Document:

Exhibit 10.76.1

         AMENDMENT NO. 1 TO THE CREDIT AGREEMENT dated as of December 4, 2003
among HEADWATERS INCORPORATED, a Delaware corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders parties to the
Credit Agreement referred to below (collectively, the "Lenders") and GENERAL
ELECTRIC CAPITAL CORPORATION, as agent (the "Agent") for the Lenders.

         PRELIMINARY STATEMENTS:

         (1) The Borrower, the Subsidiary Guarantors (as defined therein), the
Lenders and the Agent have entered into a Credit Agreement dated as of September
19, 2002 (as amended, supplemented or otherwise modified through the date
hereof, the "Credit Agreement"). Capitalized terms not otherwise defined in this
Amendment have the same meanings as specified in the Credit Agreement.

         (2) The Borrower and the Required Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.

         (3) The Required Lenders are, on the terms and conditions stated below,
willing to grant the request of the Borrower and the Borrower and the Required
Lenders have agreed to amend the Credit Agreement as hereinafter set forth.

SECTION 1. Amendment to Credit Agreement. The Credit Agreement is, effective as
of the date hereof and subject to the satisfaction of the conditions precedent
set forth in Section 2, hereby amended as follows:

                  (a) The definition of "Excess Cash Flow" contained in Article
         I of the Credit Agreement is amended by (i) deleting clause (b)(vi)
         therein and (ii) renumbering the existing clause (b)(vii) as clause
         (b)(vi).

                  (b) Section 2.05(b)(i) is amended by adding at the end of the
         first sentence thereof the phrase "less the aggregate principal amount
         of all optional prepayments of the Facilities made during such Fiscal
         Year pursuant to Section 2.05 (so long as, in the case of the Revolving
         Credit Facility, such prepayment is accompanied by a permanent
         reduction in the Revolving Credit Commitments)".

                  (c) Section 5.02(f) is amended by replacing each reference
         therein to "$10,000,000" with the number "$25,000,000".

                  (d) Section 5.02(f) is amended by adding at the end of each of
         clauses (i) and (vii)(D), the following sub-clause (aa):

                           "and (aa) the aggregate amount of Net Cash Proceeds
                  from the sale or issuance by the Borrower or any of its
                  Restricted Subsidiaries of any Equity Interests not required
                  to prepay the Advances pursuant to Section 2.05(b)(iii);
                  provided that the sum of (x), (y), (z) and (aa) shall not
                  exceed $50,000,000 in the aggregate;"

<PAGE>

                  (e) Section 5.02(j) is amended by replacing clause (iv)
         therein with the following clause (iv):

                           "(iv) prepayments of the Debt in respect of the
                  Mezzanine Facility with the Net Cash Proceeds from the sale or
                  issuance by the Borrower or any of its Restricted Subsidiaries
                  of any Equity Interests or Subordinated Debt to the extent
                  that such Net Cash Proceeds are not required to prepay the
                  Facilities pursuant to Section 2.05(b),".

SECTION 2. Conditions of Effectiveness. This Amendment shall become effective as
of the date first above written when, and only when, the Agent shall have
received counterparts of this Amendment executed by the Borrower and the
Required Lenders or, as to any of the Lenders, advice satisfactory to the Agent
that such Lender has executed this Amendment and the consent attached hereto
executed by each Loan Party (other than the Borrower). This Amendment is subject
to the provisions of Section 9.01 of the Credit Agreement. Section 1 hereof
shall become effective when, and only when, the Agent shall have additionally
received all of the following documents, each such document (unless otherwise
specified) dated the date of receipt thereof by the Agent (unless otherwise
specified) and in sufficient copies for each Lender, in form and substance
satisfactory to the Agent (unless otherwise specified):

                  (a) Counterparts of the Consent appended hereto (the
         "Consent"), executed by each of the Loan Parties (other than the
         Borrower).

                  (b) A certificate signed by a duly authorized officer of the
         Borrower stating that:

                           (i) The representations and warranties contained in
                  Section 3 are correct on and as of the date of such
                  certificate as though made on and as of such date other than
                  any such representations or warranties that, by their terms,
                  refer to a date other than the date of such certificate; and

                           (ii) No event has occurred and is continuing that
                  constitutes a Default.

SECTION 3. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:

                  (a) The execution, delivery and performance by the Borrower of
         this Amendment and the Credit Agreement as amended by this Amendment
         are within the Borrower's corporate powers, have been duly authorized
         by all necessary corporate action and do not (i) contravene the
         Borrower's charter or by-laws, (ii) violate any law, rule or regulation
         (including, without limitation, Regulation X of the Board of Governors
         of the Federal Reserve System), or any order, writ, judgment,
         injunction, decree, determination or award, binding on or affecting the
         Borrower or any of its Subsidiaries or any of their properties, (iii)
         conflict with or result in the breach of, or constitute a default
         under, any contract, loan agreement, indenture, mortgage, deed of
         trust, lease or other instrument binding on or affecting the Borrower,
         any of its Subsidiaries or any of their properties or (iv) except for
         the Liens created under the Collateral Documents result in or require
         the creation or imposition of any Lien upon or with respect to any of

                                       2
<PAGE>

         the properties of the Borrower or any of its Subsidiaries, except such
         contraventions, violations or conflicts which could not be reasonably
         likely to have a Material Adverse Effect.

                  (b) No Governmental Authorization and no notice to or filing
         with, any Governmental Authority or any other third party is required
         for the due execution, delivery or performance by the Borrower of this
         Amendment or the Credit Agreement as amended by this Amendment.

                  (c) This Amendment has been duly executed and delivered by the
         Borrower. This Amendment and the Credit Agreement as amended by this
         Amendment are legal, valid and binding obligations of the Borrower,
         enforceable against the Borrower in accordance with their respective
         terms, except to the extent that such enforcement may be subject to
         applicable bankruptcy, insolvency, reorganization, moratorium or other
         laws of general application relating to or affecting enforcement of
         creditors' rights and laws concerning equitable remedies.

SECTION 4. Reference to and Effect on the Loan Documents. (a) On and after the
effectiveness of this Amendment, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof' or words of like import referring to the
Credit Agreement, and each reference in the Notes and each of the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof' or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.

                  (b) The Credit Agreement, the Notes and each of the other Loan
         Documents, as specifically amended by this Amendment, are and shall
         continue to be in full force and effect and are hereby in all respects
         ratified and confirmed. Without limiting the generality of the
         foregoing, the Collateral Documents and all of the Collateral described
         therein do and shall continue to secure the payment of all Obligations
         of the Loan Parties under the Loan Documents, as amended by this
         Amendment.

