exv4w1






Exhibit 4.1




SELECTICA, INC.




and




COMPUTERSHARE INVESTOR SERVICES, LLC, as Rights Agent




AMENDED AND RESTATED RIGHTS AGREEMENT




Dated as of January 2, 2009














 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	Section 1. Certain Definitions
	 	 	2	 
	 
	 	 	 	 
	Section 2. Appointment of Rights Agent
	 	 	7	 
	 
	 	 	 	 
	Section 3. Issue of Right Certificates
	 	 	7	 
	 
	 	 	 	 
	Section 4. Form of Right Certificates
	 	 	9	 
	 
	 	 	 	 
	Section 5. Countersignature and Registration
	 	 	9	 
	 
	 	 	 	 
	Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates
	 	 	10	 
	 
	 	 	 	 
	Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights
	 	 	10	 
	 
	 	 	 	 
	Section 8. Cancellation and Destruction of Right Certificates
	 	 	12	 
	 
	 	 	 	 
	Section 9. Availability of Shares of Preferred Stock
	 	 	12	 
	 
	 	 	 	 
	Section 10. Preferred Stock Record Date
	 	 	13	 
	 
	 	 	 	 
	Section 11. Adjustment of Purchase Price, Number and Kind of Shares and Number of Rights
	 	 	13	 
	 
	 	 	 	 
	Section 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	20	 
	 
	 	 	 	 
	Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	21	 
	 
	 	 	 	 
	Section 14. Fractional Rights and Fractional Shares
	 	 	24	 
	 
	 	 	 	 
	Section 15. Rights of Action
	 	 	25	 
	 
	 	 	 	 
	Section 16. Agreement of Right Holders
	 	 	25	 
	 
	 	 	 	 
	Section 17. Right Certificate Holder Not Deemed a Stockholder
	 	 	26	 
	 
	 	 	 	 
	Section 18. Concerning the Rights Agent
	 	 	26	 
	 
	 	 	 	 
	Section 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	26	 
	 
	 	 	 	 
	Section 20. Duties of Rights Agent
	 	 	27	 
	 
	 	 	 	 
	Section 21. Change of Rights Agent
	 	 	29	 
	 
	 	 	 	 
	Section 22. Issuance of New Right Certificates
	 	 	30	 






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	 	 	Page	 
	Section 23. Redemption
	 	 	30	 
	 
	 	 	 	 
	Section 24. Exchange
	 	 	30	 
	 
	 	 	 	 
	Section 25. Notice of Certain Events
	 	 	31	 
	 
	 	 	 	 
	Section 26. Notices
	 	 	32	 
	 
	 	 	 	 
	Section 27. Supplements and Amendments
	 	 	33	 
	 
	 	 	 	 
	Section 28. Successors
	 	 	33	 
	 
	 	 	 	 
	Section 29. Benefits of this Agreement
	 	 	33	 
	 
	 	 	 	 
	Section 30. Determinations and Actions by the Board of Directors
	 	 	33	 
	 
	 	 	 	 
	Section 31. Severability
	 	 	34	 
	 
	 	 	 	 
	Section 32. Governing Law
	 	 	34	 
	 
	 	 	 	 
	Section 33. Counterparts
	 	 	34	 
	 
	 	 	 	 
	Section 34. Descriptive Headings
	 	 	34	 






ii









 






AMENDED AND RESTATED RIGHTS AGREEMENT




          This Amended and Restated Rights Agreement, dated as of January 2, 2009 (“Agreement”), between
Selectica, Inc., a Delaware corporation (the “Company”), and Computershare Investor Services, LLC,
as Rights Agent (the “Rights Agent”), amends and restates that certain Rights Agreement, dated
February 4, 2003, between the Company and the Rights Agent, as amended on November 17, 2008 and
December 31, 2008 (the “Original Agreement”).




          WHEREAS, in connection with the adoption of the Original Agreement, the Company declared a
dividend of one right (an “Original Right”) for each share of Common Stock (as hereinafter defined)
of the Company outstanding as of the Close of Business (as defined below) on February 18, 2003 (the
“Original Record Date”), each Original Right representing the right to purchase one one-thousandth
(subject to adjustment) of a share of the Company’s Series A Junior Participating Preferred Stock,
upon the terms and subject to the conditions set forth in the Original Agreement, and authorized
and directed the issuance of one Original Right (subject to adjustment as provided in the Original
Agreement) with respect to each share of Common Stock that became outstanding between the Original
Record Date and the earlier of the Distribution Date and the Expiration Date (such terms as defined
in the Original Agreement);




          WHEREAS, as a result of Versata Enterprises, Inc. and Trilogy, Inc., and their Affiliates and
Associates becoming Acquiring Persons and thus causing the occurrence of a Flip-In Event (such
terms as defined in the Original Agreement), the Review Committee of the Board of Directors (the
“Review Committee”) became entitled to declare an exchange of each Original Right (other than the
Original Rights formerly held by Versata Enterprises, Inc. and Trilogy, Inc. and their Affiliates
and Associates, which rights had become void under the terms of the Original Agreement) for one
share of Common Stock (the “Exchange”);




          WHEREAS, it is anticipated that the Review Committee will approve the Exchange, and the
Exchange will become effective, promptly following the adoption of this Agreement and, upon the
effectiveness of the Exchange, all of the Original Rights shall become void and/or be cancelled and
shall cease to be outstanding; and




          WHEREAS, the Review Committee desires to amend and restate the Original Agreement as set forth
herein and, in connection therewith and subject to the effectiveness of the exchange of the
Original Rights, has authorized and declared a dividend of one right (a “Right”) for each share of
Common Stock (as hereinafter defined) of the Company outstanding as of the Close of Business (as
defined below) on January 2, 2009 (the “Record Date”), each Right representing the right to
purchase one one-thousandth (subject to adjustment) of a share of the Company’s Series B Junior
Participating Preferred Stock, upon the terms and subject to the conditions herein set forth, and
has further authorized and directed the issuance of one Right (subject to adjustment as provided
herein) with respect to each share of Common Stock that shall become outstanding between the Record
Date and the earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined); provided, however, that Rights may be













 






issued with respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section 22.




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




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




               (a) “Acquiring Person” shall mean any Person (other than the Company, any Related Person or
any Exempt Person) that itself or together with all Affiliates and Associates of such Person is or
becomes the Beneficial Owner of 4.99% or more of the shares of Common Stock then outstanding;
provided, however, that any Person who would otherwise qualify as an Acquiring
Person as of the Close of Business on January 2, 2009 will not be deemed to be an Acquiring Person
for any purpose of this Agreement on and after such date unless and until such time as such Person
acquires beneficial ownership of additional shares of Common Stock representing one-half of one
percent (.5%) or more of the shares of Common Stock then outstanding (provided, that such
Person will be deemed to be an Acquiring Person if, upon acquiring beneficial ownership of such
additional shares of Common Stock, such Person is the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding), unless, upon becoming the Beneficial Owner of such additional
shares of Common Stock, such Person is not then the Beneficial Owner of 4.99% or more of the shares
of Common Stock then outstanding; provided, further, that a Person will not be
deemed to have become an Acquiring Person solely as a result of (i) a reduction in the number of
shares of Common Stock outstanding, (ii) the exercise of any options, warrants, rights or similar
interests (including restricted stock) granted by the Company to its directors, officers and
employees, (iii) any unilateral grant of any security by the Company, or (iv) an Exempt
Transaction, unless and until such time as such Person thereafter acquires the beneficial ownership
of one additional share of Common Stock. Notwithstanding the foregoing, if the Board of Directors
determines in good faith that a Person who would otherwise be an “Acquiring Person” as defined
pursuant to the foregoing provisions of this Section 1(a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an “Acquiring Person” as defined pursuant to the foregoing
provisions of this Section 1(a), then such Person shall not be deemed to be or to have become an
“Acquiring Person” for any purposes of this Agreement.



