exv4w1






Exhibit 4.1




 





PREFERRED STOCK RIGHTS AGREEMENT




BY AND BETWEEN




IMPAX LABORATORIES, INC.




AND




STOCKTRANS, INC.,




AS RIGHTS AGENT




Dated as of January 20, 2009




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	Section 1. Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 2. Appointment of Rights Agent
	 	 	11	 
	 
	 	 	 	 
	Section 3. Issue of Rights Certificates
	 	 	11	 
	 
	 	 	 	 
	Section 4. Form of Rights Certificates
	 	 	12	 
	 
	 	 	 	 
	Section 5. Countersignature and Registration
	 	 	13	 
	 
	 	 	 	 
	Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	14	 
	 
	 	 	 	 
	Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	14	 
	 
	 	 	 	 
	Section 8. Cancellation and Destruction of Rights Certificates
	 	 	17	 
	 
	 	 	 	 
	Section 9. Reservation and Availability of Preferred Stock
	 	 	17	 
	 
	 	 	 	 
	Section 10. Preferred Stock Record Date
	 	 	18	 
	 
	 	 	 	 
	Section 11. The Flip-In
	 	 	18	 
	 
	 	 	 	 
	Section 12. The Flip-Over
	 	 	20	 
	 
	 	 	 	 
	Section 13. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	23	 
	 
	 	 	 	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	27	 
	 
	 	 	 	 
	Section 15. Rights of Action
	 	 	28	 
	 
	 	 	 	 
	Section 16. Agreement of Right Holders
	 	 	28	 
	 
	 	 	 	 
	Section 17. Rights Certificate Holder Not Deemed a Stockholder
	 	 	29	 
	 
	 	 	 	 
	Section 18. Concerning the Rights Agent
	 	 	30	 
	 
	 	 	 	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	30	 
	 
	 	 	 	 
	Section 20. Duties of Rights Agent
	 	 	31	 
	 
	 	 	 	 
	Section 21. Change of Rights Agent
	 	 	32	 
	 
	 	 	 	 
	Section 22. Issuance of New Rights Certificates
	 	 	33	 






i









 






	 	 	 	 	 
	 	 	Page
	Section 23. Redemption and Termination
	 	 	34	 
	 
	 	 	 	 
	Section 24. Effectiveness of this Agreement
	 	 	35	 
	 
	 	 	 	 
	Section 25. Notice of Certain Events
	 	 	35	 
	 
	 	 	 	 
	Section 26. Notices
	 	 	35	 
	 
	 	 	 	 
	Section 27. Supplements and Amendments
	 	 	36	 
	 
	 	 	 	 
	Section 28. Successors
	 	 	37	 
	 
	 	 	 	 
	Section 29. Determinations and Actions by the Board of Directors, Etc.
	 	 	37	 
	 
	 	 	 	 
	Section 30. Benefits of this Agreement
	 	 	39	 
	 
	 	 	 	 
	Section 31. Severability
	 	 	39	 
	 
	 	 	 	 
	Section 32. Governing Law
	 	 	40	 
	 
	 	 	 	 
	Section 33. Counterparts
	 	 	40	 
	 
	 	 	 	 
	Section 34. Descriptive Headings
	 	 	40	 
	 
	 	 	 	 
	Section 35. Force Majeure
	 	 	40	 
	 
	 	 	 	 
	Exhibit A — Form of Certificate of Designation of Rights, Preferences and Privileges of Series A
Junior Participating Preferred Stock
	 	 	 	 
	 
	 	 	 	 
	Exhibit B — Form of Rights Certificate
	 	 	 	 
	 
	 	 	 	 
	Exhibit C — Form of Summary of Rights
	 	 	 	 







ii









 








PREFERRED STOCK RIGHTS AGREEMENT




     This Preferred Stock Rights Agreement is dated as of January 20, 2009 (this
“Agreement” or the “Rights Agreement”), by and between IMPAX LABORATORIES, INC., a
Delaware corporation (the “Company”), and STOCKTRANS, INC. (the “Rights Agent”).



     WHEREAS, on January 20, 2009 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company (the “Board of Directors”) authorized and declared a dividend
distribution of one preferred stock purchase right (a “Right”) for each share of common
stock, $0.01 per share, of the Company (the “Common Stock”) outstanding as of the close of
business on January 30, 2009 (the “Record Date”), each Right representing the right to
purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock of the
Company having the rights, preferences, powers and privileges set forth in the form of the
Certificate of Designation of Rights, Preferences and Privileges attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth, and the Board of Directors has
further authorized and directed the issuance of one Right (subject to adjustment as provided
herein) with respect to each share of Common Stock that shall become outstanding between the Record
Date and the earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined); provided, however, that Rights may be issued with respect to
shares of Common Stock that shall become outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22.



     NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereto, intending to be legally bound 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, on or after the date hereof, be the Beneficial
Owner of 20% or more of the Voting Power of the aggregate of all shares of Voting Stock then
outstanding and shall include all Affiliates and Associates of such Person; but such term shall not
include (i) an Exempted Entity (as defined below), (ii) a Grandfathered Stockholder (as defined
below), or (iii) any other Person who or which the Board of Directors determines, prior to the time
such Person would otherwise be an Acquiring Person, should be exempted from the definition of
Acquiring Person, provided, however, that the Board of Directors may make such
exemption subject to such conditions, if any, which the Board of Directors may determine.
Notwithstanding the foregoing:




               (i) No Person shall become an “Acquiring Person” as the result of an acquisition of
shares of
Voting Stock by the Company which, by reducing the number of shares outstanding, increases the
proportionate percentage of the total Voting Power represented by all shares of Voting Stock of the
Company Beneficially Owned by such Person to 20% or more of the total Voting Power of the aggregate
of all shares of Voting Stock then outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 20% or more of the total Voting Power of the Company then
outstanding by reason of share purchases by the Company and shall, after such share purchases by
the Company, become the Beneficial Owner of any additional



 









 







Voting Stock of the Company (other than shares issued by the Company as a dividend or
distribution made pro rata to all holders of Common Stock), then such Person shall be deemed to be
an “Acquiring Person;”



               (ii) If the Board of Directors determines in good faith that a Person who would otherwise be
an “Acquiring Person” has become such inadvertently (including, without limitation, because (A)
such Person was unaware that it Beneficially Owned a percentage of Voting Stock that would
otherwise cause such Person to be an “Acquiring Person” or (B) such Person was aware of the extent
of its Beneficial Ownership of Voting Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement), then such Person shall not be deemed to be or to have
become an “Acquiring Person” for any purposes of this Agreement unless and until such Person shall
have failed to divest itself, as soon as practicable, if the Company so requests, of Beneficial
Ownership of a sufficient number of shares of Voting Stock so that such Person would no longer
otherwise qualify as an “Acquiring Person;”



               (iii) No Person shall become an “Acquiring Person” if any such Person who has become
and is
such a Beneficial Owner solely because (A) of a change in the aggregate number of shares of Voting
Stock since the last date on which such Person acquired Beneficial Ownership of any shares of the
Voting Stock, or (B) if acquired such Beneficial Ownership in the good faith belief that such
acquisition would not (1) cause such Beneficial Ownership to be equal to or exceed 20% of the
Voting Power of the aggregate of all shares of Voting Stock of the Company then outstanding and
such Person relied in good faith in computing the percentage of its Beneficial Ownership on
publicly filed reports or documents of the Company that are inaccurate or out-of-date, or (2)
otherwise cause a Distribution Date or the adjustment provided for in a Flip-In Event or Flip-Over
Event to occur. Notwithstanding this clause (iii), if any Person that is not an Acquiring Person
due to this clause (iii) does not reduce its percentage of Beneficial Ownership of the Voting Power
of the aggregate of all shares of Voting Stock of the Company then outstanding to less than 20% by
the Close of Business on the fifth Business Day after notice from the Company (the date on which
such notice is first mailed or sent being the first day) that such person’s Beneficial Ownership of
the Voting Power of the aggregate of all shares of Voting Stock of the Company then outstanding is
equal to or exceeds 20%, such Person shall, at the end of such five Business Day period, become an
Acquiring Person (and such clause (B) shall no longer apply to such Person); and



               (iv) If a bona fide swaps dealer who would otherwise be an “Acquiring Person” has
become so as
a result of its actions in the ordinary course of its business that the Board of Directors
determines in good faith were taken without the intent of evading or assisting any other Person to
evade the purposes and intent of this Agreement, or otherwise seeking to control or influence the
management or policies of the Company, then such Person shall not be deemed to be an “Acquiring
Person” for any purposes of this Agreement.



               (v) For purposes of this definition, the determination whether any Person acted in “good
faith” shall be conclusively determined by the Board of Directors of the Company, acting by a vote
of those directors of the Company whose approval would be required to redeem the Rights under this
Agreement.



2









 





          (b) “Adjustment Shares” shall have the meaning ascribed thereto in Section 11(a)
hereof.




          (c) “Affiliate” and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the Exchange Act Regulations, as in effect on the date of this Agreement;
provided, however, that no Subsidiary of the Company, employee benefit plan of the
Company or any Subsidiary of the Company, or Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan shall be deemed an Affiliate or
Associate.




          (d) “Agreement” shall mean this Rights Agreement as originally executed or as it may
from time to time be supplemented, amended, renewed, restated or extended pursuant to the
applicable provisions hereof.




