**Exhibit 4.1**

 

**HOSPIRA, INC.**

 

and

 

 

**EQUISERVE TRUST COMPANY, N.A.**

as Rights Agent

 

 

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RIGHTSAGREEMENTDATED AS OF APRIL 28, 2004

EFFECTIVE AS OFAPRIL 12, 2004

 

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**TABLE OF CONTENTS**

 
| SECTION 1.   | CERTAIN DEFINITIONS                                                                                                             |   |
|--------------|---------------------------------------------------------------------------------------------------------------------------------|--------|
|         |                                                                                                                            |   |
| SECTION 2.   | APPOINTMENT OF  RIGHTS AGENT                                                                                                    |   |
|         |                                                                                                                            |   |
| SECTION 3.   | ISSUE OF  RIGHTS CERTIFICATES                                                                                                   |   |
|         |                                                                                                                            |   |
| SECTION 4.   | FORM OF RIGHTS  CERTIFICATES                                                                                                    |   |
|         |                                                                                                                            |   |
| SECTION  5.  | COUNTERSIGNATURE  AND REGISTRATION                                                                                              |   |
|         |                                                                                                                            |   |
| SECTION  6.  | TRANSFER,  SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED,  DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES |   |
|         |                                                                                                                            |   |
| SECTION  7.  | EXERCISE  OF RIGHTS; PURCHASE PRICE                                                                                             |   |
|         |                                                                                                                            |   |
| SECTION  8.  | CANCELLATION  AND DESTRUCTION OF RIGHTS CERTIFICATES                                                                            |   |
|         |                                                                                                                            |   |
| SECTION  9.  | RESERVATION  AND AVAILABILITY OF CAPITAL STOCK                                                                                  |   |
|         |                                                                                                                            |   |
| SECTION 10.  | PREFERRED  STOCK RECORD DATE                                                                                                    |   |
|         |                                                                                                                            |   |
| SECTION  11. | ADJUSTMENT  OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS                                                    |   |
|         |                                                                                                                            |   |
| SECTION  12. | CERTIFICATE  OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES                                                                     |   |
|         |                                                                                                                            |   |
| SECTION  13. | CONSOLIDATION,  MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER                                                           |   |
|         |                                                                                                                            |   |
| SECTION  14. | FRACTIONAL  RIGHTS AND FRACTIONAL SHARES                                                                                        |   |
|         |                                                                                                                            |   |
| SECTION 15.  | RIGHTS OF ACTION                                                                                                                |   |
|         |                                                                                                                            |   |
| SECTION 16.  | AGREEMENT OF  RIGHTS HOLDERS                                                                                                    |   |
|         |                                                                                                                            |   |
| SECTION  17. | RIGHTS  CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER                                                                             |   |
|         |                                                                                                                            |   |
| SECTION 18.  | CONCERNING THE  RIGHTS AGENT                                                                                                    |   |
|         |                                                                                                                            |   |
| SECTION  19. | MERGER  OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT                                                                      |   |
|         |                                                                                                                            |   |
| SECTION 20.  | DUTIES OF RIGHTS  AGENT                                                                                                         |   |
|         |                                                                                                                            |   |
| SECTION 21.  | CHANGE OF RIGHTS  AGENT                                                                                                         |   |
|         |                                                                                                                            |   |
| SECTION  22. | ISSUANCE  OF NEW RIGHTS CERTIFICATES                                                                                            |   |
|         |                                                                                                                            |   |
| SECTION 23.  | REDEMPTION AND  TERMINATION                                                                                                     |   |
|         |                                                                                                                            |   |
| SECTION 24.  | EXCHANGE                                                                                                                        |   |
|         |                                                                                                                            |   |
| SECTION 25.  | NOTICE OF CERTAIN  EVENTS                                                                                                       |   |
|         |                                                                                                                            |   |
| SECTION  26. | NOTICES                                                                                                                         |   |

 

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| SECTION 27.  | SUPPLEMENTS AND  AMENDMENTS                                |   |
|--------------|------------------------------------------------------------|--------|
|         |                                                       |   |
| SECTION 28.  | SUCCESSORS                                                 |   |
|         |                                                       |   |
| SECTION  29. | DETERMINATIONS  AND ACTIONS BY THE BOARD OF DIRECTORS, ETC |   |
|         |                                                       |   |
| SECTION 30.  | BENEFITS OF  THIS AGREEMENT                                |   |
|         |                                                       |   |
| SECTION 31.  | SEVERABILITY                                               |   |
|         |                                                       |   |
| SECTION 32.  | GOVERNING LAW                                              |   |
|         |                                                       |   |
| SECTION 33.  | COUNTERPARTS                                               |   |
|         |                                                       |   |
| SECTION 34.  | DESCRIPTIVE HEADINGS                                       |   |

 

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| Exhibit  A - |   | Form  of Certificate of Designations of Series A Junior Participating Preferred  Stock |
|--------------|--------|----------------------------------------------------------------------------------------|
|         |   |                                                                                   |
| Exhibit  B - |   | Form  of Rights Certificate                                                            |

 

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**RIGHTS AGREEMENT**

 

Rights Agreement, datedas of April 28, 2004, effective as of April 12, 2004 (the “Agreement”),by and between Hospira, Inc., a Delaware corporation (the “Company”),and EquiServe Trust Company, N.A., a national banking association (the “RightsAgent”).

 

WITNESSETH:

 

WHEREAS, the Board ofDirectors of the Company has authorized the issuance of one Right in respectof, and to be issued together with, each share of common stock, par value $0.01per share, of the Company (the “Common Stock”) issued and outstanding asof the close of business on April 30, 2004 (the “Record Date”); and theBoard of Directors of the Company has authorized the issuance of one Right (assuch number may hereinafter be adjusted pursuant to the provisions of Section11(p) hereof) for each share of Common Stock of the Company issued (whetheroriginally issued or delivered from the Company’s treasury) between the RecordDate and the earlier of the Distribution Date (as hereinafter defined) and theExpiration Date (as hereinafter defined), and, in certain circumstancesprovided for in Section 22 hereof, after the Distribution Date, eachRight initially representing the right to purchase one Fractional Share (ashereinafter defined) of Series A Junior Participating Preferred Stock of theCompany, upon the terms and subject to the conditions hereinafter set forth(the “Rights”).

 

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

 

Section 1.  CertainDefinitions.  Forpurposes of this Agreement, the following terms shall have the meaningsindicated:

 

“Acquiring Person” shall mean any Person who orwhich, together with all Affiliates and Associates of such Person, shall be theBeneficial Owner of 15% or more of the shares of Common Stock then outstanding,but shall not include any Exempt Person; provided, however, thata Person shall not be or become an Acquiring Person if such Person, togetherwith its Affiliates and Associates, shall become the Beneficial Owner of 15% ormore of the shares of Common Stock then outstanding solely as a result of areduction in the number of shares of Common Stock outstanding due to therepurchase of Common Stock by the Company unless and until such time as suchPerson or any Affiliate or Associate of such Person shall purchase or otherwisebecome the Beneficial Owner of additional shares of Common Stock constituting1% or more of the then-outstanding shares of Common Stock or any other Person(or Persons) who is (or collectively are) the Beneficial Owner of shares ofCommon Stock constituting 1% or more of the then-outstanding shares of CommonStock shall become an Affiliate or Associate of such Person; and provided,further, that if the Board of Directors, with the concurrence of amajority of the members of the Board of Directors who are not such Person orrepresentatives, nominees, Affiliates or Associates of such Person, determinesin good faith that a Person that would otherwise be an “Acquiring Person” has becomesuch inadvertently (including, without limitation, because (1) such Person wasunaware that it beneficially owned a percentage of Common Stock that wouldotherwise cause such Person to be an “Acquiring Person” or (2) such Person wasaware of the extent of its Beneficial Ownership of Common Stock but had noactual knowledge of the consequences of such Beneficial Ownership under thisAgreement) and

 

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without anyintention of changing or influencing control of the Company, and if such Personas promptly as practicable divested or divests itself of Beneficial Ownershipof a sufficient number of shares of Common Stock so that such Person would nolonger be an “Acquiring Person,” then such Person shall not be deemed to be orto have become an “Acquiring Person” for any purposes of this Agreement.

 

“Adjustment Shares” shall have the meaning setforth in Section 11(a)(ii) hereof.

 

“Affiliate” shall have the meaning ascribed tosuch term in Rule 12b-2 of the General Rules and Regulations under the ExchangeAct, as in effect on the date of this Agreement.

 

“Associate” shall mean, with reference to anyPerson, (1) any corporation, firm, partnership, association, unincorporatedorganization or other entity (other than the Company or a Subsidiary of theCompany) of which such Person is an officer or general partner (or officer orgeneral partner of a general partner) or is, directly or indirectly, theBeneficial Owner of 10% or more of any class of equity securities, (2) anytrust or other estate in which such Person has a substantial beneficialinterest or as to which such Person serves as trustee or in a similar fiduciarycapacity and (3) any relative or spouse of such Person, or any relative of suchspouse, who has the same home as such Person.

 

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

 

(i)  that such Person or any of such Person’sAffiliates or Associates, directly or indirectly, is the “beneficial owner” of(as determined pursuant to Rule 13d-3 of the General Rules and Regulationsunder the Exchange Act as in effect on the date of this Agreement) or otherwisehas the right to vote or dispose of, including pursuant to any agreement,arrangement or understanding (whether or not in writing); provided, however,that a Person shall not be deemed the “Beneficial Owner” of, or to“beneficially own,” any security under this subparagraph (i) as a result of anagreement, arrangement or understanding to vote such security if suchagreement, arrangement or understanding: (A) arises solely from a revocableproxy or consent given in response to a proxy or consent solicitation that isnot exempted by Rule 14a-2(b)(2) of the General Rules and Regulations under theExchange Act as in effect on the date of this Agreement and that is madepursuant to, and in accordance with, the applicable provisions of the GeneralRules and Regulations under the Exchange Act and (B) is not then reportable bysuch Person on Schedule 13D or 13G under the Exchange Act (or any comparable orsuccessor report);

 

(ii)  that such Person or any of such Person’sAffiliates or Associates, directly or indirectly, has the right or obligationto acquire (whether such right or obligation is exercisable or effectiveimmediately or only after the passage of time or the occurrence of an event)pursuant to any agreement, arrangement or understanding (whether or not inwriting) or upon the exercise of conversion rights, exchange rights, otherrights, warrants or options, or otherwise; provided, however,that a Person shall not be deemed the “Beneficial Owner” of, or to“beneficially own,” (A) securities tendered pursuant to a tender or exchangeoffer made by such Person or any of such Person’s Affiliates or Associatesuntil such tendered securities are accepted for purchase or exchange, (B)

 

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securitiesissuable upon exercise of Rights at any time prior to the occurrence of aTriggering Event, or (C) securities issuable upon exercise of Rights from andafter the occurrence of a Triggering Event which Rights were acquired by suchPerson or any of such Person’s Affiliates or Associates prior to theDistribution Date or pursuant to Section 3(a) or Section 22 hereof(the “Original Rights”) or pursuant to Section 11(i) or (p)hereof in connection with an adjustment made with respect to any OriginalRights; or

 

(iii)  that are beneficially owned, directly orindirectly, by (A) any other Person (or any Affiliate or Associate thereof)with which such Person or any of such Person’s Affiliates or Associates has anyagreement, arrangement or understanding (whether or not in writing) for thepurpose of acquiring, holding, disposing (except pursuant to a tender of securitiespursuant to a tender or exchange offer prior to such tendered securities beingaccepted for purchase or exchange as described in the proviso to subparagraph(ii) of this definition) or voting (except pursuant to a revocable proxy orconsent as described in the proviso to subparagraph (i) of this definition) ofany voting securities of the Company or (B) any group (as that term is used inRule 13d-5(b) of the General Rules and Regulations under the Exchange Act) ofwhich such Person is a member;

 

provided, however, thatnothing in this definition shall cause a Person engaged in business as anunderwriter of securities to be the “Beneficial Owner” of, or to “beneficiallyown,” any securities acquired through such Person’s participation in good faithin a firm commitment underwriting (including, without limitation, securitiesacquired pursuant to stabilizing transactions to facilitate a public offeringin accordance with Regulation M promulgated under the Exchange Act, or to coveroverallotments created in connection with a public offering) until theexpiration of forty days after the date of such acquisition.  For purposes of this Agreement, “voting” asecurity shall include voting, granting a proxy, acting by consent, making arequest or demand relating to corporate action (including, without limitation,calling a stockholder meeting) or otherwise giving an authorization (within themeaning of Section 14(a) of the Exchange Act as in effect on the date of thisAgreement) in respect of such security.

 

“Business Day” shall mean any day other than aSaturday, Sunday or a day on which banking institutions in New York City areauthorized or obligated by law or executive order to close.

 

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

 

“Closing Price” of a security for any day shallmean the last sales price, regular way, on such day or, in case no such saletakes place on such day, the average of the closing bid and asked prices,regular way, on such day, in either case as reported in the principaltransaction reporting system with respect to securities listed or admitted totrading on the New York Stock Exchange, or, if such security is not listed oradmitted to trading on the New York Stock Exchange, on the principal nationalsecurities exchange on which such security is listed or admitted to trading,or, if such security is not listed or admitted to trading on any nationalsecurities exchange but sales price information is reported for such security,as reported by NASDAQ or such other self-regulatory organization or registeredsecurities information

 

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processor (as suchterms are used under the Exchange Act) that then reports information concerningsuch security, or, if sales price information is not so reported, the averageof the high bid and low asked prices in the over-the-counter market on suchday, as reported by NASDAQ or such other entity, or, if on such day suchsecurity is not quoted by any such entity, the average of the closing bid andasked prices as furnished by a professional market maker making a market insuch security selected by the Board of Directors of the Company, or, if on suchday no market maker is making a market in such security, the fair value of suchsecurity on such day as determined in good faith by the Board of Directors ofthe Company.

 

“Common Stock” shall mean the common stock, parvalue $0.01 per share, of the Company, except that “Common Stock” when usedwith reference to equity interests issued by any Person other than the Companyshall mean the capital stock of such Person with the greatest voting power, orthe equity securities or other equity interest having power to control ordirect the management, of such Person.

 

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

 

“Company” shall mean the Person named as the“Company” in the preamble of this Agreement until a successor Person shall havebecome such or until a Principal Party shall assume, and thereafter be liablefor, all obligations and duties of the Company hereunder, pursuant to theapplicable provisions of this Agreement, and thereafter “Company” shall meansuch successor Person or Principal Party.

 

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

 

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

 

“Distribution Date” shall mean the earlier of(i) the close of business on the tenth day (or, if such Stock Acquisition Dateresults from the consummation of a Permitted Offer, such later date as may bedetermined by the Company’s Board of Directors as set forth below before theDistribution Date occurs) after the Stock Acquisition Date or (ii) the close ofbusiness on the tenth Business Day (or such later date as may be determined bythe Company’s Board of Directors as set forth below before the Distribution Dateoccurs) after the date that a tender offer or exchange offer by any Person(other than any Exempt Person) is first published or sent or given within themeaning of Rule 14d-2(a) of the General Rules and Regulations under theExchange Act as then in effect, if upon consummation thereof, such Person wouldbe an Acquiring Person, other than a tender or exchange offer that isdetermined before the Distribution Date occurs to be a Permitted Offer.  The Board of Directors of the Company may,to the extent set forth in the preceding sentence, defer the date set forth inclause (i) or (ii) of the preceding sentence to a specified later date or to anunspecified later date to be determined by a subsequent action or event (but inno event to a date later than the close of business on the tenth day after thefirst occurrence of a Triggering Event).

 

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

 

“Exchange Act” shall mean the SecuritiesExchange Act of 1934, as amended.

 

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“Exchange Ratio” shall have the meaning setforth in Section 24 hereof.

 

“Exempt Person” shall mean the Company, anySubsidiary of the Company, any employee benefit plan of the Company or of anySubsidiary of the Company, and any Person organized, appointed or establishedby the Company for or pursuant to the terms of any such plan or for the purposeof funding any such plan or funding other employee benefits for employees ofthe Company or any Subsidiary of the Company.

