Exhibit 4.2


 


SUPERMEDIA INC.
 
AND
 
MELLON INVESTOR SERVICES LLC, as Rights Agent
 
RIGHTS AGREEMENT
 
dated as of
 
March 3, 2010
 















 
TABLE OF CONTENTS
 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1

  	
  Certain
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2

  	
  Appointment
  of Rights Agent

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 3

  	
  Issue
  of Right Certificates

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 4

  	
  Form of
  Right Certificates

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 5

  	
  Countersignature
  and Registration

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 6

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

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7

  	
  Exercise
  of Rights: Purchase Price; Expiration Date of Rights

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 8

  	
  Cancellation
  and Destruction of Right Certificates

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 9

  	
  Reservation
  and Availability of Shares of Preferred Stock

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 10

  	
  Preferred
  Stock Record Date

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 11

  	
  Adjustment
  of Purchase Price, Number of Shares or Number of Rights

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 12

  	
  Certificate
  of Adjusted Purchase Price or Number of Shares

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 13

  	
  Consolidation,
  Merger or Sale or Transfer of Assets or Earning Power

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 14

  	
  Fractional
  Rights and Fractional Shares

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 15

  	
  Rights
  of Action

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section 16

  	
  Agreement
  of Right Holders

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section 17

  	
  Right
  Certificate Holder Not Deemed a Stockholder

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 18

  	
  Concerning
  the Rights Agent

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 19

  	
  Merger
  or Consolidation or Change of Name of Rights Agent

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 20

  	
  Duties
  of Rights Agent

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 21

  	
  Change
  of Rights Agent

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 22

  	
  Issuance
  of New Right Certificates

  	
  36

  
	
   

  	
   

  	
   

  
	Section 23
	Redemption
	36




 

















 


	
  Section 24

  	
  Exchange

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 25

  	
  Notice
  of Certain Events

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 26

  	
  Notices

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 27

  	
  Supplements
  and Amendments

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 28

  	
  Successors

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 29

  	
  Benefits
  of this Agreement

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 30

  	
  Determinations
  and Actions by the Board

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 31

  	
  Severability

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 32

  	
  Governing
  Law

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 33

  	
  Descriptive
  Headings; References; Calculation of Time Periods

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 34

  	
  Counterparts

  	
  42

  
	
   

  	
   

  	
   

  
	Section 35
	Force Majeure
	42




 
Exhibit A
Form of Certificate of Designations of Series A Junior Participating Preferred Stock of SuperMedia Inc.
 
Exhibit B
Form of Right Certificate
Form of Assignment
Form of Election to Purchase
 
Exhibit C
Summary of Rights to Purchase Preferred Stock


 

















 


RIGHTS AGREEMENT


 


This
Rights Agreement, dated as of March 3, 2010 (this “Agreement”), is
between SUPERMEDIA INC., formerly known as Idearc Inc., a Delaware
corporation (the “Company”), and MELLON INVESTOR SERVICES LLC (operating
with the service name BNY Mellon Shareowner Services), a New Jersey limited
liability company, as Rights Agent (the “Rights Agent”).


 


W I T N E S S E T H:


 


WHEREAS, the Board of Directors of the Company
(the “Board”) has authorized and declared a dividend distribution of one
preferred share purchase right (a “Right”) for each outstanding share of
Common Stock (as defined below) outstanding as of
5:00 p.m., New York City time, on March 25, 2010 (the “Record Date”)
and has authorized the issuance of one Right (subject to adjustment) in respect
of each share of Common Stock issued between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Expiration Date (as such
terms are hereinafter defined) and under certain other circumstances, each
Right representing the right to purchase one one-thousandth of one share of
Series A Junior Participating Preferred Stock of the Company having the
rights and preferences set forth in the form of Certificate of Designations of
Series A Junior Participating Preferred Stock of SuperMedia Inc., attached
hereto as Exhibit A, upon the terms and subject to the conditions
hereinafter set forth;


 


NOW,
THEREFORE, in
consideration of the premises and the mutual agreements 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 (other than a Company Entity or a Grandfathered Person) who or that
shall be or become the Beneficial Owner of 20% or more of the shares of Common
Stock then outstanding.  Notwithstanding
the foregoing:


 


(i)                                     no Person shall become an “Acquiring
Person” as the result of an acquisition of Common Stock by a Company Entity
that, by reducing the number of shares outstanding, increases the proportionate
number of shares Beneficially Owned by a Person to 20% or more of the shares of
Common Stock then outstanding; provided, however, that if such
Person becomes the Beneficial Owner of 20% or more of the shares of Common
Stock then outstanding by reason of share acquisitions by Company Entities and
shall, after such share acquisitions by Company Entities, become the Beneficial
Owner of any additional shares of Common Stock (other than by reason of a stock
dividend, stock split or other corporate action effected by the Company), then
such Person shall be deemed to be an “Acquiring Person,” except as
otherwise provided in Section 1(a)(ii), unless upon consummation of
the acquisition of such additional shares of Common Stock such Person does not
beneficially own 20% or more of the shares of Common Stock then outstanding;


 


(ii)                                  if (A) the Board determines in good
faith that a Person who or that has satisfied the conditions for becoming an “Acquiring
Person” pursuant to the foregoing provisions 


 

















 


of this Section 1(a) did so
inadvertently (including, without limitation, because (1) such Person was
unaware that such Person had become the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding or (2) such Person was aware of
the extent of its Beneficial Ownership of Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, (B) such Person (and/or its Affiliates and Associates) divests a
sufficient number of shares of Common Stock (including, in the case solely of
Derivative Common Shares (as such term is hereinafter defined), by terminating
one or more subject derivative transactions or disposing of a sufficient number
of subject derivative securities) so that such Person would no longer satisfy
the conditions for being an “Acquiring Person” pursuant to the foregoing
provisions of this Section 1(a), and (C) such determination by
the Board is made and such divestment by such Person (and/or its Affiliates and
Associates) is completed prior to the time when the first Right is distributed
by the Rights Agent pursuant to Section 3(a), then such Person
shall not be an “Acquiring Person” and shall be deemed to have never
been an “Acquiring Person” for all purposes of this Agreement (such
that, for the avoidance of doubt, no Distribution Date shall occur, or be
deemed to have occurred, as a result thereof and no adjustment pursuant to Section 11(a)(ii) or
Section 13 shall be made in respect thereof); provided, however,
that if such Person, after such determination and divestment, becomes the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding
by reason of becoming the Beneficial Owner of any additional shares of Common
Stock, then such Person shall be deemed to be an “Acquiring Person”
unless a subsequent determination and divestment is made pursuant to this Section 1(a)(ii);
and


 


(iii)                               if a Person would be deemed to be an Acquiring Person
upon the adoption of this Agreement because such Person is the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding on the date of
this Agreement, such Person will not be deemed an Acquiring Person for any
purposes of this Agreement unless and until such Person acquires Beneficial
Ownership of one or more additional shares of Common Stock after the date of
this Agreement (other than pursuant to a dividend or distribution paid in
shares of Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock), unless upon becoming the Beneficial Owner of such additional
shares of Common Stock, such Person is not then the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding.


 


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


 


(c)                                  “Agreement” shall have the meaning
set forth in the preamble hereto.


 


(d)                                 “Associate,” when used to indicate
a relationship with any Person, shall mean each, any and all of the following:


 


(i)                                     any firm, corporation, limited liability
company, partnership, joint venture, bank, trust or other entity of which such
Person is an officer or partner;


 


(ii)                                  any firm, corporation, limited liability
company, partnership, joint venture, bank, trust or other entity of which such
Person is, directly or indirectly, the Beneficial Owner of 


 


2

















 


10% or more of any class of equity securities; provided,
however, that any such firm, corporation, limited liability company,
partnership, joint venture, bank, trust or other entity shall not be an “Associate”
of a Person if, and only for so long as, such Person (A) satisfies the
criteria set forth in both Rule 13d-1(b)(1)(i) and
Rule 13d-1(b)(1)(ii) of the General Rules and Regulations under
the Exchange Act, (B) has reported Beneficial Ownership of the equity
securities of such firm, corporation, limited liability company, partnership,
joint venture, bank, trust or other entity on Schedule 13G under the Exchange
Act and is not required to report its ownership of such equity securities on
Schedule 13D under the Exchange Act, (C) is the Beneficial Owner of less
than 20% of the shares of Common Stock then outstanding (including any such
shares that are beneficially owned by such Person’s Affiliates and Associates
after giving effect to this proviso) and (D) has not reported and is not
required to report its ownership of Common Stock on Schedule 13D under the
Exchange Act;


 


(iii)                               any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity; and


 


(iv)                              any relative or spouse of such Person, or
any relative of such spouse, who has the same home as such Person.


 


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


 


(i)                                     that such Person, or any of such Person’s
Affiliates or Associates, beneficially owns, directly or indirectly, within the
meaning of Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement;


 


(ii)                                  that such Person, or any of such Person’s
Affiliates or Associates, has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time or the
satisfaction of other conditions) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities), written or otherwise, or upon the exercise of conversion rights,
exchange rights, warrants, options or other rights (other than the Rights); provided,
however, that a Person shall not be deemed the “Beneficial Owner”
of, or to “beneficially own,” (1) 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 (2) securities that such Person has a right to acquire on the
exercise of Rights at any time prior to the time that such Person becomes an
Acquiring Person; or (B) the right to vote pursuant to any agreement,
arrangement or understanding, written or otherwise; provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own,” any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (x) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and (y) is
not then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report);


 


(iii)                               that are beneficially owned, directly or
indirectly, by any other Person (or any of such other Person’s Affiliates or
Associates) with which such Person (or any of such 


 


3

















 


Person’s Affiliates or Associates) has (A) 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 Section 1(e)(ii)(B)) or disposing
of any securities of the Company or (B) any agreement, arrangement or
understanding (whether or not in writing) to cooperate in obtaining, changing
or influencing the control of the Company; provided, however,
that (1) nothing in this Section 1(e) 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 (40) days after the date of such acquisition, and then
only if such securities continue to be owned by such Person at the expiration
of such forty (40) day period, (2) no Person who is an officer, director
or employee of a Company Entity shall be deemed, solely by reason of such
Person’s status or authority as such, to be the “Beneficial Owner”
of, or to “beneficially own,” any securities (including, without
limitation, in a fiduciary capacity) beneficially owned by such Company Entity
or by any other officer, director or employee of such Company Entity and
(3) a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” any securities held by such Person in trust
accounts, managed accounts and the like, or otherwise held in a fiduciary
capacity, that are beneficially owned by third Persons who are not Affiliates
or Associates of such Person; or


 


(iv)                              that are the
subject of a derivative transaction entered into by such Person (or any of such
Person’s Affiliates or Associates), or a derivative security acquired by such
Person (or any of such Person’s Affiliates or Associates), that gives such
Person (or any of such Person’s Affiliates or Associates) the economic
equivalent of ownership of an amount of such securities due to the fact that
the value of the derivative is explicitly determined by reference to the price
or value of such securities, or that provides such Person (or any of such
Person’s Affiliates or Associates) an opportunity, directly or indirectly, to
profit, or to share in any profit, derived from any change in the value of such
securities, in any case without regard to whether (a) such derivative
conveys any voting rights in such securities to such Person (or any of such
Person’s Affiliates or Associates), (b) the derivative is required to be,
or capable of being, settled through delivery of such securities or
(c) such Person (or any of such Person’s Affiliates or Associates) may
have entered into other transactions that hedge the economic effect of such
derivative.  In determining the number of
shares of Common Stock beneficially owned by virtue of the operation of this Section 1(e)(iv),
the subject Person shall be deemed to beneficially own (without duplication)
the notional or other number of shares of Common Stock specified in the
documentation evidencing the derivative position as being subject to be
acquired upon the exercise or settlement of the applicable right or as the
basis upon which the value or settlement amount of such right, or the
opportunity of the holder of such right to profit or share in any profit, is to
be calculated in whole or in part, and in any case (or if no such number of
shares of Common Stock is specified in such documentation or otherwise), as
determined by the Board in good faith to be the number of shares of Common
Stock to which the derivative position relates. 
Such shares of Common Stock that are deemed so beneficially owned
pursuant to the operation of this Section 1(e)(iv) shall be
referred to herein as “Derivative Common Shares.”


