failure to make any
determinations with respect to an Acquiring Person or any of its Affiliates,
Associates or transferees hereunder.


 


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


 


10





















 


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


 


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


 


Section 9. 
Reservation and Availability of Capital Stock.  (a) 
The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its
authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement, including Section 11(a)(iii),
will be sufficient to permit the exercise in full of all outstanding Rights.


 


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


 


(c) 
The Company shall use its best efforts to (i) prepare and file, as soon
as practicable following the earliest date after the first occurrence of a Section 11(a)(ii)
Event on which the consideration to be delivered by the Company upon exercise
of the Rights has been determined in accordance with Section 11(a)(iii), a
registration statement under the Act with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such securities,
and (B) the Expiration Date.  The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or “blue sky” laws of the various states in connection
with the exercisability of the Rights. 
The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first sentence
of this Section 9(c), the exercisability of the Rights in order to prepare
and file such registration statement and permit it to become effective.  Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the


 


11





















 


Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.  In
addition, if the Company shall determine that a registration statement is
required following the Distribution Date, and a Section 11(a)(ii) Event
has not occurred, the Company may temporarily suspend (and shall give the
Rights Agent prompt notice thereof) the exercisability of Rights until such
time as a registration statement has been declared effective.  Notwithstanding any provision of this Agreement
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification or exemption in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.


 


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


 


(e) 
The Company further covenants and agrees that it will pay, when due and
payable, any and all transfer taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights.  The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of one one-thousandths of a share
of Preferred Stock (or Common Stock and/or other securities, as the case may
be) in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the holder
of such Rights Certificate at the time of surrender) or until it has been
established to the Company’s satisfaction that no such tax is due.


 


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


 


12





















 


evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares or other securities for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.


 


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


 


(a)  (i)  In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a reclassification of
the Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and Section 7(e),
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 Preferred Stock or capital stock, as the
case may be, issuable on such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and
kind of shares of Preferred Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior to such date and at a time
when the Preferred Stock 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.  If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).


 


(ii)  Subject to Section 24, in the event any
Person becomes an Acquiring Person, then each holder of a Right (except as
provided below and in Section 7(e)) shall thereafter have the right to
receive, upon exercise thereof at a price equal to the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of a number of
one one-thousandths of a share of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event and
(y) dividing that product (which, following such first occurrence shall
thereafter be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d)) per share of Common Stock on the date of such
first occurrence (such number of shares, the “Adjustment Shares”).


 


13





















 


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


 


14





















 


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 notice of such announcements
to the Rights Agent).  For purposes of
this Section 11(a)(iii), the value of each Adjustment Share shall be the
current market price (as determined pursuant to Section 11(d)) per share
of Common Stock on the Section 11(a)(ii) Trigger Date and the value of any
“common stock equivalent” shall be deemed to equal the current market price (as
determined pursuant to Section 11(d)) per share of the Common Stock on
such date.


 


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


 


(c)  In case the Company shall fix a record date
for a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than Preferred Stock)
or subscription rights or warrants (excluding those


 


15





















 


referred to in Section 11(b)),
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price
(as determined pursuant to Section 11(d)) per share of Preferred Stock 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 and shall be binding on the Rights
Agent and the holders of the Rights) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to a share of Preferred Stock and the denominator of
which shall be such current market price (as determined pursuant to Section 11(d))
per share of Preferred Stock.  Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.


 


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


 


16





















 


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


 


(ii) For the purpose of any
computation hereunder, the “current market price” per share of Preferred Stock
shall be determined in the same manner as set forth above for the Common Stock
in clause (i) of this Section 11(d) (other than the last sentence
thereof).  If the current market price
per share of Preferred Stock cannot be determined in the manner provided above,
or if the Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the “current market price”
per share of Preferred Stock shall be conclusively deemed to be an amount equal
to 1000 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current market
price per share of the Common Stock.  If
neither the Common Stock nor the Preferred Stock is publicly held or so listed
or traded, “current market price” per share of the Preferred Stock shall mean
the fair value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights.  For all purposes of this
Agreement, the “current market price” of one one-thousandth of a share of
Preferred Stock shall be equal to the “current market price” of one share of
Preferred Stock divided by 1000.