 

“Expiration Date” shall mean the earliest tooccur of (i) the Final Expiration Date, (ii) the time at which the Rights areredeemed as provided in Section 23 hereof, (iii) the time at which theRights expire pursuant to Section 13(d) hereof, and (iv) the time atwhich all Rights then outstanding and exercisable are exchanged pursuant to Section24 hereof.

 

“Final Expiration Date” shall mean the close ofbusiness on April 11, 2014.

 

“Flip-In Event” shall mean an event describedin Section 11(a)(ii) hereof.

 

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

 

“Flip-Over Event” shall mean any eventdescribed in clause (x), (y) or (z) of Section 13(a) hereof, butexcluding any transaction described in Section 13(d) hereof that causesthe Rights to expire.

 

“Fractional Share” with respect to thePreferred Stock shall mean one one-hundredth of a share of Preferred Stock.

 

“NASDAQ” shall mean the National Association ofSecurities Dealers, Inc. Automated Quotations System.

 

“Original Rights” shall have the meaning setforth in the definition of “Beneficial Owner.”

 

“Permitted Offer” shall mean a tender offer oran exchange offer for all outstanding shares of Common Stock at a price and onterms determined, prior to the time the Person making the offer or anyAffiliate or Associate thereof is an Acquiring Person, by at least a majorityof the members of the Board of Directors who are not officers or employees ofthe Company and who are not, and are not representatives, nominees, Affiliatesor Associates of, an Acquiring Person or the person making the offer, afterreceiving advice from one or more investment banking firms, to be (a) at aprice and on terms that are fair to stockholders and not inadequate (takinginto account all factors that such members of the Board deem relevantincluding, without limitation, prices that could reasonably be achieved if theCompany or its assets were sold on an orderly basis designed to realize maximumvalue) and (b) otherwise in the best interests of the Company and itsstockholders.

 

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

 

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“Preferred Stock” shall mean shares of Series AJunior Participating Preferred Stock, par value $0.01 per share, of the Companyhaving the rights, powers and preferences set forth in the form of Certificateof Designations attached hereto as Exhibit A and, to the extent thatthere is not a sufficient number of shares of Series A Junior ParticipatingPreferred Stock authorized to permit the full exercise of the Rights, any otherseries of Preferred Stock, par value $0.01 per share, of the Company designatedfor such purpose containing terms substantially similar to the terms of theSeries A Junior Participating Preferred Stock.

 

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

 

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

 

“Record Date” shall have the meaning set forthin the recitals clause at the beginning of this Agreement.

 

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

 

“Rights” shall have the meaning set forth in therecitals clause at the beginning of this Agreement.

 

“Rights Agent” shall mean the Person named asthe “Rights Agent” in the preamble of this Agreement until a successor RightsAgent shall have become such pursuant to the applicable provisions hereof, andthereafter “Rights Agent” shall mean such successor Rights Agent.  If at any time there is more than one Personappointed by the Company as Rights Agent pursuant to the applicable provisionsof this Agreement, “Rights Agent” shall mean and include each such Person.

 

“Rights Certificates” shall mean thecertificates evidencing the Rights.

 

“Securities Act” shall mean the Securities Actof 1933, as amended.

 

“Spread” shall have the meaning set forth in Section11(a)(iii) hereof.

 

“Stock Acquisition Date” shall mean the firstdate of public announcement (which, for purposes of this definition and Section23, shall include, without limitation, a report filed pursuant to Section13(d) of the Exchange Act) by the Company or an Acquiring Person that anAcquiring Person has become such.

 

“Subsidiary” shall mean, with reference to anyPerson, any corporation or other Person of which an amount of voting securitiessufficient to elect at least a majority of the directors or other personsperforming similar functions is beneficially owned, directly or indirectly, bysuch Person, or otherwise controlled by such Person.

 

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

 

“Trading Day” with respect to a security shallmean a day on which the principal national securities exchange on which suchsecurity is listed or admitted to trading is open for the transaction ofbusiness, or, if such security is not listed or admitted to trading on anynational

 

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securitiesexchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, ifsuch security is not so quoted, a Business Day.

 

“Triggering Event” shall mean any Flip-In Eventor any Flip-Over Event.

 

Section 2.  Appointmentof Rights Agent. The Company hereby appoints the Rights Agent (i) to act as agent for theCompany and (ii) to take certain actions in respect of the holders of theRights (who, in accordance with Section 3 hereof, shall prior to theDistribution Date also be the holders of the Common Stock) (although it isexpressly agreed that the Rights Agent shall not act as agent for such holders)in accordance with the terms and conditions hereof, and the Rights Agent herebyaccepts such appointment.  The Companymay from time to time appoint such co-Rights Agents as it may deem necessary ordesirable, upon ten (10) days’ prior written notice to the Rights Agent.  The Rights Agent shall have no duty tosupervise, and shall in no event be liable for, the acts or omissions of anysuch co-Rights Agent.

 

Section 3.  Issueof Rights Certificates

 

(a)  Until the Distribution Date, (x) the Rightswill be evidenced by the certificates for Common Stock registered in the namesof the holders of the Common Stock and not by separate certificates, and (y)the Rights will be transferable only in connection with the transfer of theunderlying shares of Common Stock (including a transfer to the Company).  As soon as practicable after theDistribution Date, the Rights Agent will send by first-class, insured, postageprepaid mail, to each record holder of the Common Stock as of the close ofbusiness on the Distribution Date (other than any Person referred to in thefirst sentence of Section 7(e)), at the address of such holder shown onthe records of the Company, one or more Rights Certificates, evidencing oneRight for each share of Common Stock so held, subject to adjustment as providedherein.  In the event that an adjustmentin the number of Rights per share of Common Stock has been made pursuant to Section11(p) hereof, at the time of distribution of the Rights Certificates, theCompany shall make the necessary and appropriate rounding adjustments (inaccordance with Section 14(a) hereof) so that Rights Certificatesrepresenting only whole numbers of Rights are distributed and cash is paid inlieu of any fractional Rights.  As ofand after the Distribution Date, the Rights will be evidenced solely by suchRights Certificates.

 

(b)  One Right will be issued in respect of eachshare of Common Stock issued and outstanding as of the close of business on theRecord Date.  Certificates issued forsuch shares of Common Stock and for shares of Common Stock that are issued orshall be transferred or exchanged after the Record Date but prior to theearlier of the Distribution Date or the Expiration Date shall also be deemed tobe certificates for Rights, and shall bear the legend referred to in paragraph(c) of this Section 3.

 

(c)  Rights shall be issued in respect of allshares of Common Stock that are issued (whether originally issued or deliveredfrom the Company’s treasury) after the Record Date but prior to the earlier ofthe Distribution Date or the Expiration Date or, in certain circumstancesprovided in Section 22 hereof, after the Distribution Date.  Certificates issued for shares of CommonStock that shall so become outstanding or shall be transferred or exchanged

 

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afterthe Record Date but prior to the earlier of the Distribution Date or the ExpirationDate shall also be deemed to be certificates for Rights, and shall bear thefollowing legend:

 

Thiscertificate also evidences and entitles the holder hereof to certain Rights asset forth in the Rights Agreement between Hospira, Inc. (the “Company”)and EquiServe Trust Company, N.A.****(the “Rights Agent”), dated as ofApril 12, 2004, as it may from time to time be supplemented or amended (the “RightsAgreement”), the terms of which are hereby incorporated herein by referenceand a copy of which is on file at the principal offices of the Company.  Under certain circumstances, as set forth inthe Rights Agreement, such Rights may be redeemed, may be exchanged, may expireor may be evidenced by separate certificates and will no longer be evidenced bythis certificate.  The Company or theRights Agent will mail to the holder of this certificate a copy of the RightsAgreement, as in effect on the date of mailing, without charge promptly afterreceipt of a written request therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTSBENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES ANACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS AREDEFINED IN THE RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES THEREOF, WILL BECOMENULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

With respect to such certificates containing theforegoing legend, until the earlier of the Distribution Date or the ExpirationDate, the Rights associated with the Common Stock represented by suchcertificates shall be evidenced by such certificates alone, and registeredholders of Common Stock shall also be the registered holders of the associatedRights, and the transfer of any of such certificates shall also constitute thetransfer of the Rights associated with the Common Stock represented by suchcertificates.

 

Section 4.  Formof Rights Certificates.

 

(a)  The Rights Certificates (and the forms ofelection to purchase and of assignment to be printed on the reverse thereof),when, as and if issued, shall be substantially in the form set forth in ExhibitB hereto and may have such marks of identification or designation and suchlegends, summaries or endorsements printed thereon as the Company may deemappropriate 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 orregulation made pursuant thereto or with any rule or regulation of any stockexchange or quotation system on which the Rights may from time to time belisted or quoted, or to conform to usage. Subject to the provisions of Section 11 and Section 22hereof, the Rights Certificates, whenever issued, shall be dated as of theRecord Date and on their face shall entitle the holders thereof to purchasesuch number of Fractional Shares of Preferred Stock as shall be set forththerein at the price set forth therein (such exercise price per FractionalShare (or, as set forth in this Agreement, for other securities), the “PurchasePrice”), but the amount and type of securities purchasable upon theexercise of each Right and the Purchase Price thereof shall be subject toadjustment as provided herein.

 

(b)  Any Rights Certificate issued pursuant to Section3(a) or Section 22 hereof that represents Rights beneficially ownedby a Person described in the first sentence of Section

 

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7(e),and any Rights Certificate issued pursuant to Section 6 or Section 11hereof upon transfer, exchange, replacement or adjustment of any such Rights,shall contain (to the extent feasible) the following legend, modified asapplicable to apply to such Person:

 

The Rightsrepresented by this Rights Certificate are or were beneficially owned by aPerson who was or became an Acquiring Person or an Affiliate or Associate of anAcquiring Person (as such terms are defined in the Rights Agreement).  Accordingly, this Rights Certificate and theRights represented hereby [will] [have] become null and void in thecircumstances and with the effect specified in Section 7(e) of suchAgreement.

 

The provisions of Section 7(e) of thisAgreement shall be operative whether or not the foregoing legend is containedon any such Rights Certificate.  TheCompany shall give notice to the Rights Agent promptly after it becomes awareof the existence of any Acquiring Person or any Associate or Affiliate thereof.

 

Section 5.  Countersignatureand Registration.

 

(a)  The Rights Certificates shall be executed onbehalf of the Company by its Chairman of the Board, its Chief ExecutiveOfficer, its President or any Vice President, either manually or by facsimilesignature, and shall have affixed thereto the Company’s seal or a facsimilethereof, which shall be attested by the Secretary or an Assistant Secretary ofthe Company, either manually or by facsimile signature.  The Rights Certificates shall becountersigned 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 shallhave signed any of the Rights Certificates shall cease to be such officer ofthe Company before countersignature by the Rights Agent and issuance anddelivery by the Company, such Rights Certificates, nevertheless, may becountersigned by the Rights Agent and issued and delivered by the Company withthe same force and effect as though the person who signed such RightsCertificates had not ceased to be such officer of the Company; and any RightsCertificate may be signed on behalf of the Company by any person who, at theactual date of the execution of such Rights Certificate, shall be a properofficer of the Company to sign such Rights Certificate, although at the date ofthe execution of this Rights Agreement any such person was not such an officer.

 

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

 

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

 

(a)  Subject to the provisions of Section 4(b),Section 7(e), Section 13(d), Section 14 and Section 24hereof, at any time after the close of business on the Distribution Date, andat or prior to the close of business on the Expiration Date, any RightsCertificate or Rights

 

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Certificatesmay be transferred, split up, combined or exchanged for another RightsCertificate or Rights Certificates, entitling the registered holder to purchasea like number of Fractional Shares of Preferred Stock (or, following a TriggeringEvent, Common Stock, other securities, cash or other assets, as the case maybe) as the Rights Certificate or Rights Certificates surrendered then entitledsuch 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 Rights Certificatesshall make such request in writing delivered to the Rights Agent, and shallsurrender the Rights Certificate or Rights Certificates to be transferred, splitup, combined or exchanged at the principal office or offices of the RightsAgent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take anyaction whatsoever with respect to the transfer of any such surrendered RightsCertificate until the registered holder shall have completed and signed thecertificate contained in the form of assignment on the reverse side of suchRights Certificate and shall have provided such additional evidence of theidentity of the Beneficial Owner (or former Beneficial Owner) thereof or of theAffiliates or Associates thereof as the Company shall reasonably request.  Thereupon the Rights Agent shall, subject toSection 4(b), Section 7(e), Section 13(d), Section 14and Section 24 hereof, countersign and deliver to the Person entitledthereto a Rights Certificate or Rights Certificates, as the case may be, as sorequested.  The Company may requirepayment by the holder of a sum sufficient to cover any tax or governmentalcharge 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 RightsAgent of evidence reasonably satisfactory to them of the loss, theft,destruction or mutilation of a Rights Certificate, and, in case of loss, theftor destruction, of indemnity or security reasonably satisfactory to them, andreimbursement to the Company and the Rights Agent of all reasonable expensesincidental thereto, and upon surrender to the Rights Agent and cancellation ofthe Rights Certificate if mutilated, the Company will, subject to Section4(b), Section 7(e), Section 13(d), Section 14 and Section24, execute and deliver a new Rights Certificate of like tenor to theRights Agent for countersignature and delivery to the registered owner in lieuof the Rights Certificate so lost, stolen, destroyed or mutilated.

 

Section 7.  Exerciseof Rights; Purchase Price.

 

(a)  Subject to Section 7(e) hereof, theregistered holder of any Rights Certificate may exercise the Rights evidencedthereby (except as otherwise provided herein including, without limitation, therestrictions on exercisability set forth in Section 9(c), Section11(a)(iii) and Section 23(a) hereof) in whole or in part at any timeafter the Distribution Date upon surrender of the Rights Certificate, with theform of election to purchase and the certificate on the reverse side thereofduly completed and executed, to the Rights Agent at the principal office oroffices of the Rights Agent designated for such purpose, together with paymentof the aggregate Purchase Price with respect to the total number of FractionalShares of Preferred Stock (or other securities, cash or other assets, as thecase may be) as to which such surrendered Rights are then exercisable, at orprior to the Expiration Date.

 

(b)  The Purchase Price for each Fractional Shareof Preferred Stock pursuant to the exercise of a Right shall initially be $100,and shall be subject to adjustment from time to

 

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timeas provided in Sections 11 and 13(a) hereof and shall be payablein accordance with paragraph (c) below.

 

(c)  Upon receipt of a Rights Certificaterepresenting exercisable Rights, with the form of election to purchase and thecertificate on the reverse side thereof duly executed, accompanied by payment,with respect to each Right so exercised, of the Purchase Price per FractionalShare of Preferred Stock (or other shares, securities, cash or other assets, asthe case may be) to be purchased as set forth below and an amount equal to anyapplicable transfer tax, the Rights Agent shall, subject to Section 20(k)hereof, thereupon promptly (i)(A) requisition from any transfer agent of theshares of Preferred Stock (or make available, if the Rights Agent is thetransfer agent for such shares) certificates for the total number of FractionalShares of Preferred Stock to be purchased, and the Company hereby irrevocablyauthorizes its transfer agent to comply with all such requests, or (B) if theCompany, in its sole discretion, shall have elected to deposit the shares ofPreferred Stock issuable upon exercise of the Rights hereunder with adepositary agent, requisition from the depositary agent depositary receiptsrepresenting interests in such number of Fractional Shares of Preferred Stockas are to be purchased (in which case certificates for the shares of PreferredStock represented by such receipts shall be deposited by the transfer agentwith the depositary agent) and the Company will direct the depositary agent tocomply with such request, (ii) requisition from the Company the amount of cash,if any, to be paid in lieu of fractional shares in accordance with Section14 hereof, (iii) after receipt of such certificates or depositary receipts,cause the same to be delivered to or upon the order of the registered holder ofsuch Rights Certificate, registered in such name or names as may be designatedby such holder and (iv) after receipt thereof, deliver such cash, if any, to orupon the order of the registered holder of such Rights Certificate.  The payment of the Purchase Price (as suchamount may be reduced pursuant to Section 11(a)(iii) hereof) may be madein cash or by certified check, cashier’s or official bank check or bank draftpayable to the order of the Company or the Rights Agent.  In the event that the Company is obligatedto issue other securities (including Common Stock) of the Company, pay cashand/or distribute other property pursuant to Section 11(a) or Section13(a) hereof, the Company will make all arrangements necessary so that suchother securities, cash and/or other property are available for distribution bythe Rights Agent, if and when appropriate. The Company reserves the right to require prior to the occurrence of aTriggering Event that, upon exercise of Rights, a number of Rights be exercisedso that only whole shares of Preferred Stock would be issued.

