Document:

Exhibit
4.1

 

SECOND SUPPLEMENTAL INDENTURE

 

by and among

 

GLOBALSTAR, INC.

AS ISSUER,

 

 

AND

 

 

U.S. BANK, NATIONAL ASSOCIATION

AS TRUSTEE

 

 

8.00% Convertible Senior Unsecured Notes

 

 

 

Dated as of June 19, 2009

 

 

 

Supplemental To Indenture For Senior Debt Securities

 

Dated as of April 15,
2008

 

 

	
  ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE

  	
  2

  
	
  Section 1.01. Scope of
  Second Supplemental Indenture

  	
  2

  
	
  Section 1.02. Definitions

  	
  2

  
	
  Section 1.03. Other
  Definitions

  	
  8

  
	
  Section 1.04. Rules of
  Construction

  	
  8

  
	
  ARTICLE 2 THE SECURITIES

  	
  9

  
	
  Section 2.01. Title; Amount
  and Issue of Securities; Principal and Interest

  	
  9

  
	
  Section 2.02. Form of
  Securities

  	
  9

  
	
  Section 2.03. Legends

  	
  10

  
	
  Section 2.04. Registrar and
  Paying Agent

  	
  10

  
	
  Section 2.05. General
  Provisions Relating to Transfer and Exchange

  	
  11

  
	
  Section 2.06. Book-Entry
  Provisions for the Global Securities

  	
  11

  
	
  ARTICLE 3 COVENANTS

  	
  12

  
	
  Section 3.01. Payment of
  Securities

  	
  12

  
	
  Section 3.02. Further
  Instruments and Acts

  	
  13

  
	
  Section 3.03. Statement by
  Officer as to Default

  	
  13

  
	
  Section 3.04. Special
  Interest

  	
  13

  
	
  Section 3.05. Reports by
  Company

  	
  14

  
	
  Section 3.06. Shareholder
  Approval

  	
  14

  
	
  Section 3.07. Usury Laws

  	
  14

  
	
  ARTICLE 4 REDEMPTION OF SECURITIES

  	
  14

  
	
  Section 4.01. Mandatory
  Redemption

  	
  14

  
	
  Section 4.02. Notice of
  Redemption

  	
  15

  
	
  ARTICLE 5 DEFAULTS AND REMEDIES

  	
  15

  
	
  Section 5.01. Additional
  Events of Default

  	
  15

  
	
  Section 5.02. Sole Remedy
  for Failure to Report

  	
  17

  
	
  ARTICLE 6 DISCHARGE OF INDENTURE

  	
  17

  
	
  Section 6.01. Discharge of
  Liability on Securities

  	
  17

  
	
  Section 6.02. Reinstatement

  	
  18

  
	
  Section 6.03. Officer’s
  Certificate; Opinion of Counsel

  	
  18

  
	
  ARTICLE 7 AMENDMENTS

  	
  19

  
	
  Section 7.01. With Consent
  of Holders

  	
  19

  
	
  Section 7.02. Without
  Consent of Holders

  	
  19

  
	
  Section 7.03. Without
  Consent of Holders of Senior Debt

  	
  20

  
	
  ARTICLE 8 PURCHASE AT THE OPTION OF HOLDERS UPON A
  FUNDAMENTAL CHANGE

  	
  20

  
	
  Section 8.01. Purchase at
  the Option of the Holders Upon a Fundamental Change

  	
  20

  
	
  Section 8.02. Further
  Conditions and Procedures for Purchase at the Option of the Holder Upon a
  Fundamental Change

  	
  22

  
	
  Section 8.03. Purchase of
  Securities in Open Market

  	
  24

  
	
  ARTICLE 9 CONVERSION

  	
  25

  
	
  Section 9.01. Conversion of
  Securities

  	
  25

  
	
  Section 9.02. Conversion
  Procedures

  	
  25

  
	
  Section 9.03. Settlement
  Upon Conversion

  	
  25

  
	
  Section 9.04. Adjustments to
  Base Conversion Rate

  	
  26

  
	
  Section 9.05. Make-Whole
  Adjustment to Common Stock Delivered Upon Conversion

  	
  34

  
	
  Section 9.06. Fractional
  Shares

  	
  34

  

 

i

 

	
  Section 9.07. Notice of
  Adjustment

  	
  34

  
	
  Section 9.08. Notice of
  Certain Transactions

  	
  34

  
	
  Section 9.09. Effect of
  Recapitalizations, Reclassifications, and Changes of Common Stock

  	
  35

  
	
  Section 9.10. Responsibility
  of Trustee

  	
  36

  
	
  Section 9.11. Stockholder
  Rights Plan

  	
  36

  
	
  Section 9.12. Taxes on
  Conversion

  	
  37

  
	
  Section 9.13. Certain Covenants
  of the Company

  	
  37

  
	
  Section 9.14. Automatic
  Conversion

  	
  37

  
	
  Section 9.15. Limitation on
  Conversion Prior to Shareholder Approval

  	
  39

  
	
  ARTICLE 10 MISCELLANEOUS

  	
  39

  
	
  Section 10.01. No Defeasance

  	
  39

  
	
  Section 10.02. Notices,
  Etc., to Trustee and Company

  	
  39

  
	
  Section 10.03. Communication
  by Holders with other Holders

  	
  40

  
	
  Section 10.04. Rules by
  Trustee, Paying Agent and Registrar

  	
  40

  
	
  Section 10.05. Legal
  Holidays

  	
  40

  
	
  Section 10.06. Governing Law

  	
  40

  
	
  Section 10.07.
  Incorporators, Shareholders, Officers and Directors of the Company Exempt
  from Individual Liability

  	
  40

  
	
  Section 10.08. Successors
  and Assigns

  	
  41

  
	
  Section 10.09. Multiple
  Originals

  	
  41

  
	
  Section 10.10. Conflict with
  Trust Indenture Act

  	
  41

  
	
  Section 10.11. Effect of
  Headings and Table of Contents

  	
  41

  
	
  Section 10.12. Separability
  Clause

  	
  41

  
	
  Section 10.13. Benefits of
  the Second Supplemental Indenture

  	
  41

  
	
  Section 10.14. Calculations

  	
  41

  
	
  Section 10.15. Ratification
  and Incorporation of Original Indenture

  	
  41

  
	
  ARTICLE 11 SUBORDINATION OF SECURITIES

  	
  42

  
	
  Section 11.01. Securities
  Subordinated to Senior Debt

  	
  42

  
	
  Section 11.02. No Payment on
  Securities in Certain Circumstances

  	
  42

  
	
  Section 11.03. Payment over
  of Proceeds upon Dissolution, Etc.

  	
  42

  
	
  Section 11.04. Payment Over
  of Other Proceeds

  	
  44

  
	
  Section 11.05. Subrogation

  	
  44

  
	
  Section 11.06. Obligations
  of Company Unconditional

  	
  45

  
	
  Section 11.07. Notice to
  Trustee

  	
  45

  
	
  Section 11.08. Reliance on
  Judicial Order or Certificate of Liquidating Agent

  	
  46

  
	
  Section 11.09. Trustee’s
  Relation to Senior Debt

  	
  46

  
	
  Section 11.10. Subordination
  Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior
  Debt

  	
  46

  
	
  Section 11.11. Holders
  Authorize Trustee to Effectuate Subordination of Securities

  	
  47

  
	
  Section 11.12. Not to
  Prevent Events of Default

  	
  47

  
	
  Section 11.13. Trustee’s
  Compensation Not Prejudiced

  	
  47

  
	
  Section 11.14. No Waiver of
  Subordination Provisions

  	
  47

  
	
  Section 11.15. Limitations
  on Enforcement

  	
  47

  
	
  Section 11.16. Trust Monies
  Not Subordinated

  	
  48

  
	
  Section 11.17.
  Non-competition

  	
  48

  
	
  Section 11.18. Filing of Claims
  Upon an Insolvency Event

  	
  49

  

 

ii

 

SECOND SUPPLEMENTAL INDENTURE dated as of June 19,
2009, between Globalstar, Inc., a Delaware corporation (the “Company” or the “Issuer”) and U.S. Bank National Association, as Trustee (the “Trustee”).

 

Each party agrees as follows for the benefit
of the other parties and for the equal and ratable benefit of the Holders of
the Company’s 8.00% Convertible Senior Unsecured Notes (the “Securities”) on
the date hereof.

 

W I T N E S S E T H:

 

WHEREAS, this Second Supplemental Indenture
is supplemental to the Original Indenture; and

 

WHEREAS, for its lawful corporate purposes,
the Company has duly authorized the issue of the Securities which comprise (i) Original
Securities (as defined herein) in the aggregate principal amount of $55,000,000
and (ii) Additional Securities (as defined herein) issued in accordance
with the terms hereof, and in order to provide the terms and conditions upon
which the Securities are to be authenticated, issued and delivered, the Company
has duly authorized the execution and delivery of this Second Supplemental
Indenture; and

 

WHEREAS, pursuant to Section 3.1 of the
Original Indenture, the Company may establish one or more series of Securities
(as such term is defined in the Original Indenture) from time to time as
authorized by a supplemental indenture, of which the Securities shall be one
such series; and

 

WHEREAS, the Form of Security, the
certificate of authentication to be borne by each Security, the Assignment
Form, the Form of Conversion Notice, and the Form of Fundamental
Change Purchase Notice to be borne by the Securities are to be substantially in
the forms hereinafter provided for; and

 

WHEREAS, all acts and things necessary to
make the Securities, when executed by the Company and authenticated and
delivered by the Trustee or a duly authorized authenticating agent, as in the
Indenture provided, the valid, binding and legal obligations of the Company,
and to constitute these presents a valid agreement according to its terms, have
been done and performed, and the execution of this Second Supplemental
Indenture and the issue hereunder of the Securities have in all respects been
duly authorized.

 

NOW, THEREFORE, THIS SECOND SUPPLEMENTAL
INDENTURE WITNESSETH:

 

That in order to declare the terms and
conditions upon which the Securities are, and are to be, authenticated, issued
and delivered, and in consideration of the premises and of the purchase and
acceptance of the Securities by the holders thereof, the Company covenants and
agrees with

 

1

 

the Trustee for the equal
and proportionate benefit of the respective holders from time to time of the
Securities (except as otherwise provided below), as follows:

 

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.  Scope of Second Supplemental Indenture.  The changes, modifications and supplements to the Original Indenture
affected by this Second Supplemental Indenture shall be applicable only with
respect to, and shall only govern the terms of, the Securities, which comprise (i) Original
Securities in the aggregate principal amount of $55,000,000 and (ii) Additional
Securities issued in accordance with the terms hereof, which in each case may
be issued from time to time, and shall not apply to any other securities that
may be issued under the Original Indenture unless a supplemental indenture with
respect to such other securities specifically incorporates such changes,
modifications and supplements.  The
provisions of the Second Supplemental Indenture shall supersede any
corresponding or inconsistent provisions in the Original Indenture.

 

Section 1.02.  Definitions.  The terms defined in this Section 1.02
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Second Supplemental Indenture and for
purposes of the Original Indenture as it relates to the Securities shall have
the respective meanings specified in this Section 1.02.  Except as otherwise provided in this Second
Supplemental Indenture, all words, terms and phrases defined in the Original
Indenture (but not otherwise defined herein) shall have the same meaning herein
as in the Original Indenture. All other terms used in this Second Supplemental
Indenture that are defined in the Trust Indenture Act or that are by reference
therein defined in the Securities Act (except as herein otherwise expressly
provided or unless the context otherwise requires) shall have the meanings
assigned to such terms in said Trust Indenture Act and in said Securities Act
as in force at the date of the execution of this Second Supplemental
Indenture.  The words “herein,” “hereof,”
“hereunder,” and words of similar import refer to this Second Supplemental
Indenture as a whole and not to any particular Article, Section or other
subdivision.

 

“Additional
Interest” has the meaning specified in Section 5.01(f).

 

“Additional
Securities” means additional Securities issued under this Second
Supplemental Indenture in accordance with Sections 2.01 and 3.01 hereof, as
part of the same series as the Initial Securities.

 

“Base
Conversion Price” at any time means a dollar amount equal to $1,000
divided by the Base Conversion Rate at such time, rounded to the nearest cent.

 

“Base Conversion
Rate” shall initially be 555.6 shares of Common Stock per $1,000
principal amount of Securities, subject to adjustment as provided in Article 9.

 

“Beneficial
Owner” shall mean, with respect to any security, any Person who is
considered a “beneficial owner” of such security in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act.

 

“Business
Day” means any day other than a Saturday, a Sunday or a day on which
banking institutions in The City of New York are authorized or required by law,
regulation or executive order to close.

 

2

 

“Capital
Stock” of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person.

 

“Change of
Control” means the occurrence of any of the following events:

 

(1)                                  any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be deemed to have
beneficial ownership of all shares that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of Voting Stock representing 50% or more (or, if
such person is Thermo Capital Partners LLC, 70% or more) of the total voting
power of all outstanding Voting Stock of the Company; or

 

(2)                                  the Company
consolidates with, or merges with or into, another Person or the Company sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person; provided, however, that any such
transaction will not be a Change of Control if immediately after such
transaction the Person or Persons that “beneficially owned” (as defined in Rules 13d-3
and 13d-5 under the Exchange Act) immediately prior to the transaction,
directly or indirectly, Voting Stock representing a majority of the total
voting power of all outstanding Voting Stock of the Company, “beneficially own
or owns” (as so determined), directly or indirectly, Voting Stock representing
a majority of the total voting power of the outstanding Voting Stock of the
surviving or transferee person; or

 

(3)                                  the first day
on which the Continuing Directors cease for any reason to constitute a majority
of the Board of Directors (defined without regard to the words “or any duly
authorized committee of that board to which the powers of that board have been
lawfully delegated” in such definition); or

 

(4)                                  the adoption of
a plan of liquidation or dissolution of the Company.

 

The number of shares of “outstanding Voting
Stock of the Company” for purposes of clause (1) of the definition of
Change of Control, shall include (without duplication) all shares of Common
Stock that any Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time.

 

“Close of Business” means 5:00 p.m. New York City time.

 

“Closing
Sale Price” of the Common Stock (or any other securities on any
date) means the last reported sale price per share (or if no last reported sale
price is reported, the average of the bid and ask prices or, if more than one
in either case, the average of the average bid and the average ask prices) on
that date as reported in composite transactions for the principal United States
national or regional securities exchange on which the Common Stock or such
securities, as applicable, are listed for trading. If the Common Stock or the
other security, as applicable, is not listed for trading on a United States
national or regional securities exchange on the relevant date, the Closing Sale
Price will be the last quoted bid price for Common Stock or the other security,
as applicable, in the over-the-counter market on the relevant date as reported
by Pink Sheets LLC or similar organization. If Common Stock or the other
security, as applicable, is not so quoted 

 

3

 

the Closing Sale Price will
be the average of the mid-point of the last bid and ask prices for Common Stock
or the other security, as applicable, on the relevant date from each of three
nationally recognized independent investment banking firms selected by the
Company for this purpose (which determination shall be conclusive and shall be
evidenced by an Officer’s Certificate delivered to the Trustee).

 

“COFACE
Agent” means BNP Paribas, as COFACE Agent under the COFACE Facility
Agreement.

 

“COFACE
Facility Agreement” means the COFACE Facility Agreement dated as of June 5,
2009 between the Company, BNP Paribas, Société Général, Natixis, Calyon, Crédit
Industriel et Commercial as mandated lead arrangers, the COFACE Agent, BNP
Paribas as security agent and the lenders party thereto (as amended, modified
or supplemented from time to time).

 

“COFACE
Final Maturity Date” means the earlier to occur of (i) December 15,
2019 and (ii) the date that is 104 months after the final “Launch” as such
term is defined in the COFACE Facility Agreement.

 

“COFACE
Finance Documents” means the “Finance Documents” as such term is
defined in the COFACE Facility Agreement.

 

“COFACE
Finance Parties” means the “Finance Parties” as such term is defined
in the COFACE Facility Agreement.

 

“COFACE
Security Agent” means BNP Paribas, as Security Agent under the
COFACE Facility Agreement.

 

“Common
Stock” means the Company’s common stock, par value $0.0001 per share
at the date of this Second Supplemental Indenture or, subject to Section 9.09,
shares of any class or classes resulting from any reclassification or
reclassifications thereof and that have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and that are not subject to redemption
by the Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares
of all such classes resulting from all such reclassifications.

 

“Continuing
Directors” means, as of any date of determination, any member of the
Board of Directors who was (a) a member of the Board of Directors on the
date of the Original Indenture or (b) nominated for election or elected to
the Board of Directors with the approval of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such
nomination or election.  Solely for
purposes of this definition, the term “Board of Directors” shall be defined
without regard to the words “or any duly authorized committee of that board to
which the powers of that board have been lawfully delegated” in such
definition.

 

4

 

“Conversion
Agent” means the office or agency appointed by the Company where
Securities may be presented for conversion. 
The Conversion Agent appointed by the Company shall initially be the
Trustee.

 

“Ex-Dividend
Date” means the first date upon which a sale of the Common Stock
does not automatically transfer the right to receive the relevant distribution
from the seller of the Common Stock to its buyer.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.

 

“Fair
Market Value” means the amount that a willing buyer would pay a
willing seller in an arm’s length transaction.

 

“Final Discharge
Date” means the date on which all the Senior Debt has been
unconditionally and irrevocably paid and discharged in full and none of the
COFACE Finance Parties is under any obligation (whether actual or contingent)
to make advances or provide other financial accommodation to the Issuer under
the COFACE Finance Documents.

 

A “Fundamental
Change” means the occurrence of a Change of Control or a Termination
of Trading.

 

“Initial
Securities” means the first $55,000,000 of aggregate principal
amount of Securities issued under this Second Supplemental Indenture on the
date hereof.

 

“Indenture”
means the Original Indenture, as amended and supplemented by this Second
Supplemental Indenture and, if further amended or supplemented as herein
provided, as so amended or supplemented.

 

“Insolvency Event” means a
situation where any of the following occurs in respect of the Issuer:  (a) the commencement of a voluntary case
(or analogous motion) under the US federal bankruptcy laws or under other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding-up or adjustment of debts or analogous proceedings; (b) the Issuer’s
filing of a petition (or analogous motion) seeking to take advantage of any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding-up, composition for adjustment of debts or analogous
proceedings; (c) the Issuer’s consent to, or failure to contest, in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws; (d) any application for or
consent to, or failure to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator or of a substantial part of its property, domestic or foreign; (e) any
admission in writing by the Issuer of its inability to pay its debts as they
become due; (f) any general assignment for the benefit of creditors; (g) the
taking of any corporate action for the purpose of authorizing any of the
foregoing; or (h) any suspension or threat to suspend making payment on
any of the Issuer’s debts or, by reason of actual or anticipated financial
difficulties, commencement of negotiations with one (1) or more
creditors with a view to rescheduling any of the Issuer’s indebtedness (other
than the COFACE Finance Parties in connection with the COFACE Finance
Documents).

 

5

 

“Intercreditor
Agreement” means the Intercreditor Agreement between the Company,
the Trustee and BNP Paribas as COFACE Agent under the COFACE Facility Agreement
providing for the subordination of the Company’s obligations under this
Indenture for the benefit of the COFACE Finance Parties (as amended, modified
or supplemented from time to time).

 

“Interest
Payment Date” means June 15 and December 15 of each
calendar year, beginning with, and including, December 15, 2009.

 

“Issue Date”
means June 19, 2009.

 

“Market
Disruption Event” means the occurrence or existence for more than
one half hour period in the aggregate on any Scheduled Trading Day for the
Common Stock of any suspension or limitation imposed on trading (by reason of
movements in price exceeding limits permitted by NASDAQ or otherwise) in the
Common Stock or in any options, contracts or futures contracts relating to the
Common Stock, and the suspension or limitation occurs or exists at any time
before 1:00 p.m. (New York City time) on such Scheduled Trading Day.

 

“NASDAQ” means The NASDAQ Global Select Market.

 

“Officer”
means, with respect to any Person, the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer or any Vice President of such Person.

 

“Opening of
Business” means 9:00 a.m. New York City time.

 

“Original
Indenture” means the indenture for Senior Debt Securities dated as
of April 15, 2008 by and between the Company and the Trustee.

 

“Original
Securities” means the $55,000,000 aggregate principal amount of
Securities issued on the date hereof.

 

“Permitted
Payment” means (a) any payment made in the form of Additional
Securities or PIK Interest Shares in respect of interest and other amounts due
on the Securities; (b) payments made at any time that “Shareholder
Distributions” are permitted under Clause 22.6 of the COFACE Facility
Agreement; or (c) payments made after the Final Discharge Date.

 

“Person”
means an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity, or a governmental
body.

 

“PIK
Interest Shares” means shares of Common Stock issued in payment of
interest on Securities in accordance with Section 3.01 hereof.

 

“Placement
Agent” means Lazard Capital Markets LLC.

