Document:

Exhibit 4.9

 

AMENDED
BYLAWS

 

OF

 

YAHOO!
INC.

 

(as of
November 13, 2001)

 

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I - CORPORATE
  OFFICES

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Registered Office

  	
   

  
	
  1.2

  	
  Other Offices

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II - MEETINGS
  OF STOCKHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Place of Meetings

  	
   

  
	
  2.2

  	
  Annual Meeting

  	
   

  
	
  2.3

  	
  Special Meeting

  	
   

  
	
  2.4

  	
  Notice
  of Stockholder’s Meetings; Affidavit of Notice

  	
   

  
	
  2.5

  	
  Advance Notice
  of Stockholder Nominees

  	
   

  
	
  2.6

  	
  Quorum

  	
   

  
	
  2.7

  	
  Adjourned Meeting; Notice

  	
   

  
	
  2.8

  	
  Conduct of Business

  	
   

  
	
  2.9

  	
  Voting

  	
   

  
	
  2.10

  	
  Waiver of Notice

  	
   

  
	
  2.11

  	
  Record Date
  for Stockholder Notice; Voting

  	
   

  
	
  2.12

  	
  Proxies

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III - DIRECTORS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Powers

  	
   

  
	
  3.2

  	
  Number of Directors

  	
   

  
	
  3.3

  	
  Election,
  Qualification and Term of Office of Directors

  	
   

  
	
  3.4

  	
  Resignation and Vacancies

  	
   

  
	
  3.5

  	
  Place of Meetings;
  Meetings by Telephone

  	
   

  
	
  3.6

  	
  Regular Meetings

  	
   

  
	
  3.7

  	
  Special Meetings; Notice

  	
   

  
	
  3.8

  	
  Quorum

  	
   

  
	
  3.9

  	
  Waiver of Notice

  	
   

  
	
  3.10

  	
  Board
  Action by Written Consent without a Meeting

  	
   

  
	
  3.11

  	
  Fees and Compensation
  of Directors

  	
   

  
	
  3.12

  	
  Approval of Loans to
  Officers

  	
   

  
	
  3.13

  	
  Removal of Directors

  	
   

  
	
  3.14

  	
  Chairman
  of the Board of Directors

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV - COMMITTEES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Committees of Directors

  	
   

  
	
  4.2

  	
  Committee Minutes

  	
   

  
	
  4.3

  	
  Meetings and Action
  of Committees

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V - OFFICERS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Officers

  	
   

  
	
  5.2

  	
  Appointment of Officers

  	
   

  
	
  5.3

  	
  Subordinate Officers

  	
   

  
	
  5.4

  	
  Removal and
  Resignation of Officers

  	
   

  
	
  5.5

  	
  Vacancies in Offices

  	
   

  
	
  5.6

  	
  Chief Executive Officer

  	
   

  
	
  5.7

  	
  President

  	
   

  
	
  5.8

  	
  Vice Presidents

  	
   

  
	
  5.9

  	
  Secretary

  	
   

  
	
  5.10

  	
  Chief Financial Officer

  	
   

  
	
  5.11

  	
  Representation
  of Shares of Other Corporations

  	
   

  
	
  5.12

  	
  Authority and Duties
  of Officers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Indemnification
  of Directors and Officers

  	
   

  
	
  6.2

  	
  Indemnification of Others

  	
   

  
	
  6.3

  	
  Payment of Expenses in
  Advance

  	
   

  
	
  6.4

  	
  Indemnity Not Exclusive

  	
   

  
	
  6.5

  	
  Insurance

  	
   

  
	
  6.6

  	
  Conflicts

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII - RECORDS
  AND REPORTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Maintenance and
  Inspection of Records

  	
   

  
	
  7.2

  	
  Inspection by Directors

  	
   

  
	
  7.3

  	
  Annual Statement to
  Stockholders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII - GENERAL
  MATTERS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Checks

  	
   

  
	
  8.2

  	
  Execution
  of Corporate Contracts and Instruments

  	
   

  
	
  8.3

  	
  Stock
  Certificates; Partly Paid Shares

  	
   

  
	
  8.4

  	
  Special Designation
  on Certificates

  	
   

  
	
  8.5

  	
  Lost Certificates

  	
   

  
	
  8.6

  	
  Construction; Definitions

  	
   

  
	
  8.7

  	
  Dividends

  	
   

  
	
  8.8

  	
  Fiscal Year

  	
   

  
	
  8.9

  	
  Seal

  	
   

  
	
  8.10

  	
  Transfer of Stock

  	
   

  
	
  8.11

  	
  Stock Transfer Agreements

  	
   

  
	
  8.12

  	
  Registered Stockholders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX - AMENDMENTS

  	
   

  

 

 

 

 

BYLAWS

 

OF

 

YAHOO!
INC.

 

ARTICLE I

 

CORPORATE
OFFICES

 

1.1                                 Registered Office.

 

The address of the Corporation’s registered office in
the State of Delaware is 1013 Centre Road, Wilmington, County of New
Castle.  The name of its registered
agent at such address is Corporation Service Company.

 

1.2                                 Other Offices.

 

The Board of Directors may at any time establish other
offices at any place or places where the Corporation is qualified to do
business.

 

ARTICLE
II

 

MEETINGS
OF STOCKHOLDERS

 

2.1                                 Place of Meetings.

 

Meetings of stockholders shall be held at any place,
within or outside the State of Delaware, designated by the Board of Directors.
In the absence of any such designation, stockholders’ meetings shall be held at
the registered office of the Corporation.

 

2.2                                 Annual Meeting.

 

(a)           The
annual meeting of stockholders shall be held each year on a date and at a time
designated by the Board of Directors. 
In the absence of such designation, the annual meeting of stockholders
shall be held on the third Tuesday of May in each year at 10:00 a.m.  However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day.  At the
meeting, directors shall be elected and any other proper business may be transacted.

 

(b)           Nominations
of persons for election to the Board of Directors of the Corporation and the
proposal of business to be transacted by the stockholders may be made at an
annual meeting of stockholders (i) pursuant to the Corporation’s notice with
respect to such meeting, (ii) by or at the direction of the Board of Directors
or (iii) by any stockholder of the Corporation who was a stockholder of record
at the time of giving of the notice provided for in

 

1

 

 

this Section 2.2, who is entitled to vote at the meeting and who has
complied with the notice procedures set forth in this Section 2.2.

 

(c)           In
addition to the requirements of Section 2.5, for nominations or other business
to be properly brought before an annual meeting by a stockholder pursuant to
clause (iii) of paragraph (b) of this Section 2.2, the stockholder must have
given timely notice thereof in writing to the secretary of the Corporation and
such business must be a proper matter for stockholder action under the General
Corporation Law of  Delaware.  To be timely, a stockholder’s notice shall
be delivered to the secretary at the principal executive offices of the
Corporation not less than 60 days nor more than 90 days prior to the first anniversary
of the preceding year’s annual meeting of stockholders; provided, however, that
in the event that the date of the annual meeting is more than 30 days prior to
or more than 60 days after such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the 90th day prior to such
annual meeting and not later than the close of business on the later of the
60th day prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made.  Such stockholder’s notice shall set forth
(i) as to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including
such person’s written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (ii) as to any other business
that the stockholder proposes to bring before the meeting, a brief description
of such business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (A) the name and address of such
stockholder, as they appear on the Corporation’s books, and of such beneficial
owner and (B) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.

 

(d)           Only
such business shall be conducted at an annual meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set
forth in this Section 2.2.  The chairman
of the meeting shall determine whether a nomination or any business proposed to
be transacted by the stockholders has been properly brought before the meeting
and, if any proposed nomination or business has not been properly brought
before the meeting, the chairman shall declare that such proposed business or
nomination shall not be presented for stockholder action at the meeting.

 

(e)           For
purposes of this Section 2.2, “public announcement” shall mean disclosure in a
press release reported by the Dow Jones News Service, Associated Press or a
comparable national news service.

 

(f)            Nothing
in this Section 2.2 shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Corporation’s proxy statement pursuant to
Rule 14a-8 under the Exchange Act.

 

2

 

 

2.3                                 Special Meeting.

 

A special meeting of the stockholders may be called at
any time by the Board of Directors, or by the chairman of the board, or by the
president.

 

2.4                                 Notice of Stockholder’s Meetings;
Affidavit of Notice.

 

All notices of meetings of stockholders shall be in
writing and shall be sent or otherwise given in accordance with this Section
2.4 of these Bylaws not less than 10 nor more than 60 days before the date of
the meeting to each stockholder entitled to vote at such meeting (or such
longer or shorter time as is required by Section 2.5 of these Bylaws, if
applicable).  The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.

 

Written notice of any meeting of stockholders, if
mailed, is given when deposited in the United States mail, postage prepaid,
directed to the stockholder at his address as it appears on the records of the
Corporation.  An affidavit of the
secretary or an assistant secretary or of the transfer agent of the Corporation
that the notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.

 

2.5                                 Advance Notice of Stockholder
Nominees.

 

Only persons who are nominated in accordance with the
procedures set forth in this Section 2.5 shall be eligible for election as
directors.  Nominations of persons for
election to the Board of Directors of the Corporation may be made at a meeting
of stockholders by or at the direction of the Board of Directors or by any
stockholder of the Corporation entitled to vote for the election of directors
at the meeting who complies with the notice procedures set forth in this
Section 2.5.  Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the secretary of the Corporation.  To be timely, a stockholder’s notice shall
be delivered to or mailed and received at the principal executive offices of
the Corporation not less than 60 days nor more than 90 days prior to the
meeting; provided, however, that in the event that less than 60 days’ notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made.  Such stockholder’s notice shall
set forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director, (i) the name, age, business address and
residence address of such person, (ii) the principal occupation or employment
of such person, (iii) the class and number of shares of the Corporation which
are beneficially owned by such person and (iv) any other information relating
to such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including, without limitation, such
person’s written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Corporation’s books, of
such stockholder and (ii) the class and number of shares of the Corporation
which are beneficially owned by such stockholder.  At the request of the Board of

 

3

 

 

Directors any person nominated by the Board of Directors for election
as a director shall furnish to the secretary of the Corporation that
information required to be set forth in a stockholder’s notice of nomination
which pertains to the nominee.  No
person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 2.5.  The chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that a nomination was not
made in accordance with the procedures prescribed by the Bylaws, and if he or
she should so determine, he or she shall so declare to the meeting and the
defective nomination shall be disregarded.

