Exhibit 4.1



Exhibit 4.1

SIGMA DESIGNS, INC.

and

MELLON INVESTOR SERVICES
  LLC,

As Rights Agent



 

 

PREFERRED STOCK RIGHTS
  AGREEMENT

Dated as of June
  7, 2004




TABLE
  OF CONTENTS 

			
      Page

    
			
      

    
	Section
      1.	Certain
      Definitions 	
      1

    
	  		
      

    
	Section
      2.	 Appointment
      of Rights Agent 	
      7

    
	  		
      

    
	Section
      3.	Issuance
      of Rights Certificates 	
      7

    
	  		
      

    
	Section
      4.	Form of
      Rights Certificates 	
      8

    
	  		
      

    
	Section
      5.	Countersignature
      and Registration 	
      9

    
	  		
      

    
	Section
      6.	Transfer,
      Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
      Lost or Stolen Rights Certificates 	
      10

    
	    		
      

    
	Section
      7.	Exercise
      of Rights; Exercise Price; Expiration Date of Rights 	
      11

    
	    		
      

    
	Section
      8.	Cancellation
      and Destruction of Rights Certificates 	
      13

    
	  		
      

    
	Section
      9.	Reservation
      and Availability of Preferred Shares 	
      13

    
	  		
      

    
	Section
      10.	Record
      Date 	
      14

    
	  		
      

    
	Section
      11.	Adjustment
      of Exercise Price, Number of Shares or Number of Rights 	
      15

    
	  		
      

    
	Section
      12.	Certificate
      of Adjusted Exercise Price or Number of Shares 	
      21

    
	  		
      

    
	Section
      13.	Consolidation,
      Merger or Sale or Transfer of Assets or Earning Power 	
      21

    
	  		
      

    
	Section
      14.	 Fractional
      Rights and Fractional Shares 	
      25

    
	  		
      

    
	Section
      15.	Rights
      of Action 	
      26

    
	  		
      

    
	Section
      16.	Agreement
      of Rights Holders 	
      27

    
	  		
      

    
	Section
      17.	Rights
      Certificate Holder Not Deemed a Shareholder 	
      27

    
	  		
      

    
	Section
      18.	Concerning
      the Rights Agent 	
      28

    
	  		
      

    
	Section
      19.	Merger
      or Consolidation or Change of Name of Rights Agent 	
      29

    
	  		
      

    
	Section
      20.	 Duties
      of Rights Agent 	
      29

    
	  		
      

    
	Section
      21.	Change
      of Rights Agent 	
      31

    
	  		
      

    
	Section
      22.	 Issuance
      of New Rights Certificates 	
      32

    
	  		
      

    
	Section
      23.	 Redemption
      	
      33

    
	  		
      

    
	Section
      24.	Exchange	
      33

    
	  		
      

    
	Section
      25.	 Notice
      of Certain Events 	
      35

    
	  		
      

    
	Section
      26.	Notices	
      35

    
	  		
      

    
	Section
      27.	Supplements
      and Amendments 	
      36

    
	  		
      

    
	Section
      28.	Successors
      	
      37

    
	  		
      

    
	Section
      29.	 Determinations
      and Actions by the Board of Directors, etc 	
      37

    
	  		
      

    
	Section
      30.	Benefits
      of this Agreement 	
      37

    
	  		
      

    
	Section
      31.	Severability
      	
      38

    
	  		
      

    
	Section
      32.	Governing
      Law 	
      38

    
	  		
      

    
	Section
      33.	Counterparts
      	
      38

    
	    		
      

    
	Section
      34.	Descriptive
      Headings 	
      38

    
	  		
      

    


EXHIBITS 

	Exhibit
      A 	Form
      of Certificate of Determination	
      

    
	  		
      

    
	Exhibit
      B 	Form
      of Rights Certificate	
      

    
	    		
      

    
	Exhibit
      C 	Summary
      of Rights	
      

    
	  		
      

    




 

PREFERRED
  STOCK RIGHTS AGREEMENT 

      This
  Preferred Stock Rights Agreement is dated as of June 7, 2004, between Sigma
  Designs, Inc., a California corporation, (the "Company"), and Mellon Investor
  Services LLC, a New Jersey limited liability company, as Rights Agent (the "Rights
  Agent"). 

      On
  May 28, 2004, (the "Rights Dividend Declaration Date"), the Board
  of Directors of the Company authorized and declared a dividend of one Preferred
  Share Purchase Right (a "Right") for each Common Share (as hereinafter
  defined) of the Company outstanding as of the Close of Business (as hereinafter
  defined) on June 18, 2004 (the "Record Date"), each Right representing
  the right to purchase one one-thousandth (0.001) of a share of Series D Participating
  Preferred Stock (as such number may be adjusted pursuant to the provisions of
  this Agreement), having the rights, preferences and privileges set forth in
  the form of Certificate of Determination of Rights, Preferences and Privileges
  of Series D Participating Preferred Stock attached hereto as Exhibit A, upon
  the terms and subject to the conditions herein set forth, and further authorized
  and directed the issuance of one Right (as such number may be adjusted pursuant
  to the provisions of this Agreement) with respect to each Common Share that
  shall become outstanding between the Record Date and the earlier of the Distribution
  Date and the Expiration Date (as such terms are hereinafter defined), and in
  certain circumstances after the Distribution Date. 

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

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

              (a)
  "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 Common Shares then outstanding, but shall not include
  the Company, any Subsidiary of the Company or any employee benefit plan of the
  Company or of any Subsidiary of the Company, or any entity holding Common Shares
  for or pursuant to the terms of any such plan. Notwithstanding the foregoing,
  no Person shall be deemed to be an Acquiring Person as the result of an acquisition
  of Common Shares by the Company which, by reducing the number of shares outstanding,
  increases the proportionate number of shares beneficially owned by such Person
  to 15% or more of the Common Shares of the Company then outstanding; provided,
  however, that if a Person shall become the Beneficial Owner of 15% or
  more of the Common Shares of the Company then outstanding by reason of share
  purchases by the Company and shall, after such share purchases by the Company,
  become the Beneficial Owner of any additional Common Shares of the Company (other
  than pursuant to a dividend or distribution paid or made by the Company on the
  outstanding Common Shares in Common Shares or pursuant to a split or subdivision
  of the outstanding Common Shares), then such Person shall be deemed to be an
  Acquiring Person unless upon becoming the Beneficial Owner of such additional
  Common Shares of the Company such Person does not beneficially own 15% or more
  of the Common Shares of the Company then outstanding. Notwithstanding the foregoing,
  (i) if the Company's Board of Directors determines in good faith that a Person
  who would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
  provisions of this paragraph (a), has become such inadvertently (including,
  without limitation, because (A) such Person was unaware that it beneficially
  owned a percentage of the Common Shares that would otherwise cause such Person
  to be an "Acquiring Person," as defined pursuant to the foregoing provisions
  of this paragraph (a), or (B) such Person was aware of the extent of the Common
  Shares it beneficially owned but had no actual knowledge of the consequences
  of such beneficial ownership under this Agreement) and without any intention
  of changing or influencing control of the Company, and if such Person divested
  or divests as promptly as practicable a sufficient number of Common Shares so
  that such Person would no longer be an "Acquiring Person," as defined pursuant
  to the foregoing provisions of this paragraph (a), then such Person shall not
  be deemed to be or to have become an "Acquiring Person" for any purposes of
  this Agreement including, without limitation Section 1(gg) hereof; and (ii)
  if, as of the date hereof, any Person is the Beneficial Owner of 15% or more
  of the Common Shares outstanding, such Person shall not be or become an "Acquiring
  Person," as defined pursuant to the foregoing provisions of this paragraph (a),
  unless and until such time as such Person shall become the Beneficial Owner
  of additional Common Shares (other than pursuant to a dividend or distribution
  paid or made by the Company on the outstanding Common Shares in Common Shares
  or pursuant to a split or subdivision of the outstanding Common Shares), unless,
  upon becoming the Beneficial Owner of such additional Common Shares, such Person
  is not then the Beneficial Owner of 15% or more of the Common Shares then outstanding.
  

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                  (b)
  "Adjustment Fraction" shall have the meaning set forth in Section
  11(a)(i) hereof. 

                  (c)
  "Affiliate" and "Associate" shall have the respective
  meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
  under the Exchange Act, as in effect on the date of this Agreement. 

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

                      (i)
  which such Person or any of such Person's Affiliates or Associates beneficially
  owns, directly or indirectly, for purposes of Section 13(d) of the Exchange
  Act and Rule 13d-3 thereunder (or any comparable or successor law or regulation);
  

                      (ii)
  which such Person or any of such Person's Affiliates or Associates has (A) the
  right to acquire (whether such right is exercisable immediately or only after
  the passage of time) pursuant to any agreement, arrangement or understanding
  (other than customary agreements with and between underwriters and selling group
  members with respect to a bona fide public offering of securities), or upon
  the exercise of conversion rights, exchange rights, rights (other than the Rights),
  warrants or options, or otherwise; provided, however, that a Person
  shall not be deemed pursuant to this Section 1(d)(ii)(A) to be the Beneficial
  Owner of, or to beneficially own, (1) securities tendered pursuant to a tender
  or exchange offer made by or on behalf of such Person or any of such Person's
  Affiliates or Associates until such tendered securities are accepted for purchase
  or exchange, or (2) securities which a Person or any of such Person's Affiliates
  or Associates may be deemed to have the right to acquire pursuant to any merger
  or other acquisition agreement between the Company and such Person (or one or
  more of its Affiliates or Associates) if such agreement has been approved by
  the Board of Directors of the Company prior to there being an Acquiring Person;
  or (B) the right to vote pursuant to any agreement, arrangement or understanding;
  provided, however, that a Person shall not be deemed the Beneficial
  Owner of, or to beneficially own, any security under this Section 1(d)(ii)(B)
  if the agreement, arrangement or understanding to vote such security (1) arises
  solely from a revocable proxy or consent given to such Person in response to
  a public proxy or consent solicitation made pursuant to, and in accordance with,
  the applicable rules and regulations of the Exchange Act and (2) is not also
  then reportable on Schedule 13D under the Exchange Act (or any comparable or
  successor report); or 

2



 

                      (iii)
  which are beneficially owned, directly or indirectly, by 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 (other than customary agreements with and between underwriters
  and selling group members with respect to a bona fide public offering of securities)
  for the purpose of acquiring, holding, voting (except to the extent contemplated
  by the proviso to Section 1(d)(ii)(B)) or disposing of any securities of the
  Company; provided, however, that in no case shall an officer or
  director of the Company be deemed (x) the Beneficial Owner of any securities
  beneficially owned by another officer or director of the Company solely by reason
  of actions undertaken by such persons in their capacity as officers or directors
  of the Company or (y) the Beneficial Owner of securities held of record by the
  trustee of any employee benefit plan of the Company or any Subsidiary of the
  Company for the benefit of any employee of the Company or any Subsidiary of
  the Company, other than the officer or director, by reason of any influence
  that such officer or director may have over the voting of the securities held
  in the plan. 

                   (e)
  "Business Day" shall mean any day other than a Saturday, Sunday
  or a day on which banking institutions in California are authorized or obligated
  by law or executive order to close.

              
      (f) "Close of Business" on any given date
  shall mean 5:00 P.M., California time, on such date; provided, however,
  that if such date is not a Business Day it shall mean 5:00 P.M., California
  time, on the next succeeding Business Day. 

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

              
      (h) "Common Shares" when used with reference
  to the Company shall mean the shares of Common Stock of the Company. Common
  Shares when used with reference to any Person other than the Company shall mean
  the capital stock (or equity interest) with the greatest voting power of such
  other Person or, if such other Person is a Subsidiary of another Person, the
  Person or Persons which ultimately control such first-mentioned Person. 

3



 

                    (i)
  "Company" shall mean Sigma Designs, Inc., a California corporation,
  subject to the terms of Section 13(a)(iii)(C) hereof. 

                    (j)
  "Current Per Share Market Price" of any security (a "Security"
  for purposes of this definition), for all computations other than those made
  pursuant to Section 11(a)(iii) hereof, shall mean the average of the daily closing
  prices per share of such Security for the thirty (30) consecutive Trading Days
  immediately prior to, but not including, such date, and for purposes of computations
  made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price
  of any Security on any date shall be deemed to be the average of the daily closing
  prices per share of such Security for the ten (10) consecutive Trading Days
  immediately prior to, but not including, such date; provided, however,
  that in the event that the Current Per Share Market Price of the Security is
  determined during a period following the announcement by the issuer of such
  Security of (i) a dividend or distribution on such Security payable in shares
  of such Security or securities convertible into such shares or (ii) any subdivision,
  combination or reclassification of such Security, and prior to the expiration
  of the applicable thirty (30) Trading Day or ten (10) Trading Day period, after,
  but not including, the ex-dividend date for such dividend or distribution, or
  the record date for such subdivision, combination or reclassification, then,
  and in each such case, the Current Per Share Market Price shall be appropriately
  adjusted to reflect the current market price per share equivalent of such Security
  . The closing price for each day shall be the last sale price, regular way,
  or, in case no such sale takes place on such day, the average of the closing
  bid and asked prices, regular way, in either case as reported in the principal
  consolidated transaction reporting system with respect to securities listed
  or admitted to trading on the New York Stock Exchange or, if the Security is
  not listed or admitted to trading on the New York Stock Exchange, as reported
  in the principal consolidated transaction reporting system with respect to securities
  listed on the principal national securities exchange on which the Security is
  listed or admitted to trading or, if the Security is not listed or admitted
  to trading on any national securities exchange, the last sale price or, if such
  last sale price is not reported, the average of the high bid and low asked prices
  in the over-the-counter market, as reported by Nasdaq or such other system then
  in use, or, if on any such date the Security is not quoted by any such organization,
  the average of the closing bid and asked prices as furnished by a professional
  market maker making a market in the Security selected by the Board of Directors
  of the Company. If on any such date no market maker is making a market in the
  Security, the fair value of such shares on such date as determined in good faith
  by the Board of Directors of the Company shall be used. If the Preferred Shares
  are not publicly traded, the Current Per Share Market Price of the Preferred
  Shares shall be conclusively deemed to be the product of (x) the Current Per
  Share Market Price of the Common Shares as determined pursuant to this Section
  1(j), as appropriately adjusted to reflect any stock split, stock dividend or
  similar transaction occurring after the date hereof, multiplied by (y) 1,000.
  If the Security is not publicly held or so listed or traded, Current Per Share
  Market Price shall mean the fair value per share as determined in good faith
  by the Board of Directors of the Company, whose determination shall be described
  in a statement filed with the Rights Agent and shall be conclusive for all purposes.
  

