Document:

Prepared by R.R. Donnelley Financial -- Rights Agreement

  
 Exhibit 4.1 
  
 
 
 CARDIMA, INC. 
  
 and 
  
 AMERICAN STOCK TRANSFER & TRUST
COMPANY 
  
 Rights Agent 
  
 
 
 RIGHTS AGREEMENT 
  
 Dated as of May 20, 2002 
  
 

  
 TABLE OF CONTENTS 
  
 
	  	  	  	  	 Page
 

	 
	 Exhibit A—
 	  	 Certificate of Designation,
 	  	  
	 
	  	  	 Rights and Preferences of Series A
 	  	  
	 
	  	  	 Participating Preferred Stock
 	  	 A-1
 
	 
	 Exhibit B—
 	  	 Form of Rights Certificate
 	  	 B-1
 
	 
	 Exhibit C—
 	  	 Form of Summary of Rights
 	  	 C-1
 

 
  

  
 RIGHTS AGREEMENT 
  
 THIS AGREEMENT is dated as of May 20, 2002 between CARDIMA, INC., a Delaware corporation (the “Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New
York corporation (the “Rights Agent”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, effective May 17, 2002, the Board of Directors of the Company authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of Common Stock, $0.001 par value per share, of the Company (the “Common Stock”) outstanding as of the close of business on May 21, 2002 (the “Record Date”), and contemplates the issuance of
one Right (subject to adjustment as provided herein) for each share of Common Stock of the Company issued between the Record Date and the earlier of the Distribution Date and the Expiration Date, as such terms are hereinafter defined (with Rights
also to be issued in connection with certain issuances of Common Stock after the Distribution Date, as provided more fully herein), each Right representing the right to purchase one one-hundredth of a share of Series A Participating Preferred Stock
of the Company having the rights, powers and preferences set forth in the form of Certificate of Designation, Rights and Preferences attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set forth (the
“Rights”): 
  
 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereto hereby agree as follows: 
  
 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 (as such term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the shares of Common Stock then outstanding or who was such a Beneficial Owner at any time after the date hereof, whether or not such
Person continues to be the Beneficial Owner of 15% or more of the outstanding shares of Common Stock. Notwithstanding the foregoing, (i) in no event shall a Person who or which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of less than 15% of the Company’s outstanding shares of Common Stock become an Acquiring Person solely as a result of a reduction of the number of shares of outstanding Common Stock, including repurchases of outstanding shares
of Common Stock by the Company, which reduction increases the percentage of outstanding shares of Common Stock beneficially owned by such Person (provided that any subsequent increase in the amount of Common Stock beneficially owned by such Person,
together with all Affiliates and Associates of such Person, without the prior approval of the Company shall cause such Person to be an Acquiring Person); (ii) the term Acquiring Person shall not mean (A) the Company, (B) any subsidiary of the
Company (as such term is
 
 

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hereinafter defined), (C) any employee benefit plan of the Company or any of its subsidiaries, or (D) any entity holding securities of the Company organized, appointed or established by the
Company or any of its subsidiaries for or pursuant to the terms of any such plan; and (iii) no Person shall be deemed to be an Acquiring Person if (A) within five business days after such Person would otherwise have become an Acquiring Person (but
for the operation of this clause (iii)), such Person notifies the Board of Directors that such Person did so inadvertently and, within two business days after such notification, such Person is the Beneficial Owner of less than 15% of the outstanding
shares of Common Stock, (B) by reason of such Person’s Beneficial Ownership of 15% or more of the outstanding shares of Common Stock on the date hereof if, prior to the Record Date, such Person notifies the Board of Directors that such Person
is no longer the Beneficial Owner of 15% or more of the then outstanding shares of Common Stock 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 paragraph (a), has become such inadvertently, and such Person divests Beneficial Ownership as promptly as practicable of a sufficient number of shares of Common Stock so that such Person would no longer be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (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 “beneficially own,” any securities: 
  
 (i)  which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly; 
  
 (ii)  which such Person or any of such Person’s Affiliates or Associates has (A) the right or obligation to acquire (whether such right or obligation is exercisable or effective immediately or only
after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of
securities) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed under this clause (A) the “Beneficial Owner”
of, or to “beneficially own,” securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for payment or exchange; or (B)
the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed under this clause (B) the “Beneficial Owner” of, or to “beneficially
own,” any
 
 

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security if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or 
  
 (iii)  which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) (other than customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or with which such Person or any of such Person’s Affiliates have otherwise formed a group, for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described
in clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of any securities of the company. 
  
 (d)  “Business Day” shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of Massachusetts 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 time, on such date; provided,
however, that if such date is not a Business Day it shall mean 5:00 P.M., Eastern time, on the next succeeding Business Day. 
  
 (f)  “Common Stock” shall have the meaning set forth in the Recitals hereof, except that “Common Stock” when used with reference to stock issued by any Person other than the Company shall
mean the capital stock with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person or, if such Person is a subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has issued and outstanding such capital stock, equity securities or equity interests. 
  
 (g)  “Person” shall mean any individual, firm, corporation, partnership, joint venture, association, trust or other entity. 
  
 (h)  “Preferred Stock” shall mean the Series A Participating Preferred Stock, $0.001 par value, of the Company.

  
 (i)  “Stock Acquisition Date” shall mean the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such. 
  
 (j)  A
“subsidiary” of any Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or
 
 

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voting interests is owned, directly or indirectly, by such Person, or which is otherwise controlled by such Person. 
  
 (k)  “Voting power” shall mean the voting power of all securities of the Company then outstanding and generally entitled to vote for the election of
directors of the Company. 
  
 2.  Appointment of Rights Agent.    The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable upon ten (10) days prior written notice to the Rights Agent. The Rights Agent shall
have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such Co-Rights Agent. In the event the Company appoints one or more Co-Rights Agents, the respective duties of the Rights Agents and any Co-Rights Agents
shall be as the Company shall determine. 
  
 3.  Issue of Rights Certificates. 
  
 (a)  Until the earlier of (i) the Stock Acquisition Date or (ii) the tenth day after the date of the commencement of, or
first public announcement of the intent of any Person (other than the Company, any subsidiary of the Company, or any employee benefit plan of the Company or any of its subsidiaries) to commence (which intention to commence remains in effect for five
(5) Business Days after such announcement), a tender or exchange offer which would result in such Person becoming an Acquiring Person, unless such date is extended by the Board of Directors of the Company (including any such date which is on or
after the date of this Agreement and prior to the issuance of the Rights; the earlier of such dates being herein referred to as the “Distribution Date”), (x) the Rights shall be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights
(and the right to receive certificates therefor) shall be transferable only in connection with the transfer of the underlying shares of Common Stock. As soon as practicable after the Distribution Date, the Rights Agent shall send by first-class,
insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, a certificate for Rights, in substantially the form of
Exhibit B hereto (the “Rights Certificates”), evidencing one Right for each share of Common Stock so held. As of and after the Distribution Date, the Rights shall be evidenced solely by such Rights Certificates. 

 
 As soon as practicable following the Record Date, the Company shall send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit C (the “Summary of Rights”), by first-class, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of the Record Date, until the Distribution Date (or earlier redemption, expiration or termination of the Rights), 
 

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 the Rights shall be evidenced by such certificates for the Common Stock and the registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or earlier redemption, expiration or termination of the Rights), the surrender for transfer of any of the certificates for the Common Stock outstanding on the Record Date, even without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. 
  
 (b)  Certificates issued for Common Stock (including, without limitation, certificates issued upon transfer or exchange of Common Stock) after the Record
Date, but prior to the earlier of the Distribution Date or the Expiration Date (as such term is defined in Section 7 hereof), shall have impressed, printed, stamped, written or otherwise affixed onto them the following legend: 

 
 THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN
CARDIMA, INC. (THE “COMPANY”) AND AMERICAN STOCK TRANSFER & TRUST COMPANY (THE “RIGHTS AGENT”) DATED AS OF MAY 20, 2002 (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE REDEEMED, MAY EXPIRE, OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE
EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES, RIGHTS ISSUED TO
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR CERTAIN RELATED PERSONS AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. 
  
 With respect to such certificates containing the foregoing legend, until the Distribution Date (or earlier redemption, expiration or termination of the Rights), the Rights associated with the Common Stock represented
by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificate.

  
 4.  Form of Rights Certificates. 
  
 (a)  The Rights Certificates (and the forms of election to purchase shares and of assignment and certificates to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto 
 

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 or with any rule or regulation of any stock exchange or national quotation system on which the Rights may from time to time be listed
or quoted, or to conform to usage. Subject to the provisions of Section 11 and Section 23 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date, and on their face shall entitle the holders thereof to purchase
such number of one one-hundredths of a share of Preferred Stock as shall be set forth therein at the price per one one-hundredth of a share set forth therein, such price to be initially equal to the amount set forth in Section 7(b) below (the
“Purchase Price”), but the number of such shares and the Purchase Price shall be subject to adjustment as provided herein. 
  
 (b)  Any Rights Certificate issued pursuant to Section 3(a) hereof that represents Rights beneficially owned by an Acquiring Person or any Associate or Affiliate thereof, any Rights Certificate issued at any
time upon the transfer of any Rights to such an Acquiring Person or any Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate, and any Rights Certificate issued pursuant to Section 6 or Section 11 upon
transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain the following legend: 
  
 THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE HELD BY A PERSON WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON, AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT. THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT. 
  
