Document:

Exhibit
10.16

 

AMENDED
AND RESTATED MANAGEMENT CONSULTING AGREEMENT

 

This AMENDED AND RESTATED
MANAGEMENT CONSULTING AGREEMENT (“Agreement”) is entered into as of
December 10, 2003, by and between Compass Minerals International, Inc.
(formerly known as Salt Holdings Corporation), a Delaware corporation (the “Company”),
and Apollo Management V, L.P., a Delaware limited partnership (“Apollo”).

 

RECITALS

 

WHEREAS, Apollo and the
Company are each parties to that certain management consulting and advisory
agreement, dated as of November 28, 2001, between the Company and Apollo (the “Original
Management Consulting Agreement”); and

 

WHEREAS, the Company and
Apollo desire to amend and restate the Original Management Consulting Agreement
as set forth herein;

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the foregoing, and the mutual agreements set forth herein and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:

 

Section 1.                                            Retention
of Apollo.  The Company hereby
retains Apollo, and Apollo accepts such retention, upon the terms and
conditions set forth in this Agreement.

 

Section 2.                                            Term.  This Agreement shall commence on the date
hereof and, unless otherwise extended pursuant to the final sentence of this
Section 2, shall terminate on the tenth anniversary of the Original Management
Consulting Agreement (the “Term”). 
Upon the fifth anniversary of the date hereof, and at the end of each
year thereafter (each of such fifth anniversary and the end of each year
thereafter being a “Year End”), the Term shall automatically be extended
for an additional year unless notice to the contrary is given by either party
at least 30, but no more than 60, days prior to such Year End, as
applicable.  Notwithstanding anything in
this Section 2, this Agreement may terminated at any time upon written notice
to the Company from Apollo.  The
provisions of Sections 3(c), 5 and 7 through 13 shall survive the termination
of this Agreement for any reason.

 

Section 3.                                            Management
Consulting Services.

 

(a)                                  Apollo shall advise the Company and
the Company’s subsidiaries concerning such management matters that relate to
proposed financial transactions, acquisitions and other senior management
matters related to the business, administration and policies of the Company and
its subsidiaries and affiliates, in each case as the Company shall reasonably
and specifically request by way of written notice to Apollo, which notice shall
specify the services required of Apollo and shall include all background
material necessary for Apollo to complete such services.  Apollo shall devote such time to any such
written request as Apollo shall deem, in

 

 

its discretion, necessary. 
Such consulting services, in Apollo’s discretion, shall be rendered in
person or by telephone or other communication. 
Apollo shall have no obligation to the Company and its subsidiaries as
to the manner and time of rendering its services hereunder, and the Company and
its subsidiaries shall not have any right to dictate or direct the details of
the services rendered hereunder.

 

(b)                                 Apollo shall perform all services to
be provided hereunder as an independent contractor to the Company (or the
Company’s subsidiaries) and not as an employee, agent or representative of the
Company.  Apollo shall have no authority
to act for or to bind the Company, without its prior written consent.

 

(c)                                  This Agreement shall in no way
prohibit Apollo or any of its partners or affiliates or any director, officer,
partner or employee of Apollo or any of its partners or affiliates from
engaging in other activities, whether or not competitive with any business of
the Company or any of its respective subsidiaries or affiliates.

 

Section 4.                                            Compensation.  As consideration for Apollo’s agreement to
render the services set forth in Section 3(a) of this Agreement and as
compensation for any such services rendered by Apollo, the Company agrees to
pay, or cause its subsidiaries to pay, to Apollo an annual fee of $1,000,000,
payable in equal quarterly installments of $250,000 each on the first day of
each fiscal quarter (or, if such date is not a business day, on the next
business day thereafter).

 

If Apollo elects to
terminate this Agreement upon written notice to the Company pursuant to Section
2 herein, as consideration for the termination of Apollo’s services under this
Agreement and any additional compensation to be received hereunder, the Company
agrees to pay, or cause its subsidiaries to pay, to Apollo the sum of
$5,500,000 less any amounts Apollo has already received from the date hereof
from the Company pursuant to the immediately preceding paragraph.

