exv4w1



 







Exhibit 4.1




VOLCANO CORPORATION




and




AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent




RIGHTS AGREEMENT




Dated as of June 20, 2006




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 1.
	 	Certain Definitions

	 	 	1	 
	 	 	 
	 	 	 	 
	Section 2.
	 	Appointment of Rights Agent

	 	 	6	 
	 	 	 
	 	 	 	 
	Section 3.
	 	Issue of Right Certificates

	 	 	7	 
	 	 	 
	 	 	 	 
	Section 4.
	 	Form of Right Certificates

	 	 	8	 
	 	 	 
	 	 	 	 
	Section 5.
	 	Countersignature and Registration

	 	 	9	 
	 	 	 
	 	 	 	 
	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 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

	 	 	20	 
	 	 	 
	 	 	 	 
	Section 14.
	 	Fractional Rights and Fractional Shares

	 	 	24	 
	 	 	 
	 	 	 	 
	Section 15.
	 	Rights of Action

	 	 	25	 
	 	 	 
	 	 	 	 
	Section 16.
	 	Agreement of Right Holders

	 	 	25	 
	 	 	 
	 	 	 	 
	Section 17.
	 	Right Certificate Holder Not Deemed a Stockholder

	 	 	25	 
	 	 	 
	 	 	 	 
	Section 18.
	 	Concerning the Rights Agent

	 	 	26	 
	 	 	 
	 	 	 	 
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent

	 	 	26	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 20.
	 	Duties of Rights Agent

	 	 	27	 
	 	 	 
	 	 	 	 
	Section 21.
	 	Change of Rights Agent

	 	 	29	 
	 	 	 
	 	 	 	 
	Section 22.
	 	Issuance of New Right Certificates

	 	 	30	 
	 	 	 
	 	 	 	 
	Section 23.
	 	Redemption

	 	 	30	 
	 	 	 
	 	 	 	 
	Section 24.
	 	Exchange

	 	 	31	 
	 	 	 
	 	 	 	 
	Section 25.
	 	Notice of Certain Events

	 	 	32	 
	 	 	 
	 	 	 	 
	Section 26.
	 	Notices

	 	 	32	 
	 	 	 
	 	 	 	 
	Section 27.
	 	Supplements and Amendments

	 	 	33	 
	 	 	 
	 	 	 	 
	Section 28.
	 	Successors

	 	 	33	 
	 	 	 
	 	 	 	 
	Section 29.
	 	Benefits of this Agreement

	 	 	34	 
	 	 	 
	 	 	 	 
	Section 30.
	 	Determinations and Actions by the Board of Directors

	 	 	34	 
	 	 	 
	 	 	 	 
	Section 31.
	 	Severability

	 	 	34	 
	 	 	 
	 	 	 	 
	Section 32.
	 	Governing Law

	 	 	34	 
	 	 	 
	 	 	 	 
	Section 33.
	 	Counterparts

	 	 	34	 
	 	 	 
	 	 	 	 
	Section 34.
	 	Descriptive Headings

	 	 	34	 







ii









 








RIGHTS AGREEMENT




          This RIGHTS AGREEMENT (the “Agreement”), dated as of June 20, 2006, is entered into by and
between VOLCANO CORPORATION, a Delaware corporation (the
“Company”), and AMERICAN STOCK TRANSFER &
TRUST COMPANY, a New York corporation, as Rights Agent (the
“Rights Agent”).




RECITALS




          WHEREAS, the Board of Directors of the Company (the “Board”) 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 on June 20, 2006 (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 set forth
this Agreement; and




          WHEREAS, the Board 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 hereof.




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




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




          “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 20% 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 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 Beneficial Ownership of a sufficient number of
shares of Common Stock so that such


2









 







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 20% 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 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), unless, upon becoming the Beneficial Owner of such
additional shares of Common Stock, such Person is not then the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding; (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 20% or more of the shares of Common Stock then outstanding,
provided further, however, that if a Person shall become the Beneficial
Owner of 20% 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 20% or more of the shares of Common Stock then outstanding, (iv) no person shall become an
“Acquiring Person” if such Person, together with its Affiliates and Associates, shall become the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding pursuant to a
Qualifying Offer; and (v) no Person shall become an “Acquiring Person” if such person together,
with its Affiliates and Associates, shall become the Beneficial Owner of 20% or more of the shares
of Common Stock pursuant to a transaction approved in advance by the Board of Directors. 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 Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.




