exv4w1






Exhibit 4.1




 





RIGHTS AGREEMENT




between




ION Geophysical Corporation




and




Computershare Trust Company, N.A.




Rights Agent




Dated as of December 30, 2008




 




















 










TABLE OF CONTENTS



	 	 	 	 	 
	 	 	Page
	SECTION 1. CERTAIN DEFINITIONS
	 	 	1	 
	 
	SECTION 2. APPOINTMENT OF RIGHTS AGENT
	 	 	7	 
	 
	SECTION 3. ISSUE OF RIGHTS CERTIFICATES
	 	 	7	 
	 
	SECTION 4. FORM OF RIGHTS CERTIFICATES
	 	 	9	 
	 
	SECTION 5. COUNTERSIGNATURE AND REGISTRATION
	 	 	9	 
	 
	SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES
	 	 	10	 
	 
	SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE
	 	 	11	 
	 
	SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES
	 	 	12	 
	 
	SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK
	 	 	13	 
	 
	SECTION 10. PREFERRED STOCK RECORD DATE
	 	 	14	 
	 
	SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS
	 	 	15	 
	 
	SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES
	 	 	21	 
	 
	SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER
	 	 	22	 
	 
	SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
	 	 	24	 
	 
	SECTION 15. RIGHTS OF ACTION
	 	 	25	 
	 
	SECTION 16. AGREEMENT OF RIGHTS HOLDERS
	 	 	25	 
	 
	SECTION 17. RIGHTS 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
	 	 	27	 
	 
	SECTION 20. DUTIES OF RIGHTS AGENT
	 	 	27	 
	 
	SECTION 21. CHANGE OF RIGHTS AGENT
	 	 	29	 
	 
	SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES
	 	 	30	 
	 
	SECTION 23. REDEMPTION AND TERMINATION
	 	 	31	 
	 
	SECTION 24. EXCHANGE
	 	 	31	 
	 
	SECTION 25. NOTICE OF CERTAIN EVENTS
	 	 	32	 
	 
	SECTION 26. NOTICES
	 	 	33	 






i









 





TABLE OF CONTENTS

(continued)



	 	 	 	 	 
	 	 	Page
	SECTION 27. SUPPLEMENTS AND AMENDMENTS
	 	 	34	 
	 
	SECTION 28. SUCCESSORS
	 	 	35	 
	 
	SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC
	 	 	35	 
	 
	SECTION 30. BENEFITS OF THIS AGREEMENT
	 	 	35	 
	 
	SECTION 31. SEVERABILITY
	 	 	35	 
	 
	SECTION 32. GOVERNING LAW
	 	 	36	 
	 
	SECTION 33. COUNTERPARTS
	 	 	36	 
	 
	SECTION 34. DESCRIPTIVE HEADINGS
	 	 	36	 
	 
	SECTION 35. FORCE MAJEURE
	 	 	36	 











ii









 











Exhibit A —     Form of Certificate of Designation




Exhibit B —     Form of Rights Certificate





iii









 








RIGHTS AGREEMENT




     Rights Agreement, dated as of December 30, 2008 (the “Agreement”), by and between ION
Geophysical Corporation, a Delaware corporation (the “Company”), and Computershare Trust
Company, N.A., a federally chartered trust company (the “Rights Agent”).



W I T N E S S E T H:




     WHEREAS, the Board of Directors of the Company has authorized the issuance of one Right (as
hereinafter defined) in respect of, and to be issued together with, each share of common stock, par
value $0.01 per share, of the Company (the “Common Stock”) issued and outstanding as of the
close of business on January 9, 2009 (the “Record Date”); and the Board of Directors of the
Company has authorized the issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p) hereof) for each share of Common Stock of the
Company issued (whether originally issued or delivered from the Company’s treasury) between the
Record Date and the earlier of the Distribution Date (as hereinafter defined) and the Expiration
Date (as hereinafter defined), and, in certain circumstances provided for in Section 22
hereof, after the Distribution Date, each Right initially representing the right to purchase one
Fractional Share (as hereinafter defined) of Preferred Stock, upon the terms and subject to the
conditions hereinafter set forth (the “Rights”).



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



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




     “Acquiring Person” shall mean any Person who or which, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of 20% or more of the shares of Common
Stock then outstanding, but shall not include any Exempt Person; provided, however,
that a Person shall not be or become an Acquiring Person if such Person, together with its
Affiliates and Associates, shall become the Beneficial Owner of 20% or more of the shares of Common
Stock then outstanding solely as a result of a reduction in the number of shares of Common Stock
outstanding due to the repurchase of Common Stock by the Company unless and until such time as (x)
such Person or any Affiliate or Associate of such Person shall purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock constituting 1% or more of the
then-outstanding shares of Common Stock (other than as pursuant to a dividend or distribution paid
or made by the Company on the Common Stock then outstanding or pursuant to a split or subdivision
of the then outstanding Common Stock) or (y) any other Person (or Persons) who is (or collectively
are) the Beneficial Owner of shares of Common Stock constituting 1% or more of the then-outstanding
shares of Common Stock shall become an Affiliate or Associate of such Person; and provided,
further, that if the Board of Directors, with the concurrence of a majority of the members
of the Board of Directors who are not such Person or representatives, nominees, Affiliates or
Associates of such Person, determines in good faith that a Person that would otherwise be an
“Acquiring Person” has become such inadvertently (including, without limitation, because (1) such
Person was unaware that it beneficially owned a percentage of Common Stock that would otherwise
cause such Person to be an “Acquiring



1









 







Person” or (2) such Person was aware of the extent of its Beneficial Ownership of Common Stock
but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement)
and without any intention of changing or influencing control of the Company, and if such Person as
promptly as practicable divested or divests itself of Beneficial Ownership of a sufficient number
of shares of Common Stock so that such Person would no longer be an “Acquiring Person,” then such
Person shall not be deemed to be or to have become an “Acquiring Person” for any purposes of this
Agreement.



     “Adjustment Fraction” shall have the meaning set forth in Section 11(p)
hereof.



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



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



     “Associate” shall mean, with reference to any Person, (i) any corporation, firm,
partnership, association, unincorporated organization or other entity (other than the Company or a
Subsidiary of the Company) of which such Person is a director, officer or general partner (or
director, officer or general partner of a general partner) or is, directly or indirectly, the
Beneficial Owner of 10% or more of any class of equity securities, (ii) any trust or other estate
in which such Person has a substantial beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity and (iii) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.