 The provisions of Section 7(e) of this Rights Agreement shall be operative whether or not the foregoing legend is contained on any such Rights Certificate. 
  
 5.  Countersignature and Registration.    The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, any Vice
Chairman of the Board, its President or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary
of the Company, either manually or by facsimile signature. The Rights Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the Person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates
may be signed on behalf of the Company by any Person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer. 
  
 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 Rights Certificates 
 

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 issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights Certificates. 
  
 6.  Transfer, Split Up,
Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.    Subject to the provisions of Section 15 hereof, at any time after the close of business on the Distribution Date,
and at or prior to the close of business on the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock as the Rights Certificate or Rights Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate
shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. 
  
 Upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate and 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, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company shall execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated. 
  
 7.  Exercise of Rights; Purchase Price; Expiration Date of Rights. 
  
 (a)  The registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the principal office of the Rights Agent, together with payment of the Purchase Price for each one one-hundredth of a
share of Preferred Stock (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 May 20, 2012 (the “Final Expiration Date”), (ii) the time at
which the Rights are redeemed as provided in Section 24 hereof, (iii) the consummation of a transaction contemplated by Section 13(d) hereof or (iv) the time at which the Rights are exchanged as provided in Section 24(c) hereof (such earliest time
being herein referred to as the “Expiration Date”). Notwithstanding any other provision of this Agreement, any Person who prior to the Distribution Date becomes a record holder of shares of Common Stock may exercise all of the rights of a
registered holder of a Rights Certificate with respect to the Rights associated with such shares of 
 

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 Common Stock in accordance with and subject to the provisions of this Agreement, including the provisions of Section 7(e) hereof, as of
the date such Person becomes a record holder of shares of Common Stock. 
  
 (b)  The Purchase Price for
each one one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right initially shall be $50.00, shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below. 
  
 (c)  Upon receipt of a Rights
Certificate representing exercisable Rights, with the appropriate form of election to purchase duly executed, accompanied by payment of the Purchase Price for the shares (or other securities or property) to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) in the form of certified check or bank draft payable to the order of the Company, the Rights Agent shall, subject to Section 21(k), thereupon promptly (i)(A) requisition from any transfer
agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent) certificates for the number of one one-hundredths of a share of Preferred Stock 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 shares of Preferred Stock issuable upon exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company shall direct the depositary agent to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional
shares in accordance with Section 15, (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (iv) when appropriate after receipt, promptly deliver such cash to or upon the order of the registered holder of such Rights Certificate. In the event that the Company is obligated to issue other securities of
the Company and/or distribute other property pursuant to Section 11(a), the Company shall make all arrangements necessary so that such other securities and/or property 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), the Rights Agent shall return such Rights Certificate to the registered holder thereof after imprinting, stamping or otherwise indicating thereon that the
rights represented by such Rights Certificate no longer include the rights provided by Section 11(a)(ii) of this Agreement and if less than all the Rights represented by such Rights Certificate were so exercised, the Rights Agent shall indicate on
the Rights Certificate the number of Rights represented thereby which continue to include the rights provided by Section 11(a)(ii). 
  
 (d)  In case the registered holder of any Rights Certificate shall exercise (except pursuant to Section 11(a)(ii)) less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Rights Certificate or to such holder’s duly authorized assigns, subject to the provisions of Section 15 hereof.

 

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 (e)  Notwithstanding anything in this Agreement to the contrary, if
there occurs any of the events set forth in Section 11(a)(ii) or Section 13(a) then any Rights that are or were on or after the Distribution Date beneficially owned by an Acquiring Person or any Associate or Affiliate of an Acquiring Person shall
become null and void, without any further action, and any holder of such Rights shall thereafter have no rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. 
  
 (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 the certificate contained in the appropriate form of election to purchase set forth on the reverse side
of the Rights Certificate surrendered for such exercise shall have been properly completed and duly executed by the registered holder thereof and the Company shall have been provided with 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. 
  
 8.  Cancellation and Destruction of Rights Certificates.    All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company or shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company. 
  
 9.  Reservation and Availability of Preferred
Stock.    The Company covenants and agrees that it shall cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock, or any authorized and issued shares of Preferred Stock held in its
treasury, the number of shares of Preferred Stock that will be sufficient to permit the exercise in full of all outstanding Rights and, after the occurrence of an event specified in Sections 11 or 13, shall so reserve and keep available a sufficient
number of shares of Common Stock (and/or other securities) which may be required to permit the exercise in full of the Rights pursuant to this Agreement. 
  
 So long as the shares of Preferred Stock (and, after the occurrence of an event specified in Section 11 or 13, any other securities) issuable upon the exercise of the Rights may be listed on any national securities
exchange or automated quotation system, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares (or other securities) reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise. 
  
 The Company covenants and agrees that it shall take all such action as may be
necessary to ensure that all shares of Preferred Stock and/or other securities delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares or other securities (subject
 
 

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to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable shares or securities. 
  
 The Company further covenants and agrees that it shall 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 Rights Certificates or of any certificates for shares of Preferred Stock and/or other securities 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 Rights Certificates to a Person other than, or in respect of the issuance or delivery of the shares of Preferred Stock and/or other securities in a name other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any certificates for shares of Preferred Stock, and/or other securities in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax is due. 
  
 The Company shall use its best efforts to (i) file, if required by law, as soon as practicable following the Distribution Date, a registration statement
on an appropriate form under the Securities Act of 1933, as amended (the “Act”), with respect to the securities purchasable upon exercise of the Rights, (ii) cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act and the rules and regulations thereunder) until the Expiration Date (unless and until the Company
shall have received an opinion of counsel to the effect that the maintenance of such registration statement in effect is no longer necessary). The Company also will take such action as may be appropriate under the blue sky laws of the various
states. 
  
 10.  Preferred Stock Record Date.    Each Person in whose name any certificate for
shares of Preferred Stock (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 shares of Preferred Stock (or other securities) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly presented and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such presentation
and payment is a date upon which the Preferred Stock (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 Stock (or other securities) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall not be entitled to any
rights of a stockholder of the Company with respect to 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. 
  
 11.  Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.    The Purchase Price, the number of 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. 
 

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 (a)  (i)  In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares or (D)
issue any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in Section 7(e), 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 upon exercise of a Right 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
and other securities which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), 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). 
  
 (ii)  Subject to Section 24(c) of this Agreement, in the event any Person, alone or together with its Affiliates and Associates, shall become an Acquiring Person (except pursuant to a tender or exchange offer for all outstanding
shares of Common Stock at a price and on terms determined, prior to the date of the first acceptance of payment for any of such shares, by at least a majority of the members of the Board of Directors who are not officers of the Company and are not
Acquiring Persons, or the offeror, or Affiliates or Associates thereof to be in the best interests of the Company and its stockholders (other than the Person or an Affiliate or Associate thereof on whose behalf the offer is being made) (a
“Permitted Offer”)), then, promptly following the first occurrence of an event described in this Section 11(a)(ii), proper provision shall be made so that each holder of a Right, except as provided in Section 7(e) hereof, shall, for a
period of sixty (60) days after the later of the occurrence of any such event and the effective date of an appropriate registration statement pursuant to Section 9, have a right to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of shares of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one
one-hundredth of a share of Preferred Stock for which a Right is then exercisable and (y) dividing that product by fifty percent (50%) of the current market price per one share of Common Stock (determined pursuant to Section 11(d)) on the date of
the occurrence of the event set forth in this subparagraph (ii) (such number of shares being referred to as the “number of Adjustment Shares”); provided, however, that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of 
 

 11 

 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); and provided, further, that such 60–day period shall not be deemed to run during any period in which the exercise of the Rights or the fulfillment by the Company or the Rights Agent of its or their obligations under their Agreement
shall be enjoined or otherwise prohibited in full or in part by any court or other governmental agency or body. 
  
 (iii)  In lieu of issuing shares of Common Stock 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
shares of Common Stock to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (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, shares of Common Stock, other securities or any combination thereof having an aggregate value equal to the value of the shares of Common Stock which otherwise would have been
issuable pursuant to Section 11(a)(ii), which aggregate value shall be determined by a nationally recognized investment banking firm selected by a majority of the Board of Directors. For purposes of the preceding sentence, the value of the Common
Stock shall be determined pursuant to Section 11(d) hereof and the value of any preferred stock or preference stock which a majority of the Board of Directors determines to be a “common stock equivalent” shall be deemed to have the same
value as the Common Stock. Any such election by the Board of Directors must be made and publicly announced within sixty (60) days following the date on which the event described in Section 11(a)(ii) 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 sixty (60) days following the date on which the event described in Section
11(a)(ii) 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)  If the Company
shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them (for a period expiring within forty five (45) calendar days after such record date) to subscribe for or purchase Preferred Stock
(or shares having the same or more favorable rights, privileges and preferences as the Preferred Stock (“equivalent preferred stock”)) or securities convertible into Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or per share of equivalent preferred stock (or having a conversion price per share, if a security convertible into 
 

 12 

 Preferred Stock or equivalent preferred stock) less than the current market price (as defined in Section 11(d)) per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). 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 determined reasonably and with good faith to the holders of Rights by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes. Shares of Preferred Stock 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)  If
the Company shall fix a record date for the making of a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights, options or warrants (excluding those referred to in Section 11(b)), 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 current market price (as defined in Section 11(d)) per share of Preferred Stock on such record date, less the fair market value (as determined reasonably and with good faith to
the holders of Rights by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such subscription rights, options or warrants distributable in respect of one share of Preferred Stock and the denominator of which shall be the current market price (as defined in
Section 11(d)) per share of the Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such 
 

 13 

 distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would be in effect if such
record date had not been fixed. 
  