 


(e)  Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
share of Common Stock or one one-millionth of a share of Preferred Stock or one
ten-thousandth 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 (3) years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.


 


17





















 


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


 


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


 


(i)  The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of one one-thousandths of a share of Preferred
Stock purchasable upon the exercise of a Right. 
Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment.  Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price.  The Company shall make a public
announcement (with prompt notice thereof to the Rights Agent) of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made.  This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least ten (10) days later than the date of the
public announcement.  If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this 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,
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


 


18





















 


Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment.  Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.


 


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


 


(k)  Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated value, if any, of
the number of one one-thousandths of a share of Preferred Stock 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 shares of Preferred
Stock at such adjusted Purchase Price.


 


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


 


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


 


(n)  The Company covenants and agrees that it
shall not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), (ii) merge with or into any other Person


 


19





















 


(other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow 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 (x) at the
time of or immediately after such consolidation, merger, sale or transfer there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, sale or
transfer, the stockholders of the Person who constitutes, or would constitute,
the “Principal Party” for purposes of Section 13(a) shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.


 


(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, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.


 


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


 


Section 12. 
Certificate of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as provided in
Section 11 or Section 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
and computations accounting for such adjustment, (b) promptly file with the
Rights Agent, and with each transfer agent for the Preferred Stock and the
Common Stock, a copy of such certificate, and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a Rights Certificate
in accordance with Section 26.  The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.


 


20





















 


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


 


(a)  In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)) shall engage in a
share exchange with or shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such share exchange,
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets, cash
flow or earning power aggregating more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o)) (any
event described in clauses (x), (y) or (z) of this Section 13(a) following
the Stock Acquisition Date, a “Section 13 Event”), then, and in each such
case, proper provision shall be made so that: (i) each holder of a Right,
except as provided in Section 7(e), shall thereafter have the right to
receive upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one
one-thousandths of a share of Preferred Stock, such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (l) multiplying the then
current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to
as the “Purchase Price” for each Right and for all purposes of this Agreement)
by (2) 50% of the current market price (determined pursuant to Section 11(d)(i))
per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section 11
shall apply only to such Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter


 


21





















 


deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall
be of no effect following the first occurrence of any Section 13 Event.


 


(b)  “Principal Party” shall mean:


 


(i)  in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the Person that
is the issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no securities are
so issued, the Person that is the other party to such merger or consolidation;
and


 


(ii)  in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person that is the
party receiving the greatest portion of the assets, cash flow or earning power
transferred pursuant to such transaction or transactions;


 


provided, however, that in any such case described in
the foregoing clause (i) or (ii) of this Section 13(b), (1) if the Common
Stock of such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, “Principal
Party” shall refer to such other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Stock
of two or more of which are and have been so registered, “Principal Party”
shall refer to whichever of such Persons is the issuer of the Common Stock
having the greatest aggregate market value.


 


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


 


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


 


(ii)  use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under blue
sky laws of such jurisdiction, as may be necessary or appropriate; and


 


22





















 


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


 


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


 


Section 14. 
Fractional Rights and
Fractional Shares.


 


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


 


(b)  The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock) upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock). 
Fractions of shares of Preferred Stock in integral multiples of one
one-thousandth of a share may, at the election of the Company, be evidenced by
depositary receipts pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, however, that such
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares represented by such depositary receipts.  In lieu of fractional shares of Preferred
Stock that are not integral multiples of one one-thousandth of a share of


 


23





















 


Preferred Stock, 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 one-thousandth of a share of
Preferred Stock.  For purposes of this Section 14(b),
the current market value of one one-thousandth of a share of Preferred Stock
shall be one one-thousandth of the closing price of a share of Preferred Stock
(as determined pursuant to Section 11(d)(ii)) for the Trading Day
immediately prior to the date of such exercise.


 


(c)  Following the occurrence of a Triggering
Event, the Company shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock.  In
lieu of fractional shares of Common Stock, the Company 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 share of Common Stock. 
For purposes of this Section 14(c), the current market value of one
share of Common Stock shall be the closing price of one share of Common Stock
(as determined pursuant to Section 11(d)(i)) for the Trading Day immediately
prior to the date of such exercise.