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

4



 

                  (l)
  "Distribution Date" shall mean the earlier of (i) the Close of Business
  on the tenth (10th) Business Day (or such later date as may be determined by
  action of the Company's Board of Directors) after the Shares Acquisition Date
  (or, if the tenth (10th) Business Day after the Shares Acquisition Date occurs
  before the Record Date, the Close of Business on the Record Date) or (ii) the
  Close of Business on the tenth (10th) Business Day (or such later date as may
  be determined by action of the Company's Board of Directors) after the date
  that a tender or exchange offer by any Person (other than the Company, any Subsidiary
  of the Company, any employee benefit plan of the Company or of any Subsidiary
  of the Company, or any Person or entity organized, appointed or established
  by the Company for or pursuant to the terms of any such plan) 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, if, assuming the successful consummation
  thereof, such Person would be an Acquiring Person. 

                  (m)
  "Equivalent Shares" shall mean Preferred Shares and any other
  class or series of capital stock of the Company which is entitled to the same
  rights, privileges and preferences as the Preferred Shares. 

                  (n)
  "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
  

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

                  (p)
  "Exercise Price" shall have the meaning set forth in Section 4(a)
  hereof.

                  (q)
  "Expiration Date" shall mean the earliest to occur of: (i) the
  Close of Business on the Final Expiration Date, (ii) the Redemption Date, or
  (iii) the time at which the Board of Directors orders the exchange of the Rights
  as provided in Section 24 hereof. 

                  (r)
  "Final Expiration Date" shall mean June 18, 2014. 

                  (s)
  "Nasdaq" shall mean The Nasdaq Stock Market, Inc. 

                  (t)
  "Person" shall mean any individual, firm, corporation, limited
  liability company, or other entity, and shall include any successor (by merger
  or otherwise) of such entity. 

                  (u)
  "Post-Event Transferee" shall have the meaning set forth in Section
  7(e) hereof. 

                  (v)
  "Preferred Shares" shall mean shares of Series D Participating
  Preferred Stock of the Company."Pre-Event Transferee" shall have the meaning
  set forth in Section 7(e) hereof. 

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

5



 

                  (y)
  "Record Date" shall have the meaning set forth in the recitals at the
  beginning of this Agreement. 

                  (z)
  "Redemption Date" shall have the meaning set forth in Section
  23(a) hereof. 

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

                  (bb)
  "Rights Agent" shall mean (i) Mellon Investor Services LLC, a
  New Jersey limited liability company, (ii) its successor or replacement as provided
  in Sections 19 and 21 hereof or (iii) any additional Person appointed pursuant
  to Section 2 hereof. 

                  (cc)
  "Rights Certificate" shall mean a certificate substantially in
  the form attached hereto as Exhibit B. 

                  (dd)
  "Rights Dividend Declaration Date" shall have the meaning set
  forth in the recitals at the beginning of this Agreement. 

                  (ee)
  "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
  in Section 11(a)(iii) hereof. 

                  (ff)
  "Section 13 Event" shall mean any event described in clause (i), (ii)
  or (iii) of Section 13(a) hereof. 

                  (gg)
  "Securities Act" shall mean the Securities Act of 1933, as amended.
  

                  (hh)
  "Shares Acquisition Date" shall mean the first date of public announcement
  (which, for purposes of this definition, shall include, without limitation,
  a report filed pursuant to Section 13(d) of the Exchange Act) by the Company
  or an Acquiring Person that an Acquiring Person has become such; provided
  that, if such Person is determined not to have become an Acquiring Person
  pursuant to Section 1(a) hereof, then no Shares Acquisition Date shall be deemed
  to have occurred by virtue of such event.

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

                  (jj)  "Subsidiary"
  of any Person shall mean any corporation or other entity of which an amount
  of voting securities sufficient to elect a majority of the directors or Persons
  having similar authority of such corporation or other entity is beneficially
  owned, directly or indirectly, by such Person, or any corporation or other entity
  otherwise controlled by such Person.

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

                  (ll)  "Summary
  of Rights" shall mean a summary of this Agreement substantially in the
  form attached hereto as Exhibit C.

                  (mm)"Total
  Exercise Price" shall have the meaning set forth in Section 4(a) hereof.

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

6



 

                   (oo)
  A "Triggering Event" shall be deemed to have occurred upon any
  Person becoming an Acquiring Person. 

      Section
  2. Appointment of Rights Agent. The Company hereby appoints the Rights
  Agent to act as agent for the Company in accordance with the terms and conditions
  hereof, and the Rights Agent hereby accepts such appointment. The Company may
  from time to time appoint such co-Rights Agents as it may deem necessary or
  desirable, upon ten (10) days' prior written notice to the Rights Agent. The
  Rights Agent shall have no duty to supervise, and shall in no event be liable
  for, the acts or omissions of any co-Rights Agent.

      Section
  3. Issuance of Rights Certificates. 

                   (a)
  Until the Distribution Date, (i) the Rights will be evidenced (subject to the
  provisions of Sections 3(b) and 3(c) hereof) by the certificates for Common
  Shares registered in the names of the holders thereof (which certificates shall
  also be deemed to be Rights Certificates) and not by separate Rights Certificates
  and (ii) the right to receive Rights Certificates will be transferable only
  in connection with the transfer of Common Shares. Until the earlier of the Distribution
  Date or the Expiration Date, the surrender for transfer of certificates for
  Common Shares shall also constitute the surrender for transfer of the Rights
  associated with the Common Shares represented thereby. As soon as practicable
  after the Distribution Date, the Company will prepare and execute, the Rights
  Agent will countersign, and the Company will send or cause to be sent (and the
  Rights Agent will, if requested and provided with all necessary information,
  send) by first-class, postage-prepaid mail, to each record holder of Common
  Shares as of the Close of Business on the Distribution Date, at the address
  of such holder shown on the records of the Company, a Rights Certificate evidencing
  one Right for each Common Share so held, subject to adjustment as provided herein.
  In the event that an adjustment in the number of Rights per Common Share has
  been made pursuant to Section 11 hereof, then 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 (in accordance with Section 14(a) hereof).
  As of the Distribution Date, the Rights will be evidenced solely by such Rights
  Certificates and may be transferred by the transfer of the Rights Certificates
  as permitted hereby, separately and apart from any transfer of Common Shares,
  and the holders of such Rights Certificates as listed in the records of the
  Company or any transfer agent or registrar for the Rights shall be the record
  holders thereof. 

                   (b)
  On the Record Date or as soon as practicable thereafter, the Company will send
  a copy of the Summary of Rights by first-class, postage-prepaid mail, to each
  record holder of Common Shares as of the Close of Business on the Record Date,
  at the address of such holder shown on the records of the Company's transfer
  agent and registrar. With respect to certificates for Common Shares outstanding
  as of the Record Date, until the Distribution Date, the Rights will be evidenced
  by such certificates registered in the names of the holders thereof together
  with the Summary of Rights. 

                   (c)
  Unless the Board of Directors by resolution adopted at or before the time of
  the issuance of any Common Shares 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) specifies to the
  contrary, Rights shall be issued in respect of all Common Shares that are so
  issued, and Certificates representing such Common Shares shall also be deemed
  to be certificates for Rights, and shall bear the following legend: 

7



 


  THIS CERTIFICATE ALSO
    EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN
    A RIGHTS AGREEMENT BETWEEN SIGMA DESIGNS, INC. AND MELLON INVESTOR SERVICES
    LLC, AS THE RIGHTS AGENT, DATED AS OF JUNE 7, 2004 (THE "RIGHTS AGREEMENT"),
    THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY
    OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SIGMA DESIGNS, INC.
    UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS
    WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED
    BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE
    A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST
    THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
    ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON
    OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
    AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
    SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID. 



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 Shares represented
  by such certificates shall be evidenced by such certificates alone, and the
  surrender for transfer of any such certificate shall also constitute the transfer
  of the Rights associated with the Common Shares represented thereby. 

                   (d)
  In the event that the Company purchases or acquires any Common Shares after
  the Record Date but prior to the Distribution Date, any Rights associated with
  such Common Shares shall be deemed canceled and retired so that the Company
  shall not be entitled to exercise any Rights associated with the Common Shares
  which are no longer outstanding. 

      Section
  4. Form of Rights Certificates. 

                   (a)
  The Rights Certificates (and the forms of election to purchase Common Shares
  and of assignment to be printed on the reverse thereof) shall be substantially
  in the form of 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 (but which do not affect the rights, duties
  or responsibilities of the Rights Agent) and 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 a national market system, on which the Rights may from
  time to time be listed or included, or to conform to usage. Subject to the provisions
  of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed,
  shall be dated as of the Record Date (or in the case of Rights issued with respect
  to Common Shares issued by the Company after the Record Date, as of the date
  of issuance of such Common Shares) and on their face shall entitle the holders
  thereof to purchase such number of one-thousandths (0.001) of a Preferred Share
  as shall be set forth therein at the price set forth therein (such exercise
  price per one one-thousandth (0.001) of a Preferred Share being hereinafter
  referred to as the "Exercise Price" and the aggregate Exercise
  Price of all Preferred Shares issuable upon exercise of one Right being hereinafter
  referred to as the "Total Exercise Price"), but the number and
  type of securities purchasable upon the exercise of each Right and the Exercise
  Price shall be subject to adjustment as provided herein. 

8



 

                   (b)
  Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof
  that represents Rights beneficially owned by: (i) an Acquiring Person or any
  Associate or Affiliate of an Acquiring Person, (ii) a Post-Event Transferee,
  (iii) a Pre-Event Transferee or (iv) any subsequent transferee receiving transferred
  Rights from a Post-Event Transferee or a Pre-Event Transferee, either directly
  or through one or more intermediate transferees, and any Rights Certificate
  issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement
  or adjustment of any other Rights Certificate referred to in this sentence,
  shall contain (to the extent the Rights Agent has written notice thereof and
  to the extent feasible) the following legend: 


  THE RIGHTS REPRESENTED
    BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
    WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
    PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
    RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
    IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.



       Section
  5. Countersignature and Registration. 

                   (a)
  The Rights Certificates shall be executed on behalf of the Company by its Chairman
  of the Board, its Chief Executive Officer, its Chief Financial Officer, its
  President or any Vice President, either manually or by facsimile signature,
  and by the Secretary or an Assistant Secretary of the Company, either manually
  or by facsimile signature, and shall have affixed thereto the Company's seal
  (if any) or a facsimile thereof. The Rights Certificates shall be manually countersigned
  by the Rights Agent and shall not be valid for any purpose unless countersigned.
  In case any officer of the Company who shall have signed any of the 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 on behalf of the Company 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. 

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                    (b)
  Following the Distribution Date and receipt by the Rights Agent of written notice
  to that effect and all other relevant information referred to in Section 3,
  the Rights Agent will keep or cause to be kept, at its office designated for
  such purposes, books for registration and transfer of the Rights Certificates
  issued hereunder. Such books shall show the names and addresses of the respective
  holders of the Rights Certificates, the number of Rights evidenced on its face
  by each of the Rights Certificates and the date of each of the Rights Certificates.
  

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

                    (a)
  Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time after
  the Close of Business on the Distribution Date, and at or prior to the Close
  of Business on the Expiration Date, any Rights Certificate or Rights Certificates
  may be transferred, split up, combined or exchanged for another Rights Certificate
  or Rights Certificates, entitling the registered holder to purchase a like number
  of one-thousandths (0.001) of a Preferred Share (or, following a Triggering
  Event, other securities, cash or other assets, as the case may be) as the Rights
  Certificate or Rights Certificates surrendered then entitled such holder 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
  office of the Rights Agent designated for such purpose. Neither the Rights Agent
  nor the Company shall be obligated to take any action whatsoever with respect
  to the transfer of any such surrendered Rights Certificate until the registered
  holder shall have properly 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) or Affiliates or Associates thereof as the Company
  or the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
  subject to Sections 7(e), 14 and 24 hereof, countersign and deliver to the person
  entitled thereto a Rights Certificate or Rights Certificates, as the case may
  be, as so requested, registered in such name or names as may be designated by
  the surrendering registered holder. The Company may require payment from the
  registered 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. The Rights Agent shall have no duty or obligation
  to take any action under any Section of the Agreement which requires payment
  by a holder of the Rights of applicable taxes and/or governmental charges unless
  and until it is reasonably satisfied that all such taxes and/or governmental
  charges have been paid. 

                    (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 satisfactory
  to them, and, at the request of the Company or the Rights Agent, 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 make and deliver a new Rights Certificate of
  like tenor to the Rights Agent for delivery to the registered holder in lieu
  of the Rights Certificate so lost, stolen, destroyed or mutilated. 

