Exhibit 4.1


 


HOSPIRA, INC.  




 


and


 


 


EQUISERVE TRUST COMPANY, N.A.


as Rights Agent


 


 












 


 


RIGHTS
AGREEMENT



DATED AS OF APRIL 28, 2004


EFFECTIVE AS OF
APRIL 12, 2004


 

















 


TABLE OF CONTENTS


 


	
  SECTION 1.

  	
  CERTAIN DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  APPOINTMENT OF
  RIGHTS AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  ISSUE OF
  RIGHTS CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  FORM OF RIGHTS
  CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.

  	
  COUNTERSIGNATURE
  AND REGISTRATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.

  	
  TRANSFER,
  SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED,
  DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.

  	
  EXERCISE
  OF RIGHTS; PURCHASE PRICE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.

  	
  CANCELLATION
  AND DESTRUCTION OF RIGHTS CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.

  	
  RESERVATION
  AND AVAILABILITY OF CAPITAL STOCK

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  PREFERRED
  STOCK RECORD DATE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  11.

  	
  ADJUSTMENT
  OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  12.

  	
  CERTIFICATE
  OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.

  	
  CONSOLIDATION,
  MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  14.

  	
  FRACTIONAL
  RIGHTS AND FRACTIONAL SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  RIGHTS OF ACTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  AGREEMENT OF
  RIGHTS HOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  17.

  	
  RIGHTS
  CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  CONCERNING THE
  RIGHTS AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  19.

  	
  MERGER
  OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  DUTIES OF RIGHTS
  AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
  CHANGE OF RIGHTS
  AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  22.

  	
  ISSUANCE
  OF NEW RIGHTS CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
  REDEMPTION AND
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 24.

  	
  EXCHANGE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 25.

  	
  NOTICE OF CERTAIN
  EVENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  26.

  	
  NOTICES

  	
   

  



 


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  SECTION 27.

  	
  SUPPLEMENTS AND
  AMENDMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 28.

  	
  SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  29.

  	
  DETERMINATIONS
  AND ACTIONS BY THE BOARD OF DIRECTORS, ETC

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 30.

  	
  BENEFITS OF
  THIS AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 31.

  	
  SEVERABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 32.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 33.

  	
  COUNTERPARTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 34.

  	
  DESCRIPTIVE HEADINGS

  	
   

  



 


ii

















 


	
  Exhibit
  A -

  	
   

  	
  Form
  of Certificate of Designations of Series A Junior Participating Preferred
  Stock

  
	
   

  	
   

  	
   

  
	
  Exhibit
  B -

  	
   

  	
  Form
  of Rights Certificate

  



 


iii

















 


RIGHTS AGREEMENT


 


Rights Agreement, dated
as of April 28, 2004, effective as of April 12, 2004 (the “Agreement”),
by and between Hospira, Inc., a Delaware corporation (the “Company”),
and EquiServe Trust Company, N.A., a national banking association (the “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 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 April 30, 2004 (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 Series A Junior Participating Preferred Stock of the
Company, 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 15% 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 15% 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 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 or 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 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


 


1

















 


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 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, (1) 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 an officer or general partner (or 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, (2) 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 (3) 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 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)


 


2

















 


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.


 


“Business Day” shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in New York City are
authorized or obligated by law or 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


 


3

















 


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
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.


 


4

















 


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


 


“Exempt Person” shall mean 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.


 


“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 April 11, 2014.


 


“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-hundredth of a share of Preferred Stock.


 


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


 


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


 


“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.


 


5

















 


“Preferred Stock” shall mean shares of Series A
Junior Participating Preferred Stock, par value $0.01 per share, of the Company
having the rights, powers and preferences set forth in the form of Certificate
of Designations attached hereto as Exhibit A and, to the extent that
there is not a sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the Rights, any other
series of Preferred Stock, par value $0.01 per share, of the Company designated
for such purpose containing terms substantially similar to the terms of the
Series A Junior Participating Preferred Stock.


 


“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.


 


“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 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


 


6

















 


securities
exchange but is quoted by NASDAQ, a day on which NASDAQ 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.


 


(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


 


7

















 


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 Hospira, Inc. (the “Company”)
and EquiServe Trust Company, N.A.  (the “Rights Agent”), dated as of
April 12, 2004, 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.


 


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


 


8

















 


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 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


 


9

















 


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 sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split-up,
combination or exchange of Rights Certificates.


 


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


 


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 $100,
and shall be subject to adjustment from time to


 


10

















 


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 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


 


11

















 


(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 as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.


 


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


 


12

















 


(b)  So long as any shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights 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
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,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to 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


 


13

















 


the
issuance or delivery of the Rights Certificates and of any certificates for a
number of Fractional Shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights.  The Company shall not, however, be required
to pay any 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 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 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 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 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 (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
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.