 


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


 


(e)  Whenever a payment for fractional Rights or
fractional shares is to be made by the Rights Agent, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate setting forth in
reasonable detail the facts related to such payment and the prices and/or
formulas utilized in calculating such payments, and (ii) provide sufficient
monies to the Rights Agent in the form of fully collected funds to make such
payments.


 


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


 


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


 


24





















 


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


 


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


 


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


 


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


 


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


 


Section 18. 
Concerning the Rights
Agent.


 


(a)  The Company agrees to pay to the Rights Agent
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 disbursements and other disbursements incurred in the


 


25





















 


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 incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the reasonable costs and expenses of defending against any
claim of liability in the premises.


 


(b)  The Rights Agent shall be authorized and
protected and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its acceptance and administration
of this Agreement in reliance upon any Rights Certificate or certificate for
Common Stock 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.


 


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


 


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


 


(b)  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


 


26





















 


conditions, by all of
which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:


 


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


 


(b)  Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of “current market price”) be proved or
established by the Company prior to taking, 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 the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization and protection to the Rights Agent, and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or omitted
to be taken by it in good faith by it under the provisions of this Agreement in
reliance upon such certificate.


 


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


 


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


 


(e)  The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11, Section 13 or Section 24 or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
shares of Common Stock


 


27





















or Preferred Stock will,
when so issued, be validly authorized and issued, fully paid and nonassessable.


 


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


 


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


 


(h)  The Rights Agent and any stockholder,
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 from acting in any other capacity for the Company or for any other
Person.


 


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


 


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


 


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


 


Section 21.  Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days’


 


28





















 


notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, 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 thirty (30) days’ notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Stock and Preferred Stock, by registered
or certified mail, and to the holders of the Rights Certificates by first-class
mail.  In the event that the transfer
agency relationship in effect between the Company and the Rights Agent terminates,
the Rights Agent will be deemed to resign automatically on the effective date
of such termination; and any required notice shall be sent by the Company.  If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any registered holder of a Rights Certificate
(who shall, with such notice, submit such holder’s Rights Certificate for
inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (i) a Person organized and doing business under the laws of the United
States or of the or of any other state of the United States or the District of
Columbia, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (ii) an Affiliate of such Person.  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 reasonable assurance, conveyance, act or deed necessary for the
purpose.  Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
and the Preferred Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. 
Failure to give any notice provided for in this Section 21 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.  In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, granted or awarded prior to
the Distribution Date, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case,
if


 


29





















 


deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing an appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.


 


Section 23.  Redemption and Termination.


 


(a)  The Board of Directors of the Company may, at
its option, at any time prior to the earlier of (i) the Close of Business on
the tenth day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the Close of
Business on the tenth day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption Price”). 
Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company’s right of redemption hereunder has
expired.  The Company may, at its option,
pay the Redemption Price in cash, shares of Common Stock (based on the “current
market price”, as defined in Section 11(d)(i), of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors.  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.


 


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


 


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 7(e))
for shares of Common Stock at an exchange ratio of one share of


 


30





















 


Common Stock 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 of the Company shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any  Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or pursuant to the terms
of any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of fifty percent (50%) or more of the Common Stock
then outstanding.


 


(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 a holder of any such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio.  The Company shall
promptly give public notice (with prompt notice thereof to the Rights Agent) of
any exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange.  The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent.  Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of exchange
will state the method by which the exchange of the Common Stock for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged.  Any partial
exchange will be effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of Section 7(e))
held by each holder of Rights.


 


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


 


(d)  In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such actions as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.


 


(e)  The Company shall not be required to issue
fractions of shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock. 
In lieu of such fractional shares of Common Stock, there shall be paid
to the registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value


 


31





















 


of a whole share of Common Stock.  For the purposes of this subsection (e),
the current market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the second sentence
of Section 11(d)(i)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.


 


Section 25.  Notice of Certain Events.


 


(a)  In case the Company shall propose, at any
time after the Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of Preferred Stock or to make any other distribution
to the holders of Preferred Stock (other than a regular periodic cash dividend
out of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)), or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one transaction or a series of
related transactions, of more than 50% of the assets, cash flow 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)), or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to the Rights Agent and to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26,
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier.