          (e) A Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“Beneficially Own” and to have “Beneficial Ownership” of any securities:




               (i) That such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly (as determined pursuant to Rule 13d-3 of the Exchange Act Regulations as in
effect on the date of this Agreement); provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to Beneficially Own or to have Beneficial Ownership of, any
security if the agreement, arrangement, or understanding to vote such security that would otherwise
render such Person the Beneficial Owner of such security (1) arises solely from a revocable proxy
or consent given to such Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the Exchange Act and the Exchange Act
Regulations, and (2) is not also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report);



               (ii) That such Person or any of such Person’s Affiliates or Associates has (A) the
right to
acquire (whether such right is exercisable immediately or only upon the occurrence of certain
events or the passage of time or both) pursuant to any agreement, arrangement, or understanding
(other than customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities or agreements with or between Persons and the
Company with respect to any other bona fide issuance of securities by the Company to such Persons
for resale within forty (40) days, including, without limitation, pursuant to Section 4(2) of the
Securities Act or Rule 144A or Regulation S promulgated under the Securities Act), whether or not
in writing, or upon the exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants, options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own or to have Beneficial Ownership of
securities tendered pursuant to a tender or exchange offer made in accordance with the Exchange Act
Regulations by or on behalf of such Person or any of such Person’s Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B) the right to vote (whether
such right is exercisable immediately or upon the occurrence of certain events or the passage of
time or both) pursuant to any agreement, arrangement, or understanding (except to the extent
contemplated by the proviso to subparagraph (i) of this paragraph (e));



3









 





               (iii) That are Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate or Associate of such Person) with which such Person (or any of such Person’s Affiliates
or Associates) has any agreement, arrangement, or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a bona fide public offering
of securities or agreements with or between Persons and the Company with respect to any other bona
fide issuance of securities by the Company to such Persons for resale within forty (40) days,
including, without limitation, pursuant to Section 4(2) of the Securities Act or Rule 144A or
Regulation S promulgated under the Securities Act), whether or not in writing, for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to subparagraph (i) of
this paragraph (e)), or disposing of any such securities; or



               (iv) That are Beneficially Owned, directly or indirectly, by a Counterparty under any
Derivatives Contract (without regard to any short or similar position under the same or any other
Derivatives Contract) to which such Person or any of such Person’s Affiliates or Associates is a
Receiving Party (as such terms are defined in the immediately following paragraph); provided
however that the number of securities that a Person is deemed to Beneficially Own pursuant to this
clause (iv) in connection with a particular Derivatives Contract shall not exceed the number of
Notional Securities that are subject to such Derivatives Contract; provided, further, that the
number of securities Beneficially Owned by each Counterparty (“Counterparty A”) under a
Derivatives Contract shall for purposes of this clause (iv) be deemed to include all securities
that are Beneficially Owned, directly or indirectly, by a Counterparty (“Counterparty B”)
under any Derivatives Contract to which such Counterparty A is a Receiving Party, with this proviso
being applied to successive Counterparties as appropriate.



     A “Derivatives Contract” is a contract between two parties (the “Receiving
Party” and the “Counterparty”) that is designed to produce economic benefits and risks
to the Receiving Party that correspond substantially to the ownership by the Receiving Party of a
number of securities (the number corresponding to such economic benefits and risks, the
“Notional Securities”), regardless of whether obligations under such contract are settled
through the delivery of cash, securities or other property, without regard to any short position
under the same or any other Derivative Contract.



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



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




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




4









 








          (h) “Closing Price” of any security on any given day shall be the last sale price,
regular way, of such security or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, on the principal trading market on which such security
is then traded.




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




          (j) “Common Equity Interest” when used with reference to any Person other than the
Company shall mean the class or series of capital stock (or equity interest) with the greatest
voting power (in relation to any other classes or series of capital stock (or equity interest)) of
such other Person.




          (k) “Current Market Price” of any security on any given day shall be deemed to be the
average of the daily Closing Prices per share or other trading unit of such security for ten (10)
consecutive Trading Days (as hereinafter defined) immediately preceding such date;
provided, however, that with respect to shares of capital stock, in the event that
the current market price per share of the capital stock is determined during a period following the
announcement of (i) a dividend or distribution on the capital stock payable in shares of such
capital stock or securities convertible into shares of such capital stock (other than the Rights),
or (ii) any subdivision, combination or reclassification of the capital stock, and prior to the
expiration of the requisite ten (10) Trading Day period, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision, combination or
reclassification, then and in each such case, the “Current Market Price” shall be properly adjusted
to take into account ex-dividend trading; and provided further that if the security is not publicly
held or not so listed or traded, Current Market Price per share or other trading unit shall mean
the fair value per share or other trading unit as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.




          (l) “Distribution Date” shall mean the earlier of (i) the tenth (10th) day
after the Stock Acquisition Date (as hereinafter defined), or (ii) the tenth (10th)
Business Day (or such later date as may be determined by action of a majority of the Board of
Directors prior to such time as any Person becomes an Acquiring Person and of which later date the
Company will give the Rights Agent prompt written notice) after the date of the commencement of, or
first public announcement of the intent to commence, a tender or exchange offer by any Person
(other than an Exempted Entity), if upon consummation thereof, such Person would be the Beneficial
Owner of shares of Voting Power representing 20% or more of the total Voting Power of the aggregate
of all shares of Voting Stock then outstanding (including any such date which is after the date of
this Agreement and prior to the issuance of the Rights) other than pursuant to a Qualified Offer.




          (m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and in
effect on the date of this Agreement, and all references to any rule or regulation of the General
Rules and Regulations under the Exchange Act shall be, except as otherwise




5









 







specifically provided herein, to such rule or regulation as was in effect on the date of this
Agreement.




          (n) “Exchange Act Regulations” shall mean the General Rules and Regulations under the
Exchange Act.




          (o) “Exempted Entity” shall mean (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or any Subsidiary of the Company, and (iv) any trust
fiduciary of other entity organized, appointed or established that holds Common Stock or other
Voting Stock for or pursuant to the terms of any such employee benefit plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the Company or of any
Subsidiary of the Company.




          (p) “Expiration Date” shall have the meaning ascribed thereto in Section 7(a) hereof.




          (q) “Final Expiration Date” shall have the meaning ascribed thereto in Section 7(a)
hereof.




          (r) “Flip-In Event” shall mean the event described in Section 11(a) hereof.




          (s) “Flip-Over Event” shall mean any of the events described in Section 12(a) hereof.




          (t) “Grandfathered Stockholder” shall mean any Person who or which would otherwise be
deemed an “Acquiring Person” upon the adoption of this Agreement; provided,
however, that any Grandfathered Stockholder shall not be deemed an “Acquiring Person” for
purposes of this Agreement only for so long as (i) neither it nor any of its Affiliates or
Associates purchase or otherwise acquire (including by becoming a member of a Group, or, if such
Person is already a member of a Group, as a result of actions taken by any other member of such
Group) Beneficial Ownership of any additional shares of outstanding Voting Stock after adoption of
this Agreement (other than pursuant to a dividend or distribution paid or made by the Company on
the outstanding Voting Stock or pursuant to a split or subdivision of the outstanding Voting
Stock), and in the event that any Grandfathered Stockholder (or its Affiliates or Associates) does
so acquire Beneficial Ownership of additional shares of outstanding Voting Stock, then such Person
shall no longer be deemed a “Grandfathered Stockholder” and shall be deemed an “Acquiring Person;”
and (ii) such Person does not cease to be the Beneficial Owner of twenty percent (20%) or more of
the shares of Voting Stock then outstanding, including as a result of the disbandment of a Group,
and in the event that any Grandfathered Stockholder ceases to be the Beneficial Owner of twenty
percent (20%) or more of the shares of Voting Stock then outstanding, then such Person shall no
longer be deemed a “Grandfathered Stockholder.”




          (u) “Group” shall mean any two or more Persons, each of whom Beneficially Own shares
of Voting Stock, and who have agreed, whether through a written agreement or otherwise, to act in
concert for the purpose or effect of changing or influencing the control or management of the
Company or acquiring, holding, voting or disposing of equity securities of the Company.




6









 








          (v) “Nasdaq” shall mean The Nasdaq Stock Market, Inc.




          (w) “NYSE” shall mean The New York Stock Exchange, Inc.




          (x) “Person” shall mean any individual, partnership (general or limited), limited
liability company, firm, corporation, association, trust, unincorporated organization, or other
entity, any syndicate or group deemed to be a Person under Section 14(d)(2) of the Exchange Act,
and shall include any successor (by merger or otherwise) of such entity.




          (y) “Preferred Stock” shall mean shares of Series A Junior Participating Preferred
Stock, $0.01 par value per share, of the Company.




          (z) “Purchase Price” shall have the meaning ascribed thereto in Section 7(b) hereof.




          (aa) “Qualified Offer” shall mean an offer determined by the Board of Directors to
have each of the following characteristics:




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



               (ii) An offer that has been commenced within the meaning of Rule 14d-2(a) under the
Exchange
Act and is made by an offeror (including Affiliates or Associates of such offeror) that
beneficially owns no more than ten percent (10%) of the outstanding Common Stock as of the date of
such commencement;



               (iii) An offer whose per-share offer price is greater than the higher of (a) the highest
reported market price for the Common Stock in the immediately preceding twenty-four (24) months,
and (b) an amount at least twenty-five percent (25%) higher than the Current Market Price per share
of Common Stock, with, in the case of an offer that includes shares of common stock of the offeror,
such per-share offer price being determined using the lowest reported market price for common stock
of the offeror during the five (5) trading days immediately preceding and the five (5) trading days
immediately following the commencement of such offer within the meaning of Rule 14d-2(a) under the
Exchange Act;



               (iv) An offer that, within twenty (20) Business Days after the commencement date of the
offer
(or within ten (10) Business Days after any increase in the offer consideration), does not result
in a nationally recognized investment banking firm retained by the Board of Directors rendering an
opinion to the Board of Directors that the consideration being offered to the Stockholders is
either inadequate or unfair;



               (v) If the offer includes shares of common stock of the offeror, an offer pursuant to which
(i) the offeror shall permit a nationally recognized investment banking firm retained by the Board
of Directors and legal counsel designated by the Company to have access to such offeror’s books,
records, management, accountants and other appropriate outside advisers for the purposes of
permitting such investment banking firm and such legal counsel to



7









 







conduct a due diligence review of the offeror in order to permit such investment banking firm
(relying as appropriate on the advice of such legal counsel) to be able to render an opinion to the
Board of Directors with respect to whether the consideration being offered to the Stockholders is
fair or adequate, and (ii) within ten (10) Business Days after such investment banking firm shall
have notified the Company and the offeror that it had completed the due diligence review to its
satisfaction (or following completion of such due diligence review within ten (10) Business Days
after any increase in the consideration being offered), such investment banking firm does not
render an opinion to the Board of Directors that the consideration being offered to the
Stockholders is either unfair or inadequate and such investment banking firm does not after the
expiration of such ten (10) Business Day period render an opinion to the Board of Directors that
the consideration being offered to the Stockholders has become either unfair or inadequate based on
a subsequent disclosure or discovery of a development or developments that have had or are
reasonably likely to have a material adverse affect on the value of the common stock of the
offeror;



               (vi) An offer that is subject only to the minimum tender condition described below in item
(viii) of this definition and other customary terms and conditions, which conditions shall not
include any requirements with respect to the offeror or its agents being permitted any due
diligence with respect to the books, records, management, accountants and other outside advisers of
the Company;



               (vii) An offer pursuant to which the Company has received an irrevocable written commitment of
the offeror that the offer will remain open for at least one hundred twenty (120) Business Days
and, if a Special Meeting is duly requested in accordance with Section 29(d), for, at least ten
(10) Business Days after the date of the Special Meeting or, if no Special Meeting is held within
ninety (90) Business Days following receipt of the Special Meeting Notice in accordance with
Section 29(d), for at least ten (10) Business Days following such ninety (90) Business Day Period;



               (viii) An offer that is conditioned on a minimum of at least two-thirds of the outstanding
shares of the Common Stock being tendered and not withdrawn as of the offer’s expiration date,
which condition shall not be waivable;



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



               (x) If the offer includes shares of common stock of the offeror, the offeror is a publicly
owned United States corporation, and its common stock is freely tradable and is listed or admitted
to trading on either the NYSE or Nasdaq, (ii) no stockholder approval of the offeror is required to
issue such common stock, or, if required, has already been obtained, and (iii) no other class of
voting stock of the offeror is outstanding, and the offeror meets the registrant eligibility
requirements for use of Form S-3 for registering securities under the Securities Act; and



8









 





               (xi) An offer that is otherwise in the best interests of the Company and its stockholders.



