Document:

Exhibit 4.1

 

 

EVOLVING
SYSTEMS, INC.

 

AND

 

AMERICAN STOCK
TRANSFER & TRUST COMPANY LLC

 

AS RIGHTS
AGENT

 

RIGHTS
AGREEMENT

 

DATED AS OF MARCH 4,
2009

 

 

 

TABLE
OF CONTENTS

 

	
  Section 1.

  	
  Certain Definitions

  	
  1

  
	
  Section 2.

  	
  Appointment of Rights Agent

  	
  4

  
	
  Section 3.

  	
  Issue of Right Certificates

  	
  4

  
	
  Section 4.

  	
  Form of Right Certificates

  	
  6

  
	
  Section 5.

  	
  Countersignature and Registration

  	
  7

  
	
  Section 6.

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

  	
  7

  
	
  Section 7.

  	
  Exercise of Rights; Purchase Price; Expiration Date of Rights

  	
  8

  
	
  Section 8.

  	
  Cancellation and Destruction of Right Certificates

  	
  10

  
	
  Section 9.

  	
  Availability of Preferred Shares

  	
  10

  
	
  Section 10.

  	
  Preferred Shares Record Date

  	
  11

  
	
  Section 11.

  	
  Adjustment of Purchase Price, Number of Shares or Number of Rights

  	
  11

  
	
  Section 12.

  	
  Certificate of Adjusted Purchase Price or Number of Shares

  	
  18

  
	
  Section 13.

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

  	
  18

  
	
  Section 14.

  	
  Fractional Rights and Fractional Shares

  	
  21

  
	
  Section 15.

  	
  Rights of Action

  	
  22

  
	
  Section 16.

  	
  Agreement of Right Holders

  	
  23

  
	
  Section 17.

  	
  Right Certificate Holder Not Deemed a Stockholder

  	
  23

  
	
  Section 18.

  	
  Concerning the Rights Agent

  	
  23

  
	
  Section 19.

  	
  Merger or Consolidation or Change of Name of Rights Agent

  	
  24

  
	
  Section 20.

  	
  Duties of Rights Agent

  	
  24

  
	
  Section 21.

  	
  Change of Rights Agent

  	
  26

  
	
  Section 22.

  	
  Issuance of New Right Certificates

  	
  27

  
	
  Section 23.

  	
  Redemption

  	
  27

  
	
  Section 24.

  	
  Exchange

  	
  29

  
	
  Section 25.

  	
  Notice of Certain Events

  	
  30

  
	
  Section 26.

  	
  Notices

  	
  31

  
	
  Section 27.

  	
  Supplements and Amendments

  	
  32

  
	
  Section 28.

  	
  Determination and Actions by the Board of Directors, etc.

  	
  32

  
	
  Section 29.

  	
  Successors

  	
  33

  
	
  Section 30.

  	
  Benefits of this Agreement

  	
  33

  
	
  Section 31.

  	
  Severability

  	
  33

  
	
  Section 32.

  	
  Governing Law

  	
  33

  
	
  Section 33.

  	
  Counterparts

  	
  33

  
	
  Section 34.

  	
  Descriptive Headings

  	
  33

  

 

i

 

RIGHTS
AGREEMENT

 

THIS RIGHTS AGREEMENT (“Agreement”),
dated as of March 4, 2009, between EVOLVING SYSTEMS, INC., a Delaware corporation
(the “Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY LLC (“Rights
Agent”).

 

The Board of Directors of the
Company has authorized and declared a dividend of one preferred share purchase
right (a “Right”) for each Common Share (as such term is hereinafter defined)
outstanding at the close of business on March 16, 2009 (the “Record Date”),
each Right representing the right to purchase one one-hundredth of a Preferred
Share (as such term is hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest to occur of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined); provided,
however, that Rights may be issued with respect to Common Shares
that shall become outstanding after the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date in accordance with
the provisions of Section 22 hereof.

 

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

 

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

 

(a)           “Acquiring Person” shall mean any
Person (as such term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter defined) of
22.5% or more of the Common Shares then outstanding.  Notwithstanding the foregoing, (i) the
term Acquiring Person shall not include (A) the Company, (B) any
Subsidiary (as such term is hereinafter defined) of the Company, (C) any
employee benefit or compensation plan of the Company or any Subsidiary of the
Company, (D) any Person holding Common Shares for or pursuant to the terms
of any such employee benefit or compensation plan, and (ii) no Person
shall become an “Acquiring Person”: (A) 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 22.5% or more of the Common Shares then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 22.5% or more of
the Common Shares then outstanding by reason of share purchases by the Company
and shall, following written notice from, or public disclosure by the Company
of such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares without the prior consent of the Company and shall
then Beneficially Own more than 22.5% of the Common Shares then outstanding,
then such Person shall be deemed to be an “Acquiring Person,” (B) a Person
who would otherwise be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this Section 1(a), has become such as a result of
the acquisition of Common Shares directly from the Company or pursuant to the
exercise of options pursuant to the option plan of the Company; provided,
however, that if such Person shall purchase additional Common Shares after
becoming the Beneficial Owner of 22.5% or more of the Common Shares then
outstanding, such Person shall be deemed an “Acquiring Person,”

 

1

 

subject to the exceptions set forth in this Section 1(a),
or (C) if the 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,
and such Person divests, as promptly as practicable (as determined in good faith
by the Board of Directors), but in any event within five Business Days,
following receipt of written notice from the Company of such event, of
Beneficial Ownership of 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 no
longer be deemed to be an “Acquiring Person” for purposes of this Agreement;
provided, however, that if such Person shall again become the Beneficial Owner
of 22.5% or more of the Common Shares then outstanding, such Person shall be
deemed an “Acquiring Person,” subject to the exceptions set forth in this Section 1(a).

 

(b)           “Affiliate” and “Associate” shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), as in effect on the date of this Agreement.

 

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

 

(i)            which such Person or any of such
Person’s Affiliates or Associates is deemed to beneficially own, within the
meaning of Rule 13d-3 and Rule 13d-5 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Rights
Agreement;

 

(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; provided,
that such securities are disposed of by the underwriter or selling group
members within 40 days after the date of such acquisition) or upon the exercise
of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, 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 (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 if the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or

 

(iii)          which are beneficially owned, directly
or indirectly, by any other Person with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities, provided, that such securities are
disposed of by the underwriter or selling group members within

 

2

 

40 days after the date of such acquisition)
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B) hereof) or
disposing of any securities of the Company.

 

Notwithstanding anything in
this definition of Beneficial Ownership to the contrary, the phrase, “then
outstanding,” when used with reference to a Person’s Beneficial Ownership of
securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially hereunder.

 

Notwithstanding the foregoing,
no officer or director of the Company shall be deemed to Beneficially Own any
securities of any other Person solely by virtue of any actions such officer or
director takes in such capacity.

 

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

 

(e)           “Close of Business” on any given date
shall mean 5:00 p.m., Eastern Standard Time, on such date; provided,
however, that if such date is not a Business Day it shall mean 5:00 p.m.,
Eastern Standard Time, on the next succeeding Business Day.

 

(f)            “Common Shares” shall mean the
shares of common stock, par value $0.001 per share, of the Company; provided,
however, that, “Common Shares,” when used in this Agreement in connection with
a specific 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.

 

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

 

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

 

(i)            “Interested Stockholder” shall mean
any Acquiring Person or any Affiliate or Associate of an Acquiring Person or
any other Person in which any such Acquiring Person, Affiliate or Associate has
an interest, or any other Person acting directly or indirectly on behalf of or
in concert with any such Acquiring Person, Affiliate or Associate.