 

“Placement
Agent Agreement” means the Placement Agent Agreement dated June 16,
2009 between the Company and the Placement Agent related to the initial
placement of the Securities.

 

6

 

“Prospectus
Supplement” means the final prospectus supplement, dated June 8,
2009, relating to the offering by the Company of the Securities.

 

“Regular
Record Date” for the payment of interest on the Securities, means
the May 31 (whether or not a Business Day) immediately preceding an
Interest Payment Date on June 15 and the November 30 (whether or not
a Business Day) immediately preceding an Interest Payment Date on December 15.

 

“Scheduled
Trading Day” means a day that is scheduled to be a Trading Day.

 

“Securities”
has the meaning ascribed to it in the second introductory paragraph of this
Second Supplemental Indenture.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

 

“Securities
Custodian” means the custodian with respect to the Global Security
(as appointed by DTC), or any successor Person thereto and shall initially be
the Trustee.

 

“Senior
Debt” means all Debt of the Company, whether currently outstanding
or hereafter issued, owed to any COFACE Finance Party under or in connection
with the COFACE Finance Documents, including any amendment, modification or
supplement thereto or refinancing thereof.

 

“Shareholder
Approval” means the approval by the Company’s shareholders of the
issuance of all shares of Common Stock issuable upon conversion of the
Securities and exercise of the Warrants in accordance with the requirements of
Listing Rule 5635(d) of NASDAQ.

 

“Special
Interest” has the meaning specified in Section 5.02.

 

“Stated Maturity”
means, with respect to the payment of principal of the Securities, the later to
occur of (i)  June 19, 2019 and (ii) the date that is six months
after COFACE Final Maturity Date.

 

“Termination
of Trading” will be deemed to have occurred if the Common Stock (or
other common stock into which the Securities are then convertible) is not
listed on a United States national securities exchange or approved for
quotation and trading on a national automated dealer quotation system or
established automated over-the-counter trading market in the United States.

 

“Trading
Day” means any day on which (i) there is no Market Disruption
Event and (ii) NASDAQ is open for trading, or, if the Common Stock is not
listed on NASDAQ, any day on which the principal national securities exchange
on which the Common Stock is listed is open for trading, or, if the Common
Stock is not listed on a national securities exchange, any Business Day.  A “Trading
Day” only includes those days that have a scheduled closing time of
4:00 p.m. (New York City time) or the then standard closing time for
regular trading on the relevant exchange or trading system.

 

7

 

“UCC”
means the Uniform Commercial Code as in effect in the State of New York.

 

“Voting
Stock” of any Person means all classes of the Capital Stock of such
Person entitled to vote generally in the election of the board of directors,
managers or trustees of such Person.

 

“Warrants”
means the warrants to purchase shares of the Common Stock issued on the date
hereof in connection with the sale of the Securities.

 

Section 1.03.  Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
  “Additional
  Shares”

  	
   

  	
  9.05(a)

  
	
  “Agent
  Members”

  	
   

  	
  2.06(a)

  
	
  “Business
  Combination”

  	
   

  	
  9.09(a)

  
	
  “Company
  Notice”

  	
   

  	
  8.02

  
	
  “Company
  Notice Date”

  	
   

  	
  8.02

  
	
  “Conversion
  Date”

  	
   

  	
  9.02(a)

  
	
  “Conversion
  Shares”

  	
   

  	
  9.03(a)

  
	
  “Effective
  Date”

  	
   

  	
  9.05(a)

  
	
  “Fundamental
  Change Purchase Date”

  	
   

  	
  8.01(a)

  
	
  “Fundamental
  Change Purchase Notice”

  	
   

  	
  8.01(c)

  
	
  “Fundamental
  Change Purchase Price”

  	
   

  	
  8.01(a)

  
	
  “Global
  Security Legend”

  	
   

  	
  2.03

  
	
  “Make
  Whole Fundamental Change”

  	
   

  	
  9.05(a)

  
	
  “Make
  Whole Fundamental Change Notice”

  	
   

  	
  9.05(a)

  
	
  “Make
  Whole Premium”

  	
   

  	
  9.05(a)

  
	
  “Paying
  Agent”

  	
   

  	
  2.04

  
	
  “Registrar”

  	
   

  	
  2.04

  
	
  “Settlement
  Date”

  	
   

  	
  9.03(b)

  
	
  “Spin-Off”

  	
   

  	
  9.04(d)

  
	
  “Stock
  Price”

  	
   

  	
  9.05(b)

  
	
  “Valuation
  Period”

  	
   

  	
  9.04(d)

  

 

Section 1.04.  Rules of Construction.  In
addition to the rules of construction set forth in Section 1.1 of the Original
Indenture, unless the context otherwise requires:

 

(a)           “or” is not exclusive; and

 

(b)           the principal amount of any non-interest bearing or
other discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP.

 

8

 

ARTICLE 2

THE SECURITIES

 

Section 2.01.  Title; Amount and Issue of Securities;
Principal and Interest.  (a) The Securities shall be known and
designated as the “8.00% Convertible Senior Unsecured Notes” of the
Company.  The aggregate principal amount
of Securities that may be authenticated and delivered under this Second
Supplemental Indenture is initially limited to (i) $55,000,000 in Original
Securities and (ii) such Additional Securities as shall be issued from time to
time in accordance with the terms hereof, except for Securities authenticated
and delivered upon registration of, transfer of, or in exchange for or in lieu
of other Securities pursuant to the terms hereof.

 

(b)           Subject to Section 5.2 of the Original Indenture,
the Securities shall mature on the Stated Maturity unless earlier converted,
redeemed or purchased in accordance with the provisions hereof.

 

(c)           Interest on the Securities shall accrue from and
including the date specified on the face of such Securities until the principal
thereof is paid or made available for payment. 
Interest shall be payable semiannually in arrears on June 15 and December
15 in each year, commencing December 15, 2009. 
The interest so payable on any Security shall be paid to the Person in
whose name such Security is registered at the close of business on the Regular
Record Date for such Interest Payment Date. 
Interest on the Securities will be payable solely in the form of (a) Additional
Securities in the aggregate principal amount equal to the amount of the
interest due on the applicable Interest Payment Date or (b) PIK Interest Shares
in accordance with Section 3.01 hereof. 
For purposes of this Second Supplemental Indenture and the Securities,
unless the context clearly requires otherwise, references to “interest” shall
include Additional Interest and Special Interest.

 

(d)           Principal on Global Securities shall be payable to
DTC in immediately available funds.

 

(e)           Principal of Definitive Securities shall be payable
at the office of the Paying Agent, which initially will be an office or agency
of the Trustee, or an office or agency maintained for such purpose, in the
Borough of Manhattan, The City of New York.

 

Section 2.02.  Form of Securities.  (a) Except as otherwise
provided pursuant to this Section 2.02, the Securities are issuable in fully
registered form without coupons in substantially the form of Exhibit A hereto,
with such applicable legends as are provided for in Section 2.03.  The Securities are not issuable in bearer
form.  The terms and provisions contained
in the form of Security shall constitute, and are hereby expressly made, a part
of this Second Supplemental Indenture and to the extent applicable, the Company
and the Trustee, by their execution and delivery of this Second Supplemental
Indenture, expressly agree to such terms and provisions and to be bound
thereby.

 

(b)           The Securities shall be issued initially in the form
of one or more permanent Global Securities, with the applicable legends as
provided in Section 2.03.  Each Global
Security shall be duly executed by the Company and authenticated and delivered
by the Trustee, and shall 

 

9

 

be registered in the name of
DTC or its nominee and retained by the Trustee, as Securities Custodian, at its
corporate trust office, for credit to the accounts of the Agent Members holding
the Securities evidenced thereby.  The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
Securities Custodian, and of DTC or its nominee, as hereinafter provided.

 

Section 2.03.  Legends.  (a) Global Security
Legend.  Notwithstanding anything to the
contrary provided in Article Two the Original Indenture each Global Security
shall bear the following legend (the “Global
Security Legend”) on the face thereof:

 

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO IN THE TERMS OF SECURITIES
ATTACHED HERETO.”

 

(b)           Legend for Definitive Securities.  Notwithstanding anything to the contrary
provided in Article Two of the Original Indenture each Definitive Security
shall bear a legend substantially in the following form:

 

“THIS SECURITY WILL NOT BE ACCEPTED IN
EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL SECURITY UNLESS THE HOLDER OF
THIS SECURITY, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD NO SECURITIES.”

 

Section 2.04.  Registrar and Paying Agent.  The
Company shall maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (the “Registrar”), which Registrar shall constitute a Security
Register (as such term is defined in the Original Indenture) and an office or
agency where Securities may be presented for payment (the “Paying Agent”).  The Company may have one or more co-registrars
and one or more additional paying agents. 
The term “Paying Agent” includes any additional paying agent and the
term “Registrar” includes any co-registrar.

 

10

 

The Company shall enter into an appropriate agency
agreement with any Registrar or Paying Agent not a party to this Second
Supplemental Indenture, which shall incorporate the terms of the Trust
Indenture Act.  The agreement shall
implement the provisions of this Second Supplemental Indenture that relate to
such agent.  The Company shall notify the
Trustee of the name and address of each such agent.  If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 6.7 of the Original
Indenture.  The Company or any of its
domestically organized, wholly owned Subsidiaries may act as Paying Agent,
Registrar or transfer agent.

 

The Company initially appoints the Trustee as
Registrar and Paying Agent for the Securities. 
The Company may remove any Registrar or Paying Agent upon written notice
to such Registrar or Paying Agent and to the Trustee; provided, however, that
no such removal shall become effective until (i) acceptance of any appointment
by a successor as evidenced by an appropriate agreement entered into by the
Company and such successor Registrar or successor Paying Agent, as the case may
be, and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as Registrar or Paying Agent until the appointment of a
successor in accordance with clause (i) above. 
The Registrar or Paying Agent may resign at any time upon written notice
to the Company and the Trustee.

 

Section 2.05.  General Provisions Relating to Transfer and
Exchange.  A Holder may transfer a Security only by
written application to the Registrar stating the name of the proposed
transferee and otherwise complying with the terms of the Indenture.  No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer by the Registrar in the Securities
Register.

 

In addition to the matters described in the
7th paragraph of Section 3.5 of the Original Indenture, neither the Company nor
the Registrar shall be required to exchange or register a transfer of any
Securities surrendered for conversion or, if a portion of any Security is
surrendered for conversion, the portion thereof surrendered for conversion.

 

Section 2.06.  Book-Entry Provisions for the Global
Securities.  (a)  The Global Securities initially shall:

 

(i)            be registered
in the name of DTC (or a nominee thereof);

 

(ii)           be delivered to
the Trustee as Securities Custodian; and

 

(iii)          bear the Global
Security Legend set forth in Section 2.03(a).

 

Members of, or participants in, DTC (“Agent Members”) shall have no rights under
this Second Supplemental Indenture with respect to any Global Security held on
their behalf by DTC, or the Trustee as its custodian, or under such Global
Security, and DTC may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the absolute owner of such Global Security for
all purposes whatsoever.  Notwithstanding
the foregoing, nothing contained herein shall prevent the Company, the Trustee
or any agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as
between DTC and the Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.

 

11

 

(b)           The Holder of a Global Security may grant proxies
and otherwise authorize any Person, including Agent Members and Persons that
may hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Second Supplemental Indenture or the Securities.

 

ARTICLE 3

COVENANTS

 

Section 3.01.  Payment of Securities.  (a)  The Company will pay or cause to be paid the
principal of and interest and Special Interest, if any, on the Securities on
the dates and in the manner provided in the Securities.  Principal will be considered paid on the date
due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 11:00 a.m. New York City time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal then due or, in the case of interest and Special Interest and
Additional Interest, if any, payable on or before the Stated Maturity of any
Security, if the Company has delivered (i) Additional Securities in an
aggregate principal amount equal to the amount of such interest and Special
Interest and Additional Interest, if any, then due, or (ii) in the case of
Holders for which a Common Stock Election is effective, in PIK Interest Shares
in an amount calculated in accordance with paragraph (b) of this Section 3.01,
in either case in accordance with the terms of this Indenture.  Additional Securities shall automatically be
deemed to have been issued to each Holder of record in an aggregate principal
amount equal to the amount of interest and Special Interest and Additional
Interest, if any, due to such Holder on the applicable Interest Payment Date,
and the Company shall thereafter promptly cause to be executed and
authenticated such Additional Securities in accordance with Section 2.3 of the
Original Indenture and deliver such Additional Securities to each Holder of
record (or to the Trustee or the authenticating agent in custody for such
Person).  Subject to Section 3.01(b)(iv),
PIK Interest Shares, if any, shall automatically be deemed to have been issued
to each applicable Holder of record in an amount determined as set forth in Section
3.01(b), and the Company shall thereafter deliver such PIK Interest Shares as
set forth in Section 3.01(b). Such Paying Agent shall return to the Company
promptly, and in any event, no later than three Business Days following the
date of payment, any money (including accrued interest) that exceeds such
amount of principal and interest paid on the Securities or, in the case of
interest and Special Interest and Additional Interest, if any, paid on or
before the Stated Maturity, any Additional Securities or Additional Shares
outstanding in connection with the payment of such interest.

 

The Company will pay interest on overdue
principal at the rate specified in the Securities in Additional Securities or
PIK Interest Shares, as applicable, and it will pay interest on overdue
installments of interest and Special Interest and Additional Interest, if any,
in Additional Securities or PIK Interest Shares, as applicable, at the same
rate.

 

Interest shall be computed on the basis of a
360-day year comprising twelve 30-day months.

 

(b)  Subject to the procedures set forth
in this paragraph, a Holder of Securities may, in its sole discretion, elect to
receive interest and Special Interest and Additional Interest, if any, in
respect of the Securities held by it in the form of Common Stock in lieu of
Additional Securities.

 

12

 

(i)            Such Holder
must complete and manually sign the interest election notice on the back of the
Security (which shall be substantially in the form set forth in the form of
Security attached as Exhibit A (an “Interest
Election Notice”) and deliver such notice to the Company at least 5
Business Days prior to the first Interest Payment Date for which such election
will be effective.  Such Interest
Election Notice shall remain effective and apply to all subsequent Interest
Payment Dates unless and until such Holder revokes it by delivering written
notice to the Company as set forth on the Interest Election Notice.

 

(ii)           On each
Interest Payment Date, a Holder for which an Interest Election Notice is in
effect shall be entitled to receive, in lieu of Additional Securities, a number
of PIK Interest Shares equal to the quotient of (x) the aggregate amount of
interest and Special Interest and Additional Interest, if any, payable on the
applicable Securities on such Interest Payment Date, divided  by (y)
95% of the volume-weighted average Closing Price of the Common Stock for the 10
Trading Days immediately preceding the Interest Payment Date.

 

(iii)          The Company shall
deliver the PIK Interest Shares as soon as practicable, and in no event later
than the third Business Day following the applicable Interest Payment Date.

 

(iv)          Notwithstanding
anything to the contrary herein, all interest and Special Interest and Additional
Interest, if any, will be payable solely in the form of Additional Securities
(and not in PIK Interest Shares) at any time that the volume-weighted average
Closing Price of the Common Stock for the 10 Trading Days immediately preceding
the applicable Interest Payment Date is less than $0.25 per share.

 

Section 3.02.  Further Instruments and Acts.  Upon
request of the Trustee, the Company will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Second Supplemental Indenture.

 

Section 3.03.  Statement by Officer as to Default.  The
Company shall deliver to the Trustee, within 30 days after the Company becomes
aware of the occurrence of any Event of Default or Default, an Officer’s
Certificate setting forth the details of such events which would constitute an
Event of Default or Default, its status and the action which the Company
proposes to take with respect thereto.

 

Section 3.04.  Special Interest.  If Special Interest is payable
by the Company pursuant to Section 5.02 the Company shall deliver to the
Trustee an Officer’s Certificate to that effect stating (i) the amount of such
Special Interest that is payable and (ii) the date on which such Special
Interest is payable.  Unless and until a
Responsible Officer of the Trustee receives such a certificate, the Trustee may
assume without inquiry that no Special Interest is payable.  If the 

 

13

 

Company
has paid Special Interest directly to the persons entitled to it, the Company
shall deliver to the Trustee an Officer’s Certificate setting forth the
particulars of such payment.

 

Section 3.05.  Reports by Company.  (a) In addition to and
notwithstanding the Company’s reporting obligations set forth in Section 7.4 of
the Original Indenture, the Company shall deliver to the Trustee electronically
(or otherwise in conformity with Section 1.6 of the Original Indenture), within
15 days after it is required to file the same with the SEC, copies of all
annual reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) that the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. In the event the Company
at any time is no longer subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the Trustee all reports,
if any, as may be required by the provisions of Section 314(a) of the Trust
Indenture Act.

 

(b)           Delivery of such reports and documents to the
Trustee is for informational purposes only and the Trustee’s receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the compliance by
the Company with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer’s Certificates).

 

Section 3.06.  Shareholder Approval.  The
Company shall obtain Shareholder Approval within 60 days of the date hereof.

 

Section 3.07.  Usury Laws.  The Company covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.

 

ARTICLE 4

REDEMPTION OF SECURITIES

 

Section 4.01.  Mandatory Redemption.

 

(a)           On the Stated Maturity, the Company shall redeem for
cash all Outstanding Securities, at a price (the “Redemption Price”) equal to 100% of the principal amount of
Securities to be redeemed, plus accrued and unpaid interest to, but excluding,
the Redemption Date; provided that if the Redemption Date falls after a Regular
Record Date and on or prior to the corresponding Interest Payment Date, the
Redemption Price shall be 100% of the principal amount of the Securities
redeemed but shall not include accrued and unpaid interest, if any. Instead,
the Company shall pay such accrued and unpaid interest, if any, on the Interest
Payment Date to the Holder of record at the Close of Business on the
corresponding Regular Record Date. If the Company is required to redeem
Securities pursuant to this Section 4.01, it shall notify the 

 

14

 

Trustee in writing of such
redemption together with the Redemption Date, the Base Conversion Rate, the
principal amount of Securities to be redeemed and the Redemption Price.

 

(b)           The Company shall not redeem any of the Securities
on any date if the principal amount of the Securities has been accelerated, and
the acceleration has not been rescinded on or prior to such date.

 

(c)           Except as provided in paragraph (a) of this Section 4.01,
the Company shall not be required to make any mandatory redemption of the Securities.  The Securities are not subject to redemption
through the operation of any sinking fund.

 

Section 4.02.  Notice of Redemption.  The
Company shall notify each Holder of Securities to be redeemed in the manner
provided in Section 11.4 of the Original Indenture.  In addition to those matters set forth in Section
11.4 of the Original Indenture, a notice of redemption sent to the Holder shall
state:

 

(a)           the then current Base Conversion Rate and provide a
statement that the Securities called for redemption may be converted at any
time before the Close of Business on the Business Day immediately prior to the
Redemption Date, and that Holders who wish to convert Securities must comply
with the relevant procedures;

 

(b)           that Securities called for redemption and not
converted shall be redeemed on the Redemption Date;

 

(c)           the name and address of the Paying Agent and the
Conversion Agent;

 

(d)           that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price; and

 

(e)           the CUSIP or ISIN number of the Securities.

 

ARTICLE 5

DEFAULTS AND REMEDIES

 

Section 5.01.  Additional Events of Default.  In
addition to those Events of Default set forth in Section 5.1 of the Original
Indenture, the following events shall also be Events of Default with respect to
the Securities:

 

(a)           failure by the Company to pay on interest on the
Securities within five Business Days of the applicable Interest Payment Date;

 

(b)           failure by the Company to comply with its obligation
to convert the Securities into shares of Common Stock upon exercise of a Holder’s
conversion right in accordance with Article 9 and, if applicable, failure by
the Company to deliver any Make-Whole Premium pursuant to Section 9.05;

 

(c)           failure by the Company to provide to the Holders
Company Notice of a Fundamental Change pursuant to Section 8.01;

 

15

 

(d)           default by the Company or any Subsidiary in the
payment of principal or interest on any mortgage, agreement or other instrument
under which there may be outstanding, or by which there may be secured or
evidenced, any indebtedness of the Company or indebtedness of any Subsidiary
for money borrowed in excess of $5.0 million in the aggregate, whether the
indebtedness exists or shall hereafter be created, resulting in the
indebtedness becoming or being declared due and payable, and the acceleration
shall not have been rescinded or annulled within 30 days after written notice
of the acceleration has been received by the Company or the Subsidiary from the
Trustee (or has been received by the Company or the Subsidiary, as the case may
be, and the Trustee from Holders of at least 25% in principal amount of
Outstanding Securities);

 

(e)           default in the performance, or breach, of any covenant
in this Indenture (other than the covenant in Section 8.1 of the Original
Indenture or any other covenant a default in whose performance or whose breach
is elsewhere in this Section specifically dealt with) and continuance of such
default or breach for a period of 45 days after there has been given to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied; and

 

(f)            failure by the Company or any Subsidiary to pay
final and non-appealable judgments, the aggregate uninsured portion of which is
at least $10.0 million, if the judgments are not paid, discharged or fully
bonded against within 60 days.