 


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


 


14

















 


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 Purchase Price in accordance with the terms of
this Agreement, in lieu of shares of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by 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 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 (including, without
limitation, the Preferred Stock) that the Board of Directors of the Company has


 


15

















 


determined to have
the same value as shares of Common Stock (such shares of preferred stock are
herein referred to as “Common Stock Equivalents”)), (4) debt securities
of the Company, (5) other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, 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 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


 


16

















 


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 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 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 Common Stock of a Person on any date shall be deemed to be the
average of the daily Closing Prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the “Current
Market Price” per share of Common Stock on any date shall be deemed to be
the average of the daily Closing Prices per share of such Common Stock for the
10 consecutive Trading Days immediately following such date; provided, however,
that in the event that the Current Market Price per share of Common Stock is
determined during a period following the announcement of (A) a dividend or
distribution on such Common Stock other than a regular quarterly cash dividend
or the


 


17

















 


dividend of the
Rights, or (B) any subdivision, combination or reclassification of such Common
Stock, and the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, shall not
have occurred prior to the commencement of the requisite 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 the Common
Stock is not publicly held or not so listed or traded, “Current Market Price”
per share shall mean the fair value per share as determined in good faith by
the Board 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 the purpose of any computation
hereunder, the “Current Market Price” per share (or Fractional Share) of
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the
last sentence thereof).  If the Current
Market Price per share (or Fractional Share) of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is not
publicly held or listed or traded in a manner described in clause (i) of this Section
11(d), the “Current Market Price” per share of Preferred Stock shall
be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Current Market Price per share of the Common
Stock.  If neither the Common Stock nor
the Preferred Stock is publicly held or so listed or traded, Current Market
Price per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board 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. 
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 100.


 


(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 ten-thousandth of a share
of Common Stock or other share or to the nearest ten-thousandth of a Fractional
Share of Preferred Stock, as the case may be. 
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three 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


 


18

















 


practicable
to the provisions with respect to the Preferred Stock contained in Sections
11(a), (b), (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 ten-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 ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price.  The Company shall make a public
announcement of its election to adjust the number of 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


 


19

















 


Certificates
theretofore and thereafter issued may continue to express the Purchase Price
per 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 of the
number of shares of Common 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 number of shares of Common Stock or 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 in their good faith judgment
the Board of Directors of the Company shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the current
market price, (iii) issuance wholly for cash of shares of Preferred Stock or
securities 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


 


20

















 


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 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 Preferred Stock and the
Common 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


 


21

















 


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.


 


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 Purchase Price in
accordance with the terms of this Agreement, in lieu of shares of Preferred
Stock or Common 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


 


22

















 


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


 


(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


 


23

















 


(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;


 


(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 subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired shares of
Common Stock pursuant to a 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


 


24

















 


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 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-hundredth 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


 


25

















 


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:


 


(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.


 


26

















 


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
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 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.


 


27

















 


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


 


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


 


(b)  Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person 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, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.


 


(c)  The Rights Agent shall be liable hereunder
only for its own gross negligence, bad faith or willful misconduct.  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 or 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 or Common Stock or
other securities will, when so issued, be validly authorized and issued, fully
paid and nonassessable.


 


28

















 


(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 Chief Executive Officer, the
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and 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 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with
the Company.


 


Section 21.  Change
of Rights Agent. 
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Company, and to each transfer agent of the Common Stock 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 resign automatically on the
effective date of such termination; and any required notice will be sent by the
Company. The Company may remove the Rights Agent or any successor Rights Agent
(with


 


29

















 


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 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) a corporation or
trust company organized and doing business under the laws of the United States,
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 $100,000,000 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 of the Common Stock
and the Preferred Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. 
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.


 


Section 22.  Issuance
of New Rights Certificates.  Notwithstanding any of the provisions of this Agreement or 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


 


30

















 


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


 


Section 23.  Redemption
and Termination.


 


(a)  The Board of Directors of the Company may,
at its option, at any time prior to the earlier of (i) the close of business on
the tenth 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
$0.01 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 (i) occurs when there is an Acquiring Person
and (ii) was not approved prior to such merger by the Board of Directors of the
Company and by the stockholders of the Company 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 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,


 


31

















 


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.


 


(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.


 


32

















 


Section 25.  Notice
of Certain Events.


 


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


 


Hospira, Inc.

275 N. Field Drive

Lake Forest, Illinois 60064

Attention: General Counsel


 


33

















 


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)
as follows:


 


EquiServe Trust Company,
N.A.

150 Royall Street 

Canton, Massachusetts 02021

Attention:  Client Administration


 


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 provided in the last sentence of 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 Common 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 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.


 


34

















 


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 Common Stock outstanding at any
particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which any Person is
the Beneficial Owner, shall, 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 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.


 


35

















 


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


 


[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.