     For the purposes of the definition of Qualified Offer, “fully financed” shall mean that the
offeror has sufficient funds for the offer and related expenses which shall be evidenced by (i)
firm, unqualified, written commitments from responsible financial institutions having the necessary
financial capacity, accepted by the offeror, to provide funds for such offer subject only to
customary terms and conditions, (ii) cash or cash equivalents then available to the offeror, set
apart and maintained solely for the purpose of funding the offer with an irrevocable written
commitment being provided by the offeror to the Board of Directors to maintain such availability
until the offer is consummated or withdrawn, or (iii) a combination of the foregoing; which
evidence has been provided to the Company prior to, or upon, commencement of the offer. If an
offer becomes a Qualified Offer in accordance with this definition, but subsequently ceases to be a
Qualified Offer as a result of the failure at a later date to continue to satisfy any of the
requirements of this definition, such offer shall cease to be a Qualified Offer and the provisions
of Section 29(d) shall no longer be applicable to such offer, provided the actual redemption of the
Rights pursuant to Section 29(d) shall not have already occurred.



          (bb) “Record Date” shall have the meaning ascribed thereto in the preamble of this
Agreement.




          (cc) “Redemption Resolution” shall have the meaning ascribed thereto in Section 29(d)
hereof.




          (dd) “Right” shall have the meaning ascribed thereto in the preamble of this
Agreement.




          (ee) “Rights Agent” shall have the meaning ascribed thereto in the preamble of this
Agreement.




          (ff) “Rights Dividend Declaration Date” shall have the meaning ascribed thereto in the
preamble of this Agreement.




          (gg) “Securities Act” shall mean the Securities Act of 1933, as amended and in effect
on the date of this Agreement, and all references to any rule or regulation under the Securities
Act shall be, except as otherwise specifically provided herein, to such rule or regulation as was
in effect on the date of this Agreement.




          (hh) “Series A Junior Participating Preferred Stock” shall mean the Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company having the rights and
preferences set forth in the Certificate of Designation attached to this Agreement as Exhibit A.




          (ii) “Special Meeting” shall have the meaning ascribed thereto in Section 29(d)
hereof.




9









 








          (jj) “Special Meeting Notice” shall have the meaning ascribed thereto in Section 29(d)
hereof.




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




          (ll) “Subsidiary” shall mean, with reference to any Person, any other Person of which
(1) a majority of the Voting Power of the Voting Securities or equity interests is Beneficially
Owned, directly or indirectly, by such first-mentioned Person or otherwise controlled by such
first-mentioned Person, or (2) an amount of Voting Securities or equity interests sufficient to
elect at least a majority of the directors or equivalent governing body of such other Person is
Beneficially Owned, directly or indirectly, by such first-mentioned Person, or otherwise controlled
by such first-mentioned Person.




          (mm) “Trading Day,” with respect to any security shall mean a day on which the
principal national securities exchange on which the security is listed or admitted to trading is
open for the transaction of business or, if the security is not listed or admitted to trading on
any national securities exchange, a Business Day.




          (nn) “Triggering Event” shall mean a Flip-In Event or a Flip-Over Event.




          (oo) “Voting Power” when used with reference to the Voting Securities of any Person
shall mean the number of votes (whether cast in person, by proxy, or by written consent) entitled
(1) to be cast generally in the election of directors or members of the governing body of such
Person (if such person is a corporation or is managed by or under the direction of a governing body
performing functions and having obligations similar to those of a corporate board of directors), or
(2) to participate in the management and control of such Person (if such Person is not a
corporation and is not managed by or under the direction of a governing body performing functions
and having obligations similar to those of a corporate board of directors).




          (pp) “Voting Securities” when used in reference to any Person, shall mean the
outstanding capital stock, equity interest, or other voting securities of such Person, in each case
entitling the holder thereof (1) to cast votes, in person or by proxy, or to act by written
consent, in the election of directors or members of the governing body of such Person (if such
person is a corporation or is managed by or under the direction of a governing body performing
functions and having obligations similar to those of a corporate board of directors), or (2) to
participate in the management and control of such Person (if such Person is not a corporation and
is not managed by or under the direction of a governing body performing functions and having
obligations similar to those of a corporate board of directors).




          (qq) “Voting Stock” shall mean the Common Stock, the Preferred Stock, and any other
class or series of securities or Voting Securities of the Company entitled to vote generally,
together with the Common Stock, (1) to be cast generally in the election of directors or members of
the governing body of the Company or (2) to participate in the management and control of the
Company.




10









 








          (rr) “Whole Board” shall mean the total number of directors which the Company would
have if there were no vacancies.




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



     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 shall in no event be liable
for, the acts or omissions of any such Co-Rights Agent.



     Section 3. Issue of Rights Certificates.



          (a) Until the Distribution Date, (x) the Rights will be evidenced by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which certificates for
Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates,
and (y) the Rights will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Rights Certificate, in substantially
the form of Exhibit B hereto (the “Rights Certificates”), evidencing one Right for each
share of Common Stock so held. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Sections 11, 12 or 13 hereof, at the time of distribution
of the Rights Certificates, the Company may make the necessary and appropriate rounding adjustments
(in accordance with Section 14 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.




          (b) As soon as practicable following the Record Date, the Company will send a copy of a
Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary of
Rights”), by first-class, postage prepaid mail to each record holder of the Common Stock as of
the Close of Business on the Record Date, at the address of such holder shown on the records of the
Company. The failure to send a copy of the Summary of the Rights shall not affect the
enforceability of any part of this Agreement or the rights of any holder of the Rights. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for transfer of any
certificates representing shares of Common Stock in respect of which Rights have been issued shall
also constitute the transfer of the Rights associated with such shares of Common Stock.




          (c) Certificates for the Common Stock issued after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date (as hereinafter defined), shall be deemed also to be
certificates for Rights, and shall bear the following legend:




11









 









This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Impax Laboratories, Inc.
(the “Company”) and StockTrans, Inc. dated as of January 20, 2009 (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 may be redeemed, may expire, or may be evidenced by separate
certificates or book entry form 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 without charge after receipt of a written request
therefor. Under certain circumstances, the Rights beneficially owned by
Acquiring Persons (as defined in the Rights Agreement) or any Affiliate or
Associate thereof (as defined in the Rights Agreement) and any subsequent
holder of such Rights may become null and void.



          (d) After the Distribution Date but prior to the Expiration Date, Rights shall, without
further action, be issued in connection with the issuance of Common Stock upon the exercise of
stock options granted prior to the Distribution Date or pursuant to other benefits under any
employee plan or arrangement established prior to the Distribution Date; provided,
however, that if, pursuant to the terms of any option or other benefit plan, the number of
shares issuable thereunder is adjusted after the Distribution Date, the number of Rights issuable
upon issuance of the shares shall be equal only to the number of shares which would have been
issuable prior to the adjustment. In the event that the Company purchases or acquires any shares
of Common Stock after the Record Date but prior to the Distribution Date, any Rights associated
with such shares of Common Stock shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the shares of Common Stock that are no
longer outstanding.




     Section 4. Form of Rights Certificates.



          (a) The Rights Certificates may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed or to conform to usage.
Subject to the provisions of this Agreement, including Sections 7, 11, 12, 13, 22 and 24, 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 shares of Preferred Stock as shall be
set forth therein at the Purchase Price (as defined in Section 7(b)), but the number of such shares
and the Purchase Price shall be subject to adjustment as provided herein.




          (b) Any Rights Certificate issued pursuant hereto 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) that becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an




12









 







Acquiring Person (or of any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and that receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person (or such Associate
or Affiliate) or to any Person with whom such Acquiring Person (or such Associate or Affiliate) has
any continuing written or oral agreement, arrangement, or understanding regarding either the
transferred Rights, shares of Common Stock, or the Company; or (B) a transfer that the Board of
Directors has determined in good faith to be part of a plan, agreement, arrangement, or
understanding that has as a primary purpose or effect the avoidance of Section 7(e) hereof shall,
upon the written direction of the Board of Directors, contain (to the extent feasible), the
following legend:





“The Rights represented by this Rights Certificate are or were Beneficially
Owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in
the Rights Agreement, dated as of January 20, 2009 (the “Rights Agreement”),
by and between Impax Laboratories, Inc. and StockTrans, Inc., as Rights
Agent). 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 countersigned by the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the 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, the Rights Agent will keep or cause to be kept, at its
office designated as the appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and the date of each of
the Rights Certificates.




13









 








	 	 	 	 	 
	 

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






          (a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that have become null and void pursuant to Section 7(e) hereof, that have been
redeemed pursuant to Section 23 hereof, or that 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 shares of Preferred Stock (or,
following a Triggering Event, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and executed the certificate set forth 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) of the Rights represented by such
Rights Certificate or Affiliates or Associates thereof as the Company shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of Sections 4, 7 and 14 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 may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any transfer, split up,
combination, or exchange of Rights Certificates.




          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security 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 owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.




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



          (a) Subject to Sections 7(e), 9(c) and 9(f) hereof, at or prior to the earlier of (i) the
Close of Business on January 20, 2012 (the “Final Expiration Date”), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof, and (iii) the time at which the Rights
are exchanged as provided in Section 24 hereof (the earlier of (i), (ii), and (iii) being the
“Expiration Date”), the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby in whole or in part at any time after the Distribution Date (except as otherwise
provided herein) upon surrender of the Rights Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent




14









 







designated for such purpose, together with the aggregate Purchase Price with respect to the
total number of one one-thousandths of a share of Preferred Stock (or other shares, securities,
cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable.




          (b) The Purchase Price for each one one-thousandth of a share of Preferred Stock pursuant to
the exercise of a Right shall initially be $15.00 (the “Purchase Price”), and shall be
subject to adjustment from time to time as provided in Sections 11, 12 and 13 hereof and shall be
payable in lawful money of the United States of America in accordance with Paragraph (c) below.
Each one one-thousandth of a share of Preferred Stock shall be referred to herein as a
“Unit” of Preferred Stock.




