Exhibit 4.1


 


EXECUTION COPY


 


 


NORTHWESTERN CORPORATION


 


and


 


LaSalle Bank National Association, as Rights
Agent


 


 


RIGHTS AGREEMENT


 


Dated as of December 5, 2005


 
















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Certain Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Appointment of Rights
  Agent

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Issue of Right
  Certificates

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Form of Right
  Certificates

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Countersignature and
  Registration

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

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

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Exercise of Rights,
  Purchase Price; Expiration Date of Rights

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Cancellation and
  Destruction of Right Certificates

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Availability of Shares
  of Preferred Stock

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Preferred Stock Record
  Date

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Adjustment of Purchase
  Price, Number and Kind of Shares and Number of Rights

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Certificate of Adjusted
  Purchase Price or Number of Shares

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  Consolidation, Merger
  or Sale or Transfer of Assets or Earning Power

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Fractional Rights and
  Fractional Shares

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.

  	
   

  	
  Rights of Action

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
   

  	
  Agreement of Right
  Holders

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Right Certificate
  Holder Not Deemed a Stockholder

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Concerning the Rights
  Agent

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Merger or Consolidation
  or Change of Name of Rights Agent

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Duties of Rights Agent

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 21.

  	
   

  	
  Change of Rights Agent

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 22.

  	
   

  	
  Issuance of New Right
  Certificates

  	
   

  	
  31

  



 


i





















 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 23.

  	
   

  	
  Redemption

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 24.

  	
   

  	
  Exchange

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 25.

  	
   

  	
  Notice of Certain
  Events

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 26.

  	
   

  	
  Notices

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 27.

  	
   

  	
  Supplements and
  Amendments

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 28.

  	
   

  	
  Successors

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 29.

  	
   

  	
  Benefits of this
  Agreement

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 30.

  	
   

  	
  Determinations and Actions
  by the Board of Directors

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 31.

  	
   

  	
  Severability

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 32.

  	
   

  	
  Governing Law

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 33.

  	
   

  	
  Counterparts

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 34.

  	
   

  	
  Descriptive Headings

  	
   

  	
  36

  



 


ii





















 


RIGHTS AGREEMENT


 


Rights Agreement, dated as of December 5, 2005 (“Agreement”),
between Northwestern Corporation, a Delaware corporation (the “Company”), and
LaSalle Bank National Association, a national banking association, as Rights
Agent (the “Rights Agent”).


 


This Agreement supersedes any prior contract, agreement or
understanding, whether oral or written, relating to the subject matter of this
Agreement.


 


The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a “Right”) for each share of
Common Stock (as hereinafter defined) of the Company outstanding as of the
Close of Business (as defined below) on December 15, 2005 (the “Record
Date”), each Right representing the right to purchase one one-thousandth (subject
to adjustment) of a share of Preferred Stock (as hereinafter defined), upon the
terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earlier of the Distribution Date
and the Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to shares of Common
Stock that shall become outstanding after the Distribution Date and prior to
the Expiration Date in accordance with Section 22.


 


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


 


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


 


(a)                        “Acquiring
Person” shall mean any Person (as such term is hereinafter defined) who or
which shall be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the shares of Common Stock then outstanding, but shall not
include an Exempt Person (as such term is hereinafter defined); provided,
however, that (i) if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an “Acquiring Person” became
the Beneficial Owner of a number of shares of Common Stock such that the Person
would otherwise qualify as an “Acquiring Person” inadvertently (including,
without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of Common Stock that would otherwise cause such
Person to be an “Acquiring Person” or (B) such Person was aware of the
extent of its Beneficial Ownership of Common Stock but had no actual knowledge
of the consequences of such Beneficial Ownership under this Agreement) and
without any intention of changing or influencing control of the Company, then
such Person shall not be deemed to be or to have become an “Acquiring Person” for
any purposes of this Agreement unless and until such Person shall have failed
to divest itself, as soon as practicable (as determined, in good faith, by the
Board of Directors of the Company), of Beneficial


 


1





















 