          “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.




          “Beneficial Owner,” “Beneficial Ownership” or “beneficially own” means, with respect to any
Person, 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;



3









 






               (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 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
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 related
solely to a revocable proxy or consent under the proviso clause in (ii)(B) above) 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”, including, without limitation, in a fiduciary capacity,
by an Exempt Person or by any other such officer, director or employee of an Exempt Person.




          “Board” shall have the meaning set forth in the Recitals hereto.




4









 








          “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 office of the Rights Agent is
located are authorized or obligated by law or executive order to close.




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




          “Common Stock” when used with reference to the Company shall mean the Common Stock, par value
$0.001 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.




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




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




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




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




          "Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and as in effect on
the date of this Agreement.




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




          “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.




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




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




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




5









 








          “Nasdaq” shall mean the Nasdaq National Market or such other securities exchange on which the
Common Stock of the Company may be listed from time to time.




          “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.




          “Preferred Stock” shall mean the Series A Junior Participating Preferred Stock, par value
$.001 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.




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




          "Purchase Price” shall have the meaning set forth in Section 4 hereof, as may be adjusted
pursuant to the terms of this Agreement.




          “Qualifying Offer” shall mean an all-cash tender offer for all outstanding shares of Common
Stock which meets all of the following requirements:





               (i) the Person or group making the tender offer must, prior to
or upon commencing such offer, have provided the Company firm
written commitments from responsible financial institutions, which
have been accepted by such Person or group, to provide, subject only
to customary terms and conditions (which shall in no event include
conditions requiring access by such financial institutions to
non-public information to be provided by the Company, conditions
based on the accuracy of any information concerning the Company
other than such as would be the subject of representations and
warranties in a public financing by the Company, or conditions
requiring the Company to make any representations, warranties or
covenants in connection with such financing) funds for such offer
which, when added to the amount of cash and cash equivalents which
such Person or group then has available and has irrevocably
committed in writing to the Company to utilize for purposes of the
offer if consummated, and to set apart and maintain available for
such purposes until the offer is consummated or withdrawn, will be
sufficient to pay for all shares outstanding on a fully diluted
basis and all related expenses;




               (ii) the price per share offered in such offer must be at least
equal to the average Closing Price of the Common Stock for the
twenty (20) consecutive Trading Days ending on the fourth
(4th) Trading Day preceding the commencement of the offer
and must not be less than twenty-five percent (25%) below the
highest



6









 







price paid by such Person for any share of Common Stock during
the preceding twelve months;




               (iii) such offer must remain open for at least thirty (30)
Business Days; and




               (iv) prior to or upon commencing such offer, such Person or
group must irrevocably commit in writing to the Company and in the
offer to purchase relating to the offer that such Person or group
will not materially amend such offer, except to increase the price
offered.



          “Record Date” shall have the meaning set forth in the Recitals hereto.




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




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




          “Right” shall have the meaning set forth in the Recitals hereto.




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




          “Securities Act” shall mean the Securities Act of 1933, as amended and as in effect on the
date of this Agreement.




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




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




          “Stock Acquisition Date” shall mean the first date of public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such, or such earlier date as a majority of
the Board shall become aware of the existence of an Acquiring Person.




          “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.




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




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




7









 








          “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 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. The Rights Agent shall have no duty to supervise,
and in no event shall be liable for, the acts or omissions of any such co-Rights Agent.




          Section 3. Issue of Right Certificates.




          (a) Until the Close of Business on the earlier of (i) the tenth (10th) day after
the Stock Acquisition Date or (ii) the tenth (10th) Business Day (or such later date as
may be determined by action of the Board 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 the Beneficial Owner of shares of Common Stock aggregating twenty
percent (20%) or more of the Common Stock then outstanding (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 other
provisions of this Section 3) by the certificates for Common Stock registered in the names of the
holders thereof together with a copy of the Summary of Rights (as defined in Section 3(b) below)
attached thereto, 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 and provided with all necessary
information, 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) 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. In addition, as promptly as
practicable following the Record Date, the Company shall send a copy of a Summary of Rights to
Purchase Preferred Stock, in substantially the form of Exhibit C hereto




8









 





(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, at the address of such holder shown on
the records of the Company.