 

Upon presentation by
Apollo to the Company of such documentation as may be reasonably requested by
the Company, the Company shall reimburse, or cause its subsidiaries to
reimburse, Apollo for all out-of-pocket expenses, including, without
limitation, legal fees and expenses, and other disbursements incurred by
Apollo, its affiliates or any of its affiliates’ directors, officers, employees
or agents in the performance of Apollo’s obligations under the Original
Management Consulting Agreement, whether incurred on, after or prior to the
date thereof.

 

Nothing in this Agreement
shall have the effect of prohibiting Apollo or any of its affiliates from
receiving from the Company or any of its subsidiaries or affiliates any other
fees, including any fee payable pursuant to Section 6.

 

Section 5.                                            Indemnification.  The Company agrees that it shall, or it
shall cause its subsidiaries to, indemnify and hold harmless Apollo, its
affiliates and its affiliates’ directors, officers, employees and agents
(collectively, the “Indemnified Persons”) on demand from and against any
and all liabilities, costs, expenses (including,
without limitation, attorneys’ fees, travel expenses, and a per diem
compensation for any time required in connection with any

 

2

 

investigation, proceeding or litigation) and disbursements (collectively,
“Claims”) of any kind with respect to or arising from this Agreement or
the Original Management Consulting Agreement or the performance by any
Indemnified Person of any services in connection herewith or therewith or on
behalf of the Company or any of its subsidiaries in any manner or in their
capacity as a director. shareholder, officer or agent of the Company or any of
its subsidiaries.  The indemnification
provided for in this Section 4 shall be in addition to and not be deemed
exclusive of any other rights to which any Indemnified Person may be entitled
under the Company’s certificate of incorporation, as amended, by-laws, as
amended, any agreement, or otherwise, and shall continue as to any Indemnified
Person who has ceased to be party to this Agreement or a director of the
Company or any of its subsidiaries.  Any
repeal, modification or termination of any right or protection provided to any
Indemnified Person pursuant to the Company’s certificate of incorporation, as
amended, by-laws, as amended, any agreement, or otherwise, shall not adversely
affect any right or protection provided to such Indemnified Person
hereunder.  Notwithstanding the
foregoing provision, the Company shall not be liable for any Claim under this
Section 5 arising from the willful misconduct of any Indemnified Person.

 

Section 6.                                            Other
Services.  If the Company or any of
its subsidiaries shall determine that it is advisable for the Company or such
subsidiaries to hire a financial advisor, consultant investment banker or any
similar agent in connection with any merger, acquisition, disposition,
recapitalization, issuance of securities, financing or any similar transaction,
it shall notify Apollo of such determination in writing.  Promptly thereafter, upon the request of
Apollo, the parties shall negotiate in good faith to agree upon appropriate
services, compensation and indemnification for the Company or such subsidiary
to hire Apollo or its affiliates for such services.  The Company and its subsidiaries may not hire any person, other
than Apollo or its affiliates, for any services, unless all of the following
conditions have been satisfied: (a) the parties are unable to agree after 30
days following receipt by Apollo of such written notice, (b) such other person
has a reputation that is at least equal to the reputation of Apollo in respect
of such services, (c) ten business days shall have elapsed after the Company or
such subsidiary provides a written notice to Apollo of its intention to hire
such other person, which notice shall identify such other person and shall
describe in reasonable detail the nature of the services to be provided, the
compensation to be paid and the indemnification to be provided, (d) the
compensation to be paid is not more than Apollo was willing to accept in the
negotiations described above and (e) the indemnification to be provided is not
more favorable to the Company or the applicable subsidiary than the
indemnification that Apollo was willing to accept in the negotiations described
above.  In the absence of an express
agreement to the contrary, at the closing of any merger, acquisition or similar
transaction, Apollo shall receive a fee equal to 1% of the aggregate enterprise
value paid or provided by the Company (including the aggregate value of (x) equity
securities, warrants, rights and options acquired or retained, (y) indebtedness
acquired, assumed or refinanced and (z) any other consideration or compensation
paid in connection with such transaction).