Ownership of a sufficient
number of shares of Common Stock so that such Person would no longer otherwise
qualify as an “Acquiring Person”; (ii) if, as of the date hereof or prior
to the first public announcement of the adoption of this Agreement, any Person
is or becomes the Beneficial Owner of 15% or more of the shares of Common Stock
outstanding, such Person shall not be deemed to be or to become an “Acquiring
Person” unless and until such time as such Person shall, after the first public
announcement of the adoption of this Agreement, become the Beneficial Owner of
additional shares of Common Stock (other than pursuant to (x) a dividend or
distribution paid or made by the Company on the outstanding Common Stock, (y) a
split or subdivision of the outstanding Common Stock, or (z) the distribution
of Common Stock by the Company to “Class 9 Shares” as defined under that
certain Plan of Reorganization of the Company confirmed on October 9,
2004), unless, upon becoming the Beneficial Owner of such additional shares of
Common Stock, such Person is not then the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding; and (iii) no Person shall
become an “Acquiring Person” as the result of an acquisition of shares of
Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares of Common Stock
beneficially owned by such Person to 15% or more of the shares of Common Stock
then outstanding, provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional shares of Common Stock
(other than pursuant to a dividend or distribution paid or made by the Company
on the outstanding Common Stock or pursuant to a split or subdivision of the
outstanding Common Stock), then such Person shall be deemed to be an “Acquiring
Person” unless upon becoming the Beneficial Owner of such additional shares of
Common Stock such Person does not beneficially own 15% or more of the shares of
Common Stock then outstanding.  For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), as in effect on the date hereof.


 


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


 


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


 


(i)                  which such
Person or any of such Person’s Affiliates or Associates is deemed to
beneficially own, directly or indirectly, within the meaning of Rule l3d-3
of the General Rules and Regulations under the Exchange Act as in effect
on the date hereof;


 


2





















 


(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, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, (x) 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, (y) securities which such Person has a right to
acquire upon the exercise of Rights at any time prior to the time that any
Person becomes an Acquiring Person or (z) securities issuable upon the exercise
of Rights from and after the time that any Person becomes an Acquiring Person
if such Rights were acquired by such Person or any of such Person’s Affiliates
or Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (“Original Rights”) or pursuant to
Section 11(i) or Section 11(n) with respect to an adjustment to
Original Rights; 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 by reason of such agreement, arrangement or understanding 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 promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or


 


(iii)            which are beneficially
owned, directly or indirectly, by any other Person and with respect to which
such Person or any of such Person’s Affiliates or Associates has 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) for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso to Section 1(c)(ii)(B)) or
disposing of such securities of the Company;


 


provided, however, that no Person who
is an officer, director or employee of an Exempt Person shall be deemed, solely
by reason of such Person’s status or authority as such, to be the “Beneficial
Owner” of, to have “Beneficial Ownership” of or to “beneficially own” any
securities that are “beneficially owned” (as defined in this
Section l(c)), including, without limitation, in a fiduciary capacity, by
an Exempt Person or by any other such officer, director or employee of an
Exempt Person.


 


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


 


3





















 


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


 


(f)                          “Common
Stock” when used with reference to the Company shall mean the Common Stock,
presently par value $.01 per share, of the Company.  “Common Stock” when used with reference to
any Person other than the Company shall mean the common stock (or, in the case
of an unincorporated entity, the equivalent equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.


 


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


 


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


 


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


 


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


 


(k)                        “Exempt
Person” shall mean the Company or any Subsidiary (as such term is hereinafter
defined) of the Company, in each case including, without limitation, in its
fiduciary capacity, or any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity or trustee holding Common Stock for or
pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or of any
Subsidiary of the Company.


 


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


 


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


 


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


 


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


 


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


 


4





















 


(q)                       “New
York Stock Exchange” shall mean the New York Stock Exchange, Inc.


 


(r)                          “Person”
shall mean any individual, firm, corporation, partnership, limited liability
company, trust or other entity, and shall include any successor (by merger or
otherwise) to such entity.


 


(s)                        “Preferred
Stock” shall mean the Series A Junior Participating Preferred Stock, par
value $.01 per share, of the Company having the rights and preferences set
forth in the Form of Certificate of Designation attached to this Agreement
as Exhibit A.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(cc)                  “Subsidiary”
of any Person shall mean any corporation or other entity of which securities or
other ownership interests having ordinary voting power sufficient to elect a
majority of the board of directors or other persons performing similar
functions are beneficially owned, directly or indirectly, by such Person, and
any corporation or other entity that is otherwise controlled by such Person.


 


5





















 


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


 


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


 


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


 


Section 2.  Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.  The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.


 


Section 3.  Issue of
Right Certificates.