 

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

 

(k)           “Preferred Shares” shall mean shares
of Series C Junior Participating Preferred Stock, par value $0.001 per
share, of the Company having the designations and the powers, preferences and
rights, and the qualifications, limitations and restrictions set forth in the Form of
Certificate of Designation attached to this Agreement as Exhibit A.

 

3

 

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

 

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

 

(n)           “Shares Acquisition Date” shall mean
the first date of public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such; provided, however that, if such
Person is determined not to have become an Acquiring Person pursuant to clause (B) or
(C) of Section 1(a)(ii) hereof, then no Shares Acquisition Date
shall be deemed to have occurred.

 

(o)           “Subsidiary” of any Person shall mean
any corporation, limited partnership, limited liability company or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.

 

(p)           “Transaction” shall mean any merger,
consolidation or sale of stock or assets described in Section 13(a) hereof
or any acquisition of Common Shares which would result in a Person becoming an
Acquiring Person or a Principal Party (as such term is hereinafter defined).

 

(q)           “Transaction Person” with respect to
a Transaction shall mean (i) any Person who (A) is or will become an
Acquiring Person or a Principal Party if the Transaction were to be consummated
and (B) directly or indirectly proposed or nominated a director of the
Company which director is in office at the time of consideration of the
Transaction, or (ii) an Affiliate or Associate of such a Person.

 

Section 2.               Appointment of Rights Agent.  The Company hereby appoints the Rights Agent
to act as agent for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.  The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.

 

Section 3.               Issue
of Right Certificates.

 

(a)           Until the earlier of (i) the
Shares Acquisition Date or (ii) the tenth Business Day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement
(determined in accordance with Rule 14d-2 under the Exchange Act) 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
holding Common Shares for or pursuant to the terms of any such plan) of, or of
the first public announcement of the intention of 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 holding Common Shares
for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer (which intention to commence remains in effect for five Business
Days after such announcement), the consummation of which would result in any
Person becoming an Acquiring Person (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights) (the earlier of
such dates in clauses (i) and (ii) of this Section 3(a) being
herein referred to as the “Distribution Date”); provided, however, that if any tender or exchange offer
referred to in clause

 

4

 

(ii) of this Section 3(a) is
cancelled, terminated or otherwise withdrawn prior to the Distribution Date
without the purchase of any Common Shares pursuant thereto, such offer shall be
deemed, for purposes of this Section 3(a), never to have been made, (x) the
Rights will be evidenced by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y) the
Rights (and the right to receive Right Certificates therefor) will be transferable
only in connection with the transfer of Common Shares.  As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid mail, to each record
holder of Common 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 Right
Certificate, in substantially the form of Exhibit B hereto (a “Right
Certificate”), evidencing one Right for each Common Share so held, subject to
the adjustment provisions of Section 11 herein.  As of the Distribution Date, the Rights will
be evidenced solely by such Right Certificates.

 

(b)           On the Record Date, or as soon as
practicable thereafter, the Company will send (directly or through the Rights
Agent or its transfer agent) a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto
(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.  With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date,
notwithstanding the absence of the legend set forth in Section 3(c), the
Rights will be evidenced by such certificates registered in the names of the
holders thereof.  Until the Distribution
Date (or the earlier of the Redemption Date and the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby.

 

(c)           Certificates for Common Shares which
become outstanding (including, without limitation, reacquired Common Shares
referred to in this Section 3(c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise affixed to
them the following legend:

 

This certificate also evidences
and entitles the holder hereof to certain rights as set forth in a Rights
Agreement between Evolving Systems, Inc. (the “Corporation”) and American
Stock Transfer & Trust Company LLC, as Rights Agent (the “Rights Agent”),
dated as of March 4, 2009, as amended from time to time (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of the
Corporation.  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 Corporation will mail
to the holder of this certificate a copy of the Rights Agreement without charge
after

 

5

 

receipt of a written request
therefor addressed to the Secretary of the Corporation.  As described in the Rights Agreement, Rights
issued to any Person who becomes an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and certain related
persons, whether currently held by or on behalf of such Person or by any
subsequent holder, shall become null and void.

 

With respect to such
certificates containing the foregoing legend, until the Distribution 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. 
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. 
Notwithstanding this Section 3(c), the omission of a legend shall
not affect the enforceability of any part of this Rights Agreement or the
rights of any holder of the Rights.

 

If the Common Shares issued
after the Record Date but prior to the Distribution Date shall be
uncertificated, the registration of such Common Shares on the stock transfer
books of the Company shall evidence one Right for each Common Share represented
thereby and the Company shall mail to every Person that holds such Common
Shares a confirmation of the registration of such Common Shares on the stock
transfer books of the Company, which confirmation will have impressed, printed,
written or stamped thereon or otherwise affixed thereto the above legend.  The Company shall mail or arrange for the
mailing of a copy of this Agreement to any Person that holds Common Shares, as
evidenced by the registration of the Common Shares in the name of such Person
on the stock transfer books of the Company, without charge, after the receipt
of a written request therefor.

 

Section 4.               Form of Right
Certificates.

 

(a)           The Right Certificates (and the form
of election to purchase Preferred Shares, the form of assignment and the form
of certification to be printed on the reverse thereof) shall be substantially
the same as 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 quotation system on
which the Rights may from time to time be listed, or to conform to usage.  Subject to the provisions of Section 7, Section 11
and Section 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-hundredths of a Preferred Share as
shall be set forth therein at the price per one one-hundredth of a Preferred
Share set forth therein (the “Purchase Price”), but the number of such one
one-hundredths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.

 

6

 

(b)           Any Right Certificate issued pursuant
to Section 3(a) or Section 22 hereof that represents Rights
which are null and void pursuant to Section 11(a)(ii) hereof and any
Right Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence shall contain (to the extent feasible)
the following legend:

 

The Rights represented by this Right 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 Right
Certificate and the Rights represented hereby are null and void.

 

The provisions of Section 11(a)(ii) hereof
shall be operative whether or not the foregoing legend is contained on any such
Right Certificate.

 

Section 5.               Countersignature and
Registration.  The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, its Vice Chairman of the Board, its
Chief Financial Officer, or any of its Vice Presidents, either manually or by
facsimile signature, shall have affixed thereto the Company’s seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature.  The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned.  In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.  Each Right Certificate shall be dated as of
the date of the countersignature by the Rights Agent.

 

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

 

Section 6.               Transfer, Split Up,
Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.  Subject
to the provisions of Section 11(a)(ii), Section 14 and Section 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 earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of one one-hundredths of a Preferred Share as the

 

7

 

Right Certificate or Right Certificates
surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office 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 Right Certificate until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right 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 Section 11(a)(ii), Section 14 and Section 24
hereof, countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.  The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

 

Upon receipt by the Company and
the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company’s request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will issue, execute and deliver a new Right Certificate of like tenor
to the Rights Agent for countersignature and delivery to the registered holder
in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

 

Notwithstanding any other
provisions hereof, the Company and the Rights Agent may amend this Rights
Agreement to provide for uncertificated Rights in addition to or in place of
Rights evidenced by Rights Certificates.

 

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

 

(a)           The
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share (or such other number of shares or other securities) as to
which the Rights are exercised, at or prior to the earliest of (i) the
Close of Business on March 4, 2019 (the “Final Expiration Date”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof
(the “Redemption Date”), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.