 

Section 7.                                            Notices.  All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed sufficient if
personally delivered, sent by nationally-recognized overnight courier, by
telecopy, or by registered or certified mail, return receipt requested and
postage prepaid, addressed as follows:

 

if to Apollo, to:

 

3

 

	
   

  	
  Apollo Management V,
  L.P.

  
	
   

  	
  1301 Avenue of the
  Americas

  
	
   

  	
  38th Floor

  
	
   

  	
  New York, New York
  10019

  
	
   

  	
  Attention:  Scott Kleinman

  
	
   

  	
  Telecopier: (212)
  515-3232;

  
	
   

  
	
  if to the
  Company:

  
	
   

  
	
   

  	
  Compass Minerals
  International, Inc.

  
	
   

  	
  8300 College Park
  Boulevard

  
	
   

  	
  Overland Park, Kansas
  66210

  
	
   

  	
  Attention:  Chief Executive Officer

  
	
   

  	
  Telecopier: (913)
  338-7919

  

 

or to such other address
as the party to whom notice is to be given may have furnished to each other
party in writing in accordance herewith. 
Any such notice or communication shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of nationally-recognized overnight courier, on the next business day after
the date when sent, (c) in the case of telecopy transmission, when received,
and (d) in the case of mailing, on the third business day following that on
which the piece of mail containing such communication is posted.

 

Section 8.                                            Benefits
of Agreement.  This Agreement shall
bind and inure to the benefit of Apollo, the Company, the Company’s
subsidiaries, the Indemnified Persons and any successors to or assigns of
Apollo and the Company; provided,  however, that other than any
assignment to an affiliate of Apollo, this Agreement may not be assigned by
either party hereto without the prior written consent of the other party, which
consent will not be unreasonably withheld in the case of any assignment by
Apollo.  Upon Apollo’s request, the
Company shall cause its subsidiaries to become parties hereto directly in order
to avail themselves of the services hereunder.

 

Section 9.                                            Governing
Law.  This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York (without giving effect to principles of conflicts of laws).

 

Section 10.                                      Headings.  Section headings are used for convenience
only and shall in no way affect the construction of this Agreement.

 

Section 11.                                      Entire
Agreement; Amendments.  This
Agreement contains the entire understanding of the parties with respect to its
subject matter, and neither it nor any part of it may in any way be altered,
amended, extended, waived, discharged or terminated except by a written
agreement signed by each of the parties hereto.

 

Section 12.                                      Counterparts.  This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

 

4

 

Section 13.                                      Waivers.  Any party to this Agreement may, by written
notice to the other party, waive any provision of this Agreement.  The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.

 

5

 

IN WITNESS WHEREOF, the parties have duly executed
this Management Consulting Agreement as of the date first above written.

 

	
   

  	
  COMPASS MINERALS
  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APOLLO MANAGEMENT V,
  L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit
10.19

 

 

 

COMPASS MINERALS
INTERNATIONAL, INC.

 

and

 

American Stock
Transfer & Trust Company

 

as Rights Agent

 

Rights Agreement

 

Dated as of
December 11, 2003

 

	
   

  

 

 

RIGHTS AGREEMENT

 

Rights Agreement, dated as of December 11, 2003,
between Compass Minerals International, Inc., a Delaware corporation (the “Company”), and
American Stock Transfer & Trust Company, a New York corporation, as Rights
Agent (the “Rights
Agent”).

 

RECITALS

 

WHEREAS, on December 10, 2003, the Board of Directors
of the Company adopted this Agreement, and has authorized and declared a
dividend of one preferred share purchase right (a “Right”) for each Common Share (as
defined in Section 1.6) of the Company outstanding at the close of business
December 11, 2003 (the “Record Date”) and has authorized and directed the issuance
of one Right (subject to adjustment as provided herein) with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date and the Expiration Date (as such terms are
defined in Sections 3.1 and 7.1), each Right initially representing the right
to purchase one one-thousandth (subject to adjustment) of a share of Series A
Junior Participating Preferred Stock (the “Preferred Shares”) of the Company having
the rights, powers and preferences set forth in the form of Certificate of
Designation attached hereto as Exhibit A, upon the terms and subject to
the conditions hereinafter set forth provided, however, that Rights may be issued
with respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section
22.

