exv4w1



 





Exhibit 4.1




PHOENIX TECHNOLOGIES LTD.




and




COMPUTERSHARE TRUST COMPANY, N.A.




Rights Agent




AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT




Dated effective as of October 5, 2007




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	Section 1.

	 	Certain Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.

	 	Appointment of Rights Agent
	 	 	7	 
	 
	 	 	 	 	 	 
	Section 3.

	 	Issuance of Rights Certificates
	 	 	7	 
	 
	 	 	 	 	 	 
	Section 4.

	 	Form of Rights Certificates
	 	 	8	 
	 
	 	 	 	 	 	 
	Section 5.

	 	Countersignature and Registration
	 	 	9	 
	 
	 	 	 	 	 	 
	Section 6.

	 	Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	10	 
	 
	 	 	 	 	 	 
	Section 7.

	 	Exercise of Rights; Exercise Price; Expiration Date of Rights
	 	 	11	 
	 
	 	 	 	 	 	 
	Section 8.

	 	Cancellation and Destruction of Rights Certificates
	 	 	13	 
	 
	 	 	 	 	 	 
	Section 9.

	 	Reservation and Availability of Preferred Shares
	 	 	13	 
	 
	 	 	 	 	 	 
	Section 10.

	 	Record Date
	 	 	14	 
	 
	 	 	 	 	 	 
	Section 11.

	 	Adjustment of Exercise Price, Number of Shares or Number of Rights
	 	 	15	 
	 
	 	 	 	 	 	 
	Section 12.

	 	Certificate of Adjusted Exercise Price or Number of Shares
	 	 	21	 
	 
	 	 	 	 	 	 
	Section 13.

	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	21	 
	 
	 	 	 	 	 	 
	Section 14.

	 	Fractional Rights and Fractional Shares
	 	 	24	 
	 
	 	 	 	 	 	 
	Section 15.

	 	Rights of Action
	 	 	25	 
	 
	 	 	 	 	 	 
	Section 16.

	 	Agreement of Rights Holders
	 	 	26	 
	 
	 	 	 	 	 	 
	Section 17.

	 	Rights Certificate Holder Not Deemed a Stockholder
	 	 	26	 
	 
	 	 	 	 	 	 
	Section 18.

	 	Concerning the Rights Agent
	 	 	26	 
	 
	 	 	 	 	 	 
	Section 19.

	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	27	 
	 
	 	 	 	 	 	 
	Section 20.

	 	Duties of Rights Agent
	 	 	27	 
	 
	 	 	 	 	 	 
	Section 21.

	 	Change of Rights Agent
	 	 	30	 
	 
	 	 	 	 	 	 
	Section 22.

	 	Issuance of New Rights Certificates
	 	 	30	 
	 
	 	 	 	 	 	 
	Section 23.

	 	Redemption
	 	 	31	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	Section 24.

	 	Exchange
	 	 	32	 
	 
	 	 	 	 	 	 
	Section 25.

	 	Notice of Certain Events
	 	 	33	 
	 
	 	 	 	 	 	 
	Section 26.

	 	Notices
	 	 	34	 
	 
	 	 	 	 	 	 
	Section 27.

	 	Supplements and Amendments
	 	 	34	 
	 
	 	 	 	 	 	 
	Section 28.

	 	Successors
	 	 	35	 
	 
	 	 	 	 	 	 
	Section 29.

	 	Determinations and Actions by the Board of Directors, etc
	 	 	35	 
	 
	 	 	 	 	 	 
	Section 30.

	 	Benefits of this Agreement
	 	 	35	 
	 
	 	 	 	 	 	 
	Section 31.

	 	Severability
	 	 	35	 
	 
	 	 	 	 	 	 
	Section 32.

	 	Governing Law
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 33.

	 	Counterparts
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 34.

	 	Descriptive Headings
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 35.

	 	Designation and Amount
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 36.

	 	Proportional Adjustment
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 37.

	 	Dividends and Distributions
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 38.

	 	Voting Rights
	 	 	39	 
	 
	 	 	 	 	 	 
	Section 39.

	 	Certain Restrictions
	 	 	39	 
	 
	 	 	 	 	 	 
	Section 40.

	 	Reacquired Shares
	 	 	40	 
	 
	 	 	 	 	 	 
	Section 41.

	 	Liquidation, Dissolution or Winding Up
	 	 	41	 
	 
	 	 	 	 	 	 
	Section 42.

	 	Consolidation, Merger, etc
	 	 	41	 
	 
	 	 	 	 	 	 
	Section 43.

	 	No Redemption
	 	 	41	 
	 
	 	 	 	 	 	 
	Section 44.

	 	Ranking
	 	 	41	 
	 
	 	 	 	 	 	 
	Section 45.

	 	Amendment
	 	 	41	 
	 
	 	 	 	 	 	 
	Section 46.

	 	Fractional Shares
	 	 	41	 






ii









 






	 	 	 
	EXHIBITS
	 	 
	 
	 	 
	Exhibit A

	 	Form of Certificate of Designations
	 
	 	 
	Exhibit B

	 	Form of Rights Certificate
	 
	 	 
	Exhibit C

	 	Summary of Rights







iii











 





AMENDED AND RESTATED PREFERRED SHARE RIGHTS AGREEMENT




     This Amended and Restated Preferred Share Rights Agreement, dated effective as of October 5,
2007 by and between Phoenix Technologies Ltd., a Delaware corporation (the “Company”) and
Computershare Trust Company, N.A. (the “Rights Agent”), amends and restates in its entirety the
Preferred Share Rights Agreement dated as of October 22, 1999, between Phoenix Technologies Ltd., a
Delaware corporation, and BankBoston, N.A., a national banking association (the predecessor to the
Agent).