 

The foregoing will constitute Events of
Default whatever the reason for any such Event of Default and whether it is
voluntary or involuntary or is affected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

 

Prior to the declaration of the acceleration
of the Securities, the Holders of two-thirds of the aggregate principal amount
of the Outstanding Securities may waive, on behalf of all of the Holders of the
Securities, any Event of Default set forth in this Section 5.01 and its
consequences except an Event of Default under clause (a) and clause (b) of this
Section 5.01.

 

The Company will deliver to the Trustee
promptly, and in no case more than 3 Business Days, after becoming aware of the
occurrence of an Event of Default, written notice thereof.

 

(g)           At any time that an Event of Default (other than an
Event of Default arising solely from the Company’s failure to comply with the
reporting obligations under Section 3.05(a) hereof) has occurred and is
continuing, additional interest shall accrue on the Securities at a rate equal
to 2.50% per annum of the principal amount of the Securities (the “Additional Interest”).  The Additional Interest shall be paid
semi-annually in arrears, with the first semi-annual payment due on the first
regular Interest Payment Date following the date on which the Additional
Interest began to accrue on the Securities. The Additional Interest shall
accrue on all Outstanding Securities from and including the date on which an
Event of Default shall first occur to, but not including, the date on which the
Event of Default shall have been cured or waived.

 

16

 

Section 5.02.  Sole Remedy for Failure to Report. 
Notwithstanding any other provision of the Indenture, to the extent
elected by the Company, the sole remedy for an Event of Default relating to the
failure to comply with the reporting obligations under Section 3.05(a) and for any
failure to comply with the requirements of Section 314(a)(1) of the Trust
Indenture Act, will for the first 45 days after the occurrence of the Event of
Default consist exclusively of the right to receive special interest on the
Securities at a rate equal to 0.50% per annum of the principal amount of the
Securities (the “Special Interest”).  The Special Interest shall be paid
semi-annually in arrears, with the first semi-annual payment due on the first
regular Interest Payment Date following the date on which the Special Interest
began to accrue on any Securities. The Special Interest shall accrue on all
Outstanding Securities from and including the date on which an Event of Default
relating to a failure to comply with the provisions of Section 3.05(a) or a
failure to comply with Section 314(a)(1) of the Trust Indenture Act shall first
occur to, but not including, the 45th day thereafter (or any earlier date on
which the Event of Default shall have been cured or waived). On such 45th day
(or earlier, if the Event of Default relating to the failure to comply with Section
3.05(a) and failure to comply with Section 314(a)(1) of the Trust Indenture Act
is cured or waived prior to such 45th day), the Special Interest shall cease to
accrue and, if the Event of Default relating to the failure to comply with Section
3.05(a) and failure to comply with Section 314(a)(1) of the Trust Indenture Act
shall not have been cured or waived prior to the 45th day, the Securities shall
be subject to acceleration as provided in Section 5.2 of the Original
Indenture. The provisions of this paragraph shall not affect the rights of
Holders in the event of the occurrence of any other Event of Default. If the
Company shall not elect to pay Special Interest upon an Event of Default resulting
from the failure of the Company to comply with the provisions of Section 3.05(a)
and for any failure by it to comply with Section 314(a)(1) of the Trust
Indenture Act, the Securities shall be subject to acceleration as provided in Section
5.2 of the Original Indenture.

 

If the Company shall elect to pay Special
Interest in connection with an Event of Default relating to its failure to
comply with the requirements of Section 3.05(a) and for any failure by it to
comply with Section 314(a)(1) of the Trust Indenture Act, (1) the Company shall
notify all Holders and the Trustee and Paying Agent of the election on or
before the Close of Business on the date on which the Event of Default shall
first occur, and (2) all references herein to interest accrued or payable as of
any date shall include any Special Interest accrued or payable as of such date
as provided in this Section 5.02.

 

ARTICLE 6

DISCHARGE OF INDENTURE

 

Section 6.01.  Discharge of Liability on
Securities.  Article 4 of the
Original Indenture shall not apply to the Securities.  When (1) the Company shall deliver to the
Registrar for cancellation all Securities theretofore authenticated (other than
any Securities which have been mutilated, destroyed, lost or wrongfully taken
and in lieu of or in substitution for which other Securities shall have been
authenticated and delivered) and not theretofore canceled, or (2) all the
Securities not theretofore canceled or delivered to the Registrar for
cancellation shall have (a) been deposited for conversion and the Company shall
deliver to the Holders shares of Common Stock or a combination of cash and
shares of Common Stock, as applicable, sufficient to pay all amounts owing in
respect of all Securities (other than any Securities which shall have been mutilated,
destroyed, lost or wrongfully taken and in lieu of or in substitution for which
other 

 

17

 

Securities
shall have been authenticated and delivered) not theretofore canceled or
delivered to the Registrar for cancellation or (b) become due and payable on
the Stated Maturity for the payment of principal of the Securities or
Redemption Date or Fundamental Change Purchase Date, as applicable, and the
Company shall deposit with the Trustee cash and shares of Common Stock, if any,
as applicable, sufficient to pay all amounts owing in respect of all Securities
(other than any Securities which shall have been mutilated, destroyed, lost or
wrongfully taken and in lieu of or in substitution for which other Securities
shall have been authenticated and delivered) not theretofore canceled or
delivered to the Registrar for cancellation, including the principal amount and
interest accrued and unpaid to such Stated Maturity for the payment of
principal of the Securities or Redemption Date or Fundamental Change Purchase
Date, as the case may be, and if in either case (1) or (2) the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company, then this Second Supplemental Indenture with respect to the
Securities shall cease to be of further effect (except as to (i) remaining
rights of registration of transfer, substitution and exchange and conversion of
Securities; (ii) rights hereunder of Holders to receive from the Trustee
payments of the amounts then due, including interest with respect to the
Securities and the other rights, duties and obligations of Holders, as
beneficiaries hereof solely with respect to the amounts, if any, so deposited
with the Trustee; and (iii) the rights, obligations and immunities of the
Trustee, Authenticating Agent, Paying Agent, Conversion Agent and Registrar
under this Second Supplemental Indenture with respect to the Securities), and
the Trustee, on demand of the Company accompanied by an Officer’s Certificate
and an Opinion of Counsel as required by Section 6.03 and at the cost and
expense of the Company, shall execute proper instruments acknowledging satisfaction
of and discharging this Second Supplemental Indenture with respect to the
Securities; however, the Company hereby agrees to reimburse the Trustee,
Authenticating Agent, Paying Agent, Conversion Agent and Registrar for any
costs or expenses thereafter reasonably and properly incurred by the Trustee,
Authenticating Agent, Paying Agent, Conversion Agent and Registrar and to
compensate the Trustee, Authenticating Agent, Paying Agent, Conversion Agent
and Registrar for any services thereafter reasonably and properly rendered by
the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and Registrar
in connection with this Second Supplemental Indenture with respect to the
Securities.

 

Section 6.02.  Reinstatement.  If the Trustee or the Paying
Agent is unable to apply any money to the Holders entitled thereto by reason of
any order or judgment of any court of governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company’s
obligations under the Indenture with respect to the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 6.01
until such time as the Trustee or the Paying Agent is permitted to apply all
such money in accordance with the Indenture and the Securities to the Holders
entitled thereto; provided, however, that if the Company make any payment of
principal amount of or interest on any Security following the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee
or Paying Agent.

 

Section 6.03.  Officer’s Certificate; Opinion of Counsel.  Upon any
application or demand by the Company to the Trustee to take any action under Section 6.01,
the Company shall furnish to the Trustee an Officer’s Certificate or Opinion of
Counsel stating that all conditions precedent, if any, provided for in this
Second Supplemental Indenture relating to the proposed action have been
complied with.

 

18

 

ARTICLE 7

AMENDMENTS

 

Section 7.01.  With Consent of Holders.  In
addition to the matters described in Section 9.2 of the Original
Indenture, the Company and the Trustee may not, without the consent of each
Holder of Outstanding Securities affected, amend or waive any portion of the
Indenture or the Securities for one or more of the following purposes:

 

(a)           to reduce the Fundamental Change Purchase Price or
the Redemption Price payable with respect to any of the Securities;

 

(b)           to change the principal amount, rate of interest or
Stated Maturity of any Security;

 

(c)           to change the Company’s obligation to redeem the
Securities on a Redemption Date in a manner adverse to the Holder;

 

(d)           to change the Company’s obligation to purchase any
Security upon a Fundamental Change pursuant to Section 8.01 in a manner
adverse to the Holder;

 

(e)           to reduce the Make Whole Premium or otherwise modify
the provisions of Section 9.05 in a manner adverse to the Holder;

 

(f)            to reduce the Fundamental Change Make-Whole Amount
or otherwise modify the provisions of Section 8.01 in a manner adverse to
any Holder; and

 

(g)           to impair the right of a Holder to convert any
Security or reduce the amount of cash or the number of shares of Common Stock
(or any other property) receivable upon conversion.

 

Section 7.02.  Without Consent of Holders.  In
addition to the matters described in Section 9.1 of the Original
Indenture, the Company and the Trustee may amend or supplement the Indenture or
the Securities without notice to or consent of any Holder of an Outstanding
Security for one or more of the following purposes:

 

(a)           to cure any ambiguity, omission, defect or
inconsistency in the Indenture, to correct or supplement any provision in the
Indenture, or to make any other provisions with respect to matters or questions
arising under the Indenture, so long as the interests of Holders of Securities
are not adversely affected in any respect under the Indenture; provided that
such amendment made solely to conform the provisions of the Indenture to the
corresponding description of the Securities contained in the Prospectus
Supplement shall not be deemed to adversely affect the interests of the Holders
of Securities; and

 

(b)           to provide for conversion rights of Holders if any
reclassification or change of Common Stock or any consolidation, merger or sale
of all or substantially all of the Company’s property and assets occurs or
otherwise comply with the provisions of the Indenture in the event of a merger,
consolidation or transfer, sale, conveyance, lease or other disposition of all
or substantially all of the Company’s property and assets (including the
provisions of Section 9.09 hereof and Article 8 of the Original
Indenture).

 

19

 

Section 7.03.  Without
Consent of Holders of Senior Debt. 
Notwithstanding anything to the contrary herein, no amendment may be
made to the subordination provisions of this Indenture or to this Section 7.03,
if such amendment would adversely affect the rights of any holder of Senior
Debt then outstanding unless the holders of such Senior Debt consent to such
amendment.

 

ARTICLE 8

PURCHASE AT THE OPTION OF HOLDERS UPON A FUNDAMENTAL CHANGE

 

Section 8.01.  Purchase at the Option of the Holders Upon a
Fundamental Change.  (a)  If a Fundamental Change occurs,
each Holder shall have the right, at such Holder’s option, to require the
Company to purchase any or all of such Holder’s Securities on a date specified
by the Company that is no later than 35 days, and no earlier than 20 days,
after the date of the Company Notice of the occurrence of such Fundamental
Change (the “Fundamental Change Purchase Date”).
The Company shall purchase such Securities for cash at a price (the “Fundamental Change Purchase Price”), which
shall be equal to 100% of the principal amount of the Securities to be
purchased plus (i) the applicable Fundamental Change Make-Whole Amount, if
any, and (ii) any accrued and unpaid interest to, but excluding, the
Fundamental Change Purchase Date.  For
any Fundamental Change Purchase Date, the “Fundamental
Change Make-Whole Amount” shall mean the amount set forth in
Schedule A to this Second Supplemental Indenture.

 

(b)           The Company shall mail to all Holders a Company
Notice upon the occurrence of a Fundamental Change and of the purchase right
arising as a result thereof, including the information required by Section 8.02
hereof, on or before the 10th Business Day after the occurrence of such
Fundamental Change.

 

(c)           For a Security to be so purchased at the option of
the Holder pursuant to this Section 8.01, such Holder must (i) deliver to
the Paying Agent a written notice of purchase (a “Fundamental Change Purchase Notice”) in the form entitled “Form of
Fundamental Change Purchase Notice” attached to the Security duly completed, on
or before the Close of Business on the Business Day immediately preceding the
Fundamental Change Purchase Date, stating:

 

	
  (A)

  	
  if
  the Securities are in the form of Definitive Securities, the certificate
  numbers of the Securities which the Holder shall deliver to be purchased;

  
	
   

  	
   

  
	
  (B)

  	
  the
  portion of the principal amount of the Securities that the Holder shall
  deliver to be purchased, which portion must be $1,000 in principal amount or
  an integral multiple thereof; and

  
	
   

  	
   

  
	
  (C)

  	
  that such Securities shall be purchased as of the Fundamental Change
  Purchase Date pursuant to the terms and conditions specified in
  Section 8.01 of this Second Supplemental Indenture and whether the
  Holder elects to receive cash or Common Stock in respect of such Securities
  pursuant to Schedule A, and

  

 

(ii)           deliver or book-entry transfer such Securities to
the Paying Agent (together with all necessary endorsements) at the offices of
the Paying Agent after delivery of the Purchase 

 

20

 

Notice, such delivery or
transfer being a condition to receipt by the Holder of the Fundamental Change
Purchase Price therefor; provided, however, that such Fundamental Change
Purchase Price shall be so paid pursuant to this Section 8.01 only if the
Securities so delivered or transferred to the Paying Agent shall conform in all
respects to the description thereof in the related Fundamental Change Purchase
Notice.

 

If the Securities are in the form of Global
Securities, the Fundamental Change Purchase Notice must comply with the
appropriate Depositary procedures.

 

The Paying Agent shall promptly return to the
respective Holders thereof any Securities (x) with respect to which a
Fundamental Change Purchase Notice has been withdrawn in compliance with this
Second Supplemental Indenture, or (y) held by it during the continuance of
an acceleration of the principal amount of the Securities (other than an
acceleration in connection with an Event of Default resulting from a failure by
the Company to pay the Fundamental Change Purchase Price with respect to such
Securities) in which case, upon such return, the Fundamental Change Purchase
Notice with respect thereto shall be deemed to have been withdrawn.

 

(d)           The Company shall purchase from a Holder, pursuant
to this Section 8.01, Securities if the principal amount of such
Securities is $1,000 or an integral multiple of $1,000 if so requested by such
Holder.

 

Notwithstanding anything herein to the
contrary, any Holder delivering to the Paying Agent the Fundamental Change
Purchase Notice contemplated by this Section 8.01 shall have the right at
any time prior to the Close of Business on the Business Day immediately prior
to the Fundamental Change Purchase Date to withdraw such Fundamental Change
Purchase Notice (in whole or in part) by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 8.02(b).

 

The Paying Agent shall promptly notify the
Company of the receipt by it of any Fundamental Change Purchase Notice or
written notice of withdrawal thereof.

 

At or before 11:00 a.m. (New York City
time) on the Fundamental Change Purchase Date, the Company shall deposit with
the Paying Agent (or if the Company or an affiliate of the Company is acting as
the Paying Agent, shall segregate and hold in trust as provided in Section 10.3
of the Original Indenture) cash sufficient to pay the aggregate Fundamental
Change Purchase Price of the Securities to be purchased pursuant to this Section 8.01.  Payment by the Paying Agent of the
Fundamental Change Purchase Price for such Securities shall be made promptly
following the later of the Fundamental Change Purchase Date or the time of
book-entry transfer or delivery of such Securities, together with necessary
endorsements.  If the Paying Agent holds,
in accordance with the terms of this Second Supplemental Indenture, cash
sufficient to pay the Fundamental Change Purchase Price of such Securities on
the Fundamental Change Purchase Date, then, on and after such date, such Securities
shall cease to be outstanding and interest on such Securities shall cease to
accrue, whether or not book-entry transfer of such Securities is made or such
Securities are delivered to the Paying Agent, and all other rights of the
Holder shall terminate (other than the right to receive the Fundamental Change
Purchase Price upon delivery or transfer of the Securities).

 

21

 

The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold
in trust for the benefit of Holders or the Trustee all cash held by the Paying
Agent for the payment of the Fundamental Change Purchase Price and shall notify
the Trustee of any Default by the Company in making any such payment.  If the Company or an affiliate of the Company
acts as Paying Agent, it shall segregate the cash held by it as Paying Agent
and hold it as a separate trust fund.  The
Company at any time may require a Paying Agent to deliver all cash held by it
to the Trustee and to account for any funds disbursed by the Paying Agent. Upon
doing so, the Paying Agent shall have no further liability for the cash
delivered to the Trustee.

 

Notwithstanding anything to the contrary no
Securities may be purchased by the Company pursuant to this Section 8.01
if the principal amount of the Securities has been accelerated (except in the
case of an acceleration in connection with an Event of Default resulting from a
failure by the Company to pay the Fundamental Change Purchase Price with
respect to such Securities), and the acceleration has not been rescinded, on or
prior to the relevant Fundamental Change Purchase Date.

 

Section 8.02.  Further Conditions and Procedures for
Purchase at the Option of the Holder Upon a Fundamental Change.  (a) Notice
of Fundamental Change. The Company shall send notices (each, a “Company Notice”) to the Holders, beneficial
owners of the Securities as required by applicable law, the Trustee and the
Paying Agent, on or before the 10th Business Day after the occurrence of the
Fundamental Change, as the case may be (each such date of delivery, a “Company Notice Date”). Each Company Notice
shall include a form of Fundamental Change Purchase Notice, as the case may be,
to be completed by a Holder and shall state:

 

	
  (i)

  	
  the
  applicable Fundamental Change Purchase Price;

  
	
   

  	
   

  
	
  (ii)

  	
  the
  Base Conversion Rate at the time of such notice and any expected adjustments
  to the Base Conversion Rate;

  
	
   

  	
   

  
	
  (iii)

  	
  the
  applicable Fundamental Change Purchase Date, as the case may be, and the last
  date on which a Holder may exercise its repurchase rights under
  Section 8.01;

  
	
   

  	
   

  
	
  (iv)

  	
  the
  name and address of the Paying Agent and the Conversion Agent;

  
	
   

  	
   

  
	
  (v)

  	
  that
  Securities must be surrendered to the Paying Agent to collect payment of the
  Fundamental Change Purchase Price;

  
	
   

  	
   

  
	
  (vi)

  	
  that
  Securities as to which a Fundamental Change Purchase Notice has been
  delivered may be surrendered for conversion only if the applicable
  Fundamental Change Purchase Notice has been withdrawn in accordance with the
  terms of this Second Supplemental Indenture;

  
	
   

  	
   

  
	
  (vii)

  	
  that the Fundamental Change Purchase Price for any Securities as to
  which a Fundamental Change Purchase Notice has been given and not withdrawn
  shall be paid by the Paying Agent promptly following the later

  

 

22

 

	
   

  	
  of
  (1) the Fundamental Change Purchase Date and (2) the time of
  book-entry transfer or delivery of such Securities;

  
	
   

  	
   

  
	
  (viii)

  	
  the
  procedures the Holder must follow under Section 8.01 and
  Section 8.02;

  
	
   

  	
   

  
	
  (ix)

  	
  that,
  unless the Company defaults in making payment of such Fundamental Change
  Purchase Price on Securities for which any Fundamental Change Purchase Notice
  has been submitted, interest will cease to accrue on and after the
  Fundamental Change Purchase Date;

  
	
   

  	
   

  
	
  (x)

  	
  the
  CUSIP or ISIN number of the Securities;

  
	
   

  	
   

  
	
  (xi)

  	
  the
  procedures for withdrawing a Fundamental Change Purchase Notice; and

  
	
   

  	
   

  
	
  (xii)

  	
  the events causing a Fundamental Change and the effective date of the
  Fundamental Change.

  

 

Simultaneously with providing such Company
Notice, the Company will publish a notice containing the information in such
Company Notice in a newspaper of general circulation in The City of New York or
publish such information on its then existing website or through such other
public medium as it may use at the time.

 

At the Company’s request, made at least five
Business Days prior to the date upon which such notice is to be mailed, and at
the Company’s expense, the Paying Agent shall give the Company Notice in the
Company’s name; provided, however, that, in all cases, the text of the Company
Notice shall be prepared by the Company.

 

(b)           Upon receipt by the Company of the Fundamental
Change Purchase Notice specified in Section 8.01(c) the Holder of the
Securities in respect of which such Fundamental Change Purchase Notice was
given shall (unless such Fundamental Change Purchase Notice is withdrawn as
specified in the following two paragraphs) thereafter be entitled to receive
solely the Fundamental Change Purchase Price with respect to such Securities.
Such Fundamental Change Purchase Price shall be paid by the Paying Agent to
such Holder promptly following the later of (1) the Fundamental Change
Purchase Date with respect to such Securities (provided the conditions in this Article 8
have been satisfied) and (2) the time of delivery or book-entry transfer
of such Securities to the Paying Agent by the Holder thereof in the manner
required by Section 8.01. Securities in respect of which a Fundamental
Change Purchase Notice has been given by the Holder thereof may not be
converted on or after the date of the delivery of such Fundamental Change
Purchase Notice unless such Fundamental Change Purchase Notice has first been
validly withdrawn as specified in the following two paragraphs.