 

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

 

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

 

1.1.   “Acquiring Person” shall mean any
Person (as such term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Common Shares of the Company then outstanding but shall not
include an Exempt Person (as such term is hereinafter defined).  Notwithstanding the foregoing, no Person
shall become an “Acquiring Person” as the result of an acquisition of Common
Shares by the Company which, by reducing the number of 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
solely by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of one or more 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
shares of Common Stock such Person does not beneficially own 15% or more of the
shares of Common Stock then outstanding. 
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good

 

 

faith that a Person who would otherwise be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this Section 1.1, has become
such inadvertently (including, without limitation, because (A) such Person was
unaware that it beneficially owned a percentage of Common Stock that would otherwise
cause such Person to be an “Acquiring Person”
or (B) such Person was aware of the extent of its Beneficial Ownership of
Common Stock 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 such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person, as defined pursuant to the foregoing provisions
of this Section 1.1, then such Person shall not be deemed to be or have become
an “Acquiring Person” at any time
for any purposes of this Agreement.  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 Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as in effect on the date
of this Agreement.

 

1.2.   “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.

 

1.3.   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 (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act as in effect on the date of this
Agreement);

 

(ii)                                  which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has (A) the right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with regulatory
requirements, fulfillment of a condition or otherwise) pursuant to any
agreement, arrangement or understanding, whether or not in writing (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
(w) 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, (x) securities
which such Person has a right to acquire upon the exercise of Rights at any
time prior to the time that any Person becomes an Acquiring Person, (y)
securities issuable upon the exercise of Rights from and after the time that
any Person becomes an Acquiring Person if such Rights were acquired by such
Person or any of such Person’s Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3.1 or Section 22 (“Original Rights”)
or pursuant to Section 11.9 or Section 11.15 with respect to an adjustment to
Original Rights or (z) securities which such Person or any of such Person’s
Affiliates or Associates may acquire, does or do acquire or may be deemed to
acquire or may be deemed to have the right to acquire, pursuant to any merger
or other acquisition agreement

 

2

 

between the Company and such Person (or one or more of such Person’s
Affiliates or Associates) if prior to such Person becoming an Acquiring Person
the Board of Directors of the Company has approved such agreement and
determined that such Person shall not be or be deemed to be the beneficial
owner of such securities within the meaning of this Section 1.3; or (B) the
right to vote pursuant to any agreement, arrangement or understanding (whether
or not in writing); provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security under this
clause (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) and with respect to which such Person or any of such
Person’s Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities), whether or not in writing, for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in the proviso
to Section 1.3(ii)(B)) or disposing of any securities of the Company;

 

provided,
however, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such Person’s status or
authority as such, to be the “Beneficial Owner” of, to have “Beneficial
Ownership” of or to “beneficially own” any securities that are “beneficially
owned” (as defined in this Section 1.3), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer, director
or employee of an Exempt Person.

 

1.4.   “Apollo” shall mean Apollo Management V, L.P., any of its
Affiliates and Associates, including, without limitation, YBR Holdings, LLC,
YBR Netherlands I, L.P. and YBR Netherlands II, L.P., any Person with whom, or
with any of whose Affiliates or Associates, Apollo has an 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), whether or not in writing, for the purposes of
acquiring, holding, voting (except pursuant to 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) or disposing of any securities of the Company and any group
(within the meaning of Rule 13d-3 of the Exchange Act) formed thereby.

 

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

 

1.6.   “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.

 

3

 

1.7.   “Common Shares” when used with
reference to the Company shall mean the shares of common stock, par value $.01
per share, of the Company.  “Common Shares” when used with reference to
any Person other than the Company shall mean the capital stock with the
greatest voting power, or the equity securities or other equity interest having
power to control or direct the management, of such other Person or, if such
Person is a Subsidiary (as such term is hereinafter defined) of another Person,
the Person or Persons which ultimately control such first-mentioned Person, and
which has issued and outstanding such capital stock, equity securities or
equity interest.

