exv4w1



 





Exhibit 4.1




HALOZYME THERAPEUTICS, INC.




AND




CORPORATE STOCK TRANSFER




as Rights Agent




RIGHTS AGREEMENT




Dated as of May 4, 2006, as amended





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	1.

	 	Certain Definitions
	 	 	1	 
	2.

	 	Appointment of Rights Agent
	 	 	5	 
	3.

	 	Issuance of Right Certificates
	 	 	6	 
	4.

	 	Form of Right Certificates
	 	 	7	 
	5.

	 	Countersignature and Registration
	 	 	8	 
	6.

	 	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates
	 	 	9	 
	7.

	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	9	 
	8.

	 	Cancellation and Destruction of Right Certificates
	 	 	11	 
	9.

	 	Reservation and Availability of Shares of Preferred Stock
	 	 	11	 
	10.

	 	Preferred Stock Record Date
	 	 	12	 
	11.

	 	Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price
	 	 	12	 
	12.

	 	Certification of Adjustments
	 	 	21	 
	13.

	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	21	 
	14.

	 	Fractional Rights and Fractional Shares
	 	 	25	 
	15.

	 	Rights of Action
	 	 	26	 
	16.

	 	Agreement of Right Holders
	 	 	26	 
	17.

	 	Right Certificate Holder Not Deemed a Stockholder
	 	 	27	 
	18.

	 	Concerning the Rights Agent
	 	 	27	 
	19.

	 	Merger or Consolidation or Changed Name of Rights Agent
	 	 	27	 
	20.

	 	Duties of Rights Agent
	 	 	28	 
	21.

	 	Change of Rights Agent
	 	 	30	 
	22.

	 	Issuance of New Right Certificates
	 	 	31	 
	23.

	 	Redemption
	 	 	31	 
	24.

	 	Exchange of Rights for Common Stock
	 	 	32	 






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	25.

	 	Notice of Proposed Actions
	 	 	33	 
	26.

	 	Notices
	 	 	34	 
	27.

	 	Supplements and Amendments
	 	 	34	 
	28.

	 	Successors
	 	 	35	 
	29.

	 	Benefits of this Rights Agreement
	 	 	35	 
	30.

	 	Determinations and Actions by the Board of Directors
	 	 	35	 
	31.

	 	Governing Law
	 	 	35	 
	32.

	 	Counterparts
	 	 	36	 
	33.

	 	Descriptive Headings
	 	 	36	 
	34.

	 	Severability
	 	 	36	 






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RIGHTS AGREEMENT




     This Rights Agreement (“Rights Agreement”), dated as of May 4, 2006, as amended on November
12, 2007, between Halozyme Therapeutics, Inc., a Nevada corporation (the “Company”), and Corporate
Stock Transfer (the “Rights Agent”).



WITNESSETH:




     WHEREAS, the Board of Directors of the Company on May 4, 2006 (i) authorized the issuance and
declared a dividend of one right (“Right”) for each share of the common stock, par value $0.001 per
share, of the Company outstanding as of the Close of Business (as such term is hereinafter defined)
on May 29, 2006 (the “Record Date”), each Right representing the right to purchase one
one-thousandth of a share of Series A Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation attached hereto as Exhibit
A upon the terms and subject to the conditions hereinafter set forth, and (ii) further
authorized the issuance of one Right with respect to each share of Common Stock of the Company that
shall become outstanding between the Record Date and the Distribution Date (as such term is
hereinafter defined);



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



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



          (a) “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such
term is hereinafter defined) of such Person shall be the Beneficial Owner (as such term is
hereinafter defined) of twenty percent (20%) or more of the outstanding Common Stock of the
Company, without the prior approval of the Board of Directors; provided, however,
that in no event shall a Person who or which, together with all Affiliates and Associates of such
Person, is the Beneficial Owner of less than 20% of the Company’s outstanding Common Stock, become
an Acquiring Person solely as a result of a reduction of the number of shares of outstanding Common
Stock, including repurchases of outstanding shares of Common Stock by the Company, which reduction
increases the percentage of outstanding shares of Common Stock beneficially owned by such Person;
provided, further, that if a Person shall become the Beneficial Owner of 20% or
more of the Company’s outstanding Common Stock then outstanding solely by reason of a reduction of
the number of shares of outstanding Common Stock, and shall thereafter become the Beneficial Owner
of any additional shares of Common Stock of the Company, then such Person shall be deemed to be an
Acquiring Person unless upon the consummation of the acquisition of such additional shares of
Common Stock such person does not own 20% or more of the shares of Common Stock then outstanding.
An Acquiring Person shall not include an Exempt Person (as such term is hereinafter defined).
Notwithstanding the foregoing, if (i) either (x) the Board of Directors determines in good faith
that a Person who would otherwise be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently (including, without limitation,



 









 







because (A) such Person was unaware that it beneficially owned a percentage of Common Stock
that would otherwise cause such Person to be an Acquiring Person or (B) such Person was aware of
the extent of its Beneficial Ownership but had no actual knowledge of the consequences of such
Beneficial Ownership under this Rights Agreement) and without any intention of changing or
influencing control of the Company, or (y) within two Business Days of being requested by the
Company to advise the Company regarding same, such Person certifies in writing that such Person
acquired Beneficial Ownership of 20% or more of the Company’s outstanding Common Stock
inadvertently or without knowledge of the terms of the Rights, and (ii) such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that such Person would no
longer be an Acquiring Person, as defined pursuant to the foregoing provisions of this paragraph
(a), then such Person shall not be deemed to be or to have become an Acquiring Person for any
purposes of this Rights Agreement.



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



          (c) A Person shall be deemed the “Beneficial Owner” of any securities



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



               (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has (A) the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities), whether or not in writing, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or to
“beneficially own,” securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person’s Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote or dispose of or has “beneficial ownership” of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, or
any comparable or successor rule), including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to “beneficially own”, any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or



               (iii) which are beneficially owned, directly or indirectly, by any other Person with which
such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except as
described in the proviso to clause (B) of subparagraph (ii) of this Section 1(c)) or disposing of
any securities of the Company; provided, however, that no



2









 







Person who is an officer, director or employee of an Exempt Person shall be deemed, solely by
reason of such Person’s status or authority as such, to be the Beneficial Owner of, to have
“beneficial ownership” of or to “beneficially own” any securities that are “beneficially owned” (as
defined in this Section 1(c)), including, without limitation, in a fiduciary capacity, by an Exempt
Person or by any other such officer, director or employee of an Exempt Person.