               (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date
hereof, and to the extent not included within the foregoing clause of this Section 1(b), shall also
include, with respect to any Person, any other Person (whether or not a Related Person or an Exempt
Person) whose shares of Common Stock would be deemed constructively owned by such first Person,
owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or
otherwise aggregated with shares owned by such first Person pursuant to the provisions of the Code,
or any successor provision or replacement provision, and the Treasury Regulations thereunder,
provided, however, that a Person shall not
be deemed to be the Affiliate or Associate of another Person solely because either or both
Persons are or were directors of the Company.



2









 





               (c) “Agreement” shall have the meaning ascribed thereto in the preamble to this Agreement, and
such term shall include all amendments to this Agreement.



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




     (i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) (including any purchase orders for shares of Common Stock initiated prior
to the first public announcement of the adoption of this Agreement) or upon the exercise of
conversion rights, exchange rights, warrants, options, or other rights (in each case, other
than upon exercise or exchange of the Rights); provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own” securities
(including rights, options or warrants) which are convertible or exchangeable into or
exercisable for Common Stock until such time as such securities are converted or exchanged
into or exercised for Common Stock except to the extent the acquisition or transfer of such
rights, options or warrants would be treated as exercised on the date of its acquisition or
transfer under Section 1.382-4(d) of the Treasury Regulations; provided,
further, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person’s Affiliates or Associates until such tendered securities are
accepted for purchase or exchange;




     (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has or shares the right to vote or dispose of, or has “beneficial ownership” of
(as defined under Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding (whether or not in
writing), but only if the effect of such agreement, arrangement or understanding is to treat
such Persons as an “entity” under Section 1.382-3(a)(1) of the Treasury Regulations; or




     (iii) of which any other Person is the Beneficial Owner, if such Person or any of such
Person’s Affiliates or Associates has any agreement, arrangement or understanding (whether
or not in writing) with such other Person (or any of such other Person’s Affiliates or
Associates) with respect to acquiring, holding, voting or disposing of such securities of
the Company, but only if the effect of such agreement, arrangement or understanding is to
treat such Persons as an “entity” under Section 1.382-3(a)(1) of the Treasury Regulations;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding (whether or not in writing)
which (1) arises solely from a revocable proxy given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules
and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D or Schedule 13G under the Exchange Act (or any comparable or
successor report), or (B) if such beneficial ownership arises solely as a result of such
Person’s status as a “clearing agency,” as defined in Section 3(a)(23) of the



3









 







Exchange Act;
provided, further, that nothing in this Section 1(d) shall cause a Person
engaged in business as an underwriter of securities or member of a selling group to be the
Beneficial Owner of, or to beneficially own, any securities acquired through such Person’s
participation in good faith in an underwriting syndicate until the expiration of 40 calendar
days after the date of such acquisition, or such later date as the Board of Directors of the
Company may determine in any specific case. Notwithstanding anything herein to the contrary,
to the extent not within the foregoing provisions of this Section 1(d), a Person shall be
deemed the Beneficial Owner of, and shall be deemed to beneficially own or have beneficial
ownership of, securities which such Person would be deemed to constructively own or which
otherwise would be aggregated with shares owned by such Person pursuant to Section 382 of
the Code, or any successor provision or replacement provision and the Treasury Regulations
thereunder.



               (e) “Book Entry” shall mean an uncertificated book entry for the Common Stock.



               (f) “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of California or the city in which the principal office of the
Rights Agent is located are authorized or obligated by law or executive order to close.



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



               (h) “Code” shall mean the Internal Revenue Code of 1986, as amended.



               (i) “Common Stock” when used with reference to the Company shall mean the Common Stock,
presently par value $.0001 per share, of the Company. “Common Stock” when used with reference to
any Person other than the Company shall mean the common stock (or, in the case of an entity other
than a corporation, the equivalent equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.



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



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



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



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



               (n) “Exchange” shall have the meaning set forth in the recitals hereto.



4









 





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



               (p) “Exempt Person” shall mean a Person whose Beneficial Ownership (together with all
Affiliates and Associates of such Person) of 4.99% or more of the then-outstanding Common Stock
will not, as determined by the Board of Directors in its sole discretion, jeopardize or endanger
the availability to the Company of the NOLs; provided, however, that such a Person
will cease to be an “Exempt Person” if the Board of Directors makes a contrary determination with
respect to the effect of such Person’s Beneficial Ownership (together with all Affiliates and
Associates of such Person) upon the availability to the Company of its NOLs.



               (q) “Exempt Transaction” shall mean any transaction that the Board of Directors determines, in
its sole discretion, is exempt, which determination shall be irrevocable.



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



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



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



               (u) “Flip-In Event” shall have the meaning set forth in Section 11(a)(ii) hereof.



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



               (w) “NOLs” shall mean the Company’s net operating loss carryforwards.



               (x) “NYSE” shall mean the New York Stock Exchange.



               (y) “Original Agreement” shall have the meaning set forth in the recitals hereto.



               (z) “Original Right” shall have the meaning set forth in the recitals hereto.



               (aa) “Person” shall mean any individual, firm, corporation, partnership, limited liability
company, limited liability partnership, trust or other legal entity, group of persons making a
“coordinated acquisition” of shares or otherwise treated as an entity within the
meaning of Section 1.382-3(a)(1) of the Treasury Regulations or otherwise, and includes any
successor (by merger or otherwise) of such individual or entity.



5









 





               (bb) “Preferred Stock” shall mean the Series B Junior Participating Preferred Stock, par value
$.0001 per share, of the Company having the rights and preferences set forth in the Form of
Certificate of Designation attached to this Agreement as Exhibit A.



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



               (dd) “Purchase Price” shall have the meaning set forth in Section 7(b) hereof.



               (ee) “Record Date” shall have the meaning set forth in the recitals hereto.



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



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



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



               (ii) “Related Person” shall mean (i) any Subsidiary of the Company or (ii) any employee
benefit or stock ownership plan of the Company or of any Subsidiary of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan



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



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



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



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



               (nn) “Stock Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed pursuant to Section
13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such under the terms of this Agreement, or such earlier date as a majority of the Board of
Directors of the Company shall become aware of the existence of an Acquiring Person under the terms
of this Agreement.



               (oo) “Subsidiary” of any Person shall mean any corporation or other entity of which securities
or other ownership interests having ordinary voting power sufficient to elect a majority of the
board of directors or other persons performing similar functions are



6









 







beneficially owned, directly
or indirectly, by such Person, and any corporation or other entity that is otherwise controlled by
such Person.