 


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


 


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) or by facsimile transmission as
follows:


 


32





















 


EquiServe Trust Company,
N.A.


250 Royall Street


Canton, Massachusetts 02021


Attention:  Client Administration


Facsimile No.:  (781) 575-2420


 


Subject to the provisions
of Section 21, 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) or by facsimile transmission as follows:


 


Neenah Paper, Inc.


Preston Ridge III


3460 Preston Ridge Road,
Suite 600


Alpharetta, Georgia 30005


Attention: General
Counsel


Facsimile No.:  (678) 566-0464


 


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


 


Section 27.  Supplements and Amendments.  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 provision herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, any such supplement
or amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, 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 may at any time prior to such time as any Person becomes an
Acquiring Person amend this Agreement to lower the thresholds set forth in
Sections 1(a) and 3(a) to a percentage that (subject to exceptions for
specified Persons or groups excepted from the definition of “Acquiring Person”)
is not less than the greater of (i) 0.001% more than the largest percentage of
the outstanding shares of Common Stock 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, any Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan or, to the extent excepted from the
definition of “Acquiring Person”, other specified Persons or groups) and (ii)
10.0%.


 


33





















 


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


 


Section 29.  Determination and Actions
by the Board of Directors, etc. 
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock or any other class of stock outstanding at any
particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(l)(i) of the General Rules and Regulations under the Exchange
Act.  The Board of Directors of the
Company shall have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board of
Directors of the Company 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 deemed necessary or advisable for the administration of
this Agreement (including, but not limited to, a determination to redeem or not
redeem the Rights or to amend this Agreement). 
All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors of the Company in
good faith shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other Persons, and (y) not
subject the Board of Directors of the Company to any liability to the holders
of the Rights.


 


Section 30.  Benefits of this Agreement.  Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) 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, registered
holders of the Common Stock).


 


Section 31.  Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23
shall be reinstated and shall not expire until the Close of Business on the
tenth day following the date of such determination by the Board of Directors of
the Company.


 


Section 32.  Governing Law.  This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of


 


34





















 


Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.


 


Section 33.  Counterparts.  This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.


 


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


 


35





















 


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


 


	
   

  	
  NEENAH PAPER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sean T. Erwin

  	
   

  
	
   

  	
   

  	
  Name: Sean T. Erwin

  	
   

  
	
   

  	
   

  	
  Title: President and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EQUISERVE TRUST COMPANY, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joshua P. McGinn

  	
   

  
	
   

  	
   

  	
  Name:
  Joshua P. McGinn

  	
   

  
	
   

  	
   

  	
  Title:
  Senior Account Manager

  	
   

  



 





















 


Exhibit A


 


CERTIFICATE
OF DESIGNATION


 


OF


 


SERIES
A JUNIOR PARTICIPATING PREFERRED STOCK


 


OF


 


NEENAH
PAPER, INC.


 


 


Pursuant
to Section 151 of the

General Corporation Law of the State of Delaware


 


November
30, 2004


 


The undersigned do hereby
certify that the following resolution was duly adopted by the Board of
Directors of Neenah Paper, Inc., a Delaware corporation (the “Corporation”), on
November 30, 2004:


 


RESOLVED, that pursuant
to the authority vested in the board of directors of the Corporation by the
Amended and Restated Certificate of Incorporation (the “Charter”), the Board of
Directors does hereby create, authorize and provide for the issue of a series
of Preferred Stock, par value $.01 per share, of the Corporation, to be
designated “Series A Junior Participating Preferred Stock” (hereinafter
referred to as the “Series A Preferred Stock”), initially consisting of 100,000
shares, and to the extent that the designations, powers, preferences and
relative and other special rights and the qualifications, limitations or
restrictions of the Series A Preferred Stock are not stated and expressed in
the Charter, does hereby fix and herein state and express such designations,
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions thereof, as follows (all terms
used herein which are defined in the Charter shall be deemed to have the
meanings provided therein):


 


A-1





















 


Section 1.  Designation and Amount.  The shares of such series shall be designated
as “Series A Junior Participating Preferred Stock” and the number of shares
constituting such series shall be 100,000.  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.