     For all purposes of this Rights Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including any calculation for purposes of determining the
particular percentage of such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect on the date hereof.



          (d) “Board of Directors” shall mean the Company’s Board of Directors.



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



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



          (g) “Common Stock” when used with reference to the Company shall mean the common stock, par
value $0.001 per share, of the Company. “Common Stock” when used with reference to any Person
other than the Company which shall be organized in corporate form shall mean the capital stock or
other equity security with the greatest per share voting power of such Person or, if such Person is
a Subsidiary of or is controlled by another Person, the Person which ultimately controls such
first-mentioned Person. “Common Stock” when used with reference to any Person other than the
Company which shall not be organized in corporate form shall mean units of beneficial interest
which shall represent the right to participate in profits, losses, deductions and credits of such
Person and which shall be entitled to exercise the greatest voting power per unit of such Person.



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



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



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



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



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



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



          (n) “Exempt Person” shall mean the Company or any Subsidiary of the Company, including,
without limitation, in its fiduciary capacity, any employee benefit plan or employee or director
stock plan of the Company or of any Subsidiary of the Company, or any Person, organized, appointed,
established or holding Common Stock for or pursuant to the terms of any such plan or any Person
funding other employee benefits for employees of the Company or any Subsidiary of the Company.



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



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



          (q) “Flip-In Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B) or
11(a)(ii)(C) hereof.



          (r) “Flip-In Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof.



          (s) “Flip-Over Event” shall mean any event described in clause (x), (y) or (z) of Section
13(a) hereof.



          (t) “NASDAQ” shall have the meaning set forth in Section 9(b) hereof.



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



          (v) “Preferred Stock” shall mean the Series A Preferred Stock, $0.001 par value of the Company
having the rights, powers and preferences set forth in Exhibit A hereto, and, to the extent
that there is not a sufficient number of shares of Series A Preferred Stock authorized to permit
the full exercise of the Rights, any other series of Preferred Stock, $0.001 par value, of the
Company designated for such purpose containing terms substantially similar to the terms of the
Series A Preferred Stock.



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



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



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



          (z) “Record Date” shall have the meaning set forth in the Recitals within this Rights
Agreement.



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



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



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



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



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



          (ff) “Stock Acquisition Date” shall mean the first date of public announcement by the Company
or an Acquiring Person that an Acquiring Person has become such or such earlier date as a majority
of the directors shall become aware of the existence of an Acquiring Person.



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



          (hh) “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 and any corporation or other entity that is otherwise controlled by
such Person.



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



          (jj) “Trading Day” shall mean a day on which the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day.



          (kk) “Triggering Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B)
or 11(a)(ii)(C) or Section 13 hereof.



          (ll) “Voting Power” shall mean the voting power of all securities of the Company then
outstanding and generally entitled to vote for the election of directors of the Company.



     Any determination required by the definitions contained in this Section 1 shall be made by the
Board of Directors in its good faith judgment, which determination shall be binding on the Rights
Agent and the holders of the Rights.



     2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act
as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such
appointment. The Company may from time to time appoint a



5









 







co-Rights Agent as it may deem
necessary or desirable. In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agents and any Co-Rights Agents shall be as the Company shall
determine.



     3. Issuance of Right Certificates.



          (a) Until the earlier of (i) the Stock Acquisition Date (or, if the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date of the commencement by any Person (other
than an Exempt Person) of, or of the first public announcement of the intent of any Person (other
than an Exempt Person) to commence (which intention to commence remains in effect for five business
days after such announcement), a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the Beneficial Owner of 20% or
more of the outstanding Common Stock (irrespective of whether any shares are actually purchased
pursuant to any such offer) (including any such date which is after the date of this Rights
Agreement and prior to the issuance of the Rights; the earlier of such dates being herein referred
to as the “Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of
Section 3(c) hereof) by the certificates for the Common Stock registered in the names of the
holders of the Common Stock and not by separate Right Certificates, and (y) each Right will be
transferable only in connection with the transfer of a share (subject to adjustment as hereinafter
provided) of Common Stock. As soon as practicable after the Distribution Date, the Rights Agent
will mail, by first-class, postage prepaid mail, to each record holder of the Common Stock as of
the Close of Business on the Distribution Date, as shown by the records of the Company, to the
address of such holder shown on such records, a Right certificate in substantially the form of
Exhibit B hereto (a “Right Certificate”) evidencing one Right 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.



          (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, substantially in the form attached hereto as
Exhibit C (a “Summary of Rights”), by first-class, postage prepaid mail, 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.



          (c) Rights shall be issued in respect of all shares of Common Stock that are issued (either as
an original issuance or from the Company’s treasury) after the Record Date prior to the earlier of
the Distribution Date or the Expiration Date. With respect to certificates representing such
shares of Common Stock, the Rights will be evidenced by such certificates for Common Stock
registered in the names of the holders thereof together with the Summary of Rights. Until the
Distribution Date (or, if earlier, 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 attached thereto), shall also constitute the surrender for transfer of the Rights
associated with the Common Stock represented thereby.



          (d) Certificates issued for Common Stock (including, without limitation, certificates issued
upon transfer or exchange of Common Stock) after the Record Date but prior



6









 







to the earlier of the
Distribution Date or the Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:




This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between Halozyme Therapeutics, Inc. and Corporate Stock
Transfer, as Rights Agent, dated as of May 4, 2006, as the same may be amended from time to
time (the “Rights Agreement”), the terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive office of Halozyme Therapeutics, 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.
Halozyme Therapeutics, Inc. will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt by it of a written request therefor. Under certain
circumstances as provided in the Rights Agreement, Rights issued to, beneficially owned by
or transferred to any Person who is or becomes an Acquiring Person (as such terms are
defined in the Rights Agreement) or an Associate or Affiliate (as such terms are defined in
the Rights Agreement) thereof and certain transferees thereof will be null and void and will
no longer be transferable.


