exv4w1



 





Exhibit 4.1




NAVISTAR INTERNATIONAL CORPORATION




and




MELLON INVESTOR SERVICES LLC,

Rights Agent




Rights Agreement




Dated as of July 23, 2007




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	Page
	Section 1.
	 	Certain Definitions	 	1
	Section 2.
	 	Appointment of Rights Agent	 	6
	Section 3.
	 	Issuance of Rights Certificates	 	6
	Section 4.
	 	Form of Rights Certificates	 	8
	Section 5.
	 	Countersignature and Registration	 	9
	Section 6.
	 	Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates	 	9
	Section 7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	10
	Section 8.
	 	Cancellation and Destruction of Rights Certificates	 	12
	Section 9.
	 	Reservation and Availability of Capital Stock	 	13
	Section 10.
	 	Preferred Stock Record Date	 	14
	Section 11.
	 	Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights	 	15
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Shares	 	23
	Section 13.
	 	Consolidation, Merger or Sale or
Transfer of Assets, Cash Flow or Earning Power	 	23
	Section 14.
	 	Fractional Rights and Fractional Shares	 	26
	Section 15.
	 	Rights of Action	 	27
	Section 16.
	 	Agreement of Rights Holders	 	28
	Section 17.
	 	Rights Certificate Holder Not Deemed a Stockholders	 	28
	Section 18.
	 	Concerning the Rights Agent	 	29
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	30
	Section 20.
	 	Duties of Rights Agent	 	30
	Section 21.
	 	Change of Rights Agent	 	33
	Section 22.
	 	Issuance of New Rights Certificates	 	33
	Section 23.
	 	Redemption and Termination	 	34
	Section 24.
	 	Exchange	 	35
	Section 25.
	 	Notice of Certain Events	 	36
	Section 26.
	 	Notices	 	37
	Section 27.
	 	Supplements and Amendments	 	37
	Section 28.
	 	Successors	 	38
	Section 29.
	 	Determinations and Actions by the Board of Directors, etc.	 	38
	Section 30.
	 	Benefits of this Agreement	 	38
	Section 31.
	 	Severability	 	38
	Section 32.
	 	Governing Law	 	39
	Section 33.
	 	Counterparts	 	39
	Section 34.
	 	Descriptive Headings	 	39
	Section 35.
	 	Force Majeure	 	39






 









 






EXHIBITS




Exhibit A — Form of Certificate of Designation, Preferences and Rights




Exhibit B — Form of Rights Certificates




Exhibit C — Form of Summary of Rights




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RIGHTS AGREEMENT




          RIGHTS AGREEMENT, dated as of July 23, 2007 (the “Agreement”), between Navistar Financial
Corporation, a Delaware corporation (the “Company”), and Mellon Investor Services LLC, as New
Jersey limited liability company, as rights agent (the “Rights Agent”).




W I T N E S S E T H




          WHEREAS, on July 23, 2007 (the “Rights Dividend Declaration Date”), the Board of Directors of
the Company (the “Board”) authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of common stock, with a par value of $0.10 per share, of the
Company (the “Common Stock”) outstanding at the close of business on July 23, 2007 (the “Record
Date”), and has authorized the issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p) hereof) for each share of Common Stock of the Company
issued between the Record Date (whether originally issued or delivered from the Company’s treasury)
and the Distribution Date (as hereinafter defined) each Right initially representing the right to
purchase one one-thousandth of a share of the Preferred Stock (as hereinafter defined) having the
rights, powers and preferences set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set
forth (the “Rights”).




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




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




                    (a) “Acquiring Person” shall mean any Person who or which,
together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company, or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to the terms of any
such plan, (iv) any Person who becomes the Beneficial Owner of fifteen percent (15%) or more of the
shares of Common Stock then outstanding as a result of a reduction in the number of shares of
Common Stock outstanding due to the repurchase of shares of Common Stock by the Company (or any
Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan) unless and until such Person, after becoming aware that such Person
has become the Beneficial Owner of fifteen percent (15%) or more of the then outstanding shares of
Common Stock, acquires beneficial ownership of additional shares of Common Stock representing one
percent (1%) or more of the shares of Common Stock then outstanding,
(v) any such Person who has reported or is required to report such ownership (but less than
20%) on Schedule 13G under the Exchange Act (or any comparable or successor



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report) or on Schedule
13D under the Exchange Act (or any comparable or successor report) which Schedule 13D does not
state any intention to or reserve the right to control or influence the management or policies of
the Company or engage in any of the actions specified in Item 4 of such schedule (other than the
disposition of the Common Stock) and, within 10 Business Days of being requested by the Company to
advise it regarding the same, certifies to the Company that such Person acquired shares of Common
Stock in excess of 14.9% inadvertently or without knowledge of the terms of the Rights and who or
which, together with all Affiliates and Associates, thereafter reduces such Person’s, together with
its Affiliates’ and Associates’, Beneficial Ownership to less than 15% of the Common Stock of the
Company then outstanding; provided, however, that if the Person requested to so
certify fails to do so within 10 Business Days, then such Person shall become an Acquiring Person
immediately after such 10-Business-Day period, or (vi) an Exempt Person, but only for so long as
such Exempt Person, together with such Person’s Affiliates and Associates, does not become the
Beneficial Owner of any additional shares of Common Stock while such Person is an Exempt Person.




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



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



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




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




                         (ii) which such Person
or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right to vote or



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dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or





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


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




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



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



                    (g) “Common Stock” shall mean the common stock, with a
par value of $0.10 per share, of the
Company, except that “Common Stock” when used with reference to any Person other than the Company
shall mean the capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the management, of such
Person.