 

(b)           The purchase price (the “Purchase
Price”) for each one one-hundredth of a Preferred Share pursuant to the
exercise of a Right shall initially be $8.00 and shall be subject to adjustment
from time to time as provided in Section 11 and Section 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with Section 7(c) below.

 

8

 

(c)           Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9
hereof by certified check, cashier’s check, bank draft or money order payable
to the order of the Company, the Rights Agent shall thereupon promptly (i) (A) request
from any transfer agent for the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder into a depository,
request from the depositary agent depositary receipts representing such number
of one one-hundredths of a Preferred Share as are to be purchased (in which
case certificates for the Preferred Shares represented by such receipts shall
be deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, request from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Right Certificate.  In the event that the Company is obligated to
issue securities of the Company other than Preferred Shares (including Common
Shares) of the Company pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when appropriate.

 

In addition, in the case of an
exercise of the Rights by a holder pursuant to Section 11(a)(ii) hereof,
the Rights Agent shall return such Right Certificate to the registered holder
thereof after imprinting, stamping or otherwise indicating thereon that the rights
represented by such Right Certificate no longer include the rights provided by Section 11(a)(ii) hereof,
and, if fewer than all the Rights represented by such Right Certificate were so
exercised, the Rights Agent shall indicate on the Right Certificate the number
of Rights represented thereby which continue to include the rights provided by Section 11(a)(ii) hereof.

 

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

 

(e)           The Company covenants and agrees that
it will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares or any Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the exercise in full
of all outstanding Rights in accordance with this Section 7.

 

(f)            Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and signed the
certification following the

 

9

 

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

 

Section 9.               Availability
of Preferred Shares.

 

(a)           The Company covenants and agrees that

 

(i)            so long as the Preferred Shares
(and, after the time a person becomes an Acquiring Person, Common Shares or any
other securities) issuable upon the exercise of the Rights may be listed on any
national securities exchange or quotation system, the Company shall use its
commercially reasonable best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed
on such exchange or quotation system upon official notice of issuance upon such
exercise;

 

(ii)           it will take all such action as may
be necessary to ensure that all Preferred Shares (or Common Shares and other
securities, as the case may be) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or other securities; and

 

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

 

10

 

(b)           As soon as practicable after the
Distribution Date, the Company shall use its commercially reasonably best
efforts to:

 

(i)            prepare and file a registration
statement under the Securities Act of 1933, as amended (the “Act”), with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, will use its commercially reasonably best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and will use its commercially reasonably best
efforts to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the Final
Expiration Date; and

 

(ii)           use its commercially reasonably best
efforts to qualify or register the Rights and the securities purchasable upon
exercise of the Rights under the “Blue Sky” laws of such jurisdictions as may
be necessary or appropriate.

 

Section 10.             Preferred Shares Record Date.  Each person in whose name any certificate for
Preferred Shares or other securities is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares or other securities represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered with the forms of election and
certification duly executed and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred Shares or other
securities transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Shares
or other securities transfer books of the Company are open.  Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate, as such, shall not be entitled to
any rights of a holder of Preferred Shares 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 Purchase Price,
Number of Shares or Number of Rights. 
The Purchase Price, the number of Preferred Shares 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) In the event the Company
shall at any time after the date of this Agreement (A) declare a dividend
on the Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving Company), except as otherwise provided
in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been

 

11

 

exercised immediately prior to such date and
at a time when the Preferred Shares transfer books of the Company were open,
such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.  If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to any adjustment required pursuant to Section 11(a)(ii) hereof.

 

(ii)           Subject to Section 24 hereof and
the provisions of the next paragraph of this Section 11(a)(ii), in the
event any Person shall become an Acquiring Person, each holder of a Right
shall, for a period of 60 days after the later of such time any Person becomes
an Acquiring Person or the effective date of an appropriate registration
statement under the Act pursuant to Section 9 hereof (provided, however
that, if at any time prior to the expiration or termination of the Rights there
shall be a temporary restraining order, a preliminary injunction, an
injunction, or temporary suspension by the Board of Directors, or similar
obstacle to exercise of the Rights (the “Injunction”) which prevents exercise
of the Rights, a new 60-day period shall commence on the date the Injunction is
removed), have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares as shall equal the result obtained by (A) multiplying the
then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (B) 50%
of the then current per share market price of the Common Shares (determined
pursuant to Section 11(d) hereof) on the date such Person became an
Acquiring Person; provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).  In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action which would eliminate or diminish the benefits intended to
be afforded by the Rights.

 

Notwithstanding anything in
this Agreement to the contrary, from and after the time any Person becomes an
Acquiring Person, any Rights beneficially owned by (1) such Acquiring
Person or an Associate or Affiliate of such Acquiring Person, (2) a
transferee of such Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person became such, or (3) a
transferee of such Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person’s
becoming such and receives such Rights pursuant to either (x) 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 (y) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this Section 11(a)(ii),
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

 

12

 

otherwise.  The Company shall use all reasonable efforts
to insure that the provisions of this Section 11(a)(ii) and Section 4(b) hereof
are complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.  No
Right Certificate shall be issued at any time upon the transfer of any Rights
to an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Right Certificate delivered
to the Rights Agent for transfer to an Acquiring Person or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate,
whose Rights would be void pursuant to the preceding sentence shall be
canceled.

 

(iii)          In lieu of issuing Common Shares in
accordance with Section 11(a)(ii) hereof, the Company may, if a
majority of the Board of Directors then in office determines that such action
is necessary or appropriate and not contrary to the interests of holders of
Rights, elect to (and, in the event that the Board of Directors has not
exercised the exchange right contained in Section 24(c) hereof and
there are not sufficient treasury shares and authorized but unissued Common
Shares to permit the exercise in full of the Rights in accordance with the
foregoing Section 11(a)(ii), the Company shall) take all such action as
may be necessary to authorize, issue or pay, upon the exercise of the Rights,
cash (including by way of a reduction of the Purchase Price), property, Common
Shares, other securities or any combination thereof having an aggregate value
equal to the value of the Common Shares which otherwise would have been issuable
pursuant to Section 11(a)(ii) hereof, which aggregate value shall be
determined by a nationally recognized investment banking firm selected by a
majority of the Board of Directors then in office.  For purposes of the preceding sentence, the
value of the Common Shares shall be determined pursuant to Section 11(d) hereof.  Any such election by the Board of Directors
must be made within 60 days following the date on which the event described in Section 11(a)(ii) hereof
shall have occurred.  Following the occurrence
of the event described in Section 11(a)(ii) hereof, a majority of the
Board of Directors then in office may suspend the exercisability of the Rights
for a period of up to 60 days following the date on which the event described
in Section 11(a)(ii) hereof shall have occurred to the extent that
such directors have not determined whether to exercise their rights of election
under this Section 11(a)(iii).  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.

 

(b)           In case the Company shall fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them to subscribe for or purchase Preferred Shares (or
shares having the same designations and the powers, preferences and rights, and
the qualifications, limitations and restrictions as the Preferred Shares (“equivalent
preferred shares”)) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as such term is
hereinafter defined) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial

 

13

 

conversion price of the convertible
securities so to be offered) would purchase at such current market price and
the denominator of which shall be the number of Preferred Shares outstanding on
such record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.  In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. 
Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

 

(c)           In case the Company shall fix a
record date for the making of a distribution to all holders of the Preferred
Shares (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving Company) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per share
market price of the Preferred Shares (as such term is hereinafter defined) on
such record date, less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one Preferred Share and the denominator of which
shall be such current per share market price of the Preferred Shares; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.