With respect to such certificates containing the foregoing legend, the Rights associated with the
Common Stock represented by such certificates shall, until the Distribution Date, be evidenced by
such certificates alone, and registered holders of Common Stock shall also be the registered
holders of the associated Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common Stock represented
thereby. In the event that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the earlier of the Distribution Date, the Redemption Date or the
Expiration Date, any Rights associated with such shares of Common Stock shall be deemed canceled
and retired so that the Company shall not be entitled to exercise any Rights associated with the
shares of Common Stock no longer outstanding.




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



     4. Form of Right Certificates.



          (a) The Right Certificates (and the forms of election to purchase shares and of assignment to
be printed on the reverse thereof), when, as and if issued, shall be substantially in the form set
forth in 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 and as are
not inconsistent with the provisions of this Rights Agreement, or as may be required to comply with
any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 11, 13 and 22 hereof, the Right Certificates evidencing the
Rights issued on the Record Date, whenever such certificates are issued, shall be dated as of the
Record Date and the Right Certificates evidencing Rights to holders of record of Common Stock
issued after the Record Date shall be dated as of the Record
Date but shall also be dated to reflect the date of issuance of such Right Certificate. On
their face, Right Certificates shall entitle the holders thereof to purchase, for each Right, one
one-



7









 







thousandth of a share of Preferred Stock, or other securities or property as provided herein,
as the same may from time to time be adjusted as provided herein, at the price per one
one-thousandth of a share of Preferred Stock of $25.00, as the same may from time to time be
adjusted as provided herein (the “Purchase Price”).



          (b) Notwithstanding any other provision of this Rights Agreement, any Right Certificate that
represents Rights that are or were at any time on or after the earlier of the Stock Acquisition
Date or the Distribution Date beneficially owned by an Acquiring Person or any Affiliate or
Associate thereof (or any transferee of such Rights) shall have impressed on, printed on, written
on or otherwise affixed to it (if the Company or the Rights Agent has knowledge that such Person is
an Acquiring Person or an Associate or Affiliate thereof or transferee of such Persons or a nominee
of any of the foregoing) the following legend:




The beneficial owner of the Rights represented by this Right Certificate is an Acquiring
Person or an Affiliate or Associate (as such terms are defined in the Rights Agreement) of
an Acquiring Person or a subsequent holder of such Right Certificates beneficially owned by
such Persons. Accordingly, this Right Certificate and the Rights represented hereby are
null and void and will no longer be transferable as provided in the Rights Agreement.


The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Right Certificates.




     5. Countersignature and Registration.



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



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



8









 





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



          (a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time after the
Close of Business on the Distribution Date and at or prior to the Close of Business on the
Expiration Date, any Right Certificate or Certificates (other than Right Certificates representing
Rights that have become null and void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be (i) transferred or (ii) split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock or other securities as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer any Right Certificate shall surrender the Right Certificate at the office of
the Rights Agent designated for such purposes with the form of assignment on the reverse side
thereof duly endorsed (or enclose with such Right Certificate a written instrument of transfer in
form satisfactory to the Company and the Rights Agent), duly executed by the registered holder
thereof or his attorney duly authorized in writing, and with such signature guaranteed by a member
of a securities approved medallion program. Any registered holder desiring to split up, combine or
exchange any Right Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be split up, combined or
exchanged at the office of the Rights Agent designated for such purposes. Thereupon the Rights
Agent shall, subject to Sections 4(b), 7(e), 11 and 14 hereof, countersign (by manual or facsimile
signature) and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.



          (b) Subject to the provisions of Section 11(a)(ii) hereof, 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 case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company, reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will execute 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.



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



          (a) Subject to Section 11(a)(ii) hereof, the Rights shall become exercisable, and may be
exercised to purchase Preferred Stock, 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 duly executed (with such signature
duly guaranteed), to the Rights Agent at the office of the Rights Agent designated for that
purpose, together with payment of the Purchase Price with respect to each Right exercised, subject
to adjustment as hereinafter provided, at or prior to the Close of Business on the earlier of (i)
May 4, 2016 (the “Final Expiration Date”), (ii) the
time at which the Rights are redeemed as
provided in Section 23 hereof (such date being herein referred to as the “Redemption Date”) or
(iii) the



9









 







time at which all such Rights are exchanged as provided in Section 24 hereof (the
earliest of (i), (ii) and (iii) being herein referred to as the “Expiration Date”).



          (b) The Purchase Price and the number of shares of Preferred Stock or other securities or
consideration to be acquired upon exercise of a Right shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof. The Purchase Price shall be payable in lawful money
of the United States of America, in accordance with Section 7(c) hereof.



          (c) Except as provided in Section 11(a)(ii) hereof, upon receipt of a Right Certificate with
the form of election to purchase duly executed, accompanied by payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) or so much thereof as is
necessary for the shares to be purchased and an amount equal to any applicable tax or governmental
charge, by cash, certified check or official bank check payable to the order of the Company or the
Rights Agent, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)
requisition from any transfer agent of the Preferred Stock (or make available if the Rights Agent
is the transfer agent) certificates for the number of shares of Preferred Stock so elected to be
purchased and the Company will comply and hereby authorizes and directs such transfer agent to
comply with all such requests, (ii) requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14(b) hereof, and (iii) promptly
after receipt of such Preferred Stock certificates 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, when appropriate, after receipt of the cash requisitioned from
the Company promptly deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event of a purchase of securities, other than Preferred Stock, pursuant to
Section 11(a) or Section 13 hereof, the Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iii). In the event that the Company is
obligated to issue other securities of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by the Rights Agent, if
and when appropriate.



          (d) Except as otherwise provided herein, 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 his duly authorized assigns, subject
to the provisions of Sections 6 and 14 hereof.



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



10









 





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



     9. Reservation and Availability of Shares of Preferred Stock.



          (a) The Company covenants and agrees that at all times it will cause to be reserved and kept
available, out of and to the extent of its authorized and unissued shares of Preferred Stock not
reserved for another purpose (and, following the occurrence of a Triggering Event, other
securities) or held in its treasury, the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities) that, as provided in this Rights Agreement,
including Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of all
outstanding Rights; provided, however, that the Company shall be required to
reserve and keep available shares of Preferred Stock or other securities sufficient to permit the
exercise in full of all outstanding Rights pursuant to the adjustments set forth in Section
11(a)(ii), Section 11(a)(iii) or Section 13 hereof only if, and to the extent that, the Rights
become exercisable pursuant to such adjustments.