          (c) (i) Subject to Section 14 hereof, following the Distribution Date, the Company may (at the
direction of the Board of Directors) deposit with a corporation in good standing organized under
the laws of the United States or any State of the United States, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority (the “Depositary Agent” ) certificates
representing the shares of Preferred Stock that may be acquired upon exercise of the Rights and may
cause such Depositary Agent to enter into an agreement pursuant to which the Depositary Agent shall
issue receipts representing interests in the shares of Preferred Stock so deposited.




               (ii) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price for the Units of Preferred Stock (or, following a
Triggering Event, other securities, cash, or other assets, as the case may be) to be purchased
thereby as set forth below and an amount equal to any applicable transfer tax or other charge
required to be paid by the holder of such Rights Certificate in accordance with Section 9 hereof,
or evidence satisfactory to the Company of payment of such tax or charge, 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 representing such number of shares of Preferred Stock (or fractions of
shares that are integral multiples of one one-thousandth of a share of Preferred Stock) as are to
be purchased and the Company will direct its transfer agent to comply with all such requests,
and/or (B) requisition from the Depositary Agent depositary receipts representing such number of
Units of Preferred Stock as are to be purchased and the Company will direct the Depositary Agent to
comply with all such requests, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or such depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. In the event that the Company is
obligated to issue Common Stock or other securities of the Company, pay cash, and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary
so that such Common Stock, other securities, cash, and/or other property is available for
distribution by the Rights Agent, if and when necessary to comply with this Agreement. The payment
of the Purchase Price (as such amount may be reduced pursuant to



15









 







Section 11 hereof) may be made in cash or by certified or bank check or money order payable to
the order of the Company.



          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of
such Rights Certificate or to his duly authorized assigns, subject to the provisions of Sections 6
and 14 hereof.




          (e) Notwithstanding anything in this Agreement to the contrary, from and after the time that
any Person becomes an Acquiring Person, 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 who receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in such Acquiring Person
(or any such Associate or Affiliate) or to any Person with whom the Acquiring Person (or such
Associate or Affiliate) has any continuing written or oral agreement, arrangement, or understanding
regarding the transferred Rights, Voting Stock, or the Company, or (B) a transfer that the Board of
Directors has determined in good faith to be part of a plan, agreement, arrangement, or
understanding that has as a primary purpose or effect the avoidance of this Section 7(e), shall be
null and void without any further action, and any holder of such Rights thereafter shall have no
rights or preferences whatsoever with respect to such Rights, whether under any provision of this
Agreement, the Rights Certificates, or otherwise (including, without limitation, rights and
preferences pursuant to Sections 7, 11, 12, 13, 14, 23, and 24 hereof). No Rights Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Rights Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be void pursuant to the preceding
sentence shall be cancelled. The Company shall use all reasonable efforts to ensure compliance with
the provisions of this Section 7(e) and Section 4(b), but neither the Company nor the Rights Agent
shall have any liability to any holder of Rights or any other Person as a result of the Company’s
failure to make any determination under this Section 7(e) or such Section 4(b) with respect to an
Acquiring Person or its Affiliates, Associates, or transferees.




          (f) Notwithstanding anything in this Agreement or any Rights Certificate 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 transfer or exercise as set forth in this
Section 7 by such registered holder unless such registered holder shall have (i) completed and
executed the certificate following the form of election to purchase set forth on the reverse side
of the Rights Certificate surrendered for such assignment or exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) of the
Rights represented by such Rights Certificate or Affiliates or Associates thereof as the Company
shall reasonably request.




16









 








     Section 8. Cancellation and Destruction of Rights Certificates.



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



     Section 9. Reservation and Availability of Preferred 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 or any authorized and issued shares of
Preferred Stock held in its treasury, the number of shares of Preferred Stock that will be
sufficient to permit the exercise in full of all outstanding Rights.




          (b) So long as the shares of Preferred Stock issuable 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, 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
earlier of the Distribution Date or as soon as is required by law, a registration statement under
the Securities Act, with respect to the Preferred Stock purchasable upon exercise of the Rights on
an appropriate form, (ii) cause such registration statement to become effective as soon as
practicable after the filing, (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities, and (B) the Expiration Date, and
(iv) obtain such other regulatory approvals as may be necessary for it to issue securities
purchasable under the exercise of the Rights. The Company will also take all action as may be
necessary or appropriate to ensure compliance with the securities 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 one hundred twenty (120) 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 or to obtain any other
required regulatory approval in connection with the exercisability of the Rights. Upon any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in that jurisdiction shall have been obtained and, if applicable, until a
registration statement shall have been declared effective.




17









 








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




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




     Section 10. Preferred Stock Record Date.



     Each Person in whose name any certificate for a number of one one-thousandths of a share of
Preferred Stock 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 represented thereby, and
such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a date
upon which the Preferred Stock transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Stock transfer books of the Company are open.



     Section 11. The Flip-In.



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



          (a) Subject to the provisions of the following subparagraphs (b) and (c) and Section 23, in
the event that any Person becomes an Acquiring Person other than pursuant to a Qualified Offer,
each holder of a Right (which shall not include Rights which have become null and void pursuant to
the provisions of Section 7(e) hereof) shall thereafter have a right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu
of shares of Preferred Stock, such number of shares of Common Stock of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right is then exercisable and dividing
that product by (y) 50% of the Current Market Price per share of




18









 







the Common Stock on the date of the occurrence of such event (such number of shares being
herein referred to as the “Adjustment Shares”).




          (b) In the event that there shall not be sufficient issued but not outstanding and authorized
but unissued shares of Common Stock to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (a), the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exercise of the Rights;
provided, however, if the Company is unable to cause the authorization of a
sufficient number of additional shares of Common Stock, then, in the event the Rights become so
exercisable, the Company, with respect to each Right and to the extent necessary and permitted by
applicable law and any agreements or instruments in effect on the date hereof to which it is a
party shall, upon the exercise of such Rights, (i) pay an amount in cash equal to the excess of (A)
the product of (1) the number of Adjustment Shares, multiplied by (2) the Current Market Price of
the Common Stock (such product being herein referred to as the “Current Value”), over (B)
the Purchase Price, in lieu of issuing shares of Common Stock and requiring payment therefor, or
(ii) issue debt or equity securities, or a combination thereof, having a value equal to the Current
Value, where the value of such securities shall be determined by the Board of Directors based upon
the advice of a nationally recognized investment banking firm selected by the Board of Directors,
and require the payment of the Purchase Price, or (iii) deliver any combination of cash, property,
Common Stock and/or other securities having the requisite value, and require payment of all or any
requisite portion of the Purchase Price. To the extent that the Company determines that some
action need be taken pursuant to clauses (i), (ii), or (iii) of the proviso of this subparagraph
(b), a majority of the Whole Board may suspend the exercisability of the Rights for a period of up
to forty-five (45) days following the date on which the Flip-In Event shall have occurred, in order
to decide the appropriate form of distribution to be made pursuant to the above proviso and to
determine the value thereof. In the event of any suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at the time the suspension is no longer in effect.




          (c) The Board of Directors may, at its option, at any time after any Person becomes an
Acquiring Person other than pursuant to a Qualified Offer, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have been null and void
pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at an exchange ratio
of one share per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred
to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any
entity holding Common Stock or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 75% or more of the Voting
Power of the aggregate of all Voting Stock then outstanding. Immediately upon the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant to this subparagraph
(c) 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




19









 







the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by which the exchange of shares of
Common Stock for Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become null and void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights. In any exchange pursuant to this subparagraph
(c), the Company, at its option, may substitute shares of Preferred Stock (or shares of equivalent
preferred stock, as such term is defined in Section 13(b) 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 adjustments
in the voting rights of the Preferred Stock pursuant to the terms thereof, so that the fraction of
a share of Preferred Stock (or equivalent preferred stock) delivered in lieu of each share of
Common Stock shall have the same voting rights as one share of Common Stock. In the event that
there shall not be sufficient shares of Common Stock or Preferred Stock issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this
subparagraph (c), the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock or Preferred Stock for issuance upon exchange of the Rights. The
Company shall not be required to issue fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares. In lieu of such fractional shares, the Company
shall pay to the registered holders of the Rights Certificates, with regard to which such
fractional shares would otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the purposes of this subparagraph (c),
the current market value of a whole share shall be the Closing Price of the Common Stock for the
Trading Day immediately prior to the date of exchange pursuant to this subparagraph (c).




     Section 12. The Flip-Over.



     The Purchase Price, the number and kind of securities covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in this Section 12.



          (a) In the event that, following the Distribution Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person (other than a direct or
indirect, wholly-owned Subsidiary of the Company), (y) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of the 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, mortgage or otherwise transfer (or one or
more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one or more transactions,
assets or earning power aggregating more than 50% of the assets or earning




20









 







power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons,
then, and in each such case, (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 shares of freely tradable
common stock of the Principal Party, free and clear of any lien, encumbrance or other adverse
claim, 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 then
exercisable (or the number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the occurrence of the Flip-In Event if a Flip-In Event has
previously occurred) and dividing that product by (2) 50% of the Current Market Price per share of
the common stock of such Principal Party on the date of consummation of the Flip-Over Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue of the Flip-Over
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 13 hereof shall apply to such Principal Party; (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 such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of common stock thereafter deliverable upon the
exercise of the Rights; and the provisions of Section 11 hereof shall be of no effect following the
first occurrence of any Flip-Over 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 12(a), (A) the Person that is the issuer of any securities into which shares of Company
Common Stock are converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer of Common Stock that has the highest aggregate Current Market Price, and (B) if
no securities are so issued, the Person that is the other party to such merger or consolidation,
or, if there is more than one such Person, the Person the Common Stock of which has the highest
aggregate Current Market Price; and



               (ii) In the case of any transaction described in clause (z) of the first sentence of
Section
12(a), the Person that is the party receiving the largest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever Person the Common Stock of
which has the highest aggregate Current Market Price; 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-month period registered under Section 12 of the Exchange Act
(“Registered Common Stock”), or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person that has Registered Common Stock outstanding,
“Principal Party” shall refer to such other Person; (2) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person but is not a direct or indirect Subsidiary of another



21









 







Person that has Registered Common Stock outstanding, “Principal Party” shall refer to the
ultimate parent entity of such first-mentioned Person; (3) if the Common Stock of such Person is
not Registered Common Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and one or more of such other Persons has Registered
Common Stock outstanding, “Principal Party” shall refer to whichever of such other Persons is the
issuer of the Registered Common Stock having the highest aggregate Current Market Price; and (4) if
the Common Stock of such Person is not Registered Common Stock or such Person is not a corporation,
and such Person is directly or indirectly controlled by more than one Person, and none of such
other Persons have Registered Common Stock outstanding, “Principal Party” shall refer to whichever
ultimate parent entity is the corporation having the greatest stockholders’ equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate parent entity is the
entity having the greatest net assets.