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




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




     (ii) that such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right or obligation to acquire (whether such right or obligation is
exercisable or effective immediately or only after the passage of time or the occurrence of
an event) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants



2









 







or options, or otherwise; provided, however, that a Person shall not be
deemed the “Beneficial Owner” of, or to “beneficially own,” (A) securities tendered pursuant
to a tender or exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person or any of such
Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof (the “Original Rights”) or pursuant to
Section 11(i) or (p) hereof in connection with an adjustment made with
respect to any Original Rights; or




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


provided, however, that nothing in this definition shall cause a Person engaged in
business as an underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,”
any securities acquired through such Person’s participation in good faith in a firm commitment
underwriting (including, without limitation, securities acquired pursuant to stabilizing
transactions to facilitate a public offering in accordance with Regulation M promulgated under the
Exchange Act, or to cover overallotments created in connection with a public offering) until the
expiration of forty days after the date of such acquisition. For purposes of this Agreement,
“voting” a security shall include voting, granting a proxy, acting by consent, making a request or
demand relating to corporate action (including, without limitation, calling a stockholder meeting)
or otherwise giving an authorization (within the meaning of Section 14(a) of the Exchange Act as in
effect on the date of this Agreement) in respect of such security.





     “Beneficial Ownership” of any Person shall also include for purposes of this Agreement,
anything which such Person or any of such Person’s Affiliates or Associates or any other Person of
the nature described in clause (iii) of this definition shall have an obligation (contingent or
otherwise) to acquire Beneficial Ownership of, and anything of which any other Person or any of
such Person’s Affiliates or Associates shall have acquired Beneficial Ownership, or the right or
obligation to acquire Beneficial Ownership, in connection with, as a result of, in anticipation of,
or in order to hedge or offset the risk of, any contractual or financial agreement, arrangement or
understanding (including any swap, option, put, call, straddle or other derivative, whether or not
settlable in kind or in cash) with such Person or any of such Person’s Affiliates or Associates or
any other Person of the nature described in clause (iii) of this definition.



3









 





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



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



     “Closing Price” of a security for any day shall mean the last sales price, regular
way, on such day or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, on such day, in either case as reported in the principal transaction
reporting system with respect to securities listed or admitted to trading on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on the New York Stock Exchange,
on the principal national securities exchange on which such security is listed or admitted to
trading, or, if such security is not listed or admitted to trading on any national securities
exchange but sales price information is reported for such security, as reported by NASDAQ or such
other self-regulatory organization or registered securities information processor (as such terms
are used under the Exchange Act) that then reports information concerning such security, or, if
sales price information is not so reported, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by NASDAQ or such other entity, or, if on such
day, such security is not quoted by any such entity, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in such security selected by the
Board of Directors of the Company, or, if on such day, no market maker is making a market in such
security, the fair value of such security on such day, as determined in good faith by the Board of
Directors of the Company.



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



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



     “Company” shall mean the Person named as the “Company” in the preamble of this
Agreement until a successor Person shall have become such or until a Principal Party shall assume,
and thereafter be liable for, all obligations and duties of the Company hereunder, pursuant to the
applicable provisions of this Agreement, and thereafter “Company” shall mean such successor Person
or Principal Party.



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



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



     “Distribution Date” shall mean the earlier of (i) the close of business on the tenth
day (or, if such Stock Acquisition Date results from the consummation of a Permitted Offer, such
later date as may be determined by the Company’s Board of Directors as set forth below before the



4









 







Distribution Date occurs) after the Stock Acquisition Date or (ii) the close of business on
the tenth Business Day (or such later date as may be determined by the Company’s Board of Directors
as set forth below before the Distribution Date occurs) after the date that a tender offer or
exchange offer by any Person (other than any Exempt Person) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act as
then in effect, if upon consummation thereof, such Person would be an Acquiring Person, other than
a tender or exchange offer that is determined before the Distribution Date occurs to be a Permitted
Offer. The Board of Directors of the Company may, to the extent set forth in the preceding
sentence, defer the date set forth in clause (i) or (ii) of the preceding sentence to a specified
later date or to an unspecified later date to be determined by a subsequent action or event (but in
no event to a date later than the close of business on the tenth day after the first occurrence of
a Triggering Event).



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



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



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



     “Exempt Person” shall mean (i) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, and any Person organized,
appointed or established by the Company for or pursuant to the terms of any such plan or for the
purpose of funding any such plan or funding other employee benefits for employees of the Company or
any Subsidiary of the Company or (ii) Fletcher International, Ltd., a Bermuda limited partnership,
and its Affiliates.



     “Expiration Date” shall mean the earliest to occur of (i) the Final Expiration Date,
(ii) the time at which the Rights are redeemed as provided in Section 23 hereof, (iii) the
time at which the Rights expire pursuant to Section 13(d) hereof, and (iv) the time at
which all Rights then outstanding and exercisable are exchanged pursuant to Section 24
hereof.



     “Final Expiration Date” shall mean the close of business on December 29, 2011.



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



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



     “Flip-Over Event” shall mean any event described in clause (x), (y) or (z) of
Section 13(a) hereof, but excluding any transaction described in Section 13(d)
hereof that causes the Rights to expire.



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



     “NASDAQ” shall mean the NASDAQ Stock Market.



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



5









 





     “Permitted Offer” shall mean a tender offer or an exchange offer for all outstanding
shares of Common Stock at a price and on terms determined, prior to the time the Person making the
offer or any Affiliate or Associate thereof is an Acquiring Person, by at least a majority of the
members of the Board of Directors who are not officers or employees of the Company and who are not,
and are not representatives, nominees, Affiliates or Associates of, an Acquiring Person or the
Person making the offer, after receiving advice from one or more investment banking firms, to be
(a) at a price and on terms that are fair to stockholders and not inadequate (taking into account
all factors that such members of the Board deem relevant including, without limitation, prices that
could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the Company and its stockholders.



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



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



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



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



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



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



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



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



     “Rights Certificates” shall mean the certificates evidencing the Rights.



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



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



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



     “Stock Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition and Section 23, shall include, without limitation, a report
filed



6









 







pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.