 


Section 2.  Dividends and
Distributions.


 


(A) 
Subject to the prior and superior rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking prior and superior
to the shares of 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, par value $0.01 per share (the “Common Stock”), shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first business day of March, June, September and December in each
year (each such date being referred to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth,
1000 times the aggregate per share amount of all cash dividends, plus 1000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock.  In
the event the Corporation shall at any time after November 30, 2004 (the “Rights
Declaration Date”) (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each case
the amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) 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.


 


(B) 
The Corporation shall declare a dividend or distribution on the Series A
Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided, however, that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, subject to the prior and
superior rights of the holders of any shares of any series of Preferred Stock
ranking prior to and superior to the shares of Series A Preferred Stock with
respect to dividends, a dividend of $.01 per share on the Series A


 


A-2





















 


Preferred Stock
shall nevertheless by payable on such subsequent Quarterly Dividend Payment
Date.


 


(C) 
Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 60 days prior to the date fixed for the payment
thereof.


 


Section 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 1000
votes on all matters submitted to a vote of the stockholders of the
Corporation.  In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes per share
to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to such
event.


 


(B) 
Except as otherwise provided herein, in any other Certificate of
Designations 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 shall vote collectively as one class on all matters
submitted to a vote of stockholders of the Corporation.


 


(C)  (i)  If
at any time dividends on any Series A Preferred Stock shall be in arrears in an
amount equal to six (6) quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a “default
period”) which shall extend until such time when all accrued and unpaid
dividends for all previous


 


A-3





















 


quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Preferred Stock then outstanding shall have been declared and paid or set apart
for payment.  During each default period,
all holders of Preferred Stock (including holders of the Series A Preferred
Stock) with dividends in arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of series, shall have the
right to elect two (2) Directors.


 


(ii)  During any default period, such voting right
of the holders of Series A Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C)
or at any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock outstanding
shall be present in person or by proxy. 
The absence of a quorum of the holders of Common Stock shall not affect
the exercise by the holders of Preferred Stock of such voting rights.  At any meeting at which the holders of
Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of Directors as may then
exist up to two (2) Directors or, if such right is exercised at an annual
meeting, to elect two (2) Directors.  If
the number which may be so elected at any special meeting does not amount to
the required number, the holders of the Preferred Stock shall have the right to
make such increase in the number of Directors as shall be necessary to permit
the election by them of the required number. 
After the holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during the continuance of
such period, the number of Directors shall not be increased or decreased except
by vote of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari  passu
with the Series A Preferred Stock.


 


(iii)  Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding, irrespective of series,
may request, the calling of special meeting of the holders of Preferred Stock,
which meeting shall thereupon be called by the Chairman of the Board, the Chief
Executive Officer, the President, a Vice President or the Secretary of the
Corporation.  Notice of such meeting and
of any annual meeting at which holders of Preferred Stock are entitled to vote
pursuant to this paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him or her at his or her
last address as the same appears on the books of the Corporation.  Such meeting shall be called for a time not
earlier than 10 days and not later than 50 days after such order or request, or
in default of the calling of such meeting within 50 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding.  Notwithstanding the provisions of this
paragraph (C)(iii), no such special


 


A-4





















 


meeting shall be called
during the period within 50 days immediately preceding the date fixed for the
next annual meeting of the stockholders.


 


(iv)  In any default period, the holders of Common
Stock, and, if applicable, other classes of capital stock of the Corporation,
shall continue to be entitled to elect the whole number of Directors until the
holders of Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled
by vote of a majority of the remaining Directors theretofore elected by the
holders of the class of capital stock which elected the Director whose office
shall have become vacant.  References in
this paragraph (C) to Directors elected by the holders of a particular class of
stock shall include Directors appointed by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.


 


(v)  Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the certificate of incorporation
or by-laws irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject, however,
to change thereafter in any manner provided by law or in the certificate of
incorporation or by-laws).  Any vacancies
in the Board of Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the remaining Directors.


 


(D) 
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.


 


Section 4.  Certain Restrictions.


 


(A) 
Whenever quarterly dividends or other dividends or distributions payable
on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:


 


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


 


(ii)  declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends


 


A-5





















 


paid ratably on the
Series A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;


 


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


 


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


 


(B) 
The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.