 


Notwithstanding anything in
this Section 1(e) to the contrary, the phrase “then
outstanding,” when used with reference to a Person’s Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding together with 


 


4

















 


the number of such securities not then actually
issued and outstanding that such Person would be deemed to own beneficially
hereunder.


 


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


 


(g)                                 “close of business” on any given
date shall mean 5:00 p.m., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 p.m., New York City time, on the next succeeding Business Day.


 


(h)                                 “Common Stock” shall mean the
common stock, $0.01 par value (or as such par value may be changed from
time to time), of the Company.


 


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


 


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


 


(k)                                  “Company Entity” shall mean
(i) the Company, (ii) any subsidiary of the Company or (iii) any
employee benefit plan of the Company or of any subsidiary of the Company, or
any entity organized, appointed or established pursuant to the terms of any
such plan.


 


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


 


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


 


(n)                                 “Definitive Acquisition Agreement”
shall mean any agreement entered into by the Company that is conditioned on the
approval by the holders of not less than a majority of the outstanding shares
of Common Shock at a meeting of stockholders with respect to (i) a merger,
consolidation, recapitalization, reorganization, share exchange, business
combination or similar transaction involving the Company or (ii) the
acquisition in any manner, directly or indirectly, of more than 50% of the
consolidated total assets (including, without limitation, equity securities of
its subsidiaries) of the Company.


 


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


 


(p)                                 “equivalent preferred stock” shall
have the meaning set forth in Section 11(b).


 


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


 


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


 


(s)                                  “Expiration Date” shall mean the
close of business on the earlier of (i) March 25, 2013 and
(ii) March 25, 2011 if and only if Stockholder Approval has not been
obtained on or prior to such date.


 


5

















 


(t)                                    “Grandfathered Person” shall mean
(i) Paulson & Co., Inc. (including any successor thereto, by
operation of law or otherwise, but excluding any assignee, distributee or
transferee thereof, in each case by operation of law or otherwise) (the “Institutional
Investor”), (ii) any controlled Affiliates of the Institutional
Investor (including any successor to any such Affiliate or any assignee,
distributee or transferee of any such Affiliate, in each case by operation of
law or otherwise, for so long as such successor, assignee, distributee or
transferee remains a controlled Affiliate of the Institutional Investor, but
excluding any other successor to any such Affiliate or other assignee,
distributee or transferee of any such Affiliate, in each case by operation of
law or otherwise) (collectively, the “Paulson Controlled Affiliates”)
and (iii) the several investment funds and accounts managed by the
Institutional Investor and/or any Paulson Controlled Affiliates (such funds and
accounts, together with the Institutional Investor and any Paulson Controlled
Affiliates, collectively, “Paulson”) for so long as Paulson is not the
Beneficial Owner of more than the Permitted Percentage (as defined below) of
the shares of Common Stock then outstanding; provided, however,
that Paulson shall not become an “Acquiring Person” as the result of an
acquisition of Common Stock by a Company Entity that, by reducing the number of
shares outstanding, increases the proportionate number of shares Beneficially
Owned by Paulson to more than the Permitted Percentage of the shares of Common
Stock then outstanding; provided, further, that if Paulson
becomes the Beneficial Owner of more than the Permitted Percentage of the
shares of Common Stock then outstanding by reason of share acquisitions by
Company Entities and shall, after such share acquisitions by Company Entities
have been publicly disclosed or have been disclosed to (or otherwise actually
known by) Paulson, become the Beneficial Owner of any additional shares of
Common Stock (other than by reason of a stock dividend, stock split or other
corporate action effected by the Company), then Paulson shall be deemed to be
an “Acquiring Person,” except as otherwise provided in Section 1(a)(ii) (substituting
“more than the Permitted Percentage” for “20% or more” in each case in that
subsection), unless upon consummation of the acquisition of such additional
shares of Common Stock Paulson does not beneficially own more than the
Permitted Percentage of the shares of Common Stock then outstanding.


 


For purposes of this Section 1(t), the “Permitted
Percentage” shall mean the lower of (1) forty-five percent (45%) and
(2) the percentage of the outstanding shares of Common Stock that are
Beneficially Owned by Paulson at the close of business on the day that is 270
days immediately following the effective date of the consummation of the
transactions contemplated by that certain Standby Purchase Agreement, dated as
of November 18, 2009, by and between Paulson and the Company.


 


(u)                                 “Independent Directors” shall mean
members of the Board who are not officers, employees or Affiliates (or
designees of Affiliates) of the Company.


 


(v)                                 “invalidation time” shall have the
meaning set forth in Section 11(a)(ii).


 


(w)                               “NASDAQ” shall mean the NASDAQ
National Market System.


 


(x)                                   “Outside Meeting Date” shall have
the meaning set forth in Section 23(b).


 


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


 


6

















 


(z)                                   “Preferred Stock” shall mean the
Series A Junior Participating Preferred Stock of the Company having the
rights and preferences set forth in the form of Certificate of
Designations of Series A Junior Participating Preferred Stock of
SuperMedia Inc., attached hereto as Exhibit A and, to the extent
that there are not a sufficient number of shares of Series A Junior Participating Preferred Stock of
the Company authorized to permit the full exercise of the
Rights, any other series of preferred stock of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A Junior Participating
Preferred Stock of the Company.


 


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


 


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


 


(cc)                            “Qualified Offer” shall mean an
offer determined by a majority of the Independent Directors to have each of the
following characteristics:


 


(i)                                     a fully financed, all-cash tender offer,
or an exchange offer offering shares of common stock of the offeror, or a
combination thereof, in each such case for all of the outstanding shares of
Common Stock at the same per-share consideration;


 


(ii)                                  an offer that has commenced within the
meaning of Rule 14d-2(a) under the Exchange Act;


 


(iii)                               an offer whose per-share offer price
exceeds the greatest of (A) the highest reported market price per share of
the Common Stock during the 24 months immediately preceding the commencement of
the offer (within the meaning of Rule 14d-2(a) under the Exchange
Act), (B) the highest price per share of the Common Stock paid by the
Person making the offer (or any of such Person’s Affiliates) during the 24
months immediately preceding the commencement of the offer (within the meaning
of Rule 14d-2(a) under the Exchange Act) or prior to the expiration
of the offer, (C) an amount that is 25% higher than the 12-month moving
average per share price of the Common Stock (determined as of the Trading Day
immediately preceding the date of commencement of the offer (within the meaning
of Rule 14d-2(a) under the Exchange Act)), (D) an amount that is
25% higher than the closing price (as “closing price” is determined pursuant to
Section 11(d)(i)) per share of the Common Stock on the Trading Day
immediately preceding the commencement of the offer (within the meaning of
Rule 14d-2(a) under the Exchange Act) and (E) if, at the time
that the offer is commenced (within the meaning of
Rule 14d-2(a) under the Exchange Act), any other offer that is a
Qualified Offer has been commenced and remains open, the price per share of the
Common Stock offered in such earlier Qualified Offer; provided, however,
that, to the extent that an offer that includes common stock of the offeror,
such per-share offer price of the offer will be determined by valuing such
common stock of the offeror at the lowest reported market price for such common
stock of the offeror during the five (5) trading days immediately
preceding and the five (5) trading days immediately following the
commencement of the offer (within the meaning of Rule 14d-2(a) under
the Exchange Act);


 


(iv)                              an offer that, within twenty (20)
Business Days after the commencement date of the offer (or within ten
(10) Business Days after any increase in the offer consideration), 


 


7

















 


does not result in a nationally recognized investment
banking firm retained by the Board rendering an opinion to the Board that the
consideration being offered to the stockholders of the Company is either unfair
or inadequate;


 


(v)                                 if the offer includes shares of common
stock of the offeror, an offer pursuant to which (A) the offeror shall
permit representatives of the Company (including a nationally-recognized
investment banking firm retained by the Board and legal counsel and an
accounting firm designated by the Company) to have access to such offeror’s
books, records, management, accountants, financial advisors, counsel and other
appropriate outside advisors for the purposes of permitting such
representatives to conduct a due diligence review of the offeror in order to
permit the Board to evaluate the offer and make an informed decision and, if
requested by the Board, to permit such investment banking firm (relying as
appropriate on the advice of such legal counsel) to be able to render an
opinion to the Board with respect to whether the consideration being offered to
the stockholders of the Company is fair from a financial point of view and
(B) within ten (10) Business Days after such representatives of the
Company (including a nationally-recognized investment banking firm retained by
the Board and legal counsel and an accounting firm designated by the Company)
shall have notified the Company and the offeror that it had completed such due
diligence review to its satisfaction (or, following completion of such due
diligence review, within ten (10) Business Days after any increase in the
consideration being offered), such investment banking firm does not render an
opinion to the Board that the consideration being offered to the stockholders
of the Company is either unfair or inadequate and such investment banking firm
does not, after the expiration of such ten (10) Business Day period,
render an opinion to the Board that the consideration being offered to the
stockholders of the Company has become either unfair or inadequate based on a
subsequent disclosure or discovery of a development or developments that have
had or are reasonably likely to have a material adverse effect on the value of
the common stock of the offeror;


 


(vi)                              an offer that is subject to only the
minimum tender condition described below in Section 1(cc)(ix) and
other customary terms and conditions, which conditions shall not include any
financing, funding or similar conditions or any requirements with respect to
the offeror or its agents being permitted any due diligence with respect to the
books, records, management, accountants or other outside advisors of the
Company;


 


(vii)                           an offer pursuant to which the Company has received an
irrevocable, legally binding written commitment of the offeror that the offer
will remain open for at least one hundred twenty (120) days and, if a Special
Meeting is duly requested in accordance with Section 23(b), for at
least ten (10) Business Days after the date of the Special Meeting or, if
no Special Meeting is held within ninety (90) days following receipt of the
Special Meeting Notice in accordance with Section 23(b), for at
least ten (10) Business Days following such ninety (90) day period;


 


(viii)                        an offer pursuant to which the Company has received an
irrevocable, legally binding written commitment of the offeror that, in
addition to the minimum time periods specified above in Section 1(cc)(vii),
the offer, if it is otherwise to expire prior thereto, will be extended for at
least twenty (20) Business Days after any increase in the consideration being
offered or after any bona fide alternative offer is commenced within the
meaning of Rule 14d-2(a) under the Exchange Act; provided, however,
that such offer need not remain open, as a 


 