     Effective October 22, 1999 (the “Rights Dividend Declaration Date”), the Board of Directors of
the Company authorized and declared a dividend of one Preferred Share Purchase Right (a “Right”)
for each Common Share (as hereinafter defined) of the Company outstanding as of the Close of
Business (as hereinafter defined) on November 4, 1999 (the “Record Date”), each Right representing
the right to purchase one one-thousandth of a share of Series B Participating Preferred Stock (as
such number may be adjusted pursuant to the provisions of this Agreement), having the rights,
preferences and privileges set forth in the form of Certificate of Designations of Rights,
Preferences and Privileges of Series B Participating Preferred Stock attached hereto as Exhibit A,
upon the terms and subject to the conditions herein set forth, and further authorized and directed
the issuance of one Right (as such number may be adjusted pursuant to the provisions of this
Agreement) with respect to each Common Share that shall become outstanding between the Record Date
and the earlier of the Distribution Date and the Expiration Date (as such terms are hereinafter
defined), and in certain circumstances after the Distribution Date.



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



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




          (a) “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more of the Common Shares then
outstanding, but shall not include the Company, any Subsidiary of the Company or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person organized, appointed
or established by the Company for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall be deemed to be an Acquiring Person as the result of an acquisition of
Common Shares by the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more of the Common
Shares of the Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 20% or more of the Common Shares of the Company then outstanding by reason of
share purchases by the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common Shares in Common Shares or
pursuant to a split or subdivision of the outstanding Common Shares), then such Person shall be
deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of such additional
Common Shares of the Company such Person does not beneficially own 20% or more



1









 






of the Common Shares of the Company then outstanding. Notwithstanding the foregoing, (i) if
the Company’s Board of Directors determines in good faith that a Person who would otherwise be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently (including, without limitation, because (A) such Person was unaware that
it beneficially owned a percentage of the Common Shares that would otherwise cause such Person to
be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), or
(B) such Person was aware of the extent of the Common Shares it beneficially owned but had no
actual knowledge of the consequences of such beneficial ownership under this Agreement) and without
any intention of changing or influencing control of the Company, and if such Person divested or
divests as promptly as practicable a sufficient number of Common Shares so that such Person would
no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or to have become an “Acquiring Person”
for any purposes of this Agreement; and (ii) if, as of the date hereof, any Person is the
Beneficial Owner of 20% or more of the Common Shares outstanding, such Person shall not be or
become an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph
(a), unless and until such time as such Person shall become the Beneficial Owner of additional
Common Shares (other than pursuant to a dividend or distribution of Common Shares paid or made by
the Company on the outstanding Common Shares or pursuant to a split or subdivision of the
outstanding Common Shares), unless, upon becoming the Beneficial Owner of such additional Common
Shares, such Person is not then the Beneficial Owner of 20% or more of the Common Shares then
outstanding.




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




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




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




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



               (ii) which such Person or any of such Person’s Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public offering of securities),
or upon the exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be deemed pursuant to
this Section 1(d)(ii)(A) to be the Beneficial Owner of, or to beneficially own, (1) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted for purchase or
exchange, or (2) securities which a Person or any of such Person’s Affiliates or Associates may be
deemed to have the right to acquire pursuant to any



2









 







merger or other acquisition agreement between the Company and such Person (or one or more of
its Affiliates or Associates) if such agreement has been approved by the Board of Directors of the
Company prior to there being an Acquiring Person; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this Section 1(d)(ii)(B) if the
agreement, arrangement or understanding to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or



               (iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding, whether or not in writing (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section 1(d)(ii)(B)) or disposing of any securities of the
Company; provided, however, that in no case shall an officer or director of the Company be deemed
(x) the Beneficial Owner of any securities beneficially owned by another officer or director of the
Company solely by reason of actions undertaken by such persons in their capacity as officers or
directors of the Company or (y) the Beneficial Owner of securities held of record by the trustee of
any employee benefit plan of the Company or any Subsidiary of the Company for the benefit of any
employee of the Company or any Subsidiary of the Company, other than the officer or director, by
reason of any influence that such officer or director may have over the voting of the securities
held in the plan.



          (e) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in the Commonwealth of Massachusetts are authorized or obligated by law or executive
order to close




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




          (g) “Common Shares” when used with reference to the Company shall mean the shares of Common
Stock of the Company, $.001 par value. Common Shares when used with reference to any Person other
than the Company shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.




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




          (i) “Company” shall mean Phoenix Technologies Ltd., a Delaware corporation, subject to the
terms of Section 13(a)(iii)(C) hereof.