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



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



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



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



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



                    (m) “Exempt Person” shall mean any Person who or which,
together with all Affiliates and
Associates of such Person, is, as of the Exempt Time, the Beneficial Owner of 15% or more of the
Common Stock of the Company then outstanding. Notwithstanding anything to the contrary provided in
this Agreement, any Exempt Person who, together with such Person’s Affiliates and Associates, after
the Exempt Time becomes the Beneficial Owner of less than 15% of the Common Stock of the Company
then outstanding shall cease to be an Exempt Person and shall be subject to all the provisions of
this Agreement in the same manner as any Person who is not and was not an Exempt Person.



                    (n) “Exempt Time” shall mean 5:00 P.M., New York City
time, on July 23, 2007.



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



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



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



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



                    (s) “Person” shall mean any individual, firm,
corporation, partnership, trust, association,
limited liability company or other entity.



                    (t) “Preferred Stock” shall mean shares of Junior
Participating Preferred Stock, Series A with
a par value of $1.00 per share, of the Company, and, to the extent that there are not a sufficient
number of shares of Junior Participating Preferred Stock, Series A authorized to permit the full
exercise of the Rights, any other series of preferred stock of the Company designated for such
purpose containing terms substantially similar to the terms of the Junior Participating Preferred
Stock, Series A.



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



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



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



                    (x) “Record Date” shall have the meaning set forth in
the preamble of this Agreement.



                    (y) “Rights” shall have the meaning set forth in the
preamble of this Agreement.



                    (z) “Rights Agent” shall have the meaning set forth in
the preamble of this Agreement.



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



                    (bb) “Rights Dividend Declaration Date” shall have the
meaning set forth in the preamble of
this Agreement.



                    (cc) “Section 11(a)(ii) Event” shall mean any
event described in Section 11(a)(ii) hereof.



                    (dd) “Section 13 Event” shall mean any event
described in clauses (x), (y) or (z) of Section
13(a) hereof.



                    (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 (which, for
purposes of this definition, shall include, without limitation, a report filed or amended pursuant
to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such other than pursuant to a Qualified Offer.



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



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



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



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



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



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




          Section 3. Issuance of Rights Certificates.




                    (a) Until the earlier of (i) the close of business on the tenth
Business Day after the Stock
Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date occurs before the
Record Date, the close of business on the Record Date), or (ii) the close of business on the tenth
Business Day (or such later date as the Board shall determine) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act, if upon consummation thereof, such Person would become an Acquiring Person,
in either instance other than pursuant to a Qualified Offer (the earlier of (i) and (ii) being
herein referred to as the “Distribution Date”), (x) the Rights will be evidenced (subject to the
provisions of paragraphs (b) and (c) of this Section 3) by the certificates for the Common Stock
or, in the case of uncertificated shares, the balances indicated in the book-entry account system
of the transfer agent for the Common Stock, registered in the names of the holders of the Common
Stock (which shares of Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable only in connection with the transfer
of the underlying shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Rights Agent will, if requested and
provided with all the necessary information, send by first class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit B hereto (the “Rights Certificates”),
evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the



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Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates. The Company shall promptly notify the Rights Agent in writing
upon occurrence of a Distribution Date. Until such notice is received
by the Rights Agent, the Rights Agent may presume conclusively for
all purposes that a Distribution Date has not occurred.




                    (b) The Company will make available, as promptly as practicable
following the Record Date, a
copy of a Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary
of Rights”) to any holder of Rights who may so request from time to time prior to the Expiration
Date. With respect to shares of Common Stock outstanding as of the Record Date, or issued
subsequent to the Record Date, unless and until the Distribution Date shall occur, the Rights will
be evidenced by the certificates for the Common Stock or, in the case of uncertificated shares, the
balances indicated in the book-entry account system of the transfer agent for the Common Stock, and
the registered holders of the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date (as such term is defined
in Section 7(a) hereof), the transfer of any shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with such shares of Common
Stock.



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




               This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Navistar International
Corporation (the “Company”) and the Rights Agent thereunder (the “Rights Agent”)
dated as of July 23, 2007, as from time to time amended (the “Rights Agreement”),
the terms of which are hereby incorporated herein by reference and a copy of which
is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge, promptly after
receipt of a written request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder, may
become null and void.



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With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates.




          Section 4. Form of Rights Certificates.




                    (a) The Rights Certificates (and the forms of election to
purchase and of assignment to be
printed on the reverse thereof) shall each be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate (but
which do not affect the rights, duties and liabilities of the Rights
Agent) and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one one-thousandth of a share, the
“Purchase Price”), but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment as provided herein.



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




The Rights represented by this Rights Certificate are or were beneficially owned
by a Person who was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement between
Navistar International Corporation and Mellon Investor Services LLC, as rights
agent, dated as of July 23, 2007



8









 






(the “Rights Agreement”)). Accordingly, this
Rights Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of the Rights Agreement.



          Section 5. Countersignature and Registration.




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



                    (b) Following
the Distribution Date, receipt by the Rights Agent of notice to that
effect and all other relevant information referred to in
Section 3(a) to this Agreement, the Rights Agent will keep,
or cause to be kept, at its
office or offices designated for such purposes, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the date of each of the Rights Certificates.