8
















 


result of Section 1(cc)(vii) and this
Section 1(cc)(viii), beyond (A) the time that any other offer
satisfying the criteria for a Qualified Offer is then required to be kept open
under such Section 1(cc)(vii) and this Section 1(cc)(viii) or
(B) the expiration date, as such date may be extended by public
announcement (with prompt written notice to the Rights Agent) in compliance
with Rule 14e—1 under the Exchange Act, of any other tender offer for the
Common Stock with respect to which the Board has agreed to redeem the Rights
immediately prior to acceptance for payment of Common Stock thereunder (unless
such other offer is terminated prior to its expiration without any Common Stock
having been purchased thereunder) or (C) one (1) Business Day after
the stockholder vote with respect to approval of any Definitive Acquisition
Agreement has been officially determined and certified by the inspectors of
elections;


 


(ix)                                an offer that is conditioned on a minimum
of at least two-thirds of the outstanding shares of the Common Stock not held
by the Person making such offer (and such Person’s Affiliates and Associates)
being tendered and not withdrawn as of the offer’s expiration date, which
condition shall not be waivable;


 


(x)                                   an offer pursuant to which the Company has
received an irrevocable, legally binding written commitment of the offeror to
consummate, as promptly as practicable upon successful completion of the offer,
a second step transaction whereby all shares of the Common Stock not tendered
into the offer will be acquired at the same consideration per share actually
paid pursuant to the offer, subject to stockholders’ statutory appraisal
rights, if any;


 


(xi)                                an offer pursuant to which the Company
and its stockholders have received an irrevocable, legally binding written
commitment of the offeror that no amendments will be made to the offer to
reduce the consideration being offered or to otherwise change the terms of the
offer in a way that is adverse to a tendering stockholder;


 


(xii)                             an offer (other than an offer consisting solely of
cash consideration) pursuant to which the Company has received the written
representation and certification of the offeror and the written representations
and certifications of the offeror’s Chief Executive Officer and Chief Financial
Officer, acting in such capacities, that (A) all facts about the offeror
that would be material to making an investor’s decision to accept the offer
have been fully and accurately disclosed as of the date of the commencement of
the offer within the meaning of Rule 14d-2(a) under the Exchange Act,
(B) all such new facts will be fully and accurately disclosed on a prompt
basis during the entire period during which the offer remains open, and
(C) all required Exchange Act reports will be filed by the offeror in a
timely manner during such period; and


 


(xiii)                          if the offer includes non-cash consideration,
(A) the non-cash portion of the consideration offered must consist solely
of common stock of a Person that is a publicly-owned United States corporation,
(B) such common stock must be freely tradable and listed or admitted to
trading on either the New York Stock Exchange or NASDAQ, (C) no
stockholder approval of the issuer of such common stock is required to issue
such common stock, or, if such approval is required, such approval has already
been obtained, (D) no Person (including such Person’s Affiliates and
Associates) beneficially owns 20% or more of the voting stock of the issuer of
such common stock at the time of commencement of the offer or at any time
during the term of the offer, (E) no other class of voting stock or other
voting securities of the issuer of such common stock is outstanding and
(F) the issuer of such common stock meets the registrant 


 


9

















 


eligibility requirements for use of Form S-3 for
registering securities under the Securities Act, including the filing of all
required Exchange Act reports in a timely manner during the twelve calendar
months prior to the date of commencement of such offer.


 


For the purposes of Section 1(cc)(i), “fully
financed” shall mean that the offeror has sufficient funds for the offer
and related expenses which shall be evidenced by (1) firm, unqualified,
legally binding written commitments from responsible financial institutions
having the necessary financial capacity, accepted by the offeror, to provide
funds for such offer subject only to customary terms and conditions (for the
avoidance of doubt it being understood that a provision relating to the sharing
with a financing source of any break-up or termination fee shall be considered
customary), (2) cash or cash equivalents then available to the offeror,
set apart and maintained solely for the purpose of funding the offer with an
irrevocable, legally binding written commitment being provided by the offeror
to the Board to maintain such availability until the offer is consummated or
withdrawn or (3) a combination of the foregoing; which evidence has been
provided to the Company prior to, or upon, commencement of the offer.  If an offer becomes a Qualified Offer in
accordance with this Section 1(cc), but subsequently ceases to be a
Qualified Offer as a result of the failure at a later date of such offer to
continue to satisfy any of the requirements of this Section 1(cc),
such offer shall cease to be a Qualified Offer and the provisions of Section 23(b) shall
no longer be applicable to such offer, provided that the actual redemption of
the Rights pursuant to Section 23(b) shall not have already
occurred.


 


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


 


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


 


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


 


(gg)                          “Redemption Resolution” shall have
the meaning set forth in Section 23(b).


 


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


 


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


 


(jj)                                  “Rights Agent” shall have the
meaning set forth in the preamble hereto.


 


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


 


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


 


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


 


(nn)                          “Senior Voting Stock” shall have
the meaning set forth in Section 13(b).


 


(oo)                          “Shares 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) of
the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become an “Acquiring Person” for purposes of this Agreement.


 


10

















 


(pp)                          “Special Independent Committee”
means a special committee of the Board comprised of each Independent Director
who is not a director, officer, employee, Affiliate or designee of a
Grandfathered Person.


 


(qq)                          “Special Meeting” shall have the
meaning set forth in Section 23(b).


 


(rr)                                “Special Meeting Notice” shall
have the meaning set forth in Section 23(b).


 


(ss)                            “Special Meeting Period” shall
have the meaning set forth in Section 23(b).


 


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


 


(uu)                          “Stockholder Approval” shall mean
the approval of this Agreement by the affirmative vote of a majority of all the
votes cast at a meeting of stockholders of the Company, duly held in accordance
with the Company’s Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws (as each may be amended from time to time) and
applicable law, at which a quorum is present.


 


(vv)                          “subsidiary” of a Person shall
mean any corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect a majority of the
board of directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by such Person or any other
subsidiary of such Person.


 


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


 


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


 


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


 


Section 2.                                            Appointment of Rights Agent. 
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the express terms and conditions hereof (and no
implied terms or conditions), and the Rights Agent hereby accepts such
appointment.  The Company may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable, upon
ten (10) days’ prior written notice to the Rights Agent. The Rights Agent
shall have no duty to supervise, and shall in no event be liable for, the acts
or omissions of any such co-Rights Agents.


 


Section 3.                                            Issue of Right Certificates.


 


(a)                                  Until the close
of business on the earlier of (i) the tenth (10th) day after the Shares Acquisition Date or
(ii) the tenth (10th) Business Day
(or such later date as may be determined by action of the Board prior to the
Shares Acquisition Date) after the date of the commencement of, or first public
announcement of the intent to commence, by any Person (other than a Company
Entity), a tender or exchange offer the consummation of which would result in
any Person (other than a Company Entity) becoming an Acquiring Person
(including any such date that is after the date of this Agreement and prior to
the issuance of the Rights) (the earlier of the dates in subsections
(i) and (ii) hereof being herein referred to as the “Distribution
Date”), (A) the Rights will be evidenced (subject to the provisions of
Section 3(b)) by the certificates for the Common 


 


11

















 


Stock registered in the
names of the holders thereof (which certificates shall be deemed also to be
Right Certificates) and not by separate Right Certificates, and the record
holders of Common Stock represented by such certificates shall be the record
holders of the Rights represented thereby, and (B) the Rights will be
transferable only in connection with the transfer of the Common Stock.  Prior to the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.  As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if so requested by written notice and provided
with a stockholder list and all other relevant information that the Rights
Agent may reasonably request, send), by first class, postage-prepaid mail, to
each record holder of Common Stock as of the close of business on the
Distribution Date (other than an Acquiring Person or any Affiliate or Associate
of an Acquiring Person), at the address of such holder shown on the records of
the Company, a Right Certificate, in substantially the form of Exhibit B
hereto (a “Right Certificate”), evidencing one Right (subject to
adjustment as provided herein) for each share of Common Stock so held.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.  The Company shall promptly notify the Rights
Agent in writing upon the occurrence of the Distribution Date.  Until such notice is received by the Rights
Agent, the Rights Agent may presume conclusively for all purposes that the
Distribution Date has not occurred.


 


(b)                                 On the Record Date or as soon as
practicable thereafter, the Company will send a copy of a Summary of Rights to
Purchase Preferred Stock, in substantially the form attached hereto as Exhibit C
(the “Summary of Rights”), by first class, postage-prepaid mail or other
means used by the Company to deliver proxy statements to its stockholders, to
each record holder of Common Stock as of the close of business on the Record
Date at the address of such holder shown on the records of the Company.  With respect to shares of Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders
thereof together with a copy of the Summary of Rights.  Until the Distribution Date (or if earlier,
the Redemption Date or the Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.


 


(c)                                  Rights shall be
issued in respect of all shares of Common Stock issued or disposed of
(including, without limitation, upon disposition of Common Stock out of
treasury stock or issuance or reissuance of Common Stock out of authorized but
unissued shares) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date and the Expiration Date, or in certain
circumstances provided in Section 22, after the Distribution
Date.  Certificates issued for Common
Stock (including, without limitation, upon transfer of outstanding Common
Stock, disposition of Common Stock out of treasury stock or issuance or
reissuance of Common Stock out of authorized but unissued shares) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date and the Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them a legend substantially as follows:


 


This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between SuperMedia Inc. and Mellon Investor 


 


12

















 


Services LLC, as Rights
Agent, dated as of March 3, 2010, as the same may be
supplemented or amended from time to time (the “Rights Agreement”), the
terms of which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of SuperMedia Inc.  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.  SuperMedia Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor.  Under certain
circumstances, as set forth in the Rights Agreement, Rights acquired or beneficially
owned by any Person who becomes an Acquiring Person or any Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement) and their transferees will become null and void and will not longer
be transferable.


 


With
respect to such certificates containing the foregoing legend, until the earliest of the
Distribution Date, the Redemption Date and the Expiration Date, the Rights associated with the Common
Stock represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any of such certificates, except as
otherwise provided herein, shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.


 


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


 


Notwithstanding
this Section 3(c), the omission of a legend shall not affect the
enforceability of any part of this Agreement or the rights of any holder of the
Rights.


 


Section 4.                                            Form of Right Certificates. 
The Right Certificates (and the forms of election to purchase shares and
of assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate (but that do not affect the rights, duties or
obligations of the Rights Agent as set forth in this Agreement) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
automated quotation system on which the Rights may from time to time be listed,
or to conform to usage.  Subject to the
provisions of Section 22, the Right Certificates, in each case, on
their face shall entitle the holders thereof to purchase such number of shares
of the Preferred Stock as shall be set forth therein at the price per share set
forth therein (the “Purchase Price”), but the number of such shares (and
the type of securities or other property issuance upon exercise of the Rights)
and the Purchase Price shall be subject to adjustment as provided herein.


 


Section 5.                                            Countersignature and Registration. 
The Right Certificates shall be executed on behalf of the Company in the
manner provided in the Amended and Restated By-


 


13

















 


Laws of the Company (as it may be amended from time to
time) for Common Stock certificates.  The
Right Certificates shall be countersigned by the Rights Agent, either manually
or by facsimile signature, and shall not be valid for any purpose unless so
countersigned.


 


In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any such person was not
such an officer.


 


Following
the Distribution Date, and receipt by the Rights Agent of (i) written
notice of the Distribution Date pursuant to Section 3(a), and
(ii) a stockholder list and all relevant information reasonably requested
by the Rights Agent pursuant to Section 3(a), the Rights Agent will
keep or cause to be kept, at its office designated for such purposes, books for
registration and transfer of the Right Certificates issued hereunder.  Such books shall show the names and addresses
of the respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the date of each of
the Right Certificates.