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



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



     “Trading Day” with respect to a security shall mean a day on which the principal
national securities exchange on which such security is listed or admitted to trading is open for
the transaction of business, or, if such security is not listed or admitted to trading on any
national securities exchange but is quoted by NASDAQ or any other transaction reporting system, a
day on which NASDAQ or such other reporting system reports trades, or, if such security is not so
quoted, a Business Day.



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



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




          Section 3. Issue of Rights Certificates




          (a) Until the Distribution Date, (x) the Rights will be evidenced by the certificates for
Common Stock registered in the names of the holders of the Common Stock and not by separate
certificates, and (y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock as of the close of business on the Distribution
Date (other than any Person referred to in the first sentence of Section 7(e)), at the
address of such holder shown on the records of the Company, one or more Rights Certificates,
evidencing one Right for each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates.




7









 








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




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





     This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between ION Geophysical Corporation (the “Company”)
and Computershare Trust Company, N.A. (the “Rights Agent”), dated as of December 30,
2008, as it may from time to time be supplemented or amended (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights may be redeemed, may be exchanged, may
expire or may be evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company or the Rights Agent will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly
after receipt of a written request therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES THEREOF, WILL BECOME NULL AND VOID AND
WILL NO LONGER BE TRANSFERABLE.


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





8









 








          Section 4. Form of Rights Certificates.




          (a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this 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 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 Section 11 and Section
22 hereof, the Rights Certificates, whenever issued, shall be dated as of the Record Date and
on their face shall entitle the holders thereof to purchase such number of Fractional Shares of
Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price
per Fractional Share (or, as set forth in this Agreement, for other securities), the “Purchase
Price”), but the amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.




          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by a Person described in the first sentence of
Section 7(e), and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any such Rights,
shall contain (to the extent feasible) the following legend, modified as applicable to apply to
such Person:





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


The provisions of Section 7(e) of this Agreement shall be operative whether or not the
foregoing legend is contained on any such Rights Certificate. The Company shall give notice to the
Rights Agent promptly after it becomes aware of the existence of any Acquiring Person or any
Associate or Affiliate thereof.




          Section 5. Countersignature and Registration.




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




9









 




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




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




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




          (a) Subject to the provisions of Section 4(b), Section 7(e), Section
13(d), Section 14 and Section 24 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on the Expiration Date,
any Rights Certificate or Rights Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Rights Certificates, entitling the registered holder to purchase
a like number of Fractional Shares of Preferred Stock (or, following a Triggering Event, Common
Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate or
Rights Certificates surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange
any Rights Certificate or Rights Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Rights Certificates to be transferred,
split up, combined or exchanged at the principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) thereof or of the
Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 13(d),
Section 14 and Section 24 hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment by the holder of a Rights Certificate 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 such Rights Certificate.




          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement
to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company
will, subject to Section 4(b), Section 7(e), Section 13(d), Section
14 and Section 24, execute and deliver a new Rights Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.




10









 








          Section 7. Exercise of Rights; Purchase Price.




          (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly completed and executed, to the Rights Agent at
the principal office or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of Fractional Shares of
Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.




          (b) The Purchase Price for each Fractional Share of Preferred Stock pursuant to the exercise
of a Right shall initially be $21.00, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.




          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate on the reverse side thereof duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per Fractional Share of
Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i)(A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of Fractional Shares of Preferred
Stock to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Company, in its sole discretion, shall have elected to
deposit the shares of Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts representing interests
in such number of Fractional Shares of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid
in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder and (iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in cash or by
certified check, cashier’s or official bank check or bank draft payable to the order of the Company
or the Rights Agent. In the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) or Section 13(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the right to require prior to




11









 




the occurrence of a Triggering Event that, upon exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.




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




          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event, any Rights beneficially owned by or transferred to (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person other than any such Person
that became such pursuant to a Permitted Offer and the Board of Directors in good faith determines
was not involved in and did not cause or facilitate, directly or indirectly, such Triggering Event,
(ii) a direct or indirect transferee of such Rights from such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after such Triggering Event or (iii) a direct or
indirect transferee of such Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with such Triggering Event and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from such Acquiring Person (or such
Affiliate or Associate) to holders of equity interests in such Acquiring Person (or such Affiliate
or Associate) or to any Person with whom such Acquiring Person (or such Affiliate or Associate) has
any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer that the Board of Directors of the Company determines is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action, no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of this Agreement or
otherwise, and such Rights shall not be transferable. The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates or other Person
with respect to any determination regarding an Acquiring Person or its Affiliates, Associates or
transferees hereunder or any failure to make any such determination.




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




          Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split-up, combination or exchange
shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver to the Rights Agent for




12









 




cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.




          Section 9. Reservation and Availability of Capital Stock.




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




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




          (c) The Company shall use its best efforts to (i) prepare and file, as soon as practicable
following the first occurrence of a Flip-In Event or, if applicable, as soon as practicable
following the earliest date after the first occurrence of a Flip-In Event on which the
consideration to be delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section 11(a)(iii) hereof), a
registration statement on an appropriate form under the Securities Act with respect to the
securities purchasable upon exercise of the Rights, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various
states in connection with the exercisability of the Rights. The Company may temporarily suspend,
for a period of time not to exceed 90 days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. In addition, if the Company
shall determine that the Securities Act requires an effective registration statement under the
Securities Act following the Distribution Date, the Company may temporarily suspend the
exercisability of




13









 




the Rights until such time as such a registration statement has been declared 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 if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not be permitted under
applicable law or any required registration statement shall not have been declared effective.




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




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




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




14









 




limitation, the right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.




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




          (ii) Subject to Sections 23 and 24 of this Agreement, in the event any
Person shall, at any time after the Record Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is (1) a Flip-Over Event or (2) an
acquisition of shares of Common Stock pursuant to a Permitted Offer (provided that this
clause (2) shall cease to apply if such Acquiring Person thereafter becomes the Beneficial
Owner of any additional shares of Common Stock other than pursuant to such Permitted Offer
or a transaction set forth in Section 13(a) or 13(d) hereof), then, (x) the
Purchase Price shall be adjusted to be the Purchase Price immediately prior to the first
occurrence of a Flip-In Event multiplied by the number of Fractional Shares of Preferred
Stock for which a Right was exercisable immediately prior to such first occurrence and (y)
each holder of a Right (except as provided below in Section 11(a)(iii) and in
Section 7(e) hereof) shall thereafter have the right to receive, upon exercise
thereof at a price equal to the then current Purchase Price in accordance with the terms of
this Agreement, in lieu of Fractional Shares of Preferred Stock theretofore exercisable,
such number of shares of Common Stock of the Company as shall equal the result obtained by
dividing the Purchase Price by 50% of the Current Market Price per share of Common Stock on
the date of such first occurrence (such number of shares, the “Adjustment Shares”);
provided that the



15









 






Purchase Price and the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring after the date of such first
occurrence.