 


 


	
   

  	
  HOSPIRA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EQUISERVE TRUST COMPANY, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Dennis V. Moccia

  
	
   

  	
  Title:  Managing Director

  



 

















 


Exhibit A


 


FORM OF

CERTIFICATE OF DESIGNATIONS


 


of


 


SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK


 


Pursuant to Section 151 of the Delaware
General Corporation Law


 


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


 


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


 


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


 


SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK


 


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


 


2.  Dividends and Distributions.


 


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


 


A-1

















 


Preferred
Stock with respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock, in preference to the holders of shares of any
class or series of stock of the Corporation ranking junior to the Series A
Junior Participating Preferred Stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the 1st day of March, June,
September and December in each year (each such date being referred to herein as
a “Quarterly Dividend Payment Date”), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) the
Adjustment Number (as defined below) times the aggregate per share amount of
all cash dividends, and the Adjustment Number times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock, par value $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 Junior Participating
Preferred Stock.  The “Adjustment
Number” shall initially be 100.  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.


 


(B)  The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series A Junior Participating Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.


 


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


 


A-2

















 


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 Junior Participating 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 Junior
Participating Preferred Stock shall have the following voting rights:


 


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


 


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


 


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


 


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


 


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


 


A-3

















 


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


 


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


 


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


 


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


 


4.  Certain Restrictions.


 


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


 


A-4

















 


(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 Junior Participating Preferred
Stock;


 


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


 


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


 


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


 


5.  Reacquired Shares.  Any shares of Series A Junior Participating
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 any conditions
and restrictions on issuance set forth herein.


 


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


 


A-5

















 


full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall, subject to the
prior rights of all other series of Preferred Stock, if any, ranking prior
thereto, receive their ratable and proportionate share of the remaining assets
to be distributed in the ratio of the Adjustment Number to 1 with respect to
such Series A Junior Participating Preferred Stock and Common Stock, on a per
share basis, respectively.


 


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


 


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


 


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


 


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


 


A-6

















 


closing
price for each day shall be the last sales price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange, or, if the Common Stock is not listed or admitted
to trading on the New York Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange but sales price information is reported for such security, as reported
by the National Association of Securities Dealers, Inc. Automated Quotations
System (“NASDAQ”) or such other self-regulatory organization or
registered securities information processor (as such terms are used under the
Securities Exchange Act of 1934, as amended) that then reports information
concerning the Common Stock, or, if sales price information is not so reported,
the average of the high bid and low asked prices in the over-the-counter market
on such day, as reported by NASDAQ or such other entity, or, if on any such
date the Common Stock 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 the Common Stock selected by the Board of Directors of the
Corporation.  If on any such date no
such market maker is making a market in the Common Stock, the fair value of the
Common Stock on such date as determined in good faith by the Board of Directors
of the Corporation shall be used.  The
term “Trading Day” shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business, or, if the Common Stock is not listed
or admitted to trading on any national securities exchange but is quoted by
NASDAQ, a day on which NASDAQ reports trades, or, if the Common Stock is not so
quoted, a Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions in the State of New York are not authorized or obligated by law or
executive order to close.


 


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


 


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


 


A-7

















 


each
holder of the shares called for redemption shall surrender the certificate
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the redemption
price.  If fewer than all the shares
represented by any such surrendered certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.


 


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


 


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


 


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


 


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


 


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


 


	
   

  	
   

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  



 


A-8

















 


Exhibit B


 


[Form of Rights
Certificate]


 


	
  Certificate No. R-

  	
   

  	
                     
  Rights

  



 


NOT EXERCISABLE AFTER APRIL 11, 2004 OR EARLIER IF
REDEEMED OR EXCHANGED BY THE COMPANY. 
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES SET FORTH IN 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


 


HOSPIRA, INC.


 


This certifies that
                                           ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement, dated as of April 12, 2004, as it may
from time to time be supplemented or amended (the “Rights Agreement”),
between Hospira, Inc., a Delaware corporation (the “Company”), and
EquiServe Trust Company, N.A., a national banking association (the “Rights
Agent”), to purchase from the Company at any time prior to 5:00 p.m. (New
York City time) on April 11, 2004 at the principal office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent,
one one-hundredth of a fully paid, nonassessable share (a “Fractional Share”)
of Series A Junior Participating Preferred Stock (the “Preferred Stock”)
of the Company, at a purchase price of $100 per one one-hundredth of a share
(the “Purchase Price”), upon presentation and surrender of this 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 April
30, 2004, 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 $0.01 per Right, payable, at the election of
the Company, in cash or shares of Common 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 Common Stock, at any time prior to a person’s becoming the beneficial
owner 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,


 


B-2

















 


be evidenced by
depositary receipts), but in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.


 


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:

  	
  HOSPIRA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  Secretary

  
	
  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:  HOSPIRA,
INC.


 


The undersigned hereby
irrevocably elects to exercise
                    
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (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.