 


Section 6.                                            Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.  Subject to the provisions of Section 14,
at any time after the close of business on the Distribution Date, and prior to
the close of business on the earlier of the Redemption Date and the Expiration
Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become null and void pursuant to Section 11(a)(ii) or
that have been exchanged pursuant to Section 24) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of one one-thousandths of a share of Preferred Stock (or, following such time,
other securities, cash or assets as the case may be) as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such
purposes.  The Rights Certificates are
transferable only on the registry books of the Rights Agent.  Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Right Certificate or Certificates unless and until the
registered holder thereof shall have (i) properly completed and duly
executed the certificate contained in the form of assignment set forth on the
reverse side of each such Right Certificate, (ii) provided such additional
evidence of the identity of the Beneficial Owner (or any former Beneficial Owner
or the proposed Beneficial Owner) thereof and of the Rights evidenced thereby
and the Affiliates and Associates of such Beneficial Owner (or any former
Beneficial Owner or the proposed Beneficial Owner) as the Company or the Rights
Agent shall reasonably request, and (iii) paid a sum sufficient to cover
any tax or charge that may be imposed in connection with any transfer, split
up, combination or exchange or Right Certificates as required by Section 9.  


 


14

















 


Thereupon the Rights Agent shall countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested, registered in such name or
names as may be designated by the surrendering registered holder.  The Rights Agent shall have no duty or
obligation to take any action under any section of this Agreement that requires
the payment by a Rights holder of applicable taxes and/or charges unless and
until it is satisfied that all such taxes and/or charges have been paid.


 


Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in the case of loss, theft or destruction, of indemnity or security
satisfactory to them, and, at the Company’s request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.


 


Notwithstanding
any other provision of this Agreement to the contrary, the Company and the
Rights Agent may amend this Agreement to provide for uncertificated Rights in
addition to or in place of Rights evidenced by Right Certificates.


 


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


 


(a)                                  The registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof properly completed and duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purposes together
with payment of the Purchase Price for each one one-thousandth of one share of
the Preferred Stock (or Common Stock, other securities, cash or assets, as the
case may be) as to which the Rights are exercised, at or prior to the earliest
of (i) the Expiration Date, (ii) the time at
which the Rights are redeemed as provided in Section 23 (“Redemption
Date”), or (iii) the time at which such Rights are exchanged as
provided for in Section 24.


 


(b)                                 The Purchase Price for each one
one-thousandth of one share of the Preferred Stock pursuant to the exercise of
a Right shall initially be $150.00, shall be subject to adjustment from time to
time as provided in Section 11 and Section 13, and
shall be payable in lawful money of the United States of America in accordance
with Section 7(c).


 


(c)                                  Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase properly
completed and duly executed, accompanied by payment of the aggregate Purchase
Price for shares to be purchased and an amount equal to any applicable tax or
charge required to be paid by the holder of such Right Certificate in
accordance with Section 6 in cash, or by certified check or
cashier’s check payable to the order of the Company, the Rights Agent shall
thereupon (i) (A) promptly requisition from any transfer agent of the
Preferred Stock of the Company, or make available if the Rights Agent is the
transfer agent of the Preferred Stock, certificates for the number of one
one-thousandths of a share of the Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all 


 


15

















 


such requests, or (B) promptly 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 hereby directs the depositary agent to comply with such
request, (ii) when necessary to comply with this Agreement, promptly
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14,
(iii) after receipt of such certificates or depositary receipts, promptly cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder, and (iv) when necessary to comply with this Agreement, after
receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.


 


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


 


(e)                                  Notwithstanding anything in this Agreement
to the contrary, neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the purported exercise of Rights
pursuant to this Section 7 unless and until the registered holder
thereof shall have (i) properly completed and duly executed the election
to purchase on the reverse side of the Right Certificate surrendered for such
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or any former Beneficial Owner) thereof and the Affiliates
and Associates of such Beneficial Owner (or any former Beneficial Owner) as the
Company or the Rights Agent shall reasonably request.


 


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


 


Section 9.                                            Reservation and Availability of Shares of
Preferred Stock.  The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued
Preferred Stock, or its authorized and issued Preferred Stock held in its
treasury, the number of shares of the Preferred Stock that will be sufficient
to permit the exercise in full of all outstanding Rights in accordance with
this Agreement.


 


So long as the Preferred Stock (and, following the
time that a Person becomes an Acquiring Person, shares of Common Stock or other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on any national securities exchange or automated 


 


16

















 


quotation system, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed or admitted for trading on such
exchange or automated quotation system upon official notice of issuance upon
such exercise.


 


The
Company covenants and agrees that it will take all such action as may be necessary
to ensure that all shares of the Preferred Stock (and, following the time that
a Person becomes an Acquiring Person, shares of Common Stock or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such (subject to payment of the Purchase Price and
compliance with all other provisions of this Agreement), be duly and validly
authorized and issued and fully paid and nonassessable shares.


 


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


 


The
Company shall, if legally required, (i) prepare and file, as soon as
reasonably possible following the Distribution Date, a registration statement
under the Securities Act with respect to the securities purchasable upon
exercise of or exchangeable for the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as reasonably possible
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (x) the date as of which the Rights
are no longer exercisable for such securities and (y) the Expiration
Date.  The Company also shall take all
such action as may be required or as is appropriate under the securities or
blue sky laws of such jurisdictions as may be necessary with respect to the
securities purchasable upon the exercise of or exchangeable for the
Rights.  The Company may temporarily
suspend, for a period not to exceed one hundred twenty (120) days following the
Distribution Date, the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective.  Upon any such suspension of exercisability of
Rights referred to in this paragraph, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect.  The Company shall
notify the Rights Agent whenever it makes a public announcement pursuant to this
Section 9 and give the Rights Agent a copy of any such
announcement.  Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification or exemption
in such jurisdiction shall have been obtained and until a registration
statement under the Securities Act (if required) shall have been declared
effective.


 


17

















 


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


 


Section 11.                                      Adjustment of Purchase Price, Number of Shares or
Number of Rights.  The Purchase Price, the number and kind or
class of shares of stock of the Company purchasable upon exercise of each Right
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.


 


(a)                                  (i)                                     In the event the Company shall at any time after the
Record Date (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of
shares of Preferred Stock 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), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock that, 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, the holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of Preferred Stock
issuable upon exercise of one Right.  If
an event occurs that would require an adjustment under both 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, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the Purchase Price in effect immediately prior to such Person becoming an
Acquiring Person multiplied by the number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of shares of Preferred Stock, such number
of shares of Common Stock as shall equal the result 


 


18
















 


obtained by (A) multiplying such Purchase Price
by the number of one one-thousandths of a share of Preferred Stock for which a
Right is then exercisable and dividing that product by (B) 50% of the
current market price per share of the Common Stock on the date of the
occurrence of such event; provided, however, that if the
transaction that would otherwise give rise to the adjustment is also subject to
the provisions of Section 13, then only the provisions of Section 13
shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii); provided
further, however, that the Purchase Price (as so adjusted) and
the number of shares of Common Stock so receivable upon exercise of a Right
(or, at the option of the Company, such number of one one-thousandths of a
share of Preferred Stock) shall thereafter be subject to further adjustment as
appropriate in accordance with Section 11(f).  In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action that would eliminate or diminish the benefits intended to
be afforded by the Rights. 
Notwithstanding anything in this Agreement to the contrary, however,
from and after the time (the “invalidation time”) when any Person first
becomes an Acquiring Person, any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate of
any Acquiring Person), including, without limitation, any such Rights when held
by (1) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the invalidation time, (2) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the invalidation time pursuant
to either (x) a transfer from the Acquiring Person to holders of its
equity securities or to any Person with whom it has any continuing agreement,
arrangement or understanding, written or otherwise, regarding the transferred
Rights or (y) a transfer that the Board determines is part of a plan,
arrangement or understanding, written or otherwise, that has the purpose or
effect of avoiding the provisions of this Section 11(a)(ii), or
(3) a subsequent transferee of any Person described in the foregoing clauses
(1) or (2), shall be null and void without any further action and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. 
The Company shall use all reasonable efforts to ensure that the provisions
of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Rights or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. 
From and after the invalidation time, no Right Certificate shall be
issued pursuant to Section 3, Section 6 or Section 7(d) that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be null and void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be null and
void pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate; and any
Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person or any Associate or Affiliate whose Rights would be null and void
pursuant to the provisions of this paragraph shall be cancelled.


 


(iii)                               The Company may, at its option, substitute for a share
of Common Stock issuable upon the exercise of Rights in accordance with Section 11(a)(ii) a
number of shares of Preferred Stock or fraction thereof such that the current
market price per share of one share of Preferred Stock multiplied by such
number or fraction is equal to the current market price per share of one share
of Common Stock.  In the event that there
shall not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Board shall, with respect to
such 


 


19

















 


deficiency, to the extent permitted by applicable law
and any material agreements then in effect to which the Company is a party,
(A) determine the excess (such excess, the “Spread”) of
(1) the value of the shares of Common Stock issuable upon the exercise of
a Right in accordance with Section 11(a)(ii) (the “Current
Value”) over (2) the Purchase Price in effect immediately prior to
such Person becoming an Acquiring Person multiplied by the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such Person becoming an Acquiring Person and (B) with
respect to each Right (other than Rights that have become null and void
pursuant to Section 11(a)(ii)), make adequate provision to
substitute for the shares of Common Stock issuable in accordance with Section 11(a)(ii) upon
exercise of the Right and payment of the applicable Purchase Price,
(1) cash, (2) a reduction in such Purchase Price, (3) shares of
Preferred Stock or other equity securities of the Company (including, without
limitation, shares or fractions of shares of preferred stock that, by virtue of
having dividend, voting and liquidation rights substantially comparable to
those of the shares of Common Stock, are deemed in good faith by the Board to
have substantially the same value as the shares of Common Stock (such shares of
Preferred Stock and shares or fractions of shares of preferred stock are
hereinafter referred to as “Common Stock Equivalents”)), (4) debt
securities of the Company, (5) other assets or (6) any combination of
the foregoing, having a value that, when added to the value of the shares of
Common Stock issued upon exercise of such Right, shall have an aggregate value
equal to the Current Value (less the amount of any reduction in such Purchase Price),
where such aggregate value has been determined by the Board upon the advice of
a nationally recognized investment banking firm selected in good faith by the
Board; provided, however, that if the Company shall not make
adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the date on which any Person becomes an Acquiring
Person (the date on which any Person becomes an Acquiring Person being the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party, upon the surrender for exercise of a Right and without
requiring payment of such Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions of shares of
Preferred Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread.  If, upon any Person becoming an Acquiring
Person, the Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board so elects, the thirty
(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, is herein called the “Substitution Period”).  To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentence of
this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) and the last sentence of this Section 11(a)(iii),
that such action shall apply uniformly to all outstanding Rights and
(y) may suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such second sentence and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.  For purposes of this Section 11(a)(iii),
the value of the shares of Common 


 


20

















 


Stock shall be the current market price per share on
the Section 11(a)(ii) Trigger Date and the per share or fractional
value of any Common Stock Equivalent shall be deemed to equal the current market
price per share of the Common Stock.  The
Board may, but shall not be required to, establish procedures to allocate the
right to receive shares of Common Stock upon the exercise of the Rights among
holders of Rights pursuant to this Section 11(a)(iii).