 

2.6                                 Quorum.

 

The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stock­holders for the
transaction of business except as otherwise pro­vided by statute or by the
Certificate of Incorporation.  If,
however, such quorum is not present or represented at any meeting of the
stockholders, then either (a) the chairman of the meeting or (b) the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented.  At such adjourned meeting
at which a quorum is present or represented, any business may be transacted
that might have been transacted at the meeting as originally noticed.

 

2.7                                 Adjourned Meeting; Notice.

 

When a meeting is adjourned to another time or place,
unless these Bylaws otherwise require, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken.  At the
adjourned meeting the Corporation may transact any business that might have been
transacted at the original meeting.  If
the adjournment is for more than 30 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.

 

2.8                                 Conduct of Business.

 

The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including the
manner of voting and the conduct of business.

 

2.9                                 Voting.

 

(a)           The
stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these
Bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners of stock and to voting trusts and other voting agreements).

 

4

 

 

(b)           Except
as may be otherwise provided in the Certificate of Incorporation, each
stockholder shall be entitled to one vote for each share of capital stock held
by such stockholder.

 

2.10                           Waiver of Notice.

 

Whenever notice is required to be given under any
provision of the General Corporation Law of Delaware or of the Certificate of
Incorporation or these Bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice.  Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. 
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice unless so required by the Certificate of Incorporation or
these Bylaws.

 

2.11                           Record Date for Stockholder Notice;
Voting

 

In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than 60 nor less than 10 days before the date of
such meeting, nor more than 60 days prior to any other action. If the Board of
Directors does not so fix a record date:

 

(a)           The
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held.

 

(b)           The
record date for determining stockholders for any other purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.

 

A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.

 

2.12                           Proxies.

 

Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for such
stockholder by a written proxy, signed by the stockholder and filed with the
secretary of the Corporation, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer
period.  A proxy shall be deemed signed
if the stockholder’s name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the 

 

5

 

 

stockholder’s attorney-in-fact. 
The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section 212(e) of the
General Corporation Law of Delaware.

 

ARTICLE III

 

DIRECTORS

 

3.1                                 Powers.

 

Subject to the provisions of the General Corporation
Law of Delaware and any limitations in the Certificate of Incorporation or
these Bylaws relating to action required to be approved by the stockholders or
by the outstanding shares, the business and affairs of the Corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the Board of Directors.

 

3.2                                 Number of Directors.

 

The number of directors constituting the entire Board
of Directors shall be ten.  Thereafter,
this number may be changed by a resolution of the Board of Directors or of the
stockholders, subject to Section 3.4 of these Bylaws.  No reduction of the authorized number of directors shall have the
effect of removing any director before that director’s term of office expires.

 

3.3                                 Election, Qualification and Term of Office of Directors.

 

Except as provided in Section 3.4 of these
Bylaws, directors shall be elected at each annual meeting of stockholders to
hold office until the next annual meeting. 
Directors need not be stockholders unless so required by the Certificate
of Incorporation or these Bylaws, wherein other qualifications for directors
may be prescribed.  Each director,
including a director elected to fill a vacancy, shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal.

 

Elections of directors need not be by written ballot.

 

3.4                                 Resignation and Vacancies.

 

Any director may resign at any time upon written
notice to the attention of the secretary of the Corporation.  When one or more directors so resigns and
the resignation is effective at a future date, a majority of the directors then
in office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies. A vacancy
created by the removal of a director by the vote of the stockholders or by
court order may be filled only by the affirmative vote of a majority of the
shares represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute a majority of the 

 

6

 

 

quorum.  Each director so
elected shall hold office until the next annual meeting of the stockholders and
until a successor has been elected and qualified.

 

Unless otherwise provided in the Certificate of
Incorporation or these Bylaws:

 

(a)           Vacancies
and newly created directorships resulting from any increase in the authorized
number of directors elected by all of the stockholders having the right to vote
as a single class may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director.

 

(b)           Whenever
the holders of any class or classes of stock or series thereof are entitled to
elect one or more directors by the provisions of the Certificate of
Incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected.

 

If at any time, by reason of death or resignation or
other cause, the Corporation should have no directors in office, then any
officer or any stockholder or an executor, administrator, trustee or guardian
of a stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders in
accordance with the provisions of the Certificate of Incorporation or these
Bylaws, or may apply to the Court of Chancery for a decree summarily ordering
an election as provided in Section 211 of the General Corporation Law of
Delaware.

 

If, at the time of filling any vacancy or any newly
created directorship, the directors then in office constitute less than a
majority of the whole Board of Directors (as constituted immediately prior to
any such increase), then the Court of Chancery may, upon applica­tion of any
stockholder or stockholders holding at least 10% of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in office as aforesaid, which election shall be governed by the provisions of
Section 211 of the General Corporation Law of Delaware as far as
applicable.

 

3.5                                 Place of Meetings; Meetings by Telephone.

 

The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or outside the State of
Delaware.

 

Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

 

3.6                                 Regular Meetings.

 

7

 

 

Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board of Directors.

 

3.7                                 Special Meetings; Notice.

 

Special meetings of the Board of Directors for any
purpose or purposes may be called at any time by the chairman of the board, the
president, any vice president, the secretary or any two directors.

 

Notice of the time and place of special meetings shall
be delivered personally or by telephone to each director or sent by first-class
mail or telegram, charges prepaid, addressed to each director at that
director’s address as it is shown on the records of the Corporation.  If the notice is mailed, it shall be
deposited in the United States mail at least four days before the time of the
holding of the meeting.  If the notice
is delivered personally or by telephone or by telegram, it shall be delivered
personally or by telephone or to the telegraph company at least 24 hours before
the time of the holding of the meeting, or on such shorter notice as the person
or persons calling such meeting may deem necessary or appropriate under the
circumstances.  Any oral notice given
personally or by telephone may be communicated either to the director or to a
person at the office of the director who the person giving the notice has
reason to believe will promptly communicate it to the director.  The notice need not specify the purpose or
the place of the meeting, if the meeting is to be held at the principal
executive office of the Corporation.

 

3.8                                 Quorum.

 

At all meetings of the Board of Directors, a majority
of the authorized number of directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by
the Certificate of Incorporation.  If a
quorum is not present at any meeting of the Board of Directors, then the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.

 

A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for
that meeting.

 

3.9                                 Waiver of Notice.

 

Whenever notice is required to be given under any
provision of the General Corporation Law of Delaware or of the Certificate of
Incorporation or these Bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice.  Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. 
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors, or members of a committee of

 

8

 

 

directors, need be specified in any written waiver of notice unless so
required by the Certificate of Incorporation or these Bylaws.

 

3.10                           Board Action by Written Consent
without a Meeting..

 

Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting if all members of the Board of Directors or committee,
as the case may be, consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or
committee.  Written consents
representing actions taken by the board or committee may be executed by telex,
telecopy or other facsimile transmission, and such facsimile shall be valid and
binding to the same extent as if it were an original.

 

3.11                           Fees and Compensation of Directors.

 

Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. 
No such compen­sation shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.

 

3.12                           Approval of Loans to Officers.

 

The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiary, including any officer or employee who is a
director of the Corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation.  The loan,
guaranty or other assistance may be with or without interest and may be
unsecured, or secured in such manner as the Board of Directors shall approve,
including, without limitation, a pledge of shares of stock of the
Corporation.  Nothing in this Section
3.2 contained shall be deemed to deny, limit or restrict the powers of guaranty
or warranty of the Corporation at common law or under any statute.

 

3.13                           Removal of Directors.

 

Unless otherwise restricted by statute, by the
Certificate of Incorporation or by these Bylaws, any director or the entire
Board of Directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors;
provided, however, that if the stockholders of the Corporation are entitled to
cumulative voting, if less than the entire Board of Directors is to be removed,
no director may be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an election of
the entire Board of Directors.

 

No reduction of the authorized number of directors
shall have the effect of removing any director prior to the expiration of such
director’s term of office.

 

3.14                           Chairman and Vice Chairman of the
Board of Directors.

 

9

 

 

The Corporation may also have, at the discretion of
the Board of Directors, a chairman of the Board of Directors and a vice
chairman of the Board of Directors, who shall not be considered officers of the
Corporation.

 

ARTICLE IV

 

COMMITTEES

 

4.1                                 Committees of Directors.

 

The Board of Directors may, by resolution passed by a
majority of the whole Board of Directors, designate one or more committees,
with each committee to consist of one or more of the directors of the
Corporation.  The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disquali­fied member at any meeting of the
committee.  In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such absent
or disqualified member.  Any such committee,
to the extent provided in the resolution of the Board of Directors or in the
Bylaws of the Corporation, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers that may require it; but no such committee shall have the
power or authority to (a) amend the Certificate of Incorporation (except that a
committee may, to the extent autho­rized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided in Section 151(a) of the General Corporation Law of Delaware,
fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), (b) adopt an agreement of merger or consolidation under
Sections 251 or 252 of the General Corporation Law of Delaware,
(c) recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation’s property and assets, (d) recommend
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or (e) amend the Bylaws of the Corporation; and, unless the
board resolution establishing the committee, the Bylaws or the Certificate of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of Delaware.

 

4.2                                 Committee Minutes.

 

Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.