 

A Fundamental Change Purchase Notice may be
withdrawn by means of a written notice of withdrawal delivered to the office of
the Paying Agent at any time prior to the Close of 

 

23

 

Business on the Business Day
immediately prior to the Fundamental Change Purchase Date to which it relates,
specifying:

 

	
  (i)

  	
  the
  principal amount of the Securities with respect to which such notice of
  withdrawal is being submitted, which must be $1,000 or an integral multiple
  thereof;

  
	
   

  	
   

  
	
  (ii)

  	
  if
  the Securities are in the form of Definitive Securities, the certificate
  numbers of the Securities in respect of which such notice of withdrawal is
  being submitted; and

  
	
   

  	
   

  
	
  (iii)

  	
  the principal amount, if any, of any Securities that remain subject
  to the original Fundamental Change Purchase Notice and which has been or
  shall be delivered for purchase by the Company.

  

 

If the Securities are in the form of Global
Securities, the Fundamental Change Purchase Notice must comply with the
appropriate Depositary procedures.

 

(c)           Any Securities that are to be purchased only in part
shall be surrendered at the office of the Paying Agent (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or such Holder’s attorney duly authorized in writing) and
the Company shall execute and the Trustee or the Authenticating Agent shall
authenticate and deliver to the Holder of such Securities, without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Securities so
surrendered which is not purchased.

 

(d)           In connection with any offer to purchase Securities
under Section 8.01, the Company shall, to the extent applicable, (a) comply
with Rules 13e-4 and 14e-1 (and any successor provisions thereto) under
the Exchange Act, if applicable; (b) file the related Schedule TO (or any
successor schedule, form or report) under the Exchange Act, if applicable; and (c) otherwise
comply with all applicable federal and state securities laws so as to permit the
rights and obligations under Section 8.01 to be exercised in the time and
in the manner specified in Section 8.01. 
To the extent any other provision of this Second Supplemental Indenture
conflicts with any of the foregoing, the foregoing shall govern.

 

(e)           At least five Business Days before the Company
Notice Date, the Company shall deliver an Officer’s Certificate to the Trustee
specifying whether the Company desires the Trustee to give the Company Notice
required by Section 8.02 hereof.

 

Section 8.03.  Purchase of Securities in Open Market.  The
Company may purchase any or all of the Securities in the open market or by
tender at any price or pursuant to private agreements. The Company shall
surrender any Security purchased by the Company pursuant to this Article 8
to the Trustee for cancellation. Any Securities surrendered to the Trustee for
cancellation may not be reissued or resold by the Company and will be canceled
promptly in accordance with Section 3.9 of the Original Indenture.

 

24

 

ARTICLE 9

CONVERSION

 

Section 9.01.  Conversion of Securities.  (a) Subject
to the procedures for conversion set forth in this Article 9, a Holder may
convert its Securities, in whole or in part (provided that the total principal
amount of Securities converted is an integral multiple of $1,000), during the
period beginning on, and including, the date of this Second Supplemental
Indenture and ending at the Close of Business on the Business Day immediately
preceding the Stated Maturity for the payment of principal of the Securities
into the consideration described in Section 9.03.

 

(b)           Except as provided on Schedule A Securities in
respect of which a Fundamental Change Purchase Notice has been delivered may
not be surrendered for conversion pursuant to this Article 9 prior to a
valid withdrawal of such Fundamental Change Purchase Notice in accordance with
the provisions of Article 8.

 

(c)           Provisions of this Second Supplemental Indenture
that apply to conversion of all of a Security also apply to conversion of a
portion of a Security.

 

(d)           The Base Conversion Rate shall be adjusted in
certain instances as described in Section 9.04 and Section 9.05.

 

Section 9.02.  Conversion Procedures.  (a) To
convert a Security, a Holder must (i) complete and manually sign the
conversion notice on the back of the Security (which shall be substantially in
the form set forth in the form of Security attached as Exhibit A under the
heading “Conversion Notice”) and
deliver such notice to the Conversion Agent, (ii) surrender the Security
to the Conversion Agent, (iii) if required by the Conversion Agent,
furnish appropriate endorsements and transfer documents, (iv) if and as
required by Section 9.03(d), pay an amount equal to the interest payable
on the next Interest Payment Date and (v) if required pursuant to Section 9.13,
pay any applicable transfer or similar taxes. The “Conversion Date” with respect to a Security means the date on
which the Holder of the Security has complied with all of the foregoing
requirements to convert such Security. Anything herein to the contrary
notwithstanding, in the case of Global Securities, Securities may be
surrendered in accordance with the rules and procedures of the Depositary,
to the extent applicable, as in effect from time to time.

 

The Conversion Agent will, on the Holder’s
behalf, convert the Securities into the consideration described in Section 9.03.
The Holder may obtain additional copies of the required form of the Conversion
Notice from the Conversion Agent.

 

(b)           In the case of any Security which is converted in
part only, upon such conversion the Company shall execute and the Trustee shall
upon receipt of a Company Order (which the Company agrees to deliver promptly)
authenticate and deliver to the Holder thereof, without service charge, a new
Security or Securities of authorized denominations in an aggregate principal
amount equal to, and in exchange for, the unconverted portion of the principal
amount of such Security.

 

Section 9.03.  Settlement Upon Conversion.  (a) Holders
surrendering Securities for conversion shall be entitled to receive (i) a
number of shares of Common Stock (the 

 

25

 

“Conversion Shares”) equal to the quotient
of (x) the aggregate principal amount of Securities surrendered plus any
interest accrued and unpaid thereon divided by (y) the Base
Conversion Price, and (ii) any Additional Shares required pursuant to Section 9.05.

 

(b)           Upon the conversion of a Security, the Company shall
deliver the Conversion Shares and the Additional Shares, if any, as soon as
practicable and in no event later than the third Business Day following the
Conversion Date (each such delivery date, a “Settlement
Date”).

 

(c)           A Holder shall not be entitled to any rights of a
holder of Common Stock until such Holder has converted its Securities.  The Person in whose name any certificate or
certificates evidencing shares of Common Stock, if any, issuable upon
conversion shall become, at the Close of Business on such Conversion Date, the
holder of record of the shares of Common Stock represented thereby.  Except as set forth in this Second
Supplemental Indenture, no payment or adjustment will be made for dividends or
distributions declared or made on shares of Common Stock issued upon conversion
of a Security prior to the issuance of such shares of Common Stock.

 

(d)           Upon conversion of a Security, a Holder will not
receive any cash payment representing any accrued and unpaid interest through
the Conversion Date.  Instead, accrued
and unpaid interest will be converted into Common Stock as set forth in
Paragraph (a) of this Section 9.03. 
The payment and delivery to the Holder of Common Stock (if any) into
which the Holder’s Securities and all accrued and unpaid interest thereon are
convertible will be deemed to satisfy the Company’s obligation to pay the
principal amount of the Securities and the Company’s obligation to pay accrued
but unpaid interest attributable to the period from the most recent Interest
Payment Date through the Conversion Date.

 

(e)           The Base Conversion Rate will not be adjusted for
accrued and unpaid interest.

 

Section 9.04.  Adjustments to Base Conversion Rate.  The Base
Conversion Rate shall be adjusted from time to time as follows:

 

(a)           Subject to Section 9.15, if the Company issues
shares of Common Stock as a dividend or distribution on shares of the Common
Stock to all or substantially all holders of the Common Stock, or if the
Company effects a share split or share combination, the Base Conversion Rate
will be adjusted based on the following formula:

 

	
   

  	
  CR1 = CR0 ×

  	
  OS1

  	
   

  
	
   

  	
  OS0

  	
   

  

 

	
  where

  	
   

  	
   

  
	
  CR0

  	
  =

  	
  the
  Base Conversion Rate in effect immediately prior to the Opening of Business
  on such Ex-Dividend Date of the dividend or distribution, or the Opening of
  Business on the effective date of such share split or share combination, as
  applicable;

  
	
  CR1

  	
  =

  	
  the
  new Base Conversion Rate in effect immediately after the Opening of Business
  on such Ex-Dividend Date or such effective date, as applicable;

  
	
  OS0

  	
  =

  	
  the
  number of shares of Common Stock outstanding immediately prior to Opening of
  Business on such Ex-Dividend Date or such effective date, as applicable; and

  
	
  OS1

  	
  =

  	
  the number of shares of
  Common Stock that would be outstanding immediately after, and solely as a
  result of, such dividend, distribution, share split or combination, as
  applicable.

  

 

26

 

Such adjustment shall become effective
immediately following the Opening of Business on (i) the Ex-Dividend Date
for the dividend or distribution or (ii) the effective date of the share
split or combination, as the case may be. 
If any dividend or distribution of the type described in this Section 9.04(a) is
declared but not so paid or made, the new Base Conversion Rate shall be readjusted
to the Base Conversion Rate that would then be in effect if such dividend or
distribution had not been declared. Except in the case of a share combination
or a reverse split, in no event shall the Base Conversion Rate be decreased
pursuant to this Section 9.04(a).

 

(b)           Subject to Section 9.15, if the Company issues
or sells shares of Common Stock at a price per share less than the Base
Conversion Price on the Trading Day immediately preceding such issuance or
sale, the Base Conversion Rate will be adjusted based on the following formula:

 

	
   

  	
  CR1 = CR0 ×

  	
  OS0 + X

  	
   

  
	
   

  	
  OS0 + Y

  	
   

  

 

	
  where

  	
   

  	
   

  
	
  CR0

  	
  =

  	
  the
  Base Conversion Rate in effect immediately prior to the Opening of Business
  on the date of such issuance or sale;

  
	
  CR1

  	
  =

  	
  the
  new Base Conversion Rate in effect immediately after the Opening of Business
  on the date of such issuance or sale;

  
	
  OS0

  	
  =

  	
  the
  number of shares of Common Stock outstanding immediately prior to the Opening
  of Business on the date of such issuance or sale;

  
	
  X

  	
  =

  	
  the
  total number of shares of Common Stock issued or sold on such date; and

  
	
  Y

  	
  =

  	
  the
  number of shares of Common Stock equal to the quotient of (A) the
  aggregate purchase price of the Common Stock issued or sold and (B) the
  Base Conversion Price on the Trading Day immediately preceding such issuance
  or sale.

  

 

Any adjustment made pursuant to this Section 9.04(b) shall
become effective immediately following the Opening of Business on the date of
such issuance or sale. In no event shall the Base Conversion Rate be decreased
pursuant to this Section 9.04(b).

 

(c)           Subject to Section 9.15, if the Company
distributes to all or substantially all holders of its Common Stock any rights,
options or warrants entitling them to purchase, for a period expiring within 45
days of distribution, shares of Common Stock at a price per share less than the
Closing Sale Prices of the Common Stock on the Business Day immediately
preceding

 

27

the declaration date for
such distribution, the Base Conversion Rate shall be adjusted based on the
following formula:

 

	
  CR1 = CR0 ×

  	
  OS0 + X

  
	
  OS0 + Y

  

 

where

	
  CR0

  	
   

  	
  =

  	
  the
  Base Conversion Rate in effect immediately prior to the Opening of Business
  on the Ex-Dividend Date for such distribution;

  
	
  CR1

  	
   

  	
  =

  	
  the
  new Base Conversion Rate in effect immediately after the Opening of Business
  on the Ex-Dividend Date for such distribution;

  
	
  OS0

  	
   

  	
  =

  	
  the
  number of shares of Common Stock outstanding immediately prior to the Opening
  of Business on the Ex-Dividend Date for such distribution;

  
	
  X

  	
   

  	
  =

  	
  the
  total number of shares of Common Stock issuable pursuant to such rights,
  options or warrants; and

  
	
  Y

  	
   

  	
  =

  	
  the
  number of shares of Common Stock equal to the quotient of (A) the
  aggregate price payable to exercise such rights, options or warrants and
  (B) the average of the Closing Sale Prices of the Common Stock for the
  10 consecutive Trading Days ending on the Trading Day immediately preceding
  the date of announcement for the issuance of the rights, options or warrants.

  

 

For purposes of this Section 9.04(c) in
determining whether any rights, options or warrants entitle the Holders to
purchase shares of Common Stock at less than the applicable Closing Sale Price
immediately preceding the declaration date for such distribution, and in
determining the aggregate exercise or conversion price payable for the shares
of Common Stock, there shall be taken into account any consideration received
by the Company for such rights, options or warrants and any amount payable on
exercise thereof, with the value of such consideration, if other than cash, to
be determined by the Board of Directors. If any right, option or warrant
described in this Section 9.04(c) is not exercised or converted prior
to the expiration of the exercisability or convertibility thereof, the new Base
Conversion Rate shall be readjusted to the Base Conversion Rate that would then
be in effect if the right, option or warrant had not been so issued.  Any adjustment made pursuant to this Section 9.04(c) shall
become effective immediately following the Opening of Business on the
Ex-Dividend Date for the distribution of rights, options or warrants, as
applicable. In no event shall the Base Conversion Rate be decreased pursuant to
Section 9.04(c).

 

(d)                                 Subject to Section 9.15,
if the Company distributes shares of Capital Stock, evidences of its
indebtedness or other assets or property of the Company or rights or warrants
to acquire Capital Stock of the Company to all or substantially all holders of
the Common Stock, excluding:

 

(i)                                     dividends,
distributions, share splits or share combinations as to which an adjustment
applies under Section 9.04(a) or Section 9.04(c) above;

 

(ii)                                  dividends or
distributions paid exclusively in cash; and

 

28

 

(iii)                               Spin-Offs to
which the provisions set forth below in this Section 9.04(d)  shall
apply;

 

then
the Base Conversion Rate will be adjusted based on the following formula:

 

	
  CR1 = CR0 ×

  	
  SP0

  
	
  SP0 – FMV

  

 

	
  where

  
	
  CR0

  	
   

  	
  =

  	
  the
  Base Conversion Rate in effect immediately prior to the Opening of Business
  on the Ex-Dividend Date for such distribution;

  
	
  CR1

  	
   

  	
  =

  	
  the
  new Base Conversion Rate in effect immediately after the Opening of Business
  on the Ex-Dividend Date for such distribution;

  
	
  SP0

  	
   

  	
  =

  	
  the
  average of the Closing Sale Prices of the Common Stock over the 10
  consecutive Trading Days ending on the Business Day immediately preceding the
  Ex-Dividend Date for such distribution; and

  
	
  FMV

  	
   

  	
  =

  	
  the
  Fair Market Value (as determined in good faith by the Board of Directors) of
  the shares of Capital Stock, evidences of indebtedness, assets, property,
  rights or warrants distributed with respect to each outstanding share of
  Common Stock at the Opening of Business on the Ex-Dividend Date for such
  distribution.

  

 

Such adjustment shall become effective
immediately following the Opening of Business on the Ex-Dividend Date for such
distribution of the Capital Stock, evidences of indebtedness or other assets or
property of the Company or rights or warrants to acquire Capital Stock of the
Company.

 

With respect to an adjustment pursuant to
this Section 9.04(d) where there has been a payment of a dividend or
other distribution on the Common Stock of shares of Capital Stock of any class
or series, or similar equity interest, of or relating to a Subsidiary or other
business unit of the Company (a “Spin-Off”),
the Base Conversion Rate will be adjusted based on the following formula:

 

	
  CR1 = CR0 ×

  	
  FMV0 + MP0

  
	
  MP0

  

 

	
  where

  
	
  CR0

  	
   

  	
  =

  	
  the
  Base Conversion Rate in effect immediately prior to Close of Business on the
  last Trading Day of the Valuation Period;

  
	
  CR1

  	
   

  	
  =

  	
  the
  new Base Conversion Rate in effect immediately after the Close of Business on
  the last Trading Day of the Valuation Period;

  
	
  FMV0

  	
   

  	
  =

  	
  the
  average of the Closing Sale Prices of the Capital Stock or similar equity
  interest distributed to holders of Common Stock applicable to one share of
  Common Stock (determined for the purposes of the definition of Closing Sale
  Price as if the Capital Stock or similar equity interest were Common Stock)
  over the 10 consecutive Trading-Day period beginning on, and including, the
  effective date of the Spin-Off (the “Valuation Period”);
  and

  
	
  MP0

  	
   

  	
  =

  	
  the
  average of the Closing Sale Prices of Common Stock over the Valuation Period.

  

 

29

 

Such adjustment shall occur immediately after
the Close of Business on the last Trading Day of the Valuation Period; provided
that in respect of any Conversion Date occurring during the Valuation Period,
references to 10 Trading Days within the portion of this Section 9.04(d) related
to “Spin-Offs” shall be deemed replaced with the lesser number of Trading Days
as have elapsed between the effective date of such Spin-Off and the relevant
Conversion Date in determining the adjustment to the applicable Base Conversion
Rate.

 

If any such dividend or distribution
described in this Section 9.04(d) is declared but not paid or made,
the new Base Conversion Rate shall be readjusted to be the Base Conversion Rate
that would be in effect if the dividend or distribution had not been declared.
In no event shall the Base Conversion Rate be decreased pursuant to this Section 9.04(d).

 

(e)                                  Subject to Section 9.15,
if the Company pays or makes any dividend or distribution consisting
exclusively of cash to all or substantially all holders of Common Stock, the
Base Conversion Rate will be adjusted based on the following formula:

 

	
  CR1 = CR0 ×

  	
  SP0

  
	
  SP0 – C

  

 

	
  where

  
	
  CR0

  	
   

  	
  =

  	
  the
  Base Conversion Rate in effect immediately prior to the Opening of Business
  on the Ex-Dividend Date for such dividend or distribution, as applicable;

  
	
  CR1

  	
   

  	
  =

  	
  the
  new Base Conversion Rate in effect immediately after the Opening of Business
  on the Ex-Dividend Date for such dividend or distribution, as applicable;

  
	
  SP0

  	
   

  	
  =

  	
  the
  average of the Closing Sale Prices of the Common Stock over the 10
  consecutive Trading Days ending on the Business Day immediately preceding the
  Ex-Dividend Date for such dividend or distribution, as applicable; and

  
	
  C

  	
   

  	
  =

  	
  the
  amount in cash per share of Common Stock that the Company distributes to
  holders of Common Stock.

  

 

Any adjustment to the Base Conversion Rate
made pursuant to this Section 9.04(e) shall become effective
immediately following the Opening of Business on the Ex-Dividend Date for the
dividend or distribution. If any dividend or distribution described in this Section 9.04(e) is
declared but not so paid or made, the new Base Conversion Rate shall be
readjusted to the Base Conversion Rate that would then be in effect if the
dividend or distribution had not been declared. In no event shall the Base
Conversion Rate be decreased pursuant to this Section 9.04(e).

 

30

 

(f)                                    Subject to Section 9.15,
if the Company or any of its Subsidiaries makes a payment in respect of a
tender offer or exchange offer for Common Stock, to the extent that the cash
and value of any other consideration included in the payment per share of
Common Stock exceeds the average of the Closing Sale Prices of the Common Stock
over the 10 consecutive Trading-Day period commencing on, and including, the
Trading Day next succeeding the last date on which tenders or exchanges may be
made pursuant to such tender or exchange offer, the Base Conversion Rate will
be adjusted based on the following formula:

 

	
  CR1 = CR0 ×

  	
  AC + (SP1 × OS1)

  
	
  OS0 × SP1

  

 

	
  where

  
	
  CR0

  	
   

  	
  =

  	
  the
  Base Conversion Rate in effect at the Close of Business on the last Trading
  Day of the 10 consecutive Trading-Day period commencing on, and including,
  the Trading Day next succeeding the date such tender or exchange offer
  expires;

  
	
  CR1

  	
   

  	
  =

  	
  the
  new Base Conversion Rate in effect at the Opening of Business on the first
  day following the last Trading Day of the 10 consecutive Trading-Day period
  commencing on, and including, the Trading Day next succeeding the date such
  tender or exchange offer expires;

  
	
  AC

  	
   

  	
  =

  	
  the
  aggregate value of all cash and any other consideration (as determined by the
  Board of Directors) paid or payable for shares of Common Stock purchased in
  such tender or exchange offer;

  
	
  OS0

  	
   

  	
  =

  	
  the
  number of shares of Common Stock outstanding immediately prior to the date
  such tender or exchange offer expires;

  
	
  OS1

  	
   

  	
  =

  	
  the
  number of shares of Common Stock outstanding immediately after the date such
  tender or exchange offer expires (after giving effect to the purchase or
  exchange of all shares accepted for purchase or exchange in the offer); and

  
	
  SP1

  	
   

  	
  =

  	
  the
  average of the Closing Sale Prices of Common Stock for the 10 consecutive
  Trading-Day period commencing on, and including, the Trading Day next
  succeeding the date such tender or exchange offer expires.