 


(b)                                 In case the Company shall fix a record
date for the issuance of rights, options or warrants to all holders of
Preferred Stock entitling them (for a period expiring
within forty-five (45) calendar days after such record date) to subscribe for
or purchase Preferred Stock (or shares having economically equivalent rights,
privileges and preferences as the Preferred Stock (“equivalent preferred
stock”)) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or 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 per share of the 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 and
equivalent preferred stock outstanding on such record date plus the number of
shares of Preferred Stock that 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 and equivalent
preferred stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the securities issuable upon exercise of one
Right.  In case such subscription price
may be paid in consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board, whose determination shall be described in a written statement filed
with the Rights Agent.  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 that would then be in effect if such record date had not
been fixed.


 


(c)                                  In case the Company shall fix a record
date for the making of 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 or surviving corporation) of
evidences of indebtedness or assets (other than (i) a regular periodic
cash dividend, the record date for which occurs at a time when there is no
Acquiring Person, or (ii) a regular periodic cash dividend, the record
date for which occurs at a time when there is an Acquiring Person, at a rate
not in excess of 125% of the rate of the last cash dividend theretofore paid or
(iii) a dividend payable in Preferred Stock) or subscription rights or
warrants (excluding those 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 per
share of the Preferred Stock on such 


 


21

















 


record date, less the fair market value (as determined
in good faith by the Board, whose determination shall be described in a written
statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preferred Stock and the denominator of
which shall be such current market price per share of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
Preferred Stock issuable upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price that would then be in effect if such record date had not been fixed.


 


(d)                                 (i)                                     For the purpose of any computation hereunder, the “current
market price per share” of any security (a “Security”) on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however,
that in the event that the current market price per share of the Security is
determined during the period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into shares of such Security,
or (B) any subdivision, combination or reclassification of such Security,
and prior to the expiration of thirty (30) Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current market price per share shall be appropriately adjusted to reflect the
current market price per share equivalent of such security.  The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and ask prices, regular way, in either case
(1) as reported by the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange, or (2) if the Security is not listed or admitted to trading on
the New York Stock Exchange, as reported by the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to
trading, or (3) if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low ask prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use, or (4) if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and ask prices as furnished by a professional market maker
making a market in the Security selected by the Board or (5) if on any
such date, no such market maker is making a market in such Security, the fair
market value of the Security on such date as determined in good faith by the
Board.  The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.


 


(ii)                                  For the purpose of any computation
hereunder, if the Preferred Stock is publicly traded, the “current market
price per share” of Preferred Stock shall be determined in the same manner
as set forth above for Common Stock in Section 11(d)(i).  If the Preferred Stock is not publicly traded
or if the current market price per share of Preferred Stock cannot be
determined in the manner provided above but the Common Stock is publicly
traded, the “current market price per share” of Preferred Stock shall be
conclusively deemed to be the current market 


 


22

















 


price
per share of Common Stock (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the Record Date),
multiplied by one thousand.  If neither
the Common Stock nor the Preferred Stock is publicly held or so listed or
traded, the “current market price per share” of Preferred Stock shall
mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a written statement filed with the Rights
Agent.


 


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


 


(f)                                    If as a result of an adjustment made
pursuant to Section 11(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock of the
Company or of any Principal Party other than shares of the Preferred Stock,
thereafter the Purchase Price and the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the shares of the Preferred Stock contained in Section 11(a),
Section 11(b), Section 11(c), Section 11(e),
Section 11(h), Section 11(i) and Section 11(m),
and the provisions of Section 7, Section 9, Section 10,
Section 13 and Section 14 with respect to the shares of
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 the 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 Section 11(b) and
Section 11(c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price per one one-thousandth of a share of Preferred
Stock, that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest ten-millionth) obtained by (i) multiplying
(x) the number of one one-thousandths of a share of Preferred Stock
purchasable upon exercise of a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.


 


(i)                                     The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-


 


23

















 


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


 


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


 


(k)                                  Before taking any action that would cause
an adjustment reducing the Purchase Price below one one-thousandth of the then
par value, if any, of the shares of the Preferred Stock issuable upon exercise
of the Rights, the Company shall take any corporate action that may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of such 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 (with prompt written
notice of such election to the Rights Agent) to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date the shares of Preferred Stock, Common Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the shares of the Preferred Stock, Common 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; provided, however,
that the Company shall deliver to such holder a due bill or other appropriate
instrument 


 


24

















 


evidencing such holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.


 


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


 


(n)                                 In the event that at any time after the
Record Date and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on the Common Stock payable in Common
Stock or (ii) effect a subdivision, combination or consolidation of the
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock) into a greater or lesser number of shares of Common Stock, then
in any such case (A) the number of one one-thousandths of a share of
Preferred Stock purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-thousandths of a share
of Preferred Stock so purchasable immediately prior to such event by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event, and
(B) each share of Common Stock outstanding immediately after such event
shall have issued with respect to it that number of Rights that each share of
Common Stock outstanding immediately prior to such event had issued with
respect to it.  The adjustments provided
for in this Section 11(n) shall be made successively whenever
such a dividend is declared or paid or such a subdivision, combination or consolidation
is effected.  If an event occurs that
would require an adjustment under Section 11(a)(ii) and this Section 11(n),
the adjustments provided for in this Section 11(n) shall be in
addition and prior to any adjustment required pursuant to Section 11(a)(ii).


 


(o)                                 The Company agrees that, after the Shares
Acquisition 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 eliminate the benefits intended to be
afforded by the Rights.


 


Section 12.                                      Certificate of Adjusted Purchase Price or
Number of Shares.  Whenever an adjustment is made as provided in
Section 11 and Section 13, the Company shall
(a) promptly prepare a certificate setting forth such adjustment and a
brief written statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for
the Common Stock and the Preferred Stock a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 and Section 26.  The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment or statement contained
therein and shall have no duty or liability with respect to 


 


25

















 


and shall not be deemed to have knowledge of such
adjustment or event unless and until it shall have received such certificate.


 


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


 


(a)                                  In the event that, following the time at
which any Person becomes an Acquiring Person, (i) the Company shall
consolidate with, or merge with and into, any other Person (other than one or
more of its wholly-owned subsidiaries), (ii) any Person (other than one or
more of its wholly-owned subsidiaries) shall consolidate with or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (iii) the Company shall sell or otherwise transfer (or one or more of
its subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly-owned
subsidiaries), then, and in each such case, proper provision shall be made so
that (A) each holder of a Right (other than Rights that have been null and
void pursuant to Section 11(a)(ii)) shall thereafter have the right
to receive, upon the exercise thereof at the Purchase Price in effect
immediately prior to such Person becoming an Acquiring Person multiplied by the
number of one one-thousandths of a share of Preferred Stock for which a Right
would then be exercisable (whether or not such Right was then exercisable)
(each as adjusted thereafter pursuant to Section 11(a)(i), Section 11(b),
Section 11(c), Section 11(f), Section 11(h),
Section 11(i) and Section 11(m)), in accordance
with the terms of this Agreement and in lieu of shares of Preferred Stock, such
number of shares of validly issued, fully paid, non-assessable and freely
tradable Senior Voting Stock (as hereinafter defined) of the Principal Party (as
hereinafter defined) (including the Company as successor thereto or as the
surviving corporation), not subject to any liens, encumbrances, rights of call
or first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying such Purchase Price by the then number of one
one-thousandths of share of Preferred Stock for which a Right would then be
exercisable (whether or not such Right was then exercisable) (each as adjusted
thereafter pursuant to Section 11(a)(i), Section 11(b),
Section 11(c), Section 11(f), Section 11(h),
Section 11(i) and Section 11(m)) and dividing that
product by (2) 50% of the current market price per share of the Senior
Voting Stock of such Principal Party (determined in the manner described in Section 11(d))
on the date of consummation of such consolidation, merger, sale or transfer;
provided that the Purchase Price and the number of shares of Senior Voting
Stock of such Principal Party issuable upon exercise of each Right shall be
further adjusted as provided in Section 11(f) to reflect any
events occurring in respect of such Principal Party after the date of such
consolidation, merger, sale or transfer; (B) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term “Company” shall thereafter
be deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 shall apply to such Principal Party
following the occurrence of such consolidation, merger, sale or transfer; and
(D) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its Senior Voting Stock
in accordance with Section 9, with each reference to Preferred
Stock in Section 9 being deemed to be a reference to the shares of
its Senior Voting Stock) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter 


 


26

















 


be applicable, as nearly as reasonably may be, in
relation to the shares of its Senior Voting Stock thereafter deliverable upon
the exercise of the Rights; provided that, upon the subsequent occurrence of
any consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase
Price as provided in this Section 13(a), such cash, shares, rights,
warrants and other property that such holder would have been entitled to
receive had such holder, at the time of such transaction, owned the Senior
Voting Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take
such steps (including, but not limited to, reservation of shares of stock) as
may be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property.


 


(b)                                 “Principal Party” shall mean
(i) in the case of any transaction described in Section 13(a)(i) or
Section 13(a)(ii), (A) the Person that is the issuer of any
securities into which shares of Common Stock are converted in such merger or
consolidation (or, if there is more than one such issuer, the issuer of such
securities that has the greatest aggregate market value of securities
outstanding), or (B) if no securities are so issued, (1) the Person
that is the other party to the merger if such Person survives said merger (or,
if there is more than one such Person, such Person who has the greatest
aggregate market value of securities outstanding) or (2) if the Person
that is the other party to the merger does not survive the merger, the Person
that does survive the merger (including the Company if it survives) or
(3) the Person resulting from the consolidation and (ii) in
the case of any transaction described in Section 13(a)(iii), the
Person that is the other party to such transaction or, if more than one, the
Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction; provided, however,
that in any such case, if the Senior Voting Stock of such Person is not at such
time and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (w) if such
Person is a direct or indirect subsidiary of another Person the Senior Voting
Stock of which is and has been so registered, the term “Principal Party”
shall refer to such other Person; or (x) if such Person is a subsidiary,
directly or indirectly, of more than one Person and the Senior Voting Stock of
any two or more of such Persons is and has been so registered, the term “Principal
Party” shall refer to whichever of such Persons is the issuer of the Senior
Voting Stock having the greatest aggregate market value of shares outstanding;
or (y) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in clauses (w) and
(x) above shall apply to each of the owners having an interest in such
joint venture as if such joint venture were a subsidiary of both or all of such
joint venturers and the Principal Party in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such joint venture bear to the total of such
interests.  “Senior Voting Stock”
shall mean the capital stock (or equity interest) of the Principal Party with
the greatest voting power.


 


(c)                                  The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such Principal Party or Parties shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in Section 13(a) and
Section 13(b) and further providing that, as soon as
practicable after the date of any consolidation, merger or sale or transfer of
assets mentioned in Section 13(a), the Principal Party or Parties
will (i) prepare and file a registration statement under the Securities



 


27

















 


Act with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, will use its best efforts (A) to cause such registration
statement to become effective as soon as practicable after such filing,
(B) to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, and (C) to similarly comply with applicable state
securities laws, and use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange; (ii) will deliver to holders of the Rights
historical financial statements for the Principal Party or Parties and each of
its Affiliates that comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act and
(iii) obtain waivers of any rights of first refusal or preemptive rights
in respect of the Common Stock of the Principal Party subject to purchase upon
exercise of outstanding Rights.


 


(d)                                 If the
Principal Party has a provision in any of its authorized securities or in its
certificate of incorporation or by-laws or other instrument governing its
affairs, which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to this Section 13),
in connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Senior Voting Stock or
Senior Voting Stock equivalents of such Principal Party at less than the
then-current market price per share thereof or securities exercisable for, or
convertible into, Senior Voting Stock or Senior Voting Stock equivalents of
such Principal Party at less than such then-current market price or
(ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Senior Voting Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event,
the Company hereby covenants and agrees with each holder of Rights that it
shall not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.