3









 








          (j) “Current Per Share Market Price” of any security (a “Security” for purposes of this
definition), for all computations other than those made pursuant to Section 11(a)(iii) hereof,
shall mean the average of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to, but not including, such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price of any
Security on any date shall be deemed to be the average of the daily closing prices per share of
such Security for the ten (10) consecutive Trading Days immediately prior to, but not including,
such date; provided, however, that in the event that the Current Per Share Market Price of the
Security is determined during a period following the announcement by the issuer of such Security of
(i) a dividend or distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of the applicable thirty (30) Trading Day or ten (10) Trading
Day period, after the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities exchange, the last
sale price or, if such last sale price is not reported, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or,
if on any such date the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. If on any such date no market maker is making a
market in the Security, the fair value of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. If the Preferred Shares are not publicly
traded, the Current Per Share Market Price of the Preferred Shares shall be conclusively deemed to
be the Current Per Share Market Price of the Common Shares as determined pursuant to this Section
1(j), as appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof, multiplied by 1000. If the Security is not publicly held or so
listed or traded, Current Per Share Market Price shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.




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




          (l) “Distribution Date” shall mean the earlier of (i) the Close of Business on the tenth day
after the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Date occurs
before the Record Date, the Close of Business on the Record Date) or (ii) the Close of Business on
the tenth Business Day (or such later date as may be determined by action of the Company’s Board of
Directors) after the date that a tender or exchange offer by any Person




4









 







(other than the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person organized, appointed or established by
the Company for or pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act,
if, assuming the successful consummation thereof, such Person would be an Acquiring Person.




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




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




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




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




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




          (r) “Final Expiration Date” shall mean October 22, 2009.




          (s) “Nasdaq” shall mean the NASDAQ Global Market.




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




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




          (v) “Preferred Shares” shall mean shares of Series B Participating Preferred Stock, $.001 par
value, of the Company.




          (w) “Pre-Event Transferee” shall have the meaning set forth in Section 7(e) hereof.




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




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




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




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




5









 








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




          (cc) “Rights Agent” shall mean Computershare Trust Company, N.A.. or its successor or
replacement as provided in Sections 19 and 21 hereof.




          (dd) “Rights Certificate” shall mean a certificate substantially in the form attached hereto
as Exhibit B.




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




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




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




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




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




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




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




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




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




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




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




6









 








          (pp) A “Triggering Event” shall be deemed to have occurred upon any Person becoming an
Acquiring Person.




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




Section 3. Issuance of Rights Certificates.




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




          (b) On the Record Date or as soon as practicable thereafter, the Company will send a copy of
the Summary of Rights by first-class, postage-prepaid mail, to each record holder of Common Shares
as of the Close of Business on the Record Date, at the address of such holder shown on the records
of the Company’s transfer agent and registrar. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with the Summary of
Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.




7









 








          (c) Unless the Board of Directors by resolution adopted at or before the time of the issuance
of any Common Shares specifies to the contrary, Rights shall be issued in respect of all Common
Shares that are issued after the Record Date but prior to the earlier of the Distribution Date or
the Expiration Date or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates representing such Common Shares shall also be deemed to be
certificates for Rights, and shall bear the following legend:




     THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH
IN AN AMENDED AND RESTATED RIGHTS AGREEMENT BETWEEN PHOENIX TECHNOLOGIES LTD. AND COMPUTERSHARE
TRUST COMPANY, N.A., AS THE RIGHTS AGENT, DATED EFFECTIVE AS OF
OCTOBER 5, 2007, (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 PHOENIX TECHNOLOGIES LTD. 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. PHOENIX TECHNOLOGIES LTD. WILL
MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER
CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND
VOID.



     With respect to such certificates containing the foregoing legend, until the earlier of (i)
the Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.



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




Section 4. Form of Rights Certificates.




          (a) The Rights Certificates (and the forms of election to purchase Common Shares and of
assignment to be printed on the reverse thereof) shall be substantially in the form of Exhibit B
hereto and may have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate 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 automated quotation system, on which the Rights may from time to time be listed or included, or
to conform to usage. Subject to the provisions of Section 11 and



8









 






Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date (or in the case of Rights issued with respect to Common Shares issued by the Company
after the Record Date, as of the date of issuance of such Common Shares) and on their face shall
entitle the holders thereof to purchase such number of one- thousandths of a Preferred Share as
shall be set forth therein at the price set forth therein (such exercise price per one
one-thousandth of a Preferred Share being hereinafter referred to as the “Exercise Price” and the
aggregate Exercise Price of all Preferred Shares issuable upon exercise of one Right being
hereinafter referred to as the “Total Exercise Price”), but the number and type of securities
purchasable upon the exercise of each Right and the Exercise Price shall be subject to adjustment
as provided herein.




          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity
interests in such




     Acquiring Person or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which
the Company’s Board of Directors has determined is part of an agreement, arrangement or
understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:



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



Section 5. Countersignature and Registration.




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



9









 






countersigned by the Rights Agent and issued and delivered by the Company with the same force
and effect as though the person who signed such Rights Certificates on behalf of the Company had
not ceased to be such officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.




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




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




          (a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the Close
of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of one-thousandths of a Preferred Share (or, following a Triggering Event,
other securities, cash or other assets, as the case may be) as the Rights Certificate or Rights
Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate
or Rights Certificates to be transferred, split up, combined or exchanged at the office of the
Rights Agent designated in Section 26 hereof. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have properly completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably
request. Thereupon the Rights Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign
and deliver to the person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.




          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security 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 Rights Certificate if mutilated, the
Company will make and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.



10









 







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




          (a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date and prior to the Close of Business on the
Expiration Date by surrender of the Rights Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated in Section 26 hereof, together with payment of the Exercise Price for each
one-thousandth of a Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) as to which the Rights are exercised.