  

 

The adjustment to the Base Conversion Rate
under this Section 9.04(f) shall become effective immediately
following the Opening of Business on first day following the last Trading Day
of the 10 consecutive Trading-Day period commencing on, and including, the
Trading Day next succeeding the date the tender or exchange offer expires;
provided that, in respect of any Conversion Date occurring during the 10
Trading Days following the date that any tender or exchange offer expires,
references within this Section 9.04(f)  to 10 Trading Days shall be
deemed replaced with such lesser number of Trading Days as have elapsed between
the date such tender or exchange offer expires and the relevant Conversion Date
in determining the 

 

31

 

adjustment to the applicable Base Conversion
Rate.  If the Company or one of its
Subsidiaries is obligated to purchase Common Stock pursuant to any tender or
exchange offer but are permanently prevented by applicable law from effecting a
purchase or all purchases are rescinded, the new Base Conversion Rate shall be
readjusted to be the Base Conversion Rate that would be in effect if the tender
or exchange offer had not been made. In no event shall the Base Conversion Rate
be decreased pursuant to this Section 9.04(f).

 

(g)                                 Subject to Section 9.15,
if, on the fifteen month anniversary of the date hereof (the “Reset Day”), the volume-weighted average of
the Closing Sales Prices for one share of Common Stock on its primary Trading
Market (the “Reset Day Price”) for
the fifteen Trading Days immediately prior to such anniversary is less than the
Base Conversion Price then in effect, the Base Conversion Rate shall be
adjusted on such Reset Day so that the Base Conversion Price shall be equal to
the Reset Day Price.

 

(h)                                 Notwithstanding the
foregoing provisions of this Section 9.04, no adjustment will be made
thereunder, nor shall an adjustment be made to the ability of a Holder to
convert, for any distribution described therein if each Holder will otherwise
participate in the distribution on the same terms and at the same time as
holders of Common Stock, without having to convert its Securities, as if such
Holder held a number of shares of Common Stock equal to the Base Conversion
Rate in effect on the Ex-Dividend Date or effective date, as the case may be,
for such transaction multiplied by the principal amount (expressed in
thousands) of the Securities held by such Holder.

 

(i)                                     No adjustment to the Base
Conversion Rate will be made unless as specifically set forth in this Section 9.04
and Section 9.05.

 

(j)                                     Without limiting the
foregoing, the applicable Base Conversion Rate will not be adjusted upon
certain events, including but not limited to:

 

(i)                                     the issuance
of shares of Common Stock or options (a) to employees, officers or
directors of the Company pursuant to any stock or option plan duly adopted and
in effect as of the date hereof or (b) duly adopted after the date hereof
by a majority of the non-employee members of the Board of Directors or a
majority of the members of a committee of non-employee directors established
for such purpose;

 

(ii)                                  the issuance of
any shares of Common Stock pursuant to any option, warrant, right, or
exercisable, exchangeable or convertible security outstanding as of the Issue
Date, provided that the exercise price or conversion rate of such
security has not been reduced since the Issue Date;

 

(iii)                               a change in the
par value of the Common Stock; or

 

(iv)                              dividends or
distributions accumulated and unpaid as of the date hereof.

 

(k)                                  No adjustment to the Base
Conversion Rate will be required unless the adjustment would require an
increase or decrease of at least 1% of the Base Conversion Rate. If the
adjustment is not made because the adjustment does not change the Base
Conversion Rate by at 

 

32

 

least 1%, then the
adjustment that is not made will be carried forward and taken into account in
any future adjustment. All required calculations will be made to the nearest
cent or 1/1000th of a share, as the case may be.  Notwithstanding the foregoing, (i) upon
any conversion of Securities (solely with respect to Securities to be
converted), (ii) on every one year anniversary from the Issue Date of the
Securities and (iii) on the Stated Maturity for the payment of principal
of the Securities, the Company will give effect to all adjustments that have
been otherwise deferred, and those adjustments will no longer be carried
forward and taken into account in any future adjustment.

 

(l)                                     Whenever the Base Conversion
Rate is adjusted as herein provided, the Company shall promptly file with the
Trustee and any Conversion Agent other than the Trustee an Officer’s
Certificate setting forth the Base Conversion Rate after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.  Unless and until a Responsible Officer of the
Trustee shall have received such Officer’s Certificate, the Trustee shall not
be deemed to have knowledge of any adjustment of the Base Conversion Rate and
may assume that the last Base Conversion Rate of which it has knowledge is
still in effect.  Promptly after delivery
of such certificate, the Company shall prepare a notice of such adjustment of
the Base Conversion Rate setting forth the adjusted Base Conversion Rate and
the date on which each adjustment becomes effective and shall mail such notice
of such adjustment of the Base Conversion Rate to the Holder of each Security
at such Holder’s last address appearing on the Securities Register provided for
in Section 2.04 of this Second Supplemental Indenture within 20 days after
execution thereof.  Failure to deliver
such notice shall not affect the legality or validity of any such adjustment.

 

(m)                               For purposes of this Section 9.04,
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock.  If the Company pays any dividend
or makes any distribution on, or issues any rights, options or warrants in
respect of, shares of Common Stock held in treasury by the Company, the Company
shall not issue, transfer or convey such shares of Common Stock in a manner
that would have the effect of circumventing the provisions of this Section 9.04.

 

(n)                                 In addition to the
adjustments described in this Section 9.04, the Company may increase the
Base Conversion Rate as the Board of Directors deems advisable to avoid or
diminish any income tax to Holders of the Company’s Capital Stock resulting
from any dividend or distribution of Capital Stock (or rights to acquire
Capital Stock) or from any event treated as a dividend or distribution of
Capital Stock or rights to acquire Capital Stock for income tax purposes. The
Company may also, from time to time, to the extent permitted by applicable law,
increase the Base Conversion Rate by any amount for any period of at least 20
Business Days if the Board of Directors has determined that an increase would
be in the Company’s best interests. If the Board of Directors makes a
determination to increase the Base Conversion Rate, it will be conclusive. The
Company shall give Holders of Securities at least 15 days’ notice of an
increase in the Base Conversion Rate.

 

(o)                                 Notwithstanding anything to
the contrary herein, no adjustment to the Base Conversion Rate shall be made if
it would cause the Base Conversion Price to be less than $1.00.

 

33

 

Section 9.05.  Make-Whole Adjustment to Common Stock
Delivered Upon Conversion.  (a) Upon any conversion of the
Securities, the Company shall pay a “Make-Whole
Premium” by delivering a number of additional shares of Common Stock
as provided in Section 9.05(b) (the “Additional Shares”).

 

(b)                                 Subject to Section 9.15,
the number of Additional Shares per $1,000 principal amount of Securities
constituting the Make-Whole Premium shall be equal to the quotient of (i) the
aggregate principal amount of the Securities so converted multiplied by 32.00%,
less the aggregate interest paid on such Securities prior to the
applicable Conversion Date divided  by (ii) 95% of the volume-weighted
average Closing Price of the Common Stock for the 10 Trading Days immediately
preceding the Conversion Date.

 

Section 9.06.  Fractional Shares.  The Company will not issue
fractional shares of Common Stock upon conversion of Securities. If more than
one Security shall be surrendered for conversion at one time by the same
Holder, the number of full shares of Common Stock that shall be issuable upon
conversion shall be computed on the basis of the aggregate principal amount of
the Securities (or specified portions thereof to the extent permitted hereby)
so surrendered. In lieu of any fractional shares of Common Stock, the number of
shares of Common Stock delivered by the Company shall be rounded up to the
nearest whole share.

 

Section 9.07.  Notice of Adjustment.  Whenever
the Base Conversion Rate is adjusted as herein provided, the Company shall
promptly file with the Trustee and any Conversion Agent other than the Trustee,
an Officer’s Certificate setting forth the Base Conversion Rate after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.
Unless and until a Trust Officer of the Trustee shall have received such
Officer’s Certificate, the Trustee shall not be deemed to have knowledge of any
adjustment of the Base Conversion Rate and may assume that the last Base
Conversion Rate of which it has knowledge is still in effect. Promptly after
delivery of such Officer’s Certificate, the Company shall prepare a notice of
such adjustment of the Base Conversion Rate setting forth the adjusted Base
Conversion Rate and the date on which each adjustment becomes effective and
shall mail such notice of such adjustment of the Base Conversion Rate to
Holders within 20 Business Days of the effective date of such adjustment. Failure
to deliver such notice shall not affect the legality or validity of any such
adjustment.

 

Section 9.08.  Notice of Certain Transactions.  In the
event that the Company takes any action which would require an adjustment to
the Base Conversion Rate, the Company takes any action that requires the
execution of a supplemental indenture in accordance with the provisions of Section 9.09
or if there is a dissolution or liquidation of the Company, the Company shall
mail to Holders and file with the Trustee a notice stating the proposed record
or effective date, as the case may be. The Company shall mail such notice at
least 20 days before such proposed effective date. Failure to mail such notice
or any defect therein shall not affect the validity of any transaction referred
to in this Section 9.09.

 

34

 

Section 9.09.  Effect of Recapitalizations,
Reclassifications, and Changes of Common Stock.  (a) In the case of the
following events (each, a “Business
Combination”):

 

(i)                                     any
recapitalization, reclassification or change of the Common Stock, other than (A) a
change in par value, or from par value to no par value, or from no par value to
par value, or (B) as a result of a subdivision or a combination of the
Common Stock;

 

any
consolidation, merger or combination to which the Company is a party;

 

(ii)                                  any sale, lease
or other transfer to a third party of all or substantially all of the
consolidated assets of the Company and its Subsidiaries; or

 

(iii)                               any statutory
share exchange;

 

in each case as a result of which holders of
Common Stock are entitled to receive stock, other securities, other property or
assets (including cash or any combination thereof) with respect to or in
exchange for Common Stock, the Company or the successor or purchasing
corporation, as the case may be, shall execute with the Trustee a supplemental
indenture (which shall comply with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture if such supplemental indenture
is then required to so comply) providing that from and after the effective date
of the Business Combination, the settlement of the Company’s obligations to
convert Securities in accordance with the provisions of Section 9.03 shall
be based on, and each share of Common Stock deliverable in respect of any such
settlement shall consist of, the kind and amount of shares of stock, other
securities or other property or assets (including cash or any combination
thereof) which holders of Common Stock are entitled to receive in respect of
each share of Common Stock upon the Business Combination. For purposes of the
foregoing, where a Business Combination involves a transaction that causes the
Common Stock to be converted into the right to receive more than a single type
of consideration based upon any form of stockholder election, the consideration
will be deemed to be the weighted average of the types and amounts of
consideration received by the holders of Common Stock that affirmatively make
such an election. If, in the case of any such Business Combination, the stock
or other securities and assets receivable thereupon by a holder of shares of
Common Stock includes shares of stock or other securities and assets of a
Person other than the successor or purchasing Person, as the case may be, in
the Business Combination, then such supplemental indenture shall also be
executed by such other Person and shall contain such additional provisions to
protect the interests of the Holders of the Securities as the Board of Directors
shall reasonably consider necessary by reason of the foregoing, including to
the extent practicable the provisions providing for the purchase rights set
forth in Article 8 hereof. The Company shall not become a party to any
Business Combination unless its terms are materially consistent with the
provisions of this Section 9.09. The above provisions of this Section 9.09
shall similarly apply to successive Business Combinations. None of the
provisions of this Section 9.09 shall affect the right of a Holder of
Securities to convert its Securities in accordance with the provisions of this Article 9
prior to the effective date of a Business Combination.

 

35

 

If this Section 9.09 applies to any
event or occurrence, Section 9.04 hereof shall not apply.

 

(b)                                 In the event the Company
shall execute a supplemental indenture pursuant to this Section 9.09, the
Company shall promptly file with the Trustee (i) an Officer’s Certificate
briefly stating the reasons therefor and that all conditions precedent have
been complied with and (ii) an Opinion of Counsel to the effect that all
conditions precedent thereto and hereunder have been complied with, and shall
promptly mail notice of the execution of such supplemental indenture to all
Holders. Failure to mail such notice or any defect therein shall not affect the
validity of such transaction and such supplemental indenture.

 

Section 9.10.  Responsibility of Trustee.  (a) The
Trustee shall have no duty to calculate the Base Conversion Rate or to make any
computation or determination in connection therewith or to determine when an
adjustment under this Article 9 should be made, how it should be made or
what such adjustment should be, but may accept as conclusive evidence of the
same or the correctness of any such adjustment, and shall be protected in
relying upon, an Officer’s Certificate and Opinion of Counsel, including the
Officer’s Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 9.07. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company’s failure to comply with any provisions of this Article 9,
including, without limitation, whether or not a supplemental indenture is
required to be executed.

 

(b)                                 The Trustee shall not be
under any responsibility to determine the correctness of any provisions
contained in any supplemental indenture executed pursuant to Section 9.09,
but may accept as conclusive evidence of the correctness thereof, and shall be
fully protected in relying upon, the Officer’s Certificate and Opinion of
Counsel, with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 9.09.

 

(c)                                  Neither the Trustee nor any
Conversion Agent or any other Agent shall be responsible for determining
whether any event contemplated by this Article 9 has occurred which makes
the Securities eligible for conversion until the Company has delivered to the
Trustee and any Conversion Agent and each other Agent an Officer’s Certificate
stating that such event has occurred, on which Officer’s Certificate the
Trustee and any such Conversion Agent and other Agent may conclusively rely,
and the Company agrees to deliver such Officer’s Certificate to the Trustee and
any such Conversion Agent and each other Agent promptly after the occurrence of
any such event.

 

Section 9.11.  Stockholder Rights Plan.  To the
extent that the Company has a rights plan in effect upon conversion of the
Securities into Common Stock, the Holder will receive upon conversion of the
Securities in respect of which the Company has elected to deliver, in whole or
in part, Common Stock, if applicable, the rights under the rights plan unless,
prior to the conversion, the rights have expired, terminated or been redeemed
or unless the rights have separated from the Common Stock, in which case, and
only in such case, the Base Conversion Rate will be adjusted at the time of
separation as if the Company distributed to all holders of Common Stock shares
of the Company’s Capital Stock, evidences of indebtedness, other assets or
property or rights or warrants to acquire Common Stock as described in Section 9.04(d),
subject to readjustment upon the subsequent expiration, termination or
redemption of the rights.

 

36

 

Section 9.12.  Taxes on Conversion.  The issue of stock
certificates, if any, in respect of shares of Common Stock deliverable on
conversion of Securities shall be made without charge to the converting Holder
for any documentary, stamp or similar issue or transfer tax in respect of the
issue thereof. The Company shall not, however, be required to pay any such tax
which may be payable in respect of any transfer involved in the issue and
delivery of Common Stock in any name other than that of the Holder of any
Security converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the Person or Persons requesting
the issue thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has
been paid.

 

Section 9.13.  Certain Covenants of the Company.  (a) The
Company shall, prior to issuance of any Securities hereunder, and from time to
time as may be necessary, reserve out of its authorized but unissued Common
Stock or shares of Common Stock held in treasury, a sufficient number of shares
of Common Stock, free of preemptive rights, to permit the conversion of all
Outstanding Securities in accordance with the provisions of this Second
Supplemental Indenture (such number calculated, solely for purposes of this Section 9.13(a),
assuming the Company has elected or will elect to deliver solely shares of
Common Stock in respect of its obligation to convert the Securities).

 

(b)                                 All shares of Common Stock
delivered upon conversion of the Securities and all PIK Interest Shares, if
any, shall be newly issued shares or treasury shares, shall be duly authorized,
validly issued and fully paid and nonassessable and shall be free from
preemptive or similar rights and free of any lien or adverse claim.

 

(c)                                  The Company shall endeavor
promptly to comply with all federal and state securities laws regulating the
issuance and delivery of shares of Common Stock upon the conversion of
Securities or the delivery of PIK Interest Shares, if any, and shall cause to
have listed or quoted all such shares of Common Stock on NASDAQ, or each United
States national securities exchange or over-the-counter or other domestic
market on which the Common Stock is then listed or quoted.

 

(d)                                 Before taking any action
which would cause an adjustment increasing the Base Conversion Rate to an
amount that would cause the Base Conversion Price to be reduced below the then
par value per share of the Common Stock, if any, of the shares of Common Stock
issuable upon conversion of the Securities, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Base Conversion Rate.

 

Section 9.14.  Automatic Conversion.

 

(a)                                  Subject to Section 9.15,
if at any time on or prior to Stated Maturity, the Closing Price of the Common
Stock has exceeded two hundred percent (200%) of the Conversion Price then in
effect for at least thirty (30) consecutive Trading Days, all Securities then
Outstanding shall automatically convert as provided herein (an “Automatic Conversion”); provided, however,
that such Automatic Conversion shall be subject to Section 9.02 and Section 9.15
hereof.  Such Securities shall be
converted as soon as practicable, but in no event later than the third Business
Day following the Trading Day upon which this Automatic Conversion requirement
is triggered (the date of such conversion, the “Automatic Conversion Date”).

 

37

 

(b)           The
shares of Common Stock that the Holders shall receive upon Automatic Conversion
shall include any shares of Common Stock required to be delivered in respect of
a Make-Whole Premium in accordance with Section 9.05 hereof.

 

(c)           At
the request and expense of the Company, the Company shall mail or cause to be
mailed to each Holder notice (the “Automatic
Conversion Notice”) of an Automatic Conversion as soon as
practicable and no later than the first Business Day following Automatic
Conversion. If the Company gives such notice, it shall also deliver a copy of
such Automatic Conversion Notice to the Trustee. Such mailing shall be by first
class mail. Such notice, if mailed in the manner herein provided, shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the holder of any Security shall not affect the
validity of the proceedings for the Automatic Conversion of any other Security.

 

(d)           Each
Automatic Conversion Notice shall state:

 

(1)           the
aggregate principal amount of Securities to be automatically converted,

 

(2)           the
CUSIP, ISIN or similar number or numbers of the Securities being automatically
converted,

 

(3)           the
Automatic Conversion Date,

 

(4)           that
on and after said date Interest thereon will cease to accrue,

 

(5)           the
number of shares of Common Stock, if any, to be delivered in respect of a
Make-Whole Premium pursuant Section 9.05 hereof,

 

(6)           the
place or places where the Securities are to be surrendered for conversion, and

 

(7)           the
Conversion Price then in effect.

 

(e)           Prior
to or contemporaneous with the mailing of an Automatic Conversion Notice to the
Holders, the Company shall issue a press release containing the information
contained in the Automatic Conversion Notice.

 

(f)            In
the event of an Automatic Conversion, the Company shall issue and deliver a
certificate or certificates for the number of Conversion Shares and any shares
of Common Stock required to be delivered in respect of a Make-Whole Premium for
delivery to the Holders as promptly after the Automatic Conversion Date as
practicable in accordance with the provisions of this Article 9, but in no
event later than the close of business on the third next succeeding Business
Day following such Automatic Conversion Date.

 

38

 

(g)           All
Securities subject to an Automatic Conversion shall be delivered to the Trustee
or its agent to be cancelled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 3.9 of the Original Indenture.

 

(h)           Upon
Automatic Conversion, Interest on the Securities shall cease to accrue and
shall cease to be entitled to any benefit or security hereunder, and the holders
thereof shall have no right in respect of such Securities except the right to
receive the Common Stock and cash, if any, to which they are entitled pursuant
to this Section 9.14.

 

(i)            If
any of the provisions of this Section 9.14 are inconsistent with
applicable law at the time of such Automatic Conversion, such law shall govern.

 

Section 9.15.  Limitation on Conversion Prior to Shareholder
Approval.  Notwithstanding anything to
the contrary contained herein, the aggregate number of shares of Common Stock
issued (i) upon conversion of the Securities and (ii) as PIK Interest
Shares shall not exceed 19.9% of either (x) the total number of shares of
Common Stock outstanding on the date hereof or (y) the total voting power
of the Company’s securities outstanding on the date hereof that are entitled to
vote on a matter being voted on by holders of the Common Stock unless and until
the Company has obtained Shareholder Approval. 
Pursuant to Section 3.06 hereof, the Company has agreed to obtain
Shareholder Approval within 60 days hereof.

 

ARTICLE
10

MISCELLANEOUS

 

Section 10.01.  No Defeasance. 
The provisions of Article Thirteen of the Original Indenture shall
not apply to any Securities issued under this Second Supplemental Indenture.

 

Section 10.02.  Notices, Etc., to
Trustee and Company.  (a) Any
notice or communication by the Company or the Trustee to the others is duly
given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight
air courier guaranteeing next day delivery, to the others’ address:

 

If to
the Company:

 

c/o
Globalstar, Inc.

461
So. Milpitas Blvd

Milpitas,
CA 95035

Facsimile:  408-933-4949

Attention:  Chief Financial Officer

 

If to
the Trustee:

 

U.S.
Bank National Association, as Trustee

Corporate
Trust Dept. CN-OH-W6CT

425
Walnut Street

Cincinnati,
OH 45202

Facsimile:  513-632-5511

 

39

 

(b)           The
Company or  the Trustee, by notice to the others, may designate additional
or different addresses for subsequent notices or communications.