 

4.3                                 Meetings and Action of Committees.

 

10

 

 

Meetings and actions of committees shall be governed
by, and held and taken in accordance with, the provisions of Section 3.5
(place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8
(quorum), Section 3.9 (waiver of notice), and Section 3.10 (action
without a meeting) of these Bylaws, with such changes in the context of such
provisions as are necessary to substitute the committee and its members for the
Board of Directors and its members; provided, however, that the time of regular
meetings of committees may be determined either by resolution of the Board of
Directors or by resolution of the committee, that special meetings of
committees may also be called by resolution of the Board of Directors and that
notice of special meetings of committees shall also be given to all alternate
members, who shall have the right to attend all meetings of the committee.  The Board of Directors may adopt rules for
the government of any committee not inconsistent with the provisions of these
Bylaws.

 

ARTICLE V

 

OFFICERS

 

5.1                                 Officers

 

The officers of the Corporation shall be a chief executive
officer, a president, a secretary, and a chief financial officer.  The Corporation may also have, at the
discretion of the Board of Directors, one or more vice presidents, one or more
assistant secretaries, one or more assistant treasurers, and any such other
officers as may be appointed in accordance with the provisions of
Section 5.3 of these Bylaws.  Any
number of offices may be held by the same person.

 

5.2                                 Appointment of Officers.

 

The officers of the Corporation, except such officers
as may be appointed in accordance with the provisions of Sections 5.3 or
5.5 of these Bylaws, shall be appointed by the Board of Directors, subject to
the rights, if any, of an officer under any contract of employment.

 

5.3                                 Subordinate Officers.

 

The Board of Directors may appoint, or empower the
chief executive officer or the president to appoint, such other officers and
agents as the business of the Corporation may require, each of whom shall hold
office for such period, have such authority, and perform such duties as are
provided in these Bylaws or as the Board of Directors may from time to time
determine.

 

5.4                                 Removal and Resignation of Officers.

 

Subject to the rights, if any, of an officer under any
contract of employment, any officer may be removed, either with or without
cause, by an affirmative vote of the majority of the Board of Directors at any
regular or special meeting of the Board of Directors or, except in the case of
an officer chosen by the Board of Directors, by any officer upon whom such
power of removal may be conferred by the Board of Directors.

 

11

 

 

Any officer may resign at any time by giving written
notice to the attention of the secretary of the Corporation.  Any resignation shall take effect at the
date of the receipt of that notice or at any later time specified in that
notice; and, unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective.  Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the officer is a
party.

 

5.5                                 Vacancies in
Offices.

 

Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors.

 

5.6                                 Chief
Executive Officer.

 

Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the chairman of the board, if any, the chief
executive officer of the Corporation shall, subject to the control of the Board
of Directors, have general supervision, direction, and control of the business
and the officers of the Corporation.  He
or she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the Board of
Directors and shall have the general powers and duties of management usually
vested in the office of chief executive officer of a corporation and shall have
such other powers and duties as may be prescribed by the Board of Directors or
these Bylaws.

 

5.7                                 President.

 

Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the chairman of the board, if any, or the
chief executive officer, the president shall have general supervision,
direction, and control of the business and other officers of the Corporation.  He or she shall have the general powers and
duties of management usually vested in the office of president of a corporation
and such other powers and duties as may be prescribed by the Board of Directors
or these Bylaws.

 

5.8                                 Vice Presidents.

 

In the absence or disability of the chief executive
officer and president, the vice presidents, if any, in order of their rank as
fixed by the Board of Directors or, if not ranked, a vice president designated
by the Board of Directors, shall perform all the duties of the president and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president.  The
vice presidents shall have such other powers and perform such other duties as
from time to time may be prescribed for them respectively by the Board of
Directors, these Bylaws, the president or the chairman of the board.

 

5.9                               Secretary.

 

The secretary shall keep or cause to be kept, at the
principal executive office of the Corporation or such other place as the Board
of Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stock­holders. The minutes shall

 

12

 

 

show the time and place of each meeting, the names of those present at
directors’ meetings or committee meetings, the number of shares present or
represented at stockholders’ meetings, and the proceedings thereof.

 

The secretary shall keep, or cause to be kept, at the
principal executive office of the Corporation or at the office of the
Corporation’s transfer agent or registrar, as determined by resolution of the
Board of Directors, a share register, or a duplicate share register, showing
the names of all stockholders and their addresses, the number and classes of
shares held by each, the number and date of certificates evidencing such
shares, and the number and date of cancellation of every certificate
surrendered for cancellation.

 

The secretary shall give, or cause to be given, notice
of all meetings of the stockholders and of the Board of Directors required to
be given by law or by these Bylaws.  He
or she shall keep the seal of the Corporation, if one be adopted, in safe
custody and shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors or by these Bylaws.

 

5.10                           Chief
Financial Officer.

 

The chief financial officer shall keep and maintain,
or cause to be kept and maintained, adequate and correct books and records of
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital retained earnings, and shares. The books of account shall at
all reasonable times be open to inspection by any director.

 

The chief financial officer shall deposit all moneys
and other valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He or she shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the president, the chief executive officer, or the
directors, upon request, an account of all his or her transactions as chief
financial officer and of the financial condition of the Corporation, and shall
have other powers and perform such other duties as may be prescribed by the
Board of Directors or the Bylaws.

 

5.11                           Representation
of Shares of Other Corporations..

 

The chairman of the board, the chief executive
officer, the president, any vice president, the chief financial officer, the
secretary or assistant secretary of this Corporation, or any other person
authorized by the Board of Directors or the chief executive officer or the
president or a vice president, is authorized to vote, represent, and exercise
on behalf of this Corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this
Corporation.  The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by the person
having such authority.

 

13

 

 

5.12                           Authority
and Duties of Officers.

 

In addition to the foregoing authority and duties, all
officers of the Corporation shall respectively have such authority and perform
such duties in the management of the business of the Corporation as may be
designated from time to time by the Board of Directors or the stockholders.

 

ARTICLE
VI

 

INDEMNIFICATION
OF DIRECTORS, OFFICERS,

EMPLOYEES,
AND OTHER AGENTS

 

6.1                                 Indemnification
of Directors and Officers.

 

The Corporation shall, to the maximum extent and in
the manner permitted by the General Corporation Law of Delaware, indemnify each
of its directors and officers against expenses (including attorneys’ fees),
judgments, fines, settlements and other amounts actually and reasonably
incurred in connection with any proceeding, arising by reason of the fact that
such person is or was an agent of the Corporation.  For purposes of this Section 6.1, a “director” or “officer”
of the Corporation includes any person (a) who is or was a director or
officer of the Corporation, (b) who is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, or (c) who was a director or
officer of a Corporation which was a predecessor corporation of the Corporation
or of another enterprise at the request of such predecessor corporation.

 

6.2                                 Indemnification
of Others.

 

The Corporation shall have the power, to the maximum
extent and in the manner permitted by the General Corporation Law of Delaware,
to indemnify each of its employees and agents (other than directors and
officers) against expenses (including attorneys’ fees), judg­ments, fines,
settlements and other amounts actually and reason­ably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was
an agent of the Corporation.  For
purposes of this Section 6.2, an “employee” or “agent” of the Corporation
(other than a director or officer) includes any person (a) who is or was
an employee or agent of the Corporation, (b) who is or was serving at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (c) who was an
employee or agent of a corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation.

 

6.3                                 Payment
of Expenses in Advance.

 

Expenses incurred in defending any action or
proceeding for which indemnification is required pursuant to Section 6.1
or for which indemnification is permitted pursuant to Section 6.2
following authorization thereof by the Board of Directors shall be paid by the
Corporation in advance of the final disposition of such action or proceeding
upon receipt of an undertaking by or on behalf of the indemnified party to
repay such amount if it shall

 

14

 

 

ultimately be determined that the indemnified party is not entitled to
be indemnified as authorized in this Article VI.

 

6.4                                 Indemnity
Not Exclusive.

 

The indemnification provided by this Article VI
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any Bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such office,
to the extent that such additional rights to indemnification are authorized in
the Certificate of Incorporation

 

6.5                                 Insurance.

 

The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.

 

6.6                                 Conflicts.

 

No indemnification or advance shall be made under this
Article VI, except where such indemnification or advance is mandated by
law or the order, judgment or decree of any court of competent jurisdiction, in
any circumstance where it appears:

 

(a)           That
it would be inconsistent with a provision of the Certificate of Incorporation,
these Bylaws, a resolution of the stockholders or an agreement in effect at the
time of the accrual of the alleged cause of the action asserted in the
proceeding in which the expenses were incurred or other amounts were paid,
which prohibits or otherwise limits indemnification; or

 

(b)           That
it would be inconsistent with any condition expressly imposed by a court in
approving a settlement.

 

ARTICLE VII

 

RECORDS
AND REPORTS

 

7.1                                 Maintenance
and Inspection of Records.

 

The Corporation shall, either at its principal
executive offices or at such place or places as designated by the Board of
Directors, keep a record of its stockholders listing their names and addresses
and the number and class of shares held by each stockholder, a copy of these
Bylaws as amended to date, accounting books, and other records.

 

15

 

 

Any stockholder of record, in person or by attorney or
other agent, shall, upon written demand under oath stating the purpose thereof,
have the right during the usual hours for business to inspect for any proper
purpose the Corporation’s stock ledger, a list of its stockholders, and its
other books and records and to make copies or extracts therefrom.  A proper purpose shall mean a purpose
reasonably related to such person’s interest as a stock­holder.  In every instance where an attorney or other
agent is the person who seeks the right to inspection, the demand under oath shall
be accompanied by a power of attorney or such other writing that authorizes the
attorney or other agent to so act on behalf of the stockholder.  The demand under oath shall be directed to
the Corporation at its registered office in Delaware or at its principal place
of business.

 

7.2                                 Inspection
by Directors.

 

Any director shall have the right to examine the
Corporation’s stock ledger, a list of its stockholders, and its other books and
records for a purpose reasonably related to his or her position as a
director.  The Court of Chancery is
hereby vested with the exclu­sive jurisdiction to determine whether a director
is entitled to the inspection sought. 
The Court may summarily order the Corporation to permit the director to
inspect any and all books and records, the stock ledger, and the stock list and
to make copies or extracts therefrom. 
The Court may, in its discretion, prescribe any limitations or
conditions with reference to the inspection, or award such other and further
relief as the Court may deem just and proper.