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




                    (a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that may have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitles such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split
up, combined or exchanged at the office or offices of the Rights Agent designated for such purpose.
Neither the Rights



9









 




Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the registered holder
shall have properly completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof
as the Company or the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e), Section 14 hereof and Section 24 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company or the Rights Agent may require from the holders of the Rights
Certificates payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates. The Rights Agent shall have no duty
or obligation to take any action under this Section 6(a),
Section 7(c), Section 9(e) or Section 10 unless and
until the Rights Agent is satisfied that all such taxes and/or
charges have been paid.




                    (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement
to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate, if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.



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




                    (a) Subject to Section 7(e) hereof, at any time after the
Distribution Date the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part upon surrender of
the Rights Certificate, with the form of election to purchase and the certificate on the reverse
side thereof duly executed and properly completed, to the Rights Agent at the office or offices of
the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price
with respect to the total number of one one-thousandths of a share (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earliest of (i) 5:00 P.M., New York City time, on July 23,
2008, or such later date as may be established by the Board prior to the expiration of the Rights
(such date, as it may be extended by the Board, the “Final Expiration Date”), or (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof, or (iii) the time at which the
Rights may be exchanged as provided in Section 24 hereof, or (iv) the time at which all of the
Rights expire pursuant to Section 13(d) hereof (the earliest of (i), (ii), (iii) and (iv) being
herein referred to as the “Expiration Date”).



                    (b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to
the exercise of a Right initially shall be $150.00, shall be



10









 




subject to adjustment from time to time as provided in Section 11 and Section 13(a) hereof and shall be payable in accordance with
paragraph (c) below.




                    (c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of
election to purchase and the certificate duly executed and properly completed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per one one-thousandth of a
share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable tax or charge required to be
paid by the holder of such Rights Certificate in cash, or by certified check or cashier’s check
payable to the order of the Company, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for such shares) certificates for the
total number of one one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a share of Preferred Stock
as are to be purchased (in which case certificates for the shares of Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash, if any, to be paid in lieu of the issuance of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or, upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by such holder, and (iv)
when appropriate, after receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by certified bank
check or bank draft payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when necessary to comply with this Agreement. The Company reserves the
right to require prior to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred Stock would be
issued.



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



11









 





                    (e) Notwithstanding anything in this Agreement to the contrary,
from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, or any Rights Certificate which formerly evidenced such
Rights. The Company shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but neither the Company nor the Rights Agent shall
have any liability to any holder of Rights Certificates or any other Person as a result of the
failure to make any determinations with respect to an Acquiring Person or any of such Acquiring
Person’s Affiliates, Associates or transferees hereunder. The Company shall give the Rights Agent
written notice of the identity of any such Acquiring Person, Associate or Affiliate, or the nominee
of any of the foregoing, and the Rights Agent may rely on such notice
in carrying out its duties under this Agreement and shall be deemed
not to have any knowledge of the identity of any such Acquiring
Person, Associate or Affiliate, or the nominee of any of the
foregoing unless and until it shall have received such notice.



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



          Section 8. Cancellation and Destruction of Rights Certificates.




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




12









 








          Section 9. Reservation and Availability of Capital Stock.




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



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



                    (c) The Company shall use its best efforts to (i) file, as soon
as practicable following the
earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), or as soon as is required by
law following the Distribution Date, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such filing, and (iii)
cause such registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the Rights. The Company
will also take such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating, and notify the Rights Agent in writing, that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement and
written notification to the Rights Agent at such time as the suspension has been rescinded. In
addition, if the Company shall determine that a registration statement is required following the
Distribution Date, the Company may temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the exercise thereof
shall not be permitted under applicable law, or a registration statement shall not have been
declared effective.



13









 





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



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



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




          Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each

14









 








Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.




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




                         (ii) In the event any
Person shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event causing such Person
to become an Acquiring Person is a transaction set forth in Section 13(a) hereof,
or is an acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board who are not officers of
the Company and who are not representatives, nominees, Affiliates or Associates of
an Acquiring Person, after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair to stockholders and not inadequate
(taking into account all factors which such members of the Board deem relevant,
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company and its stockholders
(a “Qualified Offer”), then, promptly following the occurrence of such event,
proper provision shall be made so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one one-thousandths of a share of
Preferred Stock, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x)



15









 






multiplying the then current Purchase Price by
the then number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the Purchase Price for each Right
and for all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d) hereof per share of Common Stock) on the
date of such first occurrence (such number of shares, the “Adjustment Shares”).
The Company shall notify the Rights Agent when this Section 11(a)(ii) applies.




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



16









 






necessary
(with prompt written notice of such extension to the Rights Agent), but not more than ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such thirty (30) day period, as it may be
extended, is herein called the “Substitution Period”). To the extent that the
Company determines that action should be taken pursuant to the first and/or third
sentences of this Section 11(a)(iii), the Company (1) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all outstanding
Rights, and (2) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek such stockholder approval for such
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a public
announcement stating, and notify the Rights Agent in writing, that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement and written notification to the Rights Agent at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of each Adjustment Share shall be the Current Market Price per share of the
Common Stock on the Section 11(a)(ii) 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.



                    (b) In case the Company shall fix a record date for the issuance of
rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty five (45) calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of Preferred Stock
(“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so to be offered)
would purchase at such Current Market Price, and the denominator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration, part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in good faith by the Board,
whose determination shall be described in a statement filed with the
Rights Agent that shall be binding on the Rights Agent and holders of
Rights. Shares of
Preferred Stock owned by or held



17









 




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.