 

(c)           All
notices and communications (other than those sent to Holders) shall be deemed
to have been duly given:  at the time
delivered by hand, if personally delivered; three Business Days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

 

Section 10.03.  Communication by Holders with other Holders.  Holders may communicate pursuant to Section 312(b) of
the Trust Indenture Act with other Holders with respect to their rights under
this Second Supplemental Indenture or the Securities.  The Company, the Trustee, the Registrar and
anyone else shall have the protection of Section 312(c) of the Trust
Indenture Act.

 

Section 10.04.  Rules by Trustee, Paying Agent and
Registrar.  The Trustee may make
reasonable rules for action by, or a meeting of, Holders.  The Registrar and the Paying Agent may make
reasonable rules for their functions.

 

Section 10.05.  Legal Holidays. 
In addition to and notwithstanding Section 1.14 of the Original
Indenture if Interest Payment Date (other than an Interest Payment Date
coinciding with the Stated Maturity for the payment of principal of the
Securities or earlier Redemption Date or Fundamental Change Purchase Date) of
any Security falls on a day that is not a Business Day, then (notwithstanding
any other provision of the Indenture or of the Securities) such Interest
Payment Date shall be postponed to the next succeeding Business Day; provided
that, if such Business Day falls in the next succeeding calendar month, the
Interest Payment Date will be brought back to the immediately preceding
Business Day. If the Stated Maturity for the payment of principal of the
Securities or Redemption Date to Fundamental Change Purchase Date of a Security
would fall on a day that is not a Business Day, the required payment of
interest, if any, and principal shall be made on the next succeeding Business
Day and no interest on such payment shall accrue for the period from and after
the Stated Maturity for the payment of principal of the Securities or
Redemption Date or Fundamental Change Purchase Date, as the case may be, to the
next succeeding Business Day.

 

Section 10.06.  Governing Law. 
THIS SECOND SUPPLEMENTAL INDENTURE AND THE SECURITIES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Section 10.07.  Incorporators, Shareholders, Officers and
Directors of the Company Exempt from Individual Liability.  No recourse under or upon any obligation,
covenant or agreement of or contained in this Second Supplemental Indenture or
of or contained in the Securities or for any claim based thereon or otherwise
in respect thereof, or in the Securities or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, member, officer, manager or director, as such, past, present or
future, of the Company or any successor Person, either directly or through the
Company or any successor Person, whether by virtue of any constitution, statute
or rule of law, or by the 

 

40

 

enforcement of any assessment or penalty or
otherwise, it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a part of the
consideration for, the execution of this Second Supplemental Indenture and the
issue of the Securities.

 

Section 10.08.  Successors and Assigns.  All covenants and agreements of the Company
in this Second Supplemental Indenture and the Securities shall bind its
successors and assigns, whether so expressed or not.  All covenants and agreements of the Trustee
in this Second Supplemental Indenture shall bind its successors and assigns,
whether so expressed or not.

 

Section 10.09.  Multiple Originals. 
The parties may sign any number of copies of this Second Supplemental
Indenture.  Each signed copy shall be an
original, but all of them together represent the same agreement.  One signed copy is enough to prove this
Second Supplemental Indenture.

 

Section 10.10.  Conflict with Trust Indenture Act.  If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act that is required under
the Trust Indenture Act to be a part of and govern this Second Supplemental
Indenture, the latter provision shall control. 
If any provision of this Second Supplemental Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Second
Supplemental Indenture as so modified or excluded, as the case may be.

 

Section 10.11.  Effect of Headings and Table of Contents.  The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.

 

Section 10.12.  Separability Clause.  In case any provision in this Second Supplemental
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

Section 10.13.  Benefits of the Second Supplemental Indenture.  Nothing in this Second Supplemental Indenture
or in the Securities express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders, any benefit
or any legal or equitable right, remedy or claim under this Second Supplemental
Indenture.

 

Section 10.14.  Calculations. 
Except as otherwise provided herein, the Company will be responsible for
making all calculations called for under the Indenture and the Securities
(including calculations related to share-price based limitations on the
issuance of PIK Interest Shares and adjustments to the Base Conversion Rate).
The Company will make all such calculations in good faith and, absent manifest
error, its calculations will be final and binding on Holders. The Company will
provide a schedule of its calculations to each of the Trustee and the
Conversion Agent, and each of the Trustee and Conversion Agent is entitled to
rely conclusively upon the accuracy of the Company’s calculations without independent
verification. The Trustee will deliver a copy of such schedule to any Holder
upon the request of such Holder.

 

Section 10.15.  Ratification and Incorporation of Original
Indenture.  As supplemented hereby, the
Original Indenture is in all respects ratified and confirmed, and the Original
Indenture and this Second Supplemental Indenture shall be read, taken and
construed as one and the same instrument.

 

41

 

ARTICLE
11

SUBORDINATION OF SECURITIES

 

Section 11.01.  Securities Subordinated to Senior Debt.  The Company covenants and agrees, and each
Holder, by its acceptance of a Security, likewise covenants and agrees that all
Securities shall be issued subject to the provisions of this Article Eleven;
and each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment
of the principal of, interest and premium, if any, on each and all of the
Securities shall, to the extent and in the manner set forth in this Article Eleven
and in the Intercreditor Agreement, be subordinated in right and time of
payment to the prior indefeasible payment in full, in cash, of all existing and
future Senior Debt.

 

Section 11.02.  No Payment on Securities in Certain Circumstances.

 

(a)           The
Company shall not make or cause or permit to be made any direct or indirect
payment by or on behalf of the Company of the principal of, interest and
premium, if any, on each and all of the Securities, whether pursuant to the
terms of the Securities or upon acceleration or otherwise unless such payment
is a Permitted Payment.

 

(b)           Notwithstanding anything
contained herein to the contrary, the Trustee shall not be required to make any
payment on the Securities in the form of cash unless the Trustee has received a
certificate from the Company, in form and substance reasonably satisfactory to
the Trustee, that such payment is a Permitted Payment.

 

(c)           For
the avoidance of doubt, nothing in this Section 11.02 shall prevent (i) a
Holder from converting its Securities into Common Stock in accordance with Section 9.01
hereof, or (ii) an Automatic Conversion of the Securities.

 

Section 11.03.  Payment over of Proceeds upon Dissolution, Etc.

 

(a)           Upon  any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities, in connection with any
dissolution or winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or other marshalling of assets for the
benefit of creditors, all amounts due or to become due upon all Senior Debt
(including all interest accruing subsequent to the filing of a petition in bankruptcy
at the rate provided for in the documentation with respect thereto, whether or
not such interest is an allowed claim under applicable law) shall first be
indefeasibly paid in full, in cash, before the Holders or the Trustee on their
behalf shall be entitled to receive any payment by (or on behalf of) the
Company on account of the Securities, or any payment to acquire any of the
Securities for cash, property or securities, or any distribution with respect
to the Securities of any cash, property or securities. Before any payment may
be made by, or on behalf of, the Company on any Security, in connection with
any such dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets or securities for the Company of any kind or character,
whether in cash, property or securities, to which the Holders or the Trustee on
their behalf would be entitled, but 

 

42

 

for
the provisions of this Article Eleven, shall be made by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person making such payment or distribution or by the Holders or the
Trustee if received by them or it, directly to the COFACE Agent for the benefit
of the holders of Senior Debt, to the extent necessary to pay all such Senior
Debt in full, in cash, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior Debt.

 

(b)           To
the extent any payment of Senior Debt (whether by or on behalf of the Company,
as proceeds of security or enforcement of any right of setoff or otherwise) is
declared to be fraudulent or preferential, set aside or required to be paid to
any receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee or other similar
Person from the holders of the Senior Debt, the Senior Debt or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. To the extent the obligation
to repay any Senior Debt is declared to be fraudulent, invalid, or otherwise
set aside under any bankruptcy, insolvency, receivership, fraudulent conveyance
or similar law, then the obligation so declared fraudulent, invalid or
otherwise set aside (and all other amounts that would come due with respect
thereto had such obligation not been so affected) shall be deemed to be
reinstated and outstanding as Senior Debt for all purposes hereof as if such
declaration, invalidity or setting aside had not occurred.

 

(c)           In
the event that, notwithstanding the provision in clause (a) above
prohibiting such payment or distribution, any payment
or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities, shall be received by the
Trustee or any Holder at a time when such payment or distribution is prohibited
by clause (a) above and before all obligations in respect of Senior Debt
are indefeasibly paid in full, in cash, such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered to, the COFACE Agent for the benefit of the holders of Senior Debt,
for application to the payment of all such Senior Debt remaining unpaid, in
cash, after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Debt.

 

(d)           For
purposes of this Section 11.03, the words “cash, property or securities”
shall not be deemed to include (so long as the effect of this clause is not to
cause the Securities to be treated in any case or proceeding or similar event
described in this Section 11.03 as part of the same class of claims as the
Senior Debt or any class of claims pari passu with, or senior to) the Senior
Debt for any payment or distribution, securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment that are
subordinated, at least to the extent that the Securities are subordinated, to
the payment of all Senior Debt then outstanding; provided that (i) if a
new corporation results from such reorganization or readjustment, such
corporation assumes the Senior Debt and (ii) the rights of the holders of
the Senior Debt are not, without the consent of the COFACE Agent, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company with or into, another corporation or the liquidation
or dissolution of the Company following the sale, conveyance, transfer, lease
or other disposition of all or substantially all of its property and assets to
another corporation upon the terms and conditions provided in Section 8.1
of the Original Indenture shall 

 

43

 

not
be deemed a dissolution, winding up, liquidation or reorganization for the
purposes of this Section 11.3 if such other corporation shall, as a part
of such consolidation, merger, sale, conveyance, transfer, lease or other
disposition, comply (to the extent required) with the conditions stated in Section 8.1
of the Original Indenture.

 

Section 11.04.  Payment Over of Other Proceeds.

 

(a)           If
at any time prior to the Final Discharge Date, the Trustee or any Holder
receives or recovers:

 

(i)            any
payment or distribution of, or on account of or in relation to, the Securities
which is not a Permitted Payment, except the distribution of shares of Common
Stock upon conversion of the Securities in accordance with the terms of this
Indenture;

 

(ii)           any
amount by way of set-off in respect of the Securities; or

 

(iii)          any
distribution in cash or in kind made as a result of the occurrence of an
Insolvency Event;

 

the
Trustee or such Holder shall hold that amount in trust for the COFACE Security
Agent and inform the COFACE Security Agent and as soon as reasonably
practicable (and in any event, within five (5) Business Days) pay that
amount or an amount equal to that receipt or recovery to the COFACE Security
Agent, to be held on trust by the COFACE Security Agent for application in
accordance with the terms of the COFACE Finance Documents.

 

(b)           If
the Issuer receives or recovers any sum which, under the terms of any of the
COFACE Finance Documents, should have been paid to the COFACE Security Agent,
the Issuer shall hold that amount in trust for the COFACE Security Agent and
promptly pay that amount to the COFACE Security Agent, or, if this trust cannot
be given effect to, the Issuer will promptly pay an amount equal to that
receipt or recovery to the COFACE Security Agent for application in accordance
with the terms of the COFACE Finance Documents.

 

Section 11.05.  Subrogation.

 

(a)           Upon
the Final Discharge Date, the Holders shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of cash, property
or securities of the Company made on such Senior Debt until the principal of,
premium, if any, and interest on the Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders
of the Senior Debt of any cash, property or securities to which the Holders or
the Trustee on their behalf would be entitled except for the provisions of this
Article Eleven, and no payment pursuant to the provisions of this Article Eleven
to the holders of Senior Debt by the Holders or the Trustee on their behalf
shall, as between the Company, its creditors other than holders of Senior Debt,
and the Holders, be deemed to be a payment by the Company to or on account of
the Senior Debt. It is understood that the provisions of this Article Eleven
are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of the Senior Debt, on the other
hand.

 

44

 

(b)           If
any payment or distribution to which the Holders would otherwise have been
entitled but for the provisions of this Article Eleven shall have been
applied, pursuant to the provisions of this Article Eleven, to the payment
of all amounts payable under Senior Debt, then, and in such case, the Holders
shall be entitled to receive from the holders of such Senior Debt any payments
or distributions received by such holders of Senior Debt in excess of the
amount required to make indefeasible payment in full, in cash, of such Senior
Debt of such holders.

 

Section 11.06.  Obligations of Company Unconditional.  Nothing contained in this Article Eleven
or elsewhere in this Indenture or in the Securities is intended to or shall
impair, as among the Company and the Holders, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders the principal of,
premium, if any, and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders and creditors of the Company
other than the holders of the Senior Debt, nor shall anything herein or therein
prevent the Holders or the Trustee on their behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights of the holders of the Senior Debt pursuant to Section 11.15
hereof and otherwise pursuant to this Article Eleven.

 

Section 11.07.  Notice to Trustee.

 

(a)           The
Company shall give prompt written notice to the Trustee of any fact known to
the Company that would prohibit the making of any payment to or by the Trustee
in respect of the Securities pursuant to the provisions of this Article Eleven.
The Trustee shall not be charged with the knowledge of the existence of any
default or event of default with respect to any Senior Debt or of any other
facts that would prohibit the making of any payment to or by the Trustee unless
and until the Trustee shall have received notice in writing at its Corporate
Trust Office to that effect signed by an Officer of the Company, or by a holder
of Senior Debt or trustee or agent thereof; and prior to the receipt of any
such written notice, the Trustee shall, subject to Article Six of the
Original Indenture, be entitled to assume that no such facts exist; provided
that, if the Trustee shall not have received the notice provided for in this Section 11.07
at least two Business Days prior to the date upon which, by the terms of this
Indenture, any monies shall become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest on
any Security), then, notwithstanding anything herein to the contrary, the
Trustee shall have full power and authority to receive any monies from the
Company and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
on or after such prior date except for an acceleration of the Securities prior
to such application. Nothing contained in this Section 11.07 shall limit
the right of the holders of Senior Debt to recover payments as contemplated by
this Article Eleven. The foregoing shall not apply if the Paying Agent is
the Company. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of any
Senior Debt (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such Senior
Debt or a trustee or representative on behalf of any such holder.

 

(b)           In
the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article Eleven,
the Trustee may request such Person to furnish 

 

45

 

evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior Debt
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Eleven and, if such evidence is not
furnished to the Trustee or if the Trustee otherwise determines in the
reasonable exercise of its discretion to do so, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.

 

Section 11.08.  Reliance on Judicial Order or Certificate of
Liquidating Agent. 
Upon any payment or distribution of assets or securities referred to in
this Article Eleven, the Trustee and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or
distribution, delivered to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Debt and other Debt of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Eleven.

 

Section 11.09.  Trustee’s Relation to Senior Debt.

 

(a)           The
Trustee and any Paying Agent shall be entitled to all the rights set forth in
this Article Eleven with respect to any Senior Debt that may at any time
be held by it in its individual or any other capacity to the same extent as any
other holder of Senior Debt and nothing in this Indenture shall deprive the
Trustee or any Paying Agent of any of its rights as such holder.

 

(b)           With
respect to the holders of Senior Debt, the Trustee undertakes to perform or to
observe only such of its covenants and obligations as are specifically set
forth in this Article Eleven, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other person cash, property or
securities to which any holders of Senior Debt shall be entitled by virtue of
this Article Eleven or otherwise.

 

Section 11.10.  Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of Senior Debt. 
No right of any present or future holders of any Senior Debt to enforce
subordination as provided in this Article Eleven will at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with. The provisions of this Article Eleven are intended to be
for the benefit of, and shall be enforceable directly by, the holders of Senior
Debt.

 

46

 

Section 11.11.  Holders Authorize Trustee to Effectuate
Subordination of Securities.

 

(a)           Each
Holder by its acceptance of any Securities authorizes and expressly directs the
Trustee on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article Eleven and the
Intercreditor Agreement, and appoints the Trustee its attorney-in-fact for such
purposes, including, in the event of any dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
property and assets of the Company, the filing of a claim for the unpaid
balance of its Securities in the form required in those proceedings.

 

(b)           Each
Holder by its acceptance of any Securities authorizes and expressly directs the
Trustee on its behalf to execute and deliver the Intercreditor Agreement and
appoints the Trustee its attorney-in-fact for such purposes.  To the extent there is any inconsistency
between the terms and conditions of this Indenture and the Intercreditor
Agreement, the Intercreditor Agreement shall prevail.

 

Section 11.12.  Not to Prevent Events of Default.  The failure to make a payment on account of
principal of, premium, if any, or interest on the Securities by reason of any
provision of this Article Eleven will not be construed as preventing the
occurrence of an Event of Default.

 

Section 11.13.  Trustee’s Compensation Not Prejudiced.  Nothing in this Article Eleven will
apply to amounts due to the Trustee pursuant to other sections of this
Indenture, including Section 6.7 of the Original Indenture.

 

Section 11.14.  No Waiver of Subordination Provisions.  Without in any way limiting the generality of
Section 11.11, the holders of Senior Debt may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders,
without incurring responsibility to the Holders and without impairing or
releasing the subordination provided in this Article Eleven or the
obligations hereunder of the Holders to the holders of Senior Debt, do any one
or more of the following: (a) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding or secured; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Debt; (c) release
any Person liable in any manner for the collection of Senior Debt; and (d) exercise
or refrain from exercising any rights against the Company and any other Person.

 

Section 11.15.  Limitations on Enforcement.

 

Notwithstanding
anything to the contrary contained in Article 5 of this Second
Supplemental Indenture or Article 6 of the Original Indenture, no Holder
shall or shall cause the Trustee to, and each Holder hereby instructs and
directs the Trustee not to:

 

(a)           Seek
direct or indirect recovery, payment or repayment of, nor permit direct or
indirect payment or repayment of any of the Securities or other amounts payable
by the Company in respect thereof, provided that payment of a Permitted
Payment is not prohibited by this Section 11.15;

 

47

 

(b)           accelerate,
demand, sue for (or participate in any suit for) or accept from the Company any
payment in respect of the Securities or take any other action to enforce its
rights or to exercise any remedies in respect of any Securities (whether upon
the occurrence or during the occurrence of an Event of Default or otherwise)
unless requested to do so by the COFACE Agent;

 

(c)           assign,
transfer or otherwise dispose of, or make demand for or accept, receive or
permit to subsist any lien in respect of, all or any Securities or any
interests therein or any rights which it may have against the Issuer in respect
of all or any part of the Securities to or in favor of any person;

 

(d)           file
or join in any petition to commence any winding-up proceedings or an order
seeking reorganization or liquidation of the Company, or take any other action
for the winding-up, dissolution or administration of the Company or take, or
agree to, any other action which could or might lead to the bankruptcy,
insolvency or similar process of the Company unless requested to do so by the
COFACE Agent;

 

(e)           claim,
rank or prove as a creditor of the Company in competition with any COFACE
Finance Party in connection with the Company’s obligations under the
Securities; and/or

 

(f)            otherwise
exercise or pursue any remedy for the recovery of any Securities or in respect
of any rights arising in connection with such Securities.

 

Section 11.16.  Trust Monies Not Subordinated.  Notwithstanding anything contained herein to
the contrary, payments from money or the proceeds of U.S. Government
Obligations held in trust under Article Four of the Original Indenture by
the Trustee for the payment of principal of, premium, if any, and interest on
the Securities shall not be subordinated to the prior payment of any Senior
Debt (provided that, at the time deposited, such deposit did not violate any
then outstanding Senior Debt), and none of the Holders shall be obligated to
pay over any such amount to any holder of Senior Debt.

 

Section 11.17.  Non-competition.

 

Until
the Final Discharge Date, neither the Issuer nor the Trustee on behalf of any
Holder will by virtue of any payment or performance by it under this Agreement
or by virtue of the operation of any provision of this Indenture:

 

(a)           be subrogated to any rights,
security or moneys held, received or receivable by any Finance Party (or the
COFACE Agent or the COFACE Security Agent or any trustee or agent on their
behalf) or be entitled to any right of contribution or indemnity;

 

(b)           claim, rank, prove or vote
as a creditor of the Issuer or its estate in competition with any Finance Party
(or the COFACE Agent or the COFACE Security Agent or any trustee or agent on
their behalf);

 

48

 

(c)           receive, claim or have the
benefit of any payment, distribution or security from or on account of the
Issuer or other person (but without prejudice to any right to the benefit of
any Permitted Payments); or

 

(d)           initiate, prosecute, or
participate in any claim, action or other proceeding challenging the
enforceability, validity, perfection, or priority of the Senior Debt or any
liens securing the Senior Debt.

 

Section 11.18.  Filing of Claims Upon an Insolvency Event.