 

(d)  In case the registered holder of any RightsCertificate shall exercise fewer than all the Rights evidenced thereby, a newRights Certificate evidencing Rights equivalent to the Rights remainingunexercised shall be issued by the Rights Agent and delivered to, or upon theorder of, the registered holder of such Rights Certificate, registered in suchname or names as may be designated by such holder, subject to the provisions ofSection 14 hereof.

 

(e)  Notwithstanding anything in this Agreementto the contrary, from and after the first occurrence of a Triggering Event, anyRights beneficially owned by or transferred to (i) an Acquiring Person or anAssociate or Affiliate of an Acquiring Person other than any such Person thatbecame such pursuant to a Permitted Offer and the Board of Directors in goodfaith determines was not involved in and did not cause or facilitate, directlyor indirectly, such Triggering Event, (ii) a direct or indirect transferee ofsuch Rights from such Acquiring Person

 

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(orany such Associate or Affiliate) who becomes a transferee after such TriggeringEvent or (iii) a direct or indirect transferee of such Acquiring Person (or ofany such Associate or Affiliate) who becomes a transferee prior to orconcurrently with such Triggering Event and receives such Rights pursuant toeither (A) a transfer (whether or not for consideration) from such AcquiringPerson (or such Affiliate or Associate) to holders of equity interests in suchAcquiring Person (or such Affiliate or Associate) or to any Person with whomsuch Acquiring Person (or such Affiliate or Associate) has any continuingagreement, arrangement or understanding regarding the transferred Rights or (B)a transfer that the Board of Directors of the Company determines is part of aplan, arrangement or understanding that has as a primary purpose or effect theavoidance of this Section 7(e), shall become null and void without anyfurther action, no holder of such Rights shall have any rights whatsoever withrespect to such Rights, whether under any provision of this Agreement orotherwise, and such Rights shall not be transferable.  The Company shall use all reasonable efforts to ensure that theprovisions of this Section 7(e) and Section 4(b) hereof arecomplied with, but shall have no liability to any holder of Rights Certificatesor other Person as a result of its failure to make any determinations withrespect to an Acquiring Person or its Affiliates, Associates or transfereeshereunder.

 

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

 

Section 8.  Cancellationand Destruction of Rights Certificates.  All Rights Certificates surrendered for thepurpose of exercise, transfer, split-up, combination or exchange shall, ifsurrendered to the Company or any of its agents, be delivered to the RightsAgent for cancellation or in canceled form, or, if surrendered to the RightsAgent, shall be canceled by it, and no Rights Certificates shall be issued inlieu thereof except as expressly permitted by any of the provisions of thisAgreement.  The Company shall deliver tothe Rights Agent for cancellation and retirement, and the Rights Agent shall socancel and retire, any other Rights Certificate purchased or acquired by theCompany otherwise than upon the exercise thereof.  The Rights Agent shall deliver all canceled Rights Certificatesto the Company, or shall, at the written request of the Company, destroy suchcanceled Rights Certificates, and in such case shall deliver a certificate ofdestruction thereof to the Company.

 

Section 9.  Reservationand Availability of Capital Stock.

 

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

 

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(b)  So long as any shares of Preferred Stock(and, following the occurrence of a Triggering Event, Common Stock and/or othersecurities) issuable and deliverable upon the exercise of the Rights are listedon any national securities exchange or quoted on any trading system, theCompany shall use its best efforts to cause, from and after such time as theRights become exercisable, all shares reserved for such issuance to be listedon such exchange, or quoted on such system, upon official notice of issuance uponsuch exercise.  Following the occurrenceof a Triggering Event, the Company will use its best efforts to list (orcontinue the listing of) the Rights and the securities issuable and deliverableupon the exercise of the Rights on one or more national securities exchanges orto cause the Rights and the securities purchasable upon exercise of the Rightsto be reported by NASDAQ or such other transaction reporting system then inuse.

 

(c)  The Company shall use its best efforts to(i) prepare and file, as soon as practicable following the first occurrence ofa Flip-In Event or, if applicable, as soon as practicable following theearliest date after the first occurrence of a Flip-In Event on which theconsideration to be delivered by the Company upon exercise of the Rights hasbeen determined pursuant to this Agreement (including in accordance with Section11(a)(iii) hereof), a registration statement on an appropriate form underthe Securities Act with respect to the securities purchasable upon exercise ofthe Rights, (ii) cause such registration statement to become effective as soonas practicable after such filing, and (iii) cause such registration statementto remain effective (with a prospectus at all times meeting the requirements ofthe Securities Act) until the earlier of (A) the date as of which the Rightsare no longer exercisable for such securities and (B) the Expiration Date.  The Company will also take such action asmay be appropriate under, or to ensure compliance with, the securities or “bluesky” laws of the various states in connection with the exercisability of theRights.  The Company may temporarilysuspend, for a period of time not to exceed 90 days after the date set forth inclause (i) of the first sentence of this Section 9(c), the exercisabilityof the Rights in order to prepare and file such registration statement andpermit it to become effective.  Inaddition, if the Company shall determine that the Securities Act requires aneffective registration statement under the Securities Act following theDistribution Date, the Company may temporarily suspend the exercisability ofthe Rights until such time as such a registration statement has been declaredeffective.  Upon any such suspension,the Company shall issue a public announcement stating that the exercisabilityof the Rights has been temporarily suspended, as well as a public announcementat such time as the suspension is no longer in effect.  Notwithstanding any provision of thisAgreement to the contrary, the Rights shall not be exercisable in anyjurisdiction if the requisite qualification in such jurisdiction shall not havebeen obtained, the exercise thereof shall not be permitted under applicable lawor any required registration statement shall not have been declared effective.

 

(d)  The Company covenants and agrees that itwill take all such action as may be necessary to ensure that all FractionalShares of Preferred Stock (and, following the occurrence of a Triggering Event,Common Stock and/or other securities) delivered upon exercise of Rights shall,at the time of delivery of the certificates for such shares (subject to paymentof the Purchase Price), be duly and validly authorized and issued and fullypaid and nonassessable.

 

(e)  The Company further covenants and agreesthat it will pay when due and payable any and all federal and state transfertaxes and charges that may be payable in respect of

 

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theissuance or delivery of the Rights Certificates and of any certificates for anumber of Fractional Shares of Preferred Stock (or Common Stock and/or othersecurities, as the case may be) upon the exercise of Rights.  The Company shall not, however, be requiredto pay any transfer tax that may be payable in respect of any transfer ordelivery of Rights Certificates to a Person other than, or the issuance ordelivery of a number of Fractional Shares of Preferred Stock (or Common Stockand/or other securities, as the case may be) in respect of a name other thanthat of, the registered holder of the Rights Certificates evidencing Rightssurrendered for exercise or to issue or deliver any certificates for a numberof Fractional Shares of Preferred Stock (or Common Stock and/or othersecurities, as the case may be) in a name other than that of the registeredholder upon the exercise of any Rights until such tax shall have been paid (anysuch tax being payable by the holder of such Rights Certificate at the time ofsurrender) or until it has been established to the Company’s satisfaction thatno such tax is due.

 

Section 10.  PreferredStock Record Date. Each Person in whose name any certificate for a number of FractionalShares of Preferred Stock (or Common Stock and/or other securities, as the casemay be) is issued upon the exercise of Rights shall for all purposes be deemedto have become the holder of record of such shares (fractional or otherwise) ofPreferred Stock (or Common Stock and/or other securities, as the case may be)represented thereby on, and such certificate shall be dated, the date uponwhich the Rights Certificate evidencing such Rights was duly surrendered andpayment 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 uponwhich the Preferred Stock (or Common Stock and/or other securities, as the casemay be) transfer books of the Company are closed, such Person shall be deemedto have become the record holder of such shares (fractional or otherwise) on,and such certificate shall be dated, the next succeeding Business Day on whichthe Preferred Stock (or Common Stock and/or other securities, as the case maybe) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of aRights Certificate, as such, shall not be entitled to any rights of astockholder of the Company with respect to shares for which the Rights shall beexercisable, including, without limitation, the right to vote, to receivedividends or other distributions or to exercise any preemptive rights, andshall not be entitled to receive any notice of any proceedings of the Company,except as provided herein.

 

Section 11.  Adjustmentof Purchase Price, Number and Kind of Shares or Numberof Rights.  The Purchase Price, thenumber and kind of shares or other securities subject to purchase upon exerciseof each Right and the number of Rights outstanding are subject to adjustmentfrom time to time as provided in this Section 11.

 

(a)  (i) In the event the Company shall at any time (A) declare a dividend on theoutstanding shares of Preferred Stock payable in shares of Preferred Stock, (B)subdivide the outstanding shares of Preferred Stock, (C) combine theoutstanding shares of Preferred Stock into a smaller number of shares or (D)otherwise reclassify the outstanding shares of Preferred Stock (including anysuch reclassification in connection with a consolidation or merger in which theCompany is the continuing or surviving corporation), except as otherwiseprovided in this Section 11(a) and Section 7(e) hereof, thePurchase Price in effect at the time of the record date for such dividend or ofthe effective date of such subdivision, combination or reclassification, andthe number and

 

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kind of shares ofPreferred Stock or capital stock, as the case may be, issuable on such date,shall be proportionately adjusted so that the holder of any Right exercisedafter such time shall be entitled to receive, upon payment of the PurchasePrice then in effect, the aggregate number and kind of shares of PreferredStock or capital stock, as the case may be, which, if such Right had beenexercised immediately prior to such date and at a time when the Preferred Stocktransfer books of the Company were open, he would have owned upon such exerciseand been entitled to receive by virtue of such dividend, subdivision,combination or reclassification.  If anevent occurs that would require an adjustment under both this Section11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided forin this Section 11(a)(i) shall be in addition to, and shall be madeprior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

(ii)  Subject to Sections 23 and 24of this Agreement, in the event any Person shall, at any time after the RecordDate, become an Acquiring Person, unless the event causing such Person tobecome an Acquiring Person is (1) a Flip-Over Event or (2) an acquisition ofshares of Common Stock pursuant to a Permitted Offer (provided that this clause(2) shall cease to apply if such Acquiring Person thereafter becomes theBeneficial Owner of any additional shares of Common Stock other than pursuantto such Permitted Offer or a transaction set forth in Section 13(a) or 13(d)hereof), then, (x) the Purchase Price shall be adjusted to be the PurchasePrice immediately prior to the first occurrence of a Flip-In Event multipliedby the number of Fractional Shares of Preferred Stock for which a Right wasexercisable immediately prior to such first occurrence and (y) each holder of aRight (except as provided below in Section 11(a)(iii) and in Section7(e) hereof) shall thereafter have the right to receive, upon exercisethereof at a price equal to the Purchase Price in accordance with the terms ofthis Agreement, in lieu of shares of Preferred Stock, such number of shares ofCommon Stock of the Company as shall equal the result obtained by dividing thePurchase Price by 50% of the Current Market Price per share of Common Stock onthe date of such first occurrence (such number of shares, the “AdjustmentShares”); provided that the Purchase Price and the number ofAdjustment Shares shall be further adjusted as provided in this Agreement toreflect any events occurring after the date of such first occurrence.

 

(iii)  In the event that the number of shares ofCommon Stock that are authorized by the Company’s certificate of incorporationbut not outstanding or reserved for issuance for purposes other than uponexercise of the Rights is not sufficient to permit the exercise in full of theRights in accordance with the foregoing subparagraph (ii) of this Section11(a), the Company shall, to the extent permitted by applicable law andregulation, (A) determine the excess of (1) the value of the Adjustment Sharesissuable upon the exercise of a Right (computed using the Current Market Priceused to determine the number of Adjustment Shares) (the “Current Value”)over (2) the Purchase Price (such excess is herein referred to as the “Spread”),and (B) with respect to each Right, make adequate provision to substitute forthe Adjustment Shares, upon the exercise of the Rights and payment of theapplicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)Common Stock or other equity securities of the Company (including, withoutlimitation, shares, or units of shares, of preferred stock (including, withoutlimitation, the Preferred Stock) that the Board of Directors of the Company has

 

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determined to havethe same value as shares of Common Stock (such shares of preferred stock areherein referred to as “Common Stock Equivalents”)), (4) debt securitiesof the Company, (5) other assets or (6) any combination of the foregoing,having an aggregate value equal to the Current Value, where such aggregatevalue has been determined by the Board of Directors of the Company based uponthe advice of a nationally recognized investment banking firm selected by theBoard of Directors of the Company; provided, however, if theCompany shall not have made adequate provision to deliver value pursuant toclause (B) above within 30 days following the later of (x) the first occurrenceof a Flip-In Event and (y) the date on which the Company’s right of redemptionpursuant to Section 23(a) expires (the later of (x) and (y) beingreferred to herein as the “Flip-In Trigger Date”), then the Companyshall be obligated to deliver, upon the surrender for exercise of a Right andwithout requiring payment of the Purchase Price, shares of Common Stock (to theextent available) and then, if necessary, cash, which shares and/or cash havean aggregate value equal to the Spread. If the Board of Directors of the Company shall determine in good faiththat it is likely that sufficient additional shares of Common Stock could beauthorized for issuance upon exercise in full of the Rights, the 30-day periodset forth above may be extended to the extent necessary, but not more than 90days after the Flip-In Trigger Date, in order that the Company may seekstockholder approval for the authorization of such additional shares (suchperiod, as it may be extended, the “Substitution Period”).  To the extent that the Company or the Boardof Directors determines that some action need be taken pursuant to the firstand/or second sentences of this Section 11(a)(iii), the Company (x)shall provide, subject to Section 7(e) hereof, that such action shallapply uniformly to all outstanding Rights, and (y) may suspend theexercisability of the Rights until the expiration of the Substitution Period inorder to seek any authorization of additional shares and/or to decide theappropriate form of distribution to be made pursuant to such first sentence andto determine the value thereof.  In theevent of any such suspension, the Company shall issue a public announcementstating 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 ineffect.  For purposes of this Section11(a)(iii), the value of the Common Stock shall be the Current Market Priceper share of the Common Stock on the Flip-In Trigger Date and the value of anyCommon Stock Equivalent shall be deemed to have the same value as the CommonStock on such date.

 

(b)  In case the Company shall fix a record datefor the issuance of rights, options or warrants to all holders of PreferredStock entitling them to subscribe for or purchase (for a period expiring within45 calendar days after such record date) Preferred Stock (or shares havingsubstantially the same rights, privileges and preferences as the shares ofPreferred Stock (“Equivalent Preferred Stock”)) or securitiesconvertible into Preferred Stock or Equivalent Preferred Stock at a price pershare of Preferred Stock or per share of Equivalent Preferred Stock (or havinga conversion price per share, if a security convertible into Preferred Stock orEquivalent Preferred Stock) less than the Current Market Price per share ofPreferred Stock on such record date, the Purchase Price to be in effect aftersuch record date shall be determined by multiplying the Purchase Price ineffect immediately prior to such record date by a fraction, the numerator ofwhich shall be the number of shares of Preferred Stock outstanding on suchrecord date, plus the number of shares of Preferred Stock that the aggregateoffering price of the total

 

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numberof shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered(and/or the aggregate initial conversion price of the convertible securities soto be offered) would purchase at such Current Market Price, and the denominatorof which shall be the number of shares of Preferred Stock outstanding on suchrecord date, plus the number of additional shares of Preferred Stock and/orEquivalent Preferred Stock to be offered for subscription or purchase (or intowhich the convertible securities so to be offered are initiallyconvertible).  In case such subscriptionprice may be paid by delivery of consideration, part or all of which may be ina form other than cash, the value of such consideration shall be as determinedin good faith by the Board of Directors of the Company, whose determinationshall be described in a statement filed with the Rights Agent and shall bebinding on the Rights Agent and the holders of the Rights.  Shares of Preferred Stock owned by or heldfor the account of the Company shall not be deemed outstanding for the purposeof any such computation.  Such adjustmentshall be made successively whenever such a record date is fixed, and in theevent that such rights or warrants are not so issued, the Purchase Price shallbe adjusted to be the Purchase Price that would then be in effect if suchrecord date had not been fixed.