 (d)  (i)  For the purpose of any computation hereunder,
other than in Section 11(a)(iii), the “current market price” per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (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 Common Stock is determined in whole or in part during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock or (B) any subdivision, combination or reclassification of such
Common Stock, and prior to the expiration of thirty (30) Trading Days after the ex–dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the
“current market price” shall be properly adjusted to take into account ex–dividend trading. 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 shares of Common
Stock 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 shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by Nasdaq or such other system then in use, or, if on any such date the shares of Common Stock 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 Common Stock selected by the Board of Directors of the Company. If on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date as determined
reasonably and with good faith by the Board of Directors of the Company shall be used and shall be binding on the Rights Agent. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, “current market price” per share shall mean the fair value per share determined reasonably and with good faith to the holders of Rights by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent. 
 

 14 

  
 (ii)  For the purpose of any computation hereunder, the
“current market price” per share (or one one-hundredth of a share) of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in Section 11(d) (i) (other than the last sentence thereof). If the
current market price per share (or one one-hundredth of a share) of Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in Section 11(d)(i), the
“current market price” per share of Preferred Stock shall be conclusively deemed to be an amount equal to one hundred (100) (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalization
with respect to the Common Stock occurring after the date of this Agreement) multiplied by the current market price per share of the Common Stock and the “current market price” per one one-hundredth of a share of Preferred Stock shall be
equal to the current market price per share of the Common Stock (as appropriately adjusted). If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, “current market price” per share shall mean the fair
value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 
  
 (e)  Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (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 hundredth of a share of Common Stock or other share or one ten-thousandth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment or (ii) the
Expiration Date. 
  
 (f)  If as a result of any provision of Section 11(a), the holder of any Right
shall become entitled to receive any shares of capital stock of the Company other than Preferred Stock, 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 shares contained in Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 15 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares. 
  
 (g)  All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of shares of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein. 
 

 15 

  
 (h)  Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a share of Preferred Stock (calculated to the nearest one one-millionth) obtained by (i) multiplying (x) the number of one one-hundredth of a share of Preferred Stock
covered by a Right immediately prior to this adjustment by (y) 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 shares of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of one one-hundredth of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one millionth) 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 Rights Certificates have been issued, shall be at least ten days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 15
hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record
of Rights Certificates on the record date specified in the public announcement. 
  
 (j)  Irrespective
of any adjustment or change in the Purchase Price or the number of shares of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express 
 

 16 

  
 the Purchase Price per share and the number of shares which were expressed in the initial
Rights Certificates issued hereunder. 
  
 (k)  Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of Preferred Stock, Common Stock or other securities issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its legal
counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Preferred Stock, Common Stock or other securities at such adjusted Purchase Price. If upon any exercise of the Rights, a holder is
to receive a combination of Common Stock and common stock equivalents, a portion of the consideration paid upon such exercise, equal to at least the then par value of a share of Common Stock of the Company, shall be allocated as the payment for each
share of Common Stock of the Company so received. 
  
 (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
the shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment. 
  
 (m)  Anything to the
contrary in this Section 11 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 (i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than the current market price, (iii) issuance wholly for cash of shares
of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to hereinabove in this Section 11, hereafter made
by the Company to holders of its Preferred Stock shall not be taxable to such stockholders. 
  
 (n)  Anything in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the date of this Agreement and prior to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares or (iv) issue any shares of its capital stock in a reclassification of the
outstanding Common Stock, the number of Rights 
 

 17 

  
 associated with each share of Common Stock then outstanding, or issued or delivered thereafter
but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a fraction the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of
which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. 
  
 (o)  The exercise of Rights under Section 11(a)(ii) shall only result in the loss of rights under Section 11(a)(ii) to the extent so exercised and shall not otherwise affect the rights represented by the
Rights under this Rights Agreement, including the rights represented by Section 13. 
  
 12.  Certificate of Adjusted
Purchase Price or Number of Shares.    Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. 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. 
  
 13.  Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. 
  
 (a)  In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person, (y) any Person shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger (other than, in
the case of either (x) or (y), 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 (z) 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 fifty percent (50%) of the assets or earning power of the Company and its subsidiaries (taken as a whole) to any other Person, then, and in each such case, proper provision shall be made so that (i) following the
Distribution Date, each holder of a Right (other than as provided in Section 7(e) hereof) shall have the right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of
shares of freely tradable Common Stock of the Principal Party (as 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 
 

 18 

  
 (x) multiplying the then current Purchase Price by the number of one one-hundredths of a share
of Preferred Stock for which a Right is then exercisable (without taking into account any adjustment previously made pursuant to Section 11(a)(ii) hereof) and (y) dividing that product by fifty percent (50%) of the current market price per share of
the Common Stock of such Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or transfer; (ii) 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; (iii) 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 (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to ensure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights. 
  
 (b)  “Principal Party” shall mean: 
  
 (i)  in the case of any transaction described in (x) or (y) of the first sentence of this Section 13, the Person that is the
issuer of any securities into which shares of Common Stock of the Company 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 (including, if applicable,
the Company, if it is the surviving corporation); and 
  
 (ii)  in the case of any transaction
described in (z) of the first sentence in this Section 13, 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 such case, (1) if the Common Stock of such Person is not at such time and has 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 Stock of which is and has been so registered, “Principal Party” shall refer to
such other Person; (2) in case such Person is a subsidiary, directly or indirectly, or Affiliate of more than one Person, the Common Stock 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 Stock having the greatest aggregate market value; and (3) in case 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 (1) and (2) above shall apply to each of the chains of ownership having an interest in such joint venture as if such joint venture were a “Subsidiary” of each such joint venturer 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. 
 

 19 

  
 (c)  The Company shall not consummate any such consolidation, merger, sale or
transfer unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock 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 executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger, sale or transfer of assets mentioned in paragraph (a) of this Section 13,
the Principal Party at its own expense shall: 
  
 (i)  prepare and file a registration statement under
the Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, will use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and
will use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the 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; and 
  
 (iii)  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. The rights under this Section 13 shall be in addition to the rights to exercise
Rights and adjustments under Section 11(a)(ii) and shall survive any exercise thereunder. 
  
 (d)  Notwithstanding
anything in this Agreement to the contrary, Section 13 shall not be applicable to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is consummated with a Person or Persons who acquired shares of Common
Stock pursuant to a Permitted Offer (or a wholly owned subsidiary of any such Person or Persons) and such transaction and the Permitted Offer are related transactions, (ii) the price per share of Common Stock offered in such transaction is not less
than the price per share of Common Stock paid to all holders of Common Stock whose shares were purchased pursuant to such Permitted Offer and (iii) the form of consideration being offered to the remaining holders of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such Permitted Offer. Upon consummation of any such transaction contemplated by this subsection (d), all Rights hereunder shall expire. 
  
 14.  Additional Covenants. 
  
 (a)  The Company covenants and agrees that after the Stock Acquisition Date it shall not (i) consolidate with, (ii) merge with or into, or (iii) sell or transfer to any other Person, in one 

 20 

  
 or more transactions, assets or earning power aggregating more than fifty percent (50%) of the
assets or earning power of the Company and its subsidiaries taken as a whole, if at the time of or after such consolidation, merger or sale there are any charter or bylaw provisions or any rights, warrants or other instruments outstanding or any
other action taken which would diminish or otherwise eliminate the benefits intended to be afforded by the Rights. The Company shall not consummate any such consolidation, merger or sale 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 subsection. 
  
 (b)  The Company covenants and agrees that, after the Stock Acquisition Date, it will not, except as permitted by Section 24 hereof, take any action the purpose or effect of which is to diminish or otherwise eliminate the benefits
intended to be afforded by the Rights. 
  
 15.  Fractional Rights and Fractional Shares. 
  
 (a)  The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in
Section 11(n), or to distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 15(a), the current market value of a whole Right shall be, except as otherwise provided in the last
sentence of this paragraph (a), 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 of the Rights for any day shall be the last sale
price, 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 reasonably and with good faith to the holders of Rights by the Board of Directors of the Company shall be used and shall be binding on the Rights Agent. 
  
 (b)  The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one-hundredth of a share of Preferred Stock may, at the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it, provided that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares of Preferred Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-hundredth of a share of Preferred Stock, the Company may 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 one-hundredth of a share of Preferred Stock. For 

 21 

  
 purposes of this Section 15(b), the current market value of one one-hundredth of a share of
Preferred Stock shall be one one-hundredth of the closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise. 
  
 (c)  Following the occurrence of one of the transactions or events specified in Section 11 or Section 13 giving rise to the
right to receive common stock equivalents (other than Preferred Stock) or other securities upon the exercise of a Right, the Company shall not be required to issue fractions of shares or units of such common stock equivalents or other securities
upon exercise of the Rights or to distribute certificates which evidence fractional shares of such common stock equivalents or other securities. In lieu of fractional shares or units of such common stock equivalents or other securities, the Company
may 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 a share or unit of such common stock equivalent or other
securities. For purposes of this Section 15(c), the current market value shall be the closing price thereof determined in the same manner set forth in Section 11(d)(i) hereof with respect to Common Stock for the Trading Day immediately prior to the
date of such exercise, provided that, if such common stock equivalent or other security is not traded, the current market value thereof shall instead equal the current market value of one one-hundredth of a share of Preferred Stock for such Trading
Day as determined pursuant to Section 15(b) hereof. 
  