 


Section 5.  Reacquired Shares.


 


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


 


Section 6.  Liquidation, Dissolution
or Winding Up.


 


(A) 
Upon any liquidation (voluntary or otherwise), dissolution or winding up
of the Corporation, no distribution shall be made to the holders of shares of
capital 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
$1000 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the “Series A Liquidation Preference”). 
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received


 


A-6





















 


an amount per
share (the “Common Adjustment”) equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 1000 (as appropriately adjusted as
set forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the “Adjustment Number”).  Following the payment of the full amount of
the Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common Stock, respectively,
and the payment of liquidation preferences of all other shares of capital stock
which rank prior to or on a parity with Series A Preferred Stock, holders of
Series A Preferred Stock and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.


 


(B) 
In the event, however, that there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. 
In the event, however, that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.


 


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


 


Section 7.  Consolidation, Merger, etc.


 


In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A 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 1000 times the aggregate amount of capital
stock, securities, cash and/or any other property (payable in kind), as the
case may be, for which or into which each share of Common Stock is exchanged or
changed.  In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock


 


A-7





















 


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.


 


Section 8.  No Redemption.


 


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


 


Section 9.  Ranking.


 


The Series A Preferred
Stock shall rank junior to all other series of the Corporation’s Preferred
Stock as to the payment of dividends and the distribution of assets, whether or
not upon the dissolution, liquidation or winding up of the Corporation, unless
the terms of any such series shall provide otherwise.


 


Section 10.  Amendment.


 


The Charter 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 the affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a class.


 


Section 11.  Fractional Shares.


 


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 Series A Preferred Stock.


 


A-8





















 


IN WITNESS WHEREOF, the
Corporation has caused this certificate to be signed as of the date first set
forth above.


 


	
   

  	
  NEENAH PAPER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Sean T. Erwin

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board,
  Chief

  Executive Officer and President

  
					



 


A-9





















 


Exhibit B


 


[Form of Rights
Certificate]


 


	
  Certificate No. R-

  	
   

  	
  Rights

  



 


NOT EXERCISABLE AFTER NOVEMBER 30,
2014 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY.  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.  UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.  [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*


 










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


 


B-1





















 


Rights Certificate


 


NEENAH
PAPER, INC.


 


This certifies that                                       ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of November 30,
2004 (the “Rights Agreement”), between Neenah Paper, Inc., a Delaware
corporation (the “Company”), and EquiServe Trust Company, N.A., a nationally
chartered trust company, organized and existing under the laws of the United
States (the “Rights Agent”), to purchase from the Company at any time prior to
5:00 P.M. (Eastern Standard time) on November 30, 2014 at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-thousandth of a fully paid, nonassessable share of Series
A Junior Participating Preferred Stock, par value $.01 per share (the “Preferred
Stock”), of the Company, at a purchase price of $100 per one one-thousandth of
a share (the “Purchase Price”), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed.  The number of Rights evidenced
by this Rights Certificate (and the number of shares which may be purchased
upon exercise thereof) set forth above, and the Purchase Price per share set
forth above, are the number and Purchase Price as of                   
         ,           ,
based on the Preferred Stock as constituted at such date.  The Company reserves the right to require
prior to the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement) that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock will be issued.


 


Upon the occurrence of a Section 11(a)(ii)
Event (as such term is defined in the Rights Agreement), if the Rights
evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person or an Affiliate or Associate of such Acquiring
Person, such Rights shall become null and void and no holder hereof shall have
any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.


 


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


 


This Rights Certificate
is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the
specific


 


B-2





















 


circumstances set
forth in the Rights Agreement.  Copies of
the Rights Agreement are on file at the office of the Company and are also
available upon written request to the Company.


 


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


 


Subject to the provisions
of the Rights Agreement, the Rights evidenced by this Certificate may, in each
case at the option of the Company, be (i) redeemed by the Company at its option
at a redemption price of $.001 per Right or (ii) exchanged in whole or in part
for shares of Common Stock or other securities of the Company.  Immediately upon the action of the Board of
Directors of the Company authorizing redemption, the Rights will terminate and
the only right of the holders of Rights will be to receive the redemption
price.