 

(c)  In case the Company shall fix a record datefor a distribution to all holders of Preferred Stock (including any suchdistribution made in connection with a consolidation or merger in which theCompany is the continuing or surviving corporation) of evidences ofindebtedness, cash (other than a regular quarterly cash dividend out of theearnings or retained earnings of the Company), assets (other than a dividendpayable in Preferred Stock, but including any dividend payable in stock otherthan Preferred Stock) or subscription rights or warrants (excluding thosereferred to in Section 11(b) hereof), the Purchase Price to be in effectafter such record date shall be determined by multiplying the Purchase Price ineffect immediately prior to such record date by a fraction, the numerator ofwhich shall be the Current Market Price per share of Preferred Stock on suchrecord date, less the fair market value (as determined in good faith by theBoard of Directors of the Company, whose determination shall be described in astatement filed with the Rights Agent and shall be binding on the Rights Agent)of the portion of the cash, assets or evidences of indebtedness so to bedistributed or of such subscription rights or warrants applicable to a share ofPreferred Stock and the denominator of which shall be such Current Market Priceper share of Preferred Stock.  Suchadjustments shall be made successively whenever such a record date is fixed,and in the event that such distribution is not so made, the Purchase Priceshall be adjusted to be the Purchase Price that would have been in effect ifsuch record date had not been fixed.

 

(d)  (i) For the purpose of any computation hereunder, other than computationsmade pursuant to Section 11(a)(iii) hereof, the “Current Market Price”per share of Common Stock of a Person on any date shall be deemed to be theaverage of the daily Closing Prices per share of such Common Stock for the 30consecutive Trading Days immediately prior to such date, and for purposes ofcomputations made pursuant to Section 11(a)(iii) hereof, the “CurrentMarket Price” per share of Common Stock on any date shall be deemed to bethe average of the daily Closing Prices per share of such Common Stock for the10 consecutive Trading Days immediately following such date; provided, however,that in the event that the Current Market Price per share of Common Stock isdetermined during a period following the announcement of (A) a dividend ordistribution on such Common Stock other than a regular quarterly cash dividendor the

 

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dividend of theRights, or (B) any subdivision, combination or reclassification of such CommonStock, and the ex-dividend date for such dividend or distribution, or therecord date for such subdivision, combination or reclassification, shall nothave occurred prior to the commencement of the requisite 30 Trading Day or 10Trading Day period, as set forth above, then, and in each such case, theCurrent Market Price shall be properly adjusted to take into accountex-dividend trading.  If the CommonStock is not publicly held or not so listed or traded, “Current Market Price”per share shall mean the fair value per share as determined in good faith bythe Board of Directors of the Company, whose determination shall be describedin a statement filed with the Rights Agent and shall be conclusive for allpurposes.

 

(ii)  For the purpose of any computationhereunder, the “Current Market Price” per share (or Fractional Share) ofPreferred Stock shall be determined in the same manner as set forth above forthe Common Stock in clause (i) of this Section 11(d) (other than thelast sentence thereof).  If the CurrentMarket Price per share (or Fractional Share) of Preferred Stock cannot bedetermined in the manner provided above or if the Preferred Stock is notpublicly held or listed or traded in a manner described in clause (i) of this Section11(d), the “Current Market Price” per share of Preferred Stock shallbe conclusively deemed to be an amount equal to 100 (as such number may beappropriately adjusted for such events as stock splits, stock dividends andrecapitalizations with respect to the Common Stock occurring after the date ofthis Agreement) multiplied by the Current Market Price per share of the CommonStock.  If neither the Common Stock northe Preferred Stock is publicly held or so listed or traded, Current MarketPrice per share of the Preferred Stock shall mean the fair value per share asdetermined in good faith by the Board of Directors of the Company, whosedetermination shall be described in a statement filed with the Rights Agent andshall be conclusive for all purposes. For all purposes of this Agreement, the Current Market Price of a FractionalShare of Preferred Stock shall be equal to the Current Market Price of oneshare of Preferred Stock divided by 100.

 

(e)  Anything herein to the contrarynotwithstanding, no adjustment in the Purchase Price shall be required unlesssuch adjustment would require an increase or decrease of at least 1% in thePurchase Price; provided, however, that any adjustments that byreason of this Section 11(e) are not required to be made shall becarried forward and taken into account in any subsequent adjustment.  All calculations under this Section 11shall be made to the nearest cent or to the nearest ten-thousandth of a shareof Common Stock or other share or to the nearest ten-thousandth of a FractionalShare of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), anyadjustment required by this Section 11 shall be made no later than theearlier of (i) three years from the date of the transaction which mandates suchadjustment or (ii) the Expiration Date.

 

(f)  If as a result of an adjustment madepursuant to Section 11(a) or Section 13(a) hereof, the holder ofany Right thereafter exercised shall become entitled to receive in respect ofsuch Right any shares of capital stock other than Preferred Stock, thereafterthe number of such other shares so receivable upon exercise of any Right andthe Purchase Price thereof shall be subject to adjustment from time to time ina manner and on terms as nearly equivalent as

 

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practicableto the provisions with respect to the Preferred Stock contained in Sections11(a), (b), (c), (e), (f), (g), (h),(i), (j), (k) and (m) hereof, and the provisions ofSections 7, 9, 10, 13 and 14 hereof withrespect to the Preferred Stock shall apply on like terms to any such othershares.

 

(g)  All Rights originally issued by the Companysubsequent to any adjustment made to the Purchase Price hereunder shallevidence the right to purchase, at the adjusted Purchase Price, the number ofFractional Shares of Preferred Stock purchasable from time to time hereunderupon exercise of the Rights, all subject to further adjustment as providedherein.

 

(h)  Unless the Company shall have exercised itselection as provided in Section 11(i), upon each adjustment of thePurchase Price as a result of the calculations made in Sections 11(b)and (c), each Right outstanding immediately prior to the making of suchadjustment shall thereafter evidence the right to purchase, at the adjustedPurchase Price, that number of Fractional Shares of Preferred Stock (calculatedto the nearest one ten-thousandth of a Fractional Share) obtained by (i)multiplying (x) the number of Fractional Shares of Preferred Stock covered by aRight immediately prior to this adjustment by (y) the Purchase Price in effectimmediately prior to such adjustment of the Purchase Price, and (ii) dividingthe product so obtained by the Purchase Price in effect immediately after suchadjustment of the Purchase Price.

 

(i)  The Company may elect, on or after the dateof any adjustment of the Purchase Price, to adjust the number of Rights in lieuof any adjustment in the number of Fractional Shares of Preferred Stockpurchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number ofRights shall be exercisable for the number of Fractional Shares of PreferredStock for which a Right was exercisable immediately prior to suchadjustment.  Each Right held of recordprior to such adjustment of the number of Rights shall become that number ofRights (calculated to the nearest ten-thousandth) obtained by dividing thePurchase Price in effect immediately prior to adjustment of the Purchase Priceby the Purchase Price in effect immediately after adjustment of the PurchasePrice.  The Company shall make a publicannouncement of its election to adjust the number of Rights, indicating therecord date for the adjustment, and, if known at the time, the amount of theadjustment to be made.  This record datemay 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 dayslater than the date of the public announcement.  If Rights Certificates have been issued, upon each adjustment ofthe number of Rights pursuant to this Section 11(i), the Company shall,as promptly as practicable, cause to be distributed to holders of record ofRights Certificates on such record date Rights Certificates evidencing, subjectto Section 14 hereof, the additional Rights to which such holders shallbe 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 andreplacement for the Rights Certificates held by such holders prior to the dateof adjustment, and upon surrender thereof, if required by the Company, newRights Certificates evidencing all the Rights to which such holders shall beentitled after such adjustment.  RightsCertificates so to be distributed shall be issued, executed and countersignedin 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 theholders of record of Rights Certificates on the record date specified in thepublic announcement.

 

(j)  Irrespective of any adjustment or change inthe Purchase Price or the number of Fractional Shares of Preferred Stockissuable upon the exercise of the Rights, the Rights

 

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Certificatestheretofore and thereafter issued may continue to express the Purchase Priceper Fractional Share and the number of Fractional Shares that were expressed inthe initial Rights Certificates issued hereunder.

 

(k)  Before taking any action that would cause anadjustment reducing the Purchase Price below the then par value, if any, or thestated capital of the number of Fractional Shares of Preferred Stock or of thenumber of shares of Common Stock or other securities issuable upon exercise ofa Right, the Company shall take any corporate action that may, in the opinionof its counsel, be necessary in order that the Company may validly and legallyissue fully paid and nonassessable such number of Fractional Shares ofPreferred Stock or such number of shares of Common Stock or other securities atsuch adjusted Purchase Price.

 

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

 

(m)  Anything in this Section 11 to thecontrary notwithstanding, the Company shall be entitled to make such reductionsin the Purchase Price, in addition to those adjustments expressly required bythis Section 11, as and to the extent that in their good faith judgmentthe Board of Directors of the Company shall determine to be advisable in orderthat any (i) consolidation or subdivision of the Preferred Stock, (ii) issuancewholly for cash of any shares of Preferred Stock at less than the currentmarket price, (iii) issuance wholly for cash of shares of Preferred Stock orsecurities that by their terms are convertible into or exchangeable for sharesof Preferred Stock, (iv) stock dividends or (v) issuance of rights, options orwarrants referred to in this Section 11 hereafter made by the Company toholders of its Preferred Stock shall not be taxable to such stockholders.

 

(n)  The Company covenants and agrees that itshall not, at any time that there is an Acquiring Person, (i) consolidate withany other Person, (ii) merge with or into any other Person, or (iii) sell,lease or transfer (or permit one or more Subsidiaries to sell, lease ortransfer), in one transaction or a series of related transactions, assets orearning power aggregating more than 50% of the assets or earning power of theCompany and its Subsidiaries (taken as a whole) to any other Person or Persons,if (x) at the time of or immediately after such consolidation, merger, sale,lease or transfer there are any rights, warrants or other instruments orsecurities of the Company or any other Person outstanding or agreements,arrangements or understandings in effect that would substantially diminish orotherwise eliminate the benefits intended to be afforded by the Rights, (y)prior to, simultaneously with or immediately after such consolidation, merger,sale, lease or transfer, the stockholders or other equity owners of the Personwho constitutes, or would constitute, the “Principal Party” for purposesof Section 13(a) hereof shall have received a distribution of Rightspreviously owned by such Person or any of its Affiliates or

 

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Associates,or (z) the identity, form or nature of organization of the Principal Party(including, without limitation, the selection of the Person that will be thePrincipal Party as a result of the Company’s entering into one or moreconsolidations, mergers, sales, leases, transfers or transactions with morethan one party) would preclude or limit the exercise of Rights or otherwisediminish substantially or eliminate the benefits intended to be afforded by theRights.

 

(o)  The Company covenants and agrees that, afterthe Distribution Date, it will not, except as permitted by Section 23, Section24 or Section 27 hereof, take (or permit any Subsidiary to take) anyaction if the purpose of such action is to, or if at the time such action istaken it is reasonably foreseeable that such action will, diminishsubstantially or eliminate the benefits intended to be afforded by the Rights.

 

(p)  Notwithstanding Section 3(c) hereofor any other provision of this Agreement to the contrary, in the event that theCompany shall at any time after the Record Date and prior to the DistributionDate (i) declare a dividend on the outstanding shares of Common Stock payablein shares of Common Stock, (ii) subdivide the outstanding shares of CommonStock, (iii) combine the outstanding shares of Common Stock into a smallernumber of shares or (iv) otherwise reclassify the outstanding shares of CommonStock (including any such reclassification in connection with a consolidationor merger in which the Company is the continuing or surviving corporation), thenumber of Rights associated with each share of Common Stock then outstanding,or issued or delivered thereafter with Rights, shall be proportionatelyadjusted so that the number of Rights thereafter associated with each share ofCommon Stock following any such event shall equal the result obtained bymultiplying the number of Rights associated with each share of Common Stockimmediately prior to such event by a fraction (the “Adjustment Fraction”)the numerator of which shall be the total number of shares of Common Stockoutstanding immediately prior to the occurrence of the event and thedenominator of which shall be the total number of shares of Common Stockoutstanding immediately following the occurrence of such event.  In lieu of such adjustment in the number ofRights associated with one share of Common Stock, the Company may elect toadjust the number of Fractional Shares of Preferred Stock purchasable upon theexercise of one Right and the Purchase Price. If the Company makes such election, the number of Rights associated withone share of Common Stock shall remain unchanged, and the number of FractionalShares of Preferred Stock purchasable upon exercise of one Right and thePurchase Price shall be proportionately adjusted so that (i) the number ofFractional Shares of Preferred Stock purchasable upon exercise of a Rightfollowing such adjustment shall equal the product of the number of FractionalShares of Preferred Stock purchasable upon exercise of a Right immediatelyprior to such adjustment multiplied by the Adjustment Fraction and (ii) thePurchase Price following such adjustment shall equal the product of thePurchase Price immediately prior to such adjustment multiplied by theAdjustment Fraction.

 

Section 12.  Certificateof Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as providedin Section 11 or Section 13 hereof, the Company shall (a)promptly prepare a certificate setting forth such adjustment and a briefstatement of the facts accounting for such adjustment, (b) promptly file withthe Rights Agent, and with each transfer agent for the Preferred Stock and theCommon Stock, a copy of such certificate and (c) mail a brief summary thereofto each registered holder of a Rights Certificate (or, if prior to the

 

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DistributionDate, to each registered holder of a certificate representing shares of CommonStock) in accordance with Section 26 hereof.  The Rights Agent shall be fully protected in relying on any suchcertificate and on any adjustment therein contained.

 

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

 

(a)  In the event that, from and after the timean Acquiring Person has become such, directly or indirectly, (x) the Companyshall consolidate with, or merge with and into, any other Person, and theCompany shall not be the continuing or surviving corporation of such consolidationor merger, (y) any Person shall consolidate with, or merge with or into, theCompany, and the Company shall be the continuing or surviving corporation ofsuch consolidation or merger, and, in connection with such consolidation ormerger, all or part of the outstanding shares of Common Stock shall be changedinto or exchanged for stock or other securities of the Company or any otherPerson or cash or any other property, or (z) the Company shall sell, lease orotherwise transfer (or one or more of its Subsidiaries shall sell, lease orotherwise transfer), in one transaction or a series of related transactions,assets or earning power aggregating more than 50% of the assets or earningpower of the Company and its Subsidiaries (taken as a whole) to any Person orPersons (other than the Company or any wholly owned Subsidiary of the Companyor any combination thereof in one or more transactions each of which complies(and all of which together comply) with Section 11(o) hereof), then, andin each such case (except as may be contemplated by Section 13(d)hereof), proper provision shall be made so that: (i) the Purchase Price shallbe adjusted to be the Purchase Price immediately prior to the first occurrenceof a Triggering Event multiplied by the number of Fractional Shares ofPreferred Stock for which a Right was exercisable immediately prior to suchfirst occurrence; (ii) on and after the Distribution Date, each holder of aRight, except as provided in Section 7(e) hereof, shall thereafter havethe right to receive, upon the exercise thereof at the Purchase Price inaccordance with the terms of this Agreement, in lieu of shares of PreferredStock or Common Stock of the Company, such number of validly authorized andissued, fully paid, nonassessable and freely tradeable shares of Common Stockof the Principal Party (as such term is hereinafter defined), not subject toany liens, encumbrances, rights of first refusal or other adverse claims, asshall be equal to the result obtained by dividing the Purchase Price by 50% ofthe Current Market Price per share of the Common Stock of such Principal Partyon the date of consummation of such Flip-Over Event; provided that the PurchasePrice and the number of shares of Common Stock of such Principal Party issuableupon exercise of each Right shall be further adjusted as provided in thisAgreement to reflect any events occurring after the date of such firstoccurrence of a Triggering Event or after the date of such Flip-Over Event, asapplicable; (iii) such Principal Party shall thereafter be liable for, andshall assume, by virtue of such Flip-Over Event, all the obligations and dutiesof the Company pursuant to this Agreement; (iv) the term “Company” shallthereafter be deemed to refer to such Principal Party, it being specificallyintended that the provisions of Section 11 hereof shall apply only tosuch Principal Party following the first occurrence of a Flip-Over Event; (v)such Principal Party shall take such steps (including, but not limited to, thereservation of a sufficient number of shares of its Common Stock) in connectionwith the consummation of any such transaction as may be necessary to assurethat the provisions hereof shall thereafter be applicable, as nearly asreasonably may be, in relation to its shares of

 

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CommonStock thereafter deliverable upon the exercise of the Rights; and (vi) theprovisions of Section 11(a)(ii) hereof shall be of no effect followingthe occurrence of any Flip-Over Event.