 


(e)                                  The Company covenants and agrees that it
shall not, at any time after a Person first becomes an Acquiring Person, enter
into any transaction of the kind referred to in this Section 13 if
(x) at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements that,
as a result of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights, (y) prior to,
simultaneously with or immediately after such transaction, the stockholders of
the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13(b) shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates or
Associates or (z) the form or nature of organization of the Principal
Party would preclude or limit the exercisability of the Rights.  The provisions of this Section 13
shall similarly apply to successive mergers or consolidations or sales or other
transfers.


 


Section 14.                                      Fractional Rights and Fractional Shares.


 


(a)                                  The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates that evidence
fractional Rights.  In lieu of such
fractional Rights, there shall be 


 


28
















 


paid to the registered holders of the Right
Certificates, with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. 
The closing price for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing
bid and ask prices, regular way, in either case (i) as reported by the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange, or (ii) if
the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported by 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
(iii) 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 ask prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use, or (iv) if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and ask prices as furnished by a professional market maker making a market in
the Rights selected by the Board or (v) if on any such date, no such
market maker is making a market in the Rights, the fair market value of the
Rights on such date as determined in good faith by the Board.


 


(b)                                 The Company shall not be required to
issue fractions of shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock) upon
exercise or exchange of the Rights or to distribute certificates that evidence
fractional shares of Preferred Stock (other than fractions that 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 of Preferred Stock 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 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 shares of Preferred Stock.  In lieu of fractional shares that are not
integral multiples of one one-thousandth of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates with regard
to which such fractional shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Preferred Stock.  For purposes of this Section 14(b),
the current market value of a whole share of Preferred Stock shall be the
closing price of a share of Preferred Stock (as determined pursuant to the
second sentence of Section 11(d)(i)) for the Trading Day immediately
prior to the date of such exercise or exchange).


 


(c)                                  The Company shall not be required to
issue fractions of shares of Common Stock upon exercise or exchange of the
Rights or to distribute certificates that evidence fractional shares of Common
Stock.  In lieu of such fractional
shares, the Company shall pay to the registered holders of Right Certificates
with regard to which such fractional shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a
whole share of Common Stock.  For
purposes of this Section 14(c), 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 such exercise or exchange).


 


29

















 


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


 


(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 payments 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.  The Rights Agent
shall be fully protected in relying upon such a certificate and shall have no
duty with respect to, and shall not be deemed to have knowledge of any payment
for fractional Rights or fractional shares under any section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.


 


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


 


Notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any registered holder of a Right or other
Person as a result of the Company’s or the Rights Agent’s inability to perform
any of their respective obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, judgment, decree or ruling
(whether interlocutory or final) issued by a court or by a governmental,
regulatory, self-regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of
such obligation.


 


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


 


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


 


30

















 


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


 


(c)                                  the Company and the Rights Agent may deem
and treat the Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right 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 shall be affected by any notice to the contrary;


 


(d)                                 this Agreement may be supplemented or
amended from time to time in accordance with its terms; and


 


(e)                                  the power and authority delegated to the
Board pursuant to this Agreement shall be exclusive and shall be as set forth
in Section 30.


 


Section 17.                                      Right Certificate Holder Not Deemed a
Stockholder.  No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Stock or any other securities of the Company that may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 23,
Section 24 or Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.


 


Section 18.                                      Concerning the Rights Agent. 
The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and other disbursements (including
but not limited to counsel fees and disbursements) incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense (including, without limitation, the reasonable fees
and expenses of legal counsel), incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance,
administration and performance of its duties under this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises and the enforcement of this indemnification.  The provisions of this Section 18
and of Section 20 shall survive the termination of this Agreement,
the exercise of or expiration of the Rights and the resignation, replacement or
removal of the Rights Agent.


 


31

















 


The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred 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.  The Rights Agent shall not be deemed to have
knowledge of any event of which it was supposed to receive notice hereunder,
and the Rights Agent shall be fully protected and shall incur no liability for
failing to take action in connection therewith, unless and until it has
received such notice in writing.


 


Section 19.                                      Merger or Consolidation or Change of Name
of Rights Agent.  Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to the
appropriate business of the Rights Agent or any successor Rights Agent shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21.  In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.


 


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


 


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


 


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


 


32

















 


(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 per share”) be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
the President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
and complete authorization and protection to the Rights Agent for any action
taken, suffered or omitted by it under the provisions of this Agreement in
reliance upon such certificate.


 


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


 


(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 Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.


 


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


 


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


 


33

















 


(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 or the Treasurer of the Company,
and such instructions shall be full authorization and protection to the Rights
Agent and the Rights Agent shall not be liable for or in respect of any action
taken, suffered or omitted by it in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions.  The Rights Agent shall be fully authorized
and protected in relying upon the most recent instructions received by any such
officer.  Any application by the Rights
Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken, suffered or
omitted by the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or suffered or such omission shall be
effective.  The Rights Agent shall not be
liable for any action taken or suffered by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five
(5) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken, suffered or omitted.


 


(h)                                 The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this 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 (through its directors, officers and employees) or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
in the selection and continued employment thereof (which gross negligence, bad
faith or willful misconduct must be determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent jurisdiction).


 


(j)                                     If, with respect to any Right 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 properly completed or indicates that the Rights are
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.


 


(k)                                  The Rights Agent shall have no
responsibility to the Company, any holders of Rights or any holders of shares
of Preferred Stock or other securities for interest or earnings on any monies
held by the Rights Agent pursuant to this Agreement, except as otherwise
specifically agreed in a separate writing by the Company and the Rights Agent.


 


34

















 


(l)                                     The Rights Agent shall not be required to
take notice or be deemed to have notice of any event or condition hereunder,
including, but not limited to, a Distribution Date, a Redemption Date, any
adjustment of the Purchase Price, the existence of an Acquiring Person or any
other event or condition that may require action by the Rights Agent, unless
the Rights Agent shall be specifically notified in writing of such event or
condition by the Company, and all notices or other instruments required by this
Agreement to be delivered to the Rights Agent must, in order to be effective,
be received by the Rights Agent as specified in Section 26, and in
the absence of such notice so delivered, the Rights Agent may conclusively
assume no such event or condition exists.


 


Section 21.                                      Change of Rights Agent. 
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days’ notice
in writing mailed to the Company and to each transfer agent of the Common Stock
and the Preferred Stock by registered or certified mail.  In the event the transfer agency relationship
in effect between the Company and the Rights Agent terminates, the Rights Agent
will be deemed to have resigned automatically and be discharged from its duties
under this Agreement as of the effective date of such termination.  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 the Preferred Stock by registered or
certified mail.  The Company will provide
notice of any resignation (including any automatic resignation) or removal of
any Rights Agent to the holders of the Right Certificates by first class mail
as soon as practicable after such event. 
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent.  If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit such holder’s Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a Person (or an Affiliate of such a Person) organized and doing
business under the laws of the United States or any state of the United States,
in good standing, that is authorized under such laws to exercise corporate
trust powers or stock transfer powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million.  After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock or Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.


 


35

















 


Section 22.                                      Issuance of New Right Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company, at its option, may issue new Right Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement.  In addition, in connection with the issuance
or sale of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company may, with respect to shares of Common Stock so
issued or sold pursuant to (a) the exercise of stock options,
(b) under any employee plan or arrangement, (c) the exercise,
conversion or exchange of securities, notes or debentures issued by the Company
or (d) a contractual obligation of the Company, in each case existing
prior to the Distribution Date, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale.


 


Section 23.                                      Redemption.


 


(a)                                  The Board (with the concurrent approval
by a majority of the members of the Special Independent Committee) may, at its
option, at any time prior to the Shares Acquisition Date, redeem all but not
less than all of the then outstanding Rights at a redemption price of $0.001
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date (such redemption price
being hereinafter referred to as the “Redemption Price”).  The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board in
its sole discretion may establish.  The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the current market price of the Common Stock at the time of
redemption as determined pursuant to Section 11(d)(i)) or any other
form of consideration deemed appropriate by the Board, or any combination
thereof.


 


(b)                                 If the Company receives a Qualified Offer
and the Board has not redeemed the outstanding Rights or exempted such
Qualified Offer from the terms of this Agreement or called a special meeting of
stockholders for the purpose of voting on whether or not to exempt such
Qualified Offer from the terms of this Agreement, in each case by the end of
ninety (90) days following the commencement of such Qualified Offer, and if the
Company receives, not earlier than ninety (90) days nor later than one hundred
twenty (120) days following the commencement of such Qualified Offer, a written
notice complying with the terms of this Section 23(b) (the “Special
Meeting Notice”), properly executed by the holders of record (or their duly
authorized proxy) of 10% or more of the shares of Common Stock then outstanding
(excluding shares of Common Stock beneficially owned by the Person making the
Qualified Offer and such Person’s Affiliates and Associates), directing the
Board to submit to a vote of stockholders at a special meeting of the
stockholders of the Company (a “Special Meeting”) a resolution authorizing
the redemption of all, but not less than all, of the then outstanding Rights at
the Redemption Price (the “Redemption Resolution”), then the Board shall
take such actions as are necessary or desirable to cause the Redemption
Resolution to be submitted to a vote of stockholders within ninety (90)
Business Days following receipt by the Company of the Special Meeting Notice
(the “Special Meeting Period”), including by including a proposal
relating to adoption of the Redemption Resolution in the proxy materials of the
Company for the Special Meeting; provided, however, that if the
Company, at any time during the Special Meeting Period and prior to a vote on
the Redemption Resolution, enters into a Definitive Acquisition Agreement, the 


 


36

















 


Special Meeting Period may be extended (and any
Special Meeting called in connection therewith may be cancelled) if the
Redemption Resolution will be separately submitted to a vote at the same
meeting as the Definitive Acquisition Agreement.  For purposes of a Special Meeting Notice, the
record date for determining eligible holders of record of the Common Stock
shall be the ninetieth (90th) day
following the commencement of a Qualified Offer.  Any Special Meeting Notice must be delivered
to the Secretary of the Company at the principal executive offices of the
Company and must set forth, as to the stockholders of record executing such
Special Meeting Notice, (i) the name and address of such stockholders, as
they appear on the Company’s books and records, (ii) the number of shares
of Common Stock that are owned of record by each of such stockholders and
(iii) in the case of Common Stock that is owned beneficially by another
Person, an executed certification by the holder of record that such holder has
executed such Special Meeting Notice only after obtaining instructions to do so
from such beneficial owner.  Subject to
the requirements of applicable law, the Board may take a position in favor of
or opposed to the adoption of the Redemption Resolution, or no position with
respect to the Redemption Resolution, as it determines to be appropriate in the
exercise of its fiduciary duties.  In the
event that (A) no Person has become an Acquiring Person prior to the
effective date of redemption referred to below in this sentence, (B) the
Qualified Offer continues to be a Qualified Offer prior to the last day of the
Special Meeting Period (the “Outside Meeting Date”) and (C) either
(1) the Special Meeting is not held on or prior to the Outside Meeting
Date or (2) at the Special Meeting at which a quorum is present, the
holders of a majority of the shares of Common Stock outstanding as of the
record date for the Special Meeting selected by the Board (excluding shares of
Common Stock beneficially owned by the Person making the Qualified Offer and
such Person’s Affiliates and Associates) vote in favor of the Redemption
Resolution, then all of the Rights shall be deemed redeemed at the Redemption
Price by such failure to hold the Special Meeting or as a result of the
adoption of the Redemption Resolution by the stockholders of the Company (or
the Board shall take such other action as may be necessary to prevent the
existence of the Rights from interfering with the consummation of the Qualified
Offer), such redemption to be effective, as the case may be, (x) as of the
close of business on the Outside Meeting Date  if
a Special Meeting is not held on or prior to such date or (y) if a Special
Meeting is held on or prior to the Outside Meeting Date, as of the date on
which the results of the vote adopting the Redemption Resolution at the Special
Meeting are certified as official by the appointed inspectors of election for
the Special Meeting.