 


(a)                        Until
the Close of Business on the earlier of (i) the tenth day after the Stock
Acquisition Date or (ii) the tenth Business Day (or such later date as may
be determined by action of the Board of Directors of the Company prior to such
time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which would
result in any Person (other than an Exempt Person) becoming an Acquiring Person
(the earlier of such dates being herein referred to as the “Distribution Date”,
provided, however, that if either of such dates occurs after the
date of this Agreement and on or prior to the Record Date, then the
Distribution Date shall be the Record Date), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the
certificates for Common Stock registered in the names of the holders thereof
and not by separate Right Certificates, and (y) the Rights will be transferable
only in connection with the transfer of Common Stock.  As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign
and the Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid mail, to each record
holder of Common Stock as of the close of business on the Distribution Date
(other than any Acquiring Person or any Associate or Affiliate of an Acquiring
Person), at the address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form of Exhibit B hereto (a “Right
Certificate”), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. 
As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.


 


(b)                       On
the Record Date, or as soon as practicable thereafter, the Company will send a
copy of a Summary of Rights to Purchase Shares of Preferred Stock, in


 


6





















 


substantially the form of
Exhibit C hereto (the “Summary of Rights”), by first-class,
postage-prepaid mail, to each record holder of Common Stock as of the Close of
Business on the Record Date (other than any Acquiring Person or any Associate
or Affiliate of any Acquiring Person), at the address of such holder shown on
the records of the Company.  With respect
to certificates for Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with the Summary of Rights.  Until the Distribution Date (or, if earlier,
the Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding on the Record Date, with or without a copy of the Summary of
Rights, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby.


 


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


 


This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Northwestern
Corporation (the “Company”) and LaSalle Bank National Association, as Rights
Agent, dated as of December 5, 2005 and as amended from time to time (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
the Company.  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, as set forth in the Rights Agreement, Rights owned by or
transferred to any Person who is or becomes an Acquiring Person (as defined in
the Rights Agreement) and certain transferees thereof will become null and void
and will no longer be transferable.


 


With respect to such certificates containing the foregoing legend,
until the Distribution Date the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such


 


7





















 


certificate, except as otherwise provided herein, shall also constitute
the transfer of the Rights associated with the Common Stock represented
thereby.  In the event that the Company
purchases or otherwise acquires any Common Stock after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Stock
shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Stock which are no longer
outstanding.


 


Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.


 


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


 


Section 5.  Countersignature
and Registration.


 


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


 


(b)                       Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at an
office or agency designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder.  Such books shall show the names and


 


8





















 


addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face
by each of the Right Certificates and the date of each of the Right
Certificates.


 


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


 


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


 


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


 


9





















 


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


 


(a)                        Except
as otherwise provided herein, the Rights shall become exercisable on the
Distribution Date, and thereafter the registered holder of any Right
Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-thousandths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised, at any
time which is both after the Distribution Date and prior to the time (the
“Expiration Date”) that is the earliest of (i) the Close of Business on
December 5, 2015 (the “Final Expiration Date”), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the
“Redemption Date”) or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.


 


(b)                       The
Purchase Price shall be initially $100 for each one one-thousandth of a share
of Preferred Stock purchasable upon the exercise of a Right.  The Purchase Price and the number of one
one-thousandths of a share of Preferred Stock or other securities or property
to be acquired upon exercise of a Right shall be subject to adjustment from
time to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph
(c) of this Section 7.


 


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


 


10





















 


promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.


 


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


 


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


 


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


 


Section 9.  Availability of Shares of Preferred Stock.


 


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


 


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


 


11





















 


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


 


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


 


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


 


Section 10.  Preferred Stock Record Date.  Each Person in whose name any certificate for
Preferred Stock is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of Preferred Stock
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender


 


12





















 


and payment is a date upon
which the Preferred Stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock transfer books of the Company are open.  Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Stock for which the Rights shall be exercisable,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.


 


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


 


(a)(i)             In
the event the Company shall at any time after the date of this Agreement
(A) declare and pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of
shares of Preferred Stock or (D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the number and kind of shares of capital stock issuable
upon exercise of a Right as of the record date for such dividend or the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such date
and at a time when the Preferred Stock transfer books of the Company were open,
the holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.


 


(ii)                        Subject
to Section 24 of this Agreement, in the event any Person becomes an
Acquiring Person (the first occurrence of such event being referred to
hereinafter as the “Flip-In Event”), then (A) the Purchase Price shall be
adjusted to be the Purchase Price in effect immediately prior to the Flip-In
Event multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such Flip-In
Event, whether or not such Right was then exercisable, and (B) each holder
of a Right, except as otherwise provided in this
Section 11(a)(ii) and Section 11(a)(iii) hereof, shall
thereafter have the right to receive, upon exercise thereof at a price equal to
the Purchase Price (as so adjusted), in accordance with the terms of this
Agreement and in lieu of shares of Preferred Stock, such number of shares of
Common Stock as shall equal the result obtained by dividing the Purchase Price
(as so adjusted) by 50% of the current per share market price of the Common
Stock (determined pursuant to Section 11(d) hereof) on the date of
such Flip-In Event; provided, however, that the Purchase Price
(as so adjusted) and the number of shares of Common Stock so receivable