 

(b)  “Principal Party” shall mean

 

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

 

(ii)  in the case of any transaction described inclause (z) of the first sentence of Section 13(a), the Person that isthe party receiving the greatest portion of the assets or earning powertransferred pursuant to such transaction or transactions, or, if each Personthat is a party to such transaction or transactions receives the same portionof the assets or earning power so transferred, or if the Person receiving thegreatest portion of the assets or earning power cannot be determined, thePerson the Common Stock of which has the greatest aggregate market value;

 

provided, however, that inany such case, if the Common Stock of such Person is not at such time and hasnot been continuously over the preceding twelve-month period registered underSection 12 of the Exchange Act, and if (1) such Person is a direct or indirectSubsidiary of another Person the Common Stock of which is and has been soregistered, “Principal Party” shall refer to such other Person; (2) suchPerson is a Subsidiary, directly or indirectly, of more than one Person, theCommon Stocks of all of which are and have been so registered, “PrincipalParty” shall refer to whichever of such Persons is the issuer of the CommonStock having the greatest aggregate market value; and (3) such Person is owned,directly or indirectly, by a joint venture formed by two or more Persons thatare not owned, directly or indirectly, by the same Person, the rules set forthin (1) and (2) above shall apply to each of the chains of ownership having aninterest in such joint venture as if such party were a “Subsidiary” of both orall of such joint venturers and the Principal Parties in each such chain shallbear the obligations set forth in this Section 13 in the same ratio astheir direct or indirect interests in such Person bear to the total of suchinterests.

 

(c)  The Company shall not consummate anyFlip-Over Event unless each Principal Party (or Person that may become aPrincipal Party as a result of such Flip-Over Event) shall have a sufficientnumber of authorized shares of its Common Stock that have not been issued orreserved for issuance to permit the exercise in full of the Rights inaccordance with this Section 13 and unless prior thereto the Company andeach such Principal Party shall have executed and delivered to the Rights Agenta supplemental agreement providing for the terms set forth in paragraphs (a)and (b) of this Section 13 and further providing that, as soon as practicableafter the date of such Flip-Over Event, the Principal Party at its own expensewill

 

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(i)  prepare and file a registration statementunder the Securities Act with respect to the Rights and the securitiespurchasable upon exercise of the Rights on an appropriate form, and will useits best efforts to cause such registration statement to (A) become effectiveas soon as practicable after such filing and (B) remain effective (with aprospectus at all times meeting the requirements of the Securities Act) untilthe Expiration Date;

 

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

 

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

 

(iv)  deliver to holders of the Rights historicalfinancial statements for the Principal Party and each of its Affiliates thatcomply in all respects with the requirements for registration on Form 10 underthe Exchange Act.

 

The provisions of this Section 13 shallsimilarly apply to successive mergers or consolidations or sales or othertransfers.  In the event that aFlip-Over Event shall occur at any time after the occurrence of a Flip-InEvent, the Rights that have not theretofore been exercised shall thereafterbecome exercisable in the manner described in Section 13(a).

 

(d)  Notwithstanding anything in this Agreementto the contrary, Section 13 shall not be applicable to a transactiondescribed in subparagraphs (x) and (y) of Section 13(a) if (i) suchtransaction is consummated with a Person or Persons who acquired shares ofCommon Stock pursuant to a Permitted Offer (or a wholly owned subsidiary of anysuch Person or Persons), (ii) the price per share of Common Stock offered insuch transaction is not less than the price per share of Common Stock paid toall holders of Common Stock whose shares were purchased pursuant to suchPermitted Offer, and (iii) the form of consideration being offered to theremaining holders of shares of Common Stock pursuant to such transaction is thesame as the form of consideration paid pursuant to such Permitted Offer.  Upon consummation of any such transactioncontemplated by this Section 13(d), all Rights hereunder shall expire.

 

Section 14.  FractionalRights and Fractional Shares.

 

(a)  The Company shall not be required to issuefractions of Rights, except prior to the Distribution Date as provided in Section11(p) hereof, or to distribute Rights Certificates or scrip evidencingfractional Rights.  In lieu of suchfractional Rights, there shall be paid to the registered holders of the RightsCertificates with regard to which such fractional Rights would otherwise beissuable, an amount in cash equal to the same fraction of the Closing Price ofone

 

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Rightfor the Trading Day immediately prior to the date on which such fractionalRights would have been otherwise issuable.

 

(b)  The Company shall not be required to issuefractions of shares of Preferred Stock (other than, except as provided in Section7(c) hereof, fractions that are integral multiples of a Fractional Share ofPreferred Stock) upon exercise of the Rights or to distribute certificates orscrip evidencing fractional shares of Preferred Stock (other than, except asprovided in Section 7(c) hereof, fractions that are integral multiplesof a Fractional Share of Preferred Stock). Interests in fractions of shares of Preferred Stock in integralmultiples of a Fractional Share of Preferred Stock may, at the election of theCompany in its sole discretion, be evidenced by depositary receipts, pursuantto an appropriate agreement between the Company and a depositary selected byit, provided that such agreement shall provide that the holders of suchdepositary receipts shall have all the rights, privileges and preferences towhich they are entitled as beneficial owners of the shares of Preferred Stockrepresented by such depositary receipts. In lieu of fractional shares of Preferred Stock that are not integralmultiples of a Fractional Share of Preferred Stock, the Company may pay to theregistered holders of Rights Certificates at the time such Rights are exercisedas herein provided an amount in cash equal to the same fraction of oneone-hundredth of the Closing Price of a share of Preferred Stock for theTrading Day immediately prior to the date of such exercise.

 

(c)  Following the occurrence of a TriggeringEvent, the Company shall not be required to issue fractions of shares of CommonStock upon exercise of the Rights or to distribute certificates or scripevidencing fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to theregistered holders of Rights Certificates at the time such Rights are exercisedas herein provided an amount in cash equal to the same fraction of the ClosingPrice of one share of Common Stock for the Trading Day immediately prior to thedate of such exercise.

 

(d)  The holder of a Right by the acceptance ofthe Right expressly waives his right to receive any fractional Rights or anyfractional shares upon exercise of a Right, except as permitted by this Section14.

 

Section 15.  Rightsof Action.  Allrights of action in respect of this Agreement, other than rights of actionvested in the Rights Agent pursuant to Section 18 hereof, are vested inthe respective registered holders of the Rights Certificates (and, prior to theDistribution Date, the registered holders of the Common Stock) and, whereapplicable, the Company; and any registered holder of any Rights Certificate(or, prior to the Distribution Date, of the Common Stock), without the consentof the Rights Agent or of the holder of any other Rights Certificate (or, priorto the Distribution Date, of the Common Stock), may, in his own behalf and forhis own benefit, enforce, and may institute and maintain any suit, action orproceeding against the Company to enforce, or otherwise act in respect of, hisright to exercise the Rights evidenced by such Rights Certificate in the mannerprovided in such Rights Certificate and in this Agreement.  Without limiting the foregoing or anyremedies available to the holders of Rights, it is specifically acknowledgedthat the holders of Rights would not have an adequate remedy at law for anybreach of this Agreement and shall be entitled to specific performance of theobligations hereunder and injunctive relief against actual or threatenedviolations of the obligations hereunder of any Person subject to thisAgreement.  After a Triggering Event,holders of Rights

 

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shallbe entitled to recover the reasonable costs and expenses, including attorneys’fees, incurred by them in any action to enforce the provisions of thisAgreement.

 

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

 

(a)  prior to the Distribution Date, the Rightswill not be evidenced by Rights Certificates and will be transferable only inconnection with the transfer of Common Stock;

 

(b)  after the Distribution Date, the RightsCertificates will be transferable only on the registry books of the Rights Agentif surrendered at the principal office or offices of the Rights Agentdesignated for such purposes, duly endorsed or accompanied by a properinstrument of transfer and with the form of assignment set forth on the reverseside thereof and the certificate contained therein duly completed and fullyexecuted;

 

(c)  subject to Section 6(a) and Section7(f) hereof, the Company and the Rights Agent may deem and treat the Personin whose name a Rights Certificate (or, prior to the Distribution Date, theassociated Common Stock certificate) is registered as the absolute ownerthereof and of the Rights evidenced thereby (notwithstanding any notations ofownership or writing on the Rights Certificates or the associated Common Stockcertificate made by anyone other than the Company or the Rights Agent) for allpurposes whatsoever, and neither the Company nor the Rights Agent shall beaffected by any notice to the contrary; and

 

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

 

Section 17.  RightsCertificate Holder Not Deemed a Stockholder.  No holder, as such, of any RightsCertificate shall be entitled to vote, receive dividends or be deemed for anypurpose the holder of the number of Fractional Shares of Preferred Stock or anyother securities of the Company that may at any time be issuable upon theexercise of the Rights represented thereby, nor shall anything contained hereinor in any Rights Certificate be construed to confer upon the holder of anyRights Certificate, as such, any of the rights of a stockholder of the Companyor any right to vote for the election of directors or upon any matter submittedto stockholders at any meeting thereof, or to give or withhold consent to anycorporate action, or to receive notice of meetings or other actions affectingstockholders (except as provided in Section 25 hereof), or to receivedividends or subscription rights, or otherwise, until the Right or Rightsevidenced by such Rights Certificate shall have been exercised in accordancewith the provisions hereof.

 

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Section 18.  Concerningthe Rights Agent.

 

(a)  The Company agrees to pay to the RightsAgent reasonable compensation for all services rendered by it hereunder and,from time to time, on demand of the Rights Agent, its reasonable expenses andcounsel fees and disbursements and other reasonable disbursements incurred inthe administration and execution of this Agreement and the exercise andperformance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to holdit harmless against, any loss, liability or expense, incurred without grossnegligence, bad faith or willful misconduct on the part of the Rights Agent,for anything done or omitted by the Rights Agent in connection with theacceptance and administration of this Agreement, including the costs andexpenses of defending against any claim of liability in the premises.

 

(b)  The Rights Agent shall be protected andshall incur no liability for or in respect of any action taken, suffered oromitted by it in connection with its administration of this Agreement inreliance upon any Rights Certificate or certificate for Common Stock or forother securities of the Company, instrument of assignment or transfer, power ofattorney, endorsement, affidavit, letter, notice, direction, consent,certificate, statement or other paper or document believed by it, after properinquiry or examination, to be genuine and to be signed, executed and, wherenecessary, guaranteed, verified or acknowledged, by the proper Person orPersons.

 

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

 

(a)  Any corporation into which the Rights Agentor any successor Rights Agent may be merged or with which it may beconsolidated, or any corporation resulting from any merger or consolidation towhich the Rights Agent or any successor Rights Agent shall be a party, or anycorporation succeeding to the corporate trust or stock transfer business of theRights Agent or any successor Rights Agent, shall be the successor to theRights Agent under this Agreement without the execution or filing of any paperor any further act on the part of any of the parties hereto; provided, however,that such corporation would be eligible for appointment as a successor RightsAgent under the provisions of Section 21 hereof.  In case at the time such successor RightsAgent shall succeed to the agency created by this Agreement, any of the RightsCertificates shall have been countersigned but not delivered, any suchsuccessor Rights Agent may adopt the countersignature of a predecessor RightsAgent and deliver such Rights Certificates so countersigned; and in case atthat time any of the Rights Certificates shall not have been countersigned, anysuccessor Rights Agent may countersign such Rights Certificates either in thename of the predecessor or in the name of the successor Rights Agent; and inall such cases such Rights Certificates shall have the full force provided inthe Rights Certificates and in this Agreement.

 

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

 

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Section 20.  Dutiesof Rights Agent. The Rights Agent undertakes the duties and obligations imposed by thisAgreement upon the following terms and conditions, by all of which the Companyand the holders of Rights Certificates, by their acceptance thereof, shall bebound:

 

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

 

(b)  Whenever in the performance of its dutiesunder this Agreement the Rights Agent shall deem it necessary or desirable thatany fact or matter (including, without limitation, the identity of anyAcquiring Person and the determination of “Current Market Price”) be proved orestablished by the Company prior to taking or suffering any action hereunder,such fact or matter (unless other evidence in respect thereof be hereinspecifically prescribed) may be deemed to be conclusively proved andestablished by a certificate signed by the Chairman of the Board, the ChiefExecutive Officer, the President, any Vice President, the Treasurer, anyAssistant Treasurer, the Secretary or any Assistant Secretary of the Companyand delivered to the Rights Agent; and such certificate shall be fullauthorization to the Rights Agent for any action taken or suffered in goodfaith by it under the provisions of this Agreement in reliance upon suchcertificate.

 

(c)  The Rights Agent shall be liable hereunderonly for its own gross negligence, bad faith or willful misconduct.  In no event shall the Rights Agent be liablefor special, indirect or consequential loss or damage of any kind whatsoever(including but not limited to lost profits), even if the Rights Agent has beenadvised of the likelihood of such loss or damage and regardless of the form ofaction.

 

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

 

(e)  The Rights Agent shall not be under anyresponsibility in respect of the validity of this Agreement or the executionand delivery hereof (except the due execution hereof by the Rights Agent) or inrespect of the validity or execution of any Rights Certificate (except itscountersignature thereof); nor shall it be responsible for any breach by theCompany of any covenant or condition contained in this Agreement or in anyRights Certificate; nor shall it be responsible for any adjustment requiredunder the provisions of Section 11 or Section 13 hereof orresponsible for the manner, method or amount of any such adjustment or theascertaining of the existence of facts that would require any such adjustment(except with respect to the exercise of Rights evidenced by Rights Certificatesafter receipt of actual knowledge of any such adjustment); nor shall it by anyact hereunder be deemed to make any representation or warranty as to theauthorization or reservation of any shares of Preferred Stock or Common Stockor other securities to be issued pursuant to this Agreement or any RightsCertificate or as to whether any shares of Preferred Stock or Common Stock orother securities will, when so issued, be validly authorized and issued, fullypaid and nonassessable.

 

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(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 andassurances as may reasonably be required by the Rights Agent for the carryingout or performing by the Rights Agent of the provisions of this Agreement.

 

(g)  The Rights Agent is hereby authorized anddirected to accept instructions with respect to the performance of its dutieshereunder from the Chairman of the Board, the Chief Executive Officer, thePresident, any Vice President, the Secretary, any Assistant Secretary, theTreasurer or any Assistant Treasurer of the Company, and to apply to suchofficers for advice or instructions in connection with its duties, and it shallnot be liable for any action taken or suffered to be taken by it in good faithin 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 anyof the Rights or other securities of the Company or become pecuniarilyinterested in any transaction in which the Company may be interested, orcontract with or lend money to the Company or otherwise act as fully and freelyas though it were not Rights Agent under this Agreement.  Nothing herein shall preclude the RightsAgent from acting in any other capacity for the Company or for any other legalentity.