          (b) The Exercise Price for each one-thousandth of a Preferred Share issuable pursuant to the
exercise of a Right shall initially be Seventy-Five Dollars ($75.00), shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c) below.




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



11









 






the Company is obligated to issue securities of the Company other than Preferred Shares, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when necessary to comply with this Agreement.




          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or to his or her duly authorized assigns, subject to the provisions of Section 6 and
Section 14 hereof.




          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such (a
“Post-Event Transferee”), (iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Company’s Board of Directors has determined is
part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance
of this Section 7(e) (a “Pre- Event Transferee”) or (iv) any subsequent transferee receiving
transferred Rights from a Post-Event Transferee or a Pre-Event Transferee, either directly or
through one or more intermediate transferees, shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall notify the Rights Agent when
this Section 7(e) applies and shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but neither the Company nor the Rights
Agent shall have any liability to any holder of Rights Certificates or to any other Person as a
result of the Company’s failure to make any determinations with respect to an Acquiring Person or
any of such Acquiring Person’s Affiliates, Associates or transferees hereunder.




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



12









 







Section 8. Cancellation and Destruction of Rights Certificates.




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




Section 9. Reservation and Availability of Preferred Shares.




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




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




          (c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Triggering Event in which the consideration to be
delivered by the Company upon exercise of the Rights is described in Section 11(a)(ii) or Section
11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the case
may be, a registration statement under the Securities Act with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company may temporarily suspend,
for a period not to exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such suspension, the Company
shall issue a public announcement stating, and notify the Rights Agent, that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement and notification to the
Rights Agent at such time as the suspension is no longer in



13









 






effect. The Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction, unless the requisite qualification in such
jurisdiction shall have been obtained, or an exemption therefrom shall be available, and until a
registration statement has been declared effective.




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




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




Section 10. Record Date.




          Each Person in whose name any certificate for a number of one-thousandths of a Preferred Share
(or other securities) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the Preferred Shares (or other securities) represented thereby
on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Exercise Price with respect to which the Rights have
been exercised (and any applicable taxes or governmental charges) was made; provided, however, that
if the date of such surrender and payment is a date upon which the transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a holder of Preferred Shares (or other
securities) for which the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except as provided herein.



14









 







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




          (a) The Exercise Price, the number and kind of shares or other property covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.




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



               (ii) Subject to Section 24 of this Agreement, in the event a Triggering Event shall have
occurred, then promptly following such Triggering Event each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive for each Right, upon exercise
thereof in accordance with the terms of this Agreement and payment of the Exercise Price in effect
immediately prior to the occurrence of the Triggering Event, in lieu of a number of one-thousandths
of a Preferred Share, such number of Common Shares of the Company as shall equal the result
obtained by multiplying the Exercise Price in effect immediately prior to the occurrence of the
Triggering Event by the number of one-thousandths of a Preferred Share for which a Right was
exercisable (or would have been exercisable if the Distribution Date had occurred) immediately
prior to the first occurrence of a Triggering Event, and dividing that product by 50% of the
Current Per Share Market Price for Common Shares on



15









 







the date of occurrence of the Triggering Event; provided, however, that the Exercise Price and
the number of Common Shares of the Company so receivable upon exercise of a Right shall be subject
to further adjustment as appropriate in accordance with Section 11(e) hereof to reflect any events
occurring in respect of the Common Shares of the Company after the occurrence of the Triggering
Event.



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




16












 




and/or to decide the appropriate form of distribution to be made pursuant to such first sentence
and to determine the value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been temporarily suspended,
as well as promptly notify the Rights Agent thereof and issue a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the Current Per Share Market Price of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be deemed to have the
same value as the Common Shares on such date.




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




          (c) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the making of a distribution to all holders of the Preferred Shares or of any class or series
of Equivalent Shares (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any, or a dividend payable
in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in
Section 11(b)), then, in each such case, the Exercise Price to be in effect after such




17









 







record date shall be determined by multiplying the Exercise Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the Current Per Share Market
Price of a Preferred Share or an Equivalent Share on such record date, less the fair market value
per Preferred Share or Equivalent Share (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a Preferred Share or Equivalent Share, as the case
may be, and the denominator of which shall be such Current Per Share Market Price of a Preferred
Share or Equivalent Share on such record date; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed, and in the event that such distribution
is not so made, the Exercise Price shall be adjusted to be the Exercise Price which would have been
in effect if such record date had not been fixed.




          (d) Anything herein to the contrary notwithstanding, no adjustment in the Exercise Price shall
be required unless such adjustment would require an increase or decrease of at least 1% in the
Exercise Price; provided, however, that any adjustments which by reason of this Section 11(d) are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a Common Share or other share or one hundred-thousandth of a Preferred
Share, as the case may be. Notwithstanding the first sentence of this Section 11(d), any
adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which requires such adjustment or (ii) the Expiration Date.




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




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




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




18









 







of the Exercise Price, and (ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.




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




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




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




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




19









 







such event the issuing to the holder of any Right exercised after such record date of the
number of one- thousandths of a Preferred Share and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of one- thousandths of a
Preferred Share and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Exercise Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares (fractional or otherwise) upon the occurrence
of the event requiring such adjustment.