                    (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), cash (other than a regular quarterly cash dividend out
of the earnings or retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or
evidences of indebtedness, or of 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 (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive and binding on the Rights Agent, the holders of
the Rights and all other Persons) of the portion of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants applicable to a share of Preferred
Stock, and the denominator of which shall be such Current Market Price (as determined pursuant to
Section 11(d) hereof) 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 such Common Stock for the thirty (30) consecutive Trading Days
immediately prior to but not including such date, and for purposes of computations made pursuant to
Section 11(a)(iii) hereof, the Current Market Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such Common Stock for the ten
(10) consecutive Trading Days immediately following but not including such date; provided,
however, that in the event that the Current Market Price per share of the Common Stock is
determined during a period following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such Common Stock or securities
convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and the ex dividend date for such dividend or
distribution, or the record date for such subdivision, combination or reclassification shall not
have occurred prior to the commencement of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, then, and in each such case, the Current Market Price shall
be properly adjusted to take into account ex dividend trading. The closing price for each day
shall be the last sale price,



18









 




regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked prices in the over the
counter market, as reported by the National Association of Securities Dealers Automated Quotation
System (“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.
If on any such date no market maker is making a market in the Common Stock, the fair value of such
shares on such date shall be as determined in good faith by the
Board, whose determination shall be described in a statement filed
with the Rights Agent that shall be binding on the Rights Agent and
holders of Rights. The term “Trading Day”
shall mean a day on which the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of business or, if the shares
of Common Stock are not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so listed or traded, Current Market
Price per share shall mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.





                         (ii) For the purpose of
any computation hereunder, the Current Market Price
per share of Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this Section 11(d) (other than the
last sentence thereof). If the Current Market Price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock is not
publicly held or listed or traded in a manner described in clause (i) of this
Section 11(d), the Current Market Price per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 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 Agreement) multiplied by the Current Market Price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, Current Market Price per share of the Preferred Stock shall mean
the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.



                    (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,



19









 




however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten thousandth of a share of Common Stock or other share or one millionth of
a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.




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



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



                    (i) The Company may elect on or after the date of any adjustment of
the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of



20









 




Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the adjustment to be made, and
shall promptly give the Rights Agent a copy of such announcement. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.




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



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



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



21









 





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



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



                    (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 otherwise eliminate the benefits intended to be afforded by the Rights.



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



22









 




the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the occurrence of such event.





          Section 12. Certificate of
Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made or any event affecting the Rights or their
exercisability (including without limitation an event which causes
the Rights to become null and void) as provided in Section 11
and Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment or describing
such event and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment or statement contained therein
and shall have no duty or liability with respect to, and shall not be
deemed to have knowledge of, any such adjustment unless and until it
shall have received such certificate.




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




                    (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation of such consolidation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing
or surviving corporation of such consolidation or merger and, in connection with such consolidation
or merger, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash
or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets, cash flow or earning power aggregating more than 50% of the assets, cash flow
or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that: (i) each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement, 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 be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is exercisable immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such one one-thousandths of a
share for which a Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence of a
Section 11(a)(ii)



23









 







Event), and (2) dividing that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the “Purchase Price” for each Right and for all purposes
of this Agreement) by 50% of the Current Market Price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.



                    (b) “Principal Party” shall mean:




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




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


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




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



24









 




practicable after the date of any consolidation, merger or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will





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




                         (ii) take all such
other action as may be necessary to enable the Principal
Party to issue the securities purchasable upon exercise of the Rights, including
but not limited to the registration or qualification of such securities under all
requisite securities laws of jurisdictions of the various states and the listing
of such securities on such exchanges and trading markets as may be necessary or
appropriate; and




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



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




                    (d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be
applicable to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired shares of Common Stock pursuant to
a tender offer or exchange offer for all outstanding shares of Common Stock which is a Qualified
Offer as such term is defined in Section 11(a)(ii) hereof (or a wholly owned subsidiary of any such
Person or Persons), (ii) the price per share of Common Stock offered in such transaction is not
less than the price per share of Common Stock paid to all holders of shares of Common Stock whose
shares were purchased pursuant to such tender offer or exchange offer and (iii) the form of
consideration being offered to the remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.



          Section 14. Fractional Rights and Fractional Shares.




                    (a) The Company shall not be required to issue fractions of
Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to



25









 







distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over the counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional market maker making a
market in the Rights, selected by the Board. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in good faith by the
Board shall be used, which determination shall be described in a
statement filed with the Rights Agent that shall be binding on the
Rights Agent and holders of Rights.



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



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



26









 





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



                    (e) Whenever a payment for fractional Rights or fractional Shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth the facts related to such payment and the prices and/or formulas utilized in calculating such
payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected
funds to make such payments. The Rights Agent shall be fully protected in relying upon such a
certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of
any payment for fractional Rights or fractional shares under any Section of this Agreement relating
to the payment of fractional Rights or fractional shares unless and until the Rights Agent shall
have received such a certificate and sufficient monies.




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




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




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



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



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



27









 





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



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




          Section 18. Concerning the Rights Agent.





                    (a) The
Company agrees to pay to the Rights Agent reasonable
compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the preparation, delivery, amendment,
administration and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense (including, without limitation, the reasonable fees and expenses of counsel), incurred
without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent (which gross negligence, bad faith or willful misconduct must be
determined by a final non-appealable order, judgement, decree or
ruling of a court of competent jurisdiction), for any
action taken, suffered, or omitted by the Rights Agent in connection with the acceptance,
administration, exercise and performance of its duties under this Agreement, including, without
limitation, the costs and expenses of defending against any claim of liability and appealing any
claim of liability arising therefrom, directly or indirectly. The provisions of this Section 18
and Section 20 below shall survive the termination of this Agreement, the exercise or expiration of
the Rights and the resignation, replacement or removal of the Rights
Agent. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.