          (iii) In the event that the number of shares of Common Stock that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall, to the extent permitted by applicable law and regulation, (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of
a Right (computed using the Current Market Price used to determine the number of Adjustment
Shares) (the “Current Value”) over (2) the Purchase Price (such excess is herein
referred to as the “Spread”), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon the exercise of the Rights and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock, such as the Preferred Stock that the Board
of Directors of the Company has determined to have the same value as shares of Common Stock
(such shares of preferred stock being referred to as the “Common Stock
Equivalents”)), (4) debt securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board of Directors of the Company based upon
the advice of a nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Flip-In Event and (y) the date on which
the Company’s right of redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the “Flip-In Trigger Date”), then the
Company shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If 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, the 30-day period set forth above may be
extended to the extent necessary, but not more than 90 days after the Flip-In Trigger Date,
in order that the Company may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the “Substitution Period”).
To the extent that the Company or the Board of Directors determines that some action need be
taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be made pursuant
to such first 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 Common Stock shall be the Current Market



16









 







Price per share of the Common Stock on the Flip-In Trigger Date and the value of any
Common Stock Equivalent shall be deemed to have the same value as the Common Stock on such
date.



          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within 45 calendar days after such record date) Preferred Stock (or shares having
substantially the same rights, privileges and preferences as the shares of Preferred Stock
(“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or per share of Equivalent
Preferred Stock (or having a conversion price per share, if a security convertible into Preferred
Stock or Equivalent Preferred Stock) less than the Current Market Price per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of shares of Preferred Stock that the aggregate offering price of
the total number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so to be offered)
would purchase at such Current Market Price, and the denominator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration, part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.




          (c) In case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Market Price per share of
Preferred Stock on such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be such Current Market
Price per share of Preferred Stock. Such adjustments shall be made successively




17









 




whenever such a record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price that would have been in effect if
such record date had not been fixed.





     (d) (i) For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share
of any security (a “Security” for the purpose of this Section 11(d)(i)) of a Person
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 immediately prior to but not including such
date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof,
the “Current Market Price” per share of a Security on any date shall be deemed to be
the average of the daily Closing Prices per share of such Security for the 10 consecutive
Trading Days immediately following but not including such date; provided,
however, that in the event that the Current Market Price per share of a Security is
determined during a period following the announcement of (A) a dividend or distribution on
such Security other than a regular quarterly cash dividend or the dividend of the Rights, or
(B) any subdivision, combination or reclassification of such Security, and the ex-dividend
date for such dividend or distribution, or the record date for such subdivision, combination
or reclassification, shall not have occurred prior to the commencement of the requisite 30
Trading Day or 10 Trading Day period, as set forth above, then, and in each such case, the
Current Market Price shall be properly adjusted to take into account ex-dividend trading.
If a Security is not publicly held or not so listed or traded, “Current Market
Price” per share shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.




          (ii) For all purposes of this Agreement, the Current Market Price of a Fractional Share
of Preferred Stock shall be equal to the Current Market Price of one share of Preferred
Stock divided by 1000.



          (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments that 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-thousandth of a Common Share or other share or one-millionth of
a share of Preferred Stock, as the case may be or to such other figure as the Board of Directors
may deem appropriate. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii) the Expiration Date.




          (f) If as a result of an adjustment made pursuant to Section 11(a) or Section
13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive, in
respect of such Right, any shares of capital stock other than Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in Sections
11(a), (b),




18









 







(c), (e), (f), (g), (h), (i), (j),
(k) and (m) hereof, and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock shall apply on
like terms to any such other shares.




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




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




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




          (j) Irrespective of any adjustment or change in the Purchase Price or the number of
Fractional Shares of Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the Purchase Price per




19









 




Fractional Share and the number of Fractional Shares that were expressed in the initial Rights
Certificates issued hereunder.




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then par value, if any, or the stated capital of the number of Fractional Shares of Preferred
Stock or other securities issuable upon exercise of a Right, the Company shall take any corporate
action that may, in the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable such number of Fractional Shares of Preferred Stock
or such other securities 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 the issuance to the holder of any Right exercised after
such record date the number of Fractional Shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above the number of
Fractional Shares of Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder’s right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment.




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




          (n) The Company covenants and agrees that it shall not, at any time that there is an
Acquiring Person, (i) consolidate with any other Person, (ii) merge with or into any other Person,
or (iii) sell, lease or transfer (or permit one or more Subsidiaries to sell, lease or transfer),
in one transaction or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons, if (x) at the time of or immediately after such consolidation, merger,
sale, lease or transfer there are any rights, warrants or other instruments or securities of the
Company or any other Person outstanding or agreements, arrangements or understandings in effect
that would substantially diminish or otherwise eliminate the benefits intended to be afforded by
the Rights, (y) prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease or transfer, the stockholders or other equity owners of the Person who constitutes, or
would constitute, the “Principal Party” for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of its Affiliates or
Associates, or (z) the identity, form or nature of organization of the Principal Party (including,
without limitation, the selection of the Person that will be the Principal Party as a result of the




20









 




Company’s entering into one or more consolidations, mergers, sales, leases, transfers or
transactions with more than one party) would preclude or limit the exercise of Rights or otherwise
diminish substantially or eliminate the benefits intended to be afforded by the Rights.