 

(i)  The Rights Agent may execute and exerciseany of the rights or powers hereby vested in it or perform any duty hereundereither itself or by or through its attorneys or agents, and the Rights Agentshall not be answerable or accountable for any act, omission, default, neglector misconduct of any such attorneys or agents or for any loss to the Companyresulting from any such act, omission, default, neglect or misconduct; provided,however, that reasonable care was exercised in the selection andcontinued employment thereof.

 

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

 

(k)  If, with respect to any Rights Certificatesurrendered to the Rights Agent for exercise or transfer, the certificateattached to the form of assignment or form of election to purchase, as the casemay be, has either not been completed or indicates an affirmative response to clause1 and/or 2 thereof, the Rights Agent shall not take any further action withrespect to such requested exercise or transfer without first consulting withthe Company.

 

Section 21.  Changeof Rights Agent. The Rights Agent or any successor Rights Agent may resign and bedischarged from its duties under this Agreement upon 30 days’ notice in writingmailed to the Company, and to each transfer agent of the Common Stock and thePreferred Stock, by registered or certified mail, and to the registered holders,if any, of the Rights Certificates by first-class mail. In the event thetransfer agency relationship in effect between the Company and the Rights Agentterminates, the Rights Agent will be deemed to resign automatically on theeffective date of such termination; and any required notice will be sent by theCompany. The Company may remove the Rights Agent or any successor Rights Agent(with

 

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orwithout cause) upon 30 days’ notice in writing, mailed to the Rights Agent orsuccessor Rights Agent, as the case may be, and to each transfer agent of theCommon Stock and the Preferred Stock, by registered or certified mail, and tothe registered holders of the Rights Certificates, if any, by first-class mail. If the Rights Agent shall resign or beremoved or shall otherwise become incapable of acting, the Company shallappoint a successor to the Rights Agent. Notwithstanding the foregoing provisions of this Section 21, inno event shall the resignation or removal of a Rights Agent be effective untila successor Rights Agent shall have been appointed and have accepted suchappointment.  If the Company shall failto make such appointment within a period of 30 days after giving notice of suchremoval or after it has been notified in writing of such resignation orincapacity by the resigning or incapacitated Rights Agent or by the registeredholder of a Rights Certificate (who shall, with such notice, submit his RightsCertificate for inspection by the Company), then the Rights Agent or theregistered holder of any Rights Certificate may apply to any court of competentjurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whetherappointed by the Company or by such a court, shall be (a) a corporation ortrust company organized and doing business under the laws of the United States,in good standing, which is authorized under such laws to exercise corporatetrust or stock transfer powers and is subject to supervision or examination by federalor state authority and which has at the time of its appointment as Rights Agenta combined capital and surplus of at least $100,000,000 or (b) an affiliate ofa corporation or trust company described in clause (a) of this sentence.  After appointment, the successor RightsAgent shall be vested with the same powers, rights, duties and responsibilitiesas 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 successorRights Agent any property at the time held by it hereunder, and execute anddeliver any further assurance, conveyance, act or deed necessary for thepurpose.  Not later than the effectivedate of any such appointment, the Company shall file notice thereof in writingwith the predecessor Rights Agent and each transfer agent of the Common Stockand the Preferred Stock, and mail a notice thereof in writing to the registeredholders 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 ofthe resignation or removal of the Rights Agent or the appointment of thesuccessor Rights Agent, as the case may be.

 

Section 22.  Issuanceof New Rights Certificates.  Notwithstanding any of the provisions of this Agreement or of theRights to the contrary, the Company may, at its option, issue new RightsCertificates evidencing Rights in such form as may be approved by its Board ofDirectors to reflect any adjustment or change in the Purchase Price and thenumber or kind or class of shares or other securities or property purchasableunder the Rights Certificates made in accordance with the provisions of thisAgreement.  In addition, in connectionwith the issuance or sale of shares of Common Stock following the DistributionDate and prior to the Expiration Date, the Company (a) shall, with respect toshares of Common Stock so issued or sold pursuant to the exercise of stockoptions or under any employee plan or arrangement granted or awarded on orprior to the Distribution Date, or upon the exercise, conversion or exchange ofsecurities issued by the Company on or prior to the Distribution Date, and (b)may, in any other case, if deemed necessary or appropriate by the Board ofDirectors of the Company, issue Rights Certificates representing theappropriate number of Rights in connection with such issuance or sale; provided,however, that (i) no such Rights Certificate shall be issued if, and tothe extent that, the Company shall be advised by counsel that such issuancewould create a significant risk

 

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ofmaterial adverse tax consequences to the Company or the Person to whom suchRights Certificate would be issued, and (ii) no such Rights Certificate shallbe issued if, and to the extent that, appropriate adjustment shall otherwisehave been made in lieu of the issuance thereof.

 

Section 23.  Redemptionand 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 onthe tenth day following the first date of public announcement of the occurrenceof a Flip-In Event and (ii) the Expiration Date, cause the Company to redeemall 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, if necessary, toreflect any stock split, stock dividend or similar transaction (such redemptionprice being hereinafter referred to as the “Redemption Price”); provided,however, that the Rights may not be redeemed following any merger towhich the Company is a party that (i) occurs when there is an Acquiring Personand (ii) was not approved prior to such merger by the Board of Directors of theCompany and by the stockholders of the Company at a stockholders’ meeting.  Notwithstanding anything contained in thisAgreement to the contrary, the Rights shall not be exercisable after the firstoccurrence of a Flip-In Event until such time as the Company’s right ofredemption hereunder has expired.  TheCompany may, at its option, pay the Redemption Price in cash, shares of CommonStock (based on the Current Market Price of the Common Stock at the time ofredemption) or any other form of consideration deemed appropriate by the Boardof Directors.

 

(b)  Immediately upon the effectiveness of theaction of the Board of Directors of the Company ordering the redemption of theRights (the effectiveness of which action may be conditioned on the occurrenceof one or more events or on the existence of one or more facts or may beeffective at some future time), evidence of which shall be filed with theRights Agent and without any further action and without any notice, the rightto exercise the Rights will terminate and the only right thereafter of theholders of Rights shall be to receive the Redemption Price for each Right soheld.  Promptly after the effectivenessof 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 theregistered holders of the then outstanding Rights by mailing such notice to allsuch holders at each holder’s last address as it appears upon the registrybooks of the Rights Agent or, prior to the Distribution Date, on the registrybooks of the Company for the Common Stock. Any notice that is mailed in the manner herein provided shall be deemedgiven, whether or not the holder receives the notice.  Each such notice of redemption shall state the method by whichthe payment of the Redemption Price will be made.

 

Section 24.  Exchange.

 

(a)  The Board of Directors of the Company may,at its option, at any time and from time to time after the occurrence of aFlip-In Event, exchange all or part of the then outstanding and exercisableRights (which shall not include Rights that have become void pursuant to theprovisions of Section 7(e) hereof) for shares of Common Stock or CommonStock Equivalents or any combination thereof, at an exchange ratio of one shareof Common Stock, or such number of Common Stock Equivalents or unitsrepresenting fractions thereof as would be deemed to have the same value as oneshare of Common Stock, per Right,

 

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appropriatelyadjusted, if necessary, to reflect any stock split, stock dividend or similartransaction (such exchange ratio being hereinafter referred to as the “ExchangeRatio”).  Notwithstanding theforegoing, the Board of Directors may not effect such exchange at any timeafter (i) any Person (other than an Exempt Person), together with allAffiliates and Associates of such Person, becomes the Beneficial Owner of 50%or more of the shares of Common Stock then outstanding or (ii) the occurrenceof a Flip-Over Event.

 

(b)  Immediately upon the effectiveness of theaction of the Board of Directors of the Company ordering the exchange of anyRights pursuant to and in accordance with subsection (a) of this Section 24(the effectiveness of which action may be conditioned on the occurrence of oneor more events or on the existence of one or more facts or may be effective atsome future time) and without any further action and without any notice, theright to exercise such Rights shall terminate and the only right thereafter ofa holder of such Rights shall be to receive that number of shares of CommonStock and/or Common Stock Equivalents equal to the number of such Rights heldby such holder multiplied by the Exchange Ratio.  The Company shall promptly give public notice of any suchexchange; provided, however, that the failure to give, or anydefect in, such notice shall not affect the validity of such exchange.  The Company promptly shall mail a notice ofany such exchange to all of the registered holders of such Rights at their lastaddresses as they appear upon the registry books of the Rights Agent.  Any notice which is mailed in the mannerherein provided shall be deemed given, whether or not the holder receives thenotice.  Each such notice of exchangewill state the method by which the exchange of the shares of Common Stockand/or Common Stock Equivalents for Rights will be effected and, in the eventof any partial exchange, the number of Rights that will be exchanged.  Any partial exchange shall be effected asnearly pro rata as possible based on the number of Rights (other than Rightsthat have become void pursuant to the provisions of Section 7(e) hereof)held by each holder of Rights.

 

(c)  In the event that the number of shares ofCommon Stock that are authorized by the Company’s certificate of incorporationbut not outstanding or reserved for issuance for purposes other than uponexercise of the Rights is not sufficient to permit an exchange of Rights ascontemplated in accordance with this Section 24, the Company may, at itsoption, take all such action as may be necessary to authorize additional sharesof Common Stock for issuance upon exchange of the Rights.

 

(d)  The Company shall not be required to issuefractions of shares of Common Stock or to distribute certificates or scripevidencing fractional shares of Common Stock upon exchange of the Rights.  In lieu of such fractional shares of CommonStock, the Company shall pay to the registered holders of Rights with regard towhich such fractional shares of Common Stock would otherwise be issuable anamount in cash equal to the same fraction of the value of a whole share ofCommon Stock.  For purposes of this Section24, the value of a whole share of Common Stock shall be the Closing Priceper share of Common Stock for the Trading Day immediately prior to the date ofexchange pursuant to this Section 24, and the value of any Common StockEquivalent shall be deemed to have the same value as the Common Stock on suchdate.

 

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Section 25.  Noticeof Certain Events.

 

(a)  In case the Company shall propose, at anytime after the Distribution Date, (i) to pay any dividend payable in stock ofany class to the holders of Preferred Stock or to make any other distributionto the holders of Preferred Stock (other than a regular quarterly cash dividendout of earnings or retained earnings of the Company), or (ii) to offer to theholders of Preferred Stock rights or warrants to subscribe for or to purchaseany additional shares of Preferred Stock or shares of stock of any class or anyother securities, rights or options, or (iii) to effect any reclassification ofits Preferred Stock (other than a reclassification involving only thesubdivision of outstanding shares of Preferred Stock), or (iv) to effect anyconsolidation or merger into or with any other Person (other than a whollyowned Subsidiary of the Company in a transaction that complies with Section11(o) hereof), or to effect any sale, lease or other transfer of all orsubstantially all the Company’s assets to any other Person or Persons (otherthan a wholly owned Subsidiary of the Company in a transaction that complieswith Section 11(o) hereof), or (v) to effect the liquidation,dissolution or winding up of the Company, then, in each such case, the Companyshall give to each holder of record of a Rights Certificate, to the extentfeasible and in accordance with Section 26 hereof, a notice of suchproposed action, which shall specify the record date for the purposes of such stockdividend, distribution of rights or warrants, or the date on which suchreclassification, consolidation, merger, sale, lease, transfer, liquidation,dissolution or winding up is to take place and the date of participationtherein by the holders of the shares of Preferred Stock, if any such date is tobe fixed, and such notice shall be so given in the case of any action coveredby clause (i) or (ii) above at least 20 days prior to the record date fordetermining holders of the shares of Preferred Stock for purposes of suchaction, and in the case of any such other action, at least 20 days prior to thedate of the taking of such proposed action or the date of participation thereinby the holders of the shares of Preferred Stock, whichever shall be the earlier.  The failure to give notice required by this Section25 or any defect therein shall not affect the legality or validity of theaction taken by the Company or the vote upon any such action.

 

(b)  In case any Flip-In Event or Flip-Over Eventshall occur, then (i) the Company shall as soon as practicable thereafter giveto each registered holder of a Rights Certificate (or if occurring prior to theDistribution Date, the registered holders of Common Stock), in accordance with Section26 hereof, a notice of the occurrence of such event, which shall specifythe event and the consequences of the event to holders of Rights under Section11(a)(ii) or Section 13(a) hereof, and (ii) all references in thepreceding paragraph to Preferred Stock shall be deemed thereafter to refer toCommon Stock and/or, if appropriate, other securities.

 

Section 26.  Notices.  Notices or demands authorized by thisAgreement to be given or made by the Rights Agent or by the holder of anyRights Certificate to or on the Company shall be sufficiently given or made ifsent by first-class mail, postage prepaid, addressed (until another address isfiled in writing with the Rights Agent) as follows:

 

Hospira, Inc.275 N. Field Drive****Lake Forest, Illinois 60064Attention: General Counsel

 

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

 

EquiServe Trust Company,N.A.****150 Royall Street Canton, Massachusetts 02021****Attention:  **Client Administration**

 

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

 

Section 27.  Supplementsand Amendments. Except as provided in the last sentence of this Section 27, atany time when the Rights are then redeemable, the Company may in its sole andabsolute discretion and the Rights Agent shall, if the Company so directs,supplement or amend any provision of this Agreement in any respect without theapproval of any holders of Rights or holders of Common Stock.  At any time when the Rights are notredeemable, except as provided in the last sentence of 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 ofRights in order (i) to cure any ambiguity, (ii) to correct or supplement anyprovision contained herein that may be defective or inconsistent with any otherprovisions herein, (iii) to shorten or lengthen any time period hereunder or(iv) to change or supplement the provisions hereunder in any manner that theCompany may deem necessary or desirable; provided that no such amendment orsupplement shall materially adversely affect the interests of the holders ofRights (other than an Acquiring Person or an Affiliate or Associate of anAcquiring Person); and further provided that this Agreement may not besupplemented or amended pursuant to this sentence to lengthen (A) a time periodrelating to when the Rights may be redeemed or (B) any other time period unlessthe lengthening of such other time period is for the purpose of protecting,enhancing or clarifying the rights of, and/or the benefits to, the holders ofRights (other than any Acquiring Person and its Affiliates andAssociates).  Upon the delivery of acertificate from an appropriate officer of the Company which states that theproposed supplement or amendment is in compliance with the terms of this Section27, the Rights Agent shall execute such supplement or amendment; provided,however, that the Rights Agent may, but shall not be obligated to, enterinto any such supplement or amendment that affects the Rights Agent’s ownrights, duties or immunities under this Agreement.  Notwithstanding anything contained in this Agreement to thecontrary, no supplement or amendment shall be made that decreases theRedemption Price.

 

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

 

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Section 29.  Determinationsand Actions by the Board of Directors, etc.  For all purposes of this Agreement, anycalculation of the number of shares of Common Stock outstanding at anyparticular time, including for purposes of determining the particularpercentage of such outstanding shares of Common Stock of which any Person isthe Beneficial Owner, shall, subject to the last sentence of the definition ofBeneficial Owner in Section 1, be made in accordance with the lastsentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under theExchange Act as in effect on the date of this Agreement.  The Board of Directors of the Company (or,as set forth herein, certain specified members thereof) shall have theexclusive power and authority to administer this Agreement and to exercise allrights and powers specifically granted to the Board of Directors of the Companyor to the Company, or as may be necessary or advisable in the administration ofthis Agreement, including, without limitation, the right and power to (i)interpret the provisions of this Agreement and (ii) make all determinationsdeemed necessary or advisable for the administration of this Agreement(including, without limitation, a determination to redeem or not redeem theRights or to amend this Agreement).  Allsuch actions, calculations, interpretations and determinations (including, forpurposes of clause (y) below, all omissions with respect to the foregoing) thatare done or made by the Board of Directors of the Company in good faith, shall(x) be final, conclusive and binding on the Company, the Rights Agent, theholders of the Rights, as such, and all other parties, and (y) not subject theBoard of Directors to any liability to the holders of the Rights.