                    (b) The Rights Agent shall be authorized and protected and shall incur
no liability for or in
respect of any action taken, suffered or omitted by it in connection
with its acceptance and administration of
this Agreement and in the exercise and performance



28









 




of its duties hereunder, in reliance upon any
Rights Certificate or certificate for Common Stock or, in the case of uncertificated shares, the
associated balance indicated in the book-entry account system of the transfer agent for the Common
Stock, or for other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it, in the absence of gross
negligence, bad faith or willful misconduct, to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or
Persons or otherwise upon the advice of counsel as set forth in Section 20 of this Agreement. The
Rights Agent shall not be deemed to have any knowledge of any event of which it was supposed to
receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no
liability for failing to take action in connection therewith unless and until it has received such
notice in writing.




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




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



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



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




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



29









 





                    (b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of Current Market Price) be proved or established by the
Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer,
any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent and the Rights Agent
shall incur no liability for or in respect of any
action taken, suffered or omitted in the absence of gross negligence,
bad faith or willful misconduct by it under the provisions of this Agreement in
reliance upon such certificate.



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



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



                    (e) The
Rights Agent shall not have any liability for or be under any responsibility in
respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment or change required under the provisions of Section 11, Section 13 or Section
24 hereof or responsible for the manner, method or amount of any such
adjustment or change or the
ascertaining of the existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to
Section 12 hereof describing such change or adjustment upon
which the Rights Agent may rely); nor shall it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or
Preferred Stock will, when so issued, be validly authorized and issued, fully paid and
nonassessable.



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



30









 





                    (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 Chief Financial Officer, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and such instructions shall be
full authorization and protection to the Rights Agent and the Rights Agent shall not be liable for or in respect
of any action taken, suffered, or omitted to be taken by it in
accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. The Rights Agent shall
be fully authorized and protected in relying upon the most recent
instructions received by any such officer.



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



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



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



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



          Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in
writing mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock
known to the Rights Agent, by registered or certified mail, and, if such resignation occurs after
the Distribution Date, to the registered holders of the Rights Certificates by first class mail.
In the event the transfer agency relationship in effect between the Company and the Rights Agent
terminates, the Rights


31









 







Agent will be deemed to resign automatically on the effective date of such
termination; and any required notice will be sent by the Company. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and, if such removal occurs
after the Distribution Date, to the holders of the Rights Certificates by first class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment
within a period of thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for inspection by the Company), then
any registered holder of any Rights Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall either be (a) a Person organized and doing business under the
laws of the United States or any state of the United States, in good standing, which is authorized
under such laws to exercise corporate trust, stock transfer or stockholder services powers 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 of a Person described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and 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 the Preferred Stock, and, if such appointment occurs
after the Distribution Date, mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be.




          Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, granted or awarded as of
the Distribution Date, or upon the exercise, conversion or exchange of securities hereinafter
issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the
Board, issue Rights Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no


32









 







such Rights Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.




          Section 23. Redemption and Termination.




                    (a) The Board may, at its option, at any time prior to the
earlier of (i) the close of
business on the tenth Business Day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the close of business on the tenth
Business Day following the Record Date), or (ii) the Final Expiration Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of $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”). Notwithstanding anything contained in this Agreement to the contrary, the
Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Company’s right of redemption hereunder has expired. The Company may, at its option,
pay the Redemption Price in cash, shares of Common Stock (based on the Current Market Price, as
defined in Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board.



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



          Section 24. Exchange.




33









 








                    (a) The Board may, at its option, at any time after any Person
becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for 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 (such exchange ratio
being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board
shall not be empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Stock then outstanding.



                    (b) Immediately upon the action of the Board 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 (with prompt written notice thereof to the Rights Agent); provided,
however, that the failure to give, or any defect in, such notice shall not affect the
legality or 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 that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.



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



                    (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, there shall be paid to




34










 




the registered holders of the Rights Certificates with regard to which such fractional shares
of Common Stock would otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the purposes of this subsection (e),
the current market value of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section 24.




     Section 25. Notice of Certain Events.



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




          (b) In case any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to the Rights Agent and, to
the extent feasible, each holder of a Rights Certificate, and in accordance with Section 26 hereof,
a notice of the occurrence of such event, which shall specify the event and the consequences of the
event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to Preferred

35









 






Stock shall be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities.




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


Navistar International Corporation

4201 Winfield Road

Warrenville, Illinois 60555

Attention: Corporate Secretary



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



MELLON INVESTOR SERVICES LLC

Newport Office Center VII

480 Washington Boulevard

Jersey City, New Jersey 07310

Attention: Event Manager




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



     Section 27.
Supplements and Amendments. Subject to the last sentence of
this Section 27, prior to the Distribution Date, the Company
may and, if so directed by the Company, the Rights Agent shall supplement or amend any provision of
this Agreement without the approval of any holders of shares of Common Stock. From and after the
Distribution Date, the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights 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 and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). Upon the delivery of a certificate from an appropriate officer of the
Company that states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment. Notwithstanding



36









 







anything herein to the contrary, this Agreement may not be amended (other than pursuant to clauses
(i) or (ii) of the preceding sentence) at a time when the
Rights are not redeemable. The Rights Agent may, but shall not be
obligated to, enter into any supplement or amendment that affects the
Rights Agent’s own rights, duties and obligations or immunities
under this Agreement and it shall not be bound by any such supplement
or amendment not executed by it.