 

(d)           (i) For the purpose of any
computation hereunder, the “current per share market price” of any security (a “Security”
for the purpose of this Section 11(d)(i)) on any date shall be deemed to
be the average of the daily closing prices per share of such Security for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security or securities convertible into such shares,
or (C) any subdivision, combination or reclassification of such Security
and prior to the expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,

 

14

 

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 as reported on any tier
of the Nasdaq Stock Market or, if the Security is not listed or admitted to
trading on any national securities exchange or reported on any tier of the
Nasdaq Stock Market, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated
Quotations System (“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 or, if on any such date no professional market maker is making a market
in the Security, the price as determined in good faith by the Board of
Directors.  The term “Trading Day” shall
mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

 

(ii)           For the purpose of any computation
hereunder, the “current per share market price” of the Preferred Shares shall
be determined in accordance with the method set forth in Section 11(d)(i) hereof.  If the Preferred Shares are not publicly
traded, the “current per share market price” of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof) multiplied by one hundred.  If neither the Common Shares nor the
Preferred Shares are 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.

 

(e)           No adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one-hundredth of a
Preferred Share or one ten-thousandth of any other share or security as the
case may be.

 

Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date
of the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.

 

(f)            If as a result of an adjustment made
pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital

 

15

 

stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Shares contained in Section 11(a), Section 11(b) and
Section 11(c) hereof, and the provisions of Section 7, Section 9,
Section 10, Section 13 and Section 14 hereof with respect to the
Preferred Shares shall apply on like terms to any such other shares.

 

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

 

(h)           Unless the Company shall have
exercised its election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and
Section 11(c) hereof, each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth of a Preferred Share)
obtained by (i) multiplying (A) the number of one one-hundredths of a
Preferred Share covered by a Right immediately prior to this adjustment by (B) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.

 

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

 

16

 

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

 

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

 

(k)           Before taking any action that would
cause an adjustment reducing the Purchase Price below one one-hundredth of the
then par value, if any, of the Preferred Shares 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 fully paid and nonassessable Preferred Shares at such adjusted Purchase
Price.

 

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

 

(m)          The Company covenants and agrees that,
after the Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any action
the purpose of which is to, or if at the time such action is taken it is
reasonably foreseeable that the effect of such action is to, materially
diminish or eliminate the benefits intended to be afforded by the Rights.  Any such action taken by the Company during
any period after any Person becomes an Acquiring Person but prior to the
Distribution Date shall be null and void unless such action could be taken
under this Section 11(m) from and after the Distribution Date.

 

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

 

(o)           In the event that at any time after
the date of this Agreement and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of dividends in
Common

 

17

 

Shares) into a greater or lesser number of
Common Shares, then in any such case (A) the number of one one-hundredths
of a Preferred Share purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common Share
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each Common Share outstanding immediately prior to
such event had issued with respect to it. 
The adjustments provided for in this Section 11(o) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.

 

(p)           The exercise of Rights under Section 11(a)(ii) hereof
shall only result in the loss of rights under Section 11(a)(ii) hereof
to the extent so exercised and shall not otherwise affect the rights
represented by the Rights under this Agreement, including the rights
represented by Section 13 hereof.

 

Section 12.             Certificate of Adjusted Purchase
Price or Number of Shares.  Whenever
an adjustment is made as provided in Section 11 and Section 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 Common Shares or the Preferred Shares a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25 hereof.  The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
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 the
Shares Acquisition Date or, if a Transaction is proposed, the Distribution
Date, directly or indirectly (i) the Company shall consolidate with, or
merge with and into, any Interested Stockholder, or if in such merger or
consolidation all holders of Common Stock are not treated alike, any other
Person, (ii) any Interested Person, or if in such merger or consolidation
all holders of Common Stock are not treated alike, any other Person shall
consolidate with the Company, or merge with and into the Company, and the
Company shall be the continuing or surviving corporation of such merger (other
than, in the case of either transaction described in (i) or (ii), a merger
or consolidation which would result in all of the voting power represented by
the securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
securities of the surviving entity) all of the voting power represented by the
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation and the holders of such securities not
having changed as a result of such merger or consolidation), or (iii) the
Company shall sell, mortgage or otherwise transfer (or one or more of its
subsidiaries shall sell, mortgage or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its subsidiaries (taken as a whole) to any
Interested Stockholder or Stockholders, or if in such transaction all holders
of Common Stock are not treated alike, any other Person,

 

18

 

(other than the Company or any
Subsidiary of the Company in one or more transactions each of which
individually and the aggregate does not violate Section 13(d) hereof)
then, and in each such case, proper provision shall be made so that (A) each
holder of a Right, subject to Section 11(a)(ii) hereof, shall have
the right to receive, upon the exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of freely
tradeable Common Shares of the Principal Party (as such term is hereinafter
defined), free and clear of liens, rights of call or first refusal, encumbrances
or other adverse claims, as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable (without taking into
account any adjustment previously made pursuant to Section 11(a)(ii) hereof)
and dividing that product by (2) 50% of the then current per share market
price of the Common Shares of such Principal Party (determined pursuant to Section 11Section 11(d) hereof)
on the date of consummation of such consolidation, merger, sale or transfer; (B) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (C) the term “Company” shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such
Principal Party; and (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise
of the Rights.

 

(b)           “Principal Party”
shall mean:

 

(i)            in the case of any transaction
described in clause (i) or (ii) of the first sentence of Section 13(a) hereof,
the Person that is the issuer of any securities into which Common Shares are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to the merger or consolidation (or, if
applicable, the Company, if it is the surviving Corporation); and

 

(ii)           in the case of any transaction
described in (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;

 

provided, however, that in any case, (A) if
the Common Shares of such Person are not at such time and have not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect subsidiary or
Affiliate of another Person the Common Shares of which are and have been so
registered, “Principal Party” shall refer to such other Person; (B) if
such Person is a subsidiary, directly or indirectly, or Affiliate of more than
one Person, the Common Shares of two or more of which are and have been so
registered, “Principal Party” shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market value; and (C) if
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (A) and (B) above shall apply to each of
the chains of ownership having an interest in such joint venture as if such
party were a

 

19

 

“subsidiary” of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of such interests.

 

(c)           The Company shall not consummate any
such consolidation, merger, sale or transfer 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
each Principal Party and each other Person who may become a Principal Party as
a result of such consolidation, merger, sale or transfer shall have (i) executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in Section 13(a) and Section 13(b) hereof,
and (ii) prepared, filed and had declared and remain effective a
registration statement under the Act on the appropriate form with respect to
the Rights and the securities exercisable upon exercise of the Rights and
further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of stock or assets mentioned in Section 13(a),
the Principal Party at its own expense will:

 

(i)            cause the registration statement
under the Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the Final
Expiration Date;

 

(ii)           use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary or
appropriate;

 

(iii)          list the Rights and the securities
purchasable upon exercise of the Rights on each national securities exchange on
which the Common Shares were listed prior to the consummation of such
consolidation, merger, sale or transfer of stock or assets or on any tier of
the Nasdaq Stock Market if the Common Shares were listed on any tier of the
Nasdaq Stock Market or, if the Common Shares were not listed on a national
securities exchange or any tier of the Nasdaq Stock Market prior to the
consummation of the consolidation, merger, sale or transfer of stock or assets,
on a national securities exchange or any tier of the Nasdaq Stock Market; and

 

(iv)          deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates which comply in all material respects with the requirements for
registration on Form 10 under the Exchange Act.