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




          (p) Notwithstanding Section 3(c) hereof or any other provision of this Agreement to
the contrary, in the event that the Company shall at any time after the Record Date and prior to
the Distribution Date (i) declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock, (iii) combine the
outstanding shares of Common Stock into a smaller number of shares or (iv) otherwise reclassify the
outstanding shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter with Rights, 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 “Adjustment 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. In lieu of such adjustment
in the number of Rights associated with one share of Common Stock, the Company may elect to adjust
the number of Fractional Shares of Preferred Stock purchasable upon the exercise of one Right and
the Purchase Price. If the Company makes such election, the number of Rights associated with one
share of Common Stock shall remain unchanged, and the number of Fractional Shares of Preferred
Stock purchasable upon exercise of one Right and the Purchase Price shall be proportionately
adjusted so that (i) the number of Fractional Shares of Preferred Stock purchasable upon exercise
of a Right following such adjustment shall equal the product of the number of Fractional Shares of
Preferred Stock purchasable upon exercise of a Right immediately prior to such adjustment
multiplied by the Adjustment Fraction and (ii) the Purchase Price following such adjustment shall
equal the product of the Purchase Price immediately prior to such adjustment multiplied by the
Adjustment Fraction.




          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or Section 13 hereof, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with each
transfer agent for the Common Stock and the Preferred Stock, a copy of such certificate and (c)
mail a brief summary thereof to each registered holder of a Rights Certificate (or, if prior to the
Distribution Date, to each registered holder of a certificate representing shares of Common Stock)
in accordance with Section 26 hereof. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained.





21











 





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




          (a) In the event that, from and after the time an Acquiring Person has become such, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person,
and the Company shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or merger, and, in
connection with such consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of the Company or any other Person
or cash or any other property, or (z) the Company shall sell, lease or otherwise transfer (or one
or more of its Subsidiaries shall sell, lease or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any wholly owned Subsidiary of the Company or any combination thereof in
one or more transactions each of which complies (and all of which together comply) with Section
11(o) hereof), then, and in each such case (except as may be contemplated by Section
13(d) hereof), proper provision shall be made so that: (i) the Purchase Price shall be adjusted
to be the Purchase Price immediately prior to the first occurrence of a Triggering Event multiplied
by the number of Fractional Shares of Preferred Stock for which a Right was exercisable immediately
prior to such first occurrence; (ii) on and after the Distribution Date, each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of Fractional Shares of Preferred Stock of the Company, such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result obtained by
dividing the Purchase Price by 50% of the Current Market Price per share of the Common Stock of
such Principal Party on the date of consummation of such Flip-Over Event; provided that the
Purchase Price and the number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of such first occurrence of a Triggering Event or after the date of
such Flip-Over Event, as applicable; (iii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Flip-Over Event, all the obligations and duties of the Company
pursuant to this Agreement; (iv) the term “Company” shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following the first occurrence of a Flip-Over
Event; (v) such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (vi) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any Flip-Over Event.




          (b) “Principal Party” shall mean




22









 









     (i) in the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer the Common Stock of which has the greatest
aggregate market value, or (B) if no securities are so issued, (x) the Person that survives
such consolidation or is the other party to the merger and survives such merger, or, if
there is more than one such Person, the Person the Common Stock of which has the greatest
aggregate market value 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); and




     (ii) in the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of the
assets 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, the Person the Common Stock of which
has the greatest aggregate market value;


provided, however, that in any such case, if the Common Stock of such Person is not
at such time and has not been continuously over the preceding twelve-month period registered under
Section 12 of the Exchange Act, and if (1) such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered, “Principal Party”
shall refer to such other Person; (2) such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of all of which are and have been so registered, “Principal
Party” shall refer to whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (3) 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 (1) and (2) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a “Subsidiary” of both or all of
such joint venturers and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.




          (c) The Company shall not consummate any Flip-Over Event unless each Principal Party (or
Person that may become a Principal Party as a result of such Flip-Over Event) shall have a
sufficient number of authorized shares of its Common Stock that have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with this Section
13 and unless prior thereto the Company and each such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of such Flip-Over Event, the Principal Party at its own expense will





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



23









 






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




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




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


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




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




          Section 14. Fractional Rights and Fractional Shares.




          (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates
or scrip evidencing fractional Rights. In lieu of such fractional Rights, there shall be paid to
the registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the Closing Price of one
Right for the Trading Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable.




          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than, except as provided in Section 7(c) hereof, fractions that are integral multiples of a
Fractional Share of Preferred Stock) upon exercise of the Rights or to distribute certificates




24









 




or scrip evidencing fractional shares of Preferred Stock (other than, except as provided in
Section 7(c) hereof, fractions that are integral multiples of a Fractional Share of
Preferred Stock). Interests in fractions of shares of Preferred Stock in integral multiples of a
Fractional Share of Preferred Stock may, at the election of the Company in its sole discretion, be
evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of a
Fractional Share of Preferred Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of one one-thousandth of the Closing Price of a share of Preferred Stock for the
Trading Day immediately prior to the date of such exercise.




          (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the Closing Price of
one share of Common Stock for the Trading Day immediately prior to the date of such exercise.




          (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 of a Right, except as permitted by
this Section 14.




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




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




25









 





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




          (b) after the Distribution Date, the Rights Certificates will be transferable only on the
registry books of the Rights Agent if surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer
and with the form of assignment set forth on the reverse side thereof and the certificate contained
therein duly completed and fully executed;




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




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




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




          Section 18. Concerning the Rights Agent.




          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other reasonable 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




26









 




it harmless against, any loss, liability or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in the premises.




          (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 Rights Certificate or certificate for the Preferred Stock or the Common Stock or
for other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper
or document believed by it, after proper inquiry or examination, to be genuine and to be signed,
executed and, where necessary, guaranteed, verified or acknowledged, by the proper Person or
Persons.




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




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




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




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




27









 





          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of “Current Market Price”) be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, the Corporate Controller, or 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 only for its own gross negligence, bad faith or
willful misconduct. In no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.




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




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




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




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the




28









 




Chief Executive Officer, the President, the Chief Financial Officer, the Corporate Controller,
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 to be taken
by it in good faith in accordance with instructions of any such officer.