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



     Section 29. Determinations and Actions by the Board, etc. For all purposes of this
Agreement, any calculation of the number of shares of Common Stock or any other class of capital
stock outstanding at any particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically granted to the Board
or to the Company, or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the Board, or any of
the directors on the Board to any liability to the holders of the
Rights. The Rights Agent shall always be entitled to assume that the
Board acted in good faith and shall be fully protected and incur no
liability in reliance thereon.



     Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock)
any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock).



     Section 31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth Business Day following the
date of such determination by the Board. Without limiting the foregoing, if any provision
requiring a specific group of directors to act is



37









 




held to by any court of competent jurisdiction or
other authority to be invalid, void or unenforceable, such determination shall then be made by the
Board in accordance with applicable law and the Company’s amended certificate of
incorporation and bylaws.




     Section 32. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State.



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



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



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



38









 





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



	 	 	 	 	 	 	 
	 	 	NAVISTAR INTERNATIONAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ William Caton	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: William Caton	 	 
	 

	 	 	 	Title: Executive Vice President and	 	 
	 

	 	 	 	          Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	MELLON INVESTOR SERVICES LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	/s/ Peter Sablich	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Peter Sablich	 	 
	 

	 	 	 	Title: Relationship Manager	 	 







39









 








Exhibit A




FORM OF




CERTIFICATION OF DESIGNATION, PREFERENCES AND RIGHTS OF JUNIOR PARTICIPATING PREFERRED STOCK,

SERIES A




of




NAVISTAR INTERNATIONAL CORPORATION




Pursuant to Section 151 of the




General Corporation Law of the State of Delaware




     I, William Caton, Executive Vice President and Chief Financial Officer of Navistar
International Corporation, a corporation organized and existing under the General Corporation Law
of the State of Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY
CERTIFY:



     That pursuant to the authority conferred upon the Board of Directors by the Restated
Certificate of Incorporation of the said Corporation, the said Board of Directors on July 23, 2007
adopted the following resolution creating a series of 110,000 shares of Preferred Stock designated
as Junior Participating Preferred Stock, Series A:



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



     Section 1. Designation and Amount. The shares of such series shall be designated as
“Junior Participating Preferred Stock, Series A” and the number of shares constituting such series
shall be 110,000.



     Section 2. Dividends and Distributions.



     (A) Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Junior Participating Preferred Stock,
Series A with respect to dividends, the holders of shares of Junior Participating Preferred Stock,
Series A shall be entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on the 15th
day of March, June, September and December in each year (each such date being referred to herein as
a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Junior Participating Preferred



 









 







Stock, Series A, in an amount per share (rounded to the nearest cent) equal to the greater of (a)
$25.00 or (b) subject to the provision for adjustment hereinafter set forth, 1000 times the
aggregate per share amount of all cash dividends, and 1000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value $0.10 per share, of the
Corporation (the “Common Stock”) since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Junior Participating Preferred Stock, Series A. In the event the
Corporation shall at any time after July 23, 2007 (the “Rights Declaration Date”) (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each
such case the amount to which holders of shares of Junior Participating Preferred Stock, Series A
were entitled immediately prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.



     (B) The Corporation shall declare a dividend or distribution on the Junior Participating
Preferred Stock, Series A as provided in Paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $25.00 per share on the Junior Participating
Preferred Stock, Series A shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.



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



 









 





     Section 3. Voting Rights. The holders of shares of Junior Participating Preferred
Stock, Series A shall have the following voting rights:



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



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



     (C) (i) If at any time dividends on any Junior Participating Preferred Stock, Series
A shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein called a
“default period”) which shall extend until such time when all accrued and unpaid dividends
for all previous quarterly dividend periods and for the current quarterly dividend period
on all shares of Junior Participating Preferred Stock, Series A then outstanding shall have
been declared and paid or set apart for payment. During each default period, all holders
of Preferred Stock (including holders of the Junior Participating Preferred Stock, Series
A) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to elect two (2) directors.



          (ii) During any default period, such voting right of the holders of Junior
Participating Preferred Stock, Series A may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that neither such
voting right nor the right of the holders of any other series of Preferred Stock, if any,
to increase, in certain cases, the authorized number of directors shall be exercised unless
the holders of at least one-third in number of shares of Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of the holders of Common Stock
shall not affect the exercise by the holders of Preferred Stock of such voting right. At
any meeting at which the holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right, voting as a class,
to elect directors to fill such vacancies, if any, in the Board of Directors as may then
exist up to two (2) directors or, if such right is exercised at an annual meeting, to elect
two (2) directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred


 









 







Stock shall have the right to make such increase in the number of directors as shall
be necessary to permit the election by them of the required number. After the holders of
the Preferred Stock shall have exercised their right to elect directors in any default
period and during the continuance of such period, the number of directors shall not be
increased or decreased except by vote of the holders of Preferred Stock as herein provided
or pursuant to the rights of any equity securities ranking senior to or pari
passu with the Junior Participating Preferred Stock, Series A.




          (iii) Unless the holders of Preferred Stock shall, during an existing default period,
have previously exercised their right to elect directors, the Board of Directors may order,
or any stockholder or stockholders owning in the aggregate not less than ten percent (10%)
of the total number of shares of Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the Chairman of the Board, the President, an Executive
Vice-President, a Vice-President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote
pursuant to this Paragraph (C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not earlier than 20
days and not later than 60 days after such order or request or in default of the calling of
such meeting within 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this Paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.