          (c) The Company shall not consummate any Flip-Over Event or any other consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of authorized shares of
its Common Stock that have not been issued or reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 12, and unless prior thereto the Company and such
Principal Party and each other Person who may become a 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 12 and further providing that the Principal Party will, as
soon as practicable after the Flip-Over Event:




               (i) (A) prepare and file at its own expense an appropriate registration statement under
the
Securities Act with respect to the Common Stock that may be acquired upon exercise of the Rights,
(B) cause such registration statement to become and remain effective (and to include a prospectus
complying with the requirements of the Securities Act) until the Expiration Date, and (C) take such
action as may be required to ensure that any acquisition of such Common Stock upon the exercise of
the Rights complies with any applicable state securities or “blue sky” laws; and



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



          (d) In case the Principal Party that is to be a party to a transaction referred to in this
Section 12 has a provision in any of its authorized securities or in its Certificate of
Incorporation or By-laws or other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section 12, shares of Common
Stock of such Principal Party at less than the then Current Market Price per share or securities
exercisable for, or convertible into, Common Stock of such Principal Party at less than such then
current market price (other than to holders of Rights pursuant to this Section 12) or (ii)
providing for any special payment, tax or similar provisions in connection with the issuance of the
Common Stock of such Principal Party pursuant to the provisions of this Section 12, then, in such
event, the Company shall not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall




22









 







have been cancelled, waived or amended, or that the authorized securities shall be redeemed,
so that the applicable provision will have no effect in connection with, or as a consequence of,
the consummation of the proposed transaction.




          (e) Notwithstanding anything in this Agreement to the contrary, the provisions of this Section
12 shall not be applicable to a Flip-Over Event, if (i) such Flip-Over Event 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 (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 12(e), all
Rights hereunder shall expire.




          (f) The provisions of this Section 12 shall similarly apply to successive Flip-Over Events,
mergers, consolidations, sales or other transfers. In the event that a Flip-Over Event shall occur
at any time after the occurrence of a Flip-In Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in Section 12(a).




     Section 13. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.



     The Purchase Price, the number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in this Section 13.



          (a) 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 13(a), the
Purchase Price in effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and kind of shares of
capital stock 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, he 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 could require an adjustment under both Section 11(a)
hereof and this Section 13(a), the adjustment provided for in this Section 13(a) shall be in
addition to, and shall be made prior to any adjustment required pursuant to Section 13(a).




23









 








          (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 one one-thousandth of a 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
per one one-thousandth of a 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
one one-thousandths of shares of Preferred Stock outstanding on such record date, plus the number
of one one-thousandths of shares of Preferred Stock which the aggregate offering price of the total
number of shares of one one-thousandths 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 one one-thousandths of shares of Preferred Stock outstanding on such record date, plus
the number of additional one one-thousandths of 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 in a consideration part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent. Shares of Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such rights or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.




          (c) In case the Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular
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 subscription rights or warrants (excluding those referred to in Section 13(b)),
the Purchase Price to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction, the numerator of
which shall be the Current Market Price per one one-thousandth of a share of the Preferred Stock on
such record date, less the fair market value (as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed with the Rights Agent)
of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one one-thousandth of a share of Preferred Stock and
the denominator of which shall be such current market price per one one-thousandth of a share of
the Preferred Stock. Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is




24









 







not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would
be in effect if such record date had not been fixed.




          (d) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments which by reason
of this Section 13(d) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 13 shall be made to the nearest
cent or to the nearest one 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 13(d), any adjustment required by this Section 13 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.




          (e) If as a result of an adjustment made pursuant to Section 11(a), the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital stock of the Company
other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares contained in Section 13(a)
through (c), inclusive, and the provisions of Section 7, 9, 10, 12 and 14 hereof with respect to
the Preferred Stock shall apply on like terms to any such other shares.




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




          (g) Unless the Company shall have exercised its election as provided in Section 13(h), upon
each adjustment of the Purchase Price as a result of the calculations made in Sections 13(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.




          (h) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in substitution for any adjustment in the number of shares of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of 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-millionth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a public announcement
of its election to adjust the number of Rights,




25









 







indicating the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 13(h), 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.




          (i) 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 share
and the number of shares which were expressed in the initial Rights Certificates issued hereunder.




          (j) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then stated value, if any, of the shares 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 non-assessable
shares of Preferred Stock at such adjusted Purchase Price.




          (k) In any case in which this Section 13 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date the shares of Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the shares of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument evidencing such
holder’s right to receive such additional shares upon the occurrence of the event requiring such
adjustment.




          (l) Anything in this Section 13 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 13, as and to the extent that in its sole discretion the Company 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




26









 







dividends, or (v) issuance of rights, options or warrants referred to in this Section 13,
hereafter made by the Company to holders of its Preferred Stock shall, if practicable, not be
taxable to such stockholders.




          (m) The Company covenants and agrees that it shall not (i) consolidate with, (ii) merge with
or into, or (iii) sell or transfer to, in one or more transactions, assets or earning power
aggregating more than fifty percent (50%) of the assets or earning power of the Company and its
Subsidiaries taken as a whole, any other Person if at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.




          (n) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Sections 23, 24, 26 or 27 hereof, take any action the purpose or effect of which is to
diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights,
unless such action is approved by the Whole Board.




          (o) Whenever an adjustment is made as provided in Sections 11, 12 and 13 hereof, the Company
shall promptly (i) prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (ii) file with the Rights Agent and with each transfer agent
for the Preferred Stock and the Common Stock a copy of such Certificate, and (iii) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.




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




     Section 14. Fractional Rights and Fractional Shares.



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




27









 







the Current Market Price of a whole Right as of the date on which such fractional Rights would
have been otherwise issuable.




          (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). Subject to Section 7(c) hereof, fractions of shares of Preferred Stock in
integral multiples of one one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the
Company and a Depositary Agent selected by it. 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 Price of one
one-thousandth of a share of Preferred Stock as of the date of such exercise.




          (c) 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.




     Section 15. Rights of Action.



     All rights of action in respect of this Agreement, other than rights of action expressly
vested in the Rights Agent pursuant to Section 18 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of
the Common 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 of this Agreement and shall be entitled to specific performance of the
and injunctive relief against actual or threatened violations of the obligations hereunder of any
Person subject to this Agreement.



     Section 16. Agreement of Right Holders.



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



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




28









 








          (b) After the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office 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 duly completed and fully executed;




          (c) Subject to Sections 6 and 7 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) 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 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 penultimate
sentence of Section 7(e), shall be affected by any notice to the contrary; and




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




     Section 17. Rights Certificate Holder Not Deemed a Stockholder.



     Except as otherwise expressly provided in this Agreement, 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 shares 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, 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.



29









 





     Section 18. Concerning the Rights Agent.



     The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises. The indemnification provided for hereunder shall
survive the expiration of the Rights and the termination of this Agreement.



     The Rights Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.



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



     Any corporation into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that such corporation
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 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 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.



     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



30









 







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 imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:



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




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




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




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




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




31









 








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




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.




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




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




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




          (k) The Rights Agent shall not be required to take notice or be deemed to have notice of any
fact event or determination under this Agreement, unless and until the Rights Agent shall be
specifically notified in writing by the Company of such fact, event or determination.




     Section 21. Change of Rights Agent.



          (a) Resignation. 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 by registered or
certified mail, and to the 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 (or its
affiliate) terminates, the Rights Agent will be deemed to have resigned automatically and be
discharged from its duties under this Agreement as of the effective date of such termination, and
the Company shall be responsible for sending any required notice.




32









 








          (b) Removal by 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 to the holders of the Rights Certificates by
first-class mail.




          (c) Replacement. If the Rights Agent resigns or is removed or otherwise becomes
incapable of acting, the Company shall appoint a successor Rights Agent. If the Company fails to
appoint a successor Rights Agent within thirty (30) days after giving the Rights Agent notice of
its removal, or within thirty (30) days after receiving written notice of the resignation or
incapacity of the Rights Agent from the Rights Agent or a holder of a Rights Certificate (who
shall, with its notice, submit its Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent.




          (d) Qualifications. Any successor Rights Agent, whether appointed by the Company or
by a court, shall: (i) be a corporation organized and doing business under the laws of the United
States (or any state of the United States) in good standing; (ii) be authorized under such laws to
exercise corporate trust or stock transfer powers; (iii) be subject to supervision or examination
by a federal or state authority; and (iv) have, at the time of its appointment as Rights Agent, a
combined capital and surplus, along with its Affiliates, of at least $50,000,000.




          (e) Succession Procedures. 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 the appointment of the successor Rights Agent, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common
Stock and the Preferred Stock, and mail a notice thereof in writing to the registered holders of
the Rights Certificates. Failure to give any notice provided for in this Section 21, 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 the Rights Certificates to the
contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by a majority of the Board of Directors to reflect any adjustment or change
made in accordance with the provisions of this Agreement in the Purchase Price or the number or
kind or class of shares or other securities or property that may be acquired under the Rights
Certificates. In addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Expiration Date, 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, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if



33









 







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



     Section 23. Redemption and Termination.



          (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (i) the Close of Business on the tenth (10th) Business Day following a Stock
Acquisition Date or, if the Stock Acquisition Date shall have occurred prior to the Record Date,
the Close of Business on the tenth (10th) Business Day following the Record Date,
subject to extension by the Board of Directors for a period of time up to, but not exceeding, ten
(10) additional Business Days, and (ii) the Final Expiration Date, redeem all but not less than all
the then outstanding Rights at a redemption price of $0.01 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”), and the Company may, at its option, by action of a majority of the Whole Board, pay
the Redemption Price either in shares of Common Stock (based on the Current Market Price of the
shares of Common Stock at the time of redemption), cash or any other form of consideration, or any
combination of any of the foregoing, deemed appropriate by the Board of Directors. Subject to the
foregoing, the redemption of the Rights may be made effective at such time, on such basis and with
such conditions as the Whole Board in its sole discretion may establish. Notwithstanding anything
in this Agreement to the contrary, the Rights shall not be exercisable until such time as the
Rights shall have become non-redeemable in accordance with the terms of this Agreement.




          (b) Promptly upon the action of the Board of Directors of the Company extending the redemption
period pursuant to Section 23(a)(i), evidence of which shall have been filed with the Rights Agent,
the Company shall issue a press release indicating the date to which the Board of Directors has
extended its right to redeem the Rights.