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




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




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




20









 







shares of such other capital stock) as were issuable with respect to one Right immediately
prior to such event. Each Common Share that shall become outstanding after an adjustment has been
made pursuant to this Section 11(n) shall have associated with it the number of Rights, exercisable
at the Exercise Price and for the number of one-thousandths of a Preferred Share (or shares of such
other capital stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(n). If an event occurs which would require an
adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(n) shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.




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




          Whenever an adjustment is made as provided in Sections 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 Preferred Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 26 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make such certification or
give such notice shall not affect the validity of such adjustment or the force or effect of the
requirement for such adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein and shall have no duty with respect to and
shall not be deemed to have knowledge of 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 that, following a Triggering Event, directly or indirectly:




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



               (ii) any Person shall consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such consolidation or merger and, in
connection with such merger, all or part of the Common Shares shall be changed into or exchanged
for stock or other securities of any other Person (or the Company); or 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 or Persons (other than
the Company or one or more of its wholly owned Subsidiaries in one or more transactions, each of
which individually (and together) complies with Section 11(m) hereof), then, concurrent with and in
each such case; (A) each holder of a Right (except as provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon the exercise thereof at a price equal to the Total
Exercise Price applicable immediately prior to the occurrence of the Section 13 Event in accordance
with the terms of this Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely



21









 




tradeable Common Shares of the Principal Party (as hereinafter defined), free of any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result
obtained by dividing such Total Exercise Price by 50% of the Current Per Share Market Price of the
Common Shares of such Principal Party on the date of consummation of such Section 13 Event,
provided, however, that the Exercise Price and the number of Common Shares of such Principal Party
so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in
accordance with Section 11(e) hereof; (B) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term “Company” shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section 13 Event; (D) such
Principal Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with the consummation of any such transaction
as may be necessary to ensure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; (E) upon the subsequent occurrence of any consolidation, merger, sale or transfer of
assets or other extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and payment of the Total
Exercise Price as provided in this Section 13(a), such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party receivable upon the exercise of such
Right pursuant to this Section 13(a), and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash, shares, rights, warrants
and other property; and (F) For purposes hereof, the “earning power” of the Company and its
Subsidiaries shall be determined in good faith by the Company’s Board of Directors on the basis of
the operating earnings of each business operated by the Company and its Subsidiaries during the
three fiscal years preceding the date of such determination (or, in the case of any business not
operated by the Company or any Subsidiary during three full fiscal years preceding such date,
during the period such business was operated by the Company or any Subsidiary).




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




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



               (ii) in the case of any transaction described in clause (iii) of Section 13(a) hereof, the
Person that is the party receiving the greatest portion of the assets or earning



22









 




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




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




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



               (ii) use its best efforts to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on a national securities exchange or to



23









 




meet the eligibility requirements for quotation on Nasdaq and list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights on Nasdaq; and




               (iii) deliver to holders of the Rights historical financial statements for such Principal
Party which comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act. In the event that at any time after the occurrence of a
Triggering Event some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a) (without taking into
account any prior adjustment required by Section 11(a)(ii)).



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




          (e) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, effect or permit to occur any Section 13 Event, if (i) at the time or immediately after such
Section 13 Event there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such
Section 13 Event, the 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.




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




Section 14. Fractional Rights and Fractional Shares.




          (a) The Company shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard to which such




24









 







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 purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise issuable, as determined
pursuant to the second sentence of Section 1(j) hereof.




          (b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred Share). Interests in
fractions of Preferred Shares in integral multiples of one one-thousandth of a Preferred Share 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 Shares represented by
such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples
of one one-thousandth of a Preferred Share, the Company shall pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of a Preferred Share. For purposes of this
Section 14(b), the current market value of a Preferred Share shall be one thousand times the
closing price of a Common Share (as determined pursuant to the second sentence of Section 1(j)
hereof) for the Trading Day immediately prior to the date of such exercise.




          (c) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares upon the exercise or exchange of Rights. In
lieu of such fractional Common Shares, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of a Common Share. For purposes of this Section
14(c), the current market value of a Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 1(j) hereof) for the Trading Day immediately
prior to the date of such exercise.




          (d) The holder of a Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares (other than fractions that are integral
multiples of one one-thousandth of a Preferred Share) upon exercise of a Right.



Section 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Shares),
may, in his or her own behalf and for his or her own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect
of, his or her right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting the




25









 







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




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




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




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



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




Section 18. Concerning the Rights Agent.




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




26









 







misconduct 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 in the
premises. In no event will the Rights Agent be liable for special, punitive, indirect, incidental
or consequential loss or damage of any kind whatsoever, even if the Rights Agent has been advised
of the possibility of such loss or damage.




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




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




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




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



Section 20. Duties of Rights Agent. The Rights Agent undertakes only the duties and obligations
expressly imposed by this Agreement (and no implied duties or obligations) upon the




27









 







following terms and conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:




          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent and the Rights Agent shall incur no liability for or on account of,
any action taken, omitted or suffered 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 limitation, the identity of
any Acquiring Person and the determination of Current Per Share Market Price) be proved or
established by the Company prior to taking, omitting to take or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for or on account of any action taken, omitted or
suffered in good faith by it under the provisions of this Agreement in reliance upon such
certificate.




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




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




          (e) The Rights Agent shall not have any liability for, nor be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights, a transfer to an
Acquiring Person or any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence
of facts that would require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt by the Rights Agent of a certificate
furnished pursuant to Section 12 describing such change or adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the authorization or reservation
of any Preferred Shares to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any Preferred Shares will, when issued, be validly authorized and issued, fully paid and
nonassessable.