 


(c)                                  Immediately upon the action of the Board
ordering the redemption of the Rights pursuant to Section 23(a) or
the effectiveness of a redemption of the Rights pursuant to Section 23(b),
in either case, without any further action and without any notice, the right to
exercise the Rights will terminate and each Right will thereafter represent
only the right to receive the Redemption Price. 
The Company shall promptly give public notice of any such redemption
and, within ten (10) days after such action causing a redemption of the
Rights pursuant to Section 23(a) or Section 23(b),
the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock.  Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption
will state the method by which the payment of the Redemption Price will be
made.  Notwithstanding the foregoing, the
failure to give, or any defect in, any notice required to be made or given
pursuant to this Section 23(c) shall not affect the validity
of the redemption of the Rights.


 


37

















 


(d)                                 Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth in this Section 23
or in Section 24, and other than in connection with the repurchase
of Common Stock prior to the Distribution Date.


 


Section 24.                                      Exchange.


 


(a)                                  The Board may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 11(a)(ii))
for shares of Common Stock at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”).  Notwithstanding the foregoing, the Board
shall not be empowered to effect such exchange at any time after any Acquiring
Person, together with all Affiliates and Associates of such Acquiring Person,
becomes the Beneficial Owner of 50% or more of the voting power of the shares
of Common Stock then outstanding.  From and
after the occurrence of an event specified in Section 13(a), any
Rights that theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be only exercisable in accordance with Section 13 and
may not be exchanged pursuant to this Section 24(a).  The exchange of the Rights by the Board may
be made effective at such time, on such basis and with such conditions as the
Board in its sole discretion may establish.


 


(b)                                 Immediately upon the effectiveness of the
action of the Board ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio.  The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange.  The Company promptly shall
mail a notice of any such exchange by first class mail to all of the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent.  Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.  Each such
notice of exchange will state the method by which the exchange of Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights that will be exchanged. 
Any partial exchange shall be effected pro rata based on the number of
Rights (other than Rights that have become null and void pursuant to the
provisions of Section 11(a)(ii)) held by each holder of Rights.


 


(c)                                  The Company may, at its option,
substitute for a share of Common Stock issuable upon the exchange of Rights in
accordance with Section 24(a) a number of shares of Preferred
Stock (or equivalent preferred stock) or fraction thereof such that the current
market price per share of one share of Preferred Stock (or equivalent preferred
stock) multiplied by such number or fraction is equal to the current market
price per share of Common Stock as of the date of such exchange.  In the event that there shall be insufficient
shares of Common Stock issued but not outstanding or authorized but unissued
(and unreserved) to permit an exchange of Rights in accordance with Section 24(a),
the Company shall substitute, to the extent of such insufficiency, 


 


38
















 


for each share of Common Stock that would otherwise be
issuable upon the exchange of Rights in accordance with Section 24(a) a
number of shares of Preferred Stock (or equivalent preferred stock) or fraction
thereof such that the current market price per share of one share of Preferred
Stock (or equivalent preferred stock) multiplied by such number or fraction is
equal to the current market price per share of Common Stock as of the date of
such exchange.


 


Section 25.                                      Notice of Certain Events. 
In case the Company shall propose at any time following the Distribution
Date (a) to pay any dividend payable in stock of any class to the holders
of its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last cash dividend theretofore paid),
(b) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of the Preferred Stock or
shares of stock of any class or any other securities, rights or options,
(c) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding
Preferred Stock), (d) to effect any consolidation or merger into or with,
or to effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the Company
and its subsidiaries (taken as a whole) to, any other Person, (e) to
effect the liquidation, dissolution or winding up of the Company or (f) to
declare or pay any dividend on the shares of Common Stock payable in shares of
Common Stock or to effect a subdivision, combination or consolidation of the
shares of Common Stock (by reclassification or otherwise than by payment of
dividends in shares of Common Stock), then, in each such case, the Company
shall give to each holder of a Right Certificate and the Rights Agent, 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
Common Stock and/or the 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
(a) or (b) above at least ten (10) days prior to the record date
for determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least ten (10) days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Common Stock and/or the Preferred Stock, whichever shall
be the earlier.  In case the event set
forth in Section 11(a)(ii) or Section 13 shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right, 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) or Section 13,
as applicable.


 


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 Right Certificate to or on the Company shall be
sufficiently given or made if sent by overnight delivery service or first class
mail, postage prepaid, addressed (until another address is filed in writing by
the Company with the Rights Agent) as follows:


 


39

















 


SuperMedia Inc.


2200 West Airfield
Drive


D/FW Airport,
Texas 75261


Attention:  Corporate Secretary


 


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 Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by overnight delivery service or first class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:


 


Mellon Investor
Services LLC


600 N. Pearl
Street


Suite 1010


Dallas, TX  75201


 


with a copy to:


 


Mellon Investor
Services LLC


Newport Office
Center VII


480 Washington
Blvd.


Jersey City, NJ
07310


Attention:  Legal Department


 


Notices or demands authorized by this Agreement to
be given or made by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by overnight delivery
service or 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. 
Except as otherwise provided in this Section 27, for so long
as the Rights are then redeemable, the Company may from time to time in its
sole and absolute discretion, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of the Rights.  At any time when the Rights are no longer
redeemable, except as otherwise provided in this Section 27, the
Company (by action of the Board) may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights in order to (a) cure any ambiguity, (b) correct
or supplement any provision contained herein that may be defective or
inconsistent with any other provisions herein, (c) shorten or lengthen any
time period hereunder or (d) change or supplement the provisions hereunder
in any manner that the Company may deem necessary or desirable; provided,
however, that at any time when the Rights are no longer redeemable, this
Agreement shall not be supplemented or amended in any manner that would
adversely affect the interests of the holders of Rights (which shall not
include Rights that have become null and void pursuant to the provisions of Section 11(a)(ii))
as such, cause this Agreement to become amendable other than in accordance with
this Section 27 or cause the Rights to again become
redeemable.  Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section 27,
the 


 


40

















 


Rights Agent shall execute such supplement or
amendment; provided that such supplement or amendment does not adversely affect
the rights, duties or obligations of the Rights Agent under this Agreement.


 


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


 


Notwithstanding anything contained in this Agreement
to the contrary, no amendment to Section 1(t), and no other supplement
or amendment to this Agreement that specifically relates to one or more
Grandfathered Persons, may be effected without the approval of a majority of
the members of the Special Independent Committee.


 


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.                                      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 Right
Certificates (and, prior to the Distribution Date, the 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 Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock).  Notwithstanding
anything to the contrary set forth in this Agreement, Paulson shall be an
intended third party beneficiary with respect to Section 1(t).


 


Section 30.                                      Determinations and Actions by the Board. 
The Board shall have the exclusive power and authority to administer
this Agreement and to exercise the rights and powers specifically granted to
the Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (a) interpret the provisions of this Agreement and (b) make
all determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights, to exchange or not exchange 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) that are
done or made by the Board in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights, as
such, and all other Persons and (y) not subject the Board to any liability
to the holders of the Rights or any other Person.  The Rights Agent is entitled always to assume
the Company’s Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.


 


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, if
such excluded provision shall affect the rights, immunities, duties or
obligations of the Rights Agent hereunder, the Rights Agent shall be 


 


41

















 


entitled to resign immediately; and provided  further,
that, notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or authority to
be invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 shall be reinstated (with prompt notice to the
Rights Agent) and shall not expire until the close of business on the tenth (10th) Business Day following the date of such
determination by the Board.  Without
limiting the foregoing, if any provision requiring a specific group of
directors of the Company to act is held by any court of competent jurisdiction
or other governmental or judicial authority to be invalid, void or
unenforceable, such determination shall then be made by the full Board in
accordance with applicable law and the Company’s Amended and Restated
Certificate of Incorporation and Amended and Restated By-laws (as each may be
amended from time to time).


 


Section 32.                                      Governing Law.  This
Agreement and each Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state; provided,
however, that with respect solely to matters regarding the rights and
obligations of the Rights Agent hereunder, the laws of the State of New York
shall govern without regard to its conflict of laws principles.


 


Section 33.                                      Descriptive Headings; References; Calculation of Time
Periods.  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.  Except as otherwise specifically provided,
any reference to any section or exhibit will be deemed to refer to such section
of or exhibit to this Agreement.  Each
reference in this Agreement to a period of time following or after a specified
date or event shall be calculated without including such specified date or the
day on which such specified event occurs.


 


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


 


Section 35.                                      Force Majeure. 
Notwithstanding anything to the contrary contained herein, the Rights
Agent shall not be liable for any delays or failures in performance resulting
from acts beyond its reasonable control including, without limitation, acts of
God, terrorist acts, shortage of supply, breakdowns or malfunctions,
interruptions or malfunction of computer facilities, or loss of data due to
power failures or mechanical difficulties with information storage or retrieval
systems, labor difficulties, war, or civil unrest.


 


{Remainder
of Page Left Intentionally Blank}


 


42

















 


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


 


	
  Attest:

  	
   

  	
  SUPERMEDIA
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Tara D. Mackey

  	
   

  	
  By:

  	
  /s/
  Cody Wilbanks

  
	
  Name:

  	
  Tara
  D. Mackey

  	
   

  	
  Name:

  	
  Cody Wilbanks

  
	
  Title:

  	
  Vice
  President-Associate General 

  	
   

  	
  Title:

  	
  Executive Vice President-General
  

  
	
   

  	
  Counsel and Assistant
  Secretary

  	
   

  	
   

  	
  Counsel and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MELLON
  INVESTOR SERVICES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Patricia Hodson

  
	
   

  	
   

  	
  Name:

  	
  Patricia Hodson

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


43

















 


Exhibit A


 


Form of
Certificate of Designations of Series A Junior Participating Preferred
Stock of SuperMedia Inc.


 


{See Attached}


 

















 


Exhibit B


 


Form of Right Certificate
 


	Certificate No. R-
	 
	Rights




 
NOT EXERCISABLE AFTER MARCH 25, 2013 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.  THE RIGHTS ARE SUBJECT, AT THE OPTION OF THE COMPANY, TO REDEMPTION AT $0.001 PER RIGHT OR TO EXCHANGE, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS AND THEIR AFFILIATES AND ASSOCIATES (AS SUCH TERMS ARE DEFINED IN SECTION 1 OF THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
 


Right Certificate


 


SUPERMEDIA 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 March 3,
2010  (the “Rights
Agreement”) between SUPERMEDIA INC., a Delaware corporation (the “Company”), and
MELLON INVESTOR SERVICES LLC, a New Jersey limited liability company
(the “Rights Agent”), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to the close of business (as such term is defined in the Rights
Agreement) on March 25, 2013 at the office of the Rights Agent, or its
successors as Rights Agent, designated for such purposes, one one-thousandth of
one fully paid and non-assessable share of the Series A Junior
Participating Preferred Stock (the “Preferred Stock”) of the Company, at
a purchase price of $150.00  per one
one-thousandth of one share (the “Purchase Price”), upon presentation
and surrender of this Right Certificate with the Form of Election to
Purchase duly executed.  The number of
Rights evidenced by this Right Certificate (and the number of one
one-thousandths of a share of Preferred Stock that 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 March 3, 2010, based on the
shares of the Preferred Stock of the Company as constituted at such date.