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




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




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




          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative response to clause (1)
and/or (2) of such certificate, 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 with respect to the Common Stock and the
Preferred Stock by registered or certified mail, and to the registered holders, if any, of the
Rights Certificates by first-class mail. In the event the transfer agency relationship in effect
between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have
resigned automatically and be discharged from its duties under this Rights Agreement as of the
effective date of such termination, and the Company shall be responsible for sending any required
notice. The Company may remove the Rights Agent or any successor Rights Agent (with or without
cause) 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 and the Preferred Stock, by
registered or certified mail, and to the registered holders of the Rights Certificates, if any, by
first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent. Notwithstanding
the foregoing provisions of this Section 21, in no event shall the resignation or removal
of a Rights Agent be effective until a successor Rights Agent shall have




29









 




been appointed and have accepted such appointment. 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 registered holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the Rights Agent or the registered holder
of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) an entity organized and doing business under the laws of the United States or any
state thereof, in good standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or state authority
and which has at the time of its appointment as Rights Agent a combined capital and surplus of at
least $10 million or (b) an affiliate of a corporation or trust company described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent with respect to the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.




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




30









 





          Section 23. Redemption and Termination.




          (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier
of (i) the close of business on the tenth day following the first date of public announcement of
the occurrence of a Flip-In Event and (ii) the Expiration Date, cause the Company to redeem all but
not less than all the then outstanding Rights at a redemption price of $0.001 per Right, as such
amount may be appropriately adjusted, if necessary, to reflect any stock split, stock dividend or
similar transaction (such redemption price being hereinafter referred to as the “Redemption
Price”); provided, however, that the Rights may not be redeemed following any
merger to which the Company is a party that occurs when there is an Acquiring Person if such
redemption was not approved prior to such merger by each of (i) the Board of Directors of the
Company and (ii) the stockholders of the Company acting at a stockholders’ meeting. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Flip-In Event until such time as the Company’s right of redemption hereunder
has expired. The Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Market Price of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.




          (b) Immediately upon the effectiveness of the action of the Board of Directors of the Company
ordering the redemption of the Rights (the effectiveness of which action may be conditioned on the
occurrence of one or more events or on the existence of one or more facts or may be effective at
some future time), evidence of which shall be filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the effectiveness of the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and
the registered holders of the then outstanding Rights by mailing such notice to all such holders at
each holder’s last address as it appears upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the Company for the Common Stock. Any notice that
is mailed in the manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of 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 and from time to
time after the occurrence of a Flip-In Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and void pursuant to the
provisions of Section 7(e) hereof) for shares of Common Stock or Common Stock Equivalents
or any combination thereof, at an exchange ratio of one share of Common Stock, or such number of
Common Stock Equivalents or units representing fractions thereof as would be deemed to have the
same value as one share of Common Stock, per Right, appropriately adjusted, if necessary, to
reflect any stock split, stock dividend or similar transaction (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board
of Directors may not effect such exchange at any time after (i) any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the shares of Common Stock then outstanding or (ii) the occurrence of a Flip-Over
Event.




31









 





          (b) Immediately upon the effectiveness of the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to and in accordance with subsection (a) of this
Section 24 (the effectiveness of which action may be conditioned on the occurrence of one
or more events or on the existence of one or more facts or may be effective at some future time)
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 and/or Common Stock Equivalents equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of
any such exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the registered holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange of the shares of Common Stock
and/or Common Stock Equivalents for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange shall be effected as
nearly pro rata as possible based on the number of Rights (other than Rights that have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.




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




          (d) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates or scrip evidencing fractional shares of Common Stock upon exchange of the
Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights 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 value of a whole share of Common
Stock. For purposes of this Section 24, the value of a whole share of Common Stock shall
be the Closing Price per share of Common Stock for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24, and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Stock on such date.




          Section 25. Notice of Certain Events.




          (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the




32









 




subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a wholly owned Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), or to effect any sale, lease or other
transfer of all or substantially all the Company’s assets to any other Person or Persons (other
than a wholly owned Subsidiary of the Company in a transaction that complies with Section
11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of record of a Rights Certificate,
to the extent feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock dividend, distribution
of rights or warrants, or the date on which such reclassification, consolidation, merger, sale,
lease, transfer, liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at least 20 days prior
to the date of the taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the legality or
validity of the action taken by the Company or the vote upon any such action.




          (b) In case any Flip-In Event or Flip-Over Event shall occur, then (i) the Company shall as
soon as practicable thereafter give to each registered holder of a Rights Certificate (or if
occurring prior to the Distribution Date, the registered holders of Common Stock), in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13(a) hereof, and (ii) all references in the preceding paragraph to Preferred Stock
shall be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities.




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



ION Geophysical Corporation

2105 CityWest Blvd, Suite 400

Houston, Texas 77042-2839

Attention: R. Brian Hanson

Facsimile: (281) 879-3674



Copy to (which shall not constitute notice):




33









 




ION Geophysical Corporation

2105 CityWest Blvd, Suite 400

Houston, Texas 77042-2839

Attention: David L. Roland

Facsimile: (281) 879-3600



And



Mayer Brown LLP

700 Louisiana Street, Suite 3400

Houston, Texas 77002

Attention: Marc H. Folladori

Facsimile: (713) 238-4696



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



Computershare Trust Company, N.A.

250 Royall Street

Canton, Massachusetts 02021

Attention: Client Services

Facsimile: (972) 943-8823



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




              Section 27. Supplements and Amendments. Except as otherwise provided in this
Section 27, at any time when 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 Rights or
holders of Preferred Stock. At any time when the Rights are not redeemable, except as provided in
the last sentence of this Section 27, the Company may and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of any holders of
Rights in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein, (iii) to shorten or
lengthen any time period hereunder or (iv) to change or supplement the provisions hereunder in any
manner that the Company may deem necessary or desirable; provided that no such amendment or
supplement shall materially adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); and further provided
that this Agreement may not be supplemented or amended pursuant to this sentence to lengthen (A) a
time period relating to when the Rights may be redeemed or (B) any other time




34









 




period unless the lengthening of such other time period is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights (other than
any Acquiring Person and its Affiliates and Associates). Upon the delivery of a certificate from
an appropriate officer of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment; provided, however, that the Rights Agent may, but shall
not be obligated to, enter into any such supplement or amendment that affects the Rights Agent’s
own rights, duties or immunities under this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made that decreases the Redemption
Price.




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




          Section 29. Determinations and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of shares of Preferred Stock or Common
Stock outstanding at any particular time, including for purposes of determining the particular
percentage of such outstanding shares of Preferred Stock or Common Stock of which any Person is the
Beneficial Owner, shall, subject to the last sentence of the definition of Beneficial Owner in
Section 1, be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement.
The Board of Directors of the Company (or, as set forth herein, certain specified members thereof)
shall have the exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of the Company or to the Company,
or as may be necessary or advisable in the administration of this Agreement, including, without
limitation, the right and power 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 this Agreement).
All such actions, calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) that are done or made by the Board
of Directors of the Company in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights, as such, and all other parties, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.