 

After the
occurrence of an Insolvency Event, each Holder irrevocably authorizes, empowers
and appoints the COFACE Security Agent to take any of the following actions, in
accordance with the terms of this Indenture (provided that the COFACE Security
Agent shall have no obligation to take any such actions):

 

(a)           accelerate repayment of any Securities
or otherwise declare any Securities prematurely due and payable or payable on
demand;

 

(b)           enforce, sue or prove for
any claim for repayment of any Securities by execution or otherwise or
institute any creditor’s process whether before or after judgment, or any
equivalent or like process in any jurisdiction;

 

(c)           in respect of any
Securities, take, or permit to be taken, any action or step, or petition, apply
or vote for, initiate or support any step (including the appointment of any
liquidator, receiver, administrator or similar officer), to commence or
continue any proceedings against the Issuer or in relation to the bankruptcy,
insolvency, winding-up, liquidation, receivership, administration,
reorganisation, dissolution or similar proceedings of the Issuer or any
suspension of payments or moratorium of any indebtedness of the Issuer, or any
analogous procedure or step in any jurisdiction;

 

(d)           commence or join any legal
or arbitration action or proceedings against the Issuer to recover in respect
of any Securities;

 

(e)           make any demand against the
Issuer in relation to any guarantee, indemnity or other assurance against loss
in respect of the Securities or exercise any right to require the Issuer to
acquire the Securities (including exercising any put or call option against the
Issuer for the redemption or purchase of the Securities);

 

(f)            exercise any right of
set-off against the Issuer in respect of the Securities;

 

(g)           enter into any composition,
assignment or arrangement with the Issuer in order to effect or protect its
rights under this Indenture or any COFACE Finance Document;

 

(h)           collect and receive all
distributions on, or on account of, any or all of the Securities; or

 

(i)            otherwise exercise or pursue
any remedy and do all other things the COFACE Security Agent considers
reasonably necessary for the recovery of any Securities or in respect of any
rights arising in connection with such Securities.

 

49

 

IN WITNESS
WHEREOF, the parties have caused this Second Supplemental Indenture to be duly
executed as of the date first written above.

 

	
   

  	
  GLOBALSTAR, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK, NATIONAL
  ASSOCIATION, as Trustee

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

50

 

Schedule A

 

Fundamental Change Make-Whole
Amount

 

(a)  Holders that elect to require
the Company to repurchase Securities upon a Fundamental Change pursuant to Section 8.01
of this Second Supplemental Indenture may elect, in lieu of receiving the
amount of cash required in respect of such Securities pursuant to Article 8,
to require the Company to satisfy its repurchase obligation by converting the
Securities into Common Stock in accordance with the procedures and on the terms
set forth in Article 9 of this Second Supplemental Indenture and on this
Schedule A to this Second Supplemental Indenture (a “Share Election”).

 

(b)  If a Holder makes a Share
Election with respect to any Securities, the Holder shall be entitled to
receive a total number of shares of Common Stock equal to (i) the number
of Conversion Shares required upon conversion of such Securities pursuant to Section 9.03(a) and
any Additional Shares required upon conversion of such Securities pursuant to Section 9.05
(together, the “Base Shares”) plus (ii) a number of shares of
Common Stock equal to the product of the Applicable Percentage and the number
of Base Shares (the “Fundamental Change Shares”).

 

(c)   If a Holder elects to require the Company to
repurchase Securities for cash upon a Fundamental Change, the Fundamental
Change Make-Whole Amount shall be equal to the product of (i) the number
of Additional Shares and Fundamental Change Shares the Holder would have
received such Holder had made a Share Election with respect to such Securities multiplied
by (ii) the Base Conversion Price.

 

(d)  The “Applicable Percentage”
means: (i) prior to the Reset Day, 15%; provided that if the fair
market value per share of the consideration available to holders of the Common
Stock in connection with the transaction giving rise to the Fundamental Change
is greater than the Base Conversion Price, the Applicable Percentage shall be
12% and (ii) on or after the Reset Day, 12%.Exhibit
4.1

 

MINES MANAGEMENT, INC.

 

and

 

COMPUTERSHARE TRUST COMPANY, N.A.

 

RIGHTS AGREEMENT

 

Dated as of June 18, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  Section 1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 2.

  	
   

  	
  Appointment of Rights Agent

  	
   

  	
  4

  
	
  Section 3.

  	
   

  	
  Issue of Right Certificates

  	
   

  	
  4

  
	
  Section 4.

  	
   

  	
  Form of Right Certificates

  	
   

  	
  5

  
	
  Section 5.

  	
   

  	
  Countersignature and Registration

  	
   

  	
  5

  
	
  Section 6.
  

  	
   

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

  	
   

  	
  6

  
	
  Section 7.

  	
   

  	
  Exercise of Rights; Purchase Price; Expiration Date of
  Rights

  	
   

  	
  6

  
	
  Section 8.

  	
   

  	
  Cancellation and Destruction of Right Certificates

  	
   

  	
  7

  
	
  Section 9.

  	
   

  	
  Availability of Preferred Shares

  	
   

  	
  7

  
	
  Section 10.

  	
   

  	
  Preferred Shares Record Date

  	
   

  	
  7

  
	
  Section 11.

  	
   

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

  	
   

  	
  8

  
	
  Section 12.

  	
   

  	
  Certificate of Adjusted Purchase Price or Number of
  Shares

  	
   

  	
  12

  
	
  Section 13.

  	
   

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

  	
   

  	
  13

  
	
  Section 14.

  	
   

  	
  Fractional Rights and Fractional Shares

  	
   

  	
  13

  
	
  Section 15.

  	
   

  	
  Rights of Action

  	
   

  	
  14

  
	
  Section 16.

  	
   

  	
  Agreement of Right Holders

  	
   

  	
  14

  
	
  Section 17.

  	
   

  	
  Right Certificate Holder Not Deemed a Stockholder

  	
   

  	
  15

  
	
  Section 18.

  	
   

  	
  Concerning the Rights Agent

  	
   

  	
  15

  
	
  Section 19.

  	
   

  	
  Merger or Consolidation or Change of Name of Rights
  Agent

  	
   

  	
  15

  
	
  Section 20.

  	
   

  	
  Duties of Rights Agent

  	
   

  	
  16

  
	
  Section 21.

  	
   

  	
  Change of Rights Agent

  	
   

  	
  17

  
	
  Section 22.

  	
   

  	
  Issuance of New Right Certificates

  	
   

  	
  18

  
	
  Section 23.

  	
   

  	
  Redemption

  	
   

  	
  18

  
	
  Section 24.

  	
   

  	
  Exchange

  	
   

  	
  18

  
	
  Section 25.

  	
   

  	
  Notice of Certain Events

  	
   

  	
  19

  
	
  Section 26.

  	
   

  	
  Notices

  	
   

  	
  20

  
	
  Section 27.

  	
   

  	
  Supplements and Amendments

  	
   

  	
  21

  
	
  Section 28.

  	
   

  	
  Successors

  	
   

  	
  21

  
	
  Section 29.

  	
   

  	
  Benefits of This Agreement

  	
   

  	
  21

  
	
  Section 30.

  	
   

  	
  Severability

  	
   

  	
  21

  
	
  Section 31.

  	
   

  	
  Governing Law

  	
   

  	
  21

  

 

i

 

	
  Section 32.

  	
   

  	
  Counterparts

  	
   

  	
  21

  
	
  Section 33.

  	
   

  	
  Descriptive Headings

  	
   

  	
  21

  
	
  Section 34.

  	
   

  	
  Stockholder Approval

  	
   

  	
  21

  
	
  Section 35.

  	
   

  	
  Determinations and Actions by the Board of Directors

  	
   

  	
  22

  
	
  Section 36.

  	
   

  	
  Regulatory Approvals

  	
   

  	
  22

  
	
  Section 37.

  	
   

  	
  Declaration as to Non-Canadian, Non-U.S. Holders

  	
   

  	
  22

  
	
  Section 38.

  	
   

  	
  Force Majeure

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of
  Certificate of Designations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of
  Right Certificate

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Summary
  of Rights to Purchase Preferred Shares

  	
   

  	
   

  

 

ii

 

Agreement,
dated as of June 18, 2009, between Mines Management, Inc., an Idaho
corporation (the “Company”), and
Computershare Trust Company, N.A., a federally chartered trust company as
rights agent (the “Rights Agent”).

 

The
Board of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a “Right”)
for each Common Share (as hereinafter defined) of the Company outstanding on June 18, 2009 (the “Record Date”), each Right representing the right to purchase one
one-thousandth of a Preferred Share (as hereinafter defined), upon the terms
and subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).

 

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

 

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

 

(a)                                  “Acquiring
Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 20%
or more of the Common Shares of the Company then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of any such plan, (iv) any
Person who becomes the Beneficial Owner of 20% or more of the Common Shares of
the Company then outstanding as a result of an Exempt Acquisition (as such term
is hereinafter defined), provided that such Person does not subsequently, at
any time while the Beneficial Owner of 20% or more of the Common Shares of the
Company then outstanding, acquire Beneficial Ownership of additional Common
Shares of the Company (except pursuant to a subsequent Exempt Acquisition or
upon the exercise of any rights hereunder or pursuant to a stock dividend or
distribution or similar action by the Company) or (v) any Person who is,
as of the date of this Agreement, the Beneficial Owner of 20% or more of the
Common Shares of the Company then outstanding, but only so long as such Person
thereafter does not, at any time while the Beneficial Owner of 20% or more of
the Common Shares of the Company then outstanding, acquire Beneficial Ownership
of any additional Common Shares (other than upon the exercise of any rights
hereunder or pursuant to a stock dividend or distribution or similar action by
the Company or pursuant to an Exempt Acquisition); provided, however,  that
a Person excluded from the definition of Acquiring Person pursuant to
clause (iv) or (v) shall cease to be so excluded immediately at
such time as such Person ceases to be the Beneficial Owner of 20% or more of
the Common Shares of the Company then outstanding. Notwithstanding the
foregoing, no Person shall become an “Acquiring Person” as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares of the Company outstanding, increases the proportionate number of
Common Shares of the Company beneficially owned by such Person; provided, however, that, if a Person shall become the Beneficial Owner of
20% or more of the Common Shares of the Company then outstanding by reason of
share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be deemed to be an “Acquiring Person.”Notwithstanding
the foregoing, if the Board of Directors of the Company 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 as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an “Acquiring
Person” for any purposes of this Agreement.

 

1

 

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

 

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

 

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

 

(i)                                     which such Person or any of such Person’s
Affiliates or Associates beneficially owns, directly or indirectly;

 

(ii)                                  which such Person or any of such Person’s
Affiliates or Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a  bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights), warrants
or options, or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act or any comparable applicable legislation and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

 

(iii)                               which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide  public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(d)(ii)(B) hereof) or disposing of any securities
of the Company.

 

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

 

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

 

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

 

(g)                                 “Common Shares” when used with reference to the Company shall mean
the shares of common stock, par value $0.001 per share, of the Company. “Common
Shares” when used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest

 

2

 

voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.

 

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

 

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

 

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

 

(k)                                  “Exempt Acquisition” shall mean an acquisition of Common
Shares of the Company in respect of which the Board of Directors has determined
in advance of the completion of the acquisition and the execution of any
definitive agreement related thereto that the Person acquiring Common Shares of
the Company in the acquisition who would otherwise be an “Acquiring Person” as
defined above, should not be deemed an “Acquiring Person” because the
acquisition is in the best interests of the Company’s stockholders.

 

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

 

(m)                               “NASDAQ” shall mean the National Association of Securities
Dealers, Inc. Automated Quotation System.

 

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

 

(o)                                 “Preferred Shares” shall mean shares of Series A
Junior Participating Preferred Stock, no par value, of the Company having the
rights and preferences set forth in the Form of Certificate of
Designations attached to this Agreement as Exhibit A.

 

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

 

(q)                                 “Record Date” shall have the meaning set forth in the second
paragraph hereof.

 

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

 

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

 

(t)                                    “Right” shall have the meaning set forth in the second
paragraph hereof.

 

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

 

(v)                                 “Shares Acquisition Date” shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.

 

(w)                               “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 equity interest is owned, directly or indirectly, by such Person.

 

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

 

(y)                                 “Trading Day” shall have the meaning set forth in Section 11(d) hereof.

 

3

 

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

 

Section 3.                                          Issue of Right Certificates.  (a) Until
the earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Common Shares
of the Company for or pursuant to the terms of any such plan) of a tender or
exchange offer the consummation of which would result in any Person becoming
the Beneficial Owner of Common Shares of the Company aggregating 20% or
more of the then outstanding Common Shares of the Company except pursuant to an
Exempt Acquisition (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the “Distribution
Date”), (x) the
Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares of the Company registered in the names of
the holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares of the Company. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested and provided with the necessary information, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares of the Company as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a “Right Certificate”), evidencing one Right for each Common Share so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

 

(b)                                 On the Record Date, or as soon as
practicable thereafter, the Company will send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form of Exhibit C hereto
(the “Summary of Rights”), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares of the Company outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with
a copy of the Summary of Rights attached thereto. Until the Distribution Date
(or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares of the Company
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares of the Company represented thereby.

 

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

 

This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between Mines Management, Inc. (the “Company”)
and Computershare Trust Company, N.A. (the “Rights Agent”), dated as of June 18, 2009 as it may be
amended from time to time (the “Rights Agreement”), the terms of which are
hereby incorporated herein by reference

 

4

 

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 will
be evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. As set forth in the
Rights Agreement, Rights beneficially owned by any Person (as defined in the
Rights Agreement) who becomes an Acquiring Person (as defined in the Rights
Agreement) become null and void.

 

With
respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares of the Company
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares of the Company
represented thereby. In the event that the Company purchases or acquires any
Common Shares of the Company after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares of the Company
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares of the Company which
are no longer outstanding.

 

Section 4.                                          Form of Right Certificates. 
The Right Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto, and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect
the duties, rights or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any applicable rule or regulation
made pursuant thereto or with any applicable rule or regulation of any
governmental authority, stock exchange, securities commission or the Financial
Industry Regulatory Authority, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-thousandths of a Preferred
Share as shall be set forth therein at the price per one one-thousandth of a
Preferred Share set forth therein (the “Purchase
Price”), but the
number of such one one-thousandths of a Preferred Share and the Purchase Price
shall be subject to adjustment as provided herein.

 

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

 

Following
the Distribution Date, and receipt by the Rights Agent of all necessary
information, the Rights Agent will keep or cause to be kept, at its office
designated for such purpose (the “Designated
Office”), books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall

 

5

 

show
the names and addresses of the respective holders of the Right Certificates,
the number of Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.

 

Section 6.                                          Transfer, Split Up, Combination
and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.  Subject to the provisions of Section 14
hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right Certificates (other
than Right Certificates representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the registered holder to purchase a like number of
one one-thousandths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the
Designated Office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates. The Rights Agent shall have
no duty or obligation under this Section 6 unless and until it is
reasonably satisfied that all such taxes and/or charges have been paid.

 

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

 

Section 7.                                          Exercise of Rights; Purchase
Price; Expiration Date of Rights.  (a) Subject
to Section 34 hereof, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein), in
whole or in part, at any time after the Distribution Date, upon surrender of
the Right Certificate, with the form of election to purchase on the reverse
side thereof properly and duly executed, to the Rights Agent at the Designated
Office of the Rights Agent, together with payment of the Purchase Price for
each one one-thousandth of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Close of Business on June 18,
2019  (the “Final Expiration Date”),
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the “Redemption Date”), or (iii) the time at which
such Rights are exchanged as provided in Section 24 hereof.

 

(b)                                 The Purchase Price for each one
one-thousandth of a Preferred Share purchasable pursuant to the exercise of a
Right shall initially be $12.00, and shall be subject to adjustment from time
to time as provided in Section 11 or 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 Right Certificate
representing exercisable Rights, with the form of election to purchase properly
and duly executed, accompanied by payment of the Purchase Price for the shares
to be purchased and an amount equal to any applicable tax or charge required to
be paid by the holder of such Right Certificate in accordance with Section 9
hereof by certified check, cashier’s check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
Preferred

 

6

 

Shares to be purchased and the Company hereby irrevocably authorizes
any such transfer agent to comply with all such requests, or (B) requisition
from the depositary agent depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent of the Preferred Shares with such depositary
agent) and the Company hereby directs such depositary agent to comply with such
request; (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section 14
hereof; (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder; and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate.

 

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

 

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

 

Section 9.                                          Availability of Preferred Shares. 
The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury the number of Preferred Shares that will
be sufficient to permit the exercise in full of all outstanding Rights in
accordance with Section 7 hereof. The Company covenants and agrees that it
will take all such action as may be necessary to ensure that all Preferred
Shares delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

 

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

 

Section 10.                                   Preferred Shares Record Date. 
Each Person in whose name any certificate for Preferred Shares is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Shares represented thereby on, and such
certificate shall be dated, the

 

7

 

date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable tax or charge) was made;
provided, however, that,
if the date of such surrender and payment is a date upon which the Preferred Shares
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares transfer
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.

 

Section 11.                                   Adjustment of Purchase Price,
Number of Shares or Number of Rights.  The Purchase
Price, the number of Preferred Shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.

 

(a)           (i) In
the event the Company shall at any time after the date of this Agreement (A) declare
a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of Preferred Shares or (D) issue any shares
of its capital stock in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.

 

(ii)                                  Subject to Section 24 hereof, in the
event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result obtained by (A) multiplying
the then current Purchase Price by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable and dividing that product
by (B) 50% of the then current per share market price of the Common Shares
of the Company (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event. In the event that any Person shall become
an Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action which would eliminate or diminish the benefits intended to
be afforded by the Rights.

 

From
and after the occurrence of such event, any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) shall be null and void, and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement. No Right Certificate shall be issued pursuant to Section 3
hereof that represents Rights beneficially owned by an Acquiring Person whose
Rights would be null and void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be null and void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such

 

8

 

Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be null and
void pursuant to the preceding sentence shall be cancelled.

 

(iii)          In
the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with subparagraph (ii) above, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exercise of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exercise of a Right, a
number of Preferred Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share as of the date
of issuance of such Preferred Shares or fraction thereof.

 

(b)           In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares (“equivalent
preferred shares”))
or securities convertible into Preferred Shares or equivalent preferred shares
at a price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convertible into Preferred
Shares or equivalent preferred shares) less than the then current per share
market price (as defined in Section 11(d)) of the Preferred Shares on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and holders of the Rights. Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and, in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

 

(c)           In
case the Company shall fix a record date for the making of a distribution to
all holders of the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the then-current per share market price of the Preferred Shares
on such record date, less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and holders of the Rights)

 

9

 

of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such then-current per share
market price of the Preferred Shares on such record date; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a record date is
fixed; and, in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.

 

(d)           (i) For
the purpose of any computation hereunder, the “current per share market price”
of any security (a “Security” for
the purpose of this Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of such Security for the 30
consecutive Trading Days immediately prior to but not including such date; provided, however, that, in the event that the current per share market
price of the Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or Securities convertible into such
shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after but not including
the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the current per share market price shall be appropriately adjusted
to reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, reported
at or prior to 4:00 P.M. Eastern time or, in case no such sale takes place
on such day, the average of the bid and asked prices, regular way, reported as
of 4:00 P.M. Eastern time, in either case, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange (as determined by volume of trading)
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price reported at or prior to 4:00 P.M. Eastern time or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported as of 4:00 P.M. Eastern time by
NASDAQ or such other system then in use, or, if on any such date the Security
is not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. The term “Trading Day” shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business, or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.

 

(ii)           For
the purpose of any computation hereunder, the “current per share market price”
of the Preferred Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Shares are not publicly
traded, the “current per share market price” of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, “current per share market price” shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.

 

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

 

10

 

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

 

(f)            If,
as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c) hereof,
inclusive, and the provisions of Sections 7, 9, 10 and 13 hereof with
respect to the Preferred Shares shall apply on like terms to any such other
shares.

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

(n)           In
the event that, at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on
the Common Shares payable in Common Shares, or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then, in any such case, (A) the number of
one one-thousandths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of
one one-thousandths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.

 

Section 12.            Certificate of Adjusted Purchase
Price or Number of Shares.  Whenever an adjustment is made
as provided in Section 11 or 13 hereof, the Company shall promptly (a) prepare
a certificate setting forth the amount of the adjustment and a brief statement
of the facts and computations accounting for such adjustment (including,
without limitation, the record date for the adjustment), (b) file with the
Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares and

 

12

 

the Securities and Exchange Commission or other
relevant regulatory authority a copy of such certificate and (c) if such
adjustment occurs at any time after the Distribution Date, mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall have no duty with
respect to and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.

 

Section 13.            Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.  In the event,
directly or indirectly, at any time after a Person has become an Acquiring
Person, (a) the Company shall consolidate with, or merge with and into,
any other Person, (b) 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 and, in connection with such merger, all
or part of the Common Shares shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other
property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at a
price equal to the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the
Company as successor thereto or as the surviving corporation) as shall equal
the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-thousandths of a Preferred Share for which a Right is
then exercisable and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of such other Person (or the
Company as successor thereto or as the surviving corporation) (determined
pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the issuer of such Common
Shares 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 issuer; and (iv) such issuer shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares of the Company thereafter deliverable upon
the exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless, prior thereto, the Company and
such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of
such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The provisions of this Section 13
shall similarly apply to successive mergers or consolidations or sales or other
transfers.