28









 








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




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or
any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken, omitted or suffered by
it in good faith in accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent under this Rights Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken 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 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, affiliate, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent 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 or any other Person resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct.




          (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 such risk or liability is not assured to it.




          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative response





29












 




to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.



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



Section 22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the Exercise Price and
the number or kind or class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to Common Shares so
issued or sold
pursuant to the exercise of stock options or under any employee plan or arrangement or upon the
exercise, conversion or exchange of other securities of the Company outstanding at the date hereof
or upon the exercise, conversion or exchange of securities hereinafter issued by the Company and
(b) may, in any other case, if deemed necessary or appropriate by the Board of




30









 







Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued and
this sentence shall be null and void ab initio if, and to the extent that, such issuance or this
sentence would create a significant risk of or result in material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued or would create a significant
risk of or result in such options’ or employee plans’ or arrangements’ failing to qualify for
otherwise available special tax treatment and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.




Section 23. Redemption.




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




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




31









 








Section 24. Exchange.




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




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




          (c) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with
Section 24(a), the Company shall either take such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the Rights or alternatively, at the option
of the Board of Directors, with respect to each Right (i) pay cash in an amount equal to the
Current Value (as hereinafter defined), in lieu of issuing Common Shares in exchange therefor, or
(ii) issue debt or equity securities or a combination thereof, having a value equal to the Current
Value, in lieu of issuing Common Shares in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment banking firm selected by
majority vote of the Board of Directors, or (iii) deliver any combination of cash, property, Common
Shares and/or other securities having a value equal to the Current Value in exchange for each
Right. For purposes of this Section 24(c) only, the “Current Value”
shall mean the product of the Current Per Share Market Price of Common Shares on the date of
the occurrence of the event described above in subparagraph (a), multiplied by the number of Common
Shares for which the Right otherwise would be exchangeable if there were sufficient




32









 







shares
available. To the extent that the Company determines that some action need be taken pursuant to
clauses (i), (ii) or (iii) of this Section 24(c), the Board of Directors may temporarily suspend
the exercisability of the Rights for a period of up to sixty (60) days following the date on which
the event described in Section 24(a) shall have occurred, in order to seek any authorization of
additional Common Shares and/or to decide the appropriate form of distribution to be made pursuant
to the above provision and to determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement (with prompt notice thereof to the Rights Agent)
stating that the exercisability of the Rights has been temporarily suspended.




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




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




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




Section 25. Notice of Certain Events.




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




          (b) In case any Triggering Event or Section 13 Event shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to the Rights Agent and to each holder of a
Rights Certificate, in accordance with Section 26 hereof, a notice of the




33









 







occurrence of such event,
which shall specify the event and the consequences of the event to holders of Rights under Sections
11(a)(ii) and 13 hereof.



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



Phoenix Technologies Ltd.

915 Murphy Ranch Road

Milpitas, CA 95035

Attention: General Counsel



with a copy to:



Heller Ehrman LLP

275 Middlefield Road

Menlo Park, CA 94025

Attention: Elias Blawie




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


Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

Attention: Client Administration




     Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Rights Certificate 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. Prior to the occurrence of a Distribution Date, the Company may supplement or amend this
Agreement in any respect without the approval of any holders of Rights and the Rights Agent shall,
subject to the restrictions contained in this paragraph if the Company so directs, execute such
supplement or amendment. From and after the occurrence of a Distribution Date, the Company and the
Rights Agent may from time to time supplement or amend this Agreement without the approval of any
holders of Rights in order to (i) cure any ambiguity, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent with any other provisions herein, (iii)
shorten or lengthen any time period hereunder or (iv) to change or supplement the provisions
hereunder in any manner that the Company may deem necessary or desirable and that shall not
adversely affect the interests of the
Rights Agent or the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when




34









 







the Rights
may be redeemed at such time as the Rights are not then redeemable or (B) any other time period
unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate officer
of the Company that states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or amendment. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares.



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



Section 29. Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers specifically granted
to the Board, or the Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not redeem the Rights or
to amend the Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates and all other Persons and (y) not
subject the Board to any liability to the holders of the Rights. The Rights Agent shall always be
entitled to assume that the Company’s Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.



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



Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect the purpose or




35









 







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



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



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



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.




[Remainder of page intentionally left blank]




36









 








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


	 	 	 	 	 
	     “COMPANY”	PHOENIX TECHNOLOGIES LTD.
 	 
	 	By:  	 	 
	 	 	Name: 	  	 
	 	 	Title:  	  	 
	 
	     “RIGHTS AGENT”	COMPUTERSHARE TRUST COMPANY, N.A.
 	 
	 	By:  	 	 
	 	 	Name: 	  
	 
	 	 	Title:  	  	 






37






 






EXHIBIT A




     CERTIFICATE OF DESIGNATIONS OF RIGHTS, PREFERENCES AND PRIVILEGES OF SERIES B PARTICIPATING
PREFERRED STOCK OF PHOENIX TECHNOLOGIES LTD.



     The undersigned, Albert E. Sisto and Stuart J. Nichols, do hereby certify:



     1. That they are the duly elected and acting President and Secretary, respectively, of Phoenix
Technologies Ltd., a Delaware corporation (the “Corporation”).