          (c) 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) 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 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 (the “Rights”) as set forth in a Rights Agreement
between Volcano Corporation (the “Company”) and American Stock Transfer
& Trust Company, as Rights Agent, dated as of June 20, 2006 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.



          (d) 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 together with a copy of the Summary of Rights attached thereto, and,
except as otherwise provided herein, the surrender for transfer of any such certificate, with or
without a copy of the Summary of Rights attached thereto, 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 the other provisions of this Section 3(d)
or of the foregoing Section 3(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 Certificate. The Right Certificates (and the forms of
election to purchase shares and of assignment to be printed on the reverse thereof) shall be




9









 







substantially in the form set forth on 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, which do not affect the duties or responsibilities of the Rights
Agent 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 price per one
one-thousandth of a share of Preferred Stock set forth therein (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 its Chairman of the
Board, Chief Executive Officer, President, any of its Vice Presidents, or its Treasurer, 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 or an Assistant 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 and receipt by the Right Agent of all necessary
information, the Rights Agent will keep or cause to be kept, at an office or agency designated for
such purpose, books for registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the date of each of
the Right Certificates.




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




          (a) Subject to the provisions of this Agreement, at any time after the Distribution Date and
prior to the Expiration Date, any Right Certificate or Right Certificates may be transferred, split
up, combined or exchanged for another Right Certificate or Right

10









 








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 charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right Certificates. The Rights
Agent shall have no duty or obligation under this Section unless and until it is satisfied that all
such taxes and/or charges have been paid.




          (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 satisfactory to
them, and, at the Company’s request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of
like tenor to the Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.




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




          (a) Except as otherwise provided herein, the Rights shall become exercisable on the
Distribution Date, and thereafter the registered holder of any Right Certificate may, subject to
Section 11(a)(ii) hereof and except as otherwise provided herein, exercise the Rights evidenced
thereby in whole or in part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly and properly 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 June 20, 2016 (the “Final
Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof
(the “Redemption Date”), (iii) the time at which such Rights are exchanged as provided in Section
24 hereof, or (iv) upon the purchase of shares of Common Stock pursuant to a Qualifying Offer.




          (b) The Purchase Price shall be initially $32.00 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

11









 








in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with Subsection (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 and properly 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 tax or charge required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check, cashier’s check or
money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Stock, or make available if the Rights Agent
is the transfer agent for the Preferred Stock, certificates for the number of shares of Preferred
Stock to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) requisition from a depositary agent appointed by the Company
depositary receipts representing interests in such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case certificates for the Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the depositary agent),
and the Company hereby directs any such depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as may be designated
by such holder and (iv) when appropriate, after receipt, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate.




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




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

12









 








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 cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.




          Section 9. Availability of Shares of Preferred Stock.




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




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




          (c) From and after such time as the Rights become exercisable, the Company shall use its best
efforts, if then necessary to permit the issuance of shares of Preferred Stock upon the exercise of
Rights, to register and qualify, under the Securities Act, such shares of Preferred Stock on an
appropriate form (to the extent exemptions therefrom are not available), cause such registration
statement and qualifications to become effective as soon as possible after such filing (with a
prospectus at all times meeting the requirements of the Securities Act and the rules and
regulations thereunder) and keep such registration and qualifications effective 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 ninety (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
in each case with prompt notice thereof to the Rights Agent. 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 registration under
any applicable securities laws (including blue sky laws) 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.




13









 








          (e) The Company further covenants and agrees that it will pay when due and payable any and all
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 tax or charge 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 or charge shall have been paid (any such tax or charge 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 or charge 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 taxes or charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Stock for which the Rights shall be exercisable,
including, without limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of the Company, except as
provided herein.




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





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



14









 







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 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 has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 11(a)(ii), and subsequent
transferees of such Persons, shall be null and 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 null and void pursuant to the provisions of this Section 11(a)(ii), and any Right
Certificate delivered to the Rights Agent that represents Rights that are or have become
null and void pursuant to the provisions of this paragraph shall be cancelled. 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



15









 






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
Section 11(a)(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
Section 11(a)(ii), the Board shall, 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 null and void
pursuant to the foregoing Section 11(a)(ii)), make adequate
provision to substitute for the shares of Common Stock issuable in accordance with the foregoing Section 11(a)(ii) upon
exercise of the Right and payment of the Purchase Price (as adjusted in accordance
therewith), (1) cash, (2) a reduction in such Purchase Price, (3) shares of Preferred Stock
or other equity securities of the Company (including, without limitation, shares or
fractions of shares of preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the shares of Common Stock, are
deemed in good faith by the Board 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 upon the advice of a nationally recognized investment banking firm selected in good
faith by the Board; 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 “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 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 so elects, the thirty (30) day period set forth above may be extended to
the



16









 







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), 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, in each case with prompt notice thereof to the Rights Agent. 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 may, but
shall not be required to, establish procedures to allocate the right to receive shares of
Common Stock upon the exercise of the Rights among holders of Rights pursuant to this
Section 11(a)(iii).