 

7.3                                 Annual
Statement to Stockholders.

 

The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition
of the Corporation.

 

ARTICLE VIII

 

GENERAL
MATTERS

 

8.1                                 Checks.

 

From time to time, the Board of Directors shall
determine by resolution which person or persons may sign or endorse all checks,
drafts, other orders for payment of money, notes or other evidences of
indebtedness that are issued in the name of or payable to the Corporation, and
only the persons so authorized shall sign or endorse those instruments.

 

8.2                                 Execution
of Corporate Contracts and Instruments.

 

The Board of Directors, except as otherwise provided
in these Bylaws, may authorize any officer or officers, or agent or agents, to
enter into any contract or execute any instrument in the name of and on behalf
of the Corporation; such authority may be general or confined to specific
instances.  Unless so authorized or
ratified by the Board of Directors or within the agency power of an officer, no
officer, agent or employee shall have any power or 

 

16

 

 

authority to bind the Corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.

 

8.3                                 Stock
Certificates; Partly Paid Shares.

 

The shares of the Corporation shall be represented by
certifi­cates, provided that the Board of Directors of the Corporation may
provide by resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertificated shares.  Any such resolution shall not apply to shares represented by a
certifi­cate until such certificate is surrendered to the Corporation.  Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation by
the chairman or vice-chairman of the Board of Directors, or the chief executive
officer or the president or vice-president, and by the chief financial officer
or an assistant treasurer, or the secretary or an assistant secretary of the
Corporation representing the number of shares registered in certificate
form.  Any or all of the signa­tures on
the certificate may be a facsimile.  In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.

 

The Corporation may issue the whole or any part of its
shares as partly paid and subject to call for the remainder of the consid­eration
to be paid therefor.  Upon the face or
back of each stock certificate issued to represent any such partly paid shares,
upon the books and records of the Corporation in the case of uncertifi­cated
partly paid shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated. 
Upon the declaration of any dividend on fully paid shares, the
Corporation shall declare a dividend upon partly paid shares of the same class,
but only upon the basis of the percentage of the consideration actually paid
thereon.

 

8.4                                 Special
Designation on Certificates.

 

If the Corporation is authorized to issue more than
one class of stock or more than one series of any class, then the powers, the
designations, the preferences, and the relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of the certificate
that the Corporation shall issue to represent such class or series of stock;
provided, how­ever, that, except as otherwise provided in Section 202 of
the General Corporation Law of Delaware, in lieu of the foregoing requirements
there may be set forth on the face or back of the certificate that the
Corporation shall issue to represent such class or series of stock a statement
that the Corporation will furnish without charge to each stockholder who so
requests the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.

 

17

 

 

8.5                                 Lost Certificates

 

Except as provided in this Section 8.5, no new
certificates for shares shall be issued to replace a previously issued certifi­cate
unless the latter is surrendered to the Corporation and canceled at the same
time.  The Corporation may issue a new
certificate of stock or uncertificated shares in the place of any certificate
previously issued by it, alleged to have been lost, stolen or destroyed, and
the Corporation may require the owner of the lost, stolen or destroyed
certificate, or the owner’s legal representa­tive, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate or uncertificated shares.

 

8.6                                 Construction;
Definitions.

 

Unless the context requires otherwise, the general
provisions, rules of construction, and definitions in the Delaware General
Corporation Law shall govern the construction of these Bylaws.  Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term “person” includes both a corporation and a natural
person.

 

8.7                                 Dividends.

 

The directors of the Corporation, subject to any
restrictions contained in (a) the General Corporation Law of Delaware or (b) the
Certificate of Incorporation, may declare and pay dividends upon the shares of
its capital stock.  Dividends may be
paid in cash, in property, or in shares of the Corporation’s capital stock.

 

The directors of the Corporation may set apart out of any of the funds
of the Corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of
the Corporation, and meeting contingencies.

 

8.8                                 Fiscal Year.

 

The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors and may be changed by the Board of
Directors.

 

8.9                                 Seal.

 

The Corporation may adopt a corporate seal, which may
be altered at pleasure, and may use the same by causing it or a facsimile
thereof, to be impressed or affixed or in any other manner reproduced.

 

8.10                           Transfer of Stock.

 

Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or accom­panied
by proper evidence of succession, 

 

18

 

 

assignation or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.

 

8.11                           Stock
Transfer Agreements.

 

The Corporation shall have power to enter into and
perform any agreement with any number of stockholders of any one or more
classes of stock of the Corporation to restrict the transfer of shares of stock
of the Corporation of any one or more classes owned by such stockholders in any
manner not prohibited by the General Corporation Law of Delaware.

 

8.12                           Registered
Stockholders.

 

The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends and to vote as such owner, shall be entitled to hold liable
for calls and assessments the person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of another person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.

 

ARTICLE IX

 

AMENDMENTS

 

The Bylaws of the Corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
Corporation may, in its Certificate of Incorporation, confer the power to
adopt, amend or repeal Bylaws upon the directors.  The fact that such power has been so conferred upon the directors
shall not divest the stockholders of the power, nor limit their power to adopt,
amend or repeal Bylaws.

 

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Exhibit 4.1  

Execution Copy 

 
 

PEREGRINE SYSTEMS, INC.
  
    and
  
    MELLON INVESTOR SERVICES LLC
  
    PREFERRED STOCK RIGHTS AGREEMENT
  
    Dated as of February 28, 2002    
  

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	Page

	

Section 1.	
 	

Certain Definitions	
 	

1
	

Section 2.	
 	

Appointment of Rights Agent	
 	

7
	

Section 3.	
 	

Issuance of Rights Certificates	
 	

7
	

Section 4.	
 	

Form of Rights Certificates	
 	

9
	

Section 5.	
 	

Countersignature and Registration	
 	

10
	

Section 6.	
 	

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

10
	

Section 7.	
 	

Exercise of Rights; Exercise Price; Expiration Date of Rights	
 	

11
	

Section 8.	
 	

Cancellation and Destruction of Rights Certificates	
 	

13
	

Section 9.	
 	

Reservation and Availability of Preferred Shares	
 	

13
	

Section 10.	
 	

Record Date	
 	

15
	

Section 11.	
 	

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

15
	

Section 12.	
 	

Certificate of Adjusted Exercise Price or Number of Shares	
 	

22
	

Section 13.	
 	

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

22
	

Section 14.	
 	

Fractional Rights and Fractional Shares	
 	

26
	

Section 15.	
 	

Rights of Action	
 	

27
	

Section 16.	
 	

Agreement of Rights Holders	
 	

28
	

Section 17.	
 	

Rights Certificate Holder Not Deemed a Stockholder	
 	

28
	

Section 18.	
 	

Concerning the Rights Agent	
 	

28
	

Section 19.	
 	

Merger or Consolidation or Change of Name of Rights Agent	
 	

29
	

Section 20.	
 	

Duties of Rights Agent	
 	

30
	

Section 21.	
 	

Change of Rights Agent	
 	

32
	

Section 22.	
 	

Issuance of New Rights Certificates	
 	

33
	

Section 23.	
 	

Redemption	
 	

33
	

Section 24.	
 	

Exchange	
 	

34
	

Section 25.	
 	

Notice of Certain Events	
 	

36
	

Section 26.	
 	

Notices	
 	

36
	

Section 27.	
 	

Supplements and Amendments	
 	

37
	

Section 28.	
 	

Successors	
 	

38
	

Section 29.	
 	

Determinations and Actions by the Board of Directors, etc.	
 	

38
	

Section 30.	
 	

Benefits of this Agreement	
 	

38
	

Section 31.	
 	

Severability	
 	

38
	
 	
 	

 	
 	

 

ii

 

	

Section 32.	
 	

Governing Law	
 	

38
	

Section 33.	
 	

Counterparts	
 	

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Section 34.	
 	

Descriptive Headings	
 	

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EXHIBITS	
 	

 	
 	

 
	

Exhibit A	
 	

Form of Certificate of Designation	
 	

 
	

Exhibit B	
 	

Form of Rights Certificate	
 	

 
	

Exhibit C	
 	

Summary of Rights	
 	

 

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PREFERRED STOCK RIGHTS AGREEMENT    
  

        This Preferred Stock Rights Agreement is dated as of February 28, 2002, between Peregrine Systems, Inc., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey limited liability company, as Rights Agent (the "Rights
Agent"). 

        On
February 19, 2002, (the "Rights Dividend Declaration Date"), the Board of Directors of the Company authorized and declared a
dividend of one Preferred Share Purchase Right (a "Right") for each Common Share (as hereinafter defined) of the Company outstanding as of the Close of
Business (as hereinafter defined) on March 12, 2002 (the "Record Date"), each Right representing the right to purchase one
one-thousandth (0.001) of a share of Series A Participating Preferred Stock (as such number may be adjusted pursuant to the provisions of this Agreement), having the rights,
preferences and privileges set forth in the form of Certificate of Designations of Rights, Preferences and Privileges of Series A Participating Preferred Stock attached hereto as  Exhibit A,
upon the terms and subject to the conditions herein set forth, and further authorized and directed the issuance of one Right (as such
number may be adjusted pursuant to the provisions of this Agreement) with respect to each Common Share that shall become outstanding between the Record Date and the earlier of the Distribution Date
and the Expiration Date (as such terms are hereinafter defined), and in certain circumstances after the Distribution Date. 