                  (c) The execution, delivery and effectiveness of this
         Amendment shall not, except as expressly provided herein, operate as a
         waiver of any right, power or remedy of any Lender or the Agent under
         any of the Loan Documents, nor constitute a waiver of any provision of
         any of the Loan Documents.

SECTION 5. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all
costs and expenses of the Agent in connection with the preparation, execution,
delivery and administration, modification and amendment of this Amendment and
the other instruments and documents to be delivered hereunder (including,
without limitation, the reasonable fees and expenses of counsel for the Agent)
in accordance with the terms of Section 9.04 of the Credit Agreement.

SECTION 6. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of

                                       3
<PAGE>

which taken together shall constitute but one and the same agreement. Delivery
of an executed counterpart of a signature page to this Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this
Amendment.

SECTION 7. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                       4
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                           HEADWATERS INCORPORATED

                                           By: /s/ Harlan M. Hatfield
                                              ----------------------------------
                                               Title: Secretary, V.P.

                                       5
<PAGE>

                                           GENERAL ELECTRIC CAPITAL CORPORATION,
                                           as Agent and as Lender

                                           By: /s/ Richard W. Moskwa
                                              ----------------------------------
                                              Title: Manager-Operations

                                       6
<PAGE>

                                           ARK II CLO 2001-1, Limited

                                           By: Patriarch Partners II, LLC,
                                               as Collateral Manager

                                           By: /s/ Lynn Tilton
                                              ----------------------------------
                                              Title: Manager

                                       7
<PAGE>

                                          Aurum CLO 2002-1 Ltd.,
                                          by Columbia Management Advisors, Inc.,
                                          as Investment Manager

                                          By: /s/ James R. Fellows
                                             -----------------------------------
                                             Title: Sr. Vice President &
                                             Portfolio Manager

                                       8
<PAGE>

                                          CIT LENDING SERVICES CORPORATION

                                          By: /s/ John T. Sirico
                                             -----------------------------------
                                             Title: Vice President

                                       9
<PAGE>

                                         Columbian Floating Rate Advantage Fund,
                                         by Columbian Management Advisors, Inc.
                                         as Advisor

                                         By: /s/ James R. Fellows
                                            ------------------------------------
                                            Title: Sr. Vice President &
                                            Portfolio Manager

                                       10
<PAGE>

                                        Franklin CLO I, Limited
                                        Franklin CLO II, Limited
                                        Franklin CLO III, Limited
                                        Franklin CLO IV, Limited
                                        Franklin Floating Rate Trust
                                        Franklin Floating Rate Master Series
                                        Franklin Floating Rate Daily Access Fund

                                        By: /s/ Tyler Chan
                                           -------------------------------------
                                           Title: Asst. Vice President

                                       11
<PAGE>

                                      GoldenTree High Yield Opportunities II, LP
                                      By: GoldenTree Asset Management, LP

                                      By: /s/ Fred Haddad
                                         ---------------------------------------
                                         Title: Portfolio Manager

                                       12
<PAGE>

                                       GoldenTree High Yield Opportunities I, LP
                                       By: GoldenTree Asset Management, LP

                                       By: /s/ Fred Haddad
                                          --------------------------------------
                                          Title: Portfolio Manager

                                       13
<PAGE>

                                        GoldenTree Loan Opportunities I, Limited
                                        By: GoldenTree Asset Management, LP

                                        By: /s/ Fred Haddad
                                           -------------------------------------
                                            Title: Portfolio Manager

                                       14
<PAGE>

                                       GoldenTree Loan Opportunities II, Limited
                                       By: GoldenTree Asset Management, LP

                                       By: /s/ Fred Haddad
                                          --------------------------------------
                                           Title: Portfolio Manager

                                       15
<PAGE>

                                       ORIX FUNDING LLC

                                       By: /s/ Ann E. Morris
                                          --------------------------------------
                                          Title: Asst. Vice President

                                       16
<PAGE>

                                      Reliant Standard Life Insurance
                                      By: GoldenTree Asset Management, LP

                                      By: /s/ Fred Haddad
                                         ---------------------------------------
                                         Title: Portfolio Manager

                                       17
<PAGE>

                                                  SRF 2000, INC.

                                                  By: /s/ Ann E. Morris
                                                     ---------------------------
                                                     Title: Asst. Vice President

                                       18
<PAGE>

                                              SunAmerica Life Insurance Company

                                              By: /s/ W. Jeffrey Baxter
                                                 -------------------------------
                                                 Title: Vice President

                                       19
<PAGE>

                                             University of Chicago
                                             By: GoldenTree Asset Management, LP

                                             By: /s/ Fred Haddad
                                                --------------------------------
                                                Title: Portfolio Manager

                                       20
<PAGE>

Agreed as of the date first above written:

Zions Bank

By: /s/ Tracy Groll
-----------------------
Title: Vice President

                                       21
<PAGE>

                                     CONSENT

                                                    Dated as of December 4, 2003

         Each of the undersigned, as Loan Parties under the Loan Documents
referred to in the Credit Agreement referred to in the foregoing Amendment,
hereby consents to such Amendment and hereby confirms and agrees that (a)
notwithstanding the effectiveness of such Amendment, each Loan Document to which
such Loan Party is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, except that, on and
after the effectiveness of such Amendment, each reference in each such Loan
Document to the "Credit Agreement", "thereunder", "thereof' or words of like
import shall mean and be a reference to the Credit Agreement, as amended by such
Amendment, and (b) the Collateral Documents to which such Loan Party is a party
and all of the Collateral described therein do, and shall continue to, secure
the payment of all of the Secured Obligations (in each case, as defined
therein).

                                   HEADWATERS TECHNOLOGY INNOVATION GROUP, INC.,

                                   HEADWATERS NANOKINETIX, INC.,

                                   HEADWATERS CLEAN COAL CORP.,

                                   HYDROCARBON TECHNOLOGIES, INC.,

                                   COVOL SERVICES CORPORATION,

                                   HTI CHEMICAL SUB, INC.
                                   F/K/A CHEMSAMPCO, INC.,

                                   HEADWATERS OLYSUB CORPORATION,

                                   UTAH SYNFUEL #1, L.P.