10



 

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

                   (a)
  Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any
  Rights Certificate may exercise the Rights evidenced thereby (except as otherwise
  provided herein) in whole or in part at any time after the Distribution Date
  and prior to the Close of Business on the Expiration Date by surrender of the
  Rights Certificate, with the form of election to purchase on the reverse side
  thereof duly executed, to the Rights Agent at the office of the Rights Agent
  designated for such purpose, together with payment of the Exercise Price for
  each one-thousandth (0.001) of a Preferred Share (or, following a Triggering
  Event, other securities, cash or other assets as the case may be) as to which
  the Rights are exercised. 

                   (b)
  The Exercise Price for each one-thousandth (0.001) of a Preferred Share issuable
  pursuant to the exercise of a Right shall initially be $58.00, shall be subject
  to adjustment from time to time as provided in Sections 11 and 13 hereof and
  shall be payable in lawful money of the United States of America in accordance
  with paragraph (c) below. 

                   (c)
  Upon receipt of a Rights Certificate representing exercisable Rights, with the
  form of election to purchase duly executed, accompanied by payment of the Exercise
  Price for the number of one-thousandths (0.001) of a Preferred Share (or, following
  a Triggering Event, other securities, cash or other assets as the case may be)
  to be purchased and an amount equal to any applicable tax or charge required
  to be paid by the holder of such Rights Certificate in accordance with Section
  9(e) hereof, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
  promptly (i) (A) requisition from any transfer agent of the Preferred Shares
  (or make available, if the Rights Agent is the transfer agent for the Preferred
  Shares) a certificate or certificates for the number of one-thousandths (0.001)
  of a Preferred Share (or, following a Triggering Event, other securities, cash
  or other assets as the case may be) to be purchased and the Company hereby irrevocably
  authorizes its transfer agent to comply with all such requests or (B) if the
  Company shall have elected to deposit the total number of one-thousandths (0.001)
  of a Preferred Share (or, following a Triggering Event, other securities, cash
  or other assets as the case may be) issuable upon exercise of the Rights hereunder
  with a depository agent, requisition from the depository agent depository receipts
  representing such number of one-thousandths (0.001) of a Preferred Share (or,
  following a Triggering Event, other securities, cash or other assets as the
  case may be) as are to be purchased (in which case certificates for the Preferred
  Shares (or, following a Triggering Event, other securities, cash or other assets
  as the case may be) represented by such receipts shall be deposited by the transfer
  agent with the depository agent) and the Company hereby directs the depository
  agent to comply with such request, (ii) when appropriate, requisition from the
  Company the amount of cash to be paid in lieu of issuance of fractional shares
  in accordance with Section 14 hereof, (iii) after receipt of such certificates
  or depository 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) when appropriate, after
  receipt thereof, deliver such cash to or upon the order of the registered holder
  of such Rights Certificate. The payment of the Exercise Price (as such amount
  may be reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and
  an amount equal to any applicable transfer tax or charge required to be paid
  by the holder of such Rights Certificate in accordance with Section 9(e) hereof,
  may be made in cash or by certified bank check, cashier's check or bank draft
  payable to the order of the Company. In the event that the Company is obligated
  to issue securities of the Company other than Preferred Shares, pay cash and/or
  distribute other property pursuant to Section 11(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 necessary
  to comply with this agreement. 

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                    (d)
  In case the registered holder of any Rights Certificate shall exercise less
  than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
  equivalent to the Rights remaining unexercised shall be issued by the Rights
  Agent to the registered holder of such Rights Certificate or to his or her duly
  authorized assigns, 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 (i)
  an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii)
  a transferee of an Acquiring Person (or of any such Associate or Affiliate)
  who becomes a transferee after the Acquiring Person becomes such (a "Post-Event
  Transferee"), (iii) a transferee of an Acquiring Person (or of any such
  Associate or Affiliate) who becomes a transferee prior to or concurrently with
  the Acquiring Person becoming such and receives such Rights pursuant to either
  (A) a transfer (whether or not for consideration) from the Acquiring Person
  to holders of equity interests in such Acquiring Person or to any Person with
  whom the Acquiring Person has any continuing agreement, arrangement or understanding
  regarding the transferred Rights or (B) a transfer which the Company's Board
  of Directors has determined is part of a plan, arrangement or under-standing
  which has as a primary purpose or effect the avoidance of this Section 7(e)
  (a "Pre-Event Transferee") or (iv) any subsequent transferee receiving
  transferred Rights from a Post-Event Transferee or a Pre-Event Transferee, either
  directly or through one or more intermediate transferees, shall become null
  and void without any further action and no holder of such Rights shall have
  any rights whatsoever with respect to such Rights, whether under any provision
  of this Agreement or otherwise. The Company shall notify the Rights Agent when
  this Section 7(e) applies and shall use all reasonable efforts to ensure that
  the provisions of this Section 7(e) and Section 4(b) hereof are complied with,
  but neither the Company nor the Rights Agent shall have any liability to any
  holder of Rights Certificates or to any other Person as a result of the failure
  by the Company to make any determinations with respect to an Acquiring Person
  or any of such Acquiring Person's 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, in addition to
  having complied with the requirements of subsection 7(a), have (i) properly
  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 or the Rights Agent shall reasonably request. 

12



 

      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 to any of its agents, be delivered
  to the Rights Agent for cancellation or in canceled form, or, if surrendered
  to the Rights Agent, shall be canceled by it, and no 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 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 and after any Securities
  and Exchange Commission required retention period, destroy such canceled Rights
  Certificates, and in such case shall deliver a certificate evidencing the destruction
  thereof to the Company. 

      Section
  9. Reservation and Availability of Preferred Shares. 

                   (a)
  The Company covenants and agrees that it will use its best efforts to cause
  to be reserved and kept available out of its authorized and unissued Preferred
  Shares not reserved for another purpose (and, following the occurrence of a
  Triggering Event, out of its authorized and unissued Common Shares and/or other
  securities), the number of Preferred Shares (and, following the occurrence of
  the Triggering Event, Common Shares and/or other securities) that will be sufficient
  to permit the exercise in full of all outstanding Rights. 

                   (b)
  If the Company shall hereafter list any of its Preferred Shares on a national
  securities exchange, then so long as the Preferred Shares (and, following the
  occurrence of a Triggering Event, Common Shares and/or other securities) issuable
  and deliverable upon exercise of the Rights may be listed on such exchange,
  the Company shall use its best efforts to cause, from and after such time as
  the Rights become exercisable (but only to the extent that the Board of Directors
  of the Company determines that it is reasonably likely that the Rights will
  be exercised), all shares reserved for such issuance to be listed on such exchange
  upon official notice of issuance upon such exercise. 

                   (c)
  The Company shall use its best efforts to (i) file, as soon as practicable following
  the earliest date after the first occurrence of a Triggering Event in which
  the consideration to be delivered by the Company upon exercise of the Rights
  is described in Section 11(a)(ii) or Section 11(a)(iii) hereof, or as soon as
  is required by law following the Distribution Date, as the case may be, a registration
  statement under the Securities Act with respect to the securities purchasable
  upon exercise of the Rights on an appropriate form, (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 may temporarily suspend, for a period
  not to exceed ninety (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.
  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.
  The Company shall notify the Rights Agent whenever it makes a public announcement
  pursuant to this Section 9(c) and give the Rights Agent a copy of such announcement.
  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. Notwithstanding any provision
  of this Agreement to the contrary, the Rights shall not be exercisable in any
  jurisdiction, unless the requisite qualification in such jurisdiction shall
  have been obtained, or an exemption therefrom shall be available, and until
  a registration statement has been declared and remains effective. 

13



 

                   (d)
  The Company covenants and agrees that it will take all such action as may be
  necessary to ensure that all Preferred Shares (or other securities of the Company)
  delivered upon exercise of Rights shall, at the time of delivery of the certificates
  for such securities (subject to payment of the Exercise 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 taxes and charges which may be payable in respect
  of the original issuance or delivery of the Rights Certificates or of any Preferred
  Shares (or other securities of the Company) upon the exercise of Rights. The
  Company shall not, however, be required to pay any transfer tax or charge which
  may be payable in respect of any transfer or delivery of Rights Certificates
  to a person other than, or the issuance or delivery of certificates or depository
  receipts for the Preferred Shares (or other securities of the Company) in a
  name other than that of, the registered holder of the Rights Certificate evidencing
  Rights surrendered for exercise or to issue or to deliver any certificates or
  depository receipts for Preferred Shares (or other securities of the Company)
  upon the exercise of any Rights until any such tax or charge 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 or charge is due. 

      Section
  10. Record Date. Each Person in whose name any certificate for a number
  of one-thousandths (0.001) of a Preferred Share (or other securities of the
  Company) is issued upon the exercise of Rights shall for all purposes be deemed
  to have become the holder of record of Preferred Shares (or other securities
  of the Company) 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 Total Exercise Price with respect to which the Rights have
  been exercised (and any applicable taxes and charges) was made; provided,
  however, that if the date of such surrender and payment is a date upon
  which the transfer books of the Company are closed, such Person shall be deemed
  to have become the record holder of such shares on, and such certificate shall
  be dated, the next succeeding Business Day on which the transfer books of the
  Company are open. Prior to the exercise of the Rights evidenced thereby, the
  holder of a Rights Certificate shall not be entitled to any rights of a holder
  of Preferred Shares (or other securities of the Company) 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 Exercise Price, Number of Shares or Number of Rights.
  The Exercise Price, the number and kind of shares or other property covered
  by each Right and the number of Rights outstanding are subject to adjustment
  from time to time as provided in this Section 11. 

14



 

                   (a)       (i)  
  Anything in this Agreement to the contrary notwithstanding, in the event that
  the Company shall at any time after the date of this Agreement (A) declare a
  dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide
  the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
  (by reverse stock split or otherwise) into a smaller number of Preferred Shares,
  or (D) issue any shares of its capital stock in a reclassification of the Preferred
  Shares (including any such reclassification in connection with a consolidation
  or merger in which the Company is the continuing or surviving corporation),
  then, in each such event, except as otherwise provided in this Section 11 and
  Section 7(e) hereof: (1) the Exercise Price in effect at the time of the record
  date for such dividend or of the effective date of such subdivision, combination
  or reclassification shall be adjusted so that the Exercise Price thereafter
  shall equal the result obtained by dividing the Exercise Price in effect immediately
  prior to such time by a fraction (the "Adjustment Fraction"),
  the numerator of which shall be the total number of Preferred Shares (or shares
  of capital stock issued in such reclassification of the Preferred Shares) outstanding
  immediately following such time and the denominator of which shall be the total
  number of Preferred Shares outstanding immediately prior to such time; provided,
  however, that in no event shall the consideration to be paid upon the
  exercise of one Right be less than the aggregate par value of the shares of
  capital stock of the Company issuable upon exercise of such Right; and (2) the
  number of one-thousandths (0.001) of a Preferred Share (or share of such other
  capital stock) issuable upon the exercise of each Right shall equal the number
  of one-thousandths (0.001) of a Preferred Share (or share of such other capital
  stock) as was issuable upon exercise of a Right immediately prior to the occurrence
  of the event described in clauses (A)-(D) of this Section 11(a)(i), multiplied
  by the Adjustment Fraction; provided, however, that, no such adjustment shall
  be made pursuant to this Section 11(a)(i) to the extent that there shall have
  simultaneously occurred an event described in clause (A), (B), (C) or (D) of
  Section 11(n) with a proportionate adjustment being made thereunder. Each Common
  Share that shall become outstanding after an adjustment has been made pursuant
  to this Section 11(a)(i) shall have associated with it the number of Rights,
  exercisable at the Exercise Price and for the number of one-thousandths (0.001)
  of a Preferred Share (or shares of such other capital stock) as one Common Share
  has associated with it immediately following the adjustment made pursuant to
  this Section 11(a)(i). 

                               (ii)
    Subject to Section 24 of this Agreement, in the event that a Triggering
  Event shall have occurred, then promptly following such Triggering Event each
  holder of a Right, except as provided in Section 7(e) hereof, shall thereafter
  have the right to receive for each Right, upon exercise thereof in accordance
  with the terms of this Agreement and payment of the Exercise Price in effect
  immediately prior to the occurrence of the Triggering Event, in lieu of a number
  of one-thousandths (0.001) of a Preferred Share, such number of Common Shares
  of the Company as shall equal the quotient obtained by dividing (A) the product
  obtained by multiplying (1) the Exercise Price in effect immediately prior to
  the occurrence of the Triggering Event by (2) the number of one-thousandths
  (0.001) of a Preferred Share for which a Right was exercisable (or would have
  been exercisable if the Distribution Date had occurred) immediately prior to
  the first occurrence of a Triggering Event, by (B) fifty percent (50%) of the
  Current Per Share Market Price for Common Shares on the date of occurrence of
  the Triggering Event; provided, however, that the Exercise Price
  and the number of Common Shares of the Company so receivable upon exercise of
  a Right shall be subject to further adjustment as appropriate in accordance
  with Section 11(e) hereof to reflect any events occurring in respect of the
  Common Shares of the Company after the occurrence of the Triggering Event. 