 


As
provided in the Rights Agreement, the Purchase Price, the number and kind or
class of shares of stock of the Company that may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.


 


1

















 


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


 


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


 


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


 


Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may, but are not required to, be (i) redeemed by the Company
at its option at a redemption price of $0.001 per Right or (ii) exchanged
by the Company in whole or in part for shares of Preferred Stock or Common
Stock, par value $0.01 per share, of the Company.


 


No
fractional shares of the Preferred Stock or Common Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions that
are integral multiples of one one-thousandth of one 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 Right Certificate shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Stock or of any other
securities of the Company that 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
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.


 


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


 


2

















 


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


 


	
  Dated as of     ,
  20   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
  SUPERMEDIA
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MELLON INVESTOR SERVICES LLC,

  	
   

  	
   

  
	
  as Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signature

  	
   

  	
   

  
						



 


3

















 


[Form of Reverse Side of Right Certificate]


 


FORM OF ASSIGNMENT


 


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


 


	
  FOR VALUE RECEIVED
                                                                                          
  hereby

  
	
   

  
	
  sells, assigns and
  transfers unto

  
	
   

  
	
   

  
	
  (Please print
  name and address of transferee)

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

  



 


Dated: 
                              
      , 20


 


	
   

  	
   

  
	
   

  	
  Signature

  



 


(Signature
must conform in all respects to the name of holder as written upon the face of
this Right Certificate, without alteration or enlargement or any change
whatsoever.)


 


	
  Signature Guaranteed:

  
	
   

  
	
  Signatures must be
  guaranteed by an “eligible guarantor institution” as defined in
  Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as
  amended.

  
	
   

  
	
   

  
	
  (to be completed
  if applicable)

  



 


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


 


	
   

  	
   

  
	
   

  	
  Signature

  



 


4
















 


FORM OF ELECTION TO PURCHASE


 


(To be executed by
the registered holder if such holder desires to exercise the Right Certificate)


 


	
  TO: SUPERMEDIA
  INC.

  
	
   

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

  
	
   

  
	
  [Please insert social
  security or other identifying number]

  	
   

  
	
   

  
	
   

  
	
  (Please print
  name and address)

  
	
   

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

  
	
   

  
	
  [Please insert social
  security or other identifying number]

  	
   

  
	
   

  
	
   

  
	
  (Please print
  name and address)

  
	
   

  
	
  Dated:
                                
        , 20

  
	
   

  	
   

  
	
   

  	
  Signature

  
				



 


(Signature
must conform in all respects to the name of holder as written upon the face of
this Right Certificate, without alteration or enlargement or any change
whatsoever.)


 


 


Signature Guaranteed:


 


	
  Signatures must be
  guaranteed by an “eligible guarantor institution” as defined in
  Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as
  amended.

  
	
   

  
	
   

  
	
  (to be completed
  if applicable)

  
	
   

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

  



 


	
   

  	
   

  
	
   

  	
  Signature

  



 


5

















 


Exhibit C


 


SUPERMEDIA INC.


 


SUMMARY OF RIGHTS
TO PURCHASE PREFERRED STOCK


 


The Board of Directors of
SUPERMEDIA INC., formerly known as Idearc Inc. (the “Company”) declared a
dividend distribution of one preferred stock purchase right (a “Right”)
for each outstanding share of common stock, $0.01 par value, of the Company (the “Common
Stock”).  The distribution is payable
at 5:00 p.m., New York City time, on March 25, 2010 to the stockholders of record
at 5:00 p.m., New York City time, on March 25, 2010 (the “Record Date”).  Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of the Company’s
Series A Junior Participating Preferred Stock (the “Preferred Stock”)
at a price of $150.00 per one one-thousandth of a share of Preferred Stock (the
“Purchase Price”), subject to adjustment.  The description and terms of the Rights are
set forth in a Rights Agreement dated March 3, 2010 (the “Rights
Agreement”), between the Company and Mellon Investor Services LLC, as
Rights Agent (the “Rights Agent”).


 


A copy of the Rights
Agreement has been filed with the Securities and Exchange Commission as an
Exhibit to a Registration Statement on Form 8-A dated March 3,
2010.  Copies of the Rights Agreement are
available free of charge from the Rights Agent, Mellon Investor Services
LLC.  The following summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby incorporated herein by
reference.


 


Until the close of
business on the Distribution Date, the Rights will be evidenced, with respect
to any of the Common Stock certificates outstanding as of the Record Date, by
such Common Stock certificate with a copy of this Summary of Rights.  The “Distribution Date” will be the
earlier to occur of (i) the tenth (10th)
day following a public announcement that a person or group of affiliated or
associated persons (an “Acquiring Person”) has acquired beneficial
ownership (which includes for this purpose stock referenced in derivative
transactions and securities) of 20% or more of the outstanding shares of the
Common Stock (the “Shares Acquisition Date”) or (ii) the tenth (10th) business day (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated or associated persons becomes an Acquiring Person) after
the commencement of, or announcement of an intention to commence, a tender
offer or exchange offer the consummation that would result in any person
becoming an Acquiring Person.  The
several investment funds and accounts managed by Paulson & Co. Inc.,
together with any affiliates thereof (collectively, “Paulson”) will not
be deemed to be an “Acquiring Person” so long as Paulson does not beneficially
own more than a specified percentage of the outstanding shares of the Common
Stock (which percentage will in no event exceed 45%) and meets certain other
conditions specified in the Rights Agreement.


 


The Rights Agreement
provides that, until the Distribution Date (or earlier redemption or expiration
of the Rights), the Rights will be transferable only in connection with the
transfer of the Common Stock.  Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new 


 


1

















 


issuance of the Common
Stock, will contain a notation incorporating the Rights Agreement by
reference.  Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for transfer
of any of the Common Stock certificates outstanding as of the Record Date, even
without a copy of this Summary of Rights, will also constitute the transfer of
the Rights associated with the Common Stock represented by such
certificate.  As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights (“Right
Certificates”) will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.


 


The Rights are not
exercisable until the Distribution Date. 
The Rights will expire on the earlier of (i) March 25, 2013
and (ii) March 25, 2011, if and only if Stockholder Approval has not
been obtained on or prior to such date (as applicable, the “Expiration Date”),
unless the Expiration Date is extended or unless earlier redeemed or exchanged
by the Company, in each case as described below.


 


Each share of Preferred
Stock purchasable upon exercise of the Rights will have a preferential
quarterly dividend rate equal to the greater of $1.00  per share and 1,000 times the dividend
declared on one share of the Common Stock. 
In the event of liquidation, the holders of the Preferred Stock will
receive a preferential liquidation payment of $1,000 per share plus accrued and
unpaid dividends thereon, but will be entitled to receive an aggregate
liquidation payment equal to 1,000 times the payment made on one share of
Common Stock.


 


Each share of Preferred
Stock will have 1,000 votes voting together with the Common Stock.  Finally, in the event of any merger, consolidation
or other transaction in which shares of Common Stock are exchanged, each share
of Preferred Stock will be entitled to receive 1,000 times the amount received
per one share of Common Stock.  The
Rights are protected by customary anti-dilution provisions.  Because of the nature of the Preferred Stock
dividend, liquidation and voting rights, the value of the one one-thousandth
interest in a share of Preferred Stock purchasable upon exercise of each Right
should approximate the value of one share of Common Stock.


 


The Purchase Price
payable, and the number of shares of the Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of the Preferred Stock,
(ii) upon the grant to holders of the Preferred Stock of certain rights or
warrants to subscribe for shares of the Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock or
(iii) upon the distribution to holders of the Preferred Stock of evidences
of indebtedness or assets (excluding regular periodic cash dividends out of
earnings or retained earnings at a rate not in excess of 125% of the rate of
the last cash dividend theretofore paid or dividends payable in the Preferred
Stock) or of subscription rights or warrants (other than those referred to
above).


 


The number of outstanding
Rights and the number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in 


 


2

















 


shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.


 


In the event that the
Company is acquired in a merger or other business combination transaction or
50% or more of its assets or earning power are sold after a person or group has
become an Acquiring Person, proper provision will be made so that each holder
of a Right will thereafter have the right to receive, upon the exercise thereof
at the Purchase Price, that number of shares of the senior voting stock of the
acquiring company that at the time of such transaction would have a market
value of two times the Purchase Price. 
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision will be made so that each
holder of a Right, other than Rights that were or are beneficially owned by the
Acquiring Person (which will thereafter be null and void), will thereafter have
the right to receive upon exercise that number of shares of the Common Stock
having a market value of two times the Purchase Price.


 


With certain exceptions,
no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price.  No fractional shares of Preferred Stock or
Common Stock will be issued (other than fractions that 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) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Stock or Common Stock, as applicable, on the last trading date prior to the
date of exercise.


 


At any time after any
person or group becomes an Acquiring Person and prior to the acquisition by
such person or group of 50% or more of the outstanding shares of Common Stock,
the Board may exchange the Rights (other than Rights owned by such person or
group that will have become null and void) in whole or in part, at an exchange
ratio of one share of Common Stock (or, if there is an insufficient number of
issued but not outstanding or authorized but unissued shares of Common Stock to
permit such exchange, then one one-thousandth of a Preferred Share) per Right (subject
to adjustment).


 


At any time prior to
5:00 p.m., New York City time, on the earlier of (i) the Shares
Acquisition Date and (ii) the Expiration Date, the Board may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption
Price”).  In addition, if a Qualified
Offer (as described below) is made, the record holders of 10% or more of the
outstanding shares of Common Stock may direct the Board to call a special
meeting of stockholders to consider a resolution authorizing a redemption of
all Rights.  If the special meeting is
not held within ninety (90) days of being called or if, at the special meeting,
the holders of a majority of the shares of Common Stock outstanding (other than
shares held by the offeror and its affiliated and associated persons) vote in
favor of the redemption of the Rights, then the Board will redeem the Rights or
take such other action as may be necessary to prevent the Rights from
interfering with the consummation of the Qualified Offer.


 


A Qualified Offer is an
offer determined by a majority of the independent directors on the Board to be
a fully financed offer for all outstanding shares of Common Stock at a per
share offer price that exceeds the greatest of certain price thresholds
specified in the Rights Agreement and that the Board, upon the advice of a
nationally recognized investment banking firm, does not 


 


3

















 


deem to be either unfair
or inadequate.  A Qualified Offer is
conditioned upon a minimum of at least two-thirds of the outstanding shares of
Common Stock not held by the offeror (and its affiliated and associated
persons) being tendered and not withdrawn, with a commitment to acquire all
shares of Common Stock not tendered for the same consideration.  If the Qualified Offer includes non-cash
consideration, such consideration must consist solely of freely-tradeable
common stock of a publicly traded company, and the board and its
representatives must be given access to conduct a due diligence review of the
offeror to determine whether the consideration is fair and adequate.  A Qualified Offer must also remain open for
at least one hundred twenty (120) days following commencement.


 


Immediately upon the
action of the Board to redeem or exchange the Rights, the Company shall make
announcement thereof, and upon such action, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price, or the shares of Common Stock or Preferred Stock
exchangeable for the Rights, as applicable.


 


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


 


4