 


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


 


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


 


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


 


B-3





















 


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


 


 


Dated as of                 ,
                 


 


	
  ATTEST:

  	
  NEENAH PAPER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EQUISERVE TRUST COMPANY, N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  	
   

  
							



 


B-4





















 


[Form of Reverse Side of
Rights Certificate]


 


FORM OF ASSIGNMENT


 


(To be executed by the
registered holder if such


 


holder desires to
transfer the Rights Certificate.)


 


FOR VALUE RECEIVED                                         
hereby sells, assigns and transfers unto                                                    


 


	
   

  
	
  (Please
  print name and address of transferee)

  	
   

  



 


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


 


Dated:                    ,
    


 


 


	
   

  	
   

  	
   

  
	
   

  	
  Signature

  



 


Signature Guaranteed:


 


Certificate


 


The undersigned hereby
certifies by checking the appropriate boxes that:


 


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


 


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


 


	
  Dated:                   ,    

  	
   

  	
   

  
	
   

  	
  Signature

  



 


Signature Guaranteed:


 


B-5





















 


NOTICE


 


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


 


FORM OF ELECTION TO
PURCHASE


 


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


 


TO:  NEENAH PAPER, INC.


 


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


 


Please insert social
security


or other identifying
number:                       


 


	
   

  	
   

  
	
  (Please
  print name and address)

  	
   

  
	
   

  	
   

  



 


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


 


Please insert social
security


or other identifying
number:                       


 


	
   

  	
   

  
	
  (Please
  print name and address)

  	
   

  
	
   

  	
   

  



 


Dated:               ,
    


 


	
   

  	
   

  	
   

  
	
   

  	
  Signature

  



 


Signature Guaranteed:


 


B-6





















 


Certificate


 


The undersigned hereby
certifies by checking the appropriate boxes that:


 


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


 


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


 


	
  Dated:                   ,    

  	
   

  	
   

  
	
   

  	
  Signature

  



 


Signature Guaranteed:


 


 


NOTICE


 


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


 


B-7





















 


Exhibit C


 


SUMMARY
OF RIGHTS TO PURCHASE PREFERRED STOCK


 


On November 15,
2004, the board of directors of Neenah Paper, Inc. adopted a stockholders
rights plan and declared a dividend distribution of one right for each
outstanding share of Neenah Paper’s common stock to stockholders of record at
the close of business on November 30, 2004.  Each right entitles its holder, under the
circumstances described below, to purchase from us one one-thousandth of a
share of our Series A Junior Participating Preferred Stock at an exercise price
of $100 per right, subject to adjustment. 
The description and terms of the rights are set forth in a rights
agreement between us and Equiserve Trust Company, N.A., as rights agent.


 


Initially, the rights are
associated with our common stock and evidenced by common stock certificates,
which will contain a notation incorporating the rights agreement by reference,
and are transferable with and only with the underlying shares of common
stock.  Subject to certain exceptions,
the rights become exercisable and trade separately from the common stock only
upon the “distribution date”, which occurs upon the earlier of:


 


•                                                             10
days following a public announcement that a person or group of affiliated or
associated persons (an “acquiring person”) has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of Neenah Paper’s outstanding
shares of common stock (the “stock acquisition date”), or


 


•                                                             10
business days (or later date if determined by Neenah Paper’s board of directors
prior to such time as any person or group becomes an acquiring person)
following the commencement of a tender offer or exchange offer which, if
consummated, would result in a person or group becoming an acquiring person.


 


Until the distribution
date, the surrender for transfer of any shares of common stock outstanding will
also constitute the transfer of the rights associated with those shares.


 


As soon as practicable
after the distribution date, separate certificates or book-entry statements
will be mailed to holders of record of the common stock as of the close of
business on the distribution date.  From
and after the distribution date, the separate rights certificates or book-entry
statements alone will represent the rights. 
Except as otherwise provided in the rights agreement, only shares of
common stock issued prior to the distribution date will be issued with rights.


 


The rights are not
exercisable until the distribution date and will expire at the close of
business on November 30, 2014, unless earlier redeemed or exchanged by us
as described below.