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



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



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



               (ss) “Treasury Regulations” shall mean final, temporary and proposed income tax regulations
promulgated under the Code, including any amendments thereto.”



          Section 2. Appointment of Rights Agent; Effectiveness.




               (a) The Company hereby appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution
Date be the holders of Common Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.



               (b) Other than the first sentence of Section 3(b) of this Agreement, which shall become
effective immediately upon the execution hereof, the amendments to the Original Agreement set forth
in this Agreement shall become effective at such time as the Exchange has become effective.



          Section 3. Issue of Right Certificates.




               (a) Until the earlier of (i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date or (ii) the Close of Business on the tenth Business Day (or, unless the
Distribution Date shall have previously occurred, such later date as may be specified by the Board
of Directors of the Company) after the commencement of a tender or exchange offer by any Person
(other than the Company, any Related Person or any Exempt Person), if upon the consummation thereof
such Person would be the Beneficial Owner of 4.99% or more of the then-outstanding Common Stock
(the earlier of such dates being referred to as the “Distribution Date”), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof and not by separate Right Certificates, and (y) the
Rights will be transferable only in connection with the transfer of Common Stock. As soon as
practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign and the Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class mail, postage-prepaid, to
each record holder of Common Stock as of the close of business on the Distribution Date (other
than any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the address of
such holder shown on the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a “Right Certificate”), evidencing one Right (subject to adjustment as



7









 







provided
herein) for each share of Common Stock so held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.



               (b) Notwithstanding anything to the contrary set forth in the Original Agreement or this
Agreement, upon the effectiveness of the Exchange, the Company shall not thereafter issue any
additional Original Rights and, for the avoidance of doubt, no Original Rights shall be attached to
or shall be issued with any shares of Common Stock (including shares of Common Stock issued
pursuant to the Exchange). On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Shares of Preferred Stock, in substantially the
form of Exhibit C hereto (the “Summary of Rights”), by first-class mail, postage-prepaid, to each
record holder of Common Stock as of the Close of Business on the Record Date (other than any
Acquiring Person or any Associate or Affiliate of any Acquiring Person), at the address of such
holder shown on the records of the Company. With respect to certificates for Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with the Summary of
Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any certificate for Common Stock outstanding on the Record Date, with or without a copy
of the Summary of Rights, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby.



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




This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Amended and Restated Rights
Agreement between Selectica, Inc. (the “Company”) and Computershare
Investor Services, LLC, as Rights Agent, dated as of January 2, 2009
and as amended from time to time (the “Amended and Restated Rights
Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth
in the Amended and Restated Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the
Amended and Restated Rights Agreement without charge after receipt
of a written request therefor. Under certain circumstances, as
set forth in the Amended and Restated Rights Agreement, Rights owned
by or transferred to any Person who is or becomes



8









 







an Acquiring
Person (as defined in the Amended and Restated Rights Agreement) and
certain transferees thereof will become null and void and will no
longer be transferable.


With respect to any Book Entry shares of Common Stock, such legend shall be included in a notice to
the record holder of such shares in accordance with applicable law. With respect to such
certificates containing the foregoing legend, or any notice of the foregoing legend delivered to
holders of Book Entry shares, until the Distribution Date the Rights associated with the Common
Stock represented by such certificates or Book Entry shares shall be evidenced by such certificates
or Book Entry shares alone, and the surrender for transfer of any such certificate or Book Entry
shares, except as otherwise provided herein, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Stock shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Stock which are no longer
outstanding.




          Notwithstanding this paragraph (c), neither the omission of a legend nor the failure to
deliver the notice of such legend required hereby shall affect the enforceability of any part of
this Agreement or the rights of any holder of the Rights.




          Section 4. Form of Right Certificates. The Right Certificates (and the forms of
election to purchase shares and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or interdealer quotation system on which the
Rights may from time to time be listed or quoted, or to conform to usage. Subject to the
provisions of this Agreement, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set forth therein at
the Purchase Price, but the number of such one one-thousandths of a share of Preferred Stock and
the Purchase Price shall be subject to adjustment as provided herein.




          Section 5. Countersignature and Registration.




               (a) The Right Certificates shall be executed on behalf of the Company by the President of the
Company, either manually or by facsimile signature, shall have affixed thereto the Company’s seal
or a facsimile thereof and shall be attested by the Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless countersigned.
In case any officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and effect as though the
Person who signed such Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by



9









 







any Person who, at the actual date of
the execution of such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Agreement any such Person was not
such an officer.



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



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




               (a) Subject to the provisions of this Agreement, at any time after the Distribution Date and
prior to the Expiration Date, any Right Certificate or Right Certificates may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-thousandths of a share of Preferred Stock as
the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or agency of the Rights Agent designated for such purpose. Thereupon the
Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.



               (b) Subject to the provisions of this Agreement, at any time after the Distribution Date and
prior to the Expiration Date, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.



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




               (a) Except as otherwise provided herein, the Rights shall become exercisable on the
Distribution Date, and thereafter the registered holder of any Right Certificate may, subject to
Section 11(a)(ii) hereof and except as otherwise provided herein, exercise the Rights evidenced
thereby in whole or in part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the office or agency of
the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price
with respect to the total number of one one-thousandths of a share of



10









 







Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which the Rights are exercised, at any
time which is both after the Distribution Date and prior to the time (the “Expiration Date”) that
is the earliest of (i) the Close of Business on January 2, 2012 (the “Final Expiration Date”), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”)
or (iii) the time at which such Rights are exchanged as provided in Section 24 hereof.



               (b) The Purchase Price shall be initially $1.50 for each one one-thousandth of a share of
Preferred Stock purchasable upon the exercise of a Right. The Purchase Price and the number of one
one-thousandths of a share of Preferred Stock or other securities or property to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America in accordance with
paragraph (c) of this Section 7.



               (c) Except as otherwise provided herein, upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of
the aggregate Purchase Price for the shares of Preferred Stock to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof, in cash or by certified check, cashier’s check or money order
payable to the order of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Stock, or make available if the Rights Agent is the
transfer agent for the Preferred Stock, certificates for the number of shares of Preferred Stock
to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) requisition from a depositary agent appointed by the Company depositary
receipts representing interests in such number of one one-thousandths of a share of Preferred Stock
as are to be purchased (in which case certificates for the Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent), and the Company
hereby directs any such depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the registered holder
of such Right Certificate, registered in such name or names as may be designated by such holder and
(iv) when appropriate, after receipt, promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate.



               (d) Except as otherwise provided herein, in case the registered holder of any Right
Certificate shall exercise less than all of the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the exercisable Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.



               (e) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder of
Rights upon the occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such transfer or



11









 







exercise and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof as the Company shall reasonably request.



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




          Section 9. Availability of Shares of Preferred Stock.




               (a) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock or any shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.



               (b) So long as the shares of Preferred Stock issuable upon the exercise of Rights may be
listed or admitted to trading on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed or admitted to trading on such exchange upon official notice of
issuance upon such exercise.