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                               (iii)  
  In lieu of issuing Common Shares in accordance with Section 11(a)(ii) hereof,
  the Company may, if the Company's Board of Directors determines that such action
  is necessary or appropriate and not contrary to the interest of holders of Rights
  and, in the event that the number of Common Shares which are authorized by the
  Company's Amended and Restated Articles of Incorporation but not outstanding
  or reserved for issuance for purposes other than upon exercise of the Rights
  are not sufficient to permit the exercise in full of the Rights, or if any necessary
  regulatory approval for such issuance has not been obtained by the Company,
  the Company shall: (A) determine the excess of (1) the value of the Common Shares
  issuable upon the exercise of a Right (the "Current Value") over (2) the Exercise
  Price (such excess, the "Spread") and (B) with respect to each Right, make adequate
  provision to substitute for such Common Shares, upon exercise of the Rights,
  (1) cash, (2) a reduction in the Exercise Price, (3) other equity securities
  of the Company (including, without limitation, shares or units of shares of
  any series of preferred stock which the Company's Board of Directors has deemed
  to have the same value as Common Shares (such shares or units of shares of preferred
  stock are herein called "Common Stock Equivalents")), except to the extent that
  the Company has not obtained any necessary shareholder or regulatory approval
  for such issuance, (4) debt securities of the Company, except to the extent
  that the Company has not obtained any necessary shareholder or regulatory approval
  for such issuance, (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 Company's Board of Directors based upon the advice
  of a nationally recognized investment banking firm selected by the Company's
  Board of Directors; provided, however, that if the Company shall not have made
  adequate provision to deliver value pursuant to clause (B) above within thirty
  (30) days following the later of (x) the first occurrence of a Triggering 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 "Section
  11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon
  the surrender for exercise of a Right and without requiring payment of the Exercise
  Price, Common Shares (to the extent available), except to the extent that the
  Company has not obtained any necessary shareholder or regulatory approval for
  such issuance, and then, if necessary, cash, which shares and/or cash have an
  aggregate value equal to the Spread. If the Company's Board of Directors shall
  determine in good faith that it is likely that sufficient additional Common
  Shares could be authorized for issuance upon exercise in full of the Rights
  or that any necessary regulatory approval for such issuance will be obtained,
  the thirty (30) day period set forth above may be extended to the extent necessary,
  but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date,
  in order that the Company may seek shareholder approval for the authorization
  of such additional shares or take action to obtain such regulatory approval
  (such period, as it may be extended, the "Substitution Period"). To the extent
  that the Company 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, to take any action to obtain any required regulatory approval
  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 promptly notify the Rights Agent in writing
  and it shall issue a public announcement stating that the exercisability of
  the Rights has been temporarily suspended, as well as a public announcement,
  with prompt written notice to the Rights Agent at such time as the suspension
  is no longer in effect. For purposes of this Section 11(a)(iii), the value of
  the Common Shares shall be the Current Per Share Market Price of the Common
  Shares on the Section 11(a)(ii) Trigger Date and the value of any Common Stock
  Equivalent shall be deemed to have the same value as the Common Shares on such
  date. 

16



 

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

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                   (c)
  In case the Company shall, at any time after the date of this Agreement, fix
  a record date for the making of a distribution to all holders of the Preferred
  Shares or of any class or series of Equivalent Shares (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 or assets
  (other than a regular quarterly cash dividend, if any, or a dividend payable
  in Preferred Shares) or subscription rights, options or warrants (excluding
  those referred to in Section 11(b)), then, in each such case, the Exercise Price
  to be in effect after such record date shall be determined by multiplying the
  Exercise Price in effect immediately prior to such record date by a fraction,
  the numerator of which shall be the Current Per Share Market Price of a Preferred
  Share or an Equivalent Share on such record date, less the fair market value
  per Preferred Share or Equivalent 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 which shall be binding and conclusive
  on the Rights Agent and the holders of the Rights) 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 Preferred Share or Equivalent Share, as the
  case may be, and the denominator of which shall be such Current Per Share Market
  Price of a Preferred Share or Equivalent Share on such record date; provided,
  however, that in no event shall the consideration to be paid upon the exercise
  of one Right be less than the aggregate par value of the shares of capital stock
  of the Company issuable upon exercise of one Right. 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 Exercise Price shall be adjusted to be
  the Exercise Price which would have been in effect if such record date had not
  been fixed. 

                   (d)
  Anything herein to the contrary notwithstanding, no adjustment in the Exercise
  Price shall be required unless such adjustment would require an increase or
  decrease of at least one percent (1%) of the Exercise Price; provided, however,
  that any adjustments which by reason of this Section 11(d) 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 (0.0001) of a Common Share or other share
  or one hundred-thousandth (0.00001) of a Preferred Share, as the case may be.
  Notwithstanding the first sentence of this Section 11(d), any adjustment required
  by this Section 11 shall be made no later than the earlier of (i) three (3)
  years from the date of the transaction which requires such adjustment or (ii)
  the Expiration Date.

                   
  (e) 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 any shares of capital stock other than Preferred Shares, thereafter
  the number of such other shares so receivable upon exercise of any Right and,
  if required, the Exercise Price thereof, shall be subject to adjustment from
  time to time in a manner and on terms as nearly equivalent as practicable to
  the provisions with respect to the Preferred Shares contained in Sections 11(a),
  11(b), 11(c), 11(d), 11(g), 11(h), 11(i), 11(j), 11(k) and 11(l), and the provisions
  of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply
  on like terms to any such other shares. 

18



 

                   (f)
  All Rights originally issued by the Company subsequent to any adjustment made
  to the Exercise Price hereunder shall evidence the right to purchase, at the
  adjusted Exercise Price, the number of one-thousandths (0.001) of a Preferred
  Share purchasable from time to time hereunder upon exercise of the Rights, all
  subject to further adjustment as provided herein. 

                   (g)
  Unless the Company shall have exercised its election as provided in Section
  11(h), upon each adjustment of the Exercise Price as a result of the calculations
  made in Section 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 Exercise Price, that number of Preferred Shares (calculated to
  the nearest one hundred-thousandth (0.00001) of a share) obtained by (i) multiplying
  (x) the number of Preferred Shares covered by a Right immediately prior to this
  adjustment, by (y) the Exercise Price in effect immediately prior to such adjustment
  of the Exercise Price, and (ii) dividing the product so obtained by the Exercise
  Price in effect immediately after such adjustment of the Exercise Price. 

                   (h)
  The Company may elect on or after the date of any adjustment of the Exercise
  Price as a result of the calculations made in Section 11(b) or (c) to adjust
  the number of Rights, in substitution for any adjustment in the number of Preferred
  Shares purchasable upon the exercise of a Right. Each of the Rights outstanding
  after such adjustment of the number of Rights shall be exercisable for the number
  of one-thousandths (0.001) of a Preferred Share for which a Right was exercisable
  immediately prior to such adjustment. Each Right held of record prior to such
  adjustment of the number of Rights shall become that number of Rights (calculated
  to the nearest one hundred-thousandth (0.00001)) obtained by dividing the Exercise
  Price in effect immediately prior to adjustment of the Exercise Price by the
  Exercise Price in effect immediately after adjustment of the Exercise Price.
  The Company shall make a public announcement of its election to adjust the number
  of Rights and notify the Rights Agent in writing, 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 Exercise Price is
  adjusted or any day thereafter, but, if any Rights Certificates have been issued,
  shall be at least ten (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(h), the Company shall, as promptly as
  practicable, cause to be distributed to holders of record of Rights Certificates
  on such record date Rights Certificates evidencing, subject to Section 14 hereof,
  the additional Rights to which such holders shall be entitled as a result of
  such adjustment, or, at the option of the Company, shall cause to be distributed
  to such holders of record in substitution and replacement for the Rights Certificates
  held by such holders prior to the date of adjustment, and upon surrender thereof,
  if required by the Company, new Rights Certificates evidencing all the Rights
  to which such holders shall be entitled after such adjustment. Rights Certificates
  so to be distributed shall be issued, executed and delivered by the Company,
  and countersigned and delivered by the Rights Agent in the manner provided for
  herein (and may bear, at the option of the Company, the adjusted Exercise Price)
  and shall be registered in the names of the holders of record of Rights Certificates
  on the record date specified in the public announcement. 

                   (i)
  Irrespective of any adjustment or change in the Exercise Price or the number
  of Preferred Shares issuable upon the exercise of the Rights, the Rights Certificates
  theretofore and thereafter issued may continue to express the Exercise Price
  per one one-thousandth (0.001) of a Preferred Share and the number of one-thousandths
  (0.001) of a Preferred Share which were expressed in the initial Rights Certificates
  issued hereunder. 

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                   (j)
  Before taking any action that would cause an adjustment reducing the Exercise
  Price below the par or stated value, if any, of the number of one-thousandths
  (0.001) of a Preferred Share issuable upon exercise of the Rights, the Company
  shall take any corporate action which may, in the opinion of its counsel, be
  necessary in order that the Company may validly and legally issue as fully paid
  and nonassessable shares such number of one-thousandths (0.001) of a Preferred
  Share at such adjusted Exercise Price. 

                   (k)
  In any case in which this Section 11 shall require that an adjustment in the
  Exercise Price be made effective as of a record date for a specified event,
  the Company may elect to defer (and shall promptly notify the Rights Agent in
  writing of any such election) until the occurrence of such event the issuing
  to the holder of any Right exercised after such record date of the number of
  one-thousandths (0.001) of a Preferred Share and other capital stock or securities
  of the Company, if any, issuable upon such exercise over and above the number
  of one-thousandths (0.001) of a Preferred Share and other capital stock or securities
  of the Company, if any, issuable upon such exercise on the basis of the Exercise
  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)
  upon the occurrence of the event requiring such adjustment. 

                   (l)
  Anything in this Section 11 to the contrary notwithstanding, prior to the Distribution
  Date, the Company shall be entitled to make such reductions in the Exercise
  Price, in addition to those adjustments expressly required by this Section 11,
  as and to the extent that it in its sole discretion shall determine to be advisable
  in order that any (i) consolidation or subdivision of the Preferred or Common
  Shares, (ii) issuance wholly for cash of any Preferred or Common Shares at less
  than the current market price, (iii) issuance wholly for cash of Preferred or
  Common Shares or securities which by their terms are convertible into or exchangeable
  for Preferred or Common Shares, (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 or Common Shares shall not be taxable to such shareholders.
  

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

                   (n)
  In the event that the Company shall at any time after the date of this Agreement
  (A) declare a dividend on the Common Shares payable in Common Shares, (B) subdivide
  the outstanding Common Shares, (C) combine the outstanding Common Shares (by
  reverse stock split or otherwise) into a smaller number of Common Shares, or
  (D) issue any shares of its capital stock in a reclassification of the Common
  Shares (including any such reclassification in connection with a consolidation
  or merger in which the Company is the continuing or surviving corporation),
  then, in each such event, except as otherwise provided in this Section 11(a)
  and Section 7(e) hereof: (1) each Common Share (or shares of capital stock issued
  in such reclassification of the Common Shares) outstanding immediately following
  such time shall have associated with it the number of Rights as were associated
  with one Common Share immediately prior to the occurrence of the event described
  in clauses (A)-(D) above; (2) the Exercise Price in effect at the time of the
  record date for such dividend or of the effective date of such subdivision,
  combination or reclassification shall be adjusted so that the Exercise Price
  thereafter shall equal the result obtained by multiplying the Exercise Price
  in effect immediately prior to such time by a fraction, the numerator of which
  shall be the total number of Common Shares outstanding immediately prior to
  the event described in clauses (A)-(D) above, and the denominator of which shall
  be the total number of Common Shares outstanding immediately after such event;
  provided, however, that in no event shall the consideration to be paid upon
  the exercise of one Right be less than the aggregate par value of the shares
  of capital stock of the Company issuable upon exercise of such Right; and (3)
  the number of one-thousandths (0.001) of a Preferred Share (or shares of such
  other capital stock) issuable upon the exercise of each Right outstanding after
  such event shall equal the number of one-thousandths (0.001) of a Preferred
  Share (or shares of such other capital stock) as were issuable with respect
  to one Right immediately prior to such event. Each Common Share that shall become
  outstanding after an adjustment has been made pursuant to this Section 11(n)
  shall have associated with it the number of Rights, exercisable at the Exercise
  Price and for the number of one-thousandths (0.001) of a Preferred Share (or
  shares of such other capital stock) as one Common Share has associated with
  it immediately following the adjustment made pursuant to this Section 11(n).
  If an event occurs which would require an adjustment under both this Section
  11(n) and Section 11(a)(ii) hereof, the adjustment provided for in this Section
  11(n) shall be in addition to, and shall be made prior to, any adjustment required
  pursuant to Section 11(a)(ii) hereof. 

20



 

      Section
  12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever
  an adjustment is made as provided in Sections 11 and 13 hereof, the Company
  shall promptly (a) prepare a certificate setting forth such adjustment and a
  brief statement of the facts and computations accounting for such adjustment,
  (b) file with the Rights Agent and with each transfer agent for the Preferred
  Shares a copy of such certificate and (c) mail a brief summary thereof to each
  holder of a Rights Certificate in accordance with Section 26 hereof. Notwithstanding
  the foregoing sentence, the failure of the Company to make such certification
  or give such notice shall not affect the validity of such adjustment or the
  force or effect of the requirement for such adjustment. The Rights Agent shall
  be fully protected in relying on any such certificate and on any adjustment
  or statement contained therein and shall not be deemed to have knowledge of
  or duty with respect to such adjustment or any such statement unless and until
  it shall have received such certificate. 