                                   By  /s/ Harlan M. Hatfield
                                   Name: Harlan M. Hatfield
                                   Title: Vice President, General Counsel and
                                          Secretary

                                       22
<PAGE>

                                   AMERICAN CONSTRUCTION MATERIALS, INC.,

                                   GLOBAL CLIMATE RESERVE CORPORATION,

                                   ISG RESOURCES, INC.,

                                   BEST MASONY & TOOL SUPPLY, INC.
                                   F/K/A J. MARVIN ISAAC INTERESTS, INC.,

                                   LEWIS W. OSBORNE, INC.,

                                   UNITED TERRAZZO SUPPLY CO, INC.,

                                   MAGNA WALL, INC.,

                                   ISG MANUFACTURED PRODUCTS, INC.,

                                   ISG PARTNER, INC.,

                                   ISG CAPITAL CORPORATION,

                                   ISG SWIFT CRETE, INC.,

                                   DON'S BUILDING SUPPLY, L.P.,

                                   PALESTINE CONCRETE TITLE COMPANY, L.P.

                                   By  /s/ Brett A. Hickman
                                   Name: Brett A. Hickman
                                   Title: Senior Vice President,
                                   General Counsel and Secretary

                                       23Exhibit
4.2

INTERWAVE
COMMUNICATIONS INTERNATIONAL LTD.

AND

WELLS FARGO BANK MINNESOTA, N.A.

 

 

 

 

PREFERRED SHARE RIGHTS AGREEMENT

Dated as of December 2, 2003

 

 

 

 

 

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

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Countersignature and Registration

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 6.

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

  	
  11

  
	
   

  	
   

  	
   

  
	
  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

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Record Date

  	
  15

  
	
   

  	
   

  	
   

  
	
  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

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 13.

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

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Fractional Rights and Fractional Shares

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Rights of Action

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agreement of Rights Holders

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Rights Certificate Holder Not Deemed a Shareholder

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning the Rights Agent

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger or Consolidation or Change of Name of Rights Agent

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Duties of Rights Agent

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Change of Rights Agent

  	
  32

  

 

-ii-

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Issuance of New Rights Certificates

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 23.

  	
  Redemption

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Exchange

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Notice of Certain Events

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Notices

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Supplements and Amendments

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 28.

  	
  Successors

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 29.

  	
  Determinations and Actions by the Board of Directors, etc

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 30.

  	
  Benefits of this Agreement

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Severability

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Governing Law

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Counterparts

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 34.

  	
  Descriptive Headings

  	
  38

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Resolutions of the Board of Directors Designating the Rights,
  Preferences and Privileges of Series A Participating Preferred Shares

  
	
   

  	
   

  
	
  Exhibit B

  	
  Form of Rights Certificate

  
	
   

  	
   

  
	
  Exhibit C

  	
  Summary of Rights

  

 

-iii-

 

PREFERRED
SHARE RIGHTS AGREEMENT

This Preferred Share
Rights Agreement is dated as of December 2, 2003, between Interwave Communications International Ltd.,
a company organized under the laws of Bermuda, (the “Company”), and Wells Fargo
Bank Minnesota, N.A. (the “Rights
Agent”).

On December 2, 2003 (the  “Rights Grant Date”), the Board of Directors of the
Company authorized and granted one Preferred Share Purchase Right (a  “Right”) for each Common Share (as hereinafter
defined) of the Company issued and outstanding as of the Close of Business (as
hereinafter defined) on December 30, 2003 (the “Record Date”), each Right representing the
right to purchase one one-thousandth (0.001) of a Series A Participating
Preferred Share (as such number may be adjusted pursuant to the provisions of
this Agreement), having the rights, preferences and privileges set forth in the
resolutions of the Board of Directors of the Company passed on December 2,
2003, designating the rights, preferences and privileges of Series A
Participating Preferred Shares attached hereto as Exhibit A, upon the
terms and subject to the conditions herein set forth, and further authorized
and directed the issuance of one Right (as such number may be adjusted pursuant
to the provisions of this Agreement) with respect to each Common Share that
shall become outstanding between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter
defined), and in certain circumstances after the Distribution Date.

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

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

(a)           “Acquiring Person” shall mean any Person, who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 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 entity
holding Common Shares for or pursuant to the terms of any such plan.   Notwithstanding the foregoing, no Person
shall be deemed to be an Acquiring Person as the result of an acquisition of
Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 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 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
Section 1(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
Section 1(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 Section 1(a), then such Person shall not be
deemed to be or to have become an “Acquiring Person” for any purposes of this
Agreement including, without limitation Section 1(gg) hereof; and (ii) if,
as of the date hereof, any Person is the Beneficial Owner of 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 Section 1(a),
unless and until such time as such Person shall become the Beneficial Owner of
additional Common Shares (other than pursuant to a dividend or distribution
paid or made by the Company on the outstanding Common Shares in Common Shares
or pursuant to a split or subdivision of the outstanding Common Shares),
unless, upon becoming the Beneficial Owner of such additional Common Shares,
such Person is not then the Beneficial Owner of 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, 

-2-

 

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

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

(g)           “Common Share Equivalents” shall have the meaning set
forth in Section 11(a)(iii) hereof. 
“Common Shares”
when used with reference to the Company shall mean common shares in the capital
of the Company, par value at $0.01 per share. 
Common Shares when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.

-3-

 

(h)           “Companies Act” means the Companies Act 1981
of Bermuda, as amended.

(i)            “Company” shall mean Company, a Bermuda company, subject
to the terms of Section 13(a)(iii)(C) hereof.

(j)            “Current Per Share Market Price” of any security (a
“Security” for purposes of this definition), for all computations other than
those made pursuant to Section 11(a)(iii) hereof, shall mean the average
of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to 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 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 (x) the Current Per Share Market Price
of the Common Shares as determined pursuant to this Section 1(j), as
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof, multiplied by (y) 1,000.  If the Security is not publicly held or so
listed or traded, Current Per Share Market Price shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.

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

-4-

 

(l)            “Distribution Date” shall mean the earlier of
(i) the Close of Business on the tenth (10th) day (or such
later date as may be determined by action of the Company’s Board of Directors)
after the Shares Acquisition Date (or, if the tenth (10th) day after
the Shares Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date) and (ii) the Close of Business on the tenth
(10th) Business Day (or such later date as may be determined by
action of the Company’s Board of Directors) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if, assuming the successful consummation
thereof, such Person would be an Acquiring Person.

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

(n)           “Exchange Act” shall mean the United States 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 of the
Company orders the exchange of the Rights as provided in Section 24
hereof.

(r)            “Final Expiration Date” shall mean December 30, 2013.

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

(t)            “Person” shall mean any individual, firm, partnership,
corporation, company or other entity, and shall include any successor (by
merger, amalgamation 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 Series A Participating
Preferred Shares, par value $0.001 per share, in the capital of the Company.