 

1.8.   “Exempt Person” shall mean (i) the
Company and any Subsidiary of the Company, in each case including, without
limitation, in its fiduciary capacity, or any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity or trustee holding
shares of capital stock of the Company for or pursuant to the terms of any such
plan, or for the purpose of funding other employee benefits for employees of
the Company or any Subsidiary of the Company, and (ii) Apollo.

 

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

 

1.10.   “Shares Acquisition Date” shall mean
the first date of public announcement (which, for purposes of this definition,
shall include, without limitation, the filing of a report pursuant to Section
13(d) of the Exchange Act or pursuant to a comparable successor statute) by the
Company or an Acquiring Person that an Acquiring Person has become such or that
discloses information which reveals the existence of an Acquiring Person or
such earlier date as a majority of the Board of Directors shall become aware of
the existence of an Acquiring Person.

 

1.11.   “Subsidiary” of any Person shall
mean any corporation or other entity of which a majority of the voting power of
the voting equity securities or equity interests is owned, of record or
beneficially, directly or indirectly, by such Person.

 

1.12.   A “Trigger Event” shall be deemed to
have occurred upon any Person becoming an Acquiring Person.

 

1.13.   The following terms shall have
the meanings defined for such terms in the Sections set forth below:

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Adjustment Shares

  	
   

  	
  11.1.2

  
	
  common stock equivalent

  	
   

  	
  11.1.3

  
	
  Company

  	
   

  	
  Recitals

  
	
  current per share
  market price

  	
   

  	
  11.4

  
	
  Current Value

  	
   

  	
  11.1.3

  
	
  Distribution Date

  	
   

  	
  3.1

  
	
  equivalent preferred
  stock

  	
   

  	
  11.2

  
	
  Exchange Act

  	
   

  	
  1.1

  

 

4

 

	
  Exchange Consideration

  	
   

  	
  27

  
	
  Expiration Date

  	
   

  	
  7.1

  
	
  Final Expiration Date

  	
   

  	
  7.1

  
	
  NYSE

  	
   

  	
  9

  
	
  Original Rights

  	
   

  	
  1.3

  
	
  Preferred Shares

  	
   

  	
  Recitals

  
	
  Principal Party

  	
   

  	
  13.2

  
	
  Purchase Price

  	
   

  	
  4

  
	
  Record Date

  	
   

  	
  Recitals

  
	
  Redemption Date

  	
   

  	
  7.1

  
	
  Redemption Price

  	
   

  	
  23.1

  
	
  Right

  	
   

  	
  Recitals

  
	
  Right Certificate

  	
   

  	
  3.1

  
	
  Rights Agent

  	
   

  	
  Recitals

  
	
  Security

  	
   

  	
  11.4

  
	
  Spread

  	
   

  	
  11.1.3

  
	
  Substitution Period

  	
   

  	
  11.1.3

  
	
  Summary of Rights

  	
   

  	
  3.2

  
	
  Trading Day

  	
   

  	
  11.4

  

 

Section 2.                                            Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3, shall prior to the Distribution
Date also be the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment.  The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.  In the event the Company appoints one or
more co-Rights Agents, the respective duties of the Rights Agent and any
co-Rights Agent shall be as the Company shall determine.  Contemporaneously with such appointment, if
any, the Company shall notify the Rights Agent thereof.

 

Section 3.                                            Issuance
of Right Certificates.