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

                   (a)
  In the event that, following a Triggering Event, directly or indirectly: 

                            (i)
  the Company shall consolidate with, or merge with and into, any other Person
  (other than a wholly-owned Subsidiary of the Company in a transaction the principal
  purpose of which is to change the state of incorporation of the Company and
  which complies with Section 11(m) hereof); 

21



 

                            (ii)
  any Person shall consolidate with the Company, or merge with and into the Company
  and the Company shall be the continuing or surviving corporation of such consolidation
  or merger and, in connection with such merger, all or part of the Common Shares
  shall be changed into or exchanged for stock or other securities of any other
  person (or the Company); or 

                            (iii)
  the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
  shall sell or otherwise transfer), in one or more transactions, assets or earning
  power aggregating fifty percent (50%) or more of the assets or earning power
  of the Company and its Subsidiaries (taken as a whole) to any other Person or
  Persons (other than the Company or one or more of its wholly owned Subsidiaries
  in one or more transactions, each of which individually (and together) complies
  with Section 11(m) hereof), 

                                               then,
  concurrent with and in each such case, 

                                               (A)
  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 a price equal to the
  Total Exercise Price applicable immediately prior to the occurrence of the Section
  13 Event in accordance with the terms of this Agreement, such number of validly
  authorized and issued, fully paid, nonassessable and freely tradable Common
  Shares of the Principal Party (as hereinafter defined), free of any liens, encumbrances,
  rights of first refusal or other adverse claims, as shall be equal to the result
  obtained by dividing such Total Exercise Price by an amount equal to fifty percent
  (50%) of the Current Per Share Market Price of the Common Shares of such Principal
  Party on the date of consummation of such Section 13 Event, provided, however,
  that the Exercise Price and the number of Common Shares of such Principal Party
  so receivable upon exercise of a Right shall be subject to further adjustment
  as appropriate in accordance with Section 11(e) hereof; 

                                               (B)
  such Principal Party shall thereafter be liable for, and shall assume, by virtue
  of such Section 13 Event, all the obligations and duties of the Company pursuant
  to this Agreement; 

                                               (C)
  the term "Company" shall thereafter be deemed to refer to such Principal Party,
  it being specifically intended that the provisions of Section 11 hereof shall
  apply only to such Principal Party following the first occurrence of a Section
  13 Event; 

                                               (D)
  such Principal Party shall take such steps (including, but not limited to, the
  reservation of a sufficient number of its Common Shares) in connection with
  the consummation of any such transaction as may be necessary to ensure that
  the provisions hereof shall thereafter be applicable, as nearly as reasonably
  may be, in relation to its Common Shares thereafter deliverable upon the exercise
  of the Rights; and 

                                               (E)
  upon the subsequent occurrence of any consolidation, merger, sale or transfer
  of assets or other extraordinary transaction in respect of such Principal Party,
  each holder of a Right shall thereupon be entitled to receive, upon exercise
  of a Right and payment of the Total Exercise Price as provided in this Section
  13(a), such cash, shares, rights, warrants and other property which such holder
  would have been entitled to receive had such holder, at the time of such transaction,
  owned the Common Shares of the Principal Party receivable upon the exercise
  of such Right pursuant to this Section 13(a), and such Principal Party shall
  take such steps (including, but not limited to, reservation of shares of stock)
  as may be necessary to permit the subsequent exercise of the Rights in accordance
  with the terms hereof for such cash, shares, rights, warrants and other property.
  

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                                               (F)
  For purposes hereof, the "earning power" of the Company and its Subsidiaries
  shall be determined in good faith by the Company's Board of Directors on the
  basis of the operating income of each business operated by the Company and its
  Subsidiaries during the three fiscal years preceding the date of such determination
  (or, in the case of any business not operated by the Company or any Subsidiary
  during three full fiscal years preceding such date, during the period such business
  was operated by the Company or any Subsidiary). 

                   (b)
  For purposes of this Agreement, the term "Principal Party" shall
  mean:

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

                            (ii)
  in the case of any transaction described in clause (iii) of Section 13(a) hereof,
  the Person that is the party receiving the greatest portion of the assets or
  earning power transferred pursuant to such transaction or transactions, or,
  if more than one Person that is a party to such transaction or transactions
  receives the same portion of the assets or earning power so transferred and
  each such portion would, were it not for the other equal portions, constitute
  the greatest portion of the assets or earning power so transferred, or if the
  Person receiving the greatest portion of the assets or earning power cannot
  be determined, whichever of such Persons is the issuer of Common Shares having
  the greatest aggregate market value of shares outstanding; provided that in
  any such case described in the foregoing clause (b)(i) or (b)(ii), if the Common
  Shares of such Person are not at such time or have not been continuously over
  the preceding 12-month period registered under Section 12 of the Exchange Act,
  then (1) if such Person is a direct or indirect Subsidiary of another Person
  the Common Shares of which are and have been so registered, the term "Principal
  Party" shall refer to such other Person, or (2) if such Person is a Subsidiary,
  directly or indirectly, of more than one Person, the Common Shares of which
  are and have been so registered, the term "Principal Party" shall refer to whichever
  of such Persons is the issuer of Common Shares having the greatest aggregate
  market value of shares outstanding, or (3) if such Person is owned, directly
  or indirectly, by a joint venture formed by two or more Persons that are not
  owned, directly or indirectly by the same Person, the rules set forth in clauses
  (1) and (2) above shall apply to each of the owners having an interest in the
  venture as if the Person owned by the joint venture was a Subsidiary of both
  or all of such joint venturers, and the Principal Party in each such case shall
  bear the obligations set forth in this Section 13 in the same ratio as its interest
  in such Person bears to the total of such interests. 

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                   (c)
  The Company shall not consummate any Section 13 Event unless the Principal Party
  shall have a sufficient number of authorized Common Shares 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
  such issuer shall have executed and delivered to the Rights Agent a supplemental
  agreement confirming that such Principal Party shall, upon consummation of such
  Section 13 Event, assume this Agreement in accordance with Sections 13(a) and
  13(b) hereof, that all rights of first refusal or preemptive rights in respect
  of the issuance of Common Shares of such Principal Party upon exercise of outstanding
  Rights have been waived, that there are no rights, warrants, instruments or
  securities outstanding or any agreements or arrangements which, as a result
  of the consummation of such transaction, would eliminate or substantially diminish
  the benefits intended to be afforded by the Rights and that such transaction
  shall not result in a default by such Principal Party under this Agreement,
  and further providing that, as soon as practicable after the date of such Section
  13 Event, such Principal Party will: 

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

                            (ii)
  use its best efforts to list (or continue the listing of) the Rights and the
  securities purchasable upon exercise of the Rights on a national securities
  exchange or to meet the eligibility requirements for quotation on Nasdaq and
  list (or continue the listing of) the Rights and the securities purchasable
  upon exercise of the Rights on Nasdaq; and 

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

      In
  the event that at any time after the occurrence of a Triggering Event some or
  all of the Rights shall not have been exercised at the time of a transaction
  described in this Section 13, the Rights which have not theretofore been exercised
  shall thereafter be exercisable in the manner described in Section 13(a) (without
  taking into account any prior adjustment required by Section 11(a)(ii)). 

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

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                   (e)
  The Company covenants and agrees that it shall not, at any time after the Distribution
  Date, effect or permit to occur any Section 13 Event, if (i) at the time or
  immediately after such Section 13 Event there are any rights, warrants or other
  instruments or securities outstanding or agreements in effect which would substantially
  diminish or otherwise eliminate the benefits intended to be afforded by the
  Rights, (ii) prior to, simultaneously with or immediately after such Section
  13 Event, the shareholders of the Person who constitutes, or would constitute,
  the "Principal Party" for purposes of Section 13(b) hereof shall have received
  a distribution of Rights previously owned by such Person or any of its Affiliates
  or Associates or (iii) the form or nature of organization of the Principal Party
  would preclude or limit the exercisability of the Rights. 

                   (f)
  The provisions of this Section 13 shall similarly apply to successive mergers
  or consolidations or sales or other transfers. 

      Section
  14. Fractional Rights and Fractional Shares. 

                   (a)
  The Company shall not be required to issue fractions of Rights or to distribute
  Rights Certificates which evidence fractional Rights. In lieu of such fractional
  Rights, there shall be paid to the registered holders of the Rights Certificates
  with regard to which such fractional Rights would otherwise be issuable, an
  amount in cash equal to the same fraction of the current market value of a whole
  Right. For the purposes of this Section 14(a), the current market value of a
  whole Right shall be the closing price of the Rights for the Trading Day immediately
  prior to the date on which such fractional Rights would have been otherwise
  issuable, as determined pursuant to the second sentence of Section 1(j) hereof.
  

                   (b)
  The Company shall not be required to issue fractions of Preferred Shares (other
  than fractions that are integral multiples of one one-thousandth (0.001) of
  a Preferred Share) upon exercise of the Rights or to distribute certificates
  which evidence fractional Preferred Shares (other than fractions that are integral
  multiples of one one-thousandth (0.001) of a Preferred Share). Interests in
  fractions of Preferred Shares in integral multiples of one one-thousandth (0.001)
  of a Preferred Share may, at the election of the Company, be evidenced by depository
  receipts, pursuant to an appropriate agreement between the Company and a depository
  selected by it; provided, that such agreement shall provide that the holders
  of such depository receipts shall have all the rights, privileges and preferences
  to which they are entitled as beneficial owners of the Preferred Shares represented
  by such depository receipts. In lieu of fractional Preferred Shares that are
  not integral multiples of one one-thousandth (0.001) of a Preferred Share, the
  Company shall pay to the registered holders of Rights Certificates at the time
  such Rights are exercised as herein provided an amount in cash equal to the
  same fraction of the current market value of a Preferred Share. For purposes
  of this Section 14(b), the current market value of a Preferred Share shall be
  the product equal to (x) one thousand multiplied by (y) the closing price of
  a Common Share (as determined pursuant to the second sentence of Section 1(j)
  hereof) for the Trading Day immediately prior to the date of such exercise.
  

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                   (c)
  The Company shall not be required to issue fractions of Common Shares or to
  distribute certificates which evidence fractional Common Shares upon the exercise
  or exchange of Rights. In lieu of such fractional Common Shares, the Company
  shall pay to the registered holders of Rights Certificates at the time such
  Rights are exercised as herein provided an amount in cash equal to the same
  fraction of the current market value of a Common Share. For purposes of this
  Section 14(c), the current market value of a Common Share shall be the closing
  price of a Common Share (as determined pursuant to the second sentence of Section
  1(j) hereof) 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 or
  her right to receive any fractional Rights or any fractional shares (other than
  fractions that are integral multiples of one one-thousandth (0.001) of a Preferred
  Share) upon exercise of a Right. 

                   (e)
  Whenever a payment for fractional Rights or fractional shares is to be made
  by the Rights Agent, the Company shall (i) promptly prepare and deliver to the
  Rights Agent a certificate setting forth in reasonable detail the facts related
  to such payment and the prices and/or formulas utilized in calculating such
  payments, and (ii) provide sufficient monies to the Rights Agent in the form
  of fully collected funds to make such payments. The Rights Agent shall be fully
  protected in relying upon such a certificate and (i) shall not be deemed to
  have knowledge of any payment for fractional Rights or fractional shares under
  any Section of this Agreement relating to the payment of fractional Rights or
  fractional shares, unless and until the Rights Agent shall have received such
  a certificate, and (ii) shall not be deemed to have any duty with respect to
  payment for fractional Rights or fractional shares under any Section of this
  Agreement relating to the payment of fractional Rights or fractional shares,
  unless and until the Rights Agent shall have received sufficient monies for
  such payment. 

      Section
  15. Rights of Action. 

                   (a)
  All rights of action in respect of this Agreement, excepting the rights of action
  given to the Rights Agent pursuant to Section 18 and Section 20 hereof, are
  vested in the respective registered holders of the Rights Certificates (and,
  prior to the Distribution Date, the registered holders of the Common Shares);
  and any registered holder of any Rights Certificate (or, prior to the Distribution
  Date, of the Common Shares), 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 Shares), may, in his or her own behalf and for his or her 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 or her 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 will be entitled to specific performance of the
  obligations under, and injunctive relief against actual or threatened violations
  of, the obligations of any Person subject to this Agreement. 

26



 

                   (b)
  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, judgment, decree or ruling (whether interlocutory or final) issued by
  a court or by a governmental, regulatory, self-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, that the Company must use
  all reasonable efforts to have any such injunction, order, judgment, decree
  or ruling lifted or otherwise overturned as soon as possible. 

      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 be transferable only in connection
  with the transfer of the Common Shares; 

                   (b)
  after the Distribution Date, the Rights Certificates are transferable only on
  the registry books of the Rights Agent if surrendered at the office or offices
  of the Rights Agent designated for such purposes, duly endorsed or accompanied
  by a proper instrument of transfer and with the appropriate forms and certificates
  fully executed; and 

                   (c)
  subject to Sections 6(a) and 7(f) hereof, the Company and the Rights Agent may
  deem and treat the person in whose name the Rights Certificate (or, prior to
  the Distribution Date, the associated Common Shares 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 Shares 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. 

      Section
  17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
  such, of any Rights Certificate shall be entitled to vote, receive dividends
  or be deemed for any purpose to be the holder of the Preferred Shares or any
  other securities of the Company which may at any time be issuable on the exercise
  of the Rights represented thereby, nor shall anything contained herein or in
  any Rights Certificate be construed to confer upon the holder of any Rights
  Certificate, as such, any of the rights of a shareholder of the Company or any
  right to vote for the election of directors or upon any matter submitted to
  shareholders at any meeting thereof, or to give or withhold consent to any corporate
  action, or to receive notice of meetings or other actions affecting shareholders
  (except as specifically 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. 

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      Section
  18. Concerning the Rights Agent. 