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

-5-

 

(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.

(bb)         “Rights Agent” shall mean (i) Wells Fargo Bank
Minnesota, N.A., (ii) its successor or replacement as provided in
Sections 19 and 21 hereof or (iii) any additional Person appointed
pursuant to Section 2 hereof.

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

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

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

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

(gg)         “Securities Act” shall mean the United States Securities
Act of 1933, as amended.

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

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

(jj)           “Subsidiary” of any Person shall mean any corporation or
other entity of which an amount of voting securities sufficient to elect a
majority of the directors or Persons having 

-6-

 

similar authority of such corporation or other entity
is beneficially owned, directly or indirectly, by such Person, or any corporation
or other entity otherwise controlled by such Person.

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

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

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

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

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

Section 2.               Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable,
upon ten (10) days’ prior written notice to the Rights Agent.  The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
co-Rights Agent.  In the event that the
Company appoints one or more co-Rights Agents, the respective duties of the
Rights Agent and such co-Rights Agent(s) shall be as the Company determines and
shall not be inconsistent with this Agreement.

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 the underlying 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 

-7-

 

soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Rights Certificate evidencing one
Right for each Common Share so held, subject to adjustment as provided
herein.  In the event that an adjustment
in the number of Rights per Common Share has been made pursuant to
Section 11 hereof, then at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights (in accordance with
Section 14(a) hereof).  As of 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.

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

“THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN INTERWAVE
COMMUNICATIONS INTERNATIONAL LTD. AND WELLS FARGO BANK MINNESOTA, N.A., AS THE
RIGHTS AGENT, DATED AS OF DECEMBER 2, 2003 (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 INTERWAVE COMMUNICATIONS
INTERNATIONAL 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. THE COMPANY WILL MAIL TO THE HOLDER OF
THIS CERTIFICATE A COPY OF THE 

-8-

 

RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST
THEREFOR.  UNDER CERTAIN CIRCUMSTANCES
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO
IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY
OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND
VOID.”

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

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

Section
4.               Form of Rights Certificates.

(a)           The Rights Certificates (and the
forms of election to purchase Common Shares and of assignment to be printed on
the reverse thereof) shall be substantially in the form of Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate 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 a national market system, on which the Rights may from time to time
be listed or included, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date (or in the case of Rights
issued with respect to Common Shares issued by the Company after the Record
Date, as of the date of issuance of such Common Shares) and on their face shall
entitle the holders thereof to purchase such number of one-thousandths (0.001)
of a Preferred Share as shall be set forth therein at the price set forth
therein (such exercise price per one one-thousandth (0.001) of a Preferred
Share being hereinafter referred to as the  “Exercise Price”
and the aggregate Exercise Price of all Preferred Shares issuable upon exercise
of one Right being hereinafter referred to as the  “Total Exercise
Price”), but the number and type of securities purchasable (or
the amount of cash or other assets that may be acquired) 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 

-9-

 

of an Acquiring Person, (ii) a Post-Event
Transferee, (iii) a Pre-Event Transferee or (iv) any subsequent
transferee receiving transferred Rights from a Post-Event Transferee or a
Pre-Event Transferee, either directly or through one or more intermediate
transferees, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence, shall contain (to
the extent feasible) the following legend:

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

Section
5.               Countersignature and
Registration.

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

(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.

-10-

 

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

(a)           Subject to the provisions of
Sections 7(e), 14 and 24 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of one-thousandths (0.001) of a Preferred Share (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Rights Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Rights Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose.  Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and duly executed 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 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 from the
registered holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.

(b)           Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and, 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.

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

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

(b)           The Exercise Price for each
one-thousandth (0.001) of a Preferred Share issuable pursuant to the exercise
of a Right shall initially be $39.00, shall be subject to adjustment 

-11-

 

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

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

-12-

 

(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, agreement, 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 use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights or to any other Person as a result of its failure to make any
determinations hereunder with respect to an Acquiring Person or any of such
Acquiring Person’s Affiliates, Associates or transferees.

(f)            Notwithstanding anything in this
Agreement or any Rights Certificate 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
Section 7 unless such registered holder shall, in addition to having
complied with the requirements of subsection 7(a), have (i) completed and
duly executed the certificate contained in the form of election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.

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

-13-

 

Certificates, and
in such case shall deliver a certificate attesting to the destruction thereof
to the Company.

Section
9.               Reservation and Availability
of Preferred Shares.

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

(b)           If the Company shall hereafter list
any of its Preferred Shares on a national securities exchange, then so long as
the Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) issuable and deliverable upon exercise
of the Rights may be listed on such exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable
(but only to the extent that 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 and, if appropriate, under the
Companies 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 and, if appropriate, the
Companies Act) until the earlier of (A) the date as of which the Rights
are no longer exercisable for such securities and (B) 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 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 and remains effective.

-14-

 

(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 authorized, validly issued and fully
paid and nonassessable.

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

Section 10.             Record
Date. Each Person in whose name any certificate for a number of
one-thousandths (0.001) of a Preferred Share (or other securities of the Company)
is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of Preferred Shares (or other securities of
the Company) represented thereby on, and shall be registered as such holder on
and such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Total Exercise
Price with respect to which the Rights have been exercised (and any applicable
transfer taxes) 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 shall be registered as such holder on and such
certificate shall be dated, the next succeeding Business Day on which the
transfer books of the Company are open. 
Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a holder of Preferred
Shares (or other securities of the Company) for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.

Section 11.             Adjustment
of Exercise Price, Number of Shares or Number of Rights. The Exercise
Price, the number and kind of securities, amount of cash 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.

(a)           (i)            Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the date of this Agreement (A) declare a
dividend or distribution on the Preferred Shares payable in Preferred Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine or
consolidate the outstanding Preferred Shares (by reverse stock split 

-15-

 

or otherwise) into a smaller number of Preferred
Shares, or (D) issue any shares in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation,
amalgamation or merger in which the Company is a 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 distribution or of
the effective date of such subdivision, combination, consolidation 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 other
shares 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 the
Company issuable upon exercise of such Right; and (2) the number of
one-thousandths (0.001) of a Preferred Share (or such other share as
hereinbefore provided) issuable upon the exercise of each Right shall equal the
number of one-thousandths (0.001) of a Preferred Share (or such other share as
hereinbefore provided) as was issuable upon exercise of a Right immediately
prior to the occurrence of the event described in clauses (A)-(D) of this
Section 11(a)(i), multiplied by the Adjustment Fraction; provided,
however, that, no such adjustment shall be made pursuant to this
Section 11(a)(i) to the extent that there shall have simultaneously
occurred an event described in clause (A), (B), (C) or (D) of
Section 11(n) with a proportionate adjustment being made thereunder. Each
Common Share that shall become outstanding after an adjustment has been made
pursuant to this Section 11(a)(i) shall have associated with it the number
of Rights, exercisable at the Exercise Price and for the number of one-thousandths
(0.001) of a Preferred Share (or such other shares as hereinbefore provided) as
one Common Share has associated with it immediately following the adjustment
made pursuant to this Section 11(a)(i).