 (d)  Except as otherwise expressly provided
herein, the holder of a Right by the acceptance of the Right expressly waives such holder’s right to receive (other than as provided in Section 11(n)) any fractional Rights or any fractional shares (other than, in the case of Preferred Stock,
fractions which are integral multiples of one one-hundredth of a share of Preferred Stock) upon exercise of a Right. 
  
 16.  Rights of Action.    All rights of action in respect of this Agreement, except those rights of action vested in the Rights Agent pursuant to Section 21, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock), and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder 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 

  
 17.  Agreement of Rights Holders.    Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: 
  
 (a)  prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Stock; 
  
 (b)  after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent and only 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 a Rights Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the contrary. 
  
 18.  Rights Certificate
Holder Not Deemed a Stockholder.    No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the shares of Preferred Stock, Common Stock or any
other securities of the Company which may at any time be issuable upon exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions thereof. 
  
 19.  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
disbursements and other disbursements reasonably 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 reasonable costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. 
  
 The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of 
 

 23 

  
 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. 
  

20.  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 corporate trust or
stockholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 22 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights Certificates in this Agreement. 
  
 In case at any time the
name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and in this Agreement. 
  
 21.  Duties of
Rights Agent.    The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound: 
  
 (a)  The Rights Agent may consult with legal counsel selected
by it (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

  
 (b)  Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of “current market price”) be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the 
 

 24 

  
 Chairman of the Board, any Vice Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate. 
  
 (c)  The Rights Agent
shall be liable hereunder to the Company only, for its negligence, bad faith or willful misconduct. 
  
 (d)  The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates (except as to the fact that it has countersigned the Rights
Certificates) 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 Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11 or 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after receipt of a certificate pursuant to Section 12 describing any such adjustment); nor shall it be
responsible for any determination by the Board of Directors of the Company of the current market value of the Rights or Preferred Stock or Common Stock pursuant to the provisions of Section 15 hereof; nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of any shares of Preferred Stock or other securities to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Preferred Stock or other
securities will, when so 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 other acts, instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performance 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 and certificates delivered pursuant to any provision hereof from the Chairman of the Board, any
Vice Chairman of the Board, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the 
 

 25 

  
 Company, and is authorized 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 to be taken by it in good faith in accordance with written instructions of any such officer. 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 Rights 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 any such officer actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking or omitting 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. 
  
 (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 Rights Certificate surrendered to the Rights Agent for exercise or transfer, the Certificate attached to the form of assignment
or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause l and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company. 
  
 22.  Change of Rights Agent.    The
Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days notice in writing mailed to the Company and to each transfer agent of the Common Stock and Preferred Stock by
registered or certified mail, and to holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) 
 

 26 

 days notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred
Stock by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit such holder’s Rights Certificate for inspection by the Company), then the registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a corporation organized and doing business under the laws of the United States or of the State of
New York or the State of California (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of New York or the State of California), in good standing, having a
principal office in the State of New York or the State of California, which is authorized under such laws to exercise corporate trust or stockholder services powers and is subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an affiliate of a corporation described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and Preferred Stock, and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 22, 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. 
  
 23.  Issuance of New Rights Certificates.    Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or otherwise under any employee plan or arrangement, which plan or arrangement is
existing as of the Distribution Date, or upon the exercise, conversion or exchange of any other securities issued by the Company on or 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) no such Rights Certificates shall be issued 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 
 

 27 

 Company or the Person to whom such Rights Certificates would be issued, and (ii) no such Rights Certificates shall be issued if and to the extent that
appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 
  
 24.  Redemption,
Termination and Exchange. 
  
 (a)  (i)  The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) the Stock Acquisition Date or (y) 5:00 P.M., Pacific time, on the Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”). 
  
 (ii)  In addition, and notwithstanding the provisions of Section 24(a)(i), the Board of Directors of the Company may redeem
all but not less than all of the then outstanding Rights at the Redemption Price on or after the Stock Acquisition Date but prior to any event described in Section 13(a) either (x) in connection with any event specified in Section 13(a) in which all
holders of Common Stock are treated alike and not involving (other than as a holder of Common Stock being treated like all other such holders) an Acquiring Person or an Affiliate or Associate thereof or any other Person in which such Acquiring
Person or Affiliate or Associate thereof has any interest, or any other Person acting directly or indirectly on behalf of or in association with any such Acquiring Person or Affiliate or Associate thereof, or (y) following the occurrence of an event
set forth in, and the expiration of any period during which the holder of Rights may exercise the rights under, Section 11(a)(ii) if and for as long as any Acquiring Person having triggered such event is not thereafter the Beneficial Owner of
securities representing fifteen percent (15%) or more of the outstanding shares, and at the time of redemption there are no other Persons who are Acquiring Persons. 
  
 (b)  In the case of a redemption permitted under Section 24(a)(i), immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. In the case of a redemption permitted only under Section 24(a)(ii), evidence of which shall have been filed with the Rights Agent, the right to exercise the Rights will terminate and represent only the right
to receive the Redemption Price only after ten (10) Business Days following the giving of notice of such redemption to the holders of such Rights if no event set forth in Section 11(a)(ii) shall have occurred, and, if such event shall have occurred,
upon the later of ten (10) Business Days following the giving of such notice or the expiration of any period during which the rights under Section 11(a)(ii) may be exercised. Within ten (10) days after the action of the Board of Directors ordering
any such redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice 
 

 28 

 of redemption will state the method by which the payment of the Redemption Price will be made. 
  
 In the case of a redemption permitted under Section 24(a)(i) or (ii), the Company may, at its option, discharge all of its obligations with respect to
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 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 of the Common Stock, and upon such action, all outstanding Rights Certificates shall be null and void without any further action by the Company.

  
 (c)  (i)  Subject to the limitations of applicable law, 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
7(e) hereof) for (A) shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (the “Exchange
Shares”) or (B) Substitute Consideration (as that term is defined below). The Board of Directors may determine, in its sole discretion, whether to deliver Exchange Shares or Substitute Consideration. 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 entity holding Common Stock for or
pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty percent (50%) or more of the Common Stock then outstanding. 
  
 (ii)  In the event the Board of Directors shall determine to deliver Substitute Consideration in exchange for Rights, the
Company shall (1) determine the value of the Exchange Shares (the “Exchange Value”), and (2) with respect to each Right to be exchanged, make adequate provision to substitute for Exchange Shares the following (the “Substitute
Consideration”): (v) cash, (w) Common Stock or common stock equivalents (as that term is defined in Section 11(a)(iii) hereof) or Preferred Stock or equivalent preferred stock (as that term is defined in Section 11(b) hereof), (x) debt
securities of the Company, (y) other assets or (z) any combination of the foregoing, having an aggregate value equal to the Exchange Value, where such aggregate value has been determined by the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the Board of Directors of the Company. For purposes of this Section 24(c), the value of a share of Common Stock shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the day that is the later of (x) the first occurrence of an event described in Section 11(a)(ii) hereof and (y) the date on which the Company’s right of redemption pursuant to Section 24(a) expires; and the
value of any common stock equivalent shall be deemed to have the same value as the Common Stock on such date. 
  
 (iii)  Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to this Section 24(c), 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 Exchange Shares or Substitute Consideration for 
 

 29 

 each Right exchanged by such holder. 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 address as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights. 
  
 (iv)  In the event that there
shall not be sufficient shares of Common Stock or Preferred Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24(c), the Company shall take all such action as
may be necessary to authorize additional shares of Common Stock or Preferred Stock for issuance upon exchange of the Rights. 
  
 (v)  The Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock. In lieu of such fractional shares of Common
Stock, the Company shall pay to the registered holders of the Rights Certificates with regard to which such fractional shares of Common Stock would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a
whole share of Common Stock. For the purposes of this Section 24(c)(v), the current market value of a whole share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24(c). 
  
 25.  Notice of Certain
Events.    In case the Company shall propose (a) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), (b) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class
or any other securities, rights or options, (c) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (d) 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 more than fifty percent (50%) of the assets or earning power of the Company
and its subsidiaries (taken as a whole) to, any other Person or (e) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, 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 shares of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least 
 

 30 

 twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier. 
  
 In case any of the events set forth in Section 11(a)(ii) or 13(a) of this Agreement shall
occur, then, in any such case, the Company or the Principal Party, as the case may be, shall as soon as practicable thereafter give to each holder of a Rights Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) or 13(a) hereof, as the case may be. 
  
 26.  Notices.    Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: 
  
 Cardima, Inc. 
 47266 Benicia Street 
 Fremont, California 94538-7330 
 Attention: Secretary 

 
 Subject to the provisions of Section 22, any notice or demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: 
  
 American Stock Transfer & Trust Company 
 59 Maiden Lane, Plaza Level 
 New York, New York 10038 
 Attention: Client Administration 
  
 Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books
of the Company. 
  