 

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

 

(d)           After the Distribution Date, the
Company covenants and agrees that it shall not (i) consolidate with, (ii) merge
with or into, or (iii) sell or transfer to, in one or more transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its subsidiaries taken as a whole, any other Person
(other than a Subsidiary of the Company in a transaction which does not violate
Section 11(m) hereof), if (x) at the time of or after such
consolidation, merger or sale there are any charter or bylaw provisions or any

 

20

 

rights, warrants or other instruments or
securities outstanding, agreements in effect or any other action taken which
would diminish or otherwise eliminate the benefits intended to be afforded by
the Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who constitutes,
or would constitute, the “Principal Party” for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.  The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 13(d).

 

Section 14.             Fractional Rights and Fractional
Shares.

 

(a)           The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates which evidence
fractional Rights.  In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right.  For the purposes
of this Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.  The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or as
reported on any tier of the Nasdaq Stock Market or, if the Rights are not
listed or admitted to trading on any national securities exchange or reported
on any tier of the Nasdaq Stock Market, the last quoted price or, if not so
quoted, 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 Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors
of the Company.  If on any such date no
such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.

 

(b)           The Company shall not be required to
issue fractions of Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share).   Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts;
provided, however, that holders of such depositary receipts shall have all of
the designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts.  In lieu of fractional
Preferred Shares that are not integral multiples of one one-hundredth of a
Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time

 

21

 

such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of one
Preferred Share.  For the purposes of
this Section 14(b), the current market value of a Preferred Share shall be
the current per share market price of the Preferred Shares (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise (or, if not publicly traded, in accordance
with Section 11(d)(ii) hereof).

 

(c)           Following the occurrence of one of
the transactions or events specified in Section 11 hereof giving rise to
the right to receive Common Shares, capital stock equivalents (other than
Preferred Shares) or other securities upon the exercise of a Right, the Company
shall not be required to issue fractions of Common Shares or units of such
Common Shares, capital stock equivalents or other securities upon exercise of
the Rights or to distribute certificates which evidence fractional Common
Shares, capital stock equivalents or other securities.  In lieu of fractional Common Shares, capital
stock equivalents or other securities, the Company shall pay to the registered
holders of Right 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 one Common Share or unit of such Common Shares, capital stock equivalents or
other securities.  For purposes of this Section 14(c),
the current market value shall be the current per share market price (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise and, if such capital stock
equivalent is not traded, each such capital stock equivalent shall have the
value of one one-hundredth of a Preferred Share.

 

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

 

Section 15.             Rights of Action.  All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under Section 18
and Section 20 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares) and any registered holder of any Right
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 Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his 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 right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right 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.  Holders of Rights shall be
entitled to recover the reasonable costs and expenses, including attorneys
fees, incurred by them in any action to enforce the provisions of this
Agreement.

 

22

 

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

 

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

 

(b)           after the Distribution Date, the
Right Certificates are transferable (subject to the provisions of this Rights
Agreement) only on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and

 

(c)           the Company and the Rights Agent may
deem and treat the person in whose name the Right Certificate (or, prior to the
Distribution Date, the 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 Right 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.             Right Certificate Holder Not
Deemed a Stockholder.  No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Preferred 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
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance
with the provisions hereof.

 

Section 18.             Concerning the Rights Agent.  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 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.  The indemnity
provided herein shall survive the expiration of the Rights and the termination
of this Agreement.

 

The Rights Agent shall be
protected and shall incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for the
Preferred 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 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

 

23

 

forth in Section 20 hereof.  In no case will the Rights Agent be liable
for special, indirect, incidental or consequential or consequential loss or
damage at any kind whatsoever (including but not limited to lost profits), even
if the Rights Agent has been advised of such loss or damage.

 

Section 19.             Merger or Consolidation or
Change of Name of Rights Agent.  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 shareholder
services or 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 that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof.  In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.

 

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

 

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

 

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

 

(b)           Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and

 

24

 

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 negligence, bad
faith or willful misconduct.

 

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

 

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

 

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

 

(g)           The Rights Agent is hereby authorized
and directed to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice President, the
Secretary or the Treasurer 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 with respect to its duties or obligations under
this Agreement and the date on and/or after which such action shall be taken or
omitted and the Rights Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall not be less than three
Business Days after the date indicated in such application unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking or omitting

 

25

 

any such action, the Rights Agent has
received written instructions in response to such application specifying the
action to be taken or omitted.

 

 

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

 

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

 

(k)           If, with respect to any Right
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 not been executed, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer without
first consulting with the Company.

 

Section 21.             Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days’ notice in writing mailed to the Company and to each transfer agent for
the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail.  The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent for the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail.  If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be either (a) a corporation,
business trust or limited liability company organized and doing business under
the laws of the United States or of any other state of the United States which
is authorized under such laws to exercise

 

26

 

corporate trust or stock transfer powers and
is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million or (b) a direct or indirect wholly owned
subsidiary of such an entity or its wholly-owning parent.  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 for the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. 
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

 

Section 22.             Issuance of New Right
Certificates.  Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.  In addition, in connection with the issuance
or sale of Common Shares following the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date, 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 in existence prior to
the Distribution Date, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Company and in existence prior to
the Distribution Date, and (b) may, in any other case, if deemed necessary
or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) the Company shall not
be obligated to issue any such Right Certificates if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no Right
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 Rights may be redeemed by action
of the Board of Directors pursuant to Section 23(b) hereof and shall
not be redeemed in any other manner.

 

(b)           (i) The Board of Directors of
the Company may, at its option, at any time prior to the earlier of such time
as any Person becoming an Acquiring Person or the Final Expiration Date, redeem
all but not less than all of the then outstanding Rights at a redemption price
of $0.001(1) per Right, appropriately adjusted to reflect any stock split,
stock dividend or

 

 (1) NOTE: This can be a lesser amount,
e.g., $.0001.

 

27

 

similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the “Redemption
Price”), and the Company may, at its option, pay the Redemption Price in Common
Shares (based on the “current pershare market price,” as such term is defined
in Section 11(d) hereof, of the Common Shares at the time of
redemption), cash or any other form of consideration deemed appropriate by the
Board of Directors.  The redemption of
the Rights by the Board of Directors may be made effective at such time, on
such basis and subject to such conditions as the Board of Directors in its sole
discretion may establish. 
Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable pursuant to Section 11(a)(ii) hereof
prior to the expiration or termination of the Company’s right of redemption
under this Section 23(b)(i).

 

(ii)           In addition, the Board of Directors
of the Company may, at its option, at any time after the time a Person becomes
an Acquiring Person and the expiration of any period during which the holder of
Rights may exercise the rights under Section 11(a)(ii) hereof but
prior to any event described in clause (i), (ii) or (iii) of Section 13(a) hereof,
redeem all but not less than all of the then outstanding Rights at the
Redemption Price (x) in connection with any merger, consolidation or sale
or other transfer (in one transaction or in a series of related transactions)
of stock, assets or earning power aggregating 50% or more of the stock, assets
or earning power of the Company and its subsidiaries (taken as a whole) in
which all holders of Common Shares are treated alike and not involving (other
than as a holder of Common Shares being treated like all other such holders) an
Interested Stockholder or a Transaction Person or (y)(A) if and for so
long as the Acquiring Person is not thereafter the Beneficial Owner of 22.5% or
more of the then outstanding Common Shares, and (B) at the time of
redemption no other Persons are Acquiring Persons.