 


13





















 


upon exercise of a Right shall,
following the Flip-In Event, be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof. 
Notwithstanding anything in this Agreement to the contrary, however,
from and after the Flip-In Event, any Rights that are beneficially owned by (x)
any Acquiring Person (or any Affiliate or Associate of any Acquiring Person),
(y) a transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the Flip-In Event or (z) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a transferee
prior to or concurrently with the Flip-In Event pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to
any Person with whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a transfer which
the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of such Persons, shall
be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement.  The Company
shall use all reasonable efforts to ensure that the provisions of this
Section 11(a)(ii) are complied with, but shall have no liability to
any holder of Right Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. 
From and after the Flip-In Event, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights that
are or have become void pursuant to the provisions of this paragraph, and any
Right Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of this paragraph shall be
canceled.  From and after the occurrence
of an event specified in Section 13(a) hereof, any Rights that
theretofore have not been exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only in accordance with Section 13 and not
pursuant to this Section 11(a)(ii).


 


(iii)                     The
Company may at its option substitute for a share of Common Stock issuable upon
the exercise of Rights in accordance with the foregoing subparagraph
(ii) a number of shares of Preferred Stock or fraction thereof such that
the current per share market price of one share of Preferred Stock multiplied
by such number or fraction is equal to the current per share market price of
one share of Common Stock.  In the event
that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Board of
Directors of the Company shall, with respect to such deficiency, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party, (A) determine the excess (such excess, the
“Spread”) of (1) the value of the shares of Common Stock issuable upon the
exercise of a Right in accordance with the foregoing subparagraph
(ii) (the “Current Value”) over (2) the Purchase Price (as adjusted
in accordance with the foregoing subparagraph (ii)), and (B) with respect
to each Right (other than Rights which have become void pursuant to the
foregoing subparagraph (ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with the foregoing subparagraph
(ii) upon exercise of the Right and payment of the Purchase Price (as
adjusted in accordance therewith), (1) cash, (2) a reduction in such
Purchase Price, (3) shares of Preferred Stock or other equity


 


14





















 


securities of the Company
(including, without limitation, shares or fractions of shares of preferred
stock which, by virtue of having dividend, voting and liquidation rights
substantially comparable to those of the shares of Common Stock, are deemed in
good faith by the Board of Directors of the Company to have substantially the
same value as the shares of Common Stock (such shares of Preferred Stock and
shares or fractions of shares of preferred stock are hereinafter referred to as
“Common Stock Equivalents”)), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the foregoing, having a
value which, when added to the value of the shares of Common Stock issued upon
exercise of such Right, shall have an aggregate value equal to the Current
Value (less the amount of any reduction in such Purchase Price), where such
aggregate value has been determined by the Board of Directors of the Company
upon the advice of a nationally recognized investment banking firm selected in
good faith by the Board of Directors of the Company; provided, however,
that if the Company shall not make adequate provision to deliver value pursuant
to clause (B) above within thirty (30) days following the Flip-In Event
(the date of the Flip-In Event being the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, to the extent permitted
by applicable law and any material agreements then in effect to which the
Company is a party, upon the surrender for exercise of a Right and without
requiring payment of such Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions of shares of
Preferred Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread.  If, upon the occurrence of the Flip-In Event,
the Board of Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be authorized
for issuance upon exercise in full of the Rights, then, if the Board of
Directors of the Company so elects, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is herein called the
“Substitution Period”).  To the extent
that the Company determines that some action need be taken pursuant to the
second and/or third sentence of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 11(a)(ii) hereof and the last
sentence of this Section 11(a)(iii) hereof, that such action shall
apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such second sentence
and to determine the value thereof.  In
the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no longer in
effect.  For purposes of this
Section 11(a)(iii), the value of the shares of Common Stock shall be the
current per share market price (as determined pursuant to
Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and the
per share or fractional value of any “Common Stock Equivalent” shall be deemed
to equal the current per share market price of the Common Stock.  The Board of Directors of the Company may,
but shall not be required to, establish procedures to allocate the right to
receive shares of Common Stock upon the exercise of the Rights among holders of
Rights pursuant to this Section 11(a)(iii).