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

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

        (a)  "Acquiring Person" shall mean any Person, who or which, together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall not include the Company, any Subsidiary of the Company or any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding Common Shares for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring Person as the
result of an acquisition of Common Shares by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 15% or
more of the Common Shares of the Company then outstanding; provided, however, that if a Person shall become the Beneficial Owner of 15% or more of the
Common Shares of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional Common
Shares of the Company (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person shall be deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of such additional Common Shares of the Company such
Person does not beneficially own 15% or more of the Common Shares of the Company then outstanding. Notwithstanding the foregoing, (i) if the Company's Board of Directors determines in good
faith that a Person who would otherwise be an "Acquiring Person," as defined pursuant to the foregoing provisions of this paragraph (a), has become such inadvertently (including, without
limitation, because (A) such Person was unaware that it beneficially owned a percentage of the Common Shares that would otherwise cause such Person to be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), or (B) such Person was aware of the extent of the Common Shares it beneficially owned but had no actual knowledge of the
consequences of such beneficial ownership under this Agreement) and without any intention of changing or influencing control of the Company, and if such Person divested or divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no longer be an "Acquiring Person," as defined pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be or to have become an "Acquiring Person" for any purposes of this Agreement, including, without limitation Section 1(gg) hereof; and (ii) if, as of the
date hereof, any Person is the Beneficial Owner of 15% or more of the Common Shares outstanding, such Person shall not be or become an "Acquiring Person," 

 

as defined pursuant to the foregoing provisions of this paragraph (a), unless and until such time as such Person shall become the Beneficial Owner of additional Common Shares (other than
pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares in Common Shares or pursuant to a split or subdivision of the outstanding Common Shares), unless,
upon becoming the Beneficial Owner of such additional Common Shares, such Person is not then the Beneficial Owner of 15% or more of the Common Shares then outstanding. 

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

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

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

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

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

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

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director, by reason of any influence that such officer or director may have over the voting of the securities held in the plan. 

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

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

        (g)  "Common Stock Equivalents" shall have the meaning set forth in Section 11(a)(iii) hereof.  "Common Shares" when used with reference to the
Company shall mean the shares of Common Stock of the Company, par value at $0.001 per share. Common
Shares when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person. 

        (h)  "Company" shall mean Peregrine Systems, Inc., a Delaware corporation, subject to the terms of
Section 13(a)(iii)(C) hereof. 

        (i)    "Current Per Share Market Price" of any security (a "Security" for purposes of this definition), for all computations
other than those made pursuant to Section 11(a)(iii) hereof, shall mean the average of the daily closing prices per share of such Security for the thirty (30) consecutive Trading
Days immediately prior to but not including such date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price of any Security on
any date shall be deemed to be the average of the daily closing prices per share of such Security for the ten (10) consecutive Trading Days immediately prior to but not including such date;  provided,
however, that in the event that the Current Per Share Market Price of the Security is determined during a period following the announcement by
the issuer of such Security of (i) a dividend or distribution on such Security payable in shares of such Security or securities convertible into such shares or (ii) any subdivision,
combination or reclassification of such Security, and prior to the expiration of the applicable thirty (30) Trading Day or ten (10) Trading Day period, after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the Current Per Share Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last sale price or, if such last sale price is not reported, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the Board of Directors of the Company. If on any such date no market maker is
making a market in the Security, the fair value of such shares on such date as determined in good faith by the Board of Directors of the Company shall be used. If the Preferred Shares are not publicly
traded, the Current Per Share Market Price of the Preferred Shares shall be conclusively deemed to be (x) the Current Per Share Market Price of the Common Shares as determined pursuant to this
Section 1(j), as appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof, multiplied by (y) 1,000. If the Security is not
publicly held or so listed or traded, Current 

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Per Share Market Price shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. 

        (j)    "Current Value" shall have the meaning set forth in Section 11(a)(iii) hereof. 

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

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

        (m)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 

        (n)  "Exchange Ratio" shall have the meaning set forth in Section 24(a) hereof. 

        (o)  "Exercise Price" shall have the meaning set forth in Section 4(a) hereof. 

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

        (q)  "Final Expiration Date" shall mean March 12, 2012. 

        (r)  "Nasdaq" shall mean The Nasdaq Stock Market, Inc. 

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

        (t)    "Post-Event Transferee" shall have the meaning set forth in Section 7(e) hereof. 

        (u)  "Preferred Shares" shall mean shares of Series A Participating Preferred Stock, par value $0.001 per share, of the
Company. 

        (v)  "Pre-Event Transferee" shall have the meaning set forth in Section 7(e) hereof. 

        (w)  "Principal Party" shall have the meaning set forth in Section 13(b) hereof. 

        (x)  "Record Date" shall have the meaning set forth in the recitals at the beginning of this Agreement. 

        (y)  "Redemption Date" shall have the meaning set forth in Section 23(a) hereof. 

        (z)  "Redemption Price" shall have the meaning set forth in Section 23(a) hereof. 

        (aa) "Rights Agent" shall mean (i) Mellon Investor Services LLC, (ii) its successor or replacement as provided
in Sections 19 and 21 hereof or (iii) any additional Person appointed pursuant to Section 2 hereof. 

        (bb) "Rights Certificate" shall mean a certificate substantially in the form attached hereto as Exhibit B. 

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

        (dd) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof. 

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

        (ff)  "Securities Act" shall mean the Securities Act of 1933, as amended. 

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

        (hh) "Spread" shall have the meaning set forth in Section 11(a)(iii) hereof. 

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

        (jj)  "Substitution Period" shall have the meaning set forth in Section 11(a)(iii) hereof. 

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

        (ll)  "Total Exercise Price" shall have the meaning set forth in Section 4(a) hereof. 

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

        (nn) A
"Triggering Event" shall be deemed to have occurred upon any Person becoming an Acquiring Person. 

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

        Section 3.    Issuance of Rights Certificates.    

        (a)  Until
the Distribution Date, (i) the Rights will be evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be deemed to be Rights Certificates) and not by separate Rights Certificates and (ii) the right to receive Rights
Certificates will be transferable only in connection with the transfer of Common Shares. Until the earlier of the Distribution Date or the Expiration Date, the surrender for transfer of certificates
for Common Shares shall also constitute the surrender for transfer of the Rights associated with the Common Shares represented thereby. As soon as practicable after the Distribution Date, the Company
will 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 a shareholder list and all
relevant information, send) by first-class, postage-prepaid 

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mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Rights Certificate evidencing
one Right for each Common Share so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per Common Share has been made pursuant to Section 11
hereof, then at the time of distribution of the Rights Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights (in accordance with Section 14(a) hereof). As of the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates and may be transferred by the transfer of the Rights Certificates as permitted hereby, separately and apart from any transfer of
Common Shares, and the holders of such Rights Certificates as listed in the records of the Company or any transfer agent or registrar for the Rights shall be the record holders thereof. 

        The
Company shall promptly notify the Rights Agent in writing upon the occurrence of the Distribution Date and, if such notification is given orally, the Company shall confirm same in
writing on or prior to the Business Day next following. Until such notice is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date has not
occurred. 

        (b)  On
the Record Date or as soon as practicable thereafter, the Company will send a copy of the Summary of Rights by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Record Date, at the address of such holder shown on the records of the Company's transfer agent and registrar. With respect to certificates
for Common Shares outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof together with the
Summary of Rights. 

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

THIS
CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN PEREGRINE SYSTEMS, INC. AND MELLON INVESTOR SERVICES LLC, AS RIGHTS
AGENT, DATED AS OF FEBRUARY 28, 2002 (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
PEREGRINE SYSTEMS, INC. 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 WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID. 

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

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certificate shall also constitute the transfer of the Rights associated with the Common Shares represented thereby. 

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

        Section 4.    Form of Rights Certificates.    

        (a)  The
Rights Certificates (and the forms of election to purchase Common Shares and of assignment to be printed on the reverse thereof) shall be substantially in the form
of Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which do not affect the rights, duties, immunities 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 rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or a national market system, on which the Rights may from time to time be listed or included, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date (or in the case of Rights issued with respect to
Common Shares issued by the Company after the Record Date, as of the date of issuance of such Common Shares) and on their face shall entitle the holders thereof to purchase such number of
one-thousandths (0.001) of a Preferred Share as shall be set forth therein at the price set forth therein (such exercise price per one one-thousandth (0.001) of a Preferred
Share being hereinafter referred to as the "Exercise Price" and the aggregate Exercise Price of all Preferred Shares issuable upon exercise of one Right
being hereinafter referred to as the "Total Exercise Price"), but the number and type of securities purchasable upon the exercise of each Right and the
Exercise Price shall be subject to adjustment as provided herein. 

        (b)  Any
Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a Post-Event Transferee, (iii) a Pre-Event Transferee or (iv) any subsequent transferee receiving
transferred Rights from a Post-Event Transferee or a Pre-Event Transferee, either directly or through one or more intermediate transferees, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend: 

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

        Section 5.    Countersignature and Registration    

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

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

        (b)  Following
the Distribution Date, receipt by the Rights Agent of notice to that effect and all other relevant information referred to in Section 3(a), the Rights
Agent will keep or cause to be kept, at its office designated for such purpose, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 

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

        (a)  Subject
to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business
on the Expiration Date, any Rights Certificate or Rights Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one-thousandths (0.001) of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets, as the case may be)
as the Rights Certificate or Rights Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder thereof shall have (i) completed and signed the certificate contained in the form of assignment set forth on the reverse side of
each such Rights Certificate, (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) thereof and the Affiliates and Associates of such
Beneficial Owner (or former Beneficial Owner), and of the Rights evidenced thereby, as the Company or the Rights Agent shall reasonably request, and (iii) paid a sum sufficient to cover any tax
or charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates as required by Section 9(e) hereof. Thereupon the Rights Agent shall,
subject to Sections 7(e), 14 and 24 hereof, countersign and deliver to the person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Rights Agent
shall promptly forward any such sum collected by it to the Company or to such Persons as the Company shall specify by written notice. The Rights Agent shall have no duty or obligation to take any
action under any Section of this Agreement which requires the payment by a Rights holder of applicable taxes and governmental charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid. 

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

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

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

        (b)  The
Exercise Price for each one-thousandth (0.001) of a Preferred Share issuable pursuant to the exercise of a Right shall initially be Ninety Dollars
($90.00), shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with
paragraph (c) below. 