                   (a)
  The Company agrees to pay to the Rights Agent reasonable compensation for all
  services rendered by it hereunder and, from time to time, on demand of the Rights
  Agent, its reasonable expenses and counsel fees and other disbursements incurred
  in the preparation, delivery, amendment, 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, damage, judgment, fine, penalty, claim, demand, settlement,
  cost or expense (including, without limitation, reasonable fees and expenses
  of legal counsel, both in actions by the Company against the Rights Agent and
  in actions by holders of the Rights against the Rights Agent), incurred without
  gross negligence, bad faith or willful misconduct on the part of the Rights
  Agent (which gross negligence, bad faith or willful misconduct must be determined
  by a final order, judgment, decree or ruling of a court of competent jurisdiction),
  for any action taken, suffered or omitted to be taken by the Rights Agent in
  connection with the acceptance, exercise and administration of this Agreement,
  including the costs and expenses of defending against any claim of liability
  in the premises. The costs and expenses incurred in enforcing this right of
  indemnification shall be paid by the Company if it is determined by a final
  order, judgment, decree or ruling of a court of competent jurisdiction that
  the Rights Agent is entitled to such right of indemnification hereunder. The
  provisions of this Section 18 and Section 20 below shall survive the termination
  of this Agreement, the exercise or expiration of the Rights and the resignation,
  replacement or removal of the Rights Agent. 

                   (b)
  The Rights Agent shall be authorized and protected and shall incur no liability
  for, or in respect of any action taken, suffered or omitted by it in connection
  with, its acceptance and administration of this Agreement and the exercise and
  performance of its duties hereunder, in reliance upon any Rights Certificate
  or certificate for the Preferred Shares or Common Shares 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 reasonably believed by it to be genuine and to be signed,
  executed and, where necessary, verified or acknowledged, by the proper Person
  or Persons, or otherwise upon the advice of counsel as set forth in Section
  20 hereof. The Rights Agent shall not be deemed to have knowledge of any event
  of which it was supposed to receive notice thereof hereunder, and the Rights
  Agent shall be fully protected and shall incur no liability for failing to take
  any action in connection therewith unless and until it has received such notice.
  

28



 

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

                   (a)
  Any Person into which the Rights Agent or any successor Rights Agent may be
  merged or with which it may be consolidated, or any Person resulting from any
  merger or consolidation to which the Rights Agent or any successor Rights Agent
  shall be a party, or any Person succeeding to the shareholder services 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 Person 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 the 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 Rights Agent or in the name of the successor Rights
  Agent; and in all such cases such Rights Certificates shall have the full force
  provided in the Rights Certificates and in this Agreement. 

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

      Section
  20. Duties of Rights Agent. The Rights Agent undertakes to perform only
  the duties and obligations expressly imposed by this Agreement (and no implied
  duties or obligations) 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 or an employee of the Rights Agent), and the advice or opinion of
  such counsel shall be full and complete authorization and protection to the
  Rights Agent and the Rights Agent shall incur no liability for or in respect
  of any action taken, suffered 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
  Per Share Market Price) be proved or established by the Company prior to taking,
  suffering, or omitting to take 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
  any one of the Chairman of the Board, the Chief Executive Officer, the President,
  any Vice President, the Chief Financial Officer, the Secretary or any Assistant
  Secretary of the Company and delivered to the Rights Agent; and such certificate
  shall be full and complete authorization and protection to the Rights Agent
  and the Rights Agent shall incur no liability for or in respect of any action
  taken, suffered or omitted to be taken by it under the provisions of this Agreement
  in reliance upon such certificate. 

29



 

                   (c)
  The Rights Agent shall be liable hereunder to the Company and any other Person
  only for its own gross negligence, bad faith or willful misconduct (which gross
  negligence, bad faith or willful misconduct must be determined by a final order,
  judgment, decree or ruling of a court of competent jurisdiction). Anything to
  the contrary notwithstanding, in no event shall the Rights Agent be liable for
  special, punitive, indirect, consequential or incidental 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. Any liability
  of the Rights Agent under this Agreement will be limited to the amount of annual
  fees paid by the Company to the Rights Agent. 

                   (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
  (except its countersignature thereof) or be required to verify the same, but
  all such statements and recitals are and shall be deemed to have been made by
  the Company only. 

                   (e)
  The Rights Agent shall not have any liability for or 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 change in the exercisability of the Rights or any
  adjustment in the terms of the Rights (including the manner, method or amount
  thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of
  the existence of facts that would require any such change or adjustment (except
  with respect to the exercise of Rights evidenced by Rights Certificates after
  receipt by the Rights Agent of a certificate furnished pursuant to Section 12
  describing such change or adjustment, upon which the Rights Agent may rely);
  nor shall it by any act hereunder be deemed to make any representation or warranty
  as to the authorization or reservation of any Preferred Shares to be issued
  pursuant to this Agreement or any Rights Certificate or as to whether any Preferred
  Shares will, when issued, be validly authorized and issued, fully paid and nonassessable.
  

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

                   (g)
  The Rights Agent is hereby authorized and directed to accept instructions with
  respect to the performance of its duties hereunder from any one of the Chairman
  of the Board, the Chief Executive Officer, the President, any Vice President,
  the Chief Financial Officer, the Secretary or any Assistant Secretary of the
  Company, and to apply to such officers for advice or instructions in connection
  with its duties, and such instructions shall be full authorization and protection
  to the Rights Agent and the Rights Agent shall not be liable for or in respect
  of any action taken, suffered or omitted by it in accordance with instructions
  of any such officer or for any delay in acting while waiting for those instructions.
  The Rights Agent shall be fully authorized and protected in relying upon the
  most recent instructions received by any such officer. Any application by the
  Rights Agent for written instructions from the Company may, at the option of
  the Rights Agent, set forth in writing any action proposed to be taken, suffered
  or omitted by the Rights Agent under this Rights Agreement and the date on and/or
  after which such action shall be taken or suffered or such omission shall be
  effective. The Rights Agent shall not be liable for any action taken or suffered
  by, or omission of, the Rights Agent in accordance with a proposal included
  in any such application on or after the date specified in such application (which
  date shall not be less than five (5) Business Days after the date on which any
  officer of the Company actually receives such application, unless any such officer
  shall have consented in writing to an earlier date) unless, prior to taking
  any such action (or the effective date in the case of an omission), the Rights
  Agent shall have received written instructions in response to such application
  specifying the action to be taken, suffered or omitted. 

30



 

                   (h)
  The Rights Agent and any shareholder, affiliate, 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 or any such shareholder,
  affiliate, director, officer or employee from acting in any other capacity for
  the Company or for any other Person. 

                   (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 (through its directors,
  officers or employees) or by or through its attorneys or agents, and the Rights
  Agent shall not be answerable or accountable for any act, default, neglect or
  misconduct of any such attorneys or agents or for any loss to the Company or
  any other Person resulting from any such act, default, neglect or misconduct,
  absent gross negligence, bad faith or willful misconduct in the selection and
  continued employment thereof (which gross negligence, bad faith or willful misconduct
  must be determined by a final order, judgment, decree or ruling of a court of
  competent jurisdiction). 

                   (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 it reasonably
  believes 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. 

31



 

      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
  thirty (30) days' notice in writing mailed to the Company by registered or certified
  mail. The Company may remove the Rights Agent or any successor Rights Agent
  upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor
  Rights Agent, as the case may be, and to each transfer agent of the Preferred
  Shares and the Common Shares by registered or certified mail, and to the holders
  of the Rights Certificates by first-class mail. If the Rights Agent shall resign
  or be removed or shall otherwise become incapable of acting, the Company shall
  appoint a successor to the Rights Agent. If the Company shall fail to make such
  appointment within a period of thirty (30) days after giving notice of such
  removal or after it has been notified in writing of such resignation or incapacity
  by the resigning or incapacitated Rights Agent or by the holder of a Rights
  Certificate (who shall, with such notice, submit his or her Rights Certificate
  for inspection by the Company), then the registered holder of any Rights Certificate
  may apply to any court of competent jurisdiction for the appointment of a new
  Rights Agent. 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 Preferred Shares
  and the Common Shares, 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 Exercise 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 Common Shares following the Distribution Date and prior to the redemption
  or expiration of the Rights, the Company (a) shall, with respect to Common Shares
  so issued or sold pursuant to the exercise of stock options or under any employee
  plan or arrangement or upon the exercise, conversion or exchange of other securities
  of the Company outstanding at the date hereof or upon the exercise, conversion
  or exchange of securities hereinafter issued by the Company 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 and this sentence shall
  be null and void ab initio if, and to the extent that, such issuance
  or this sentence would create a significant risk of or result in material adverse
  tax consequences to the Company or the Person to whom such Rights Certificate
  would be issued or would create a significant risk of or result in such options'
  or employee plans' or arrangements' failing to qualify for otherwise available
  special tax treatment 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.

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  Section 23. Redemption.

                   
  (a) The Company may, at its option and with the approval of the Board of Directors,
  at any time prior to the Close of Business on the earlier of (i) the fifth day
  following the Shares Acquisition Date (or such later date as may be determined
  by action of the Company's Board of Directors and publicly announced by the
  Company) and (ii) the Final Expiration Date, redeem all but not less than all
  the then outstanding Rights at a redemption price of $0.001 per Right, appropriately
  adjusted to reflect any stock split, stock dividend or similar transaction occurring
  after the date hereof (such redemption price being herein referred to as the
  "Redemption Price") and the Company may, at its option, pay the
  Redemption Price either in Common Shares (based on the Current Per Share Market
  Price thereof at the time of redemption) or cash. Such redemption of the Rights
  by the Company may be made effective at such time, on such basis and with such
  conditions as the Board of Directors in its sole discretion may establish. The
  date on which the Board of Directors elects to make the redemption effective
  shall be referred to as the "Redemption Date."

                   
  (b) Immediately upon the action of the Board of Directors of the Company ordering
  the redemption of the Rights, prompt written evidence of which shall have been
  filed with the Rights Agent, and without any further action and without any
  notice, the right to exercise the Rights will terminate and the only right thereafter
  of the holders of Rights shall be to receive the Redemption Price. The Company
  shall promptly give written notice to the Rights Agent and public notice of
  any such redemption (with prompt written notice thereof to the Rights Agent);
  provided, however, that the failure to give, or any defect in, any such notice
  shall not affect the validity of such redemption. Within ten (10) days after
  the action of the Board of Directors ordering the redemption of the Rights,
  the Company shall give written notice of such redemption to the Rights Agent
  and the holders of the then outstanding Rights by mailing such notice to all
  such holders at their last addresses as they appear upon the registry books
  of the Rights Agent or, prior to the Distribution Date, on the registry books
  of the transfer agent for the Common Shares. Any notice which is mailed in the
  manner herein provided shall be deemed given, whether or not the holder receives
  the notice. Each such notice of redemption will state the method by which the
  payment of the Redemption Price will be made. Neither the Company nor any of
  its Affiliates or Associates may redeem, acquire or purchase for value any Rights
  at any time in any manner other than that specifically set forth in this Section
  23 or in Section 24 hereof, and other than in connection with the purchase of
  Common Shares prior to the Distribution Date. 

       Section
  24. Exchange. 

                   (a)
  Subject to applicable laws, rules and regulations, and subject to subsection
  24(c) below, the Company may, at its option, by action of the Board of Directors,
  at any time after the occurrence of a Triggering Event, exchange all or part
  of the then outstanding and exercisable Rights (which shall not include Rights
  that have become null and void pursuant to the provisions of Section 7(e) hereof)
  for Common Shares at an exchange ratio of one Common Share per Right, appropriately
  adjusted to reflect any stock split, stock dividend or similar transaction occurring
  after the date hereof (such exchange ratio being hereinafter referred to as
  the "Exchange Ratio"). Notwithstanding the foregoing, the Board
  of Directors shall not be empowered to effect such exchange at any time after
  any Person (other than the Company, any Subsidiary of the Company, any employee
  benefit plan of the Company or any such Subsidiary, or any entity holding Common
  Shares for or pursuant to the terms of any such plan), together with all Affiliates
  and Associates of such Person, becomes the Beneficial Owner of 50% or more of
  the Common Shares then outstanding. 

33



 

                   (b)
  Immediately upon the action of the Board of Directors ordering the exchange
  of any Rights pursuant to subsection 24(a) of this Section 24 and without any
  further action and without any notice, the right to exercise such Rights shall
  terminate and the only right thereafter of a holder of such Rights shall be
  to receive that number of Common Shares equal to the number of such Rights held
  by such holder multiplied by the Exchange Ratio. The Company shall give public
  notice of any such exchange, as well as prompt written notice thereof to the
  Rights Agent; provided, however, that the failure to give, or
  any defect in, such notice shall not affect the validity of such exchange. The
  Company shall mail a notice of any such exchange to all of the holders of such
  Rights at their last addresses as they appear upon the registry books of the
  Rights Agent. Any notice which is mailed in the manner herein provided shall
  be deemed given, whether or not the holder receives the notice. Each such notice
  of exchange will state the method by which the exchange of the Common Shares
  for Rights will be effected and, in the event of any partial exchange, the number
  of Rights which will be exchanged. Any partial exchange shall be effected pro
  rata based on the number of Rights (other than Rights which have become null
  and void pursuant to the provisions of Section 7(e) hereof) held by each holder
  of Rights. 