 27.  Supplements and Amendments.    The Company and the Rights Agent may
from time to time supplement or amend this Agreement without approval of any holders of Rights or Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) prior to the Distribution Date, to change or supplement any provision hereunder in any manner which the Company may deem necessary or desirable or (iv) on or following the Distribution Date, to
change or supplement any provision hereunder in any manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Rights Certificates. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment 
 

 31 

 unless the Rights Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests 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 Stock. 
  
 28.  Determination and Actions by the Board of Directors, etc.    For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock or any other securities of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d–3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement. Except as otherwise provided herein, 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 to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power
to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights Certificates and all other parties, and (y) not subject the Board to any liability to the holders of the Rights Certificates. 
  
 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. 
  
 30.  Benefits of This
Agreement.    Nothing in this Agreement shall be construed to give to any person or corporation other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, the Common Stock). 
  
 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. 
  
 32.  Governing
Law.    This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and to be performed entirely within such state. 
 

 32 

  
 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. 
  
 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. 
  
 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. 
  
 
	 Attest:
 	 	  	 	 CARDIMA, INC.
 
	 
	 By:
 	 	   /s/    RONALD E. BOURQUIN
 
	 	  	 	 By:
 	 	   /s/    GABRIEL B. VEGH
 

	  	 	 Ronald E. Bourquin
 Secretary
 	 	  	 	  	 	 Gabriel B. Vegh
 Chief Executive Officer
 

 
 
	 
	 Attest:
 	 	  	 	 AMERICAN STOCK TRANSFER & TRUST
COMPANY,
 as Rights Agent
 
	 
	 By:
 	 	 
	 	  	 	 By:
 	 	   /s/    HERBERT J. LEMMER
 

	 Title:
 	 	  	 	  	 	  	 	 Herbert J. Lemmer
 Vice President
 

 
 

 33 

  
 EXHIBIT A 
  
 CERTIFICATE OF DESIGNATION, 
 RIGHTS AND
PREFERENCES OF 
 SERIES A PARTICIPATING PREFERRED STOCK OF

 CARDIMA, INC. 
  
 We, Gabriel B. Vegh, Chief Executive Officer, and Ronald E. Bourquin, Secretary, of Cardima, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, DO HEREBY CERTIFY: 
  
 That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of this Corporation, the Board of Directors
effective on May 17, 2002 adopted the following resolution creating a series of Seven Hundred Fifty Thousand (750,000) shares of Preferred Stock designated as Series A Participating Preferred Stock: 
  
 RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the powers, preferences and relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as follows: 
  
 1.  Designation and
Amount.    The shares of such series shall be designated as “Series A Participating Preferred Stock,” $0.001 par value per share, and the number of shares constituting such series shall be Seven Hundred Fifty
Thousand (750,000). 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 Series A Participating Preferred Stock to a number less than that of the
shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Corporation. 
  
 2.  Dividends and Distributions. 
  
 (A)  Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders
of shares of Series A Participating Preferred Stock in preference to the holders of shares of Common Stock, par value $0.001 per share (the “Common Stock”), of the Corporation and 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 March, June, September and December in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock in an amount per share (rounded to the nearest

 

 34 

 cent) equal to the greater of (a) $50.00, or (b) subject to the provision for adjustment hereinafter set forth, one hundred (100) times
the aggregate per share amount of all cash dividends, and one hundred (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 Series A Participating Preferred Stock. In the event the Corporation shall at any time after the close of business on May 20, 2002 (the “Rights Declaration Date”) (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, by reclassification or otherwise, then in each such case the
amount to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event under clause (b) 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 Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in
paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); 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 $50.00 per share on the Series A Participating 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 Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock unless the date of issue of such shares is prior to
the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. 
  
 3.  Voting Rights.    The holders of shares of Series A Participating Preferred Stock shall have the following
voting rights: 
 

 35 

  
 (A)  Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the holder thereof to one hundred (100) votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock into a greater number of shares or (iii) combine the outstanding Common Stock into a smaller number of
shares, by reclassification or otherwise, then in each such case the number of votes per share to which holders of shares of Series A Participating 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 outstanding immediately prior to such event.

  
 (B)  Except as otherwise provided herein or by law, the holders of shares of Series A Participating
Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. 
  
 (C)  (i)  If at any time dividends on any Series A Participating Preferred Stock shall be in arrears in an amount equal to six quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Series A Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including
holders of the Series A Participating Preferred Stock) with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two directors. 
  
 (ii)  During any default period, such voting right of the holders of Series A Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present
in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting
right initially during an existing default period, they shall have the right, voting as a class, to elect directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two directors or, if such right is exercised at an
annual meeting, to elect two directors. If the number which may be so elected at any special meeting does not 
 

 36 

  
 amount to the required number, the holders of the Preferred Stock shall have the right to make
such increase in the number of directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect directors in any default period and during the
continuance of such period, the number of directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the
Series A Participating Preferred Stock. 
  
 (iii)  Unless the holders of Preferred Stock shall, during
an existing default period, have previously exercised their right to elect directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to such holder
at such holder’s last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than ten days and not later than sixty (60) days after such order or request or in default of the calling of
such meeting within sixty (60) days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within sixty (60) days immediately preceding the date fixed for the next annual meeting of the stockholders.

  
 (iv)  In any default period, the holders of Common Stock, and other classes of stock of the
Corporation, if applicable, shall continue to be entitled to elect the whole number of directors until the holders of Preferred Stock shall have exercised their right to elect two directors voting as a class, after the exercise of which right (x)
the directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may
(except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of stock which elected the director whose office shall have become vacant.
References in this paragraph (C) to directors elected by the holders of a particular class of stock shall include directors elected by such directors to fill vacancies as provided in clause (y) of the foregoing sentence. 
  
 (v)  Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to
elect directors shall cease, (y) the term of any directors elected by the holders of Preferred Stock as a class shall 
 

 37 

  
 terminate, and (z) the number of directors shall be such number as may be provided for in, or
pursuant to, the Certificate of Incorporation or Bylaws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in
the Certificate of Incorporation or Bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining directors, even though less than a quorum.

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

4.    Certain Restrictions. 
  
 (A)  Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not 
  
 (i)  declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock; 
  
 (ii)  declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such
shares are then entitled; 
  
 (iii)  redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; or 
  
 (iv)  purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock or any shares of
stock ranking on a parity with the Series A Participating Preferred Stock except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, 
 

 38 

  
 after consideration of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. 
  
 (B)  The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. 
  
 5.  Reacquired Shares.    Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation 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 to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. 
  
 6.  Liquidation, Dissolution or Winding Up. 
  
 (A)  Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Participating Preferred Stock shall have received per share, the greater of one hundred (100) times $1.00 or one hundred (100) times the payment made per share of
Common Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the
“Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) one hundred (100) (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalization with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Participating Preferred Stock and Common Stock, respectively, holders of Series A Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share
of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. 
  
 (B)  In the event there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences
of all other series of Preferred Stock, if any, which rank on a parity with the Series A Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. 
 

 39 

  
 (C)  In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 
  
 7.  Consolidation, Merger, etc.    In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to one hundred (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 Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Participating 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 are outstanding immediately
prior to such event. 
  
 8.  Redemption.    The shares of Series A Participating Preferred
Stock shall not be redeemable. 
  
 9.  Ranking.    The Series A Participating Preferred Stock
shall rank junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. 
  
 10.  Amendment.    The Certificate of Incorporation and the Bylaws of the Corporation shall not be further amended
in any manner which would materially alter or change the powers, preferences or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of Series A Participating Preferred Stock voting separately as a class. 
  
 11.  Fractional Shares.    Series A Participating Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Participating Preferred Stock.

 

 40 

  
 IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the
foregoing as true under the penalties of perjury this 20th day of May, 2002. 
  
 
	 
	 

	 Gabriel B. Vegh
 Chief Executive
Officer
 
	  
	 
	 Attest:
 
	 
	 

	 Ronald E. Bourquin
 Secretary
 

 
 

 41 

  
 EXHIBIT B 
  
 FORM OF RIGHTS CERTIFICATE 
  
 Certificate No.
R-                                      
                                        
                                        
                      Rights 
  
 NOT EXERCISABLE AFTER MAY 20, 2012 OR EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]* 
  
 RIGHTS CERTIFICATE 
  
 CARDIMA, 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 May 20, 2002 (the “Rights Agreement”) between Cardima, Inc., a Delaware corporation (the “Company”), and American Stock Transfer &
Trust Company, a New York corporation (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 time on May 20, 2012 unless
earlier redeemed or exchanged by the Company as set forth in the Rights Agreement, at the office of the Rights Agent designated for such purpose, one one-hundredth of a fully paid, nonassessable share of Series A Participating Preferred Stock, par
value $0.001 per share (the “Preferred Stock”) of the Company, at a purchase price of $50.00 per one one-hundredth of a share (the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the appropriate
Form of Election to purchase and certificate duly executed. The number of Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of the close of business on May 20, 2002, based on the Preferred Stock as constituted at such date. 
 
*        The portion of the legend in brackets shall be inserted only if applicable. 
 

 42 

  
 As provided in the Rights Agreement, the Purchase Price and the number of shares of Preferred
Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events. 
  
 This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights Agreement are on file at the principal office of the Company and are also available upon written request to the Company. 
  

This Rights Certificate, with or without other Rights Certificates, upon surrender at the office of the Rights Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of shares of Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be exercised (other than pursuant to Section 11(a)(ii) of the Rights Agreement) in part, the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised. If this Rights Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive this
Rights Certificate duly marked to indicate that such exercise has occurred as set forth in the Rights Agreement. 
  