 

3.1.   Rights Evidenced by Share
Certificates.  Until the earlier of
(i) the tenth day after the Shares Acquisition Date or (ii) the tenth Business
Day after the date of the commencement of, or first public announcement of the
intent of any Person (other than an Exempt Person) to commence, a tender or
exchange offer the consummation of which would result in any Person (other than
an Exempt Person) becoming the Beneficial Owner of Common Shares aggregating
15% or more of the then outstanding Common Shares of the Company (the earlier
of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the Rights
(unless earlier expired, redeemed or terminated) will be evidenced (subject to
the provisions of Section 3.2) by the certificates for Common Shares registered
in the names of the holders thereof (which certificates for Common Shares shall
also be deemed to be Right Certificates) and not by separate certificates, and
(y) the Rights (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the underlying Common
Shares.  The preceding sentence
notwithstanding, prior to the occurrence of a Distribution Date specified as a
result of an event described in clause (ii) (or such later Distribution Date as
the Board of Directors of the Company may select pursuant to this sentence),
the Board of Directors may

 

5

 

postpone, one or more times, the Distribution Date which would occur as
a result of an event described in clause (ii) beyond the date set forth in such
clause (ii).  Nothing herein shall
permit such a postponement of a Distribution Date after a Person becomes an
Acquiring Person.  As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign and the Company (or, if requested, the Rights
Agent) will send, by first-class, postage-prepaid mail, to each record holder
of Common Shares as of the close of business on the Distribution Date (other
than any Acquiring Person or any Associate or Affiliate of an Acquiring
Person), at the address of such holder shown on the records of the Company, one
or more certificates for Rights, in substantially the form of Exhibit B
hereto (a “Right
Certificate”), evidencing one Right (subject to adjustment as
provided herein) for each Common Share so held.  As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.

 

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

 

3.3.   New Certificates After Record
Date.  Certificates for Common
Shares which become outstanding (whether upon issuance out of authorized but
unissued Common Shares, disposition out of treasury or transfer or exchange of
outstanding Common Shares) after the Record Date but prior to the earliest of
the Distribution Date or the Expiration Date, shall have impressed, printed,
stamped, written or otherwise affixed onto them the following legend:

 

This certificate also
evidences and entitles the holder hereof to certain rights as set forth in an
Agreement between Compass Minerals International, Inc. (the “Company”) and American Stock Transfer &
Trust Company, as Rights Agent, as the same may be amended from time to time
(the “Agreement”), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company.  Under certain circumstances, as set forth in
the 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
Agreement without charge after receipt of a written request therefor.  As described in the Agreement, Rights which are owned by, transferred
to or have been owned by Acquiring Persons or Associates or Affiliates thereof
(as defined in the Agreement) shall become null and void and will no longer be
transferable.

 

6

 

With respect to such
certificates containing the foregoing legend, until the Distribution Date (or
the earlier 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 certificates, except as otherwise
provided herein, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. 
In the event that the Company purchases or acquires any Common Shares
after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.

 

Notwithstanding this Section 3.3, the omission of a
legend shall not affect the enforceability of any part of this Agreement or the
rights of any holder of the Rights.

 

Section 4.                                            Form of
Right Certificates.  The Right
Certificates (and the forms of election to purchase shares, certification and
assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate 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 trading system on which the Rights may from time to time
be listed or quoted, or to conform to usage. 
Subject to the terms and conditions hereof, the Right Certificates,
whenever issued, shall be dated as of the Record Date, and shall show the date
of countersignature by the Rights Agent, and on their face shall entitle the
holders thereof to purchase such number of one one-thousandths of a Preferred
Share as shall be set forth therein at the price per one one-thousandth of a
Preferred Share set forth therein (the “Purchase Price”), but the number of such
one one-thousandths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.

 

Section 5.                                            Countersignature
and Registration. The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board of Directors, the President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company’s seal or a facsimile thereof which shall be attested by
the Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature.  The Right
Certificates shall be countersigned, either manually or by facsimile signature,
by an authorized signatory of the Rights Agent, but it shall not be necessary
for the same signatory to countersign all of the Right Certificates
hereunder.  No Right Certificate shall
be valid for any purpose unless so countersigned.  In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
person was not such an officer.