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




          (v) Immediately upon the expiration of a default period, (x) the right of the holders
of Preferred Stock as a class to elect directors shall cease, (y) the term of any directors
elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of
directors shall be such number as may be provided for in the certificate of incorporation
or by-laws irrespective of any increase made pursuant to the provisions of Paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change


 









 







thereafter in any manner provided by law or in the certificate of incorporation or
by-laws). Any vacancies in the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a majority of the remaining
directors.




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



     Section 4. Certain Restrictions.



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



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




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




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




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




 









 








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



     Section 5. Reacquired Shares. Any shares of Junior Participating Preferred Stock,
Series A purchased or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth herein.



     Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be
made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Participating Preferred Stock, Series A unless, prior
thereto, the holders of shares of Junior Participating Preferred Stock, Series A shall have
received an amount equal to $1,000 per share of Participating Preferred Stock, Series A, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment (the “Series A Liquidation Preference”). Following the payment of the
full amount of the Series A Liquidation Preference, no additional distributions shall be made to
the holders of shares of Junior Participating Preferred Stock, Series A unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”)
equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 1000 (as
appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in
clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Junior
Participating Preferred Stock, Series A and Common Stock, respectively, holders of Junior
Participating Preferred Stock, Series A and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.



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



     (C) In the event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a



 









 







smaller number of shares, then in each such case the Adjustment Number in effect immediately prior
to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately
prior to such event.



     Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Junior Participating Preferred Stock, Series A shall at the same time
be similarly exchanged or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Junior Participating Preferred Stock, Series A
shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such event.



     Section 8. No Redemption. The shares of Series Junior Participating Preferred Stock,
Series A shall not be redeemable.



     Section 9. Ranking. The Junior Participating Preferred Stock, Series A shall rank
junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide otherwise.



     Section 10. Amendment. At any time when any shares of Junior Participating Preferred
Stock, Series A are outstanding, neither the Restated Certificate of Incorporation of the
Corporation nor this Certificate of Designation shall be amended in any manner which would
materially alter or change the powers, preferences or special rights of the Junior Participating
Preferred Stock, Series A so as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Junior Participating Preferred Stock,
Series A, voting separately as a class.



     Section 11. Fractional Shares. Junior Participating Preferred Stock, Series A may be
issued in fractions of a share which shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in distributions and
to have the benefit of all other rights of holders of Junior Participating Preferred Stock, Series
A.



 









 





     IN WITNESS WHEREOF, Navistar International Corporation has caused this Certificate of
Designation to be executed in its corporate name this   day of  ,
2007.



	 	 	 	 	 
	 	NAVISTAR INTERNATIONAL

CORPORATION

 	 
	 	By:  	 	 
	 	Name: 	William Caton 	 
	 	Title: 	Executive Vice President and Chief Financial Officer 	 
	 




1









 








Exhibit B




[Form of Rights Certificate]




	 	 	 
	Certificate No. R

	 	                     Rights





NOT EXERCISABLE AFTER                      ___, 200___OR
EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.] 1




	 	 	 
	 

	 	Rights Certificate
	 
	 	 
	 

	 	NAVISTAR INTERNATIONAL CORPORATION








 




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





 









 





     This certifies that                     , or
registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of July 23, 2007 (the “Rights
Agreement”), between Navistar International Corporation, a Delaware corporation (the “Company”),
and Mellon Investor Services LLC (the “Rights Agent”), to purchase from the Company at any time
prior to 5:00 P.M. (New York City time) on July 23, 2008 (unless such date is extended prior
thereto by the Board of Directors), at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-thousandth of a fully paid, non assessable
share of Series A Participating Preferred Stock (the “Preferred Stock”) of the Company, at a
purchase price of $          per one one-thousandth of a share (the “Purchase Price”), upon
presentation and surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this Rights Certificate (and
the number of shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as of                      ___,
200_, based on the Preferred Stock as constituted at such date. The Company reserves the right to
require prior to the occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.



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



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



     This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
above mentioned office of the Rights Agent and are also available upon written request to the
Rights Agent.



 









 





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



     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate may be redeemed by the Company at its option at a redemption price of $0.001 per Right
at any time prior to the earlier of the close of business on (i) the tenth Business Day following
the Stock Acquisition Date (as such time period may be extended pursuant to the Rights Agreement),
and (ii) the Final Expiration Date. In addition, under certain circumstances following the Stock
Acquisition Date, the Rights may be exchanged, in whole or in part, for shares of the Common Stock,
or shares of preferred stock of the Company having essentially the same value or economic rights as
such shares. Immediately upon the action of the Board of Directors of the Company authorizing any
such exchange, and without any further action or any notice, the Rights (other than Rights which
are not subject to such exchange) will terminate and the Rights will only enable holders to receive
the shares issuable upon such exchange.



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



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



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



 









 





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



Dated as of                      __,_




	 	 	 	 	 	 	 
	 	 	NAVISTAR INTERNATIONAL

CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 







4









 








[Form of Reverse Side of Rights Certificate]




FORM OF ASSIGNMENT




(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)




	 	 	 
	      FOR VALUE RECEIVED 
	 	 
	 

	 	 





	 	 	 
	hereby sells, assigns and transfers unto
	 	 
	 

	 	 





 





(Please print name and address of transferee)




 





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




Dated:                     ,__




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature






Signature Guaranteed:





 









 








Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




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




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



Dated:                     ,__




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature






Signature Guaranteed:





 









 








NOTICE




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




 









 








FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise Rights

represented by the Rights Certificate.)