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




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




35









 




invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, then, unless there has occurred any
merger referred to in the proviso to the first sentence of Section 23(a), the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not expire until
the close of business on the tenth day following the date of such determination by the Board of
Directors of the Company or, if earlier, immediately prior to any such merger. Without limiting
the foregoing, if any provision requiring that a determination be made by less than the entire
Board of Directors of the Company is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, such determination shall then be made by the entire Board of
Directors of the Company.




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




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




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




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




[Signature page follows]




36









 





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



	 	 	 	 	 	 	 
	 	 	ION GEOPHYSICAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David L. Roland	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	David L. Roland 	 	 
	 

	 	Title:	 	Senior Vice President, General
Counsel and Corporate Secretary 	 	 
	 
	 	 	 	 	 	 
	 	 	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Edward Gurgul 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Edward Gurgul 	 	 
	 

	 	Title:	 	Manager, Investor Services 	 	 






 


37









 





Exhibit A




FORM OF

CERTIFICATE OF DESIGNATIONS

OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK OF

ION GEOPHYSICAL CORPORATION




Pursuant to Section 151 of the Delaware General Corporation Law




     The undersigned duly authorized officers of ION Geophysical Corporation (the “Corporation”), a
Delaware corporation, in accordance with the provisions of Section 103 of the Delaware General
Corporation Law (the “DGCL”), DO HEREBY CERTIFY:



     That the
Board of Directors of the Corporation on December 19, 2008, at a meeting duly called
and held, adopted the following resolution creating a series of 200,000 shares of Preferred Stock,
par value $0.01 per share, designated as Series A Junior Participating Preferred Stock:



     RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors by
the Restated Certificate of Incorporation of the Corporation (as amended from time to time, the
“Certificate of Incorporation”), the Board of Directors hereby authorizes that a series of
Preferred Stock, par value $0.01 per share, of the Corporation be, and hereby is, created and
approved for issuance out of the Preferred Stock authorized in the Certificate of Incorporation,
and hereby fixes the designation and amount thereof and the voting powers, preferences and
relative, participating, optional or other special rights, and the qualifications, limitations or
restrictions thereof, as follows:



     1. Designation and Amount. There shall be a series of Preferred Stock of the
Corporation which shall be designated as “Series A Junior Participating Preferred Stock,” par value
$0.01 per share, (hereinafter called “Series A Preferred Stock”), and the number of shares
constituting such series shall be 200,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors and by the filing of a certificate pursuant to the provisions
of the DGCL stating that such increase or reduction has been so authorized; provided,
however, that no decrease shall reduce the number of shares of Series A Preferred Stock to
a number less than the number of shares of Series A Preferred Stock issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding securities issued by the
Corporation.



     2. Dividends and Distributions.



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



A-1 









 







first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to 1,000 times the aggregate per share amount of all cash
dividends (subject to the provision for adjustment hereinafter set forth), and 1,000 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 (hereinafter defined) or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared on the common
stock, par value $0.01 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 A Preferred Stock. In
the event the Corporation shall at any time (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying each such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.



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



     (C) No dividend or distribution (other than a dividend payable in shares of Common Stock)
shall be paid or payable to the holders of shares of Common Stock unless, prior thereto, all
accrued but unpaid dividends to the date of such dividend or distribution shall have been paid to
the holders of shares of Series A Preferred Stock.



     (D) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A 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 A 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 A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared thereon, which record date
shall be no more than 30 days prior to the date fixed for the payment thereof.



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



A-2 









 





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



     (B) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.



     (C) (i) Whenever, at any time or times, dividends payable on any share or shares of Series A
Preferred Stock shall be in arrears in an amount equal to at least six full quarterly dividends
(whether or not declared and whether or not consecutive), the holders of record of the outstanding
Preferred Stock shall have the exclusive right, voting separately as a single class, to elect two
directors of the Corporation at a special meeting of shareholders of the Corporation or at the
Corporation’s next annual meeting of shareholders, and at each subsequent annual meeting of
shareholders, as provided below. At elections for such directors, the holders of shares of Series
A Preferred Stock shall be entitled to cast one vote for each one one-thousandth of a share of
Series A Preferred Stock held.




     (ii) Upon the vesting of such right of the holders of the Preferred Stock, the maximum
authorized number of members of the Board of Directors shall automatically be increased by
two and the two vacancies so created shall be filled by vote of the holders of the
outstanding Preferred Stock as hereinafter set forth. A special meeting of the shareholders
of the Corporation then entitled to vote shall be called by the Chairman or the President or
the Secretary of the Corporation, if requested in writing by the holders of record of not
less than 10% of the Preferred Stock then outstanding. At such special meeting, or, if no
such special meeting shall have been called, then at the next annual meeting of shareholders
of the Corporation, the holders of the shares of the Preferred Stock shall elect, voting as
above provided, two directors of the Corporation to fill the aforesaid vacancies created by
the automatic increase in the number of members of the Board of Directors. At any and all
such meetings for such election, the holders of a majority of the outstanding shares of the
Preferred Stock shall be necessary to constitute a quorum for such election, whether present
in person or by proxy, and such two directors shall be elected by the vote of at least a
plurality of shares held by such shareholders present or represented at the meeting. Any
director elected by holders of shares of the Preferred Stock pursuant to this Section
3 may be removed at any annual or special meeting, by vote of a majority of the
shareholders voting as a class who elected such director, with or without cause. In case
any vacancy shall occur among the directors elected by the holders of the Preferred Stock
pursuant to this Section 3, such vacancy



A-3 









 







may be filled by the remaining director so elected, or his successor then in office,
and the director so elected to fill such vacancy shall serve until the next meeting of
shareholders for the election of directors. After the holders of the Preferred Stock shall
have exercised their right to elect directors in any default period and during the
continuance of such period, the number of directors shall not be further increased or
decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari passu with the
Series A Preferred Stock.