          (c) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without
any further action and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price for each
Right so held. Within ten (10) days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the Transfer Agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the Redemption Price
will be made. In any case, failure to give such notice to




34









 







any particular holder of Rights shall not affect the sufficiency of the notice to other
holders of Rights.




     Section 24. Effectiveness of this Agreement.



     It is intended that this Agreement shall become effective upon the execution hereof.



     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 Flip-Over Event, or
(v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent feasible and 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, Flip-Over Event, 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) Upon the occurrence of a Flip-In Event or a Flip-Over Event, the Company or Principal
Party, as the case may be, shall as soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible 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 Sections 11(a) or 12(a) hereof, as the case may be.




     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:


Impax Laboratories, Inc.

30831 Huntwood Avenue

Hayward, CA 94544





35











 




Attention: Chief Financial Officer



With a copy to:



Blank Rome LLP

Watergate 600 New Hampshire Avenue

Washington, DC 20037

Attention: Keith E. Gottfried, Esq.



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 delivered by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:



StockTrans, Inc.

44 West Lancaster Avenue

Ardmore, PA 19003

Attention: Client Services



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




     Section 27. Supplements and Amendments.



     (a) Except as otherwise provided in this Section 27, for so long as the Rights are then
redeemable, the Company, by action of the Board of Directors in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, may from time to time supplement or amend any
provision of this Agreement (including, without limitation, any extension of the period in which
the Rights may be redeemed, any increase in the Purchase Price and any extension of the Final
Expiration Date) without the approval of any holders of the Rights; provided,
however, that no such supplement or amendment which obligates the Rights Agent to accept
any duties and/or responsibilities not specified in this Agreement shall become binding upon the
Rights Agent unless and until the Rights Agent consents in writing to the acceptance of such
additional duties and/or responsibilities, which consent shall not be unreasonably withheld or
delayed by the Rights Agent. At any time when the Rights are no longer redeemable, except as
otherwise provided in this Section 27, 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 the Rights in
order to (i) cure any ambiguity, (ii) correct or supplement any provision contained herein that 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



36









 




hereunder in any manner that the
Company may deem necessary or desirable, provided, however, that this Agreement may not be supplemented or amended to lengthen, pursuant
to clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed, or
modify the ability (or inability) of the Board of Directors to redeem the Rights, in either case at
such time as the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or
benefits to, the holders of Rights as such (other than Rights that have become null and void
pursuant to Section 7(e) hereof), and provided, further, that no such supplement
or amendment pursuant to this sentence shall adversely affect the interests of the holders of the
Rights as such (other than Rights that have become null and void pursuant to Section 7(e) hereof).
Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which decreases the Redemption Price.




     (b) Upon 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; provided, however, that no
supplement or amendment may be made to Sections 18, 19, 20, or 21 hereof without the consent of the
Rights Agent. Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.



     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 of Directors, Etc.



          (a) For all purposes of this Agreement, any calculation of the number of shares of any class
or series of Voting Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Voting Stock of which any Person is the
Beneficial Owner (or the particular percentage of Voting Power if such shares of Voting Stock
represented by shares of Voting Stock Beneficially Owned by such Person), shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act Regulations as in
effect on the date hereof. Except as otherwise specifically provided herein, the Board of
Directors of the Company shall have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board of Directors of the Company
or to the Company, or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to 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 this
Agreement). All such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that are done or made by
the Board in good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the Board of Directors
of the Company or any member thereof to any liability to the holders of the Rights.




37









 








          (b) It is understood that the TIDE Committee (as described below) of the Board of Directors
shall review and evaluate this Agreement in order to consider whether the maintenance of this
Agreement continues to be in the best interests of the Company, its stockholders and other relevant
constituencies of the Company at least annually, or sooner than that if any Person shall have made
a proposal to the Company or its stockholders, or taken any other action that, if effective, could
cause such Person to become an Acquiring Person hereunder, if a majority of the members of the TIDE
Committee shall deem such review and evaluation appropriate after giving due regard to all relevant
circumstances. Following each such review, the TIDE Committee shall communicate its conclusions to
the full Board of Directors, including any recommendation in light thereof as to whether this
Agreement should be modified or the Rights should be redeemed. The TIDE Committee shall be
comprised of members of the Board of Directors who are not officers, employees or Affiliates of the
Company and shall be the Nominating and Governance Committee of the Board of Directors (or any
successor committee) as long as the members of such committee meet such requirements.




          (c) The TIDE Committee and the Board of Directors, when considering whether this Agreement
should be modified or the Rights should be redeemed, shall have the power to set their own agenda
and to retain at the expense of the Company their choice of legal counsel, investment bankers and
other advisors. The TIDE Committee and the Board of Directors, when considering whether this
Agreement should be modified or the Rights should be redeemed, shall have the authority to review
all information of the Company and to consider any and all factors they deem relevant to an
evaluation of whether this Agreement should be modified or the Rights should be redeemed.




          (d) In the event the Company, not earlier than ninety (90) Business Days nor later than one
hundred twenty (120) Business Days following the commencement of a Qualified Offer, which has not
been terminated prior thereto and which continues to be a Qualified Offer, receives a written
notice complying with the terms of this Section 29(d) (the “Special Meeting Notice”) that
is properly executed by the holders of record (or their duly authorized proxy) of ten percent (10%)
of the shares of Common Stock then outstanding directing the Board of Directors to submit to a vote
of stockholders at a special meeting of the stockholders of the Company (a “Special
Meeting”) a resolution authorizing the redemption of all, but not less than all, of the then
outstanding Rights at the Redemption Price (the “Redemption Resolution”), then the Board of
Directors shall take such actions as are necessary or desirable to cause the Redemption Resolution
to be submitted to a vote of stockholders, by including a proposal relating to adoption of the
Redemption Resolution in the proxy materials of the Company for the Special Meeting. For purposes
of a Special Meeting Notice, the record date for determining eligible holders of record shall be
the ninetieth (90th) Business Day following the commencement of a Qualified Offer. Any
Special Meeting Notice must be delivered to the Secretary of the Company at the principal executive
offices of the Company and must set forth as to the stockholders of record executing the request
(x) the name and address of such stockholders, as they appear on the Company’s books and records,
(y) the class and number of shares of Common Stock which are owned of record by each of such
stockholders, and (z) in the case of Common Stock that is owned beneficially by another Person, an
executed certification by the holder of record that such holder has executed such Special Meeting
Notice only after obtaining instructions to do so from such beneficial owner. Subject to the
requirements of applicable law, the Board of Directors



38









 






may take a position in favor of or opposed to the adoption of the Redemption Resolution, or no
position with respect to the Redemption Resolution, as it determines to be appropriate in the
exercise of its duties. In the event that no Person has become an Acquiring Person prior to the
redemption date referred to in this Section, and the Qualified Offer continues to be a Qualified
Offer and either (i) the Special Meeting is not held on or prior to the ninetieth (90th)
Business Day following receipt of the Special Meeting Notice, or (ii) if, at the Special Meeting,
the holders of a majority of the shares of Common Stock outstanding as of the record date for the
Special Meeting selected by the Board of Directors shall vote in favor of the Redemption
Resolution, then all of the Rights shall be deemed redeemed by such failure to hold the Special
Meeting or as a result of such stockholder action, as the case may be, at the Redemption Price, or
the Board of Directors shall take such other action as would prevent the existence of the Rights
from interfering with the consummation of the Qualified Offer, effective either (i) as of the Close
of Business on the 90th Business Day following receipt of the Special Meeting Notice if a Special
Meeting is not held on or prior to such date or (ii) as of the date on which the results of the
vote on the Redemption Resolution at the Special Meeting are certified as official by the appointed
inspectors of election for the Special Meeting, as the case may be.




     Immediately upon the action of the Board of Directors electing to redeem the Rights pursuant
to Section 23 or the effectiveness of such redemption pursuant to Section 29(d) (or, if the
resolution of the Board of Directors electing to redeem the Rights pursuant to Section 23 states
that the redemption will not be effective until the occurrence of a specified future time or event,
upon the occurrence of such future time or event), without any further action and without any
notice, the right to exercise the Rights will terminate and each Right, whether or not previously
exercised, will thereafter represent only the right to receive the Redemption Price in cash or
securities, as determined by the Board of Directors; provided, however, that such
resolution of the Board of Directors pursuant to Section 23 may be revoked, rescinded or otherwise
modified at any time prior to the time and date of effectiveness set forth in such resolution, in
which event the right to exercise will not terminate at the time and date originally set for such
termination by the Board of Directors. Promptly after the Rights are redeemed, the Company shall
give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights
by mailing such notice in accordance with Section 26.



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



39









 







notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors determines in its good faith judgment that severing the invalid, void or
unenforceable 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 day following the date of such determination by the
Board of Directors.



     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.



Balance of Page Intentionally Left Blank




40









 





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




	 	 	 	 	 	 	 	 	 
	Attest:	 	IMPAX LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 /s/ Arthur A. Koch, Jr.	 	By:	 /s/ Larry Hsu	 	 
	 

	 	 

	 	 
	Name:
	 	 

Arthur A. Koch, Jr.	 	Name:
	 	 

Larry Hsu
	 	 
	Title:

	 	Chief Financial Officer
	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:	 	STOCKTRANS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 /s/ Angela Lamb	 	By:	 /s/ Robert J. Winterle	 	 
	 

	 	 

	 	 
	Name:

	 	Angela Lamb
	 	Name:
	 	Robert J. Winterle	 	 
	Title:

	 	Assistant Vice President
	 	Title:
	 	Vice President	 	 






41









 





EXHIBIT A




FORM




OF


CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES

OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK




OF




IMPAX LABORATORIES, INC.




(Pursuant to Section 151 of the

General Corporation Law of the State of Delaware)




 






     The undersigned, Larry Hsu, in accordance with the provisions of Section 103 of the General
Corporation Law of the State of Delaware (the “DGCL”), hereby certifies:



          1. That is he is the duly elected President and Chief Executive Officer of Impax Laboratories,
Inc., a Delaware corporation (the “Corporation”); and




          2. That, on January 20, 2009, the Board of Directors of the Corporation acting pursuant to the
authority conferred upon the Board of Directors by Article SIXTH of the Restated Certificate of
Incorporation of the Corporation (the “Certificate of Incorporation”) and in accordance
with Section 151(g) of the DGCL, adopted the following resolution creating a series of one hundred
thousand (100,000) shares of Preferred Stock, par value $0.01 per share, designated as Series A
Junior Participating Preferred Stock:




          “RESOLVED, that pursuant to the authority expressly granted and vested in the Board of
Directors of the Corporation in accordance with Article SIXTH of its Restated Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and the
designation, number, preferences, voting powers and other rights of the shares of such series, and
the qualifications, limitations and restrictions thereof are as follows:




     Section 1. Designation and Amount. The shares of a series of the Preferred Stock of
the Corporation, par value $0.01 per share, shall be designated as “Preferred Stock, Series A” (the
“Series A Junior Participating Preferred Stock”) and the number of shares constituting such
series shall initially be one hundred thousand (100,000). Such number of shares may be increased or
decreased by resolution of the Board of Directors of the Company (the “Board of Directors”
or the “Board”); provided, that no decrease shall reduce the number of shares of
Series A Junior Participating Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities issued by the
Company convertible into Series A Junior Participating Preferred Stock.