 Subject to the
provisions of the Rights Agreement, the Rights evidenced by this Certificate (i) may be redeemed by the Company at its option at a redemption price of $0.001 per Right or (ii) may be exchanged in whole or in part for shares of the Company’s
Common Stock par value $0.001 or substitute consideration. Subject to the provisions of the Rights Agreement, the Company, at its option, may elect to mail payment of the redemption price to the registered holder of the Right at the time of
redemption, in which event this certificate may become void without any further action by the Company. 
  
 No fractional shares of
Preferred Stock 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 share of Preferred Stock, 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 Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock 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

 

 43 

  
 subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement. 
  
 This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent. 
  
 WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. 
  
 Dated:                ,             . 
  
 
	 ATTEST:
 	 	  	 	 CARDIMA, INC.
 
	 
	 By:
 	 	 
	 	  	 	 By:
 	 	 

	  	 	  	 	  	 	  	 	  

 
  
 
	  	 	  	 	  
	 
	 Title:
 	 	 
	 	  	 	 Title:
 	 	 

	  	 	  	 	  	 	  	 	  

 
  
 Countersigned: 
  
 AMERICAN STOCK TRANSFER & TRUST COMPANY 
 as Rights Agent 
  
 
	 
	 By:
 	 	 

	  	 	  

 
 

 44 

  
 [Form of Reverse Side of Rights Certificate] 
  

FORM OF ASSIGNMENT 
 (To be executed by the registered holder if such 
 holder desires to transfer the Rights Certificate.) 
  
 FOR VALUE
RECEIVED,                                      
                                        
                  hereby sells, assigns and transfers
unto                                      
                                        
                                        
                                        
                                        
                          
                                        
                                        
                                        
                                        
                                        
                               
  
 
(please print name and address of transferee) 
  
 this Rights
Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint
                         Attorney, to transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution. 
  
 
	 
	 Dated:                                     
           ,             .
 
	 
	 

	 Signature
 
	 
	 

	 Signature
 
	 
	 Signature(s) Guaranteed:
 
	 
	 

 
 

 45 

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

  
  
 
	 
	 Dated:                                     
   ,             .
 
	 
	 

	 Signature
 

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

 46 

  
 FORM OF ELECTION TO PURCHASE 
  
 (To be executed if holder desires to 
 exercise the Rights Certificate pursuant to 
 Section 11(a)(ii) of the Rights Agreement.) 
  
 To CARDIMA, INC.: 

 
 The undersigned hereby irrevocably elects to exercise
                             Rights represented by this Rights Certificate to purchase the shares of
Common Stock (or such other securities of the Company) issuable upon the exercise of the Rights and requests that certificates for such shares be issued in the name of: 
  
 
(Please insert social security or other identifying number) 
  
 
(Please print name and address) 
  
 
 

The Rights Certificate indicating the balance, if any, of such Rights which may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement shall be returned to the
undersigned unless such Person requests that the Rights Certificate be registered in the name of and delivered to: (Complete only if Rights Certificate is to be registered in a name other than the undersigned.) 
  
 
Please insert social security or other identifying number 
  
 
(Please print name and address) 
  
 
 
 Dated:
                        ,             . 

 
 
	  	 	  	 	  
	 
	 
	 	  	 	 

	 
	 Signature
 	 	  	 	 Signature
 
	 
	 Signature(s) Guaranteed:
 	 	  	 	  
	 
	 
	 	  	 	  

 
 

 47 

  
 CERTIFICATE 
  
 The undersigned hereby certifies by checking the appropriate boxes that: 
  
 (1)  the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement); 
  
 (2)  this Rights Certificate [
] is [ ] is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); 

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

	 Signature
 

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

 48 

 FORM OF ELECTION TO PURCHASE 
 (To be executed if holder desires
to exercise 
 the Rights Certificate other than pursuant to 
 Section 11(a)(ii) of the Rights
Agreement.) 
  
 To CARDIMA, INC.: 
  
 The undersigned hereby irrevocably elects to exercise
                                 Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock (or such other securities of the Company or any other Person) issuable upon the exercise of the Rights and requests that certificates for such shares be issued in the name of: 
  
 
(Please insert social security or other identifying number) 
  
 
(Please print name and address) 
  
 
 
 The Rights Certificate indicating the balance, if any, of such Rights which may still be exercised pursuant to
Section 11(a)(ii) of the Rights Agreement shall be returned to the undersigned unless such Person requests that the Rights Certificate be registered in the name of and delivered to: (Complete only if Rights Certificate is to be registered in a name
other than the undersigned.) 
  
 
Please insert social security or other identifying
number 
  
 
(Please print name and address) 
  
 
 
 Dated:
                        ,             . 

 
 
	  	 	  	 	  
	 
	 
	 	  	 	 

	 
	 Signature
 	 	  	 	 Signature
 
	 
	 Signature(s) Guaranteed:
 	 	  	 	  
	 
	 
	 	  	 	  

 
 

 49 

  
 CERTIFICATE 
  
 The undersigned hereby certifies by checking the appropriate boxes that: 
  
 (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined pursuant to the Rights Agreement); 
  
 (2) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); 

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

	 Signature
 

 
  
 NOTICE 
  
 The signature to the foregoing Election to Purchase must correspond to the name as written upon the fact of this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever. 
 

 50 

  
 EXHIBIT C 
  
 SUMMARY OF RIGHTS 
  
 Effective on May 17, 2002 the Board of Directors of Cardima, Inc. (the “Company”) declared a dividend distribution of one Right for each outstanding share of common stock, $0.001 par value (the “Common
Stock”), of the Company to stockholders of record at the close of business on May 21, 2002 (the “Record Date”). Except as set forth below, each Right, when exercisable, entitles the registered holder to purchase from the Company one
one-hundredth share of a new series of preferred stock, designated as Series A Participating Preferred Stock, $0.001 par value (the “Preferred Stock”), at a price of $50.00 per one one-hundredth of a share (the “Purchase Price”),
subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the “Rights Agreement”) between the Company and American Stock Transfer & Trust Company, as Rights Agent. 
  
 Initially, the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate Rights
certificates will be distributed. The Rights will separate from the Common Stock and a Distribution Date will occur upon the earliest of (i) a public announcement that a Person or group of affiliated or associated Persons (an “Acquiring
Person”) has acquired, or obtained the right to acquire beneficial ownership of securities having 15% or more of the voting power of all outstanding voting securities of the Company or (ii) ten days (unless such date is extended by the Board of
Directors) following the commencement of (or a public announcement of an intention to make) a tender offer or exchange offer which would result in any Person or group of related Persons becoming an Acquiring Person. 
  
 Until the Distribution Date the Rights will be evidenced, with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate. The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with Common Stock certificates. From as soon as practicable after the Record Date and until
the Distribution Date (or earlier redemption or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of the Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates for Common Stock outstanding as of the Record Date (with or without this Summary of Rights attached) will also
constitute the transfer of the Rights associated with the Common Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights (“Rights Certificates”) will be
mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and the separate Rights Certificates alone will evidence the Rights. 
  
 The Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest of (i) May 20, 2012, (ii) consummation of a merger transaction with
a Person or group who acquired Common Stock pursuant to a Permitted Offer (as defined below), and the price per share of Common Stock and form of consideration offered to the remaining holders of Common Stock is in the transaction is the same price
per share and form of consideration paid in the Permitted Offer or (iii) redemption or exchange by the Company as described below. 
 

 1 

  
 The Purchase Price payable, and the number of shares of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock, (ii) upon the grant to
holders of the Preferred Stock of certain rights, options or warrants to subscribe for Preferred Stock, certain convertible securities or securities having the same or more favorable rights, privileges and preferences as the Preferred Stock at less
than the current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends out of earnings or retained earnings) or of
subscription rights or warrants (other than those referred to in clause (ii)). 
  
 In the event that, after the first date of
public announcement by the Company or an Acquiring Person that an Acquiring Person has become such, the Company is involved in a merger or other business combination transaction (whether or not the Company is the surviving corporation) or 50% or
more of the Company’s assets or earning power are sold (in one transaction or a series of transactions), proper provision shall be made so that each holder of a Right (other than an Acquiring Person) shall 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 either the Company, in the event that it is the surviving corporation of a merger or consolidation, or the acquiring company (or, in
the event there is more than one acquiring company, the acquiring company receiving the greatest portion of the assets or earning power transferred) which at the time of such transaction would have a market value of two times the exercise price of
the Right (such right being called the “Merger Right”). In the event that a Person becomes the beneficial owner of securities having 15% or more of the voting power of all then outstanding voting securities of the Company (unless pursuant
to a tender offer or exchange offer for all outstanding shares of Common Stock at a price and on terms determined prior to the date of the first acceptance of payment for any of such shares by at least a majority of the members of the Board of
Directors who are not officers of the Company and are not Acquiring Persons or Affiliates or Associates thereof to be both adequate and otherwise in the best interests of the Company and its stockholders (a “Permitted Offer”)), then proper
provision shall be made so that each holder of a Right will for a 60-day period (subject to extension under certain circumstances) thereafter have the right to receive upon exercise that number of shares of Common Stock having a market value of two
times the exercise price of the Right, to the extent available, and then (after all authorized and unreserved shares of Common Stock have been issued) a common stock equivalent (such as Preferred Stock or another equity security with at least the
same economic value as the Common Stock) having a market value of two times the exercise price of the Right, with Common Stock to the extent available being issued first (such right being called the “Subscription Right”). The holder of a
Right will continue to have the Merger Right whether or not such holder exercises the Subscription Right. Notwithstanding the foregoing, upon the occurrence of any of the events giving rise to the exercisability of the Merger Right or the
Subscription Right, any Rights that are or were at any time after the Distribution Date owned by an Acquiring Person shall immediately become null and void. 
  