     (iii) The right of the holders of the Preferred Stock, voting separately as a class, to
elect two members of the Board of Directors of the Corporation as aforesaid shall continue
until, and only until, such time as all arrears in dividends (whether or not declared) on
the Preferred Stock shall have been paid or declared and set apart for payment, at which
time such right shall terminate, except as herein or by law expressly provided, subject to
revesting in the event of each and every subsequent default of the character
above-mentioned. Upon any termination of the right of the holders of the shares of the
Preferred Stock as a class to vote for directors as herein provided, the term of office of
all directors then in office elected by the holders of Preferred Stock pursuant to this
Section shall terminate immediately. Whenever the term of office of the directors elected
by the holders of the Preferred Stock pursuant to this Section shall terminate and the
special voting powers vested in the holders of the Preferred Stock pursuant to this Section
shall have expired, the maximum number of members of the Board of Directors of the
Corporation shall be such number as may be provided for in the Bylaws of the Corporation or
in a resolution of the Board of Directors adopted pursuant thereto, irrespective of any
increase made pursuant to the provisions of this Section.



     (D) Except as set forth herein, holders of Series A 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.



     4. Certain Restrictions.



     (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares of Series A 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 A Preferred Stock;




     (ii) declare or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably on the Series A 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;



A-4 









 






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




     (iv) purchase or otherwise acquire for consideration any shares of Series A 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 such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the respective series or
classes.



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



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



     6. Liquidation, Dissolution or Winding Up.



     (A) Upon any voluntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received $1.00 per share,
plus an amount per share equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (collectively, the “Series A Liquidation Preference”).
Following the payment of the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common
Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by
(ii) 1,000 (as appropriately adjusted as set forth in subparagraph C below to reflect such events
as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the “Adjustment Number”). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of
Series A Preferred Stock and Common Stock, respectively, holders of Series A Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio, on a per
share basis, of the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.



A-5 









 





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



     (C) In the event the Corporation shall at any time (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction, the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.



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



     8. Redemption. The shares of a Series A Preferred Stock shall not be redeemable by
the Corporation. The preceding sentence shall not limit the ability of the Corporation to purchase
or otherwise deal in such shares of stock to the extent permitted by law.



     9. Ranking. The Series A Preferred Stock shall rank junior to all other series of the
Corporation’s preferred stock (whether with or without par value) as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall provide otherwise.



     10. Amendment. The Certificate of Incorporation of the Corporation, as amended as of
this date, shall not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the outstanding shares of
Series A Preferred Stock, voting separately as a class.



A-6 









 





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



     IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by [NAME], its
[TITLE], and the same to be attested by [NAME], its [TITLE] on this ___day of                     .



	 	 	 	 	 	 	 	 	 
	 	 	 	 	ION GEOPHYSICAL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	Attest
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 






A-7 









 





Exhibit B




[Form of Rights Certificate]




			
	 	 	 
	Certificate No. R-
	 	                     Rights





NOT EXERCISABLE AFTER DECEMBER 29, 2011 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.




RIGHTS CERTIFICATE




ION GEOPHYSICAL CORPORATION




     This certifies that                                         , or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of December 30, 2008, as it may
from time to time be supplemented or amended (the “Rights Agreement”), between ION
Geophysical Corporation, a Delaware corporation (the “Company”), and Computershare Trust
Company, N.A., a federally chartered trust company (the “Rights Agent”), to purchase from
the Company at any time prior to 5:00 p.m. (New York City time) on December 29, 2011 at the
principal office or offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-thousandth of a fully paid, nonassessable share (a “Fractional
Share”) of Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the
Company, at a purchase price of $21.00 per one one-thousandth of a share (the “Purchase
Price”), upon presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate set forth on the reverse hereof duly executed. The Purchase
Price may be paid in cash or by certified check, cashier’s or official bank check or bank draft
payable to the order of the Company or the Rights Agent. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per Fractional Share set forth above, are the number and
Purchase Price as of [ ], based on the Preferred Stock as constituted at such date.
The Company reserves the right to require prior to the occurrence of a Triggering Event (as such
term is defined in the Rights Agreement) that a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.



     From and after the first occurrence of a Triggering Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by or
transferred to (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person,



B-1 









 







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



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



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



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



     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at its option at a redemption price of $0.001 per Right,
payable, at the election of the Company, in cash or shares of Preferred Stock or such other
consideration as the Board of Directors may determine, at any time prior to the earlier of the
close of business on (a) the tenth day following the first public announcement of the occurrence of
a Flip-In Event (as such time period may be extended or shortened pursuant to the Rights Agreement)
and (b) the Expiration Date (as such term is defined in the Rights Agreement) or (ii) may be
exchanged in whole or in part for shares of the Company’s Common Stock, par value $0.01 per share,
and/or other equity securities of the Company deemed to have the same value as shares of Preferred
Stock, at any time prior to a person’s becoming the Beneficial Owner (as such term is defined in
the Rights Agreement) of 50% or more of the shares of Common Stock outstanding or the occurrence of
a Flip-Over Event.



     No fractional shares of Preferred Stock are required to be issued upon the exercise of any
Right or Rights evidenced hereby (other than, except as set forth above, fractions that are
integral multiples of a Fractional Share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.



B-2 









 





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



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



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



Dated as of                          ,                     




	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	ION GEOPHYSICAL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Countersigned:
	 	 	 	 	 	 	 	 






	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signature
	 	 






B-3 









 





[Form of Reverse Side of Rights Certificate]




FORM OF ASSIGNMENT




(To be executed by the registered holder if such holder desires

to transfer any Rights evidenced by the Rights Certificate.)



FOR VALUE RECEIVED                                                              hereby sells, assigns and transfers
unto                                                            




(Please print name and address of transferee)



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




Dated:                                         , 20___




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature
	 	 






Signature Guaranteed:



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





B-4 









 








CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



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



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



	 	 	 
	Dated:                     ,                     
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	Signature

	 	Guaranteed:





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




NOTICE




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



B-5 









 





FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise

Rights represented by the Rights Certificate)




To:     ION Geophysical Corporation




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



Please insert social security

or other identifying number



 




(Please print name and address)



 





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



Please insert social security

or other identifying number



 




(Please print name and address)




 


Dated:                     ,                     




	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature
	 	 






Signature Guaranteed:



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





B-6 









 








CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



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



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



	 	 	 	 	 
	Dated:                     ,                     
	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature
	 	 






Signature Guaranteed:



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




NOTICE




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




B-7