               (c) From and after such time as the Rights become exercisable, the Company shall use its best
efforts, if then necessary to permit the issuance of shares of Preferred Stock upon the exercise of
Rights, to register and qualify such shares of Preferred Stock under the Securities Act and any
applicable state securities or “Blue Sky” laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications effective (with a
prospectus at all times meeting the requirements of the Securities Act) until the earlier of the
date as of which the Rights are no longer exercisable for such securities and the Expiration Date.
The Company may temporarily suspend, for a period of time
not to exceed 90 days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a registration statement
under the Securities Act shall have been declared effective, unless an exemption therefrom is
available.



12









 





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



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



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




          Section 11. Adjustment of Purchase Price, Number and Kind of Shares and Number of
Rights. The Purchase Price, the number of shares of Preferred Stock or other securities or property
purchasable upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.




               (a) (i) In the event the Company shall at any time after the date of this Agreement (A)
declare and pay a dividend on the Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares of Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the number and kind of shares of capital stock issuable
upon exercise of a Right as of the record date for such dividend or the effective date of such
subdivision, combination or reclassification shall be proportionately



13









 







adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the aggregate number and kind
of shares of capital stock which, if such Right had been exercised immediately prior to such date
and at a time when the Preferred Stock transfer books of the Company were open, the holder would
have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.



                    (i) Subject to Section 24 of this Agreement, in the event any Person becomes an Acquiring
Person (the first occurrence of such event after the date of this Agreement being referred to
hereinafter as the “Flip-In Event”), then (A) the Purchase Price shall be adjusted to be the
Purchase Price in effect immediately prior to the Flip-In Event multiplied by the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior
to such Flip-In Event, whether or not such Right was then exercisable, and (B) each holder of a
Right, except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall
thereafter have the right to receive, upon exercise thereof at a price equal to the Purchase Price
(as so adjusted), in accordance with the terms of this Agreement and in lieu of shares of Preferred
Stock, such number of shares of Common Stock as shall equal the result obtained by dividing the
Purchase Price (as so adjusted) by 50% of the current per share market price of the Common Stock
(determined pursuant to Section 11(d) hereof) on the date of such Flip-In Event; provided,
however, that the Purchase Price (as so adjusted) and the number of shares of Common Stock
so receivable upon exercise of a Right shall, following the Flip-In Event, be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof. Notwithstanding anything in
this Agreement to the contrary, however, from and after the Flip-In Event, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate of any Acquiring
Person), (y) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes
a transferee after the Flip-In Event or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with the Flip-In Event
pursuant to either (I) a transfer from the Acquiring Person to holders of its equity securities or
to any Person with whom it has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of such Persons, shall be void without any
further action and any holder of such Rights shall thereafter have no rights whatsoever with
respect to such Rights under any provision of this Agreement. The Company shall use all reasonable
efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. From and after the Flip-In Event, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have become void pursuant to the
provisions of this paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of this paragraph shall
be canceled. From and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exercised pursuant to this Section 11(a)(ii) shall thereafter
be exercisable only in accordance with Section 13 and not pursuant to this Section 11(a)(ii).



                    (ii) The Company may at its option substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing



14









 







subparagraph (ii) a number of shares of
Preferred Stock or fraction thereof such that the current per share market price of one share of
Preferred Stock multiplied by such number or fraction is equal to the current per share market
price of one share of Common Stock. In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (ii), the Board of Directors of the
Company shall, with respect to such deficiency, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, (A) determine the excess (such
excess, the “Spread”) of (1) the value of the shares of Common Stock issuable upon the exercise of
a Right in accordance with the foregoing subparagraph (ii) (the “Current Value”) over (2) the
Purchase Price (as adjusted in accordance with the foregoing subparagraph (ii)), and (B) with
respect to each Right (other than Rights which have become void pursuant to the foregoing
subparagraph (ii)), make adequate provision to substitute for the shares of Common Stock issuable
in accordance with the foregoing subparagraph (ii) upon exercise of the Right and payment of the
Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a reduction in such Purchase
Price, (3) shares of Preferred Stock or other equity securities of the Company (including, without
limitation, shares or fractions of shares of preferred stock which, by virtue of having dividend,
voting and liquidation rights substantially comparable to those of the shares of Common Stock, are
deemed in good faith by the Board of Directors of the Company to have substantially the same value
as the shares of Common Stock (such shares of Preferred Stock and shares or fractions of shares of
preferred stock are hereinafter referred to as “Common Stock Equivalents”)), (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any reduction in such Purchase
Price), where such aggregate value has been determined by the Board of Directors of the Company
upon the advice of a nationally recognized investment banking firm selected in good faith by the
Board of Directors of the Company; provided, however, that if the Company shall not
make adequate provision to deliver value pursuant to clause (B) above within thirty (30) days
following the Flip-In Event (the date of the Flip-In Event being the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, to the extent permitted by applicable law
and any material agreements then in effect to which the Company is a party, upon the surrender for
exercise of a Right and without requiring payment of such Purchase Price, shares of Common Stock
(to the extent available), and then, if necessary, such number or fractions of shares of Preferred
Stock (to the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If, upon the occurrence of the Flip-In Event,
the Board of Directors of the Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance upon exercise in full
of the Rights, then, if the Board of Directors of the Company so elects, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such thirty (30) day period, as it may be extended, is
herein called the “Substitution Period”). To the extent that the Company determines that some
action need be taken pursuant to the second and/or third sentence of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 11(a)(ii) hereof and the last sentence of this
Section 11(a)(iii) hereof, that such action shall apply uniformly to all outstanding Rights and (y)
may suspend the exercisability of the Rights until the expiration of the Substitution Period in



15









 







order to seek any authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such second sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the shares of Common Stock shall be the current per share market price (as determined
pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and the per share or fractional
value of any “Common Stock Equivalent” shall be deemed to equal the current per share market price
of the Common Stock. The Board of Directors of the Company may, but shall not be required to,
establish procedures to allocate the right to receive shares of Common Stock upon the exercise of
the Rights among holders of Rights pursuant to this Section 11(a)(iii).



               (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Stock (or shares having the
same rights, privileges and preferences as the Preferred Stock (“Equivalent Preferred Shares”)) or
securities convertible into Preferred Stock or Equivalent Preferred Shares at a price per share of
Preferred Stock or Equivalent Preferred Shares (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or Equivalent Preferred Shares) less than the
then current per share market price of the Preferred Stock (determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred Stock and Equivalent
Preferred Shares outstanding on such record date plus the number of shares of Preferred Stock and
Equivalent Preferred Shares which the aggregate offering price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of Preferred Stock and
Equivalent Preferred Shares outstanding on such record date plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent. Shares of Preferred Stock and Equivalent Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed; and in the event
that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not been fixed.



               (c) In case the Company shall fix a record date for the making of a distribution to all
holders of the Preferred Stock (including any such distribution made in



16









 







connection with a
consolidation or merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend
payable in Preferred Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market price of the Preferred
Stock (determined pursuant to Section 11(d) hereof) on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants applicable to one
share of Preferred Stock, and the denominator of which shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such record date had
not been fixed.