 With certain exceptions, no adjustments in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractions of shares will be issued and, in
lieu thereof, an payment in cash will be made based on the market price of the Common Stock on the last trading date prior to the date of exercise. 
 

 2 

  
 At any time prior to the earlier to occur of (i) a Person becoming an Acquiring Person or (ii)
the expiration of the Rights, the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”), which redemption shall be effective upon the action of the Board of Directors.
Additionally, the Company may thereafter redeem the then outstanding Rights in whole, but not in part, at the Redemption Price (i) if such redemption is incidental to a merger or other business combination transaction or series of transactions
involving the Company but not involving an Acquiring Person or certain related Persons or (ii) following an event giving rise to, and the expiration of the exercise period for, the Subscription Right if and for as long as an Acquiring Person
beneficially owns securities representing less than 15% of the voting power of the Company’s voting securities. The redemption of Rights described in the preceding sentence shall be effective only as of such time when the Subscription Right is
not exercisable, and in any event, only after ten Business Days’ prior notice. Upon the effective date of the 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. 
  
 Subject to applicable law, the Board of Directors, at its option, may at any time after a Person
becomes an Acquiring Person (but not after the acquisition by such Person of 50% or more of the outstanding Common Stock), exchange all or part of the then outstanding and exercisable rights (except for Rights which have become void) for shares of
Common Stock equivalent to one share of Common Stock per Right (subject to adjustment) or, alternatively, for substitute consideration consisting of cash, securities of the Company or other assets (or any combination thereof). 

 
 The Preferred Stock purchasable upon exercise of the Rights will be nonredeemable and junior to any other series of preferred stock the
Company may issue (unless otherwise provided in the terms of such stock). Each share of Preferred Stock will have a preferential quarterly dividend in an amount equal to 100 times the dividend declared on each share of Common Stock, but in no event
less than $50.00. In the event of liquidation, the holders of Preferred Stock will receive a preferred liquidation payment equal to the greater of 100 times $1.00 or 100 times the payment made per each share of Common Stock. Each share of Preferred
Stock will have 100 votes, voting together with the shares of Common Stock. In the event of any merger, consolidation or other transaction in which shares of Common Stock are exchanged, each share of Preferred Stock will be entitled to receive 100
times the amount and type of consideration received per share of Common Stock. The rights of the Preferred Stock as to dividends, liquidation and voting, and in the event of mergers and consolidations, are protected by customary antidilution
provisions. Fractional shares of Preferred Stock may be issued; however, the Company may elect to distribute depositary receipts in lieu of fractional shares in multiples of one one-hundredth of a share. In lieu of fractional shares other than
fractions that are multiples of one one-hundredth of a share, a payment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. 
  
 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. 
  
 A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights 
 

 3 

  
 Agreement is available free of charge from the Company. THIS SUMMARY DESCRIPTION OF THE RIGHTS
DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE. 
 

 4<PAGE>

                                                                     Exhibit 4.1

                          POWERWAVE TECHNOLOGIES, INC.
                             2002 STOCK OPTION PLAN

         This 2002 STOCK OPTION PLAN (the "Plan") is hereby established by
POWERWAVE TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and
adopted by its Board of Directors as of January 23, 2002 (the "Effective Date").

                                   ARTICLE 1

                              PURPOSES OF THE PLAN

         1.1 Purposes. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified individuals in the
employ or service of the Company or any Affiliated Company, upon whose judgment,
initiative and efforts the successful conduct and development of the Company's
business largely depends, and (b) to provide additional incentives to such
persons or entities to devote their utmost effort and skill to the advancement
and betterment of the Company, by providing them an opportunity to participate
in the ownership of the Company and thereby have an interest in the success and
increased value of the Company.

                                   ARTICLE 2
                                   DEFINITIONS

         For purposes of this Plan, the following terms shall have the meanings
indicated:

         2.1 Administrator. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.

         2.2 Affiliated Company. "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.

         2.3 Board. "Board" means the Board of Directors of the Company.

         2.4 Cause. "Cause" means, with respect to a Participant's Continuous
Service, the termination by the Company of such Continuous Service for any of
the following reasons:

             (a) The continued, unreasonable refusal or omission by the
Participant to perform any material duties required of him by the Company if
such duties are consistent with duties customary for the position held with the
Company;

             (b) Any material act or omission by the Participant involving
malfeasance or gross negligence in the performance of Participant's duties to,
or material deviation from any of the policies or directives of, the Company;

<PAGE>

             (c) Conduct on the part of Participant which constitutes the breach
of any statutory or common law duty of loyalty to the Company; including the
unauthorized disclosure of material confidential information or trade secrets of
the Company; or

             (d) Any illegal act by Participant which materially and adversely
affects the business of the Company or any felony committed by Participant, as
evidenced by conviction thereof, provided that the Company may suspend
Participant with pay while any allegation of such illegal or felonious act is
investigated.

     2.5 Change in Control. "Change in Control" shall mean (i) the acquisition,
directly or indirectly, by any person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial
ownership of more than fifty percent (50%) of the outstanding securities of the
Company; (ii) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated; (iii) the sale, transfer
or other disposition of all or substantially all of the assets of the Company;
(iv) a complete liquidation or dissolution of the Company; or (v) any reverse
merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
merger.

     2.6  Code. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

     2.7  Committee. "Committee" means a committee of two or more members of the
Board or officers of the Company appointed by the Board to administer the Plan,
as set forth in Section 6.1 hereof.

     2.8  Common Stock. "Common Stock" means the Common Stock of the Company,
subject to adjustment pursuant to Section 4.2 hereof.

     2.9  Continuing Director. "Continuing Director means any member of the
Board of Directors of the Company who was a member of the Board prior to the
effective date of the Plan, and any person who is subsequently elected to the
Board if such person is recommended or approved by a majority of the Continuing
Directors.

     2.10 Covered Employee. "Covered Employee" means the chief executive officer
(or such person that is acting as the chief executive officer) and any other
employee whose total compensation for the taxable year is required to be
reported to the Company's shareholders pursuant to the Exchange Act by reason of
such person being among the four (4) highest compensated officers for the
taxable year.

     2.11 Disability. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.

     2.12 Effective Date. "Effective Date" means the date on which the Plan is
adopted by the Board, as set forth on the first page hereof.

                                       2

<PAGE>

     2.13 Exercise Price. "Exercise Price" means the purchase price per share of
Common Stock payable upon exercise of an Option.

     2.14 Exchange Act. "Exchange Act" means the Securities Exchange Act of
1934, as amended.

     2.15 Fair Market Value. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as
follows:

         (a) If the Common Stock is then listed or admitted to trading on a
NASDAQ market system or a stock exchange which reports closing sale prices, the
Fair Market Value shall be the closing sale price on the date of valuation on
such NASDAQ market system or principal stock exchange on which the Common Stock
is then listed or admitted to trading, or, if no closing sale price is quoted on
such day, then the Fair Market Value shall be the closing sale price of the
Common Stock on such NASDAQ market system or such exchange on the next preceding
day for which a closing sale price is reported.

         (b) If the Common Stock is not then listed or admitted to trading on a
NASDAQ market system or a stock exchange which reports closing sale prices, the
Fair Market Value shall be the average of the closing bid and asked prices of
the Common Stock in the over-the-counter market on the date of valuation.

         (c) If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the Administrator in good
faith using any reasonable method of evaluation, which determination shall be
conclusive and binding on all interested parties.

     2.16 NASD Dealer. "NASD Dealer" means a broker-dealer that is a member of
the National Association of Securities Dealers, Inc.

     2.17 Non-Employee Director. "Non-Employee Director" means a Director who
either (i) is not a current employee or officer of the Company or its parent or
a subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.

     2.18 Option. "Option" means any option to purchase Common Stock granted
pursuant to the Plan. All Options granted pursuant to the Plan shall be
nonqualified options, and no Options granted pursuant to the Plan shall be in
the form of "incentive stock option" as defined in Section 422 of the Code.

     2.19 Option Agreement. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.

     2.20 Optionee. "Optionee" means a Participant who holds an Option.

                                       3

<PAGE>

     2.21 Outside Director. "Outside Director" means a Director who either (i)
is not a current employee of the Company or an "affiliated corporation" (as
described under the of Treasury Regulations relating to Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in any
capacity other than as a Director, or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.

     2.22 Participant. "Participant" means an individual or entity who holds an
Option.

     2.23 Securities Act. "Securities Act" means the Securities Act of 1933, as
amended.

                                    ARTICLE 3

                                   ELIGIBILITY

     3.1  Options. Qualified individuals in the employ or service of the Company
or any Affiliated Company, are eligible to receive Options under the Plan.
Non-Employee Directors are not eligible to receive Options under the Plan.

     3.2  Limitation on Shares. In no event shall any Participant be granted
Options in any one calendar year pursuant to which the aggregate number of
shares of Common Stock that may be acquired thereunder exceeds 300,000 shares.