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

-16-

 

(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 Memorandum of
Association or Bye-laws 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 shares
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 shares are herein
called  “Common Share Equivalents”)),
except to the extent that the Company has not obtained any necessary
shareholder or regulatory approval for such issuance, (4) debt securities
of the Company, except to the extent that the Company has not obtained any
necessary shareholder or regulatory approval for such issuance, (5) other
assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Company’s Board of Directors based upon the advice of a nationally recognized
investment banking firm selected by the Company’s Board of Directors; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a Triggering Event and
(y) the date on which the Company’s right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein
as the  “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Exercise Price, Common Shares
(to the extent available), except to the extent that the Company has not
obtained any necessary shareholder or regulatory approval for such issuance,
and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread.  If the Company’s
Board of Directors shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights or that any necessary regulatory approval for
such issuance will be obtained, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares or take
action to obtain such regulatory approval (such period, as it may be extended,
the  “Substitution Period”).  To the extent that the Company determines that some action
need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization
of additional shares, to take any action to obtain any required regulatory
approval and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the 

-17-

 

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 Share 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 or exchangeable for Preferred Shares or
Equivalent Shares at a price per share (or having a conversion or exchange
price per share, if a security convertible into or exchangeable for 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 or exchange price of the convertible or
exchangeable 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 or
exchangeable securities so to be offered are initially convertible or
exchangeable); 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 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 (if such ownership or
holding is permitted by applicable law) 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 payment of a
dividend or the making of a distribution to all holders of the Preferred Shares
or of any class or series of Equivalent Shares (including any such dividend or
distribution made in connection with a consolidation, amalgamation or merger in
which the Company is a continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any,
or a dividend or distribution payable in Preferred Shares) or subscription
rights, options or warrants (excluding those referred to in
Section 11(b)), then, in each 

-18-

 

such case, the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the Current Per Share Market Price of a Preferred Share or an
Equivalent Share on such record date, less the fair market value per Preferred
Share or Equivalent Share (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) 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 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
dividend or distribution is not so made, the Exercise Price shall be adjusted
to be the Exercise Price which would have been in effect if such record date
had not been fixed.

(d)           Anything herein to the contrary
notwithstanding, no adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) of the Exercise Price; provided, however, that any
adjustments which by reason of this Section 11(d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this
Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth (0.0001) of a Common Share or other share or one
hundred-thousandth (0.00001) of a Preferred Share, as the case may be.  Notwithstanding the first sentence of this
Section 11(d), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date
of the transaction which requires such adjustment or (ii) the Expiration
Date.

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

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

-19-

 

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

(h)           The Company may elect on or after the
date of any adjustment of the Exercise Price as a result of the calculations
made in Section 11(b) or (c) to adjust the number of Rights, in
substitution for any adjustment in the number of Preferred Shares purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of
one-thousandths (0.001) of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. 
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
hundred-thousandth (0.00001)) obtained by dividing the Exercise Price in effect
immediately prior to adjustment of the Exercise Price by the Exercise Price in effect
immediately after adjustment of the Exercise Price.  The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made.  This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but, if any Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement.  If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(h), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment.  Rights
Certificates so to be distributed shall be issued, executed and 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
(0.001) of a Preferred Share and the number of one-thousandths (0.001) of a
Preferred Share which were expressed in the initial Rights Certificates issued
hereunder without prejudice to any such adjustment or change.

-20-

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

(k)           In any case in which this
Section 11 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the holder of any
Right exercised after such record date of the number of one-thousandths (0.001)
of a Preferred Share and other shares or securities of the Company, if any,
issuable upon such exercise over and above the number of one-thousandths
(0.001) of a Preferred Share and other shares 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 or securities
(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 bonus
issues 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 holders or shall reduce the taxes
payable by such holders.

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

(n)           In the event that the Company shall
at any time after the date of this Agreement (A) declare a dividend or
distribution on the Common Shares payable in Common Shares, (B) subdivide
the outstanding Common Shares, (C) combine or consolidate the outstanding
Common Shares (by reverse stock split or otherwise) into a smaller number of
Common Shares, or (D) issue any shares in a reclassification of the Common
Shares (including any such reclassification in connection with a consolidation,
amalgamation or merger in which the Company is a continuing or surviving
corporation), then, in each such event, except as otherwise provided in this
Section 11(a) and Section 7(e) hereof: (1) each Common Share (or
other shares issued in such 

-21-

 

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
distribution or of the effective date of such subdivision, combination,
consolidation 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 the
Company issuable upon exercise of such Right; and (3) the number of
one-thousandths (0.001) of a Preferred Share (or such other shares) issuable
upon the exercise of each Right outstanding after such event shall equal the
number of one-thousandths (0.001) of a Preferred Share (or such other shares)
as were issuable with respect to one Right immediately prior to such event.
Each Common Share that shall become outstanding after an adjustment has been
made pursuant to this Section 11(n) shall have associated with it the
number of Rights, exercisable at the Exercise Price and for the number of
one-thousandths (0.001) of a Preferred Share (or such other shares) 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 and 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the 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 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 or amalgamate
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 jurisdiction of incorporation of the Company and which complies with
Section 11(m) hereof);

 

-22-

 

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

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

then, concurrent
with and in each such case,

(A)          each holder of a Right (except as
provided in Section 7(e) hereof) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the Total Exercise Price
applicable immediately prior to the occurrence of the Section 13 Event in
accordance with the terms of this Agreement, such number of duly authorized,
validly issued, fully paid, nonassessable and freely 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 an amount equal to
fifty percent (50%) of the Current Per Share Market Price of the Common Shares
of such Principal Party on the date of consummation of such Section 13
Event, provided, however, that the Exercise Price and the number of
Common Shares of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with
Section 11(e) hereof;

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

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

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

(E)           upon the subsequent occurrence of any
consolidation, amalgamation, 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, 

 

-23-

 

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) 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.