          (b) The Company shall (i) use its best efforts to cause, from and after such time as the
Rights become exercisable, the Rights and all shares of Preferred Stock (and following the
occurrence of a Triggering Event, other securities) issued or reserved for issuance upon exercise
thereof to be reported by the The NASDAQ Stock Market (“NASDAQ”) or such other system then in use,
and if the Preferred Stock shall become listed on any national securities exchange, to cause, from
and after such time as the Rights become exercisable, the Rights and all shares of Preferred Stock
(and, following the occurrence of a Triggering Event, other securities) issued or reserved for
issuance upon exercise thereof to be listed on such exchange upon official notice of issuance upon
such exercise and (ii) if then necessary, to permit the offer and issuance of such shares of
Preferred Stock (and, following the occurrence of a Triggering Event, other securities), register
and qualify such shares of Preferred Stock (and, following the occurrence of a Triggering Event,
other securities) under the Securities Act and any applicable state securities or “blue sky” laws
(to the extent exemptions therefrom are not available), cause such registration statement and
qualifications to become effective as soon as possible after such filing and keep
such registration and qualifications effective until the Expiration Date of the Rights. The
Company may temporarily suspend, for a period of time not to exceed ninety (90) days, the
exercisability of the Rights in order to prepare and file a registration statement under the
Securities Act and permit it to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Rights Agreement to the contrary, the Rights shall



11









 







not be
exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Securities Act (if required) shall have
been declared effective.



          (c) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all shares of Preferred Stock (and following the occurrence of a Triggering Event,
other securities) delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares in accordance with
applicable law.



          (d) The Company further covenants and agrees that it will pay when due and payable any and all
taxes and governmental charges which may be payable in respect of the issuance or delivery of the
Right Certificates or of any shares of Preferred Stock (or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay any tax or
governmental charge which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or the issuance or delivery of certificates for Preferred
Stock (or other securities, as the case may be) upon exercise of Rights in a name other than that
of, the registered holder of the Right Certificate, and the Company shall not be required to issue
or deliver a Right Certificate or certificate for Preferred Stock (or other securities, as the case
may be) to a Person other than such registered holder until any such tax and governmental charge
shall have been paid (any such tax or governmental 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 governmental charge is due.



     10. Preferred Stock Record Date. Each Person in whose name any certificate for shares
of Preferred Stock (or other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the shares of Preferred
Stock (or other securities, as the case may be) represented thereby on, and such certificate shall
be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate, as such, shall not be entitled
to any rights of a stockholder of the Company with respect to the 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, if any, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided herein.



     11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price. The
number and kind of shares subject to purchase upon the exercise of each Right, the number of Rights
outstanding and the Purchase Price are subject to adjustment from time to time as follows:



          (a) (i) In the event the Company shall at any time after the date of this Rights Agreement (A)
declare or pay any dividend on Preferred Stock payable in shares of Preferred Stock, (B) subdivide
or split the outstanding shares of Preferred Stock into a greater number of shares, (C) combine or
consolidate the outstanding shares of Preferred Stock into a



12









 







smaller number of shares or effect a
reverse split of the outstanding 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 Preferred Stock or capital
stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of capital stock or other
securities, which, if such Right had been exercised immediately prior to such date, the holder
thereof would have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).



               (ii) Subject to Section 24, in the event



                    (A) any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any time
after the date of this Rights Agreement, directly or indirectly, (1) shall consolidate with or
merge with and into the Company or any of its Subsidiaries or otherwise combine with the Company or
any of its Subsidiaries and the Company or such Subsidiary shall be the continuing or surviving
corporation of such consolidation, merger or combination and the Common Stock of the Company shall
remain outstanding and no shares thereof shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or any other property, or (2) shall, in
one or more transactions, other than in connection with the exercise of a Right or Rights and other
than in connection with the exercise or conversion of securities exercisable for or convertible
into securities of the Company or of any Subsidiary of the Company, transfer any assets or property
to the Company or any of its Subsidiaries in exchange (in whole or in part) for any shares of any
class of capital stock of the Company or any of its Subsidiaries or any securities exercisable for
or convertible into shares of any class of capital stock of the Company or any of its Subsidiaries,
or otherwise obtain from the Company or any of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company or any of its Subsidiaries or any
securities exercisable for or convertible into shares of any class of capital stock of the Company
or any of its Subsidiaries (other than as part of a pro rata offer or distribution by the Company
or such Subsidiary to all holders of such shares), or (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or
otherwise acquire (other than as a pro rata dividend) or dispose of, to, from or with, as the
case may be (in one transaction or a series of transactions), the Company or any of its
Subsidiaries, any assets (including securities) on terms and conditions less favorable to the
Company or such Subsidiary than the Company or such Subsidiary would be able to obtain in
arm’s-length negotiation with an unaffiliated third party, or (4) shall receive any compensation
from the Company or any of its Subsidiaries for services other than compensation for employment as
a regular or part-time employee, or fees for serving as a director, at rates in accordance with the
Company’s (or its Subsidiary’s) past practices, or (5) shall receive the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or tax advantage provided by the Company or any



13









 







of
its Subsidiaries, or (6) shall engage in any transaction with the Company (or any of its
Subsidiaries) involving the sale, license, transfer or grant of any right in, or disclosure of, any
patents, copyrights, trade secrets, trademarks, know-how or any other intellectual or industrial
property rights recognized under any country’s intellectual property laws which the Company
(including its Subsidiaries) owns or has the right to use on terms and conditions not approved by
the Board of Directors; or