 

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

 

(d)           The Company may, at its option,
discharge all of its obligations with respect to any redemption of the Rights
by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered

 

28

 

holders of the Rights at their
last addresses as they appear on 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, and upon such action, all outstanding Right Certificates
shall be null and void without any further action by the Company.

 

Section 24.            Exchange.

 

(a)           The
Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the “Exchange
Ratio”).  Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any Person
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 of the Company ordering the exchange of any Rights pursuant
to Section 24(a) hereof 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
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange.  The Company promptly
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; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange.  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
11(a)(ii) hereof) held by each holder of Rights.

 

(c)           In lieu of issuing Common Shares in
accordance with Section 24(a) hereof, the Company may, if a majority of the
Board of Directors then in office determines that such action is necessary or
appropriate and not contrary to the interests of the holders of Rights, elect
to (and, in the event that there are not sufficient treasury shares and
authorized but unissued Common Shares to permit any exchange of the Rights in
accordance with Section 24(a) hereof, the Company shall) take all such action
as may be necessary to authorize, issue or pay, upon the exchange of the
Rights, cash (including by way of a reduction of the Purchase Price), property,
Common Shares, other securities or any combination thereof having an aggregate
value equal to the value of the Common Shares which otherwise would have been
issuable pursuant to Section 24(a) hereof, which aggregate value shall be
determined by a nationally recognized investment 

 

29

 

banking firm selected by a
majority of the Board of Directors then in office.  For purposes of the preceding sentence, the
value of the Common Shares shall be determined pursuant to Section 11(d) hereof.  Any election pursuant to this Section 24
by the Board of Directors must be made within 60 days following the date on
which the event described in Section 11(a)(ii) hereof shall have
occurred.  Following the occurrence of
the event described in Section 11(a)(ii) hereof, a majority of the
Board of Directors then in office may suspend the exercisability of the Rights
for a period of up to 60 days following the date on which the event described
in Section 11(a)(ii) hereof shall have occurred to the extent that
such directors have not determined whether to exercise their rights of election
under this Section 24.  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, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. 
For the purposes of this Section 24(d), the current market value of
a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately after the date of the first public announcement by the Company that
an exchange is to be effected pursuant to this Section 24.

 

(e)           The Company shall not be required to
issue fractions of Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon exchange of the
Rights or to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share).  Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts; provided,
however, that holders of such depositary receipts shall have all of the
designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts.  In lieu of fractional Preferred Shares that
are not integral multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Right 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 one Preferred Share.  For the purposes of this Section 24(e),
the current market value of a Preferred Share shall be one hundred (100) times
the closing price of a Common Share (as determined pursuant to Section 11(d)(i) hereof)
for the Trading Day immediately after the date of the first public announcement
by the Company that an exchange is to be effected pursuant to this Section 24.

 

Section 25.             Notice of Certain Events.

 

(a)           In case the Company shall propose (i) to
pay any dividend payable in stock of any class to the holders of its Preferred
Shares or to make any other distribution to the holders of its Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the
holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to

 

30

 

effect any reclassification of
its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of 50% or more of the stock, assets or earning power of
the Company and its Subsidiaries (taken as a whole), to any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purpose of such
stock dividend, or distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or the Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least 10 days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or the Preferred Shares,
whichever shall be the earlier.

 

(b)           In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of the occurrence of such event, which notice shall describe the event
and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof.

 

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

 

Evolving
Systems, Inc.

9777 Pyramid
Court, Suite 100

Englewood,
CO  80112

Attn: Anita T.
Moseley

 

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

 

American Stock
Transfer & Trust Company LLC

59 Maiden Lane

Plaza Level

New York, NY
10038

Attn:
Corporate Trust Department

 

31

 

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

 

Section 27.             Supplements and Amendments.  Prior to the Distribution Date, the Company
and the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of the Rights.  From and after the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, from time to
time supplement or amend any provision of this Agreement without the approval
of any holders of Right Certificates in order to (a) cure any ambiguity, (b) correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or (c) change any other
provisions with respect to the Rights which the Company may deem necessary or
desirable; provided, however, that no such supplement or amendment shall be
made which would adversely affect the interests of the holders of Rights (other
than the interests of an Acquiring Person or its Affiliates or
Associates).  Any supplement or amendment
adopted during any period after any Person has become an Acquiring Person but
prior to the Distribution Date shall become null and void unless such
supplement or amendment could have been adopted by the Company from and after
the Distribution Date.  Any such supplement
or amendment shall be evidenced by a writing signed by the Company and the
Rights Agent.  Upon delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section 27,
the Rights Agent shall execute such supplement or amendment unless the Rights
Agent shall have determined in good faith that such supplement or amendment
would adversely affect its interest under this Agreement.  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.             Determination 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 or any other securities of which
any Person is the Beneficial Owner, shall be made in accordance with Rule 13d-3(d)(1)(i) of
the General Rules and Regulations under the Exchange Act as in effect on
the date of this Agreement.  The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or the Company, or as may be necessary or advisable in
the administration of this Agreement, including without limitation, the right
and power to (a) interpret the provisions of this Agreement, and (b) 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 Rights Agent and the holders of the Rights, and (y) not
subject the Board to any liability to the holders of the Rights.

 

32

 

Section 29.             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 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 Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).

 

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

 

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

 

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

 

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.

 

33

 

In Witness Whereof, parties
whereto have caused this Agreement to be duly executed, all as of the day and
year first above written.

 

	
  Attest:

  	
   

  	
  EVOLVING SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Anita T. Moseley

  	
   

  	
  /s/ Thaddeus Dupper

  
	
  Anita T.Moseley

  	
   

  	
  Thaddeus Dupper

  
	
  Secretary

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
  AMERICAN STOCK TRANSFER & TRUST
  COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Herbert J. Lemmer

  	
   

  	
  By:

  	
  /s/ Felix Orihuela

  
	
  Print Name:

  	
  Herbert J. Lemmer

  	
   

  	
  Print Name:

  	
  Felix Orihuela

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  Vice President

  
								

 

34

 

EXHIBIT A TO RIGHTS AGREEMENT

 

FORM OF CERTIFICATE OF DESIGNATION

 

 

CERTIFICATE OF DESIGNATION

OF

 

SERIES C JUNIOR
PARTICIPATING PREFERRED STOCK

 

(Pursuant to Section 151
of the

Delaware General Corporation Law)

 

EVOLVING SYSTEMS, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the “Company”),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on March 4, 2009:

 

Resolved, that pursuant to the authority
granted to and vested in the Board of Directors of the Company in accordance
with the provisions of its Amended and Restated Certificate of Incorporation,
the Board of Directors hereby creates a series of Preferred Stock, par value
$0.001 per share, of the Company and hereby states the designation and number
of shares, and fixes the relative designations and the powers, preferences and
rights, and the qualifications, limitations and restrictions thereof (in addition
to the provisions set forth in the Certificate of Incorporation of the Company,
which are applicable to the Preferred Stock of all classes and series), as
follows:

 

Series C Junior Participating Preferred Stock:

 

Section 1.               Designation and Amount.  Four Hundred Thousand (400,000) shares of
Preferred Stock, $0.001 par value, are designated “Series C Junior
Participating Preferred Stock” with the designations and the powers,
preferences and rights, and the qualifications, limitations and restrictions
specified herein (the “Junior Preferred Stock”).  Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Junior Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Company
convertible into Junior Preferred Stock.

 

Section 2.               Dividends and Distributions.