          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period expiring within forty-five
(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


17









 







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, whose determination shall be described in a statement filed with the Rights Agent and which
shall be conclusive for all purposes. 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, whose determination shall be described in a statement
filed with the Rights Agent and which shall be conclusive for all purposes) 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
purposes 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 thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior to but not including such date;
provided, however, that in the event that the current per share market price
of the Security is determined during a period following the announcement by the issuer of
such Security of (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 but
not including the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case, the current
per share market price shall be appropriately adjusted to reflect the current market price



18









 







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 Nasdaq or, if the Security is not listed or admitted to trading on
Nasdaq, as reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal 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
securities exchange, 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. The term
“Trading Day” shall mean a day on which the principal 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 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 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, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all
purposes.



          (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 (3) 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)


19









 







and 11(m) hereof, as applicable, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Stock shall apply on like terms to any such other shares.




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




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




          (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, with prompt notice thereof to the Rights Agent. 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 ten (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


20









 








shall be registered in the names of the holders of record of Right Certificates on the record
date specified in the public announcement.




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




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




          (l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer,
with prompt notice thereof to the Rights Agent, 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 to 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

21









 








with each share of Common Stock then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the occurrence of such event.




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




          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief statement of the facts and computations
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 have no duty with respect to 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 null and 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

22









 







and issued, fully paid, non-assessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall equal the result obtained by dividing the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of the
current per share market price of the Common Stock of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or transfer;
provided, however, that the Purchase Price (as theretofore adjusted in accordance
with Section 11(a)(ii) hereof) and the number of shares of Common Stock of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof to reflect any events occurring in respect of the Common Stock
of such Principal Party after the occurrence of such consolidation, merger, sale or transfer; (B)
such Principal Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to
this Agreement; (C) the term “Company” shall thereafter be deemed to refer to such Principal Party;
and (D) such Principal Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of its shares of Common Stock in accordance with Section 9 hereof) in
connection with such consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of the Rights; provided
that, upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets or
other extraordinary transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase Price as
provided in this Section 13(a), such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of such transaction, owned
the Common Stock of the Principal Party receivable upon the exercise of a Right pursuant to this
Section 13(a), and such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent exercise of the 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 of 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



23









 






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


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




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



24









 







or admit to trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on Nasdaq or such securities exchange;




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




          (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.




25









 








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

26









 








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




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




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




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




          (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) 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 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

27









 








purpose the holder of the Preferred Stock or any other securities of the Company which may at
any time be issuable on the exercise or exchange of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right Certificate shall have
been exercised or exchanged in accordance with the provisions hereof.




          Section 18. Concerning the Rights Agent.




          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration, preparation,
delivery, amendment and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense, incurred without gross negligence, bad faith or willful misconduct as determined by a
court of competent jurisdiction on the part of the Rights Agent, for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance and administration of this Agreement,
including without limitation the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly. The indemnity provided herein shall survive the
termination of this Agreement and the termination and the expiration of the Rights. The costs and
expenses incurred in enforcing this right of indemnification shall be paid by the Company.
Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage.




          (b) The Rights Agent shall be authorized and protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its 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 Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any

28









 








Person succeeding to the stockholder services business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties hereto;
provided, that such Person would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the 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 its own name; and in all such cases such Right Certificates shall have the full force provided
in the Right Certificates and in this Agreement.




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




          Section 20. Duties of Rights Agent. The Rights Agent undertakes only the duties and
obligations expressly 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 advice or opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken, suffered or omitted by it in good faith and
in accordance with such advice or opinion.




          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including without limitations, the identity of
any Acquiring Person and the determination of current per share market price) be proved or
established by the Company prior to taking, suffering or omitting 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 (i) the President or
Chief Executive Officer of the Company and (ii) the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in reliance upon such
certificate.