                    (B) any Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person; or



                    (C) during such time as there is an Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or any recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries or any other transaction or
series of transactions involving the Company or any of its Subsidiaries (whether or not with or
into or otherwise involving an Acquiring Person or any Affiliate or Associate of such Acquiring
Person) which has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities of the Company or
any of its Subsidiaries, or securities exercisable for or convertible into equity securities of the
Company or any of its Subsidiaries, which is directly or indirectly beneficially owned by any
Acquiring Person or any Affiliate or Associate of any Acquiring Person (any of (A), (B) or (C)
being referred to herein as a “Flip-In Event”);



then upon the first occurrence of such Flip-In Event (i) the Purchase Price shall be adjusted to be
the Purchase Price in effect immediately prior to the Flip-In Event multiplied by the number of one
one-thousandth of a share of Preferred Stock for which a Right was exercisable immediately prior to
such Flip-In Event, whether or not such Right was then exercisable, and (ii) each holder of a
Right, except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall
thereafter have the right to receive, upon exercise thereof at a price equal to the Purchase Price
(as so adjusted), in accordance with the terms of this Rights Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock as shall equal the result obtained by
dividing the Purchase Price (as so adjusted) by 50% of the Current Market Price per share of the
Common Stock (determined pursuant to Section 11(d) hereof) on the date of such Flip-In Event;
provided, however, that the Purchase Price (as so adjusted) and the number of
shares of Common Stock so receivable upon the exercise of a Right shall, following the Flip-In
Event, be subject to further adjustment as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in this Rights Agreement to the contrary, however, from and after the
Flip-In Event, any Rights that are beneficially owned by (x) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (y) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who becomes a transferee after the Flip-In Event or (z) a transferee
of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Flip-In Event pursuant to either (I) 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, whether written or otherwise, regarding the transferred Rights or
(II) a transfer which the Board of Directors has determined is part of a plan, agreement,
arrangement or understanding, whether written or otherwise, which has the purpose or effect of
avoiding the provisions of this paragraph, and subsequent transferees of such Persons, shall be
null and void without any further action and any holder of such Rights shall thereafter have no



14









 






rights whatsoever with respect to such Rights under any provision of this Rights 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 Right Certificates 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 Flip-In Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof that represents Rights that
are or have become null and void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or have become null and
void pursuant to the provisions of this paragraph shall be canceled.



               (iii) The Company may at its option substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of
shares of Preferred Stock having an aggregate current market value equal to the Current Market
Price of a 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 the foregoing subparagraph (ii), the Board of Directors shall, 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 the foregoing subparagraph
(ii) (the “Current Value”) over (2) the Purchase Price (as adjusted in accordance with the
foregoing subparagraph (ii)), and (B) with respect to each Right (other than Rights which have
become null and void pursuant to the foregoing subparagraph (ii)), make adequate provision to
substitute for the shares of Common Stock issuable in accordance with the foregoing paragraph (ii)
upon exercise of the Right and payment of the Purchase Price (as adjusted in accordance therewith),
(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 which, 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 of
Directors 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 being 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 which, when added to the value of the shares of Common
Stock actually 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 of Directors upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors; provided, however,
that if the
Company shall not make adequate provision to deliver value pursuant to clause (B) above within
30 days following the date of the Flip-In Event (the “Flip-in 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 the Board of Directors shall determine in good faith that it is likely
that sufficient additional shares of Common Stock and/or Common Stock Equivalents could be
authorized for issuance upon exercise in full of the Rights, the 30-day period set forth above may



15









 







be extended to the extent necessary, but not more than 90 days after the Flip-In Trigger Date, in
order that the Company may seek stockholder approval for the authorization of such additional
shares of Common Stock or Common Stock Equivalents (such 30-day period, as it may be extended,
being hereinafter referred to as 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 the last sentence of Section
11(a)(ii) hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the Substitution Period in order
to seek any authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to the first sentence of Section 11(a)(iii) 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 Common Stock shall be the Current Market Price per share of the Common
Stock on the Flip-In Trigger Date and the per share or per unit value of any Common Stock
Equivalent shall be deemed to equal the Current Market Price per share of the Common Stock on such
date. The Board of Directors may, but shall not be required to, establish procedures to allocate
the right to receive 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 (other than the
Rights), options or warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase Preferred Stock (for a period expiring within 45 calendar days after such record date),
shares having the same rights, privileges and preferences as the Preferred Stock (a “Preferred
Stock Equivalent”) or securities convertible into Preferred Stock or Preferred Stock Equivalent at
a price per share of Preferred Stock or Preferred Stock Equivalent (or having a conversion price
per share, if a security convertible into Preferred Stock or Preferred Stock Equivalent) less than
the Current Market Price per share of Preferred Stock on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or
Preferred Stock Equivalent (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or Preferred Stock Equivalent to be offered for
subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of which is in a form other than cash,
the value of such non-cash consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent.
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 or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.



16









 





          (c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness, cash, assets (other than a
dividend payable in Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator of which shall be such
Current Market Price per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such
record date had not been fixed.



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



17









 







shares on such date as
determined in good faith by the Board of Directors shall be used and shall be binding on the Rights
Agent. If the Common Stock is not publicly held or not so listed or traded, “Current Market Price”
per share shall mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.



               (ii) For the purpose of any computation hereunder, the “Current Market Price” per share (or
one one-thousandth of a share) of Preferred Stock shall be determined in the same manner as set
forth above for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the Current Market Price per share (or one one-thousandth of a share) of Preferred
Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly
held or listed or traded in a manner described in clause (i) of this Section 11(d), the “Current
Market Price” per share of Preferred Stock shall be conclusively deemed to be an amount equal to
1,000 (as such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after the date of this
Rights Agreement) multiplied by the Current Market Price per share of the Common Stock and the
“Current Market Price” per one one-thousandth of a share of Preferred Stock shall, be equal to the
Current Market Price per share of the Common Stock (as appropriately adjusted). If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or traded, “Current Market
Price” shall mean the fair value per share as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.



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



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



          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of shares of Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.



18









 





          (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandth
of a share of Preferred Stock (calculated to the nearest one-one-thousandth) obtained by (i)
multiplying (x) the number of one one-thousandth of a share of Preferred Stock covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.



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



          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then par value, if any, of the shares of Common Stock, Preferred Stock



19









 







or other capital stock
issuable upon exercise of the Rights, the Company shall take any corporate action, including using
its best efforts to obtain any required stockholder approvals, which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock, Preferred Stock or other capital stock at such adjusted
Purchase Price. If upon any exercise of the Rights, a holder is to receive a combination of Common
Stock and Common Stock Equivalents, a portion of the consideration paid upon such exercise, equal
to at least the then par value of a share of Common Stock of the Company, shall be allocated as the
payment for each share of Common Stock of the Company so received.