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

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

(i)    in the case of any transaction described in
clause (i) or (ii) of Section 13(a) hereof: (A) the Person that
is the issuer of the securities into which the Common Shares are converted in
such merger, amalgamation 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
amalgamation or consolidation; and

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

-24-

 

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, and, if appropriate, the Companies 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 and, if
appropriate, the Companies Act) until the Expiration Date, and similarly comply
with applicable state securities laws;

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

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

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

(d)           In case the “Principal Party” for
purposes of Section 13(b) hereof has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other 

 

-25-

 

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 or
exchangeable for, or convertible into, Common Shares or Equivalent Shares of
such Principal Party at less than such then Current Per Share Market Price, or
(ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Shares of such Principal Party
pursuant to the provisions of Section 13 hereof, then, in such event, the
Company hereby agrees with each holder of Rights that it shall not consummate
any such transaction unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have
been canceled, waived or amended, or that the authorized securities shall be redeemed,
so that the applicable provision will have no effect in connection with or as a
consequence of, the consummation of the proposed transaction.

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

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

Section 14.             Fractional Rights and Fractional
Shares.

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

(b)           The Company shall not be required to
issue fractions of Preferred Shares (other than fractions that are integral
multiples of one one-thousandth (0.001) of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred
Shares 

 

-26-

 

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

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

(d)           The holder of a Right by the
acceptance of the Right expressly waives his or her right to receive any
fractional Rights or any fractional shares (other than fractions that are
integral multiples of one one-thousandth (0.001) of a Preferred Share) upon
exercise of a Right.

Section 15.             Rights
of Action. All rights of action in respect of this Agreement, excepting the
rights of action given to the Rights Agent pursuant to Section 18
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his or her own behalf and
for his or her own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in
respect of, his or her right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Agreement.

 

-27-

 

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 principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates fully
completed and duly executed; and

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

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

Section 18.             Concerning the Rights Agent.

(a)           The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.  In no event will the Rights Agent be liable
for special, 

 

-28-

 

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 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 corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of 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 the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:

 

-29-

 

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

(b)           Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of Current Per Share Market
Price) be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by 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
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

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

(d)           The Rights Agent shall not be liable
for or by reason of any of the statements of fact or recitals contained in this
Agreement or in the 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 be under
any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the validity or execution
of any Rights Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after receipt by the Rights Agent of a certificate furnished pursuant to
Section 12 describing such change or adjustment); 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 duly authorized, validly issued, fully paid and
nonassessable.

(f)            The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, 

 

-30-

 

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 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 by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date on which any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of
an omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.

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

(i)            The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.

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

 

-31-

 

(k)           If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer without
first consulting with the Company.

Section 21.             Change
of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon 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 a corporation organized
and doing business under the laws of the United States or of any state of the
United States, in good standing, which is authorized under such laws to
exercise corporate trust or shareholder services powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at least
$100 million.  After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the 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 

-32-

 

Shares following
the Distribution Date and prior to the redemption or expiration of the Rights,
the Company (a) shall, with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement or upon the exercise, conversion or exchange of other securities of
the Company outstanding at the date hereof or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company and (b) may, in
any other case, if deemed necessary or appropriate by the Board of Directors of
the Company, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued and this sentence
shall be null and void ab initio if, and to the extent that, such
issuance or this sentence would create a significant risk of or result in
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued or would create a significant risk of or
result in such options or employee plans or arrangements failing to qualify for
otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

Section 23.             Redemption.

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

-33-

 

holder receives the notice.  Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. 
Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Common Shares prior to
the Distribution Date.

Section 24.             Exchange.

(a)           Subject to applicable laws, rules and
regulations, and subject to subsection 24(c) below, the Company may, at its
option, by action of the Board of Directors of the Company, 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 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, share consolidation or subdivision, stock
dividend, bonus issue or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the  “Exchange Ratio”).
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.

(b)           Immediately upon the action of the
Board of Directors ordering the exchange of any Rights pursuant to
subsection 24(a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall give public notice of any
such exchange; 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 a majority of the Board of
Directors of the Company, 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 

-34-

 

value equal to the Current Value, in lieu of issuing
Common Shares in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment banking
firm selected by majority vote of the Board of Directors, or (iii) deliver
any combination of cash, property, Common Shares and/or other securities having
a value equal to the Current Value in exchange for each Right. For purposes of
this Section 24(c) only, the Current Value shall mean the product of the Current
Per Share Market Price of Common Shares on the date of the occurrence of the
event described above in subsection (a), multiplied by the number of Common
Shares for which the Right otherwise would be exchangeable if there were
sufficient shares available.  To the
extent that the Company determines that some action need be taken pursuant to
clauses (i), (ii) or (iii) of this Section 24(c), the Board of
Directors may temporarily suspend the exercisability of the Rights for a period
of up to sixty (60) days following the date on which the event described in
Section 24(a) shall have occurred, in order to seek any authorization of
additional Common Shares and/or to decide the appropriate form of distribution
to be made pursuant to the above provision and to determine the value
thereof.  In the event of any such
suspension, the Company shall issue a public announcement 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 with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Common Share (as
determined pursuant to the second sentence of Section 1(j) hereof).

(e)           The Company may, at its option, by
majority vote of the Board of Directors of the Company, 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; 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.

-35-

 

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 each holder of Rights in accordance with
Section 26 hereof at least twenty (20) days prior to occurrence of such
Triggering Event or such Section 13 Event.

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

 

Interwave Communications International Ltd.

2495 Leghorn Street

Mountain View, California  94043

Attention:  Cal R. Hoagland,
Chief Financial Officer

with a copy to:

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94304-1050

Attention:  Christopher D.
Mitchell

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 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:

Wells Fargo Bank Minnesota, N.A.

161 N Concord Exchange Street

St. Paul, MN 55075-1139

Attention:  John D. Baker

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 shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the Company.

-36-

 

Section 27.             Supplements
and Amendments. Prior to the Distribution Date, the Company may supplement
or amend this Agreement in any respect without the approval of any holders of
Rights and the Rights Agent shall, if the Company so directs, execute such
supplement or amendment.  From and after
the Distribution Date, the Company and the Rights Agent may from time to time
supplement or amend this Agreement without the approval of any holders of
Rights in order to (i) cure any ambiguity, (ii) correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any
manner that the Company may deem necessary or desirable and that shall not
adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided,
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then redeemable or (B) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person).  Upon the delivery of
a certificate from an appropriate officer of the Company 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 (i) to interpret the provisions of this Agreement and (ii) to
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 and all other parties and (y) with respect to claims specifically
arising from the Agreement, not subject the Board to any liability to the
holders of the Rights.