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

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

9

 

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

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

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

        Section 9.    Reservation and Availability of Preferred Shares.    

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

10

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

        (c)  The
Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Triggering Event in which
the consideration to be delivered by the Company upon exercise of the Rights is described in Section 11(a)(ii) or Section 11(a)(iii) hereof, or as soon as is required by
law following the Distribution Date, as the case may be, a registration statement under the Securities Act with respect to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as practicable after such filing and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) the
date of expiration of the Rights. The Company may temporarily suspend, for a period not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating, and notify the Rights Agent, that the exercisability of the Rights has been temporarily suspended, as well as a public announcement and notification to the Rights Agent at
such time as the suspension is no longer in effect. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction, unless the
requisite qualification in such jurisdiction shall have been obtained, or an exemption therefrom shall be available, and until a registration statement has been declared and remains effective. 

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

        (e)  The
Company further covenants and agrees that it will pay when due and payable any and all taxes and governmental charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any Preferred Shares (or other securities of the Company) 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 Rights Certificates to a person other than, or the
issuance or delivery of certificates or depository receipts for the Preferred Shares (or other securities of the Company) in a name other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any certificates or depository receipts for Preferred Shares (or other securities of the Company) upon the exercise of any Rights
until any such tax or charge shall have been paid (any such tax or charge being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the
Company's or the Rights Agent's satisfaction that no such tax or charge is due. 

        Section 10.    Record Date.    Each Person in whose name any certificate for a number of
one-thousandths (0.001) of a Preferred Share (or other securities of the Company) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record
of Preferred Shares (or other securities of the Company) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Total Exercise Price with respect to which the Rights have been exercised (and any applicable 

11

 

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

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

        (a)  Anything
in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares (by reverse stock split or
otherwise) into a smaller number of Preferred Shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such event, except as otherwise provided in this Section 11 and
Section 7(e) hereof: (1) the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall
be adjusted so that the Exercise Price thereafter shall equal the result obtained by dividing the Exercise Price in effect immediately prior to such time by a fraction (the  "Adjustment Fraction"),
 the numerator of which shall be the total number of Preferred Shares (or shares of capital stock issued in such reclassification
of the Preferred Shares) outstanding immediately following such time and the denominator of which shall be the total number of Preferred Shares outstanding immediately prior to such time;  provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of such Right; and (2) the number of one-thousandths (0.001) of a Preferred Share (or share of such other capital
stock) issuable upon the exercise of each Right shall equal the number of one-thousandths (0.001) of a Preferred Share (or share of such other capital stock) as was issuable upon exercise
of a Right immediately prior to the occurrence of the event described in clauses (A)-(D) of this Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however, that, no such
adjustment shall be made pursuant to this Section 11(a)(i) to the extent that there shall have simultaneously occurred an event described in clause (A), (B), (C) or
(D) of Section 11(n) with a proportionate adjustment being made thereunder. Each Common Share that shall become outstanding after an adjustment has been made pursuant to this
Section 11(a)(i) shall have associated with it the number of Rights, exercisable at the Exercise Price and for the number of one-thousandths (0.001) of a Preferred Share (or
shares of such other capital stock) as one Common Share has associated with it immediately following the adjustment made pursuant to this Section 11(a)(i). 

        (i)    Subject
to Section 24 of this Agreement, in the event that a Triggering Event shall have occurred, then promptly following such Triggering Event each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive for each Right, upon exercise thereof in accordance with the terms of this Agreement and payment of
the Exercise Price in effect immediately prior to the occurrence of the Triggering Event, in lieu of a number of one-thousandths (0.001) of a Preferred Share, such number of Common Shares
of the Company as shall equal the quotient obtained by dividing (A) the product obtained by multiplying (1) the Exercise Price in effect immediately prior to the occurrence of the
Triggering Event by (2) the number of one-thousandths (0.001) of a Preferred Share for which a Right was exercisable (or 

12

 

would have been exercisable if the Distribution Date had occurred) immediately prior to the first occurrence of a Triggering Event, by (B) fifty percent (50%) of the Current Per Share Market
Price for Common Shares on the date of occurrence of the Triggering Event; provided, however, that the Exercise Price and the number of Common Shares of
the Company so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in accordance with Section 11(e) hereof to reflect any events occurring in respect of
the Common Shares of the Company after the occurrence of the Triggering Event. 

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

13

 

announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Shares shall be the Current Per Share Market Price of the Common Shares on the Section 11(a)(ii) Trigger Date and the value of any
Common Stock Equivalent shall be deemed to have the same value as the Common Shares on such date. 

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

        (c)  In
case the Company shall, at any time after the date of this Agreement, fix a record date for the making of a distribution to all holders of the Preferred Shares or of
any class or series of Equivalent Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash dividend, if any, or a dividend payable in Preferred Shares) or subscription rights, options or warrants (excluding those
referred to in Section 11(b)), then, in each such case, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the Current Per Share Market Price of a Preferred Share or an Equivalent Share on such record date, less the fair market value
per Preferred Share or Equivalent Share (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a Preferred Share or Equivalent Share, as the case may be, and
the denominator of which shall be such Current Per Share Market Price of a Preferred Share or Equivalent Share on such record date; provided, however,
that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one
Right. Such adjustments shall be 

14

 

made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Exercise Price shall be adjusted to be the Exercise Price which would have been in
effect if such record date had not been fixed. 

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

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

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

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

        (h)  The
Company may elect on or after the date of any adjustment of the Exercise Price as a result of the calculations made in Section 11(b) or (c) to adjust
the number of Rights, in substitution for any adjustment in the number of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of one-thousandths (0.001) of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one hundred-thousandth (0.00001)) obtained by dividing the Exercise Price in
effect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made, and shall promptly give the Rights Agent a
copy of such announcement. This record date may be the date on which the Exercise Price is adjusted or any day thereafter, but, if any Rights Certificates have been issued, shall be at least ten
(10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(h), the
Company shall, as promptly as practicable, cause to be distributed to holders of 

15

 

record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Exercise Price) and shall be
registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. 

        (i)    Irrespective
of any adjustment or change in the Exercise Price or the number of Preferred Shares issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Exercise Price per one one-thousandth (0.001) of a Preferred Share and the number of one-thousandths (0.001) of a
Preferred Share which were expressed in the initial Rights Certificates issued hereunder. 

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

        (k)  In
any case in which this Section 11 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the
Company may elect to defer (and shall give prompt written notice of such election 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 number of one-thousandths (0.001) of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the
number of one-thousandths (0.001) of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in
effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares (fractional or otherwise) upon the occurrence of the event requiring such adjustment. 

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

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

        (n)  In
the event that the Company shall at any time after the date of this Agreement (A) declare a dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C) combine the outstanding Common Shares (by reverse stock split or otherwise) into a smaller
number of Common Shares, or (D) issue any shares of its capital stock in a reclassification of the Common Shares (including any such reclassification in connection with a consolidation or
merger in 

16

 

which the Company is the continuing or surviving corporation), then, in each such event, except as otherwise provided in this Section 11(a) and Section 7(e) hereof: (1) each
Common Share (or shares of capital stock issued in such reclassification of the Common Shares) outstanding immediately following such time shall have associated with it the number of Rights as were
associated with one Common Share immediately prior to the occurrence of the event described in clauses (A)-(D) above; (2) the Exercise Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or reclassification shall be adjusted so that the Exercise Price thereafter shall equal the result obtained by multiplying the
Exercise Price in effect immediately prior to such time by a fraction, the numerator of which shall be the total number of Common Shares outstanding immediately prior to the event described in clauses
(A)-(D) above, and the denominator of which shall be the total number of Common Shares outstanding immediately after such event; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of such Right;
and (3) the number of one-thousandths (0.001) of a Preferred Share (or shares of such other capital stock) issuable upon the exercise of each Right outstanding after such event
shall equal the number of one-thousandths (0.001) of a Preferred Share (or shares of such other capital stock) as were issuable with respect to one Right immediately prior to such event.
Each Common Share that shall become outstanding after an adjustment has been made pursuant to this Section 11(n) shall have associated with it the number of Rights, exercisable at the Exercise
Price and for the number of one-thousandths (0.001) of a Preferred Share (or shares of such other capital stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(n). If an event occurs which would require an adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(n) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. 

        Section 12.    Certificate of Adjusted Exercise Price or Number of Shares.    Whenever an adjustment is made or
any event affecting the Rights or their exercisability (including without limitation an event which causes the Rights to become null and void) occurs as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment or describing such event, and a brief, reasonably detailed statement of the facts, computations and methodology
accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Preferred Shares a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Rights Certificate in accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the Company to make such certification or give such notice shall
not affect the validity of such adjustment or the force or effect of the requirement for such adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on any
adjustment, description of event or statement contained therein and shall have no duty or liability with respect to, and shall not be deemed to have knowledge of, any such adjustment or any such event
unless and until it shall have received such certificate. 

        Section 13.    Consolidation, Merger or Sale or Transfer of Assets or Earning Power.    

        (a)  In
the event that, following a Triggering Event, directly or indirectly: 

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

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

17

 

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

then,
concurrent with and in each such case, 

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

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

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

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

        (E)  upon
the subsequent occurrence of any consolidation, merger, sale or transfer of assets or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of a Right and payment of the Total Exercise Price as provided in this Section 13(a), such cash, shares, rights, warrants
and other property which such holder would have been entitled to receive had such holder, at the time of such transaction, owned the Common Shares of the Principal Party receivable upon the exercise
of such Right pursuant to this Section 13(a), and such Principal Party shall take such steps (including, but not limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares, rights, warrants and other property. 

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

18

 

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

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

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

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

        (i)    prepare
and file a registration statement under the Securities Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such registration statement
to remain effective (with a 

19

 

prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date, and similarly comply with applicable state securities laws; 

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

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

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

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

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

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

        Section 14.    Fractional Rights and Fractional Shares.    