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




17











 





                    (i) For the purpose of any computation hereunder, if the Preferred Stock is publicly traded,
the “current per share market price” of the Preferred Stock shall be determined in accordance with
the method set forth in Section 11(d)(i). If the Preferred Stock is not publicly traded but the
Common Stock is publicly traded, the “current per share market price” of the Preferred Stock shall
be conclusively deemed to be the current per share market price of the Common Stock as determined
pursuant to Section 11(d)(i) multiplied by the then applicable Adjustment Number (as defined in and
determined in accordance with the Certificate of Designation for the Preferred Stock). If neither
the Common Stock nor the Preferred Stock is publicly traded, “current per share market price” shall
mean the fair value per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights Agent.



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



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



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



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



18









 





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



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



               (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then par value, if any, of the fraction of Preferred Stock or other shares of capital stock
issuable upon exercise of a Right, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and legally issue fully
paid and nonassessable shares of Preferred Stock or other such shares at such adjusted Purchase
Price.



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



19









 




deliver to such holder a
due bill or other appropriate instrument evidencing such holder’s right to receive such additional
shares upon the occurrence of the event requiring such adjustment.




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



               (n) Anything in this Agreement to the contrary notwithstanding, in the event that at any time
after the date of this Agreement and prior to the Distribution Date, the Company shall (i) declare
and pay any dividend on the Common Stock payable in Common Stock or (ii) effect a subdivision,
combination or consolidation of the Common Stock (by reclassification or otherwise than by payment
of a dividend payable in Common Stock) into a greater or lesser number of shares of Common Stock,
then, in each such case, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.



               (o) The Company agrees that, after the earlier of the Distribution Date or the Stock
Acquisition Date, it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or permit
any Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or eliminate the benefits
intended to be afforded by the Rights.



          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the
facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent
for the Common Stock and the Preferred Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof (if so
required under Section 25 hereof). The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be deemed to have knowledge
of any such adjustment unless and until it shall have received such certificate.





20









 








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




               (a) In the event, directly or indirectly, at any time after the Flip-In Event (i) the Company
shall consolidate with or shall merge into any other Person, (ii) any Person shall merge with and
into the Company and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Stock shall be changed into or
exchanged for stock or other securities of any other Person (or of the Company) or cash or any
other property, or (iii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or one or more wholly-owned
Subsidiaries of the Company), then upon the first occurrence of such event, proper provision shall
be made so that: (A) each holder of a Right (other than Rights which have become void pursuant to
Section 11(a)(ii) hereof) shall thereafter have the right to receive, upon the exercise thereof at
the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof), in
accordance with the terms of this Agreement and in lieu of shares of Preferred Stock or Common
Stock of the Company, such number of validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or other adverse claims,
as shall equal the result obtained by dividing the Purchase Price (as theretofore adjusted in
accordance with Section 11(a)(ii) hereof) by 50% of the current per share market price of the
Common Stock of such Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided, however,
that the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof) and
the number of shares of Common Stock of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with Section 11(f) hereof to
reflect any events occurring in respect of the Common Stock of such Principal Party after the
occurrence of such consolidation, merger, sale or transfer; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this Agreement; (C) the term
“Company” shall thereafter be deemed to refer to such Principal Party; and (D) such Principal Party
shall take such steps
(including, but not limited to, the reservation of a sufficient number of its shares of Common
Stock in accordance with Section 9 hereof) in connection with such consummation of any such
transaction as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights; provided that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall thereupon be entitled
to receive, upon exercise of a Right and payment of the Purchase Price as provided in this Section
13(a), such cash, shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the Common Stock of the
Principal Party receivable upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to, reservation of shares of
stock) as may be necessary to permit the subsequent exercise of the



21









 




Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.




               (b) “Principal Party” shall mean:



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



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


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




               (c) The Company shall not consummate any consolidation, merger, sale or transfer referred to
in Section 13(a) hereof unless prior thereto the Company and the Principal Party involved therein
shall have executed and delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in a default by the
Principal Party under this Agreement as the same shall have been assumed by the Principal Party
pursuant to Sections 13(a) and (b) hereof and



22









 




providing that, as soon as practicable after
executing such agreement pursuant to this Section 13, the Principal Party will:




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



                    (ii) use its best efforts, if the Common Stock of the Principal Party shall be listed or
admitted to trading on the NYSE, NASDAQ or on another national securities exchange, to list or
admit to trading (or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the NYSE, NASDAQ or such securities exchange, or, if the Common Stock of
the Principal Party shall not be listed or admitted to trading on the NYSE, NASDAQ or a national
securities exchange, to cause the Rights and the securities receivable upon exercise of the Rights
to be authorized for quotation on any system then in use;



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



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



               (d) In case the Principal Party has a provision in any of its authorized securities or in its
certificate of incorporation or by-laws or other instrument governing its affairs, which provision
would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights
pursuant to this Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock or Common Stock Equivalents of
such Principal Party at less than the then current market price per share thereof (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock or Common Stock Equivalents of such Principal Party at less
than such then current market price, or (ii) providing for any special payment, tax or similar
provision in connection with the issuance of the Common Stock of such Principal Party pursuant to
the provisions of Section 13, then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the consummation of the proposed
transaction.



23









 





               (e) The Company covenants and agrees that it shall not, at any time after the Flip-In Event,
enter into any transaction of the type described in clauses (i) through (iii) of Section 13(a)
hereof if (i) at the time of or immediately after such consolidation, merger, sale, transfer or
other transaction there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section 13(b) hereof shall
have received a distribution of Rights previously owned by such Person or any of its Affiliates or
Associates or (iii) the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.



          Section 14. Fractional Rights and Fractional Shares.




               (a) The Company shall not be required to issue fractions of Rights (except prior to the
Distribution Date in accordance with Section 11(n) hereof) or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the current market value of
a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or admitted to trading
on the NYSE or NASDAQ, if the Rights are not listed or admitted to trading on the NYSE or NASDAQ,
as reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by such system then in use or, if on any such
date the Rights are not so quoted, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board of Directors of the Company
shall be used.



               (b) The Company shall not be required to issue fractions of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of Preferred Stock) or to
distribute certificates which evidence fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred Stock) upon the exercise
or exchange of Rights. Interests in fractions of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such depositary



24









 




receipts. In
lieu of fractional shares of Preferred Stock that are not integral multiples of one one-thousandth
of a share of Preferred Stock, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised or exchanged as herein provided an amount in
cash equal to the same fraction of the current market value of a whole share of Preferred Stock (as
determined in accordance with Section 14(a) hereof) for the Trading Day immediately prior to the
date of such exercise or exchange.




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



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



          Section 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to
the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders of the Common
Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of
the Common Stock), without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), on his own behalf and for
his own benefit, may enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced
by such Right Certificate (or, prior to the Distribution Date, such Common Stock) in the manner
provided therein and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.




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




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



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



25









 





               (c) the Company and the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the Common Stock certificate (or Book Entry shares
in respect of Common Stock)) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates
or the Common Stock certificate (or notices provided to holders of Book Entry shares of Common
Stock) made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to Section 7(e) hereof, shall be affected by any
notice to the contrary.



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




          Section 18. Concerning the Rights Agent.