 

(a)           Subject
to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Junior Preferred Stock
with respect to dividends, the holders of shares of Junior Preferred Stock, in
preference to the holders of Common Stock, par value $0.001 per share (the “Common
Stock”), of the Company, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first day of April, July, October and January in each year (each such
date being referred to herein as a 

 

A-1

 

“Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Junior Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (i) $l.00,
or subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and (ii) 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Junior Preferred Stock.  In the
event the Company shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under clause of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(b)           The
Company shall declare a dividend or distribution on the Junior Preferred Stock
as provided in paragraph (a) of this Section 2 immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided, that in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Junior Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.

 

(c)           Dividends
shall begin to accrue and be cumulative on outstanding shares of Junior
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such 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 shares of
Junior Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date.  Accrued but unpaid dividends shall
not bear interest.  Dividends paid on the
shares of Junior Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix a record date for the determination of holders of shares of Junior Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.

 

A-2

 

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

 

(a)           Subject
to the provision for adjustment hereinafter set forth, each share of Junior
Preferred Stock shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Company.  In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the number of votes per share to which
holders of shares of Junior Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

 

(b)           Except
as otherwise provided herein, in any other Certificate of Designation creating
a series of Preferred Stock or any similar stock, or by law, the holders of
shares of Junior Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Company.

 

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

 

Section 4.               Certain Restrictions.

 

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

 

(i)            declare
or pay dividends, or make any other distributions, on any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Junior Preferred Stock;

 

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

 

(iii)          redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Junior Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Junior
Preferred Stock; or

 

A-3

 

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

 

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

 

Section 5.               Reacquired Shares.  Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and restrictions
on issuance set forth herein, in the Amended and Restated Certificate of
Incorporation, or in any other Certificate of Designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.

 

Section 6.               Liquidation, Dissolution or Winding Up.  Upon any liquidation, dissolution or winding
up of the Company, no distribution shall be made (a) to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock unless, prior thereto,
the holders of shares of Junior Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, provided that
the holders of shares of Junior Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be distributed per share
to holders of shares of Common Stock, or (b) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up.  In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the aggregate amount to which holders
of shares of Junior Preferred Stock were entitled immediately prior to such
event under the proviso in clause (a) of this Section 6 shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

A-4

 

Section 7.               Consolidation, Merger, Etc.  In case the Company shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Junior Preferred
Stock shall at the same time be similarly exchanged or changed into an amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. 
In the event the Company shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Junior Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

Section 8.               No Redemption. 
The shares of Junior Preferred Stock shall not be redeemable.

 

Section 9.               Rank. 
The Junior Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Company’s Preferred Stock.

 

Section 10.             Amendment. 
The Amended and Restated Certificate of Incorporation of the Company
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Junior Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Junior Preferred Stock, voting together
as a single class.

 

IN WITNESS WHEREOF, the
undersigned have executed this certificate as of March 4, 2009.

 

 

	
   

  	
   

  
	
   

  	
  THADDEUS DUPPER

  
	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ANITA T. MOSELEY

  
	
   

  	
  Secretary

  

 

A-5

 

EXHIBIT B TO RIGHTS
AGREEMENT

 

FORM OF RIGHT
CERTIFICATE

 

 

FORM OF RIGHT
CERTIFICATE

 

(Exhibit B to Rights
Agreement)

 

	
  Certificate No. R-

  	
   

  	
  Rights

  

 

NOT EXERCISABLE AFTER MARCH 4, 2019 OR EARLIER
IF REDEMPTION OR EXCHANGE OCCURS.  THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.

 

RIGHT CERTIFICATE

 

EVOLVING SYSTEMS, INC.

 

This certifies that ________________ or
registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of March 4,
2009 (the “Rights Agreement”), between Evolving Systems, Inc., a Delaware
corporation (the “Company”), and American Stock Transfer & Trust
Company LLC (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., Eastern Standard Time, on March 4, 2019 at
the office of the Rights Agent designated for such purpose, or at the office of
its successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series C Junior Participating Preferred Stock, par value $0.001
per share (the “Preferred Shares”), of the Company, at a purchase price of
$8.00 per one one-hundredth of a Preferred Share (the “Purchase Price”), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.  The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of __________, based on the Preferred Shares as
constituted at such date.

 

From and after the time any Person becomes an
Acquiring Person, (as such terms are defined in the Rights Agreement), if the
Rights evidenced by this Right Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee after
the Acquiring Person becomes such, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such, such Rights shall become null and void
without any further action and no holder hereof shall have any right with
respect to such Rights from and after the time any Person becomes an Acquiring
Person.

 

As provided in the Rights Agreement, the
Purchase Price and the number of one one-hundredths of a Preferred Share which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.

 

B-1

 

This Right Certificate is subject to all of
the terms, provisions and conditions of the Rights Agreement, as amended from
time to time, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Right Certificates.  Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the above-mentioned offices
of the Rights Agent.

 

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

 

Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Certificate (i) may be redeemed by
the Company at a redemption price of $0.001 per Right or (ii) may be
exchanged in whole or in part for shares of the Company’s Common Stock, par
value $0.001 per share, or, upon circumstances set forth in the Rights
Agreement, cash, property or other securities of the Company, including
fractions of a share of Preferred Stock.

 

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

 

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

 

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

 

B-2

 

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

 

	
  Attest:

  	
   

  	
  Evolving Systems, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Anita T. Moseley

  	
   

  	
  Thaddeus Dupper

  	
   

  
	
  Secretary

  	
   

  	
  President and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  	
   

  

 

	
  AMERICAN STOCK TRANSFER & TRUST COMPANY LLC 

  	
   

  
	
  as Rights Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  

 

B-3

 

Form of Reverse Side of
Right Certificate

 

FORM OF ASSIGNMENT

 

(To be executed by the
registered holder if such

holder desires to transfer the Right Certificate.)

 

For Value Received ___________________________________________________
hereby sells, assigns and transfers unto

 

	
   

  	
   

  
	
  (Please
  print name and address of transferee)

  

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  

 

FORM OF REVERSE SIDE OF
RIGHT CERTIFICATE – continued

 

 

SIGNATURE GUARANTEED:

 

Signatures must be guaranteed by an “eligible
guarantor institution” as defined in Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934, as amended.

 

 

The undersigned hereby certifies that (1) the
Rights evidenced by this Right Certificate are not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person, an
Interested Stockholder or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement); and (2) after due inquiry and to the
best of the knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person, an Interested Stockholder, or an Affiliate or Associate thereof.

 

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

B-5

 

FORM OF ELECTION TO
PURCHASE

 

(To be executed if holder
desires to exercise

Rights represented by the Right Certificate.)

 

To American Stock Transfer & Trust Company
LLC:

 

The undersigned hereby irrevocably elects to
exercise ______________________________ Rights represented by this Right
Certificate to purchase the Preferred Shares issuable upon the exercise of such
Rights and requests that certificates for such Preferred Shares be 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 Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and delivered to:

 

Please insert social security

or other identifying number: __________________

 

	
   

  
	
  (Please
  print name and address)

  
	
   

  
	
   

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  

 

B-6

 

SIGNATURE GUARANTEED:

 

Signatures must be guaranteed by an “eligible
guarantor institution” as defined in Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934, as amended.

 

 

The undersigned hereby certifies that (1) the
Rights evidenced by this Right Certificate are not beneficially owned by nor
are they being exercised on behalf of an Acquiring Person, an Interested
Stockholder or an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement); and (2) after due inquiry and to the best of the
knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Right Certificate from any Person who is or was an Acquiring
Person, an Interested Stockholder, or an Affiliate or Associate thereof.

 

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

 

 

NOTICE

 

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

 

In the event the certification set forth above in
the Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Right Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored.