 

Section 14.            Fractional Rights and Fractional
Shares.  (a) The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to
the registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the

 

13

 

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 on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any 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 Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.

 

(b)           The
Company shall not be required to issue fractions of Preferred Shares (other
than fractions which are integral multiples of one one-thousandth of a
Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-thousandth of a Preferred Share, the Company shall pay to
the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes of this Section 14(b),
the current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.

 

(c)           The
holder of a Right, by the acceptance of the Right, expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise
of a Right (except as provided above). The Rights Agent shall have no duty or
obligation with respect to this Section 14 and Section 24(d) unless
and until it has received specific instructions (and sufficient cash, if
required) from the Company with respect to its duties and obligations under
such Sections.

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

Section 18.            Concerning the Rights Agent. 
The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder, and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
damage, judgment, fine, penalty, claim, demand, settlement, cost or expense
incurred without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent, for any action taken, suffered or omitted by the Rights
Agent in connection with the acceptance, amendment and administration of this
Agreement, including without limitation the costs and expenses of defending
against any claim of liability arising therefrom directly or indirectly in the
premises.

 

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

 

Section 19.            Merger or Consolidation or Change
of Name of Rights Agent.  Any Person into which the
Rights Agent or any successor Rights Agent may be merged or with which it may
be consolidated, or any Person resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
Person succeeding to the shareholder services business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto;
provided  that such Person would
be eligible for appointment as a successor Rights Agent under

 

15

 

the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and, in case at that time any of the Right Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and, in all such cases, such Right
Certificates shall have the full force provided in the Right Certificates and
in this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)           The
Rights Agent shall not be under any liability or responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible or liable for any breach by the Company of any covenant
or condition contained in this Agreement or in any Right Certificate; nor shall
it be responsible or liable for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 11(a)(ii) hereof)
or any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of

 

16

 

Rights evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation
of any Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.

 

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

 

(g)           The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered or omitted by it in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.

 

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

 

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

 

Section 21.            Change of Rights Agent. 
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days’ notice in
writing mailed to the Company and to each transfer agent of the Common Shares
or Preferred Shares by registered or certified mail. In the event the transfer
agency relationship in effect between the Company and the Rights Agent
terminates, the Rights Agent will be deemed to have resigned automatically and
be discharged from its duties under this Agreement as of the effective date of
such termination, and the Company shall be responsible for sending any required
notice. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days’ notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares or Preferred Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (which holder shall, with such notice, submit such holder’s Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (i) a Person
organized and doing business and in good standing under the laws of the United
States or of any state of the United States, so long as such Person is

 

17

 

authorized under such laws to exercise all of the
duties of the Rights Agent under this Agreement and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50 million or (ii) an Affiliate of such Person. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

 

Section 22.            Issuance of New Right
Certificates.  Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form as may be approved
by the Board of Directors of the Company to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.

 

Section 23.            Redemption.  (a) The
Board of Directors of the Company may, at its option, at any time prior to such
time as any Person becomes an Acquiring Person, redeem all but not less than
all the then outstanding Rights at a redemption price of $0.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption
Price”). The
redemption of the Rights by the Board of Directors of the Company may be made
effective at such time, on such basis and with such conditions as the Board of
Directors of the Company, in its sole discretion, may establish.

 

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

 

Section 24.            Exchange.  (a) The
Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any adjustment in the number of Rights
pursuant to Section 11(i) (such exchange ratio being hereinafter
referred to as the “Exchange Ratio”).

 

18

 

Notwithstanding the foregoing, the Board of Directors
of the Company shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding
Common Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the Common Shares then outstanding.

 

(b)           Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of the holders of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall 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 the Rights Agent and to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights
will be effected, and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become null and
void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.

 

(c)           In
the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take
all such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exchange of a Right, a
number of Preferred Shares or fraction thereof such that the current per
share market price of one Preferred Share multiplied by such number or fraction
is equal to the current per share market price of one Common Share as of the
date of issuance of such Preferred Shares or fraction thereof.

 

(d)           The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares. In lieu of
such fractional Common Shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.

 

(e)           The
Board of Directors of the Company may implement such reasonable procedures as
it may in good faith deem appropriate to effect such exchange, which may
include procedures designed to ensure that Common Shares are not issued in
respect of Rights that have become null and void pursuant to the provisions of Section 11(a)(ii) hereof
and that Common Shares believed by it in good faith to be issuable in respect
of Rights that have not become so null and void are held in trust for the
benefit of the holders thereof.

 

Section 25.            Notice of Certain Events.  (a) In
case the Company shall, at any time after the Distribution Date, propose (i) to
pay any dividend payable in stock of any class to the holders of the Preferred
Shares or to make any other distribution to the holders of the Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the
holders of the Preferred Shares rights or warrants to

 

19

 

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

 

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

 

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

 

Mines
Management, Inc.

905
W. Riverside Avenue, Suite 311

Spokane,
Washington 99201

Attention:
Secretary

 

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

 

Computershare
Trust Company, N.A.

350
Indiana Street, Suite 750

Golden,
Colorado 80401

Attention:
Client Services

 

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

 

20

 

Section 27.            Supplements and Amendments. 
Subject to any required regulatory approvals as set forth in Section 36
of this Agreement, which approvals include, but are not limited to approvals of
any stock exchange, the Company may from time to time supplement or amend this
Agreement without the approval of any holders of Right Certificates in order to
cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, or to
make any other provisions with respect to the Rights which the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent; provided, however,
that, from and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect the
interests of the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company and, if requested by the Rights Agent, an
opinion of counsel which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Right Agent shall
execute such supplement or amendment unless the Rights Agent shall have
determined that such supplement or amendment would affect its own rights,
duties, obligations or immunities under this Agreement.

 

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

 

Section 29.            Benefits of This Agreement. 
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).

 

Section 30.            Severability. 
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

 

Section 31.            Governing Law. 
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Idaho and for all
purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts to be made and performed entirely within such
state, except that the rights, duties and obligations of the Rights Agent shall
be governed by and constructed in accordance with the laws of the Commonwealth
of Massachusetts.

 

Section 32.            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. A
signature to this Agreement transmitted electronically shall have the same
authority, effect, and enforceability as an original signature.

 

Section 33.            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.

 

Section 34.            Stockholder Approval. 
This Agreement shall not be effective unless approved by stockholders of
the Company.

 

21

 

Section 35.            Determinations and Actions by the
Board of Directors.  Except as otherwise specifically provided
herein, the Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company hereunder, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (a) to interpret the provisions of
this Agreement and (b) to make all determinations deemed necessary or
advisable for the administration of this 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 of Directors shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other parties and (y) not subject the Board of Directors or any member
thereof to any liability to the holders of the Rights.

 

Section 36.            Regulatory Approvals. 
Any obligation of the Company or action or event contemplated by this
Agreement shall be subject in any jurisdiction to the receipt of any required
prior or subsequent approval or consent from any governmental or regulatory
authority in such jurisdiction including, without limiting the generality of
the foregoing, necessary approvals of any securities regulatory authority or
stock exchange.

 

Section 37.            Declaration as to Non-Canadian,
Non-U.S. Holders.  If in the opinion of the Board of Directors
of the Company (who may rely upon the advice of counsel) any action or event
contemplated by this Agreement would require compliance with the securities
laws or comparable legislation of a jurisdiction outside Canada or the United
States, the Board of Directors acting in good faith may take such actions as it
may deem appropriate to ensure such compliance. In no event shall the Company
or the Rights Agent be required to issue or deliver Rights or securities
issuable on exercise of Rights to Persons who are citizens, residents or
nationals of any jurisdiction other than Canada or the United States in which
such issue or delivery would be unlawful without registration of the relevant
Persons or securities for such purposes, or (until such notice is given as
required by law) without advance notice to any regulatory or self-regulatory
body.

 

Section 38.            Force Majeure. 
Notwithstanding anything to the contrary contained herein, the Rights
Agent shall not be liable for any delays or failures in performance resulting
from acts beyond its reasonable control including, without limitations, acts of
God, terrorist acts, interruptions or malfunction of computer facilities, or
loss of data due to power failures or mechanical difficulties with information
storage or retrieval systems, labor difficulties, war, or civil unrest.

 

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

 

	
  Attest:  

  	
   

  	
  MINES
  MANAGEMENT, INC.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  James H. Moore  

  	
   

  	
  By:

  	
  /s/
  Glenn Dobbs  

  
	
  Name:

  	
  James
  H. Moore  

  	
   

  	
  Name:

  	
  Glenn
  Dobbs  

  
	
  Title:

  	
  Chief
  Financial Officer

  	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Attest:  

  	
   

  	
  COMPUTERSHARE
  TRUST COMPANY, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Theresa Henshaw

  	
   

  	
  By:

  	
  /s/
  Kellie Gwinn  

  
	
  Name:

  	
  Theresa
  Henshaw

  	
   

  	
  Name:

  	
  Kellie
  Gwinn  

  
	
  Title:

  	
  Client
  Services Manager

  	
   

  	
  Title:

  	
  Vice
  President

  

 

22

 

Exhibit A

 

FORM

 

of

 

CERTIFICATE OF DESIGNATIONS

 

of

 

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

 

of

 

MINES MANAGEMENT, INC.

 

(Pursuant to Section 30-1-602 of the

 

Idaho Business Corporation Act)

 

 

Mines
Management, Inc., a corporation organized and existing under the Idaho
Business Corporation Act (hereinafter called the “Corporation”), hereby
certifies that the following resolution was adopted by the Board of Directors
of the Corporation on June 18, 2009
in accordance with the provisions of Section 30-1-602 of the Idaho
Business Corporation Act.

 

RESOLVED,
that pursuant to the authority granted to and vested in the Board of Directors
of this Corporation (hereinafter called the “Board of Directors” or the “Board”)
in accordance with the provisions of the Articles of Incorporation, the Board
of Directors hereby creates a series of Preferred Stock, no par value, of the
Corporation (the “Preferred Stock”), and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and limitations
thereof as follows:

 

Series A  Junior
Participating Preferred Stock:

 

Section 1. 
Designation and Amount.  The shares of such series
shall be designated as “Series A Junior Participating Preferred Stock”
(the “Series A Preferred Stock”) and the number of shares constituting the
Series A Preferred Stock shall be 40,000. 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 Preferred Stock to a number less
than the number of shares of Series A Preferred Stock then outstanding
plus the number of shares of Series A Preferred Stock reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.

 

Section 2. 
Dividends and Distributions.

 

(A)                              Subject to the
rights of the holders of any shares of any series of Preferred Stock (or any
similar stock) ranking prior and superior to the Series A Preferred Stock
with respect to dividends, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Stock, par value $0.001 per share
(the “Common Stock”), of the Corporation, and of any other junior stock, shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for 

 

A-1

 

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
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions, other than a dividend payable in
shares 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 Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A 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 Preferred Stock
as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A
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
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of Series A
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 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 Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be not more than 60 days prior to the date fixed for the payment thereof.

 

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

 

(A)                              Subject to the
provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or

 

A-2

 

otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the number of
votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

 

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

 

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

 

Section 4. 
Certain Restrictions.

 

(A)                              Whenever
quarterly dividends or other dividends or distributions payable on the Series A
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 Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:

 

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

 

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

 

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

 

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

 

(B)                                The 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, 

 

A-3

 

under
paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.

 

Section 5. 
Reacquired Shares.  Any shares of Series A
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 subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.

 

Section 6. 
Liquidation, Dissolution or Winding Up.  Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1) to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series A Preferred
Stock shall be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation, dissolution
or winding up. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) 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.

 

Section 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 each share
of Series A Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

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

 

A-4

 

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

 

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

 

IN
WITNESS WHEREOF, these Articles of Amendment are executed on behalf of the
Corporation by its Chief Executive Officer and President and attested by its
Secretary this 18th day of
June, 2009.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Glenn
  M. Dobbs

  
	
   

  	
   

  	
  Chief
  Executive Officer and President

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Douglas
  D. Dobbs

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  

 

A-5

 

Exhibit B

 

Form of Right Certificate

 

	
  Certificate
  No. R-

  	
   

  	
  Rights

  

 

NOT
EXERCISABLE AFTER JUNE 18, 2019
OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
AGREEMENT.

 

Right Certificate

 

MINES MANAGEMENT, 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 Agreement, dated as of June 18, 2009 (the “Agreement”), between Mines Management, Inc.
an Idaho corporation (the “Company”), and Computershare Trust Company, N.A.
(the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Agreement) and prior to 5:00 P.M.,
New York City time, on June 18,
2019 at the designated office of the Rights Agent, or at the office of
its successor as Rights Agent, one one-thousandth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock, no
par value, of the Company (the “Preferred Shares”), at a purchase price of
$12.00 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a Preferred Share
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of June 18, 2009, based on the
Preferred Shares as constituted at such date. As provided in the Agreement, the
Purchase Price and the number of one one-thousandths of a Preferred Share which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.

 

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

 

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

 

Subject
to the provisions of the Agreement, the Rights evidenced by this Right
Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company’s Common Stock, par value $0.001 per share.

 

B-1

 

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

 

No
holder of this Right Certificate shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the 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 Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as
provided in the Agreement.

 

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

 

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

 

 

	
  ATTEST:  

  	
   

  	
  MINES
  MANAGEMENT, INC.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  

  	
   

  	
   

  	
  Name:  

  
	
   

  	
  Title:

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  COUNTERSIGNED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPUTERSHARE
  TRUST COMPANY, N.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:  

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

Form of Reverse Side of Right Certificate

 

B-2

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such

 holder desires to transfer the
Right Certificate.)

 

	
  FOR VALUE RECEIVED

  	
   

  	
  hereby
  sells, assigns and transfers unto

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

(Please print name and address of transferee)

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  

 

 

Signature
Guaranteed:

 

All
Guarantees must be made by a financial institution (such as a bank or broker)
which is a participant in the Securities Transfer Agents Medallion Program (“STAMP”),
the New York Stock Exchange, Inc. Medallion Signature Program (“MSP”), or
the Stock Exchanges Medallion Program (“SEMP”) and must not be dated.
Guarantees by a notary public are not acceptable.

 

The
undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Agreement).

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  

 

Form of Reverse Side of Right Certificate—continued

 

B-3

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to exercise

 Rights represented by the Right
Certificate.)

 

To:
MINES MANAGEMENT, INC.

 

The
undersigned hereby irrevocably elects to exercise
                                         
Rights represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:

 

Please
insert social security or other identifying number

 

	
   

  
	
  (Please print name and address)

  
	
   

  
	
   

  

 

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

 

Please
insert social security or other identifying number

 

	
   

  
	
  (Please print name and address)

  
	
   

  
	
   

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  

 

 

Signature
Guaranteed:

 

All
Guarantees must be made by a financial institution (such as a bank or broker)
which is a participant in the Securities Transfer Agents Medallion Program (“STAMP”),
the New York Stock Exchange, Inc. Medallion Signature Program (“MSP”), or
the Stock Exchanges Medallion Program (“SEMP”) and must not be dated.
Guarantees by a notary public are not acceptable.

 

The
undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Agreement).

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  

 

B-4

 

NOTICE

 

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

 

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

 

B-5

 

Exhibit C

 

SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES

 

Introduction

 

At
a meeting held on June 18, 2009, the shareholders and Board of Directors
of Mines Management, Inc., an Idaho corporation (the “Company”), adopted a
Rights Agreement between the Company and Computershare Trust Company, N. A. to
protect stockholders from coercive or otherwise unfair takeover tactics. In
general terms, it works by imposing a significant penalty upon any person or
group that acquires 20% or more of our outstanding common stock without the
approval of our Board. The Rights Agreement should not interfere with any
merger or other business combination approved by our Board.

 

Pursuant
to the Rights Agreement, on June 18,
2009, the Board of Directors declared a dividend of one preferred share
purchase right (a “Right”) for each outstanding share of common stock, par
value $0.001 per share. The dividend is payable on June 18, 2009 to the stockholders of record on June 18, 2009.

 

For
those interested in the specific terms of the Rights Agreement, we provide the
following summary description. Please note, however, that this description is
only a summary, and is not complete, and should be read together with the
entire Rights Agreement, which has been filed with the Securities and Exchange
Commission as an exhibit to a Registration Statement on Form 8-A dated June 19, 2009. A copy of the
agreement is available free of charge from our Company.

 

The Rights.  Our Board authorized the
issuance of a Right with respect to each outstanding share of common stock on June 18,
2009. The Rights will initially trade with, and will be inseparable from, the
common stock. The Rights are evidenced only by the certificates that represent
shares of common stock. New Rights will accompany any new shares of common
stock we issue after June 18, 2009
until the Distribution Date described below.

 

Exercise Price.  Each Right will entitle its
holder to purchase from our Company one one-thousandth of a share of Series A
Junior Participating Preferred Stock (“Preferred Share”) for $12.00 once the
Rights become exercisable. This portion of a Preferred Share will give the
stockholder approximately the same dividend, voting, and liquidation rights as
would one share of common stock. Prior to exercise, the Right does not give its
holder any dividend, voting, or liquidation rights.

 

Exercisability.  The Rights will not be
exercisable until

 

·                  10 days
after the public announcement that a person or group has become an “Acquiring
Person” by obtaining beneficial ownership of 20% or more of our outstanding
common stock, or, if earlier,

 

·                  10 business days
(or a later date determined by our Board before any person or group becomes an
Acquiring Person) after a person or group begins a tender or exchange offer
which, if completed, would result in that person or group becoming an Acquiring
Person.

 

We
refer to the date when the Rights become exercisable as the “Distribution Date.”
Until that date, the common stock certificates will also evidence the Rights,
and any transfer of shares of common stock will constitute a transfer of
Rights. After that date, the Rights will separate from the common stock 

 

C-1

 

and
be evidenced by Rights certificates that we will mail to all eligible holders
of common stock. Any Rights held by an Acquiring Person are void and may not be
exercised.

 

Consequences Of A Person Or Group Becoming An Acquiring
Person.

 

·                  Flip
In.  If a person or
group becomes an Acquiring Person, all holders of Rights except the Acquiring
Person may, for $12.00, purchase shares of our common stock with a market value
of $24.00, based on the market price of the common stock prior to such acquisition.

 

·                  Flip
Over.  If our Company
is acquired in a merger or similar transaction after the Rights Distribution
Date, all holders of Rights except the Acquiring Person may, for $12.00,
purchase shares of the acquiring corporation with a market value of $24.00,
based on the market price of the acquiring corporation’s stock prior to such
merger.

 

Preferred Share Provisions.

 

Each
one one-thousandth of a Preferred Share, if issued:

 

·                  will not be
redeemable.

 

·                  will entitle
holders to cumulative quarterly dividend payments of $.001 per each one
one-thousandth of a Preferred Share, or an amount equal to the dividend paid on
one share of common stock, whichever is greater.

 

·                  will entitle
holders upon liquidation either to receive $.001 per each one one-thousandth of
a Preferred Share, plus accumulated dividends, or an amount equal to the
payment made on one share of common stock, whichever is greater.

 

·                  will have the
same voting power as one share of common stock.

 

·                  if shares of
our common stock are exchanged via merger, consolidation, or a similar
transaction, will entitle holders to a per share payment equal to the payment
made on one share of common stock.

 

The
value of one one-thousandth interest in a Preferred Share should approximate
the value of one share of common stock.

 

Expiration.  The Rights will expire on June 18, 2019.

 

Redemption.  Our Board may redeem the
Rights for $.001 per Right at any time before any person or group becomes an
Acquiring Person. If our Board redeems any Rights, it must redeem all of the
Rights. Once the Rights are redeemed, the only right of the holders of Rights
will be to receive the redemption price of $.001 per Right. The redemption
price will be adjusted if we have a stock split or stock dividends of our
common stock.

 

Exchange.  After a person or group
becomes an Acquiring Person, but before an Acquiring Person owns 50% or more of
our outstanding common stock, our Board may extinguish the Rights by exchanging
one share of common stock or an equivalent security for each Right, other than
Rights held by the Acquiring Person.

 

C-2

 

Anti-Dilution Provisions.  Our Board may adjust the
purchase price of the Preferred Shares, the number of Preferred Shares issuable
and the number of outstanding Rights to prevent dilution that may occur from a
stock dividend, a stock split, a reclassification of the Preferred Shares or
common stock. No adjustments to the Exercise Price of less than 1% will be
made.

 

Amendments.  Subject to applicable
regulatory approval requirements, the terms of the Rights Agreement may be
amended by our Board without the consent of the holders of the Rights. After a
person or group becomes an Acquiring Person, our Board may not amend the
agreement in a way that adversely affects holders of the Rights.

 

C-3

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