 


15





















 


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


 


(c)                        In
case the Company shall fix a record date for the making of a distribution to
all holders of the Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the then current per share market price of the Preferred Stock
(determined pursuant to Section 11(d) hereof) on such record date,
less the fair market value (as determined in good faith by the Board of Directors
of the Company whose determination shall be described in a


 


16





















 


statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Preferred Stock, and the denominator of which shall be such current per
share market price (determined pursuant to Section 11(d) hereof) of
the Preferred Stock; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right.  Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.


 


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


 


(ii)                        For
the purpose of any computation hereunder, if the Preferred Stock is publicly
traded, the “current per share market price” of the Preferred Stock shall be
determined in accordance with the method set forth in Section 11(d)(i).  If the Preferred


 


17





















 


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


 


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


 


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


 


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


 


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


 


18





















 


to such adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment and
(ii) dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment.


 


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


 


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


 


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


 


19





















 


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


 


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


 


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


 


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


 


Section 12.  Certificate
of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as provided in
Section 11 or 13 hereof, the Company


 


20





















 


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


 


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


 


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


 


21





















 


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


 


(b)                       “Principal
Party” shall mean:


 


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


 


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


 


provided, however, that in any such
case described in the foregoing clause (b)(i) or (b)(ii), if the Common
Stock of such Person is not at such time or has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act,
then (1) if such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, the term
“Principal Party” shall refer to such other Person, or (2) if such Person
is a Subsidiary, directly or indirectly, of more than one Person, the Common
Stock of all of which is and has been so registered, the term “Principal Party”
shall refer to whichever of such Persons is the issuer of Common Stock having
the greatest aggregate market value of shares outstanding, or (3) if such
Person is


 


22





















 


owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned, directly
or indirectly, by the same Person, the rules set forth in clauses
(1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the Principal Party in
each such case shall bear the obligations set forth in this Section 13 in
the same ratio as its interest in such Person bears to the total of such
interests.


 


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


 


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


 


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


 


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


 


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


 


(d)                       In
case the Principal Party has a provision in any of its authorized securities or
in its certificate of incorporation or by-laws or other instrument governing
its affairs, which provision would have the effect of (i) causing such
Principal Party to issue


 


23





















 


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


 


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


 


Section 14.  Fractional
Rights and Fractional Shares.


 


(a)                        The
Company shall not be required to issue fractions of Rights (except prior to the
Distribution Date in accordance with Section 11(n) hereof) or to
distribute Right Certificates which evidence fractional Rights.  In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right.  For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. 
The closing price for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting


 


24





















 


system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Rights are 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 Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices on NASDAQ or in the over-the-counter market, as
reported by NASDAQ or such other system then in use or, if on any such date the
Rights are 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 Rights selected by the Board of Directors of the Company.  If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.


 


(b)                       The
Company shall not be required to issue fractions of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock) or to distribute certificates which evidence fractional shares
of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon the exercise or exchange of
Rights.  Interests in fractions of
Preferred Stock in integral multiples of one one-thousandth of a share of
Preferred Stock may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts.  In lieu of fractional shares of Preferred
Stock that are not integral multiples of one one-thousandth of a share of
Preferred Stock, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised or exchanged as herein
provided an amount in cash equal to the same fraction of the current market
value of a whole share of Preferred Stock (as determined in accordance with Section 14(a) hereof)
for the Trading Day immediately prior to the date of such exercise or exchange.


 


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


 


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


 


Section 15.  Rights of
Action.  All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior


 


25





















 


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


 


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


 


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


 


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


 


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


 


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


 


26





















 


otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised or exchanged in
accordance with the provisions hereof.


 


Section 18.  Concerning
the Rights Agent.


 


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


 


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


 


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


 


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


 


27





















 


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


 


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


 


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


 


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


 


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


 


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


 


(e)                                    The Rights Agent
shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms
of the Rights provided for in Sections 3, 11, 13, 23 and 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment 


 


28





















 


(except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Preferred Stock or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable.


 


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


 


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


 


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


 


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


 


29





















 


resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.


 


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


 


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


 


30





















 


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


 


Section 23.  Redemption.


 


(a)                                    The Board of
Directors of the Company may, at any time prior to the Flip-In Event, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring in respect of the Common Stock after
the date hereof (the redemption price being hereinafter referred to as the “Redemption
Price”).  The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors of the Company in its sole discretion may
establish.  The Redemption Price shall be
payable, at the option of the Company, in cash, shares of Common Stock, or such
other form of consideration as the Board of Directors of the Company shall
determine.


 


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


 


31





















 


such notice of redemption shall state the method by which the payment
of the Redemption Price will be made.


 


Section 24.  Exchange.