                   (c)
  In the event that there shall not be sufficient Common Shares issued but not
  outstanding or authorized but unissued to permit any exchange of Rights as contemplated
  in accordance with Section 24(a), the Company shall either take such action
  as may be necessary to authorize additional Common Shares for issuance upon
  exchange of the Rights or alternatively, at the option of a majority of the
  Board of Directors, with respect to each Right (i) pay cash in an amount equal
  to the Current Value (as hereinafter defined), in lieu of issuing Common Shares
  in exchange therefor, or (ii) issue debt or equity securities or a combination
  thereof, having a value equal to the Current Value, in lieu of issuing Common
  Shares in exchange for each such Right, where the value of such securities shall
  be determined by a nationally recognized investment banking firm selected by
  majority vote of the Board of Directors, or (iii) deliver any combination of
  cash, property, Common Shares and/or other securities having a value equal to
  the Current Value in exchange for each Right. For purposes of this Section 24(c)
  only, the Current Value shall mean the product of the Current Per Share Market
  Price of Common Shares on the date of the occurrence of the event described
  above in subsection (a), multiplied by the number of Common Shares for which
  the Right otherwise would be exchangeable if there were sufficient shares available.
  To the extent that the Company determines that some action need be taken pursuant
  to clauses (i), (ii) or (iii) of this Section 24(c), the Board of Directors
  may temporarily suspend the exercisability of the Rights for a period of up
  to sixty (60) days following the date on which the event described in Section
  24(a) shall have occurred, in order to seek any authorization of additional
  Common Shares and/or to decide the appropriate form of distribution to be made
  pursuant to the above provision and to determine the value thereof. In the event
  of any such suspension, the Company shall promptly notify the Rights Agent in
  writing of such suspension and shall issue a public announcement stating that
  the exercisability of the Rights has been temporarily suspended.

34



 

                   (d)
  The Company shall not be required to issue fractions of Common Shares or to
  distribute certificates which evidence fractional Common Shares. In lieu of
  such fractional Common Shares, there shall be paid to the registered holders
  of the Rights Certificates with regard to which such fractional Common Shares
  would otherwise be issuable, an amount in cash equal to the same fraction of
  the current market value of a whole Common Share (as determined pursuant to
  the second sentence of Section 1(j) hereof). 

                   (e)
  The Company may, at its option, by majority vote of the Board of Directors,
  at any time before any Person has become an Acquiring Person, exchange all or
  part of the then outstanding Rights for rights of substantially equivalent value,
  as determined reasonably and with good faith by the Board of Directors based
  upon the advice of one or more nationally recognized investment banking firms.
  

                   (f)
  Immediately upon the action of the Board of Directors ordering the exchange
  of any Rights pursuant to subsection 24(e) of this Section 24 and without any
  further action and without any notice, the right to exercise such Rights shall
  terminate and the only right thereafter of a holder of such Rights shall be
  to receive that number of rights in exchange therefor as has been determined
  by the Board of Directors in accordance with subsection 24(e) above. The Company
  shall promptly notify the Rights Agent in writing thereof and shall give public
  notice of any such exchange; provided, however, that the failure to give, or
  any defect in, such notice shall not affect the validity of such exchange. The
  Company shall mail a notice of any such exchange to the Rights Agent and all
  of the holders of such Rights at their last addresses as they appear upon the
  registry books of the transfer agent for the Common Shares of the Company. Any
  notice which is mailed in the manner herein provided shall be deemed given,
  whether or not the holder receives the notice. Each such notice of exchange
  will state the method by which the exchange of the Rights will be effected.
  

       Section
  25. Notice of Certain Events. 

                   (a)
  In case the Company shall propose to effect or permit to occur any Triggering
  Event or Section 13 Event, the Company shall give written notice thereof to
  the Rights Agent and each holder of Rights in accordance with Section 26 hereof
  at least twenty (20) days prior to occurrence of such Triggering Event or such
  Section 13 Event. 

                   (b)
  In case any Triggering Event or Section 13 Event shall occur, then, in any such
  case, the Company shall as soon as practicable thereafter give to each holder
  of a Rights Certificate, and to the Rights Agent in accordance with Section
  26 hereof, a written notice of the occurrence of such event, which shall specify
  the event and the consequences of the event to holders of Rights under Sections
  11(a)(ii) and 13 hereof. 

35



 

       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:


  
    
      
        
          
             Sigma Designs,
              Inc. 

              1221
              California Circle

              Milpitas, CA 95035 

              Attention: Chief Executive Officer 

            with a copy
              to: 

            Wilson Sonsini
              Goodrich & Rosati

              Professional Corporation 

              650 Page Mill Road 

              Palo Alto, California 94304-1050 

              Attention: Don S. Williams 

          

        

      

    

  



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


  
    
      
        
          
            Mellon Investor
              Services LLC 

              235 Montgomery
              Street 

              23rd Floor 

              San Francisco, CA 94104 

              Attention: Kerri Jones 

            With a copy
              to: 

            Mellon Investor
              Services LLC 

              85 Challenger Road 

              Ridgefield Park, New Jersey 07660-2108 

              Attention: General Counsel 

          

        

      

    

  



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 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. 

36



 

      Section
  27. Supplements and Amendments. Prior to the occurrence of a Distribution
  Date, the Company may supplement or amend this Agreement in any respect without
  the approval of any holders of Rights and the Rights Agent shall, if the Company
  so directs, but subject to the further provisions of this paragraph, execute
  such supplement or amendment. From and after the occurrence of a Distribution
  Date, the Company and the Rights Agent may from time to time supplement or amend
  this Agreement without the approval of any holders of Rights in order to (i)
  cure any ambiguity, (ii) correct or supplement any provision contained herein
  which may be defective or inconsistent with any other provisions herein, (iii)
  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 and that shall not adversely affect the interests of the holders of
  Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring
  Person); provided, this Agreement may not be supplemented or amended to lengthen,
  pursuant to clause (iii) of this sentence, (A) a time period relating to when
  the Rights may be redeemed at such time as the Rights are not then redeemable
  or (B) any other time period unless such lengthening is for the purpose of protecting,
  enhancing or clarifying the rights of, and/or the benefits to, the holders of
  Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring
  Person). Upon the delivery of a certificate from an appropriate officer of the
  Company and, if reasonably requested by the Rights Agent, an opinion of counsel,
  that states that the proposed supplement or amendment is in compliance with
  the terms of this Section 27, and provided that such supplement or amendment
  does not change or increase the Rights Agent's rights, duties, liabilities,
  or obligations hereunder without the prior written consent of the Rights Agent,
  the Rights Agent shall execute such supplement or amendment. Prior to the Distribution
  Date, the interests of the holders of Rights shall be deemed coincident with
  the interests of the holders of Common Shares. 

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

      Section
  29. Determinations and Actions by the Board of Directors, etc. For all
  purposes of this Agreement, any calculation of the number of Common Shares outstanding
  at any particular time, including for purposes of determining the particular
  percentage of such outstanding Common Shares of which any Person is the Beneficial
  Owner, shall 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. The Board of Directors
  of the Company shall have the exclusive power and authority to administer this
  Agreement and to exercise all rights and powers specifically granted to the
  Board, or the Company, or as may be necessary or advisable in the administration
  of this Agreement, including, without limitation, the right and power (i) to
  interpret the provisions of this Agreement and (ii) to make all determinations
  and calculations deemed necessary or advisable for the administration of this
  Agreement (including a determination to redeem or not redeem the Rights or to
  amend the Agreement). All such actions, calculations, interpretations and determinations
  (including, for purposes of clause (y) below, all omissions with respect to
  the foregoing) which are done or made by the Board in good faith, shall (x)
  be final, conclusive and binding on the Company, the Rights Agent, the holders
  of the Rights Certificates and all other Persons and (y) with respect to claims
  specifically arising from the Agreement, not subject the Board to any liability
  to the holders of the Rights. The Rights Agent is entitled always to assume
  the Company's Board of Directors acted in good faith and shall be fully protected
  and incur no liability in reliance thereon. 

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

37



 

      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, null, 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, null, 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, the right of redemption set forth in Section 23 hereof shall
  be reinstated and shall not expire until the Close of Business on the tenth
  day following the date of such determination by the Board of Directors. 

      Section
  32. Governing Law. This Agreement and each Right and each Rights Certificate
  issued hereunder shall be deemed to be a contract made under the laws of the
  State of California and for all purposes shall be governed by and construed
  in accordance with the laws of such State applicable to contracts to be made
  and performed entirely within such State; provided, however, that
  all provisions regarding the rights, duties and obligations of the Rights Agent,
  to the extent that they relate to the rights, duties and obligations of the
  Rights Agent, shall be governed and construed in accordance with the laws of
  the State of New York 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. 

38



 

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

	"COMPANY"	 	Sigma
      Designs, Inc.
	 	 	By:           /s/
      Thinh Q. Tran
	 	 	                 Thinh
      Q. Tran
	 	 	                 Chief
      Executive Officer 
	 	 	 
	"RIGHTS
      AGENT"	 	Mellon
      Investor Services LLC
	 	 	By:         /s/
      Kerri S. Jones      
	 	 	                Karri
      S. Jones
	 	 	      
               Assistant Vice President
	 	 	       


 


 

EXHIBIT
  A 

CERTIFICATE
  OF DETERMINATION OF 

  RIGHTS, PREFERENCES AND PRIVILEGES OF 

  SERIES D PARTICIPATING PREFERRED STOCK OF SIGMA DESIGNS, INC.

       The
  undersigned, Thinh Q. Tran and Kit Tsui, do hereby certify: 

      A.
  That they are the duly elected and acting President and Secretary, respectively,
  of Sigma Designs, Inc., a California corporation (the "Corporation").
  

      B.
  That, immediately prior to the filing of this Certificate of Determination,
  the Corporation was authorized to issue 2,000,000 shares of Preferred Stock,
  and no shares of Preferred Stock were outstanding. 

      C.
  That pursuant to the authority conferred upon the Board of Directors by the
  Second Restated Articles of Incorporation, as amended, of the Company, the Board
  of Directors of the Company on May 28, 2004 adopted the following resolutions
  creating a series of Preferred Stock designated as Series D Participating Preferred:
  

Creation of Series
  D Participating Preferred Stock 


  NOW, THEREFORE, BE
    IT RESOLVED: That pursuant to the authority vested in the Board of Directors
    of the corporation by the Second Restated Articles of Incorporation, as amended,
    the Board of Directors does hereby provide for the issue of a series of Preferred
    Stock of the Corporation and does hereby fix and herein state and express
    the designations, powers, preferences and relative and other special rights
    and the qualifications, limitations and restrictions of such series of Preferred
    Stock as follows: 



       Section
  1. Designation and Amount. The shares of such series shall be designated
  as "Series D Participating Preferred Stock." The number of shares
  constituting such series shall be 35,000. 

      Section
  2. Proportional Adjustment. In the event that the Corporation shall at
  any time after the issuance of any share or shares of Series D Participating
  Preferred Stock (i) declare any dividend on Common Stock of the Corporation
  ("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 Corporation shall simultaneously
  effect a proportional adjustment to the number of outstanding shares of Series
  D Participating Preferred Stock. 

1



 

      Section
  3. Dividends and Distributions. 

                   (a)
  Subject to the prior and superior right of the holders of any shares of any
  series of Preferred Stock ranking prior and superior to the shares of Series
  D Participating Preferred Stock with respect to dividends, the holders of shares
  of Series D Participating Preferred Stock shall be entitled to receive when,
  as and if declared by the Board of Directors out of funds legally available
  for the purpose, quarterly dividends payable in cash on the last day of April,
  July, October and January 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
  D Participating Preferred Stock, in an amount per share (rounded to the nearest
  cent) equal to 1,000 times the aggregate per share amount of all cash dividends,
  and 1,000 times the aggregate per share amount (payable in kind) of all non-cash
  dividends or other distributions other than a dividend payable in shares of
  Common Stock or a subdivision of the outstanding shares of Common Stock (by
  reclassification or otherwise), declared on 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 D Participating Preferred Stock. 

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

                   (c)
  Dividends shall begin to accrue on outstanding shares of Series D Participating
  Preferred Stock from the Quarterly Dividend Payment Date next preceding the
  date of issue of such shares of Series D 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 D 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
  from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
  not bear interest. Dividends paid on the shares of Series D Participating Preferred
  Stock in an amount less than the total amount of such dividends at the time
  accrued and payable on such shares shall be allocated pro rata on a share-by-share
  basis among all such shares at the time outstanding. The Board of Directors
  may fix a record date for the determination of holders of shares of Series D
  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. 

      Section
  4. Voting Rights. The holders of shares of Series D Participating Preferred
  Stock shall have the following voting rights: 

                   (a)
  Each share of Series D Participating Preferred Stock shall entitle the holder
  thereof to 1,000 votes on all matters submitted to a vote of the shareholders
  of the Corporation. 

2



 

                   (b)
  Except as otherwise provided herein or by law, the holders of shares of Series
  D Participating Preferred Stock and the holders of shares of Common Stock shall
  vote together as one class on all matters submitted to a vote of shareholders
  of the Corporation. 

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

      Section
  5. Certain Restrictions. 

                   (a)
  The Corporation shall not declare any dividend on, make any distribution on,
  or redeem or purchase or otherwise acquire for consideration any shares of Common
  Stock after the first issuance of a share or fraction of a share of Series D
  Participating Preferred Stock unless concurrently therewith it shall declare
  a dividend on the Series D Participating Preferred Stock as required by Section
  3 hereof. 

                   (b)
  Whenever quarterly dividends or other dividends or distributions payable on
  the Series D Participating Preferred Stock as provided in Section 3 are in arrears,
  thereafter and until all accrued and unpaid dividends and distributions, whether
  or not declared, on shares of Series D Participating Preferred Stock outstanding
  shall have been paid in full, the Corporation shall not 

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

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

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

3



 

                   (c)
  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 5, purchase
  or otherwise acquire such shares at such time and in such manner. 

      Section
  6. Reacquired Shares. Any shares of Series D 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 the conditions and restrictions on issuance set forth herein and in the Articles
  of Incorporation, as then amended. 

      Section
  7. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution
  or winding up of the Corporation, the holders of shares of Series D Participating
  Preferred Stock shall be entitled to receive an aggregate amount per share equal
  to 1,000 times the aggregate amount to be distributed per share to holders of
  shares of Common Stock plus an amount equal to any accrued and unpaid dividends
  on such shares of Series D Participating Preferred Stock. 