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



               (b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred Stock or Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper
or document believed by it to be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.



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




               (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall



26









 




be a party, or any corporation
succeeding to the stock transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties hereto;
provided, that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right Certificates and in
this Agreement.




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



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




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



               (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the President and the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such
certificate.



               (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own negligence, bad faith or willful misconduct.



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



27









 





               (e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights provided for in
Sections 3, 11, 13, 23 and 24, or the ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate furnished pursuant to Section 12, describing such
change or adjustment); nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Agreement or any Right Certificate or as to whether any
shares of Preferred Stock or other securities will, when issued, be validly authorized and issued,
fully paid and nonassessable.



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



               (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any person reasonably believed by the Rights Agent to
be one of the President or the Secretary of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on
and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action taken by, or omission
of, the Rights Agent in accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five Business Days after the
date any officer of the Company actually receives such application unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken or omitted.



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



               (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its



28









 




attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection and continued
employment thereof.




               (j) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form of election to purchase
set forth on the reverse thereof, as the case may be, has not been completed to certify the holder
is not an Acquiring Person (or an Affiliate or Associate thereof) or a transferee thereof, the
Rights Agent shall not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.



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




29









 








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




          Section 23. Redemption.




               (a) The Board of Directors of the Company may, at any time prior to the Flip-In Event, redeem
all but not less than all the then outstanding Rights at a redemption price of $.0001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring
in respect of the Common Stock after the date hereof (the redemption price being hereinafter
referred to as the “Redemption Price”). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors of the Company in its sole
discretion may establish. The Redemption Price shall be payable, at the option of the Company, in
cash, shares of Common Stock, or such other form of consideration as the Board of Directors of the
Company shall determine.



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



          Section 24. Exchange.




               (a) The Board of Directors of the Company may, at its option, at any time after the Flip-In
Event, exchange all or part of the then outstanding Rights (which shall not



30









 




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




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



               (c) The Company may at its option substitute, and, in the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit
an exchange of Rights for Common Stock as contemplated in accordance with this Section 24, the
Company shall substitute to the extent of such insufficiency, for each share of Common Stock that
would otherwise be issuable upon exchange of a Right, a number of shares of Preferred Stock or
fraction thereof (or Equivalent Preferred Shares, as such term is defined in Section 11(b)) such
that the current per share market price (determined pursuant to Section 11(d) hereof) of one share
of Preferred Stock (or Equivalent Preferred Share) multiplied by such number or fraction is equal
to the current per share market price of one share of Common Stock (determined pursuant to Section
11(d) hereof) as of the date of such exchange.



          Section 25. Notice of Certain Events.




               (a) In case the Company shall at any time after the earlier of the Distribution Date or the
Stock Acquisition Date propose (i) to pay any dividend payable in stock



31









 




of any class to the holders
of its Preferred Stock or to make any other distribution to the holders of its Preferred Stock
(other than a regular quarterly cash dividend), (ii) to offer to the holders of its Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision or combination of outstanding Preferred Stock), (iv) to effect the liquidation,
dissolution or winding up of the Company, or (v) to pay any dividend on the Common Stock payable in
Common Stock or to effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock), then, in each such
case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date for the purposes of
such dividend or distribution or offering of rights or warrants, or the date on which such
liquidation, dissolution, winding up, reclassification, subdivision, combination or consolidation
is to take place and the date of participation therein by the holders of the Common Stock and/or
Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of the Common Stock and/or Preferred Stock, whichever shall
be the earlier.




               (b) In case any event described in Section 11(a)(ii) or Section 13 shall occur then the
Company shall as soon as practicable thereafter give to each holder of a Right Certificate (or if
occurring prior to the Distribution Date, the holders of the Common Stock) in accordance with
Section 26 hereof, a notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii) and Section 13
hereof.



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



Selectica, Inc.

1740 Technology Drive, Suite 450

San Jose, CA 95110

Attention: Chief Financial Officer



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



Computershare Investor Services, LLC

655 Montgomery St # 830

San Francisco, CA

Attention: Client Services




32









 







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




          Section 27. Supplements and Amendments. Except as provided in the penultimate sentence of this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this Agreement in any
respect without the approval of any holders of the Rights. At any time when the Rights are no
longer redeemable, except as provided in the penultimate sentence of this Section 27, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights, provided that no such supplement or
amendment may (a) adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), (b) cause this Agreement
again to become amendable other than in accordance with this sentence or (c) cause the Rights again
to become redeemable. Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment, provided that any supplement or amendment that does not amend
Sections 18, 19, 20 or 21 hereof or this Section 27 in a manner adverse to the Rights Agent shall
become effective immediately upon execution by the Company, whether or not also executed by the
Rights Agent.




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




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




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




33









 







Company in good faith shall be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights, as such, and all other parties.




          Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.




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




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




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





34









 








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




	 	 	 	 	 	 	 
	 	 	SELECTICA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name: Richard Heaps
	 	 
	 

	 	 	 	Title: Chief Financial Officer and General Counsel
	 
	 	 	 	 	 	 
	 	 	COMPUTERSHARE INVESTOR SERVICES,	 	 
	 	 	LLC, as Rights Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 






 









 





Exhibit A




FORM OF

CERTIFICATE OF DESIGNATION




of




SERIES B JUNIOR PARTICIPATING PREFERRED STOCK




of




SELECTICA, INC.




Pursuant to Section 151 of the General Corporation Law

of the State of Delaware




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




          That pursuant to the authority vested in the Board of Directors of the Corporation (the “Board
of Directors”) in accordance with the provisions of the Certificate of Incorporation of the
Corporation, the Board of Directors on January 2, 2009 adopted the following resolution creating a
series of 100,000 shares of Preferred Stock designated as “Series B Junior Participating Preferred
Stock”:





     RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of
the Certificate of Incorporation, a series of Preferred Stock, par
value $.0001 per share, of the Corporation be and hereby is created,
and that the designation and number of shares thereof and the voting
and other powers, preferences and relative, participating, optional
or other rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:



Series B Junior Participating Preferred Stock




          1. Designation and Amount. There shall be a series of Preferred Stock that shall be
designated as “Series B Junior Participating Preferred Stock,” and the number of shares
constituting such series shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, however, that no decrease shall reduce the number
of shares of Series B Junior Participating Preferred Stock to less than the number of shares then
issued and outstanding plus the number of shares issuable upon exercise of outstanding rights,
options or warrants or upon conversion of outstanding securities issued by the Corporation.




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          2. Dividends and Distribution.




               (A) Subject to the prior and superior rights of the holders of any shares of any class or
series of stock of the Corporation ranking prior and superior to the shares of Series B Junior
Participating Preferred Stock with respect to dividends, the holders of shares of Series B Junior
Participating Preferred Stock, in preference to the holders of shares of any class or series of
stock of the Corporation ranking junior to the Series B Junior Participating Preferred Stock in
respect thereof, shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and February, in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series B Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or
(b) the Adjustment Number (as defined below) times the aggregate per share amount of all cash
dividends, and the Adjustment Number times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock, par value $.0001 per share, of the Corporation (the “Common Stock”)
since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of
Series B Junior Participating Preferred Stock. The “Adjustment Number” shall initially be 1,000.
In the event the Corporation shall at any time after January 2, 2009 (i) declare and pay any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each
such case the Adjustment Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.