 


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


 


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


 


(c)                                    The Company may at
its option substitute, and, in the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit an exchange of Rights for Common Stock as contemplated in accordance
with this Section 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be issuable
upon 


 


32





















 


exchange of a Right, a number of shares of Preferred Stock or fraction
thereof (or Equivalent Preferred Shares, as such term is defined in Section 11(b))
such that the current per share market price (determined pursuant to Section 11(d) hereof)
of one share of Preferred Stock (or Equivalent Preferred Share) multiplied by
such number or fraction is equal to the current per share market price of one
share of Common Stock (determined pursuant to Section 11(d) hereof)
as of the date of such exchange.


 


Section 25.  Notice of Certain Events.


 


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


 


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


 


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


 


33





















 


NORTHWESTERN CORPORATION


125 S. Dakota
Ave.  

Sioux Falls, SD 57104


Attention: President and Chief Executive Officer


 


With a copy to:


 


Manatt, Phelps & Phillips, LLP


11355 W. Olympic
Boulevard


Los Angeles, California
90064


Attention:  Gordon M. Bava


 


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


 


LaSalle
Bank National Association


Shareholder
Services Division


135 South
LaSalle Street, Suite 1960


Chicago,
Illinois 60603


Attention:  Joseph Pellicore, Assistant Vice President


 


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


 


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


 


34





















 


amend Sections 18, 19, 20 or 21 hereof or this Section 27 in a
manner adverse to the Rights Agent shall become effective immediately upon
execution by the Company, whether or not also executed by the Rights Agent.


 


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


 


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


 


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


 


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


 


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


 


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


 


35





















 


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.


 


36





















 


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


 


	
   

  	
  NORTHWESTERN CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. Hanson

  	
   

  
	
   

  	
  Name: Michael J. Hanson

  
	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LASALLE BANK NATIONAL ASSOCIATION,

  
	
   

  	
  solely as Rights Agent herein under and not within its individual
  capacity

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph Pellicore

  	
   

  
	
   

  	
  Name: Joseph Pellicore

  
	
   

  	
  Title: Assistant Vice President

  
					



 


37





















 


Exhibit A


 


FORM OF


CERTIFICATE OF DESIGNATION


 


of


 


SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK


 


of


 


NORTHWESTERN CORPORATION


 


Pursuant to Section 151 of
the General Corporation Law


of the State of Delaware


 


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


 


That pursuant to the authority vested in the
Board of Directors of the Corporation (the “Board of Directors”) in accordance
with the provisions of the Certificate of Incorporation of the said
Corporation, the said Board of Directors on December 5, 2005 adopted the
following resolution creating a series of 100,000 shares of Preferred Stock
designated as “Series A Junior Participating Preferred Stock”:


 


RESOLVED, that pursuant to the
authority vested in the Board of Directors of this Corporation in accordance
with the provisions of the Certificate of Incorporation, a series of Preferred
Stock, par value $.01 per share, of the Corporation be and hereby is created,
and that the designation and number of shares thereof and the voting and other
powers, preferences and relative, participating, optional or other rights of
the shares of such series and the qualifications, limitations and restrictions
thereof are as follows:


 


Series A
Junior Participating Preferred Stock


 


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


 


A-1





















 


2.                                         Dividends and Distribution.


 


(A)                        Subject to the prior and
superior rights of the holders of any shares of any class or series of stock of
the Corporation ranking prior and superior to the shares of Series A
Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Junior Participating Preferred Stock, in preference to
the holders of shares of any class or series of stock of the Corporation
ranking junior to the Series A Junior Participating Preferred Stock in
respect thereof, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the 30th day of March, June, September and December,
in each year (each such date being referred to herein as a “Quarterly Dividend
Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10.00 or (b) the Adjustment Number
(as defined below) times the aggregate per share amount of all cash dividends,
and the Adjustment Number times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock,
par value $.01 per share, of the Corporation (the “Common Stock”) since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock.  The “Adjustment Number” shall initially be 1,000.  In the event the Corporation shall at any
time after December 15, 2005 (i) declare and pay any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.


 


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


 


(C)                          Dividends shall begin to
accrue and be cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of 


 


A-2





















 


holders of shares of Series A Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.  The
Board of Directors may fix a record date for the determination of holders of
shares of Series A Junior Participating Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 60 days prior to the date fixed for the payment
thereof.