      Section
  8. Consolidation, Merger, etc. In case the Corporation shall enter into
  any consolidation, merger, combination or other transaction in which the shares
  of Common Stock are exchanged for or changed into other stock or securities,
  cash and/or any other property, then in any such case the shares of Series D
  Participating Preferred Stock shall at the same time be similarly exchanged
  or changed in an amount per share equal to 1,000 times the aggregate amount
  of stock, securities, cash and/or any other property (payable in kind), as the
  case may be, into which or for which each share of Common Stock is changed or
  exchanged. 

      Section
  9. No Redemption. The shares of Series D Participating Preferred Stock
  shall not be redeemable. 

      Section
  10. Ranking. The Series D 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. 

      Section
  11. Amendment. The Articles of Incorporation of the Corporation shall
  not be further amended in any manner which would materially alter or change
  the powers, preference or special rights of the Series D Participating Preferred
  Stock so as to affect them adversely without the affirmative vote of the holders
  of a majority of the outstanding shares of Series D Participating Preferred
  Stock, voting separately as a series. 

      Section
  12. Fractional Shares. Series D Participating Preferred Stock may be
  issued in fractions of a share which shall entitle the holder, in proportion
  to such holder's fractional shares, to exercise voting rights, receive dividends,
  participate in distributions and to have the benefit of all other rights of
  holders of Series D Participating Preferred Stock. 

4



 


  RESOLVED FURTHER:
    That the President or any Vice President and the Secretary or any Assistant
    Secretary of this corporation be, and they hereby are, authorized and directed
    to prepare and file a Certificate of Determination of Rights, Preferences
    and Privileges in accordance with the foregoing resolution and the provisions
    of California law and to take such actions as they may deem necessary or appropriate
    to carry out the intent of the foregoing resolution." 



      D.
  That the authorized number of shares of Preferred Stock of the Corporation is
  2,000,000, the number of shares constituting Series D Participating Preferred
  Stock is 35,000, and no such Preferred Stock has been issued. 

      We
  further declare under penalty of perjury that the matters set forth in the foregoing
  Certificate of Determination are true and correct of our own knowledge. 

      Executed
  at Milpitas, California on June __, 2004. 


  
    
      
        
          
            _____________________________

              Thinh Q. Tran 

              President 

            _________________________

              Kit Tsui 

              Secretary
              

              

          

        

      

    

  



5



 

EXHIBIT
  B 

FORM
  OF RIGHTS CERTIFICATE 

	Certificate No. R-	
      _________
        Rights

    



  NOT EXERCISABLE AFTER
    THE EARLIER OF (i) JUNE 18, 2014, (ii) THE DATE TERMINATED BY THE COMPANY
    OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS
    AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
    AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
    CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
    AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
    IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
    NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
    BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
    AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
    THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
    REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
    IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.] 



RIGHTS
  CERTIFICATE 

Sigma
  Designs, 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 June 7, 2004 (the "Rights Agreement"), between Sigma Designs,
  Inc., a California corporation (the "Company"), and Mellon Investor Services
  LLC, a New Jersey limited liability company, as Rights Agent (the "Rights Agent"),
  to purchase from the Company at any time after the Distribution Date (as such
  term is defined in the Rights Agreement) and prior to 5:00 P.M., New York time,
  on June 18, 2014 at the office of the Rights Agent designated for such purpose,
  or at the office of its successor as Rights Agent, one one-thousandth (0.001)
  of a fully paid and non-assessable share of Series D Participating Preferred
  Stock (the "Preferred Shares"), of the Company, at an Exercise Price of $58.00
  per one-thousandth (0.001) of a Preferred Share (the "Exercise Price"), upon
  presentation and surrender of this Rights Certificate with the Form of Election
  to Purchase and related Certificate duly executed. The number of Rights evidenced
  by this Rights Certificate (and the number of one-thousandths (0.001) of a Preferred
  Share which may be purchased upon exercise hereof) set forth above are the number
  and Exercise Price as of June 18, 2004 based on the Preferred Shares as constituted
  at such date. As provided in the Rights Agreement, the Exercise Price and the
  number and kind of Preferred Shares or other securities which may be purchased
  upon the exercise of the Rights evidenced by this Rights Certificate are subject
  to modification and adjustment upon the happening of certain events. 



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

1



 

      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 principal executive offices of the Company and the above-mentioned
  office of the Rights Agent. 

      Subject
  to the provisions of the Rights Agreement, the Rights evidenced by this Rights
  Certificate (i) may be redeemed by the Company, at its option, at a redemption
  price of $0.001 per Right or (ii) may be exchanged by the Company in whole or
  in part for Common Shares, substantially equivalent rights or other consideration
  as determined by the Company. 

      This
  Rights Certificate, with or without other Rights Certificates, upon surrender
  at the office 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 amount of
  securities 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. 

      No
  fractional portion of less than one one-thousandth (0.001) of a Preferred Share
  will be issued upon the exercise of any Right or Rights evidenced hereby but
  in lieu thereof a cash payment will 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 the Preferred Shares or
  of any other securities of the Company which may at any time be issuable on
  the exercise hereof, nor shall anything contained in the Rights Agreement or
  herein be construed to confer upon the holder hereof, as such, any of the rights
  of a shareholder of the Company or any right to vote for the election of directors
  or upon any matter submitted to shareholders at any meeting thereof, or to give
  or withhold consent to any corporate action, or to receive notice of meetings
  or other actions affecting shareholders (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. 

2



 

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

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

	ATTEST:	 	Sigma
      Designs, Inc.
	_____________________________	 	By: _______________________________________
	Secretary	 	Its: _______________________________________
	 	 	 
	Countersigned:	 	 
	 	 	 
	Mellon
      Investor Services LLC	 	 
	as Rights
      Agent	 	 
	By:___________________________________	 	 
	Its:___________________________________	 	 


3



 

 Form
  of Reverse Side of Rights Certificate 

FORM
  OF ASSIGNMENT 

(To be executed
  by the registered holder if such 

  holder desires to transfer the Rights Certificate)

       FOR
  VALUE RECEIVED _______________ hereby sells, assigns and transfers unto ___________________________________________________________________(Please
  print name and address of transferee) this Rights Certificate, together with
  all right, title and interest therein, and does hereby irrevocably constitute
  and appoint __________________________ Attorney, to transfer the within Rights
  Certificate on the books of the within-named Company, with full power of substitution.
  

 

Dated: _______________,
  ____ 


  
    
      
        
          
            
              
                
                  
                    
                      
                        
                          ____________________________________________

                            Signature 

                        

                      

                    

                  

                

              

            

          

        

      

    

  



 

Signature Medallion Guaranteed:
  

      Signatures
  must be guaranteed by an "Eligible Guarantor Institution" (with membership in
  an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
  of the Securities Exchange Act of 1934, as amended. 

 



 

CERTIFICATE
   

      The
  undersigned hereby certifies by checking the appropriate boxes that: 

                  (1)
  this Rights Certificate [ ] is [ ] is 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 any such Person (as such terms are defined in 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 any such Person. 

Dated: _______________,
  ____ 


  
    
      
        
          
            
              
                
                  
                    
                      
                        
                          ____________________________________________

                            Signature
                            

                        

                      

                    

                  

                

              

            

          

        

      

    

  



Signature Medallion Guaranteed:

      
  Signatures must be guaranteed by an "Eligible Guarantor Institution" (with membership
  in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
  of the Securities Exchange Act of 1934, as amended. 

 



 

Form
  of Reverse Side of Rights Certificate -- continued 

FORM
  OF ELECTION TO PURCHASE  

(To be executed
  if holder desires to 

  exercise the Rights Certificate) 

To:___________________________
  

      The
  undersigned hereby irrevocably elects to exercise _________________________
  Rights represented by this Rights Certificate to purchase the number of one-thousandths
  (0.001) of a Preferred Share issuable upon the exercise of such Rights and requests
  that certificates for such number of one-thousandths (0.001) of a Preferred
  Share issued in the name of:

 Please insert social security
  

  or other identifying number 

___________________________________________________________________________(Please
  print name and address) 

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

Please insert social security

  or other identifying
  number 

___________________________________________________________________________(Please
  print name and address) 

Dated: _______________,
  ____ 


  
    
      
        
          
            
              
                
                  
                    
                      
                        
                          _________________________________________________

                            Signature 

                        

                      

                    

                  

                

              

            

          

        

      

    

  



Signature Medallion Guaranteed:
  

      Signatures
  must be guaranteed by an "Eligible Guarantor Institution" (with membership in
  an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
  of the Securities Exchange Act of 1934, as amended. 

 



 

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 any such Person (as such terms are defined in 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 any such Person. 

Dated: _______________,
  ____ 


  
    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            ____________________________________________

                              Signature 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

  



      Signature
  Medallion Guaranteed: Signatures must be guaranteed by an "Eligible Guarantor
  Institution" (with membership in an approved signature guarantee medallion program)
  pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.
  

 



 

Form
  of Reverse Side of Rights Certificate -- continued 

NOTICE
  

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

 



 

EXHIBIT
  C 

SHAREHOLDER
  RIGHTS PLAN 

  SIGMA DESIGNS, INC. 

Summary
  of Rights 

	
      Distribution and
        

        Transfer of Rights; 

        Rights Certificate:

       

    	The Board
      of Directors has declared a dividend of one Right for each share of Common
      Stock of Sigma Designs, Inc. (the "Company") outstanding.
      Prior to the Distribution Date referred to below, the Rights will be evidenced
      by and trade with the certificates for the Common Stock. After the Distribution
      Date, the Company will mail Rights certificates to the Company's shareholders
      and the Rights will become transferable apart from the Common Stock. 
	 	 
	
      Distribution Date: 	Rights
      will separate from the Common Stock and become exercisable following (a)
      the tenth business day (or such later date as may be determined by the Company's
      Board of Directors) after a person or group acquires beneficial ownership
      of 15% or more of the Company's Common Stock or (b) the tenth business day
      (or such later date as may be determined by the Company's Board of Directors)
      after a person or group announces a tender or exchange offer, the consummation
      of which would result in ownership by a person or group of 15% or more of
      the Company's Common Stock. 
	 	 
	Preferred
      Stock 

      Purchasable Upon 

      Exercise of Rights:	After
      the Distribution Date, each Right will entitle the holder to purchase for
      $58.00 (the "Exercise Price"), a fraction of a share of the
      Company's Preferred Stock with economic terms similar to that of one share
      of the Company's Common Stock. 
	 	 
	Flip-In:	 If an
      acquirer (an "Acquiring Person") obtains 15% or more of the
      Company's Common Stock, then each Right (other than Rights owned
      by an Acquiring Person or its affiliates) will entitle the holder thereof
      to purchase, for the Exercise Price, a number of shares of the Company's
      Common Stock having a then-current market value of twice the Exercise Price.
      
		 
	Flip-Over:	 If, after
      an Acquiring Person obtains 15% or more of the Company's Common Stock, (a)
      the Company merges into another entity, (b) an acquiring entity merges into
      the Company or (c) the Company sells more than 50% of the Company's assets
      or earning power, then each Right (other than Rights owned by an
      Acquiring Person or its affiliates) will entitle the holder thereof to purchase,
      for the Exercise Price, a number of shares of Common Stock of the person
      engaging in the transaction having a then current market value of twice
      the Exercise Price.
		 
	Exchange
      Provision: 	At any
      time after the date on which an Acquiring Person obtains 15% or more of
      the Company's Common Stock and prior to the acquisition by the Acquiring
      Person of 50% of the outstanding Common Stock, the Board of Directors of
      the Company may exchange the Rights (other than Rights owned by the Acquiring
      Person or its affiliates), in whole or in part, for shares of Common Stock
      of the Company at an exchange ratio of one share of Common Stock per Right
      (subject to adjustment).
		 
	Redemption
      of the Rights: 	Rights
      will be redeemable at the Company's option for $0.001 per Right at any time
      on or prior to the fifth day (or such later date as may be determined by
      the Company's Board of Directors) after public announcement that a Person
      has acquired beneficial ownership of 15% or more of the Company's Common
      Stock (the "Shares Acquisition Date").
	 	 
	Expiration
      of the Rights: 	The Rights
      expire on the earliest of (a) June 18, 2014 or (b) exchange or redemption
      of the Rights as described above. 
		 
	Amendment
      of Terms of Rights: 	The terms
      of the Rights and the Rights Agreement may be amended in any respect without
      the consent of the Rights holders on or prior to the Distribution Date;
      thereafter, the terms of the Rights and the Rights Agreement may be amended
      without the consent of the Rights holders in order to cure any ambiguities
      or to make changes which do not adversely affect the interests of Rights
      holders (other than the Acquiring Person).
		 
	Voting
      Rights: 	Rights
      will not have any voting rights. 
		 
	Anti-Dilution
      Provisions: 	Rights
      will have the benefit of certain customary anti-dilution provisions. 
	 	 
	Taxes:
      	The Rights
      distribution should not be taxable for federal income tax purposes. However,
      following an event which renders the Rights exercisable or upon redemption
      of the Rights, shareholders may recognize taxable income. 


The foregoing
  is a summary of certain principal terms of the Shareholder Rights Plan only
  and is qualified in its entirety by reference to the Preferred Stock Rights
  Agreement dated as of June 7, 2004 between the Company and Mellon Investor Services
  LLC, as Rights Agent (the "Rights Agreement"). The Rights Agreement
  may be amended from time to time. A copy of the Rights Agreement was filed with
  the Securities and Exchange Commission as an Exhibit to a Registration Statement
  on Form 8-A dated June 8, 2004. A copy of the Rights Agreement is available
  free of charge from the Company.