     2. That pursuant to the authority conferred upon the Board of Directors by the Certificate of
Incorporation of the said Corporation, the said Board of Directors effective as of October 22, 1999
adopted the following resolution creating a series of 200,000 shares of Preferred Stock designated
as Series B Participating Preferred Stock:



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



     1. Designation and Amount. The shares of such series shall be designated as “Series B Participating Preferred Stock.” The
Series B Participating Preferred Stock shall have a par value of $.001 per share, and the number of
shares constituting such series shall be 200,000.



     2. Proportional Adjustment. In the event that the Corporation shall at any time after the issuance of any share or shares of
Series B Participating Preferred Stock (i) declare any dividend on Common Stock of the Corporation
(“Common Stock”) payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case
the Corporation shall simultaneously effect a proportional adjustment to the number of outstanding
shares of Series B Participating Preferred Stock.



     3. Dividends and Distributions.



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




38









 







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 B Participating Preferred
Stock.




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




          c. Dividends shall begin to accrue on outstanding shares of Series B Participating Preferred
Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of
Series B 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 B Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin
to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series B Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of shares of Series B
Participating Preferred Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed for the payment
thereof.




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



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




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




          c. Except as required by law, holders of Series B 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.




     5. Certain Restrictions.



          a. The Corporation shall not declare any dividend on, make any distribution on, or redeem or
purchase or otherwise acquire for consideration any shares of Common Stock




39









 







after the first issuance of a share or fraction of a share of Series B Participating Preferred
Stock unless concurrently therewith it shall declare a dividend on the Series B Participating
Preferred Stock as required by Section 3 hereof.




          b. Whenever quarterly dividends or other dividends or distributions payable on the Series B
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 B
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 B Participating Preferred Stock;



               ii. declare or pay dividends on, 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 Series B
Participating Preferred Stock, except dividends paid ratably on the Series B Participating
Preferred Stock and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then entitled;



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



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



          c. The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the Corporation unless the Corporation could,
under paragraph (a) of this Section 5, purchase or otherwise acquire such shares at such time and
in such manner.




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



40









 




conditions and restrictions on issuance set forth herein and, in the Restated Certificate of
Incorporation, as then amended.




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



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



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



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



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



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



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



41









 





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



          Executed at San Jose, California on October 26, 1999.



	 	 	 	 	 
	 

	 	Albert E. Sisto,	 	 
	 

	 	President and Chief Executive Officer	 	 
	 

	 	  

	 	 
	 

	 	Stuart J. Nichols, Secretary	 	 






42









 






EXHIBIT B




FORM OF RIGHTS CERTIFICATE




     Certificate No. R- ______ Rights



     NOT EXERCISABLE AFTER THE EARLIER OF (i) OCTOBER 22, 2009 (ii) THE DATE TERMINATED BY THE
COMPANY, OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS
AGREEMENT.] *




 






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





43









 










RIGHTS CERTIFICATE

PHOENIX TECHNOLOGIES LTD.




     This certifies that __________________, or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Amended and Restated Preferred Shares Rights Agreement
dated effective as of August ___, 2007 (the “Rights Agreement”), between Phoenix Technologies
Ltd., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A. ( the “Rights
Agent”), to purchase from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M., New York time, on October 22, 2009 at the
office of the Rights Agent designated for such purposes, or at the office of its successor as
Rights Agent, one one-thousandth (1/1,000) of a fully paid non- assessable share of Series B
Participating Preferred Stock, $.001 par value, (the “Preferred Shares”), of the Company, at an
Exercise Price of Seventy-Five Dollars ($75.00) per one-thousandth of a Preferred Share (the
“Exercise Price”), upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of one-thousandths of a Preferred Share which may be purchased
upon exercise hereof) set forth above are the number and Exercise Price as of October 22, 1999
based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement,
the Exercise Price and the number and kind of Preferred Shares or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events.



     This Rights Certificate is subject to all of the terms, covenants and restrictions of the
Rights Agreement, which terms, covenants and restrictions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the office of the Rights Agent.



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



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



44









 





     No fractional portion of less than one one-thousandth of a Preferred Share will be issued upon
the exercise of any Right or Rights evidenced hereby but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.



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



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



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



	 	 	 	 	 
	 	ATTEST: PHOENIX TECHNOLOGIES LTD.

 	 
	 	
 	 
	 	 	 
	 	By:  	
 	 
	 



	 	 	 	 	 	 
	

Countersigned:





Computershare Trust Company, N.A., as Rights Agent

 	 	 
	By:  	
 	 	 
	 	Its:  	
 	 
	 	 	 
	 	 	 
	 	 	 
	 




45











 




Form of Reverse Side of Rights Certificate




FORM OF ASSIGNMENT



(To be executed by the registered holder if such holder desires to transfer the Rights Certificate)



FOR VALUE
RECEIVED __________________ hereby sells, assigns and transfers unto



 




(Please print name and address of transferee)



 




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




Dated: _______________, ____




_____________________________________________________




Signature




Signature Guaranteed:



Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings
and loan association or credit union with membership in an approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.




46









 








CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



     (1) this Rights Certificate [     ] is [     ] is not being sold, assigned and transferred by or on
behalf of a Person who is or was an Acquiring Person, or an Affiliate or Associate of any such
Person (as such terms are defined in the Rights Agreement); (2) after due inquiry and to the best
knowledge of the undersigned, it [     ] did [     ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate
or Associate of any such Person.