 

Section 30.  Benefitsof this Agreement. Nothing in this Agreement shall be construed to give to any Person otherthan the Company, the Rights Agent and the registered holders of the RightsCertificates (and, prior to the Distribution Date, registered holders of theCommon Stock) any legal or equitable right, remedy or claim under thisAgreement; but this Agreement shall be for the sole and exclusive benefit ofthe Company, the Rights Agent and the registered holders of the RightsCertificates (and, prior to the Distribution Date, registered holders of theCommon Stock).

 

Section 31.  Severability.  If any term, provision, covenant orrestriction of this Agreement is held by a court of competent jurisdiction orother authority to be invalid, void or unenforceable, the remainder of theterms, provisions, covenants and restrictions of this Agreement shall remain infull force and effect and shall in no way be affected, impaired or invalidated;provided, however, that notwithstanding anything in thisAgreement to the contrary, if any such term, provision, covenant or restrictionis held by such court or authority to be invalid, void or unenforceable and theBoard of Directors of the Company determines in its good faith judgment thatsevering the invalid language from this Agreement would adversely affect thepurpose or effect of this Agreement, then, unless there has occurred any mergerreferred to in the proviso to the first sentence of Section 23(a), theright of redemption set forth in Section 23 hereof shall be reinstatedand shall not expire until the close of business on the tenth day following thedate of such determination by the Board of Directors of the Company or, ifearlier, immediately prior to any such merger. Without limiting the foregoing, if any provision requiring that adetermination be made by less than the entire Board of Directors of the Companyis held by a court of competent jurisdiction or other authority to be invalid,void or unenforceable, such determination shall then be made by the entireBoard of Directors of the Company.

 

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Section 32.  GoverningLaw.  ThisAgreement, each Right and each Rights Certificate issued hereunder shall bedeemed to be a contract made under the laws of the State of Delaware and forall purposes shall be governed by and construed in accordance with the laws ofsuch State applicable to contracts made and to be performed entirely withinsuch State.

 

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

 

Section 34.  DescriptiveHeadings. Descriptive headings of the several Sections of this Agreement areinserted for convenience only and shall not control or affect the meaning orconstruction of any of the provisions hereof.

 

Section 35. Force Majeure. Notwithstandinganything to the contrary contained herein, Rights Agent shall not be liable forany delays or failures in performance resulting from acts beyond its reasonablecontrol including, without limitation, acts of God, terrorist acts, shortage ofsupply, breakdowns or malfunctions, interruptions or malfunction of computerfacilities, or loss of data due to power failures or mechanical difficultieswith information storage or retrieval systems, labor difficulties, war, orcivil unrest.

 

*[Signature pagefollows]*

 

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

 

 
|   | **HOSPIRA, INC.**                 |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               |   |
|   | Name:                             |
|   | Title:                            |
|   |                              |
|   |                              |
|   | **EQUISERVE TRUST COMPANY, N.A.** |
|   |                              |
|   |                              |
|   | By:                               |   |
|   | Name: Dennis V. Moccia            |
|   | Title:  Managing Director    |

 

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**Exhibit A**

 

FORM OFCERTIFICATE OF DESIGNATIONS

 

of

 

SERIES A JUNIORPARTICIPATING PREFERRED STOCK

 

**Pursuant to Section 151 of the DelawareGeneral Corporation Law**

 

Hospira, Inc. (the “Corporation”), acorporation organized and existing under the Delaware General Corporation Law,in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

 

That pursuant to the authority vested in theCorporation’s board of directors in accordance with the provisions of theRestated Certificate of Incorporation of the Corporation, the Corporation’sboard of directors on April 12, 2004, adopted the following resolution creatinga series of Four Million (4,000,000) shares of Preferred Stock designated as“Series A Junior Participating Preferred Stock”:

 

RESOLVED,that, pursuant to the authority vested in the Board in accordance with the provisionsof the Restated Certificate of Incorporation, a series of Preferred Stock, parvalue $0.01 per share, of the Corporation be and hereby is created, and thatthe designation and number of shares thereof and the voting and other powers,preferences and relative, participating, optional or other rights of the sharesof such series and the qualifications, limitations and restrictions thereof areas follows:

 

SERIES A JUNIORPARTICIPATING PREFERRED STOCK

 

1.  Designation and Amount.  There shall be a series of Preferred Stockthat shall be designated as “Series A Junior Participating Preferred Stock,”and the number of shares constituting such series shall be Four Million(4,000,000).  Such number of shares maybe increased or decreased by resolution of the Board of Directors; provided,however, that no decrease shall reduce the number of shares of Series AJunior Participating Preferred Stock to less than the number of shares thenissued and outstanding plus the number of shares issuable upon exercise of outstandingrights, options or warrants or upon conversion of outstanding securities issuedby the Corporation.

 

2.  Dividends and Distributions.

 

(A)  Subject to the prior and superior rights ofthe holders of any shares of any series of Preferred Stock ranking prior andsuperior to the shares of Series A Junior Participating

 

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PreferredStock with respect to dividends, the holders of shares of Series A JuniorParticipating Preferred Stock, in preference to the holders of shares of anyclass or series of stock of the Corporation ranking junior to the Series AJunior Participating Preferred Stock, shall be entitled to receive, when, asand if declared by the Board of Directors out of funds legally available forthe purpose, quarterly dividends payable in cash on the 1st day of March, June,September and December in each year (each such date being referred to herein asa “Quarterly Dividend Payment Date”), commencing on the first QuarterlyDividend Payment Date after the first issuance of a share or fraction of ashare of Series A Junior Participating Preferred Stock, in an amount per share(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) theAdjustment Number (as defined below) times the aggregate per share amount ofall cash dividends, and the Adjustment Number times the aggregate per shareamount (payable in kind) of all non-cash dividends or other distributions otherthan a dividend payable in shares of Common Stock or a subdivision of theoutstanding shares of Common Stock (by reclassification or otherwise), declaredon the Common Stock, par value $0.01 per share, of the Corporation (the “CommonStock”) since the immediately preceding Quarterly Dividend Payment Date,or, with respect to the first Quarterly Dividend Payment Date, since the firstissuance of any share or fraction of a share of Series A Junior ParticipatingPreferred Stock.  The “AdjustmentNumber” shall initially be 100.  Inthe event the Corporation shall at any time (i) declare any dividend on CommonStock payable in shares of Common Stock, (ii) subdivide the outstanding CommonStock or (iii) combine the outstanding Common Stock into a smaller number ofshares, then in each such case the Adjustment Number in effect immediatelyprior to such event shall be adjusted by multiplying such Adjustment Number bya fraction the numerator of which is the number of shares of Common Stockoutstanding immediately after such event and the denominator of which is thenumber of shares of Common Stock that were outstanding immediately prior tosuch event.

 

(B)  The Corporation shall declare a dividend ordistribution on the Series A Junior Participating Preferred Stock as providedin paragraph (A) above immediately after it declares a dividend or distributionon the Common Stock (other than a dividend payable in shares of Common Stock); providedthat, in the event no dividend or distribution shall have been declared on theCommon Stock during the period between any Quarterly Dividend Payment Date andthe next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 pershare on the Series A Junior Participating Preferred Stock shall neverthelessbe payable on such subsequent Quarterly Dividend Payment Date.

 

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

 

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amountless than the total amount of such dividends at the time accrued and payable onsuch shares shall be allocated pro rata on a share-by-share basis among allsuch shares at the time outstanding. The Board of Directors may fix a record date for the determination ofholders of shares of Series A Junior Participating Preferred Stock entitled toreceive payment of a dividend or distribution declared thereon, which recorddate shall be no more than 30 days prior to the date fixed for the paymentthereof.

 

3.  Voting Rights.  The holders of shares of Series A JuniorParticipating Preferred Stock shall have the following voting rights:

 

(A)  Each share of Series A Junior ParticipatingPreferred Stock shall entitle the holder thereof to a number of votes equal tothe Adjustment Number on all matters submitted to a vote of the stockholders ofthe Corporation.

 

(B)  Except as otherwise provided herein, in theCertificate of Incorporation or by law, the holders of shares of Series AJunior Participating Preferred Stock, the holders of shares of any other classor series entitled to vote with the Common Stock and the holders of shares ofCommon Stock shall vote together as one class on all matters submitted to avote of stockholders of the Corporation.

 

(C)  (i) If at any time dividends on any Series AJunior Participating Preferred Stock shall be in arrears in an amount equal tosix quarterly dividends thereon, the occurrence of such contingency shall markthe beginning of a period (herein called a “default period”) that shallextend until such time when all accrued and unpaid dividends for all previousquarterly dividend periods and for the current quarterly dividend period on allshares of Series A Junior Participating Preferred Stock then outstanding shallhave been declared and paid or set apart for payment.  During each default period, (1) the number of Directors shall beincreased by two, effective as of the time of election of such Directors asherein provided, and (2) the holders of Preferred Stock (including holders ofthe Series A Junior Participating Preferred Stock) upon which these or likevoting rights have been conferred and are exercisable (the “Voting PreferredStock”) with dividends in arrears in an amount equal to six quarterlydividends thereon, voting as a class, irrespective of series, shall have theright to elect such two Directors.

 

(ii)  During any default period, such voting rightof the holders of Series A Junior Participating Preferred Stock may be exercisedinitially at a special meeting called pursuant to subparagraph (iii) of thisSection 3(C) or at any annual meeting of stockholders, and thereafter at annualmeetings of stockholders, provided that such voting right shall not beexercised unless the holders of at least one-third in number of the shares ofVoting Preferred Stock outstanding shall be present in person or by proxy.  The absence of a quorum of the holders ofCommon Stock shall not affect the exercise by the holders of Voting PreferredStock of such voting right.

 

(iii)  Unless the holders of Voting Preferred Stockshall, during an existing default period, have previously exercised their rightto elect Directors, the Board of Directors may order, or any stockholder orstockholders owning in the aggregate not less than ten percent of the totalnumber of shares of Voting Preferred Stock outstanding, irrespective of series,may request, the calling of a special meeting of the holders of VotingPreferred Stock, which meeting

 

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shallthereupon be called by the Chairman of the Board, the Chief Executive Officer,the President, a Vice President or the Secretary of the Corporation.  Notice of such meeting and of any annualmeeting at which holders of Voting Preferred Stock are entitled to votepursuant to this paragraph (C)(iii) shall be given to each holder of record ofVoting Preferred Stock by mailing a copy of such notice to him at his lastaddress as the same appears on the books of the Corporation.  Such meeting shall be called for a time notearlier than 20 days and not later than 60 days after such order or request or,in default of the calling of such meeting within 60 days after such order orrequest, such meeting may be called on similar notice by any stockholder orstockholders owning in the aggregate not less than ten percent of the totalnumber of shares of Voting Preferred Stock outstanding.  Notwithstanding the provisions of thisparagraph (C)(iii), no such special meeting shall be called during the periodwithin 60 days immediately preceding the date fixed for the next annual meetingof the stockholders.

 

(iv)  In any default period, after the holders ofVoting Preferred Stock shall have exercised their right to elect Directorsvoting as a class, (x) the Directors so elected by the holders of VotingPreferred Stock shall continue in office until their successors shall have beenelected by such holders or until the expiration of the default period, and (y)any vacancy in the Board of Directors may be filled by vote of a majority ofthe remaining Directors theretofore elected by the holders of the class orclasses of stock which elected the Director whose office shall have becomevacant.  References in this paragraph(C) to Directors elected by the holders of a particular class or classes ofstock shall include Directors elected by such Directors to fill vacancies asprovided in clause (y) of the foregoing sentence.

 

(v)  Immediately upon the expiration of a defaultperiod, (x) the right of the holders of Voting Preferred Stock as a class toelect Directors shall cease, (y) the term of any Directors elected by theholders of Voting Preferred Stock as a class shall terminate and (z) the numberof Directors shall be such number as may be provided for in the Certificate ofIncorporation or By-Laws irrespective of any increase made pursuant to theprovisions of paragraph (C) of this Section 3 (such number being subject,however, to change thereafter in any manner provided by law or in theCertificate of Incorporation or By-Laws). Any vacancies in the Board of Directors effected by the provisions ofclauses (y) and (z) in the preceding sentence may be filled by a majority ofthe remaining Directors.

 

(D)  Except as set forth herein, holders ofSeries A Junior Participating Preferred Stock shall have no special votingrights and their consent shall not be required (except to the extent they areentitled to vote with holders of Common Stock as set forth herein) for takingany corporate action.

 

4.  Certain Restrictions.

 

(A)  Whenever quarterly dividends or otherdividends or distributions payable on the Series A Junior ParticipatingPreferred Stock as provided in Section 2 are in arrears, thereafter and untilall accrued and unpaid dividends and distributions, whether or not declared, onshares of Series A Junior Participating Preferred Stock outstanding shall havebeen paid in full, the Corporation shall not:

 

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

 

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

 

(iii)  redeem or purchase or otherwise acquire forconsideration any shares of Series A Junior Participating Preferred Stock, orany shares of stock ranking on a parity with the Series A Junior ParticipatingPreferred Stock, except in accordance with a purchase offer made in writing or bypublication (as determined by the Board of Directors) to all holders of SeriesA Junior Participating Preferred Stock, or to all such holders and the holdersof any such shares ranking on a parity therewith, upon such terms as the Boardof Directors, after consideration of the respective annual dividend rates andother relative rights and preferences of the respective series and classes,shall determine in good faith will result in fair and equitable treatment amongthe respective series or classes.

 

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

 

5.  Reacquired Shares.  Any shares of Series A Junior ParticipatingPreferred Stock purchased or otherwise acquired by the Corporation in anymanner whatsoever shall be retired and canceled promptly after the acquisitionthereof.  All such shares shall upontheir cancellation become authorized but unissued shares of Preferred Stock andmay be reissued as part of a new series of Preferred Stock to be created byresolution or resolutions of the Board of Directors, subject to any conditionsand restrictions on issuance set forth herein.

 

6.  Liquidation, Dissolution or Winding Up.  (A) Upon any liquidation (voluntary orotherwise), dissolution or winding up of the Corporation, no distribution shallbe made to the holders of shares of stock ranking junior (either as todividends or upon liquidation, dissolution or winding up) to the Series AJunior Participating Preferred Stock unless, prior thereto, the holders ofshares of Series A Junior Participating Preferred Stock shall have received$1.00 per share, plus an amount equal to accrued and unpaid dividends anddistributions thereon, whether or not declared, to the date of such payment(the “Series A Liquidation Preference”).  Following the payment of the full amount of the Series ALiquidation Preference, no additional distributions shall be made to theholders of shares of Series A Junior Participating Preferred Stock unless,prior thereto, the holders of shares of Common Stock shall have received anamount per share (the “Common Adjustment”) equal to the quotientobtained by dividing (i) the Series A Liquidation Preference by (ii) theAdjustment Number.  Following thepayment of the

 

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fullamount of the Series A Liquidation Preference and the Common Adjustment inrespect of all outstanding shares of Series A Junior Participating PreferredStock and Common Stock, respectively, holders of Series A Junior ParticipatingPreferred Stock and holders of shares of Common Stock shall, subject to theprior rights of all other series of Preferred Stock, if any, ranking priorthereto, receive their ratable and proportionate share of the remaining assetsto be distributed in the ratio of the Adjustment Number to 1 with respect tosuch Series A Junior Participating Preferred Stock and Common Stock, on a pershare basis, respectively.

 

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

 

(C)  Neither the merger or consolidation of theCorporation into or with another corporation nor the merger or consolidation ofany other corporation into or with the Corporation shall be deemed to be aliquidation, dissolution or winding up of the Corporation within the meaning ofthis Section 6, but the sale, lease or conveyance of all or substantially allthe Corporation’s assets shall be deemed to be a liquidation, dissolution orwinding up of the Corporation within the meaning of this Section 6.

 

7.  Consolidation, Merger, etc.  In case the Corporation shall enter into anyconsolidation, merger, combination or other transaction in which the shares ofCommon Stock are exchanged for or changed into other stock or securities, cashand/or any other property, then in any such case each share of Series A JuniorParticipating Preferred Stock shall at the same time be similarly exchanged orchanged in an amount per share equal to the Adjustment Number times theaggregate amount of stock, securities, cash and/or any other property (payablein kind), as the case may be, into which or for which each share of CommonStock is changed or exchanged.