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



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



          (n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person, (ii) merge with or into any other Person, or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other Person or Persons, if
(x) at the time of or immediately after such consolidation, merger or sale there are any charter or
by-law provisions or any rights, warrants or other instruments or securities outstanding or
agreements in effect which substantially diminish or otherwise eliminate the benefits intended to
be afforded by the Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who constitutes, or would constitute,
the “Principal Party” for purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates and Associates. The Company shall
not consummate any such consolidation, merger or sale unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this subsection.



20









 





          (o) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 23, Section 24 or Section 27 hereof, take (or permit any Subsidiary 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.



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



     12. Certification of Adjustments. Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall (a) promptly prepare a certificate signed by its Chief
Executive Officer, its President or any Vice President and by the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Company setting forth such adjustment
and a brief statement of the facts giving rise to such adjustment, (b) promptly file with the
Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing shares of Common
Stock) in accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the failure
of the Company to give such notice shall not affect the validity of or the force or effect of or
the requirement for such adjustment.
The Rights Agent shall be fully protected in relying on any certificate prepared by the
Company pursuant to Sections 11 and 13 and on any adjustment therein contained and shall not be
deemed to have knowledge of any such adjustment unless and until it shall have received such
certificate. Any adjustment to be made pursuant to Sections 11 and 13 of this Rights Agreement
shall be effective as of the date of the event giving rise to such adjustment.



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



          (a) In the event that following the first occurrence of a Flip-In Event, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person or
Persons and the Company, as the case may be, shall not be the surviving or continuing Person of
such consolidation or merger, or (y) any Person or Persons shall consolidate with, or merge with
and into, the Company, and the Company shall be the continuing or surviving Person of such
consolidation or merger and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities
of any other Person or of the Company or cash or any other property other than, in the



21









 







case of the
transactions described in subparagraphs (x) or (y), a merger or consolidation which would result in
all of the Voting Power represented by the securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being converted into
securities of the surviving entity) all of the Voting Power represented by the securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation and the
holders of such securities not having changed as a result of such transactions), or (z) the Company
or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer to any other Person
or any Affiliate or Associate of such Person, in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole), then, on the first occurrence of any such
event (a “Flip-Over Event”), proper provision shall be made so that (i) each holder of a Right
(other than Rights which have become null and void pursuant to Section 11(a)(ii) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof), in accordance with the terms of
this Rights Agreement and in lieu of shares of Preferred Stock or Common Stock of the Company, such
number of validly authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall equal the result
obtained by dividing the Purchase Price (as theretofore adjusted in accordance with Section
11(a)(ii) hereof) by 50% of the Current Market Price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided, however, that the Purchase Price
(as theretofore adjusted in accordance with Section 11(a)(ii) hereof) and the number of shares of
Common Stock of such Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such Principal Party after the occurrence of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Flip-Over Event, all the obligations and duties of the Company
pursuant to this Rights Agreement; (iii) the term “Company” for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section 11 hereof shall
only apply to such Principal Party following the first occurrence of a Flip-Over Event; and (iv)
such Principal Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with Section 9 hereof) in connection
with the consummation of any such transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; provided, however, that, upon
the subsequent occurrence of any merger, consolidation, sale of all or substantially all assets,
recapitalization, reclassification of shares, reorganization 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, such cash, shares, rights, warrants and other property which such holder
would have been entitled to receive had he, at the time of such transaction, owned the shares of
Common Stock of the Principal Party purchasable upon the exercise of a Right, and such Principal
Party shall take such steps (including, but not limited to, reservation of shares of stock) as may
necessary to permit the subsequent exercise of the Rights in accordance with the terms hereof for
such cash, shares, rights, warrants and other property.



22









 





          (b) “Principal Party” shall mean



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



               (ii) in the case of any transaction described in (z) of the first sentence in Section 13(a)
hereof, the Person that is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or earning power cannot
be determined, whichever of such Persons that is the issuer of Common Stock having the greatest
aggregate market value of shares outstanding;


provided, however, that in any such case described in the foregoing paragraphs (b)(i) or
(b)(ii), (1) if the Common Stock of such Person is not at such time and has not been continuously
over the preceding 12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so
registered, the term “Principal Party” shall refer to such other Person, or (2) if such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Stock of all of which are
and have been so registered, the term “Principal Party” shall refer to whichever of such Persons is
the issuer of the Common Stock having the greatest market value of shares outstanding, or (3) 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 (1) and (2) above shall apply to each of the owners having an interest in the
joint venture as if the Person owned by the joint venture was a Subsidiary of both or all of such
joint venturers, and the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the total of such
interests.




          (c) The Company shall not consummate any consolidation, merger, sale or transfer referred to
in Section 13(a) unless the Principal Party shall have a sufficient number of authorized shares of
its Common Stock that have not been issued or reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 13 and unless prior thereto the Company and the
Principal Party involved therein shall have executed and delivered to the Rights Agent an agreement
confirming that the requirements of Sections 13(a) and (b) hereof shall promptly be performed in
accordance with their terms and that such consolidation, merger, sale or transfer of assets shall
not result in a default by the Principal Party under this Rights Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and further providing
that, as soon as practicable after executing such agreement pursuant to this Section 13, the
Principal Party at its own expense shall:



23









 





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



               (ii) use its best efforts, if the Common Stock of the Principal Party shall become listed on a
national securities exchange, to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to cause the Rights and the
securities purchased upon exercise of the Rights to be reported by NASDAQ or such other system then
in use;



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



               (iv) obtain waivers of any rights of first refusal or preemptive rights in respect of the
shares of Common Stock of the Principal Party subject to purchase upon exercise of outstanding
Rights.


In the event that any of the transactions described in Section 13(a) hereof shall occur at any time
after the occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights which have
not theretofore been exercised shall thereafter be exercisable in the manner described in Section
13(a).




          (d) Furthermore, in case the Principal Party which is to be a party to a transaction referred
to in this Section 13 has a provision in any of its authorized securities or in its Certificate of
Incorporation or Bylaws or other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section 13, shares of Common
Stock of such Principal Party at less than the then Current Market Price per share (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or convertible into, Common Stock
of such Principal Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Stock of such Principal Party pursuant to
the provisions of Section 13; then, in such event, the Company hereby 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.



24









 





     14. Fractional Rights and Fractional Shares.



          (a) The Company shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the holders of record 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 then current
market value of a whole Right. For the purposes of this Section 14(a), the then current market
value of a Right shall be determined in the same manner as the Current Market Price of a share of
Common Stock shall be determined pursuant to Section 11(d) hereof.