 

7

 

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

 

Section 6.                                            Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates. 
Subject to the provisions of Section 11.1.2 and Section 14, 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 Right Certificate or Right
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 11.1.2 or that have been exchanged pursuant to Section
27) may be transferred, split up or combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase
a like number of one one-thousandths of a Preferred Share as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase.  Any registered holder
desiring to transfer, split up or combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender, together with any required form of assignment and certificate duly
completed, the Right Certificate or Right Certificates to be transferred, split
up or combined or exchanged at the office of the Rights Agent designated for
such purpose.  Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect
to the transfer of any such surrendered Right Certificate or Right Certificates
until the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate or Right Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably
request.  Thereupon the Rights Agent
shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.  The Company may require payment from the
holders of Right Certificates of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up or combination or exchange of such Right Certificates.

 

Subject to the provisions of Section 11.1.2 , at any
time after the Distribution Date and prior to the Expiration Date, upon receipt
by the Company and the Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

 

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

 

7.1.   Exercise of Rights.  Subject to Section 11.1.2 and except as
otherwise provided herein, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certification on the reverse side thereof

 

8

 

duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price for the total number of one one-thousandths of a Preferred Share (or
other securities, cash or other assets) as to which the Rights are exercised,
at or prior to the time (the “Expiration Date”) that is the earliest of (i) the close of
business on December 11, 2013 (the “Final Expiration Date”), (ii) the time
at which the Rights are redeemed as provided in Section 23 (the “Redemption Date”),
(iii) the closing of any merger or other acquisition transaction involving the
Company pursuant to an agreement of the type described in Section 13.3 at which
time the Rights are deemed terminated, or (iv) the time at which the Rights are
exchanged as provided in Section 27.

 

7.2.   Purchase.  The Purchase Price for each one
one-thousandth of a Preferred Share pursuant to the exercise of a Right shall
be initially $70.00, shall be subject to adjustment from time to time as
provided in Sections 11, 13 and 26 and shall be payable in lawful money of the
United States of America in accordance with Section 7.3.

 

7.3.   Payment Procedures.  Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and
certification duly executed, accompanied by payment of the aggregate Purchase
Price for the total number of one one-thousandths of a Preferred Share to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9, in
cash or by certified or cashier’s check or money order payable to the order of
the Company, the Rights Agent shall thereupon promptly (i)(A) requisition from
any transfer agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates for the number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of Preferred Shares issuable upon exercise of the
Rights hereunder with a depository agent, requisition from the depositary agent
depositary receipts representing interests in such number of one
one-thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the issuance of fractional shares in accordance with Section 14 or otherwise
in accordance with Section 11.1.3, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.  In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant
to Section 11.1.3, 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.

 

7.4.   Partial Exercise.  In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14.

 

9

 

7.5.   Full Information Concerning
Ownership.  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
of Rights upon the occurrence of any purported exercise as set forth in this Section
7 unless the certificate contained in the form of election to purchase set
forth on the reverse side of the Right Certificate surrendered for such
exercise shall have been duly completed and signed by the registered holder
thereof and the Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.

 

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

 

Section 9.                                            Reservation
and Availability of Capital Stock. 
The Company covenants and agrees that from and after the Distribution
Date it will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares (and, following the occurrence of a Trigger Event,
out of its authorized and unissued Common Shares or other securities or out of
its shares held in its treasury) the number of Preferred Shares (and, following
the occurrence of a Trigger Event, Common Shares and/or other securities) that
will be sufficient to permit the exercise in full of all outstanding Rights.

 

So long as the Preferred Shares (and, following the
occurrence of a Trigger Event, Common Shares and/or other securities) issuable
upon the exercise of Rights may be listed on any national securities exchange
or traded in the over-the-counter market and quoted on the New York Stock
Exchange, Inc. (the “NYSE”), the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed
or admitted to trading on such exchange or quoted on the NYSE upon official
notice of issuance upon such exercise.

 

The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares (and,
following the occurrence of a Trigger Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable shares.