 


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


 


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


 


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


 


(C)                                If, at the time of any
annual meeting of stockholders for the election of directors, the equivalent of
six quarterly dividends (whether or not consecutive) payable on any share or
shares of Series A Junior Participating Preferred Stock are in default,
the number of directors constituting the Board of Directors of the Corporation
shall be increased by two.  In addition
to voting together with the holders of Common Stock for the election of other
directors of the Corporation, the holders of record of the Series A Junior
Participating Preferred Stock, voting separately as a class to the exclusion of
the holders of Common Stock, shall be entitled at said meeting of stockholders
(and at each subsequent annual meeting of stockholders), unless all dividends
in arrears on the Series A Junior Participating Preferred Stock have been
paid or declared and set apart for payment prior thereto, to vote for the
election of two directors of the Corporation, the holders of any Series A
Junior Participating Preferred Stock being entitled to cast a number of votes
per share of Series A Junior Participating Preferred Stock as is specified
in paragraph (A) of this Section 3. 
Until the default in payments of all dividends which permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the provisions of this Section 3(C) may
be removed at any time, without cause, only by the affirmative vote of the
holders of the shares of Series A Junior Participating Preferred Stock at
the time entitled to cast a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such holders called for
that purpose, and any vacancy thereby created may be filled by the vote of such
holders.  If and when such default shall
cease to exist, the holders of the Series A Junior 


 


A-3





















 


Participating Preferred Stock shall be divested of the foregoing
special voting rights, subject to revesting in the event of each and every
subsequent like default in payments of dividends.  Upon the termination of the foregoing special
voting rights, the terms of office of all persons who may have been elected
directors pursuant to said special voting rights shall forthwith terminate, and
the number of directors constituting the Board of Directors shall be reduced by
two.  The voting rights granted by this Section 3(C) shall
be in addition to any other voting rights granted to the holders of the Series A
Junior Participating Preferred Stock in this Section 3.


 


4.                                         Certain Restrictions.


 


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


 


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


 


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


 


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


 


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


 


A-4





















 


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


 


6.                                         Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received an amount per share (the “Series A
Liquidation Preference”) equal to the greater of (i) $100 plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(ii) the Adjustment Number times the per share amount of all cash and
other property to be distributed in respect of the Common Stock upon such
liquidation, dissolution or winding up of the Corporation.


 


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


 


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


 


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


 


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


 


A-5





















 


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


 


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


 


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


 


IN WITNESS WHEREOF, the undersigned has
executed this Certificate this 6th day of December, 2005.


 


	
   

  	
  NORTHWESTERN CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
         Name: Michael J. Hanson

  
	
   

  	
         Title: President and Chief
  Executive Officer

  



 


A-6





















 


Exhibit B


 


Form of Right Certificate


 


Certificate No. R-        


 


NOT EXERCISABLE AFTER DECEMBER 5, 2015
OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. 
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.


 


RIGHT CERTIFICATE


 


NORTHWESTERN CORPORATION


 


This certifies that                                                         
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of December 5,
2005, as the same may be amended from time to time (the “Rights Agreement”),
between Northwestern Corporation, a Delaware corporation (the “Company”), and LaSalle
Bank National Association, 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 City
time, on December 5, 2015 at the office or agency of the Rights Agent
designated for such purpose, or of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the “Preferred Stock”),
of the Company at a purchase price of $100 per one
one-thousandth of a share of Preferred Stock (the “Purchase Price”), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.  The
number of Rights evidenced by this Rights Certificate (and the number of one
one-thousandths of a share of Preferred Stock which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of December 15, 2005, based on the
Preferred Stock as constituted at such date. 
As provided in the Rights Agreement, the Purchase Price, the number of
one one-thousandths of a share of Preferred Stock (or other securities or
property) which may be purchased upon the exercise of the Rights and the 


 


B-1





















 


number of Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.


 


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


 


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


 


Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Certificate (i) may be redeemed by
the Company at a redemption price of $.01 per Right or (ii) may be
exchanged in whole or in part for shares of the Company’s Common Stock, par
value $.01 per share, or shares of Preferred Stock.


 


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


 


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


 


B-2





















 


the Right or Rights evidenced by this Right Certificate shall have been
exercised or exchanged as provided in the Rights Agreement.


 


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


 


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


 


	
   

  	
  NORTHWESTERN CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  
	
  ATTEST:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Name:

  
	
  Title

  
	
   

  
	
   

  
	
  Countersigned:

  
	
   

  
	
   

  
	
  LASALLE BANK, NATIONAL ASSOCIATION solely as Rights Agent herein
  under and not within its individual capacity

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
						



 


B-3





















 


Form of Reverse Side of
Right Certificate


 


FORM OF
ASSIGNMENT


 


(To be executed by the
registered holder if such


holder desires to transfer the
Right Certificate)


 


FOR VALUE RECEIVED                                        hereby
sells, assigns and transfers unto 


 


 




(Please print name and address of transferee)





 


                  Rights
represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint 


 


Attorney, to transfer said Rights on the books of the within-named
Company, with full power of substitution.