          (b) The Company shall not be required to issue fractions of shares of Preferred Stock or
Preferred Stock Equivalent (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock or Preferred Stock Equivalent (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred Stock). Fractions of
shares of Preferred Stock in integral multiples of one one-thousandth of a share of Preferred Stock
or Preferred Stock Equivalent 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 the
shares of Preferred Stock or Preferred Stock Equivalent represented by such depositary receipts.
In lieu of fractional shares of Preferred Stock or Preferred Stock Equivalent that are not integral
multiples of one one-thousandth of a share of Preferred Stock or Preferred Stock Equivalent, the
Company may pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one one-thousandth of a share of Preferred Stock or Preferred Stock Equivalent. For
purposes of this Section 14(b), the current market value of one one-thousandth of a share of
Preferred Stock or Preferred Stock Equivalent
shall be the Current Market Price of a share of Common Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise.



          (c) Following the occurrence of a Flip-In Event, the Company shall not be required to issue
fractions of shares or units of Common Stock or Common Stock Equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractional shares of such
Common Stock or Common Stock Equivalents or other securities. In lieu of fractional shares or
units of such Common Stock or Common Stock Equivalents or other securities, the Company may pay to
the registered holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the Current Market Value of a share or
unit of such Common Stock or Common Stock Equivalent or other securities. For purposes of this
Section 14(c), the Current Market Value shall be determined in the manner set forth in Section
11(d) hereof for the Trading Day immediately prior to the date of such exercise and, if such Common
Stock Equivalent is not traded, each such Common Stock Equivalent shall have the value of one
one-thousandth of a share of Preferred Stock.



          (d) The holder of a Right by the acceptance of a Right expressly waives his right to receive
any fractional Right or any fractional shares upon exercise of a Right.



25









 





     15. Rights of Action. As of the Record Date, all rights of action in respect of this
Rights Agreement, other than any rights of action vested in the Rights Agent pursuant to Sections
18 and 20 hereof, are vested in the respective holders of record of the Right Certificates (and,
prior to the Distribution Date, the holders of record of the Common Stock); and any holder of
record of any Right Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the Company or any other
Person to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and, accordingly, that they will be entitled to specific
performance of the obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Rights Agreement. Holders of Rights shall be
entitled to recover the reasonable costs and expenses, including attorneys’ fees, incurred by them
in any action to enforce the provisions of this Rights Agreement.



     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 not be evidenced by a Right Certificate
and will be transferable only in connection with the transfer of Common Stock;



          (b) after the Distribution Date, the Right Certificates will be transferable only on the
registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of transfer;



          (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 Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent or the transfer agent of the
Common Stock) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and



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



26









 





     17. Right Certificate Holder Not Deemed a Stockholder. No holder of a Right, as such,
shall be entitled to vote, receive dividends in respect of or be deemed for any purpose to be the
holder of Common Stock or any other securities of the Company which may at any time be issuable
upon the exercise of the Rights, 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 in the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights in respect of any
such stock or securities, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.



     18. Concerning the Rights Agent.



          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration and execution of
this Rights Agreement and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or
expense incurred without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent for any thing done or omitted to be done by the Rights Agent in connection with the
acceptance and administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability in the premises. The
indemnity provided herein shall survive the expiration of the Rights and the termination of
this Rights Agreement. Notwithstanding anything in this Rights Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss damage and regardless of the form of action.



          (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration of this Rights
Agreement in reliance upon any Right Certificate, certificate for Common Stock or 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, guaranteed, verified or
acknowledged, by the proper Person or Persons.



     19. Merger or Consolidation or Changed Name of Rights Agent.



          (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Rights Agreement without the execution or filing of
any paper or any further act on the part of any of the parties hereto, provided that such Person
would be eligible for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall



27









 







succeed to the agency created by
this Rights Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.



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



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



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



          (b) Whenever in the performance of its duties under this Rights Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including, without limitation, the
identity of any Acquiring Person and the determination of Current Market Price) be proved or
established by the Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by certificate signed by the President or any Vice President
and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the provisions of this
Rights Agreement in reliance upon such certificate.



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



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



          (e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Rights Agreement or the execution and delivery hereof (except the due execution



28









 







hereof by the
Rights Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11, 13, 23 or 24 hereof
or responsible for the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of a Certificate furnished pursuant to Section
12 describing any such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Rights Agreement or any Right Certificate or as to whether any shares of
Common 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 Rights Agreement.



          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President or the Secretary or any Assistant
Secretary or the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with instructions of 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 or omitted
by the Rights Agent under this Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. Subject to Section 20(c) hereof, the Rights
Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after the date specified in such application
(which date shall not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken 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 the Rights Agent
under this Rights Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other entity.



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



29









 







such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection and continued
employment thereof.



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



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



     21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Rights Agreement upon 30 days’ notice in writing, or
such earlier period as shall be agreed to in writing, mailed to the Company and to each transfer
agent of the Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent (with or without cause) upon
30 days’ notice in writing, or such earlier period as shall be agreed to 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 by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent. Notwithstanding
the foregoing provisions of this Section 21, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment within a period of
30 days after 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 his Right Certificate for inspection by the Company), then the
incumbent Rights Agent or the holder of record 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) a Person organized and doing
business under the laws of the United States or any State thereof, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
Affiliate controlled by a Person described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and 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, and mail a



30









 







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.



     22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this
Rights Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price per share and the number or kind or class of shares
of stock or other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company shall, with respect to shares of Common Stock
so issued or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities hereinafter issued by 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;
provided, however, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax
consequences to the Company or the Person to whom such Right Certificate would be issued, and
(ii) no such Right Certificate shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.



     23. Redemption.



          (a) The Board of Directors may, at its option, at any time prior to the earlier of (x) the
first occurrence of a Flip-In Event or (y) the Close of Business on the Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.001 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being hereinafter referred to as
the “Redemption Price”).



          (b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights (or at such later time as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights shall be to receive
the Redemption Price. The Company shall promptly give public notice of any such redemption;
provided, however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Within 10 days after such action of the Board of
Directors ordering the redemption of the Rights (or such later time as the Board of Directors may
establish for the effectiveness of such redemption), 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 which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price will



31









 







be made. The
failure to give notice required by this Section 23(b) or any defect therein shall not affect the
legality or validity of the action taken by the Company.