A-1









 





     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 Series A Junior Participating Preferred Stock with respect to dividends, and in
preference to the holders of the Common Stock, par value $0.01 per share (the “Common
Stock”), the holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day of each fiscal
quarter of the Corporation in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a)
$.01 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 of the Corporation since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the Corporation shall at any time after January 20, 2009 declare or
pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision of
combination or consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each of those cases the multiplier set forth in clause (b) of
the preceding sentence shall be adjusted by multiplying such multiplier by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately
prior to such event.



               (B) The Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in paragraph (A) 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 $.01 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on the subsequent Quarterly Dividend Payment Date.



               (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of
issue of the shares of Series A Junior Participating Preferred Stock, unless the date of issue of
the shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on the shares shall begin to accrue from the date of issue of the shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Participating Preferred Stock entitled to
receive a quarterly dividend and before the Quarterly Dividend Payment Date, in either of which
events the dividends shall begin to accrue and be cumulative from the Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not



A-2









 







bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock
in an amount less than the total amount of the dividends at the time accrued and payable on the
shares shall be allocated pro rata on a share by share basis among all the shares at the time
outstanding. The Board of Directors may fix a record date for the determination of holders of
shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be not more than sixty (60) days prior to
the date fixed for the payment thereof.



     Section 3. Voting Rights. The holders of shares of Series A Junior Participating
Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 1000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock; or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each case the number of votes per share to which holders
of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to the
event shall be adjusted by multiplying the number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after the event, and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to the event.



               (B) Except as otherwise provided herein or by law, the holders of shares of Series A
Junior
Participating Preferred Stock 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 Series A Junior Participating Preferred Stock
shall be
in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a “default period”) which
shall extend until such time when all accrued and unpaid dividends for all pervious quarterly
dividend periods and for the current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of all series of voting Preferred Stock
(collectively “Voting Preferred Stock”), including holders of the Series A Junior
Participating Preferred Stock, with dividends in arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2)
Directors, which Directors shall be in addition to the then otherwise authorized number of
Directors.



               (ii) During any default period, such voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders provided that such
voting right shall not be exercised unless the holders of ten percent (10%) in number of shares of
Voting 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 Voting Preferred
Stock of such voting right. At any meeting at



A-3









 







which the holders of Voting 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 any 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 Voting 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 Voting 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 Voting Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.



               (iii) Unless the holders of Series A Junior Participating 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 Voting Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the holders of Voting Preferred Stock,
which meeting shall thereupon be called by the Chief Executive Officer, the President, a
Vice-President or the Secretary of the Corporation. Notice of the meeting and of any annual
meeting at which holders of Voting Preferred Stock are entitled to vote pursuant to this paragraph
(C)(iii) shall be given to each holder of record of Voting 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. The
meeting shall be called for a time not earlier than twenty (20) days and not later than sixty (60)
days after the order or request or in default of the calling of the meeting within sixty (60) days
after the order or request, the 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 Voting Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (c)(iii),
no such special meeting shall be called during the period within sixty (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
then otherwise authorized until the holders of Voting Preferred Stock shall have exercised their
right, voting as a single class, to elect two (2) Directors.



               (v) The Directors elected by the holders of Voting Preferred Stock shall continue in office
until the next annual meeting of stockholders and until their successors shall have been elected
and shall qualify, or until the expiration of the default period. Any vacancy in the Board of
Directors may 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 the Directors to fill vacancies as provided in the preceding
sentence.



A-4









 





               (vi) At such time as the arrearage is fully cured, and all dividends accumulated and unpaid on
any shares of Series A Junior Participating Preferred Stock outstanding are paid, and, in addition
thereto, at least one regular dividend has been paid subsequent to curing such arrearage, (x) the
right of the holders of Voting Preferred Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Voting Preferred Stock as a class shall terminate,
and (z) the number of Directors shall be such number as may be provided for in this Certificate of
Incorporation or the Bylaws of the Corporation 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 this Certificate of Incorporation or the Bylaws of
the Corporation). Any vacancies in the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence shall be filled by the majority of the remaining Directors.



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



     Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:



               (i) Declare or pay dividends on, or 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 Series A Junior Participating Preferred Stock;



               (ii) Declare or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A
Junior Participating Preferred Stock and all the 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) to the Series A
Junior Participating Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or



               (iv) Purchase or otherwise acquire for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance with a purchase offer



A-5









 







made in writing or by publication (as determined by the Board of Directors) to all holders of
the 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 the shares at the time
and in the manner therein set forth.



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



     Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Series A Junior Participating Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment, provided that the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1000 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except distributions made ratably on the Series A Junior
Participating Preferred Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon the liquidation, dissolution or winding up.
In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each
case the aggregate amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to the event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying the amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after the event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to the event.



     Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series A Junior Participating Preferred Stock then outstanding



A-6









 







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 1000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying the amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding immediately after the event
and the denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.



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



     Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of assets, junior to all other series
of the Company’s Preferred Stock issued either before or after the issuance of the Series A Junior
Participating Preferred Stock, unless the terms of any such series shall provide otherwise.



     Section 10. Amendment. At such time as any shares of Series A Junior Participating
Preferred Stock are outstanding, the Certificate of Incorporation, as amended, of the Corporation
shall not be amended in any manner that would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the outstanding shares of
Series A Junior Participating Preferred Stock, voting together as a single class.



     RESOLVED FURTHER, that the Chief Executive Officer or any Vice President and the Secretary or
any Assistant Secretary of this corporation be, and they hereby are, authorized and directed to
prepare and file a Certificate of Designation of Rights, Preferences and Privileges in accordance
with the foregoing resolution and the provisions of Delaware law and to take such actions as they
may deem necessary or appropriate to carry out the intent of the foregoing resolution.”



     I have executed and subscribed this Certificate and do hereby affirm that the foregoing as
true under the penalties of perjury as of this 20th day of January 2009.



	 	 	 	 	 
	 

	 	 

Name: Larry Hsu
	 	 
	 

	 	Title: President and Chief Executive Officer	 	 






A-7









 





EXHIBIT B




Form of Rights Certificate




			
	 	 	 
	Certificate No. R—
	 	                    Rights





NOT EXERCISABLE AFTER THE EARLIER OF JANUARY 20, 2012 AND THE DATE ON WHICH THE RIGHTS EVIDENCED
HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN THE RIGHTS AGREEMENT, DATED AS OF
JANUARY 20, 2009 (THE “RIGHTS AGREEMENT”), BY AND BETWEEN IMPAX LABORATORIES, INC. AND STOCKTRANS,
INC., AS RIGHTS AGENT). AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY
PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN 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 BE 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 BE OR MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF THE RIGHTS
AGREEMENT.]*




RIGHTS CERTIFICATE




IMPAX LABORATORIES, INC.




     This certifies that
                                        
or registered assigns, is the registered holder 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 January 20, 2009 (the
“Rights Agreement”), between Impax Laboratories, Inc., a Delaware corporation (the
“Company”), and StockTrans, Inc. (the “Rights Agent”) to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M. (New York City time) on January 20, 2012, ___one-thousandth[s] of a fully paid,
nonassessable share of Series A Junior Participating Preferred Stock (the “Preferred
Stock”) of the Company, at a purchase price of $15.00 per one one-thousandth of a share (the
“Purchase Price”), payable in lawful money of the United States of America, upon
presentation and surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed, and payment of the Purchase Price at an office of the Rights
Agent designated for such purpose. The number of Rights evidenced by this Rights Certificate (and
the number of one one-thousandths of a share of Series A Junior Participating Preferred Stock which
may be purchased upon exercise thereof) set forth above, and the Purchase Price set forth above,
are the





 




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




B-1









 









number and Purchase Price as of the close of business on January 20, 2009, based on the
Preferred Stock as constituted on such date. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Rights Agreement.




     From and after the time that any Person becomes an Acquiring Person, 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 who becomes a transferee after the
Acquiring Person becomes an Acquiring Person, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, concurrently with or 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 thereafter have any rights or preferences with respect to
such Rights.



     As provided in the Rights Agreement, the Purchase Price, the type of security, and the number
of one one-thousandths of a share of Series A Junior Participating Preferred Stock (or other
securities or property) 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.



     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 limitation 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
principal offices of the Company and are also available upon written request to the Company.



     This Rights Certificate, with or without other Rights Certificates, upon surrender at the
office or agency 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 shares 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 Certificate
may be redeemed by the Company at its option at a redemption price of $0.01 per Right, payable in
cash, stock or other consideration, at any time prior to the earlier of (i) the close of business
on the tenth Business Day following a Stock Acquisition Date or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the Close of Business on the tenth (10th)
Business Day following the Record Date, subject to extension by the Board of Directors for a period
of time up to, but not exceeding, ten (10) additional Business Days, and (ii) the Final Expiration
Date.



B-2









 





     No fractional shares of Series A Junior Participated Preferred Stock are required to 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 Series A Junior Participating Preferred Stock), but
in lieu thereof a cash payment will be made, as provided in the Rights Agreement. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Certificates for the number of whole Rights not exercised.



     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 Series A Junior Participating Preferred Stock or of
any other securities of the Company which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.



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



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



Dated as of:
                                        
.




	 	 	 	 	 	 	 	 	 
	ATTEST:	 	IMPAX LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	Name:

	 	 

	 	Name:
	 	 

Larry Hsu
	 	 
	Title:

	 	Corporate Secretary
	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Countersigned:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	STOCKTRANS, INC., as Rights Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 
	 	 
	 

	 	 	 	 	 	      Authorized Signature	 	 






B-3









 






(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
                                        
, as attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full power of
substitution.




Dated:                                      
  




	 	 	 
	 

	 	Signature:           
              
            
             
          
	 

	 	(Signature must conform to the name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever)
	Signature Guaranteed:
	 	 
	 
	 	 
	 

(Signatures must be guaranteed by a
bank, trust company, broker, dealer
or other eligible institution
participating in a recognized
signature guarantee medallion
program)

	 	 






               The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by, were not acquired by the undersigned from, and are not
being sold, assigned or transferred to, an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).