 


	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  
					



 


Signature Guaranteed:


 


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


 


 


(To be completed)


 


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


 


	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  



 


B-4





















 


Form of Reverse Side of
Right Certificate - continued


 


FORM OF
ELECTION TO PURCHASE


 


(To be executed if holder
desires to exercise


Rights represented by the
Rights Certificate)


 


To NORTHWESTERN CORPORATION:


 


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


 




(Please print name and address)





 


 




 





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


 


Please insert social security


or other identifying number


 




(Please print name and address)





 


 




 





	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  
					



 


(Signature must conform to
holder specified on Right Certificate)


 


Signature Guaranteed:


 


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


 


B-5





















 


Form of Reverse Side of
Right Certificate - continued


 


 




(To be completed)





 


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


 


	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  



 


NOTICE


 


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


 


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


 


B-6





















 


Exhibit C


 


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


 


SUMMARY OF RIGHTS TO PURCHASE


SHARES OF PREFERRED STOCK OF


NORTHWESTERN CORPORATION


 


On December 5, 2005, the Board of
Directors of Northwestern Corporation (the “Company”) declared a dividend of one
preferred share purchase right (a “Right”) for each outstanding share of common
stock, par value $.01 per share, of the Company (the “Common Stock”).  The dividend is payable on December 15,
2005 (the “Record Date”) to the stockholders of record on that date.  Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company (the “Preferred
Stock”) at a price of $100 per one one-thousandth
of a share of Preferred Stock (the “Purchase Price”), subject to
adjustment.  The description and terms of
the Rights are set forth in a Rights Agreement dated as of December 5,
2005, as the same may be amended from time to time (the “Rights Agreement”),
between the Company and LaSalle Bank National Association, as Rights Agent (the
“Rights Agent”).


 


Until the earlier to occur of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (with certain exceptions, an “Acquiring Person”) has
acquired beneficial ownership of 15% or more of the outstanding shares of
Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors of the Company prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in a
person or group becoming an Acquiring Person (the earlier of such dates being
called the “Distribution Date”), the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with this Summary of Rights.


 


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


 


C-1





















 


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


 


The Rights are not exercisable until the
Distribution Date.  The Rights will
expire on December 5, 2015 (the “Final Expiration Date”), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.


 


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


 


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


 


Shares of Preferred Stock purchasable upon
exercise of the Rights will not be redeemable. 
Each share of Preferred Stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of the greater
of (a) $10.00 per share, and
(b) an amount equal to 1,000 times the dividend declared per share of
Common Stock.  In the event of
liquidation, dissolution or winding up of the Company, the holders of the
Preferred Stock will be entitled to a minimum preferential payment of the
greater of (a) $100 per share (plus any accrued but unpaid dividends), and
(b) an amount equal to 1,000 times the payment made per share of Common
Stock.  Each share of Preferred Stock
will have 1,000 votes, voting together with the Common Stock.  Finally, in the event of any merger,
consolidation or other transaction in which outstanding shares of Common Stock
are converted or exchanged, each share of Preferred Stock will be entitled to
receive 1,000 


 


C-2





















 


times the amount received per share of Common Stock.  These rights are protected by customary
antidilution provisions.


 


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


 


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


 


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


 


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


 


With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.  No fractional shares of Preferred Stock or
Common Stock will be issued (other than fractions of Preferred Stock which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), and
in lieu thereof an adjustment in cash will be made based on the current market
price of the Preferred Stock or the Common Stock.


 


At any time prior to the time an Acquiring
Person becomes such, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of 


 


C-3





















 


$.01 per Right (the “Redemption Price”) payable, at the option of the
Company, in cash, shares of Common Stock or such other form of consideration as
the Board of Directors of the Company shall determine.  The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors of the Company in its sole discretion may establish.  Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.


 


For so long as the Rights are then
redeemable, the Company may, except with respect to the Redemption Price, amend
the Rights Agreement in any manner. 
After the Rights are no longer redeemable, the Company may, except with
respect to the Redemption Price, amend the Rights Agreement in any manner that
does not adversely affect the interests of holders of the Rights.


 


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


 


A copy of the Rights Agreement has been filed
with the Securities and Exchange Commission as an Exhibit to the Company’s
Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 7, 2005.  A
copy of the Rights Agreement is available free of charge from the Company.  This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by reference.


 


C-4