     Dated: _______________, ___



     _____________________________________________________




     Signature



     Signature Guaranteed:



     Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.



     Form of Reverse Side of Rights Certificate — continued



47









 





FORM OF ELECTION TO PURCHASE




     (To be executed if holder desires to exercise the Rights Certificate)




To: Phoenix Technologies Ltd.



The
undersigned hereby irrevocably elects to exercise ___________________ Rights represented by this
Rights Certificate to purchase the number of one- thousandths of a Preferred Share issuable upon
the exercise of such Rights and requests that certificates for such number of one-thousandths of a
Preferred



Share issued in the name of:



Please insert social security or other identifying number _______________________________________________________________



 




(Please print name and address)



 




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



Please insert social security or other identifying number 
_____________________________________________



 




(Please print name and address)



 




Dated: _______________, ___



_____________________________________________





Signature




Signature Guaranteed:




     Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.



48









 





CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



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



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



     Associate of any such Person.



     Dated: _______________, ___



     _____________________________________________




     Signature



     Signature Guaranteed:



     Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.



     Form of Reverse Side of Rights Certificate — continued



49









 





NOTICE




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



50









 





EXHIBIT C




STOCKHOLDER RIGHTS PLAN

PHOENIX TECHNOLOGIES LTD.




     Summary of Rights



     Distribution and Transfer of Rights;



     Rights Certificate: The Board of Directors has declared a dividend of one Right for
each share of Phoenix Technologies Ltd. Common Stock outstanding. Prior to the Distribution Date
referred to below, the Rights will be evidenced by and trade with the certificates for the Common
Stock. After the Distribution Date, Phoenix Technologies Ltd. (the “Company”) will mail Rights
certificates to the Company’s stockholders and the Rights will become transferable apart from the
Common Stock.



     Distribution Date: Rights will separate from the Common Stock and become exercisable
following (a) the tenth day (or such later date as may be determined by a majority of the Company’s
Board of Directors) after a person or group acquires beneficial ownership of 20% or more of the
Company’s Common Stock or (b) the tenth business day (or such later date as may be determined by a
majority of the Company’s Board of Directors) after a person or group announces a tender or
exchange offer, the consummation of which would result in ownership by a person or group of 20% or
more of the Company’s Common Stock.



     Preferred Stock Purchasable Upon Exercise of Rights: After the Distribution Date,
each Right will entitle the holder to purchase for $75.00 (the “Exercise Price”), a fraction of a
share of the Company’s Preferred Stock with economic terms similar to that of one share of the
Company’s Common Stock.



     Flip-In: If an acquirer (an “Acquiring Person”) obtains 20% or more of the Company’s
Common Stock then each Right (other than Rights owned by an Acquiring Person or its affiliates)
will entitle the holder thereof to purchase, for the Exercise Price, a number of shares of the
Company’s Common Stock having a then current market value of twice the Exercise Price.



     Flip-Over: If, after an Acquiring Person obtains 20% or more of the Company’s Common
Stock, (a) the Company merges into another entity, (b) an acquiring entity merges into the Company
or (c) the Company sells more than 50% of the Company’s assets or earning power, then each Right
(other than Rights owned by an Acquiring Person or its affiliates) will entitle the holder thereof
to purchase, for the Exercise Price, a number of shares of Common Stock of the person engaging in
the transaction having a then current market value of twice the Exercise Price.



     Exchange Provision: At any time after the date an Acquiring Person obtains 20% or
more of the Company’s Common Stock and prior to the acquisition by the Acquiring Person of 50% of
the outstanding Common Stock, a majority of the Company’s Board of Directors may exchange the
Rights (other than Rights owned by the Acquiring Person or its affiliates), in whole or in part,
for shares of Common Stock of the Company at an exchange ratio of one share of Common Stock per
Right (subject to adjustment).



51









 





     Redemption of the Rights: Rights will be redeemable at the Company’s option for
$0.001 per Right at any time on or prior to the tenth day (or such later date as may be determined
by a majority of the Company’s Board of Directors) public announcement that a Person has acquired
beneficial ownership of 20% or more of the Company’s Common Stock (the “Shares Acquisition Date”).



     Expiration of the Rights: The Rights expire on the earliest of (a) October 22, 2009
or (b) exchange or redemption of the Rights as described above.



     Amendment of Terms of Rights: The terms of the Rights and the Rights Agreement may be
amended in any respect without the consent of the Rights holders on or prior to the Distribution
Date; thereafter, the terms of the Rights and the Rights Agreement may be amended without the
consent of the Rights holders in order to cure any ambiguities or to make changes which do not
adversely affect the interests of Rights holders (other than the Acquiring Person).



     Voting Rights: Rights will not have any voting rights.



     Anti-Dilution Provisions: Rights will have the benefit of certain customary
anti-dilution provisions.



     Taxes: The Rights distribution should not be taxable for federal income tax purposes.
However, following an event which renders the Rights exercisable or upon redemption of the Rights,
stockholders may recognize taxable income.



     The foregoing is a summary of certain principal terms of the Stockholder Rights Plan only and
is qualified in its entirety by reference to the detailed terms of the Amended and Restated
Preferred Shares Rights Agreement dated as of October 5, 2007, between the Company and the Rights
Agent.



     THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE
RIGHTS AGENT DATED AS OF October 5, 2007.




52