29









 








          (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct as determined by a court of competent
jurisdiction.




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




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




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any person reasonably believed by the Rights Agent to
be one of the President, Chief Executive Officer or 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, suffered or omitted 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, suffered or omitted by the Rights Agent under
this Agreement and the date on and/or after which such action shall be taken, or suffered or such
omission shall be effective. The Rights Agent shall not be liable for any action taken or suffered
by, or omission of, the Rights Agent in accordance with a proposal included in any such application
on or after the date specified in such application (which date shall not be less than five (5)
Business Days after the date any officer of the Company actually receives such application unless
any such officer shall have consented in

30









 








writing to an earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written instructions in response to
such application specifying the action to be taken, suffered or omitted.




          (h) The Rights Agent and any stockholder, director, officer, Affiliate 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 Person.




          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself 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 resulting from any such act, default,
neglect or misconduct absent gross negligent, bad faith or willful misconduct as determined by a
court of competent jurisdiction in the selection and continued employment or retention thereof.




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




          (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form of election to purchase
set forth on the reverse thereof, as the case may be, has not been completed to certify the holder
is not an Acquiring Person (or an Affiliate or Associate thereof), 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 thirty (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 thirty (30) days’ notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the 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 thirty (30) days after giving
notice of such removal or after it has been notified in writing of such resignation or incapacity
by the resigning or incapacitated Rights Agent or by the holder of a

31









 








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 Person doing business under the
laws of the United States or the laws of any State of the United States or of the District of
Columbia, in good standing, which is authorized under such laws to exercise corporate trust powers
or stockholder transfer agent services and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $10 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock or Preferred Stock,
and, following the Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be.




          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 the Board 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 Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale.




          Section 23. Redemption.




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

32









 








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 shall determine.




          (b) Immediately upon the action of the Board ordering the redemption of the Rights pursuant to
Subsection (a) of this Section 23 (or at such later time as the Board 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 ten (10) days after such action of
the Board ordering the redemption of the Rights (or such later time as the Board may establish for
the effectiveness of such redemption), the Company shall mail a notice of redemption to the Rights
Agent and to all the holders of the then-outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price will be made.




          Section 24. Exchange.




          (a) The Board 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 null
and 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 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 fifty percent (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 may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish.




          (b) Immediately upon the effectiveness of the action of the Board ordering the exchange of any
Rights pursuant to Subsection (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 with prompt notice thereof to the Rights Agent;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company shall promptly mail a notice of any such

33









 








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 null and void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.




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




          Section 25. Notice of Certain Events.




          (a) In case the Company shall at any time after the earlier of the Distribution Date or the
Stock Acquisition Date propose (i) to pay any dividend payable in stock 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 and the Rights Agent, in
accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, or distribution of rights or warrants, or the date on
which such liquidation, dissolution or winding up 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 ten (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 ten (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.




34









 








          (b) In case any event described in Section 11(a)(ii) or Section 13 shall occur, 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) and the Rights Agent, 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)
or Section 13 hereof, as appropriate.




          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:



Volcano Corporation.

2870 Kilgore Road

Rancho Cordova, CA 95670

Attention: President



with a copy to



Reed Smith LLP

599 Lexington Avenue

New York, New York 10022

Attention: Gerard S. DiFiore, Esq.



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:



American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Attention: Herbert Lemmer, General Counsel



Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any 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

35









 








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 proposed supplement or amendment is in
compliance with the terms of this Section 27 and that such supplement or amendment does not change
or increase the Rights Agent’s duties, liabilities or obligations, the Rights Agent shall execute
such supplement or amendment.




          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. Beneficiaries 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 holders of the Common Stock)
any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the holders of the Common Stock).




          Section 30. Determinations and Actions by the Board. The Board shall have the
exclusive power and authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board 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 (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) that are done or made by the Board in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights,
as such, and all other parties, and (y) not subject the Board to any liability to the holders of
the Rights.




          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

36









 








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; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent shall be governed by
and construed in accordance with the laws of the State of New York applicable to contracts made and
to be performed entirely within such State.