               (B) The Corporation shall declare a dividend or distribution on the Series B Junior
Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of Common
Stock).



               (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series B Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series B Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares
of Series B Junior Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on



E-2









 







such shares shall be allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the determination of holders of
shares of Series B Junior Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than 60 days prior to the date
fixed for the payment thereof.



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




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



               (B) Except as required by law, by Section 3(C) and by Section 10 hereof, holders of Series B
Junior Participating Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.



               (C) If, at the time of any annual meeting of stockholders for the election of directors, the
equivalent of six quarterly dividends (whether or not consecutive) payable on any share or shares
of Series B Junior Participating Preferred Stock are in default, the number of directors
constituting the Board of Directors of the Corporation shall be increased by two. In addition to
voting together with the holders of Common Stock for the election of other directors of the
Corporation, the holders of record of the Series B Junior Participating Preferred Stock, voting
separately as a class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of stockholders (and at each subsequent annual meeting of stockholders), unless all
dividends in arrears on the Series B Junior Participating Preferred Stock have been paid or
declared and set apart for payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series B Junior Participating Preferred Stock being entitled to
cast a number of votes per share of Series B Junior Participating Preferred Stock as is specified
in paragraph (A) of this Section 3. Each such additional director shall not be a member of Class
I, Class II or Class III of the Board of Directors of the Corporation, but shall serve until the
next annual meeting of stockholders for the election of directors, or until his successor shall be
elected and shall qualify, or until his right to hold such office terminates pursuant to the
provisions of this Section 3(C). Until the default in payments of all dividends which permitted
the election of said directors shall cease to exist, any director who shall have been so elected
pursuant to the provisions of this Section 3(C) may be removed at any time, without cause, only by
the affirmative vote of the holders of the shares of Series B Junior Participating Preferred Stock
at the time entitled to cast a majority of the votes entitled to be cast for the election of any
such director at a special meeting of such holders called for that purpose, and any vacancy thereby
created may be filled by the vote of such holders. If and when such default shall cease to exist,
the holders of the Series B Junior Participating Preferred Stock shall be divested of the foregoing
special voting rights, subject to revesting in the event of each and every subsequent like default
in payments of dividends. Upon the termination of the foregoing special voting rights, the terms
of office of all persons who may have been elected directors pursuant to said special voting rights
shall forthwith terminate, and the number of directors constituting the Board of Directors shall be
reduced by two. The voting rights granted by this Section 3(C) shall be in



E-3









 







addition to any other voting rights granted to the holders of the Series B Junior
Participating Preferred Stock in this Section 3.



          4. Certain Restrictions.




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



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



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



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



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



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




E-4









 








          6. Liquidation, Dissolution or Winding Up.




               (A) Upon any liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise, no distribution shall be made to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series B Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of Series B Junior
Participating Preferred Stock shall have received an amount per share (the “Series B Liquidation
Preference”) equal to the greater of (i) $10.00 plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of such payment, or (ii)
the Adjustment Number times the per share amount of all cash and other property to be distributed
in respect of the Common Stock upon such liquidation, dissolution or winding up of the Corporation.



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



               (C) Neither the merger or consolidation of the Corporation into or with another entity nor the
merger or consolidation of any other entity into or with the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of this Section 6.



          7. Consolidation, Merger, Etc. In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the outstanding shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series B Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment Number times the
aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or exchanged.




          8. No Redemption. Shares of Series B Junior Participating Preferred Stock shall not be
subject to redemption by the Corporation.




          9. Ranking. The Series B Junior Participating Preferred Stock shall rank junior to all other
series of the Preferred Stock as to the payment of dividends and as to the distribution of assets
upon liquidation, dissolution or winding up, unless the terms of any such series shall provide
otherwise, and shall rank senior to the Common Stock as to such matters.




          10. Amendment. At any time that any shares of Series B Junior Participating Preferred Stock
are outstanding, the Certificate of Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers, preferences or special rights of the
Series B Junior Participating Preferred Stock so as to affect them adversely




E-5









 







without the affirmative vote of the holders of two-thirds of the outstanding shares of Series
B Junior Participating Preferred Stock, voting separately as a class.




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




E-6









 








          IN WITNESS WHEREOF, the undersigned has executed this Certificate this 2nd day of January,
2009.




	 	 	 	 	 	 	 
	 	 	SELECTICA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Richard Heaps
	 	 
	 

	 	 	 	Chief Financial Officer and General Counsel	 	 







E-7












 





Exhibit B




Form of Right Certificate




Certificate No. R-                    





NOT EXERCISABLE AFTER JANUARY 2, 2012 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.0001 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.



RIGHT CERTIFICATE




SELECTICA, INC.




          This certifies that                                          or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Amended and Restated Rights Agreement, dated as of
January 2, 2009, as the same may be amended from time to time (the “Rights Agreement”), between
Selectica, Inc., a Delaware corporation (the “Company”), and Computershare Investor Services, LLC,
as Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M., local
time, on January 2, 2012 at the office or agency of the Rights Agent designated for such purpose,
or of its successor as Rights Agent, one one-thousandth of a fully paid non-assessable share of
Series B Junior Participating Preferred Stock, par value $.0001 per share (the “Preferred Stock”),
of the Company at a purchase price of $1.50 per one one-thousandth of a share of Preferred Stock
(the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and
the number of one one-thousandths of a share of Preferred Stock which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of [                    , 20___], based on the Preferred Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or property) which may be purchased upon the exercise
of the Rights and the number of Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the occurrence of certain events.




          This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by




E-8









 




reference and
made a part hereof and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the Company and the
above-mentioned office or agency of the Rights Agent. The Company will mail to the holder of this
Right Certificate a copy of the Rights Agreement without charge after receipt of a written request
therefor.




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




          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at a redemption price of $.0001 per Right or (ii) may be
exchanged in whole or in part for shares of the Company’s Common Stock, par value $.0001 per share,
or shares of Preferred Stock.




          No fractional shares of Preferred Stock or Common Stock will be issued upon the exercise or
exchange of any Right or Rights evidenced hereby (other than fractions of Preferred Stock which are
integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election
of the Company, be evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.




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




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




E-9









 





          WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of                     , 20___.




	 	 	 	 	 	 	 
	 	 	SELECTICA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

[Name]
	 	 
	 

	 	 	 	[Title]	 	 






	 	 	 
	ATTEST:
	 	 
	 
	 	 
	 

[Name]

	 	 
	[Title]
	 	 
	 
	 	 
	Countersigned:
	 	 
	 
	 	 
	COMPUTERSHARE INVESTOR SERVICES, LLC, as Rights Agent






	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

[Name]
	 	 
	 

	 	[Title]	 	 






E-10









 





Form of Reverse Side of Right Certificate




FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate)




          FOR
VALUE RECEIVED                                          hereby sells, assigns and transfers unto                                                                    





 




(Please print name and address of transferee)



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




	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 






	 	 	 	 	 
	 

	 	 

Signature
	 	 






Signature Guaranteed:




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




 




(To be completed)




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




	 	 	 	 	 
	 

	 	 

Signature
	 	 






E-11









 





Form of Reverse Side of Right Certificate – continued




FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise

Rights represented by the Right Certificate)




To SELECTICA, INC.