	 	 	 
	 

	 	Signature:           
              
             
              
        
	 

	 	(Signature must conform to the name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever)






B-4









 






(Form of Reverse Side of Rights Certificate – continued)




FORM OF ELECTION TO PURCHASE




(To be executed if the holder desires to

exercise Rights represented by the Rights Certificate.)




To: IMPAX LABORATORIES, INC.


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




Please
insert social security or other identifying number:
 






 




(Please print name and address)



If such number of Rights shall not be all the Rights evidenced by this 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 must conform to the name as written upon the face

of this Rights Certificate in every particular, without

alteration or enlargement or any change whatsoever)




Signature Guaranteed:




            
            
             
            
           

(Signatures must be guaranteed by a bank, trust

company, broker, dealer or other eligible

institution participating in a recognized

signature guarantee medallion program)




B-5









 





               The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by, were not acquired by the undersigned from, and are not
being sold, assigned or transferred to, an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).



Signature: 
               
              
              
                

(Signature must conform to the name as written upon

the face of this Rights Certificate in every

particular, without alteration or enlargement or any

change whatsoever)




NOTICE




               The signature in the Form of Assignment or Form of Election to Purchase, as the case
may be, must conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.



               In the event the certification set forth above in the Form of Assignment or the Form
of Election to Purchase, as the case may be, is not completed, such Assignment or Election to
Purchase will not be honored.



B-6









 





EXHIBIT C




SUMMARY OF RIGHTS TO PURCHASE

SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK




     On January 20, 2009, the Board of Directors (the “Board of Directors”) of Impax
Laboratories, Inc. (the “Company”) entered into a Rights Agreement (the “Rights
Agreement”) with StockTrans, Inc. (the “Rights Agent”) and, in connection therewith, on
January 20, 2009, declared a dividend distribution of one preferred stock purchase right (each, a
“Right”) for each outstanding share of common stock, par value $0.01 per share (the
“Common Stock”), of the Company, subject to the completion of appropriate documentation.
The distribution was made to stockholders of record as of the close of business on January 30, 2009
(the “Record Date”). Except as set forth below, each Right entitles the registered holder
thereof to purchase from the Company a unit consisting of one one-thousandth of a share (a
“Unit”) of a newly created series of the Company’s Series A Junior Participating Preferred
Stock, par value $0.01 per share (the “Preferred Stock”), at a purchase price of $15.00 per
Unit (the “Purchase Price”), subject to the adjustments described below.



     The Rights will initially be represented by the Common Stock certificates and are not
exercisable or transferable apart from the Common Stock until the earlier to occur of (i) ten days
following a public announcement that a person (other than certain exempted entities and any
“grandfathered stockholder”) or group of affiliated or associated persons (an “Acquiring
Person”), has acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the voting power of the aggregate of all shares of the Company’s voting securities (“Voting
Stock”) then outstanding (the “Stock Acquisition Date”) or (ii) ten business days
following the commencement of (or the first public announcement of an intention to commence) a
tender offer or exchange offer if, upon consummation thereof, such person or group would be the
beneficial owner of 20% or more of the voting power of the aggregate of all shares of the Voting
Stock then outstanding (the earlier of the dates being called the “Distribution Date”),
except in either case pursuant to an offer for all outstanding shares of Common Stock which the
Board of Directors determines to be fair and not inadequate, after receiving advice from one or
more nationally recognized investment banking firms, and which meets the other conditions therefor
contained in the Rights Agreement (a “Qualified Offer”). Until the Distribution Date (or
earlier redemption or expiration of the Rights), Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights (the “Rights Certificates”) will be
mailed to stockholders who were holders of record of the Common Stock as of the close of business
on the Distribution Date. From and after the Distribution Date, the separate Rights Certificates
alone will evidence the Rights. The Rights will expire at the close of business on January 20,
2012 (the “Final Expiration Date”), unless earlier redeemed or exchanged by the Company.



     If a person or group (with certain limited exceptions) becomes an Acquiring Person at any time
after the date of the Rights Agreement, unless the event causing the 20% threshold to be crossed is
a Qualified Offer, each holder of a Right (except as provided below) will thereafter



C-1









 




have the right to receive, upon exercise of the Right at the then current Purchase Price,
shares of Common Stock (or, in certain circumstances, cash, property or other securities of the
Company) which at the time of the transaction would have a market value of two times the Purchase
Price. The foregoing event is referred to as a “Flip-in Event.” Notwithstanding the
foregoing, no Right may be exercised for Common Stock of the Company until the Rights have become
non-redeemable, as described below.




     For example, at an exercise price of $15.00 per Right, each valid Right following a Flip-in
Event not owned by an Acquiring Person would entitle its holder to purchase $30.00 worth of Common
Stock (or other consideration, as noted above).



     In the event that, at any time following a Distribution Date, directly or indirectly (i) the
Company is consolidated with, or merged with and into, another entity and the Company is not the
surviving entity of such consolidation or merger (other than a consolidation or merger which
follows a Qualified Offer) or if the Company is the surviving entity, but shares of its outstanding
Common Stock are changed or exchanged for stock or securities (of any other person) or cash or any
other property, or (ii) more than 50% of the Company’s assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been voided) shall
thereafter have the right to receive, upon the exercise thereof at the then-current exercise price
of the Right, that number of shares of common stock of the acquiring company, which at the time of
such transaction will have a market value of two times the exercise price of the Right. The
foregoing event is referred to as a “Flip-over Event.” A Flip-in Event and a Flip-Over
Event are collectively referred to as “Triggering Events.” Following the occurrence of any
Triggering Events, any Rights that are or were beneficially owned by an Acquiring Person will be
null and void.



     For example, at an exercise price of $15.00 per Right, each valid Right following a Flip-over
Event would entitle its holder to purchase $30.00 worth of the acquiring company’s common stock.



     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) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or securities convertible into
Preferred Stock or equivalent preferred stock at less than the current market price of the
Preferred Stock or (iii) upon the distribution to holders of Preferred Stock of evidence of
indebtedness, cash (excluding regular quarterly cash dividends), assets (other than a dividend
payable in Preferred Stock but including any dividend payable in stock other than Preferred Stock)
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
require an adjustment of 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 day prior to the date of exercise.



     At any time on or prior to the earlier of (i) the close of business on the tenth business day
following a Stock Acquisition Date or, if the Stock Acquisition Date shall have occurred prior to



C-2









 







the Record Date, the close of business on the tenth business day following the Record Date,
subject to extension by the Board of Directors for a period of time up to, but not exceeding, ten
(10) additional business days, and (ii) the Final Expiration Date, the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (the “Redemption Price”),
payable in cash, stock or other consideration. The redemption of the Rights may be made effective
at such time on such basis with such conditions as the Board of Directors, in its sole discretion,
may establish. Immediately upon the redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the Redemption Price.



     At any time after a person becomes an Acquiring Person other than pursuant to a Qualified
Offer, (and until such Acquiring Person has acquired beneficial ownership of 75% or more of the
outstanding Common Stock), the Board of Directors may cause the exchange of the Rights (other than
Rights owned by the Acquiring Person, which would have become null and void), in whole or in part,
for Common Stock at an exchange ratio of one share of Common Stock for each Right (or, if
insufficient shares are available, the Company may issue preferred stock, cash, debt or equity
securities, property or a combination thereof in exchange for the Rights).



     Until a Right is exercised, the holder of the Right will not have any rights as a stockholder
of the Company solely by virtue of holding the Right, including, without limitation, the right to
vote or to receive dividends.



     As long as the Rights are attached to the Common Stock, the Company will issue one Right with
each new share of Common Stock issued so that all shares will have attached Rights. After the
Distribution Date but prior to the Final Expiration Date, Rights shall only be issued in connection
with the issuance of Common Stock upon the exercise of stock options granted prior to the
Distribution Date or pursuant to other benefits under any employee plan or arrangement established
prior to the Distribution Date.



     The terms of the Rights, other than the redemption price, may be amended by the Board of
Directors of the Company; provided, however, that after the Rights are no longer
redeemable, the Company may amend the Rights Agreement only if the amendment will not adversely
affect the interests of the holders of Rights (other than an Acquiring Person).



     The Nominating and Governance Committee of the Board of Directors shall review and evaluate
the Rights Agreement in order to consider whether the maintenance of the Rights Agreement continues
to be in the best interests of the Company, its stockholders and other relevant constituencies of
the Company at least annually or sooner than that if any Person shall have made a proposal to the
Company or its stockholders, or taken any other action that, if effective, could cause such person
to become an Acquiring Person, if a majority of the members of the Committee shall deem such review
and evaluation appropriate after giving due regard to all relevant circumstances. Following each
such review, the Committee shall communicate its conclusions to the full Board of Directors,
including any recommendation in light thereof as to whether the Rights Agreement should be modified
or the Rights should be redeemed.



     The Preferred Stock purchased upon exercise of the Rights will be non-redeemable and junior to
any other series of preferred stock that Company may issue. Each share of Preferred



C-3









 







Stock will have a minimum preferential quarterly dividend rate of $.01 per share, but will be
entitled to an aggregate dividend of 1000 times the dividend declared on the Common Stock. In the
event of liquidation, the holders of the Preferred Stock will receive a preferred liquidation
payment of $100.00 per share, but will be entitled to receive an aggregate liquidation payment
equal to 1000 times the payment made per share of Common Stock. Each share of Preferred Stock will
have 1000 votes, voting together as one class with the Common Stock. Finally, in the event of any
consolidation, merger, combination or other transaction in which shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or other property, each share of
Preferred Stock will be entitled to receive 1000 times the aggregate amount of stock or securities,
cash and/or other property, into which or for which each share of Common Stock is changed or
exchanged. The foregoing rights of the Preferred Stock are protected against dilution if
additional shares of Common Stock are issued. Because of the nature of the Preferred Stock’s
dividend, liquidation and voting rights, the value of one one-thousandth of a share of Preferred
Stock purchasable upon exercise of each Right should approximate the value of one share of Common
Stock.



     Although the distribution of the Rights should 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 as set forth above.



     The Rights are intended to protect the stockholders of the Company in the event of an unfair
or coercive offer to acquire the Company and to provide the Board with adequate time to evaluate
unsolicited offers. The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company without conditioning
the offer on a substantial number of Rights being acquired. The Rights, however, should not affect
any prospective offeror willing to make an offer at a fair price and otherwise in the best
interests of the Company and its stockholders, as determined by the Board. The Rights should not
interfere with any merger or other business combination approved by the Board.



     A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights Agreement is also
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.




C-4