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




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




37









 








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




	 	 	 	 	 
	 	VOLCANO CORPORATION

 	 
	 	By: 	/s/ R. Scott Huennekens	 
	 	 	Name:  	R. Scott Huennekens 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	AMERICAN STOCK TRANSFER & TRUST COMPANY,

as Rights Agent

 	 
	 	By:  	/s/ Herbert Lemmer	 
	 	 	Name:  	Herbert Lemmer 	 
	 	 	Title:  	VP and General Counsel 	 



38









 






	 	 	 	 	 



EXHIBIT A




FORM OF

CERTIFICATE OF DESIGNATION




OF




SERIES A JUNIOR PARTICIPATING PREFERRED STOCK




OF




VOLCANO CORPORATION




Pursuant to Section 151 of the General Corporation Law

of the State of Delaware




          VOLCANO CORPORATION (the “Corporation”), a corporation organized and existing under the
General Corporation Law of the State of Delaware, 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”) in accordance with the provisions of the Certificate of Incorporation of the Corporation,
the Board on May 2, 2006 adopted the following resolution creating a series of 250,000 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 of the Corporation, a series of
Preferred Stock, par value $.001 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 250,000. Such number of shares may be increased or decreased by
resolution of the Board; provided, however, that no decrease thereof shall reduce the number of
shares of Series A Junior Participating Preferred Stock to less than the number of shares thereof
then issued and outstanding plus the number of shares thereof issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued by the Corporation.




A-1









 








          2. 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, par value $.001 per share, of the Corporation
(the “Common Stock”) as to such matters.




          3. 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 out of funds
legally available for the purpose, quarterly dividends payable in cash on the last business day of
March, June, September and December, in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the 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) $.01 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 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 1000. In the event the Corporation shall at any time after June 20, 2006 (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 Subsection (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



A-2









 




Date next preceding the date of issue of such shares of Series A Junior Participating
Preferred Stock, unless the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an
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 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 sixty (60) days prior to the date fixed
for the payment thereof.




          4. 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 and by Sections 4(C) and 11 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 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. For such election of two additional
directors, each share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to cast the number of votes that is specified in Section 4(A) above. Until the default in
payment 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 4(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



A-3









 




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 only be filled by the vote of such holders. If and when such default shall
cease to exist, the holders of the Series A Junior Participating Preferred Stock shall be divested
of the foregoing special voting rights, subject to re-vesting in the event of each and every
subsequent like default in payments of dividends. Upon the termination of the foregoing special
voting rights, the term 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 shall be reduced by two. The voting rights granted by this Section 4(C) shall be in addition
to any other voting rights granted to the holders of the Series A Junior Participating Preferred
Stock under this Section 4.




          5. Certain Restrictions.




               (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 3 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series 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) 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, 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



A-4









 




the Corporation could, under Subsection (A) of this Section 5, purchase or otherwise acquire
such shares at such time and in such manner.




          6. 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, subject to any conditions and restrictions
on issuance set forth herein.




          7. 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) $.01 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 corporation
nor the merger or consolidation of any other corporation into or with the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this
Section 7.



          8. 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.




A-5









 








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




          10. Amendment. At any time that any shares of Series A Junior Participating Preferred Stock
are outstanding, the Certificate of Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds (2/3) 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
fractional shares that shall entitle the holders thereof, in proportion to such fractional
interests, to exercise voting rights, receive dividends, participate in distributions and to
possess all other rights of the holders of shares of Series A Junior Participating Preferred Stock.




          IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___ day of ___, 2006.




	 	 	 	 	 
	 	VOLCANO CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



A-6









 







	 	 	 	 	 



EXHIBIT B




FORM OF RIGHT CERTIFICATE




Certificate No. R-____




                     Rights






NOT EXERCISABLE AFTER JUNE 20, 2016 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO REDEMPTION AT $.0001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT (AS HEREINAFTER DEFINED).
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




VOLCANO CORPORATION




          This certifies that                                          or registered assigns, is the registered
owner of the number of rights set forth above (the “Rights”), each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of
June 20, 2006, as the same may be amended from time to time (the “Rights Agreement”), by and between
Volcano Corporation, a Delaware corporation (the “Company”), and American Stock Transfer & Trust
Company, as Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M., New
York, New York time, on June 20, 2016 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 $.001 per share (the “Preferred
Stock”), of the Company at a purchase price of $32.00 per one one-thousandth of a share of
Preferred Stock (the “Purchase Price”), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a share of Preferred Stock which may be
purchased upon exercise hereof) set forth above and the Purchase Price set forth above, are the
number, and Purchase Price, respectively, as of June 20, 2006, 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




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share of Preferred Stock (or other securities or property) which may be purchased upon the
exercise of the Rights and the number of Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the 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 holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the above-mentioned office or agency of
the Rights Agent. The Company will mail to the holder of this Right Certificate a copy of the
Rights Agreement without charge after receipt of a written request therefor.