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




	 	 	 
	   
	(Please print name and address)

	 
	 	 
	   




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




Please insert social security

or other identifying number




	 	 	 
	   
	(Please print name and address)

	 
	 	 
	   





	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 






	 	 	 	 	 
	 

	 	 

Signature
	 	 






(Signature must conform to holder specified on Right Certificate)




Signature Guaranteed:



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




E-12









 





Form of Reverse Side of Right Certificate — continued




	 	 	 
	   
	(To be completed)







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




	 	 	 	 	 
	 

	 	 

Signature
	 	 






NOTICE




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




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




E-13









 





Exhibit C





UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.



SUMMARY OF RIGHTS TO PURCHASE

SHARES OF PREFERRED STOCK OF

SELECTICA, INC.




          On January 2, 2009, the Board of Directors of Selectica, Inc. (the “Company”) declared a
dividend of one preferred share purchase right (a “Right”) for each outstanding share of common
stock, par value $.0001 per share, of the Company (the “Common Stock”). The dividend is payable on
January 2, 2009 to the stockholders of record on January 2, 2009 (the “Record Date”). Each Right
entitles the registered holder to purchase from the Company one one-thousandth of a share of Series
B Junior Participating Preferred Stock, par value $.0001 per share, of the Company (the “Preferred
Stock”) at a price of $1.50 per one one-thousandth of a share of Preferred Stock (the “Purchase
Price”), subject to adjustment, or, under certain circumstances, a number of shares of Common Stock
with a market value equal to two times the Purchase Price. The description and terms of the Rights
are set forth in the Amended and Restated Rights Agreement dated as of January 2, 2009, as the same
may be amended from time to time (the “Rights Agreement”), between the Company and U.S. Stock
Transfer Corporation, as Rights Agent (the “Rights Agent”).




          The Rights are not exercisable until the “Distribution Date.” Under the Rights Agreement, a
“Distribution Date” generally occurs upon the earlier of (i) 10 Business Days following a public
announcement that a person or group of affiliated or associated persons has, subsequent to the
adoption of the Rights Agreement, become an “Acquiring Person” under the terms of the Rights
Agreement or (ii) 10 business days (or such later date as may be determined by action of the Board
of Directors prior to such time as any person or group of affiliated or associated persons becomes
an Acquiring Person) following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the beneficial ownership
by a person or group of 4.99% or more of the outstanding shares of Common Stock. Except in certain
situations, a person or group of affiliated or associated persons becomes an “Acquiring Person”
upon acquiring beneficial ownership of 4.99% or more of the outstanding shares of Common Stock.
Until the Distribution Date, the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock certificates together with a
copy of this Summary of Rights.




          The Rights Agreement provides that, until the Distribution Date (or earlier expiration of the
Rights), the Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier expiration of the Rights), new Common Stock certificates




E-14









 




issued
after the Record Date upon transfer or new issuances of Common Stock will contain a notation
incorporating the Rights Agreement by reference and, with respect to any book-entry shares issued
after the Record Date, a proper notation or notice will be provided that incorporates the Rights
Agreement by reference. Until the Distribution Date (or earlier expiration of the Rights), the
surrender for transfer of any certificates for shares of Common Stock (or Book Entry shares of
Common Stock) outstanding as of the Record Date, even without such notation or a copy of this
Summary of
Rights, will also constitute the transfer of the Rights associated with the shares of Common
Stock represented by such certificate or Book Entry shares. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be
mailed to holders of record of the Common Stock as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.




          The Rights are not exercisable until the Distribution Date. The Rights will expire on January
2, 2012 (the “Final Expiration Date”), unless the Final Expiration Date is advanced or extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case as described
below.




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




          The number of outstanding Rights is subject to adjustment in the event of a stock dividend on
the Common Stock payable in shares of Common Stock or subdivisions, consolidations or combinations
of the Common Stock occurring, in any such case, prior to the Distribution Date.




          Shares of Preferred Stock purchasable upon exercise of the Rights will not be redeemable.
Each share of Preferred Stock will be entitled, when, as and if declared, to a minimum preferential
quarterly dividend payment of the greater of (a) $1.00 per share, and (b) an amount equal to 1,000
times the dividend declared per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will be entitled to a minimum
preferential payment of the greater of (a) $10.00 per share (plus any accrued but unpaid
dividends), and (b) an amount equal to 1,000 times the payment made per share of Common Stock.
Each share of Preferred Stock will have 1,000 votes, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which outstanding shares
of Common Stock are converted or exchanged, each share of Preferred Stock will be entitled to
receive 1,000 times the amount received per share of Common Stock. These rights are protected by
customary antidilution provisions.




E-15









 





          Because of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the
value of the one one-thousandth interest in a share of Preferred Stock purchasable upon exercise of
each Right should approximate the value of one share of Common Stock.




          In the event that any person or group of affiliated or associated persons becomes an Acquiring
Person, each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which
will thereupon become void), will thereafter have the right to receive upon exercise of a Right
that number of shares of Common Stock having a market value of two times the exercise price of the
Right.




          In the event that, after a person or group has become an Acquiring Person, the Company is
acquired in a merger or other business combination transaction or 50% or more of its consolidated
assets or earning power are sold, proper provisions will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to
receive upon the exercise of a Right that number of shares of common stock of the person with
whom the Company has engaged in the foregoing transaction (or its parent) that at the time of such
transaction have a market value of two times the exercise price of the Right.




          At any time after any person or group becomes an Acquiring Person and prior to the earlier of
one of the events described in the previous paragraph or the acquisition by such Acquiring Person
of 50% or more of the outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such Acquiring Person which will have become void),
in whole or in part, for shares of Common Stock or Preferred Stock (or a series of the Company’s
preferred stock having equivalent rights, preferences and privileges), at an exchange ratio of one
share of Common Stock, or a fractional share of Preferred Stock (or other preferred stock)
equivalent in value thereto, per Right.




          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of
Preferred Stock or Common Stock will be issued (other than fractions of Preferred Stock which are
integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election
of the Company, be evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the current market price of the Preferred Stock or the Common Stock. At any
time prior to the time an Acquiring Person becomes such, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.0001 per Right (the “Redemption
Price”) payable, at the option of the Company, in cash, shares of Common Stock or such other form
of consideration as the Board of Directors of the Company shall determine. The redemption of the
Rights may be made effective at such time, on such basis and with such conditions as the Board of
Directors of the Company in its sole discretion may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.




          For so long as the Rights are then redeemable, the Company may, except with respect to the
Redemption Price, amend the Rights Agreement in any manner. After the Rights are no longer
redeemable, the Company may, except with respect to the Redemption Price,




E-16









 




amend the Rights
Agreement in any manner that does not adversely affect the interests of holders of the Rights.




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




          A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A dated January 2, 2009. A copy of the Rights
Agreement is available free of charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to the Rights
Agreement, as the same may be amended from time to time, which is hereby incorporated herein by
reference.




E-17