          (c) In the case of a redemption permitted under Section 23(a) hereof, the Company may, at its
option, discharge all of its obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing payment of the Redemption Price
to the registered holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer
agent of the Common Stock, and upon such action, all outstanding Right Certificates shall be null
and void without any further action by the Company.



     24. Exchange of Rights for Common Stock.



          (a) The Board of Directors may, at its option, at any time after the occurrence of a Flip-In
Event, exchange all or part of the then outstanding and exercisable Rights (which (i) shall not
include Rights that have become null and void pursuant to the provisions of Section 11(a)(ii) and
(ii) shall include, without limitation, any Rights issued after the Distribution Date in accordance
with Section 22 hereof) 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 date hereof (the “Exchange Ratio”).
Notwithstanding the foregoing the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of Common Stock aggregating 50%
or more of the shares of Common Stock then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been exchanged pursuant to
this Section 24(a) shall thereafter be exercisable only in accordance with Section 13 and may not
be exchanged pursuant to this Section 24(a).



          (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder
of 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 to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become null and void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.



          (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute,
and, in the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as contemplated



32









 







in
accordance with this Section 24, the Company shall substitute to the extent of such insufficiency,
for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number
of shares of Preferred Stock or Preferred Stock Equivalent or fractions thereof having an aggregate
current per share market price (determined pursuant to Section 11(d) hereof) equal to the current
per share market price of one share of Common Stock (determined pursuant to Section 11(d) hereof)
as of the date of the Flip-In Event.



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



          (e) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market value of a whole share
of Common Stock. For the purposes of this paragraph (d), the current
market value of a whole share of Common Stock shall be the Current Market Price of a share of
Common Stock (as defined in Section 11(d) hereof for the purposes of computations made other than
pursuant to Section 11(a)(iii)) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.



     25. Notice of Proposed Actions.



          (a) In case the Company, after the Distribution Date, shall propose (i) to effect any of the
transactions referred to in Section 11(a)(i) or to pay any dividend to the holders of record of its
Preferred Stock payable in stock of any class or to make any other distribution to the holders of
record of its Preferred Stock (other than a regular periodic cash dividend), or (ii) to offer to
the holders of record of its Preferred Stock or options, warrants, or other rights to subscribe for
or to purchase shares of Preferred Stock (including any security convertible into or exchangeable
for Preferred Stock) or shares of stock of any other class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Preferred Stock or any recapitalization or reorganization of the Company,
or (iv) to effect any consolidation or merger with or into, 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 or Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to each holder of
record of a Right Certificate, in accordance with Section 26 hereof, notice of such proposed
action, which shall specify the record date for the purposes of such transaction referred to in
Section 11(a)(i), or such dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of assets, liquidation,
dissolution or winding up is to take place and the record date for determining participation
therein by the holders of record of Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii) above at least



33









 







10
days prior to the record date for determining holders of record of the Preferred Stock for purposes
of such action, and in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the holders of record of
Preferred Stock, whichever shall be the earlier.



          (b) In case any of the transactions referred to in Section 11(a)(ii) or Section 13 of this
Rights Agreement are proposed, then, in any such case, the Company shall give to each holder of
Rights, in accordance with Section 26 hereof, notice of the proposal of such transaction at least
10 days prior to consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(ii) or Section 13 hereof, as
the case may be, and, upon consummating such transaction, shall similarly give notice thereof to
each holder of Rights.



          (c) The failure to give notice required by this Section 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote upon any such
action.



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


Halozyme Therapeutics, Inc.

11388 Sorrento Valley Road

San Diego, California 92121

Attention: Chief Financial Officer



Subject to the provisions of Section 20 hereof, any notice or demand authorized by this Rights
Agreement to be given or made by the Company or by the holder of record of any Right Certificate or
Right to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the Company) as follows:



Corporate Stock Transfer

3200 Cherry Creek South Drive, Suite 430

Denver, Colorado 80209

Attention: Shari Humpherys



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




     27. Supplements and Amendments. Except as provided in the penultimate sentence of
this Section 27, for so long as the Rights are then redeemable, the Company may in its sole and
absolute discretion, and the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Rights Agreement in any respect without the approval of any



34









 







holders of the
Rights. At any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Rights Agreement without the approval of any holders
of Right Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent with any other provisions herein, (iii)
shorten or lengthen any time period hereunder, or (iv) change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable; provided that no
such supplement or amendment shall adversely affect the interests of the holders of Rights as such
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such
amendment may cause the Rights again to become redeemable or cause the Agreement again to become
amendable other than in accordance with this sentence. Notwithstanding anything contained in this
Rights Agreement to the contrary, no supplement or amendment shall be made which changes the
Redemption Price. 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.



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



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



     30. Determinations and Actions by the Board of Directors. The Board of Directors
shall have the exclusive power and authority to administer this Rights Agreement and to exercise
the rights and powers specifically granted to the Board of Directors or to the Company, or as may
be necessary or advisable in the administration of this Rights Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this Rights Agreement and (ii)
make all determinations deemed necessary or advisable for the administration of this Rights
Agreement (including, without limitation, a determination to redeem or not redeem the Rights or to
amend or not amend this Rights Agreement). All such actions, calculations, interpretations and
determinations that are done or made by the Board of Directors in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the Rights, as such, and
all other parties.



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



35









 





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



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



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



36









 





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



	 	 	 	 	 	 	 	 	 	 	 
	[SEAL]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	HALOZYME THERAPEUTICS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 
	 	/s/ David A. Ramsay	 	 	 	By: 	 	 /s/ Jonathan E. Lim	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name: David A. Ramsay
	 	 	 	 	 	Name: Jonathan E. Lim	 	 
	 

	 	Title: CFO
	 	 	 	 	 	Title: President & CEO	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[SEAL]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	CORPORATE STOCK TRANSFER	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

	 	 /s/ Shari Humphreys	 	 	 	By:  	 	 /s/ Carylyn K. Bell	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name: Shari Humphreys
	 	 	 	 	 	Name: Carylyn K. Bell	 	 
	 

	 	Title: Secretary
	 	 	 	 	 	Title: President	 	 







37