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




          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at a redemption price of $.0001 per Right or (ii) may be
exchanged in whole or in part for shares of the Company’s Common Stock, par value $.001 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 issued and evidenced by depository receipts), but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.




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




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          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                      ___, 20_.




	 	 	 	 	 
	 	VOLCANO CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



ATTEST:




	 	 	 
	 	 	 
	Name:

	 	 
	Title:
	 	 






Countersigned:




AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent




	 	 	 	 	 
	By
	 	 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	 
	 

	 	Title:	 	 







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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 (each as defined in the Rights Agreement).




	 	 	 
	 

	 	 
	 

	 	          Signature






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Form of Reverse Side of Right Certificate — continued




FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise

Rights represented by the Right Certificate)




To VOLCANO 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 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.




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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 (each 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.




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Exhibit C




SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK




     On May 2, 2006, the Board of Directors (the “Board of Directors”) of Volcano Corporation (the
“Company”) declared a dividend distribution of one preferred share purchase right (a “Right”) for
each outstanding share of Common Stock, par value $0.001 per share (the “Common Stock”), of the
Company. The dividend is payable to the stockholders of record on June 20, 2006 (the “Record
Date”), and with respect to shares of Common Stock issued thereafter until the Distribution Date
(as defined below) and, in certain circumstances, with respect to shares of Common Stock issued
after the Distribution Date. Except as set forth below, each Right, when it becomes exercisable,
entitles the registered holder to purchase from the Company one one-thousandth of a share of Series
A Junior Participating Preferred Stock, $.001 par value (the “Preferred Stock”), of the Company at
a price of $32.00 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
(the “Rights Agreement”) by and between the Company and American Stock Transfer & Trust Company, as
Rights Agent (the “Rights Agent”), dated as of June 20, 2006.



     Initially, the Rights will be attached to all certificates representing Common Stock then
outstanding, and no separate Right Certificates will be distributed. The Rights will separate from
the Common Stock upon the earliest to occur of (i) the tenth (10th) day after the public
announcement (or the Board of Directors’ becoming aware) of a person’s or group of affiliated or
associated persons’ (other than the Company, any subsidiary of the Company, any employee benefit
plan of the Company or its subsidiaries, 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 its subsidiaries (any such entity, an “Exempt Person”))
having acquired beneficial ownership of 20% or more of the outstanding shares of Common Stock
(except for acquisitions made with the prior approval of the Board of Directors or except in the
case of an inadvertent acquisition (as determined in good faith by the Board of Directors) in which
the acquirer divests itself as soon as practicable of enough shares to reduce its ownership below
such 20% threshold); or (ii) the 10th business day (or such later date as the Board of
Directors may determine) 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 (other
than an Exempt Person) becoming the beneficial owner of 20% or more of the Common Stock then
outstanding (the earliest of such dates being called the “Distribution Date”). A person or group
whose acquisition of Common Stock causes the occurrence of a Distribution Date pursuant to clause
(i) above is referred to herein as an “Acquiring Person.” The date that a person or group becomes
an Acquiring Person is referred to as the “Stock Acquisition Date.”



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



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Record Date upon transfer or new issuance of shares of Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any certificates of shares
of Common Stock outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, 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 to each initial record holder of certain Common Stock issued after the
Distribution Date), and such separate Right Certificates alone will evidence the Rights.




     The Rights are not exercisable until the Distribution Date and will expire at the close of
business on June 20, 2016, unless earlier redeemed by the Company as described below.



     In the event that any person becomes an Acquiring Person, each holder of a Right will
thereafter have the right (the “Flip-In Right”) to receive upon exercise the number of shares of
Common Stock or of one-one thousandths of a share of Preferred Stock (or, in certain circumstances,
other securities of the Company) having a value (immediately prior to such triggering event) equal
to two times the exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring Person or any
affiliate or associate thereof will be null and void.