                                    ARTICLE 4

                                   PLAN SHARES

     4.1  Shares Subject to the Plan. A total of 2,000,000 shares of Common
Stock may be issued under the Plan, subject to adjustment as to the number and
kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation,
in the event that (a) all or any portion of any Option granted or offered under
the Plan can no longer under any circumstances be exercised, or (b) any shares
of Common Stock are reacquired by the Company pursuant to an Option Agreement,
the shares of Common Stock allocable to the unexercised portion of such Option,
or the shares so reacquired, shall again be available for grant or issuance
under the Plan.

     4.2  Changes in Capital Structure. In the event that the outstanding shares
of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of shares subject to this Plan, and the number and
kind of shares and the price per share subject to outstanding Option Agreements
in order to preserve, as nearly as practical, but not to increase, the benefits
to Participants.

                                       4

<PAGE>

                                   ARTICLE 5

                                     OPTIONS

     5.1 Option Agreement. Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the vesting provisions relating to such Option, and the
Exercise Price per share. As soon as is practical following the grant of an
Option, an Option Agreement shall be duly executed and delivered by or on behalf
of the Company to the Optionee to whom such Option was granted. Each Option
Agreement shall be in such form and contain such additional terms and
conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.

     5.2 Exercise Price. The Exercise Price per share of Common Stock covered by
each Option shall be determined by the Administrator, but shall not be less than
100% of Fair Market Value on the date the Option is granted.

     5.3 Payment of Exercise Price. Payment of the Exercise Price shall be made
upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) provided
that a public market for the Common Stock exists, a "same day sale" commitment
from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to
exercise the Option and to sell a portion of the shares so purchased to pay for
the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt
of such shares to forward the Exercise Price directly to the Company; (e)
provided that a public market for the Common Stock exists, a "margin" commitment
from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to
exercise the Option and to pledge the shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such shares to forward the Exercise Price directly to the Company; or (f) any
combination of the foregoing methods of payment or any other consideration or
method of payment as shall be permitted by applicable corporate law.

     5.4 Term and Termination of Options. The term and provisions for
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted.

     5.5 Vesting and Exercise of Options. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.

     5.6 Nontransferability of Options. No Option shall be assignable or
transferable except by will or the laws of descent and distribution, and during
the life of the Optionee shall be exercisable only by such Optionee.

                                       5

<PAGE>

     5.7 Rights as Shareholder. An Optionee or permitted transferee of an Option
shall have no rights or privileges as a shareholder with respect to any shares
covered by an Option until such Option has been duly exercised and certificates
representing shares purchased upon such exercise have been issued to such
person.

     5.8 Restrictions on Underlying Shares of Common Stock. Shares of Common
Stock issued pursuant to the exercise of an option may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Option Agreement.

                                   ARTICLE 6

                           ADMINISTRATION OF THE PLAN

     6.1 Administrator. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board or two (2) or more officers of the Company
("Committee"). The Board or Committee shall have the discretion to delegate
authority to a committee consisting of (i) two (2) or more members of the Board
that are Outside Directors for the grant of Options to qualified individuals
that are Covered Employees, persons expected to be Covered Employees at the time
of the exercise of such Options, or persons in which the Company desires to
comply with 162(m) of the Code, or (ii) two (2) or more members of the Board
that are Non-Employee Directors for the grant of Options to qualified
individuals that are subject to Section 16 of the Exchange Act. As used herein,
the term "Administrator" means the Board or, with respect to any matter as to
which responsibility has been delegated to the Committee, the term Administrator
shall mean the Committee.

     6.2 Powers of the Administrator. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which Options shall be granted, the number of
shares to be represented by each Option and the consideration to be received by
the Company upon the exercise thereof; (b) to interpret the Plan; (c) to create,
amend or rescind rules and regulations relating to the Plan; (d) to determine
the terms, conditions and restrictions contained in, and the form of, Option
Agreements; (e) to determine the identity or capacity of any persons who may be
entitled to exercise a Participant's rights under any Option under the Plan; (f)
to correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Option Agreement; (g) to accelerate the vesting of any
Option; (h) to provide for rights of first refusal and/or repurchase rights; (i)
to amend outstanding Option Agreements to provide for, among other things, any
change or modification which the Administrator could have provided for upon the
grant of an Option or in furtherance of the powers provided for herein; and (j)
to make all other determinations necessary or advisable for the administration
of the Plan, but only to the extent not contrary to the express provisions of
the Plan. Notwithstanding the foregoing, the Administrator shall not have the
authority to amend an Option Agreement to effect a "re-pricing" of the exercise
price of such Option either by (i) lowering the exercise price of a previously
granted Option or (ii) by canceling a previously granted Option and granting a
new Option, except that an amendment to an Option Agreement pursuant to Section
4.2 or Section 7.1 herein shall not be considered a re-pricing of such Option.
Any action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Participants.

                                       6

<PAGE>

     6.3 Limitation on Liability. No employee of the Company or member of the
Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.

                                   ARTICLE 7

                                CHANGE IN CONTROL

     7.1 Change in Control. In the event of a Change in Control of the Company,
if the Change in Control is not approved by a majority of the Continuing
Directors, the Administrator shall cause written notice of the proposed
transaction to be given to all Participants not less than fifteen (15) days
prior to the anticipated effective date of the proposed transaction and,
concurrent with the effective date of the proposed transaction, all Options
shall be accelerated and concurrent with such date the holders of such Options
shall have the right to exercise such Options in respect to any or all shares
subject thereto which have not previously been exercised. If, within 180 days of
a Change in Control (regardless of its approval or non-approval by the
Continuing Directors), an individual Participant's status as an employee is
terminated by the Company or its successor other than for Cause, then such
Participant's Options, to the extent not previously accelerated, shall be
accelerated and concurrent with the date of such termination such Participant
shall have the right to exercise such Options in respect to any or all shares
subject thereto and not previously exercised. The Administrator in its
discretion may, at any time an Option is granted, or at any time thereafter
(regardless of its acceleration or non-acceleration), take one or more of the
following actions: (A) provide for the purchase of each Option for an amount of
cash or other property that could have been received upon the exercise of the
Option, (B) adjust the terms of the Options in a manner determined by the
Administrator to reflect the Change in Control, (C) cause the Options to be
continued or assumed, or new rights substituted therefor, by the surviving or
another entity, through the continuance of the Plan and the continuation or
assumption of outstanding Options, or the substitution for such Options of new
options of comparable value covering shares of a successor corporation, with
appropriate adjustments as to the number and kind of shares and Exercise Prices,
in which event the Plan and such Options, or the new options substituted
therefor, shall continue in the manner and under the terms so provided or (D)
make such other provision as the Administrator may consider equitable. In the
event of a Change of Control in which the Options are not continued, assumed or
substituted therefor by the surviving or another entity, regardless of whether
such Change in Control is approved by a majority of the Continuing Directors,
the Options shall be accelerated and fully exercisable upon the effective date
of the Change in Control and the Administrator shall cause written notice of the
proposed transaction to be given to all Participants not less than fifteen (15)
days prior to the anticipated effective date of the proposed transaction.

                                   ARTICLE 8

                      AMENDMENT AND TERMINATION OF THE PLAN

     8.1 Amendments. The Board may from time to time alter, amend, suspend or
terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment,

                                       7

<PAGE>

suspension or termination shall be made which shall substantially affect or
impair the rights of any Participant under an outstanding Option Agreement
without such Participant's consent. The Board may alter or amend the Plan to
comply with requirements under the Code relating to Options or other types of
options which give Optionees more favorable tax treatment than that applicable
to Options granted under this Plan as of the date of its adoption. Upon any such
alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such terms
and conditions.

     8.2 Plan Termination. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options may be granted under the Plan thereafter, but
Option Agreements, then outstanding shall continue in effect in accordance with
their respective terms.

                                   ARTICLE 9

                                 TAX WITHHOLDING

     9.1 Withholding. The Company shall have the power to withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy any
applicable Federal, state, and local tax withholding requirements with respect
to any Options exercised under the Plan. To the extent permissible under
applicable tax, securities and other laws, the Administrator may, in its sole
discretion and upon such terms and conditions as it may deem appropriate, permit
a Participant to satisfy his or her obligation to pay any such tax, in whole or
in part, up to an amount determined on the basis of the highest marginal tax
rate applicable to such Participant, by (a) directing the Company to apply
shares of Common Stock to which the Participant is entitled as a result of the
exercise of an Option, or (b) delivering to the Company shares of Common Stock
owned by the Participant. The shares of Common Stock so applied or delivered in
satisfaction of the Participant's tax withholding obligation shall be valued at
their Fair Market Value as of the date of measurement of the amount of income
subject to withholding.

                                   ARTICLE 10

                                  MISCELLANEOUS

     10.1 Benefits Not Alienable. Other than as provided above, benefits under
the Plan may not be assigned or alienated, whether voluntarily or involuntarily.
Any unauthorized attempt at assignment, transfer, pledge or other disposition
shall be without effect.

     10.2 No Enlargement of Employee Rights. This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an
inducement to, or a condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company or to limit the
right of the Company or any Affiliated Company to discharge any Participant at
any time.

                                       8

<PAGE>

     10.3 Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Option Agreements, except as otherwise provided
herein, will be used for general corporate purposes.

                                       9

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