 

B-7

 

EXHIBIT C TO RIGHTS
AGREEMENT

 

FORM OF SUMMARY OF
RIGHTS TO PURCHASE PREFERRED SHARES

 

 

EVOLVING SYSTEMS, INC.

 

SUMMARY OF RIGHTS TO
PURCHASE

PREFERRED SHARES

 

On March 4, 2009, the Board of Directors of
Evolving Systems, Inc. (the “Company”) declared a dividend of one
preferred share purchase right (a “Right”) for each outstanding share of common
stock, par value $0.001 per share (the “Common Shares”), of the Company.  The dividend is effective as of March 16,
2009 (the “Record Date”) with respect to the stockholders of record on that
date.  The Rights will also attach to new
Common Shares issued after the Record Date. 
Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series C Junior Participating Preferred
Stock, par value $0.001 per share (the “Preferred Shares”), of the Company at a
price of $8.00 per one one-hundredth of a Preferred Share (the “Purchase Price”),
subject to adjustment.  Each Preferred
Share is designed to be the economic equivalent of 100 Common Shares.  The description and terms of the Rights are
set forth in a Rights Agreement dated as of March 4, 2009 (the “Rights
Agreement”), between the Company and American Stock Transfer & Trust
Company LLC (the “Rights Agent”).

 

DETACHMENT AND TRANSFER OF
RIGHTS

 

Initially, the Rights will be evidenced by the stock
certificates representing Common Shares then outstanding, and no separate Right
Certificates will be distributed.  Until
the earlier to occur of (i) a public announcement that a person or group
of affiliated or associated persons, has become an “Acquiring Person” (as such
term is defined in the Rights Agreement) or (ii) 10 business days (or such
later date as the Board may determine) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer which
would result in the beneficial ownership by an Acquiring Person of 22.5% or
more of the outstanding Common Shares (the earlier of such dates being called the
“Distribution Date”), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate.  In general, an “Acquiring
Person” is a person, the affiliates or associates of such person, or a group,
which has acquired beneficial ownership of 22.5% or more of the outstanding
Common Shares.

 

The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of the Rights), the
Rights will be transferable with and only with the Common Shares.  Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference.  Until the Distribution Date (or earlier
redemption or expiration of the Rights) the surrender or transfer of any
certificates for Common Shares outstanding as of the Record Date, even without
such notation or a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.  As soon
as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Right Certificates”) will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.

 

C-1

 

EXERCISABILITY OF RIGHTS

 

The Rights are not exercisable until the
Distribution Date.  The Rights will
expire on March 4, 2019 (the “Final Expiration Date”), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.  Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.

 

The Purchase Price payable, and the number of
Preferred Shares or other securities or property issuable or payable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution.  The number of outstanding
Rights and the number of one one-hundredths of a Preferred Share issuable upon
exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common Shares payable in
Common Shares, or subdivisions, consolidations or combinations of the Common
Shares occurring, in any such case, prior to the Distribution Date.  With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.  No fractional Preferred Shares will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Shares on the last trading day prior
to the date of exercise.

 

TERMS OF PREFERRED SHARES

 

Preferred Shares purchasable upon exercise of the
Rights will not be redeemable.  Each
Preferred Share will be entitled to a minimum preferential quarterly dividend
payment of $l per share but will be entitled to an aggregate dividend of 100
times the dividend declared per Common Share. 
In the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per
Common Share.  Each Preferred Share will
have 100 votes, voting together with the Common Shares.  Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per Common
Share.  These rights are protected by
customary anti-dilution provisions. 
Because of the nature of the Preferred Shares’ dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.  The Preferred Shares would
rank junior to any other series of the Company’s preferred stock.

 

TRIGGER OF FLIP-IN AND
FLIP-OVER RIGHTS

 

In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by
the Acquiring Person or any affiliate or associate thereof (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of Common Shares having a market value of two times the exercise
price of the Right.  This right will
commence on the date of public announcement that a person has become an
Acquiring Person (or the effective date of a registration statement relating to
distribution of the rights, if 

 

C-2

 

later) and terminate 60 days later (subject to
adjustment in the event exercise of the rights is enjoined).

 

In the event that the Company is acquired in a
merger or other business combination transaction or 50% or more of its stock,
consolidated assets or earning power are sold to an Acquiring Person, its
affiliates or associates or certain other persons in which such persons have an
interest, proper provision will be made so that each such holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the
then current exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right.

 

REDEMPTION AND EXCHANGE OF
RIGHTS

 

At any time prior to the earliest of (i) the
close of business on the day of the first public announcement that a person has
become an Acquiring Person, or (ii) the Final Expiration Date, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of $0.001 per Right (the “Redemption Price”).  In general, the redemption of the Rights may
be made effective at such time on such basis with such conditions as the Board
of Directors in its sole discretion may establish.  Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.

 

At any time after any Person becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio of one Common
Share, or, under circumstances set forth in the Rights Agreement, cash,
property or other securities of the Company, including fractions of a Preferred
Share (or of a share of a class or series of the Company’s preferred stock
having equivalent designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions), per Right (with value equal to
such Common Shares).

 

AMENDMENT OF RIGHTS

 

The terms of the Rights generally may be amended by
the Board of Directors of the Company without the consent of the holders of the
Rights, except that from and after such time as the Rights are distributed no
such amendment may adversely affect the interests of the holders of the Rights
(excluding the interest of any Acquiring Person).

 

ADDITIONAL INFORMATION

 

A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a Current Report
on Form 8-K dated March 5, 2009. 
A copy of the Rights Agreement is available from the Company by writing
to: Anita T. Moseley, Evolving Systems, Inc., 9777 Pyramid Court, Suite 100,
Englewood, CO 80112.  This summary description
of the Rights is not intended to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby incorporated herein by
reference.

 

C-3Exhibit 4.1

 

	
  NUMBER

  T-1

  	
  SHARES

  100,000

  

 

Incorporated
Under the Laws of the

State
of Nevada

 

Please
See Transfer Restrictions on Reverse Side

 

This Certifies that the United States Department of the Treasury is
the owner of One Hundred Thousand (100,000) fully paid and
non-assessable shares of the Fixed Rate Cumulative Perpetual Preferred Stock, Series T,
$0.001 par value per share, of

 

FIRST
BUSEY CORPORATION

 

transferable only on the books of the Company
by the holder hereof in person, or by duly authorized attorney, upon surrender
of this Certificate properly endorsed.

 

Any stockholder may obtain
from the principal office of the Company, upon request and without charge, a
statement of the number of shares constituting each class or series of stock
and the designation thereof, and a copy of all the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights and the bylaws.

 

IN WITNESS WHEREOF,
the said Company has caused this Certificate to be signed by its duly
authorized officers and its Corporate Seal hereunto affixed this 6th day of March,
2009.

 

 

	
   

  	
   

  	
   

  	
   

  
	
  President and Chief Executive
  Officer

  	
   

  	
   

  	
  Chairman

  

 

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE
NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING
THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. EACH
PURCHASER OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. ANY TRANSFEREE OF THE
SECURITIES REPRESENTED BY THIS INSTRUMENT BY ITS ACCEPTANCE HEREOF (1) REPRESENTS
THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (2) AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE
TRANSFER THE SECURITIES REPRESENTED BY THIS INSTRUMENT EXCEPT (A) PURSUANT
TO A REGISTRATION STATEMENT WHICH IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR
SO LONG AS THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (C) TO THE ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS
INSTRUMENT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

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