     In the event that, at any time following the Stock Acquisition Date, (i) the Company shall
consolidate with or shall merge into any other entity, (ii) any entity 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 entity (or of the Company) or cash or any other property, or
(ii) more than 50% of the Company’s assets or earning power is sold or transferred, then each
holder of a Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right (the “Flip-Over Right”) to receive, upon exercise, common shares of the
principal surviving company having a value equal to two times the exercise price of the Right. The
holder of a Right will continue to have the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.



     The Purchase Price payable, and the number of shares of Preferred Stock, Common Stock or other
securities issuable, upon exercise of the Rights are 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 (including any such reclassification made in connection
with a consolidation or merger in which the Company is the continuing or surviving corporation);
(ii) upon the grant to holders of the shares of Preferred Stock of certain rights or warrants to
subscribe for or purchase units of Preferred Stock at a price, or securities convertible into
shares of Preferred Stock with a conversion price, less than the then current market price of the
shares of Preferred Stock; or (iii) upon the distribution to holders of the shares of Preferred
Stock (including any such distribution made in connection with a consolidation or merger in



C-2









 




which the Company is the continuing or surviving corporation) of evidences of indebtedness or
assets (excluding regular quarterly cash dividends or dividends payable in shares of Preferred
Stock) or of subscription rights or warrants (other than those referred to above)).




     The number of outstanding Rights and the number of one one-thousandths of a share of Preferred
Stock issuable upon exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Stock or a stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in any such case, prior
to the Distribution Date.



     Preferred Stock purchasable upon exercise of the Rights will not be redeemable. Each share of
Preferred Stock will be entitled to a minimum preferential quarterly dividend payment of $0.01 per
share but, if greater, will be entitled to an aggregate dividend per share of 1,000 times (as such
multiple may be adjusted to reflect dividends on Common Stock payable in shares of Common Stock,
subdivision of the outstanding Common Stock or combination of the outstanding Common Stock, the
“Adjustment Multiple”) the dividend declared per share of Common Stock. In the event of a
liquidation, dissolution or winding up of the Company, voluntary or otherwise, the holders of the
shares of Preferred Stock will be entitled to an aggregate per share payment in an amount equal to
the greater of (i) $.01 plus an amount equal to accrued and unpaid dividends and distributions on
the Preferred Stock, whether or not declared, to the date of such payment, or (ii) the Adjustment
Multiple 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. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are exchanged, each
share of Preferred Stock will be entitled to receive the amount received per share of Common Stock
times the Adjustment Multiple. These rights of the holders of the Preferred Stock are protected by
customary antidilution provisions. In the event that the amount of accrued and unpaid dividends on
the Preferred Stock is equivalent to six (6) full quarterly dividends or more, the holders of the
Preferred Stock shall have the right, voting as a class, to elect two (2) directors in addition to
the directors elected by the holders of the Common Stock until all cumulative dividends on the
Preferred Stock have been paid (or declared and set aside for payment) through the last quarterly
dividend payment date.



     No adjustment in the Purchase Price will be required until cumulative adjustments require an
adjustment of at least one percent (1%) in such Purchase Price. No fractional shares of Preferred
Stock will be issued (other than fractions which are one one-thousandth or 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 market price of the Preferred Stock on the last trading day prior to the date of exercise of a
Right.



     At any time prior to the earlier to occur of (i) a person becoming an Acquiring Person or (ii)
the expiration of the Rights, and under certain other circumstances, the Company may redeem the
Rights in whole, but not in part, at a price of $.0001 per Right (the “Redemption Price”) which
redemption shall be effective upon the action of the Board of Directors.



C-3









 





     All of the provisions of the Rights Agreement may be amended at any time and in any manner by
the Board of Directors of the Company without the consent of the holders of the Rights, except with
respect to the Redemption Price, which shall not be amendable, and, except after the Flip-In Event,
at which time 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 the Rights Agreement to again become amendable other than in accordance with the
Rights Agreement in its current form or (c) cause the Rights to again become redeemable.



     Until a Right is exercised, 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. While
the distribution of the Rights will not be taxable to stockholders of the Company, stockholders
may, depending upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter. The Company shall pay all taxes,
if any, incurred in connection with the distribution of Right Certificates or the exercise thereof,
but will not be responsible for taxes resulting from the 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 Certificates so
exchanged or exercised, as the case may be.



     A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to Amendment No. 1 to the Company’s Registration Statement on Form S-1, filed on May 5,
2006. 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, which is hereby incorporated herein by reference.




C-4