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

20

 

fractional Rights would have been otherwise issuable, as determined pursuant to the second sentence of Section 1(j) hereof. 

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

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

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

        (e)  Whenever
a payment for fractional Rights or fractional shares is to be made by the Rights Agent, the Corporation shall (i) promptly prepare and deliver to the
Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and/or formulas utilized in calculating such payments, and (ii) provide
sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty
with respect to, and shall not be deemed to have knowledge of any payment for fractional Rights or fractional shares under any Section of this Agreement relating to the payment of fractional Rights or
fractional shares unless and until the Rights Agent shall have received such a certificate and sufficient monies. 

        Section 15.    Rights of Action.    (a) All rights of action in respect of this Agreement, excepting the
rights of action given to the Rights Agent pursuant to Section 18 and Section 20 hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Shares), may, in his or her own behalf and for his or her own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his or her right to exercise the Rights evidenced by such Rights Certificate
in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the 

21

 

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. 

        (b)  Notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as
a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, judgment, decree or ruling (whether interlocutory
or final) issued by a court or by a governmental, regulatory, self-regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, that the Company must use all reasonable efforts to have any such
injunction, order, judgment, decree or ruling lifted or otherwise overturned as soon as possible. 

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

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

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

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

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

22

   
        Section 18.    Concerning the Rights Agent.    

        (a)  The
Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in the preparation, administration, delivery, execution and amendment of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent (each as determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction), for anything done
or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including, without limitation, the costs and expenses of defending against any claim of liability
in the premises. The costs and expenses incurred by the Rights Agent in enforcing this right of indemnification shall be paid by the Company unless it is determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent jurisdiction that the Rights Agent is not entitled to indemnification due to the Rights Agent's gross negligence,
bad faith or willful misconduct. In no event will the Rights Agent be liable for special, punitive, indirect, incidental or consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Rights Agent has been advised of the possibility of such loss or damage. The provisions of this Section 18 and Section 20 below shall survive the
termination of this Agreement, the exercise or expiration or the Rights and the resignation or removal of the Rights Agent. 

        (b)  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
acceptance and administration of this Agreement in reliance upon any Rights Certificate or certificate for the Preferred Shares or Common Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document reasonably believed by it to be genuine and to
be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof. The Rights Agent
shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing
to take any action in connection therewith unless and until it has received such notice in writing. 

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

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

23

 

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

        Section 20.    Rights and Duties of Rights Agent.    The Rights Agent undertakes only the duties and
obligations expressly imposed by this Agreement (and no implied duties and obligations) upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by
their acceptance thereof, shall be bound: 

        (a)  The
Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent, and the Rights Agent shall incur no liability for, or in respect of 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 (including, without
limitation, the identity of any Acquiring Person and the determination of Current Per Share Market Price) be proved or established by the Company prior to taking, suffering or omitting to take any
action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for or in respect of any action taken, 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 (each as determined by
a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction). Any liability of the Rights Agent under this Agreement will be limited to the amount of
fees paid by the Company to the Rights Agent. 

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

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

24

 

whether any Preferred Shares will, when issued, be validly authorized and issued, fully paid and non-assessable. 

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

        (g)  The
Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instructions shall be full authorization and protection to the Rights Agent, and the Rights Agent shall not be liable for or in respect of any
action taken, suffered or omitted by it in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. The Rights Agent shall be fully authorized
and protected in relying upon the most recent
instructions received from any such officer. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken, suffered or omitted by the Rights Agent under this Rights Agreement and the date on and/or after which such action shall be taken or suffered or such omission shall be effective.
The Rights Agent shall not be liable for any action taken or suffered by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified
in such application (which date shall not be less than five (5) Business Days after the date on which any officer of the Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken, suffered or omitted. 

        (h)  The
Rights Agent and any stockholder, affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though the
Rights Agent 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, absent gross negligence, bad faith or willful misconduct (each as determined by a final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction) in the selection and continued employment thereof. 

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

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

25

 

        Section 21.    Change of Rights Agent.    The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the
Company and to each transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his or her Rights Certificate for inspection by the Company), then the registered holder of any Rights Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a Person organized and doing business under the laws of
the United States or of any state of the United States, in good standing, which is subject to supervision or examination by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $100 million, or (b) an Affiliate of a Person described in clause (a). After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares and the Common Shares,
and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 

        Section 22.    Issuance of New Rights Certificates.    Notwithstanding any of the provisions of this Agreement
or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or
change in the Exercise Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall,
with respect to Common Shares so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement or upon the exercise, conversion or exchange of other securities of
the Company outstanding at the date hereof or upon the exercise, conversion or exchange of securities hereinafter issued by the Company and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale;  provided, however, that
(i) no such Rights Certificate shall be issued and this sentence shall be null and void ab
initio if, and to the extent that, such issuance or this sentence would create a significant risk of or result in material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued or would create a significant risk of or result in such options' or employee plans' or arrangements' failing to qualify for otherwise available special
tax treatment and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 

26

 

        Section 23.    Redemption.    

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

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

        Section 24.    Exchange.    

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

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

27

 

(with prompt written notice thereof to the Rights Agent); provided, however, that the failure to give, or any defect in, such notice shall not affect
the validity of such exchange. The Company shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights. 

        (c)  In
the event that there shall not be sufficient Common Shares issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with Section 24(a), the Company shall either take such action as may be necessary to authorize additional Common Shares for issuance upon exchange of the Rights or alternatively, at
the option of a majority of the Board of Directors, with respect to each Right (i) pay cash in an amount equal to the Current Value (as hereinafter defined), in lieu of issuing Common Shares in
exchange therefor, or (ii) issue debt or equity securities or a combination thereof, having a value equal to the Current Value, in lieu of issuing Common Shares in exchange for each such Right,
where the value of such securities shall be determined by a nationally recognized investment banking firm selected by majority vote of the Board of Directors, or (iii) deliver any combination
of cash, property, Common Shares and/or other securities having a value equal to the Current Value in exchange for each Right. For purposes of this Section 24(c) only, the Current Value shall
mean the product of the Current Per Share Market Price of Common Shares on the date of the occurrence of the event described above in subsection (a), multiplied by the number of Common Shares for
which the Right otherwise would be exchangeable if there were sufficient shares available. To the extent that the Company determines that some action need be taken pursuant to clauses (i),
(ii) or (iii) of this Section 24(c), the Board of Directors may temporarily suspend the exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order to seek any authorization of additional Common Shares and/or to decide the appropriate form of distribution to
be made pursuant to the above provision and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended. 

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

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

        (f)    Immediately
upon the action of the Board of Directors ordering the exchange of any Rights pursuant to subsection 24(e) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of rights in exchange therefor
as has been determined by the Board of Directors in accordance with subsection 24(e) above. The Company shall give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall mail a notice of any such exchange to all of
the holders 

28

 

of such Rights at their last addresses as they appear upon the registry books of the transfer agent for the Common Shares of the Company. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Rights will be effected. 

        Section 25.    Notice of Certain Events.    

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

        (b)  In
case any Triggering Event or Section 13 Event shall occur, then, in any such case, the Company shall as soon as practicable thereafter give to the Rights Agent
and to each holder of a Rights Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to
holders of Rights under Sections 11(a)(ii) and 13 hereof. 

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

Peregrine
Systems, Inc.

3611 Valley Centre Drive

San Diego, CA 92130

Facsimile No.: 858-481-1751 

with
a copy to:

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94304-1050

Attention: David J. Berger

Facsimile No.: 650-493-6811 

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

Mellon
Investor Services LLC

400 South Hope Street

4th Floor

Los Angeles, CA 90071

Attention: Relationship Manager

Facsimile No.: (213) 553-9735 

with
a copy to:

Mellon Investor Services LLC

85 Challenger Road

Ridgefield Park, New Jersey 07660

Attention: General Counsel

Facsimile No.: (201) 296-4004 

29

 

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

        Section 27.    Supplements and Amendments.    Prior to the occurrence of a Distribution Date, the Company may
supplement or amend this Agreement in any respect without the approval of any holders of Rights and the Rights Agent shall, if the Company so directs but subject to the other provisions of this
Section, execute such supplement or amendment. From and after the occurrence of a Distribution Date, the Company and the Rights Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Rights in order to (i) cure any ambiguity, (ii) correct or supplement any provision contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder or (iv) to change or supplement the provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders of Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);  provided, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not then redeemable or (B) any other time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person). For any supplement or amendment made by
the Company pursuant to this Section 27, upon the delivery of a certificate from an appropriate officer of the Company that states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment, provided, however, that, anything in this
Agreement to the contrary notwithstanding, the Rights Agent, shall not be obligated to, but may, enter into any supplement or amendment that affects the Rights Agent's own rights, duties, obligations
or immunities under this Agreement. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Shares. 

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

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

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

30

 

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

        Section 31.    Severability.    If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith
judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated (with prompt written notice to the Rights Agent) and shall not expire until the Close of Business on the tenth day following the date of such determination by the Board of Directors. 

        Section 32.    Governing Law.    This Agreement and each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State; provided, however, that all provisions regarding the rights, duties, obligations and immunities of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State. 

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

        Section 34.    Descriptive Headings.    Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 

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

	"COMPANY"	 	PEREGRINE SYSTEMS, INC.
	

 	
 	

By:	

/s/  MATTHEW C. GLESS      

	 	 	Name:	Matthew C. Gless

	 	 	Title:	Executive Vice President and Chief Financial Officer

	
"RIGHTS AGENT"	
 	
MELLON INVESTOR SERVICES LLC
	

 	
 	

By:	

/s/  RAYMOND TORRES      

	 	 	Name:	Raymond Torres

	 	 	Title:	Assistant Vice President

31

 
 

EXHIBIT A    
  

 
 

FORM OF CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES OF SERIES A PARTICIPATING PREFERRED STOCK OF
  PEREGRINE SYSTEMS, INC.    
  