 


C-1





















 


In the event that a
person or group becomes an acquiring person (a “flip-in event”), each holder of
a right (other than any acquiring person and certain related parties, whose
rights automatically become null and void) will have the right to receive, upon
exercise, common stock having a value equal to two times the exercise price of
the right.  If an insufficient number of
shares of common stock is available for issuance, then Neenah Paper’s board of
directors would be required to substitute cash, property or other securities of
Neenah Paper for the common stock.  The
rights may not be exercised following a flip-in event while Neenah Paper has
the ability to cause the rights to be redeemed, as described later in this
summary.


 


For example, at an
exercise price of $100 per right, each right not owned by an acquiring person
(or by certain related parties) following a flip-in event would entitle its
holder to purchase $200 worth of common stock (or other consideration, as noted
above) for $100.  Assuming that the
common stock had a per share value of $50 at that time, the holder of each
valid right would be entitled to purchase four shares of common stock for $100.


 


In the event (a “flip-over
event”) that, at any time following the stock acquisition date:


 


•                                                             Neenah
Paper is acquired in a merger or other business combination transaction in
which Neenah Paper is not the surviving corporation,


 


•                                                             Neenah
Paper is acquired in a merger or other business combination transaction in
which it is the surviving entity and all or part of its common stock is
converted into securities of another entity, cash or other property, or


 


•                                                             50%
or more of Neenah Paper’s assets, cash flow or earning power is sold or
transferred,


 


then each holder of a
right (except rights which previously have been voided as described above) will
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the right.  Flip-in events and flip-over events are
collectively referred to as “triggering events”.


 


The exercise price
payable, and the number of shares of preferred stock or other securities or
property issuable, upon exercise of the rights are subject to adjustment from
time to time to prevent dilution:


 


•                                                             in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the preferred stock,


 


•                                                            if
holders of the preferred stock are granted certain rights, options or warrants
to subscribe for preferred stock or convertible securities at less than the
current market price of the preferred stock, or


 


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•                                                             upon
the distribution to holders of the preferred stock of evidences of indebtedness
or assets (excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).


 


With certain exceptions,
no adjustment in the exercise price will be required until cumulative
adjustments amount to at least 1% of the exercise price.  No fractional shares of preferred stock will
be issued and, in lieu thereof, an adjustment in cash will be made based on the
market price of the preferred stock on the last trading day prior to the date
of exercise.


 


In general, Neenah Paper
may redeem the rights in whole, but not in part, at a price of $.001 per right
(subject to adjustment and payable in cash, common stock or other consideration
deemed appropriate by Neenah Paper’s board of directors) at any time until ten
days following the stock acquisition date. 
Immediately upon the action of the board of directors authorizing any
redemption, the rights will terminate and the only right of the holders of
rights will be to receive the redemption price.


 


At any time after there
is an acquiring person and prior to the acquisition by the acquiring person of
50% or more of the outstanding shares of common stock, we may exchange the
rights (other than rights owned by the acquiring person which will have become
void), in whole or in part, at an exchange ratio of one share of common stock,
or one one-thousandth of a share of preferred stock (or of a share of a class
or series of Neenah Paper’s preferred stock having equivalent rights,
preferences and privileges), per right (subject to adjustment).


 


Until a right is
exercised, its holder will have no rights as a stockholder of Neenah Paper,
including, without limitation, the right to vote or to receive dividends.  While the distribution of the rights will not
result in the recognition of taxable income by Neenah Paper or its
stockholders, stockholders may, depending upon the circumstances, recognize
taxable income after a triggering event.


 


The terms of the rights
may be amended by Neenah Paper’s board of directors without the consent of the
holders of the rights, including an amendment to lower certain thresholds
described above to not less than the greater of 10% or .001% more than the
largest percentage of the outstanding shares of common stock then known to us
to be beneficially owned by any person or group of affiliated or associated
persons.  Once there is an acquiring
person, however, no amendment can adversely affect the interests of the holders
of the rights.


 


A copy of the rights
agreement is available free of charge from Neenah Paper.  This description of the rights does not
purport to be complete and is qualified in its entirety by reference to the
rights agreement, which is incorporated herein by reference.


 


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