 

8.  Redemption.  (A) The Corporation, at its option, may redeem shares of theSeries A Junior Participating Preferred Stock in whole at any time and in partfrom time to time, at a redemption price equal to the Adjustment Number timesthe current per share market price (as such term is hereinafter defined) of theCommon Stock on the date of the mailing of the notice of redemption, togetherwith unpaid accumulated dividends to the date of such redemption.  The “current per share market price”on any date shall be deemed to be the average of the closing price per share ofsuch Common Stock for the ten consecutive Trading Days (as such term ishereinafter defined) immediately prior to such date; provided, however,that in the event that the current per share market price of the Common Stockis determined during a period following the announcement of (A) a dividend ordistribution on the Common Stock other than a regular quarterly cash dividendor (B) any subdivision, combination or reclassification of such Common Stockand the ex-dividend date for such dividend or distribution, or the record datefor such subdivision, combination or reclassification, shall not have occurredprior to the commencement of such ten Trading Day period, then, and in eachsuch case, the current per share market price shall be properly adjusted totake into account ex-dividend trading. The

 

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closingprice for each day shall be the last sales price, regular way, or, in case nosuch sale takes place on such day, the average of the closing bid and askedprices, regular way, in either case as reported in the principal transactionreporting system with respect to securities listed or admitted to trading onthe New York Stock Exchange, or, if the Common Stock is not listed or admittedto trading on the New York Stock Exchange, on the principal national securitiesexchange on which the Common Stock is listed or admitted to trading, or, if theCommon Stock is not listed or admitted to trading on any national securitiesexchange but sales price information is reported for such security, as reportedby the National Association of Securities Dealers, Inc. Automated QuotationsSystem (“NASDAQ”) or such other self-regulatory organization orregistered securities information processor (as such terms are used under theSecurities Exchange Act of 1934, as amended) that then reports informationconcerning the Common Stock, or, if sales price information is not so reported,the average of the high bid and low asked prices in the over-the-counter marketon such day, as reported by NASDAQ or such other entity, or, if on any suchdate the Common Stock is not quoted by any such entity, the average of theclosing bid and asked prices as furnished by a professional market maker makinga market in the Common Stock selected by the Board of Directors of theCorporation.  If on any such date nosuch market maker is making a market in the Common Stock, the fair value of theCommon Stock on such date as determined in good faith by the Board of Directorsof the Corporation shall be used.  Theterm “Trading Day” shall mean a day on which the principal nationalsecurities exchange on which the Common Stock is listed or admitted to tradingis open for the transaction of business, or, if the Common Stock is not listedor admitted to trading on any national securities exchange but is quoted byNASDAQ, a day on which NASDAQ reports trades, or, if the Common Stock is not soquoted, a Monday, Tuesday, Wednesday, Thursday or Friday on which bankinginstitutions in the State of New York are not authorized or obligated by law orexecutive order to close.

 

(B)  In the event that fewer than all theoutstanding shares of the Series A Junior Participating Preferred Stock are tobe redeemed, the number of shares to be redeemed shall be determined by theBoard of Directors and the shares to be redeemed shall be determined by lot orpro rata as may be determined by the Board of Directors or by any other methodthat may be determined by the Board of Directors in its sole discretion to beequitable.

 

(C)  Notice of any such redemption shall be givenby mailing to the holders of the shares of Series A Junior ParticipatingPreferred Stock to be redeemed a notice of such redemption, first class postageprepaid, not later than the fifteenth day and not earlier than the sixtieth daybefore the date fixed for redemption, at their last address as the same shallappear upon the books of the Corporation. Each such notice shall state: (i) the redemption date; (ii) the numberof shares to be redeemed and, if fewer than all the shares held by such holderare to be redeemed, the number of such shares to be redeemed from such holder;(iii) the redemption price; (iv) the place or places where certificates forsuch shares are to be surrendered for payment of the redemption price; and (v)that dividends on the shares to be redeemed will cease to accrue on the closeof business on such redemption date. Any notice that is mailed in the manner herein provided shall beconclusively presumed to have been duly given, whether or not the stockholderreceived such notice, and failure duly to give such notice by mail, or anydefect in such notice, to any holder of Series A Junior Participating PreferredStock shall not affect the validity of the proceedings for the redemption ofany other shares of Series A Junior Participating Preferred Stock that are tobe redeemed.  On or after the date fixedfor redemption as stated in such notice,

 

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eachholder of the shares called for redemption shall surrender the certificateevidencing such shares to the Corporation at the place designated in suchnotice and shall thereupon be entitled to receive payment of the redemptionprice.  If fewer than all the sharesrepresented by any such surrendered certificate are redeemed, a new certificateshall be issued representing the unredeemed shares.

 

(D)  The shares of Series A Junior ParticipatingPreferred Stock shall not be subject to the operation of any purchase,retirement or sinking fund.

 

9.  Ranking.  The Series A Junior Participating Preferred Stock shall rankjunior to all other series of the Corporation’s Preferred Stock as to thepayment of dividends and the distribution of assets, unless the terms of anysuch series shall provide otherwise, and shall rank senior to the Common Stockas to such matters.

 

10.  Amendment.  At any time that any shares of Series A Junior ParticipatingPreferred Stock are outstanding, the Certificate of Incorporation of theCorporation shall not be amended in any manner which would materially alter orchange the powers, preferences or special rights of the Series A JuniorParticipating Preferred Stock so as to affect them adversely without theaffirmative vote of the holders of two-thirds or more of the outstanding sharesof Series A Junior Participating Preferred Stock, voting separately as a class.

 

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

 

IN WITNESS WHEREOF, the undersigned has executed thisCertificate and does affirm the foregoing as true this 30th day of April, 2004.

 
|   |                    |   |
|--------|-------------------------|--------|
|   | Chief Executive Officer |   |

 

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**Exhibit B**

 

[Form of RightsCertificate]

 
| Certificate No. R- |   |                      Rights |
|--------------------|--------|----------------------------------------------------------------------------------------------------------------------------|

 

NOT EXERCISABLE AFTER APRIL 11, 2004 OR EARLIER IFREDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT$0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THERIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHOIS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (ASSUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOFWILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

RIGHTSCERTIFICATE

 

HOSPIRA, INC.

 

This certifies that                                           ,or registered assigns, is the registered owner of the number of Rights setforth above, each of which entitles the owner thereof, subject to the terms, provisionsand conditions of the Rights Agreement, dated as of April 12, 2004, as it mayfrom time to time be supplemented or amended (the “Rights Agreement”),between Hospira, Inc., a Delaware corporation (the “Company”), andEquiServe Trust Company, N.A., a national banking association (the “RightsAgent”), to purchase from the Company at any time prior to 5:00 p.m. (NewYork City time) on April 11, 2004 at the principal office or offices of theRights Agent designated for such purpose, or its successors as Rights Agent,one one-hundredth of a fully paid, nonassessable share (a “Fractional Share”)of Series A Junior Participating Preferred Stock (the “Preferred Stock”)of the Company, at a purchase price of $100 per one one-hundredth of a share(the “Purchase Price”), upon presentation and surrender of this RightsCertificate with the Form of Election to Purchase and related Certificate setforth on the reverse hereof duly executed. The Purchase Price may be paid in cash or by certified check, cashier’sor official bank check or bank draft payable to the order of the Company or theRights Agent.  The number of Rightsevidenced by this Rights Certificate (and the number of shares which may bepurchased upon exercise thereof) set forth above, and the Purchase Price perFractional Share set forth above, are the number and Purchase Price as of April30, 2004, based on the Preferred Stock as constituted at such date.  The Company reserves the right to requireprior to the occurrence of a Triggering Event (as such term is defined in theRights Agreement) that a number of Rights be exercised so that only wholeshares of Preferred Stock will be issued.

 

From and after the first occurrence of a TriggeringEvent (as such term is defined in the Rights Agreement), if the Rightsevidenced by this Rights Certificate are beneficially owned by or transferredto (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person(as such terms are defined in the Rights Agreement), (ii) a transferee of anysuch Acquiring Person,

 

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Associate orAffiliate, or (iii) under certain circumstances specified in the RightsAgreement, a transferee of a person who, concurrently with or after suchtransfer, became an Acquiring Person or an Affiliate or Associate of anAcquiring Person, such Rights shall, with certain exceptions, become null andvoid in the circumstances set forth in the Rights Agreement, and no holderhereof shall have any rights whatsoever with respect to such Rights from andafter the occurrence of such Triggering Event.

 

As provided in the Rights Agreement, the PurchasePrice and the number and kind of shares of Preferred Stock or other securitiesor assets that may be purchased upon the exercise of the Rights evidenced bythis Rights Certificate are subject to modification and adjustment upon thehappening of certain events, including Triggering Events.

 

This Rights Certificate is subject to all of theterms, provisions and conditions of the Rights Agreement, which terms,provisions and conditions are hereby incorporated herein by reference and madea part hereof and to which Rights Agreement reference is hereby made for a fulldescription of the rights, limitations of rights, obligations, duties andimmunities hereunder of the Rights Agent, the Company and the holders of theRights Certificates, which limitations of rights include the temporarysuspension of the exercisability of such Rights under the specificcircumstances set forth in the Rights Agreement.  Copies of the Rights Agreement are on file at the above-mentionedoffice of the Rights Agent and are also available upon written request to theCompany or the Rights Agent.

 

This Rights Certificate, with or without other RightsCertificates, upon surrender at the principal office or offices of the RightsAgent designated for such purpose, may be exchanged for another RightsCertificate or Rights Certificates of like tenor and date evidencing Rightsentitling the holder to purchase a like aggregate number of Fractional Sharesof Preferred Stock as the Rights evidenced by the Rights Certificate or RightsCertificates surrendered shall have entitled such holder to purchase.  If this Rights Certificate shall beexercised in part, the holder shall be entitled to receive upon surrenderhereof another Rights Certificate or Rights Certificates for the number ofwhole Rights not exercised.

 

Subject to the provisions of the Rights Agreement, theRights evidenced by this Certificate (i) may be redeemed by the Company at itsoption at a redemption price of $0.01 per Right, payable, at the election ofthe Company, in cash or shares of Common Stock or such other consideration asthe Board of Directors may determine, at any time prior to the earlier of theclose of business on (a) the tenth day following the first public announcementof the occurrence of a Flip-In Event (as such time period may be extended orshortened pursuant to the Rights Agreement) and (b) the Expiration Date (assuch term is defined in the Rights Agreement) or (ii) may be exchanged in wholeor in part for shares of the Company’s Common Stock, par value $0.01 per share,and/or other equity securities of the Company deemed to have the same value asshares of Common Stock, at any time prior to a person’s becoming the beneficialowner of 50% or more of the shares of Common Stock outstanding or theoccurrence of a Flip-Over Event.

 

No fractional shares of Preferred Stock are requiredto be issued upon the exercise of any Right or Rights evidenced hereby (other than,except as set forth above, fractions that are integral multiples of aFractional Share of Preferred Stock, which may, at the election of the Company,

 

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be evidenced bydepositary receipts), but in lieu thereof a cash payment may be made, asprovided in the Rights Agreement.

 

No holder of this Rights Certificate, as such, shallbe entitled to vote or receive dividends or be deemed for any purpose theholder of shares of Preferred Stock or of any other securities of the Companythat may at any time be issuable on the exercise hereof, nor shall anythingcontained in the Rights Agreement or herein be construed to confer upon theholder hereof, as such, any of the rights of a stockholder of the Company or anyright to vote for the election of directors or upon any matter submitted tostockholders at any meeting thereof, or to give or withhold consent to anycorporate action, or to receive notice of meetings or other actions affectingstockholders (except as provided in the Rights Agreement), or to receivedividends or subscription rights, or otherwise, until the Right or Rightsevidenced by this Rights Certificate shall have been exercised as provided inthe Rights Agreement.

 

This Rights Certificate shall not be valid orobligatory for any purpose until it shall have been countersigned by the RightsAgent.

 

WITNESS the signature of the proper officers of theCompany and its corporate seal.

 
| Dated as of    |                 |   |   |
|----------------|----------------------|--------|--------|
|           |                 |
| ATTEST:        | HOSPIRA, INC.        |
|           |                 |
|           |                 |
|           |                 | By     |   | Secretary |
| Title:         |                 |
|           |                 |
| Countersigned: |                 |
|           |                 |
|           |                 |
| By:            |                 |   |   |
|           | Authorized Signature |   |   |
|                |                      |        |        |  |  |  |  |  |  |

 

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[Form ofReverse Side of Rights Certificate]

 

FORM OFASSIGNMENT

 

(To be executedby the registered holder if such holder desiresto transfer any Rights evidenced by the Rights Certificate.)

 

FOR VALUE RECEIVED                                                                                         hereby sells, assigns and transfersunto                                                                                                                                                                                                                                                                                                                                                       

(Please print name andaddress of transferee)

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

 
| Dated:                |      | , 20   |   |   |   |
|-----------------------|-----------|--------|--------|--------|--------|
|                  |      |
|                  |      |   |
|                  | Signature |
| Signature Guaranteed: |      |

 

Signatures must be guaranteed by a member firm of anational securities exchange, a member of the National Association ofSecurities Dealers, Inc., a commercial bank or trust company having an officeor correspondent in the United States or another eligible guarantor institution(as defined pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934,as amended).

 

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CERTIFICATE

 

The undersigned hereby certifies by checking theappropriate boxes that:

 

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

 

(2) after due inquiry and to the best knowledge of theundersigned, it [ ] did [ ] did not acquire the Rights evidenced by this RightsCertificate from any Person who is, was or subsequently became an AcquiringPerson or an Affiliate or Associate of an Acquiring Person or who is a director indirect transferee of an Acquiring Person or of an Affiliate or Associateof an Acquiring Person.

 
| Dated:                |      | , |   |   |   |   |
|-----------------------|-----------|---|--------|--------|--------|--------|
|                  | Signature |
|                  |      |
| Signature Guaranteed: |      |

 

Signatures must be guaranteed by a member firm of anational securities exchange, a member of the National Association ofSecurities Dealers, Inc., a commercial bank or trust company having an officeor correspondent in the United States or another eligible guarantor institution(as defined pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934,as amended).

 

NOTICE

 

The signatures to the foregoing Assignment andCertificate must correspond to the name as written upon the face of this RightsCertificate in every particular, without alteration or enlargement or anychange whatsoever.

 

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FORM OFELECTION TO PURCHASE

 

(To be executedif holder desires to exerciseRights represented by the Rights Certificate)

 

To:  HOSPIRA,INC.

 

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

 

Please insert social securityor other identifying number

 

 

(Please print name andaddress)

 

 

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

 

Please insert social securityor other identifying number

 

 

(Please print name and address)

 

 
| Dated: |      | ,      |   |   |   |
|--------|-----------|--------|--------|--------|--------|
|   |      |
|   |      |   |
|   | Signature |

 

Signature Guaranteed:

 

Signatures must be guaranteed by a member firm of anational securities exchange, a member of the National Association ofSecurities Dealers, Inc., a commercial bank or trust company having an officeor correspondent in the United States or another eligible guarantor institution(as defined pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934,as amended).

 

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CERTIFICATE

 

The undersigned herebycertifies by checking the appropriate boxes that:

 

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

 

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

 

 
| Dated:                |      | , |   |   |   |   |
|-----------------------|-----------|---|--------|--------|--------|--------|
|                  | Signature |
|                  |      |
| Signature Guaranteed: |      |

 

Signatures must beguaranteed by a member firm of a national securities exchange, a member of theNational Association of Securities Dealers, Inc., a commercial bank or trustcompany having an office or correspondent in the United States or anothereligible guarantor institution (as defined pursuant to Rule 17Ad-15 under theSecurities Exchange Act of 1934, as amended).

 

NOTICE

 

The signatures to the foregoing Election to Purchaseand Certificate must correspond to the name as written upon the face of thisRights Certificate in every particular, without alteration or enlargement orany change whatsoever.

 

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