Section 30.             Benefits
of this Agreement. Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and the registered holders
of the 

-37-

 

Rights (and, prior
to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim pursuant to this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights (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 effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated
and shall not expire until the Close of Business on the tenth day following the
date of such determination by the Board of Directors.

Section 32.             Governing
Law. This Agreement and each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
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.

-38-

 

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

 

	
  “COMPANY”

  	
  INTERWAVE COMMUNICATIONS

  INTERNATIONAL LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CAL R. HOAGLAND

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Cal R. Hoagland

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “RIGHTS
  AGENT”

  	
  WELLS
  FARGO BANK MINNESOTA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN D. BAKER

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John D. Baker

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Assistant Vice President

  

 

 

 

 

-39-

EXHIBIT A

RESOLUTIONS OF THE BOARD
OF DIRECTORS OF INTERWAVE

COMMUNICATIONS INTERNATIONAL LTD.

DESIGNATING THE RIGHTS, PREFERENCES AND PRIVILEGES OF SERIES A

PARTICIPATING PREFERRED SHARES

Pursuant to the authority
vested in the Board of Directors of Interwave Communications International Ltd.
(the “Company”) by Section 3.1(a)(i) of the Bye-Laws of said Company, the said
Board of Directors of the Company on December 2, 2003 adopted the following
resolutions creating a series of 340,000 Preferred Shares designated as Series
A Participating Preferred Shares:

“RESOLVED:  That pursuant to the authority vested in the
Board of Directors of the Company by Section 3.1(a)(i) of the Bye-Laws of the
Company, the Board of Directors does hereby provide for the creation of a
series of Preferred Shares of the Company and does hereby fix and herein state
and express the designations, rights, preferences, privileges and restrictions
of such series of Preferred Shares as follows:

Section 1.               Designation
and Amount.  The shares of such
series shall be designated as “Series A Participating Preferred Shares.” The Series A
Participating Preferred Shares shall have a par value of USD $0.001 per share,
and the number of shares constituting such series shall be 340,000.

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

Section 3.               Dividends and Distributions.

(a)           Subject to the prior and superior
right of the holders of any class or series of shares of the Company ranking
prior and superior to the Series A Participating Preferred Shares with respect
to dividends or distributions, the holders of Series A Participating Preferred
Shares shall be entitled to receive if, as and when declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the last day of March, June, September and December in each
year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing
on the first Quarterly Dividend Payment Date after the first issuance of a
Series A Participating Preferred Share or fraction thereof, 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 Common Shares or a subdivision of 

A-1

 

the outstanding Common Shares (by reclassification or otherwise),
declared on the Common Shares since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any Series A Participating Preferred Share or
fraction thereof.

(b)           The Company shall declare a dividend
or distribution on the Series A Participating Preferred Shares as provided in
and subject to the terms of paragraph (a) above immediately after it declares a
dividend or distribution on the Common Shares (other than a dividend payable in
Common Shares).

(c)           Dividends shall begin to accrue on
outstanding Series A Participating Preferred Shares from the Quarterly Dividend
Payment Date next preceding the date of issue of such Series A Participating
Preferred Shares, 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 Series A
Participating Preferred Shares 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 Series
A Participating Preferred Shares 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 Series A Participating
Preferred Shares entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.

Section 4.               Voting
Rights.  The holders of Series A
Participating Preferred Shares shall have the following voting rights:

(a)           Each
Series A Participating Preferred Share shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the Shareholders of the
Company.

(b)           Except
as otherwise provided herein or by law, the holders of Series A Participating
Preferred Shares and the holders of Common Shares shall vote together as though
they were one class on all matters submitted to a vote of Shareholders of the
Company.

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

Section 5.               Certain Restrictions.

(a)           The
Company shall not declare any dividend on, make any distribution on, or redeem
or purchase or otherwise acquire for consideration any Common Shares after the
first 

 

A-2

 

issuance of a
Series A Participating Preferred Share or fraction thereof unless concurrently
therewith it shall declare a dividend on the Series A Participating Preferred
Shares as required by Section 3 hereof.

(b)           Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Participating Preferred Shares as provided in Section 3 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on Series A Participating Preferred Shares outstanding
shall have been paid in full, the Company 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 the Company ranking junior (either as to dividends
and distributions or upon liquidation, dissolution or winding up) to the Series
A Participating Preferred Shares;

(ii)      declare or pay dividends on, or make any
other distributions on any shares of the Company ranking on a parity (either as
to dividends or distributions or upon liquidation, dissolution or winding up)
with the Series A Participating Preferred Shares, except dividends or
distributions paid ratably on the Series A Participating Preferred Shares and
all such parity shares on which dividends or distributions 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 any shares of the Company ranking on a parity (either as to
dividends and distributions or upon liquidation, dissolution or winding up)
with the Series A Participating Preferred Shares, provided that the Company may
at any time redeem, purchase or otherwise acquire shares of any such parity
shares in exchange for any shares of the Company ranking junior (either as to
dividends or distributions or upon dissolution, liquidation or winding up) to
the Series A Participating Preferred Shares;

(iv)     purchase or otherwise acquire for
consideration any Series A Participating Preferred Shares, or any shares of the
Company ranking on a parity with the Series A Participating Preferred Shares,
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 A classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.

(c)           The
Company shall not permit (to the extent it has the power not to permit) any
subsidiary of the Company to purchase or otherwise acquire for consideration
any shares of the Company unless the Company could, under paragraph (a) of this
Section 5, purchase or otherwise acquire such shares at such time and in
such manner as specified therein.

Section 6.               Reacquired
Shares.  Any Series A Participating
Preferred Shares purchased or otherwise acquired by the Company in any manner
whatsoever shall, as provided in the Companies 

A-3

 

Act 1981 of Bermuda (the “Act”), be treated as canceled.  All such shares shall upon their
cancellation become authorized but unissued Preferred Shares and may be
reissued as part of a new series of Preferred Shares to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein and in the Bye-Laws, as then in
force.

Section 7.               Liquidation,
Dissolution or Winding Up.  Upon any
liquidation, dissolution or winding up of the Company, the holders of Series A
Participating Preferred Shares 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 Common Shares, plus an amount equal to any accrued and unpaid
dividends on such Series A Participating Preferred Shares.

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

Section 9.               No
Redemption.  The Series A
Participating Preferred Shares shall not be redeemable.