To: NAVISTAR CORPORATION:




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



Please insert social security

or other identifying number




 




(Please print name and address)




 





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



Please insert social security

or other identifying number




 




(Please print name and address)




 





 





Dated:                     ,__




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature






Signature Guaranteed:





 









 








Certificate




          The undersigned hereby certifies by checking the appropriate boxes that:




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




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



Dated:                     ,__




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature






Signature Guaranteed:





 









 








NOTICE




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




 









 








Exhibit C




SUMMARY OF RIGHTS TO PURCHASE




PREFERRED STOCK




     On July 23, 2007, the Board of Directors of Navistar International Corporation (the “Company”)
declared a dividend distribution of one Right for each outstanding share of Company Common Stock to
stockholders of record at the close of business on July 23, 2007 (the “Record Date”). Each Right
entitles the registered holder to purchase from the Company a unit consisting of one one-thousandth
of a share (a “Unit”) of Junior Participating Preferred Stock, Series A, with a par value of $1.00
per share (the “Series A Participating Preferred Stock”), at a Purchase Price of $150.00 per
Unit, subject to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the “Rights Agreement”) between the Company and Mellon Investor Services LLC, as Rights
Agent.



     Initially, the Rights will be attached to all Common Stock certificates or, in the case of
uncertificated shares, the associated balance indicated in the book-entry account system of the
transfer agent for the Common Stock, representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified in the Rights Agreement,
the Rights will separate from the Common Stock and a Distribution Date will occur upon the earlier
of (i) 10 business days following a public announcement that a person or group of affiliated or
associated persons (an “Acquiring Person”) has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the “Stock Acquisition Date”), other than as a result of
repurchases of stock by the Company or certain inadvertent actions by institutional or certain
other stockholders or (ii) 10 business days (or such later date as the Board shall determine)
following the commencement of a tender offer or exchange offer that would result in a person or
group becoming an Acquiring Person. Until the Distribution Date, (i) the Rights will be evidenced
by shares of Common Stock and will be transferred with and only with such Common Stock, (ii) new
Common Stock certificates issued after the Record Date will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. Pursuant to the Rights Agreement, the Company reserves the right
to require prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise
of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be
issued.



i 









 





     The Rights are not exercisable until the Distribution Date and will expire at 5:00 P.M. (New
York City time) on July 23, 2008, unless such date is extended or the Rights are earlier redeemed
or exchanged by the Company as described below.



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



     In the event that a Person becomes an Acquiring Person, except pursuant to an offer for all
outstanding shares of Common Stock which the independent directors determine to be fair and not
inadequate and to otherwise be in the best interests of the Company and its stockholders, after
receiving advice from one or more investment banking firms (a “Qualified Offer”), each holder of a
Right will thereafter have the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a value equal to two times
the exercise price of the Right. Notwithstanding any of the foregoing, following the occurrence of
the event set forth in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void. However, Rights are not exercisable following the occurrence of the event set forth
above until such time as the Rights are no longer redeemable by the
Company as set forth below. Any person who, together with its affiliates and associates, beneficially owns 15% or more of the
outstanding shares of Common Stock at 5 P.M., New York City time, on July 23, 2007 (an “Exempt
Person”) shall not be deemed an Acquiring Person, but only for so long as such person, together
with its affiliates and associates, does not become the beneficial owner of any additional shares
of Common Stock while such person is an Exempt Person. A person will cease to be an Exempt Person
if such person, together with such person’s affiliates and associates, becomes the beneficial owner
of 15% or less of the outstanding shares of Common Stock.



     For example, at an exercise price of $150 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $300 worth of Common Stock (or other consideration, as noted
above) for $150. Assuming that the Common Stock had a per share value of $70.65 at such time,
the holder of each valid Right would be entitled to purchase four (4) shares of Common Stock for
$150.



     In the event that, at any time following the Stock Acquisition Date, (i) the Company engages
in a merger or other business combination transaction in which the Company is not the surviving
corporation (other than with an entity which acquired the shares pursuant to a Qualified Offer),
(ii) the Company engages in a merger or other business combination transaction in which the Company
is the surviving corporation and the Common Stock of the Company is changed or exchanged, or (iii)
50% or more of the Company’s assets, cash flow or earning power is sold or transferred, each holder
of a Right (except Rights which have previously been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right. The events set forth in this paragraph and in
the second preceding paragraph are referred to as the “Triggering Events.”



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     At any time after a person becomes an Acquiring Person and prior to the acquisition by such
person or group of fifty percent (50%) or more of the outstanding Common Stock, the Board may
exchange the Rights (other than Rights owned by such person or group which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock, or one one-thousandth of a
share of Preferred Stock (or of a share of a class or series of the Company’s preferred stock
having equivalent rights, preferences and privileges), per Right (subject to adjustment).



     The Purchase Price payable, and the number of Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).



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



     At any time until ten business days following the Stock Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $0.001 per Right (payable in cash,
Common Stock or other consideration deemed appropriate by the Board of Directors). Immediately
upon the action of the Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the $0.001 redemption
price.



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



     Any of the provisions of the Rights Agreement may be amended by the Board of Directors of the
Company prior to the Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any ambiguity, to make changes that do not
adversely affect the interests of holders



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of Rights, or to shorten or lengthen any time period under the Rights Agreement. The
foregoing notwithstanding, no amendment may be made at such time as the Rights are not redeemable.



     A copy of the Rights Agreement is being filed with the Securities and Exchange Commission as
an Exhibit to a Current Report on Form 8-K dated July 23, 2007.
A copy of the Rights Agreement is available free of charge from the
Company. This summary
description of the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.




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