        The undersigned, Matthew C. Gless, does hereby certify: 

        1.    That
he is the duly elected and acting Executive Vice President and Chief Financial Officer of Peregrine Systems, Inc., a Delaware corporation (the  "Corporation"). 

        2.    That
pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Certificate of Incorporation of the said Corporation, the said Board of
Directors of the Corporation on February 19, 2002 adopted the following resolutions creating a series of 500,000 shares of Preferred Stock designated as Series A Participating Preferred
Stock: 

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

        Section 1.    Designation and Amount.    The shares of such series shall be designated as  "Series A Participating Preferred Stock." The Series A Participating Preferred Stock shall have a par value of $0.001 per share, and the
number of shares constituting such series shall be 500,000. 

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

        Section 3.    Dividends and Distributions.    

        (a)  Subject
to the prior and superior right of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A
Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock shall be entitled to receive when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to 1,000 times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock. 

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

        (c)  Dividends
shall begin to accrue on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares of Series A Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin 

 

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

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

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

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

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

        Section 5.    Certain Restrictions.    

        (a)  The
Corporation shall not declare any dividend on, make any distribution on, or redeem or purchase or otherwise acquire for consideration any shares of Common Stock
after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock unless concurrently therewith it shall declare a dividend on the Series A
Participating Preferred Stock as required by Section 3 hereof. 

        (b)  Whenever
quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 3 are in
arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid
in full, the Corporation shall not 

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

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

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

2

 

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

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

        Section 6.    Reacquired Shares.    Any shares of Series A Participating Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein and in the Amended and Restated Certificate of Incorporation, as then amended. 

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

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

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

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

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

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

        RESOLVED
FURTHER, that the President, Chief Executive Officer or any Vice President and the Secretary or any Assistant Secretary of this corporation be, and they hereby are, authorized
and 

3

 

directed to prepare and file a Certificate of Designation of Rights, Preferences and Privileges in accordance with the foregoing resolution and the provisions of Delaware law and to take such
actions as they may deem necessary or appropriate to carry out the intent of the foregoing resolution." 

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

        Executed
at San Diego, California on February 28, 2002. 

	 	 	
 Matthew C. Gless

Executive Vice President and Chief Financial Officer

4

 
 

EXHIBIT B    
  

 
 

FORM OF RIGHTS CERTIFICATE    
  

	Certificate No. R-	 	                        Rights

NOT
EXERCISABLE AFTER THE EARLIER OF (i) MARCH 12, 2012, (ii) THE DATE TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS
AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
RIGHTS AGREEMENT.]1 

	1
	The
portion of the legend in bracket shall be inserted only if applicable and shall replace the preceding sentence. 

 
 

RIGHTS CERTIFICATE
  
    PEREGRINE SYSTEMS, INC.    
  

        This certifies that                         , or registered
assigns, is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement dated as of February 28, 2002, (the "Rights
Agreement"), between Peregrine Systems, Inc., a Delaware corporation (the "Company"), and Mellon Investor Services LLC, a
New Jersey limited liability company (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined
in the Rights Agreement) and prior to 5:00 P.M., New York time, on March 12, 2012 at the office of the Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-thousandth (0.001) of a fully paid and non-assessable share of Series A Participating Preferred Stock, par value $0.001 per share (the  "Preferred Shares"), of the
Company, at an Exercise Price of $90.00 per one-thousandth (0.001) of a Preferred Share (the
"Exercise Price"), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the number of one-thousandths (0.001) of a Preferred Share that may be purchased upon exercise hereof) set forth
above are the number and Exercise Price as of March 12, 2002, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Exercise Price and the number
and kind of Preferred Shares or other securities that may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the
happening of certain events. 

        This
Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary 

 

suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the principal executive offices of
the Company. 

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

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

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

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

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

2

 

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

	ATTEST:	 	Peregrine Systems, Inc.
	

                      

 Secretary	
 	

By:	

                        

	

 	

 	
 	

Its:	

                        

	

Countersigned:	
 	

 	

 
	

Mellon Investor Services LLC

as Rights Agent	
 	

 	

 
	

By:	

                        
	
 	

 	

 
	Its:	                        
	 	 	 

3

 
 

Form of Reverse Side of Rights Certificate    
  

        FORM OF ASSIGNMENT 

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

        FOR
VALUE RECEIVED                          hereby sells, assigns and transfers unto 

(Please print name and address of transferee) 

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

	Dated:                         ,
            	 	 
	

 	
 	

 Signature

Signature
Guaranteed: 

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

CERTIFICATE 

The
undersigned hereby certifies by checking the appropriate boxes that: 

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

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

	Dated:                         ,
            	 	 
	

 	
 	

 Signature

Signature
Guaranteed: 

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

 
 

Form of Reverse Side of Rights Certificate—continued    
  

        FORM OF ELECTION TO PURCHASE 

(To
be executed if holder desires to

exercise the Rights Certificate) 

To:                            

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

Please
insert social security

or other identifying number 

(Please print name and address) 

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

Please
insert social security

or other identifying number 

(Please print name and address) 

	Dated:                         ,
            	 	 
	

 	
 	

 Signature

Signature
Guaranteed: 

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

CERTIFICATE 

The
undersigned hereby certifies by checking the appropriate boxes that: 

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

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

	Dated:                         ,
            	 	 
	

 	
 	

 Signature

Signature
Guaranteed: 

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

 
 

Form of Reverse Side of Rights Certificate—continued    
  

        NOTICE 

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

 
 

EXHIBIT C
  
    STOCKHOLDER RIGHTS PLAN
  PEREGRINE SYSTEMS, INC.
  Summary of Rights    
  

	
Distribution and Transfer of Rights; Rights Certificate:	
 	

The Board of Directors has declared a dividend of one Right for each share of Common Stock of Peregrine Systems, Inc. (the "Company") outstanding. Prior to the Distribution Date referred to below,
the Rights will be evidenced by and trade with the certificates for the Common Stock. After the Distribution Date, the Company will mail Rights certificates to the Company's stockholders and the Rights will become transferable apart from the Common
Stock.
	
Distribution Date:	
 	

Rights will separate from the Common Stock and become exercisable following (a) the tenth business day (or such later date as may be determined by the Company's Board of Directors) after a person or group acquires beneficial ownership of 15% or more
of the Company's Common Stock or (b) the tenth business day (or such later date as may be determined by the Company's Board of Directors) after a person or group announces a tender or exchange offer, the consummation of which would result in
ownership by a person or group of 15% or more of the Company's Common Stock. (collectively, the "Limitations").
	
Preferred Stock Purchasable Upon Exercise of Rights:	
 	

After the Distribution Date, each Right will entitle the holder to purchase for $90 (the "Exercise Price"), a fraction of a share of the Company's Preferred Stock with economic terms similar to
that of one share of the Company's Common Stock.
	
Flip-In:	
 	

If an acquirer (an "Acquiring Person") obtains 15% or more of the Company's Common, then each Right (other than Rights owned by an Acquiring Person or its affiliates) will entitle the holder
thereof to purchase, for the Exercise Price, a number of shares of the Company's Common Stock having a then-current market value of twice the Exercise Price.
	
Flip-Over:	
 	

If, after an Acquiring Person obtains 15% or more of the Company's Common Stock, (a) the Company merges into another entity, (b) an acquiring entity merges into the Company or (c) the Company sells more than 50% of the Company's assets or earning
power, then each Right (other than Rights owned by an Acquiring Person or its affiliates) will entitle the holder thereof to purchase, for the Exercise Price, a number of shares of Common Stock of the person engaging in the transaction having a then
current market value of twice the Exercise Price.
	
 	
 	

 

 

	
Exchange Provision:	
 	

At any time after the date on which an Acquiring Person obtains 15% or more of the Company's Common Stock and prior to the acquisition by the Acquiring Person of 50% of the outstanding Common Stock, a majority of the Board of Directors and the Board
of Directors of the Company may exchange the Rights (other than Rights owned by the Acquiring Person or its affiliates), in whole or in part, for shares of Common Stock of the Company at an exchange ratio of one share of Common Stock per Right
(subject to adjustment).
	
Redemption of the Rights:	
 	

Rights will be redeemable at the Company's option for $0.001 per Right at any time on or prior to the fifth day (or such later date as may be determined by the Company's Board of Directors) after public announcement that a Person has acquired
beneficial ownership of 15% or more of the Company's Common Stock (the "Shares Acquisition Date").
	
Expiration of the Rights:	
 	

The Rights expire on the earliest of (a) March 12, 2012 or (b) exchange or redemption of the Rights as described above.
	
Amendment of Terms of Rights:	
 	

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

Rights will not have any voting rights.
	
Anti-Dilution Provisions:	
 	

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

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

The
foregoing is a summary of certain principal terms of the Stockholder Rights Plan only and is qualified in its entirety by reference to the Preferred Stock Rights Agreement dated as of
February 28, 2002 between the Company and Mellon Investor Services LLC as Rights Agent (the "Rights Agreement"). The Rights Agreement may be
amended from time to time. A copy of the Rights Agreement was filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
March 5, 2002. A copy of the Rights Agreement is available free of charge from the Company. 

2

QuickLinks

PEREGRINE SYSTEMS, INC. and MELLON INVESTOR SERVICES LLC PREFERRED STOCK RIGHTS AGREEMENT Dated as of February 28, 2002

TABLE OF CONTENTS

PREFERRED STOCK RIGHTS AGREEMENT

EXHIBIT A

FORM OF CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES OF SERIES A PARTICIPATING PREFERRED STOCK OF PEREGRINE SYSTEMS, INC.

EXHIBIT B

FORM OF RIGHTS CERTIFICATE

RIGHTS CERTIFICATE PEREGRINE SYSTEMS, INC.

Form of Reverse Side of Rights Certificate

Form of Reverse Side of Rights Certificate—continued

Form of Reverse Side of Rights Certificate—continued

EXHIBIT C STOCKHOLDER RIGHTS PLAN PEREGRINE SYSTEMS, INC. Summary of Rights

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