Section 10.             Ranking.  The Series A Participating Preferred Shares
shall rank junior to all other series of the Company’s Preferred Shares as to
dividends and distributions and upon liquidation, dissolution or winding up,
unless the terms of any such series shall provide otherwise.

Section 11.             Amendment.  Neither the Bye-Laws of the Company nor
these resolutions creating the Series A Participating Preferred Shares shall be
amended in any manner which would materially alter or change the rights,
preferences or privileges of the Series A Participating Preferred Shares so as
to affect them adversely without the affirmative vote of the holders of a
majority of the outstanding Series A Participating Preferred Shares, voting
separately as a series.

Section 12.             Fractional
Shares.  Series A Participating
Preferred Shares 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 A Participating Preferred Shares.”

 

 

 

A-4

 

EXHIBIT B

FORM
OF RIGHTS CERTIFICATE

	
  Certificate No. R-

  	
   

  	
  Rights

  

NOT EXERCISABLE AFTER THE EARLIER OF (i) DECEMBER 30, 2013,
(ii) THE DATE TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY
EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT.  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.  [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). 
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF
SUCH RIGHTS AGREEMENT.]*

RIGHTS
CERTIFICATE

INTERWAVE COMMUNICATIONS
INTERNATIONAL 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 Rights
Agreement dated as of December 2, 2003, (the “Rights Agreement”), between Interwave
Communications International Ltd., a company organized under the laws of
Bermuda (the  “Company”), and Wells Fargo
Bank Minnesota, 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 December 30, 2013 at
the office of the Rights Agent designated for such purpose, or at the office of
its successor as

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

 

 

B-1

 

Rights Agent, one
one-thousandth (0.001) of a fully paid and non-assessable Series A
Participating Preferred Share, par value $0.001 per share (the  “Preferred Shares”), of the Company, at an Exercise
Price of $39.00 per one-thousandth (0.001) of a Preferred Share (the  “Exercise Price”), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed.  The number
of Rights evidenced by this Rights Certificate (and the number of
one-thousandths (0.001) of a Preferred Share which may be purchased upon
exercise hereof) set forth above are the number and Exercise Price as of
December 30, 2003 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, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights, which limitations of rights include the
temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement.  Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office of the Rights
Agent.

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

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

No fractional portion of
less than one one-thousandth (0.001) of a Preferred Share will be issued upon
the exercise of any Right or Rights evidenced hereby but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

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

B-2

 

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:

  	
   

  	
  Interwave Communications International Ltd.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo Bank Minnesota, N.A.

  	
   

  	
   

  	
   

  
	
  as Rights Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
						

B-3

 

Form of Reverse Side of
Rights Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate)

 

	
                                             FOR
  VALUE RECEIVED _______________ hereby sells, assigns and transfers
  unto

  

 

	
   

  
	
  (Please print name and address of transferee)

  
	
   

  
	
   

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

  
	
   

  
	
  Dated: _______________, ____

  
	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

Signature Medallion Guaranteed:

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

 

B-4

 

CERTIFICATE

The undersigned
hereby certifies by checking the appropriate boxes that:

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

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

 

	
  Dated: _______________, ____

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

Signature Medallion Guaranteed:

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

 

 

B-5

 

Form of Reverse Side of
Rights Certificate — continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder
desires to

exercise the Rights Certificate)

To:___________________________

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

Please insert
social security

or
other identifying number

 

	
   

  
	
  (Please print name and address)

  
	
   

  
	
   

  

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

Please insert
social security

or
other identifying number

 

	
   

  
	
  (Please print name and address)

  
	
   

  
	
   

  

 

	
  Dated: _______________, ____

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

Signature Medallion
Guaranteed:

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

 

B-6

 

CERTIFICATE

The undersigned hereby
certifies by checking the appropriate boxes that:

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

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

 

	
  Dated: _______________, ____

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

Signature Medallion Guaranteed:

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

 

B-7

 

Form of Reverse Side of
Rights Certificate — continued

NOTICE

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

 

 

 

B-8

 

EXHIBIT C

SHAREHOLDER RIGHTS PLAN

INTERWAVE
COMMUNICATIONS INTERNATIONAL LTD.

Summary of Rights

 

	
  Distribution
  and Transfer of Rights;  Rights Certificate:

  	
   

  	
  The Board of Directors has declared a dividend of one Right for each
  common share of Interwave Communications International Ltd. (the “Company”)
  outstanding.  Prior to the
  Distribution Date referred to below, the Rights will be evidenced by and
  trade with the certificates for the common shares.  After the Distribution Date, the Company will mail Rights
  certificates to the Company’s shareholders and the Rights will become
  transferable apart from the common shares.

  
	
   

  	
   

  	
   

  
	
  Distribution
  Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Preferred
  Shares Purchasable Upon Exercise of Rights:

  	
   

  	
  After the Distribution Date, each Right will entitle the holder to
  purchase for $39.00 (the “Exercise Price”), a fraction of a Preferred Share of
  the Company with economic terms similar to that of one common share of the
  Company.

  
	
   

  	
   

  	
   

  
	
  Flip-In:

  	
   

  	
  If an acquirer (an “Acquiring Person”) obtains 20% or more of the
  Company’s common shares, 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 common shares of the Company
  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 shares, (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
  common shares of the person engaging in the transaction having a then current
  market value of twice the Exercise Price.

  
	
   

  	
   

  	
   

  
	
  Exchange
  Provision:

  	
   

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

  

 

C-1

 

	
  Redemption
  of the Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Expiration
  of the Rights:

  	
   

  	
  The Rights expire on the earliest of (a) December 30, 2013 or
  (b) exchange or redemption of the Rights as described above.

  
	
   

  	
   

  	
   

  
	
  Amendment
  of Terms of Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Voting
  Rights:

  	
   

  	
  Rights will not have any voting rights.

  
	
   

  	
   

  	
   

  
	
  Anti-Dilution
  Provisions:

  	
   

  	
  Rights will have the benefit of certain customary anti-dilution
  provisions.

  
	
   

  	
   

  	
   

  
	
  Taxes:

  	
   

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

  

The foregoing is a
summary of certain principal terms of the Shareholder Rights Plan only and is
qualified in its entirety by reference to the Preferred Share Rights Agreement
dated as of December 2, 2003 between the Company and Wells Fargo Bank
Minnesota, N.A. as Rights Agent (the “Rights Agreement”). 
The Rights Agreement may be amended from time to time.  A copy of the Rights Agreement was filed
with the Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated December 18, 2003. 
A copy of the Rights Agreement is available free of charge from the
Company.

 

C-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]