 

From and after such time as the Rights become
exercisable, the Company shall use its best efforts, if then necessary to
permit the issuance of Preferred Shares upon the exercise of Rights, to
register and qualify such Preferred Shares under the Securities Act and any
applicable

 

10

 

state securities or “Blue Sky” laws (to the extent exemptions therefrom
are not available), cause such registration statement and qualifications to
become effective as soon as possible after such filing and keep such
registration and qualifications effective until the earlier of the date as of
which the Rights are no longer exercisable for such securities and the
Expiration Date.  The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective.  Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. 
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 and until a
registration statement under the Securities Act (if required) shall have been
declared effective.

 

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

 

Section 10.                                      Preferred
Shares Record Date.  Each person in
whose name any certificate for Preferred Shares (or Common Shares and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares (or Common Shares and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon
which the Preferred Shares (or Common Shares and/or other securities, as the
case may be) transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open.  Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

 

11

 

Section 11.                                      Adjustment of
Purchase Price, Number of Shares or Number of Rights.  The Purchase Price, the number of Preferred
Shares or other securities or property purchasable upon exercise of each Right
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.

 

11.1.   Post-Execution Events.

 

11.1.1.     Corporate
Dividends, Reclassifications, Etc. 
In the event the Company shall at any time after the date of this
Agreement (A) declare and pay a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11.1, the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.  If an event
occurs which would require an adjustment under both Section 11.1.1 and Section
11.1.2, the adjustment provided for in this Section 11.1.1 shall be in addition
to, and shall be made prior to, the adjustment required pursuant to, Section
11.1.2.

 

11.1.2.     Acquiring
Person Events; Triggering Events. 
Subject to Sections 23.1 and 27, in the event that a Trigger Event
occurs, then, from and after the first occurrence of such event, each holder of
a Right, except as provided below, shall thereafter have a right to receive,
upon exercise thereof at a price per Right equal to the then current Purchase
Price multiplied by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable (without giving effect to this Section
11.1.2), in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-thousandths of a Preferred Share for which a Right is then
exercisable (without giving effect to this Section 11.1.2) and (y) dividing
that product by 50% of the current per share market price of the Common Shares
(determined pursuant to Section 11.4) on the first of the date of the
occurrence of, or the date of the first public announcement of, a Trigger Event
(the “Adjustment
Shares”); provided that the Purchase Price and the number of Adjustment Shares
shall thereafter be subject to further adjustment as appropriate in accordance
with Section 11.6.  Notwithstanding the
foregoing, upon the occurrence of a Trigger Event, any Rights that are or were
acquired or beneficially owned by (1) any Acquiring Person or any Associate or
Affiliate thereof, (2) a transferee of any Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (3) a transferee of any Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or

 

12

 

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 Board of Directors of the Company has determined is part
of a plan, arrangement or understanding which has as a primary purpose or
effect avoidance of this Section 11.1.2, and subsequent transferees, shall
become void without any further action, and any holder (whether or not such
holder is an Acquiring Person or an Associate or Affiliate of an Acquiring
Person) of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement or otherwise.  From and after the Trigger Event, no Right Certificate shall be
issued pursuant to Section 3 or Section 6 that represents Rights that are or
have become void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become void pursuant to the provisions of this paragraph shall be
canceled.

 

The Company shall use all reasonable efforts to ensure
that the provisions of this Section 11.1.2 are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to any Acquiring Person or
its Affiliates, Associates or transferees hereunder.

 

From and after the occurrence of an event specified in
Section 13.1, any Rights that theretofore have not been exercised pursuant to
this Section 11.1.2 shall thereafter be exercisable only in accordance with
Section 13 and not pursuant to this Section 11.1.2.

 

11.1.3.     Insufficient
Shares.  The Company may at its
option substitute for a Common Share issuable upon the exercise of Rights in
accordance with the foregoing Section 11.1.2 a number of Preferred Shares or
fraction thereof such that the current per share market price of one Preferred
Share multiplied by such number or fraction is equal to the current per share
market price of one Common Share.  In
the event that upon the occurrence of a Trigger Event there shall not be
sufficient Common Shares authorized but unissued, or held by the Company as treasury
shares, to permit the exercise in full of the Rights in accordance with the
foregoing Section 11.1.2, the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon exercise of
the Rights, provided,  however,
that if the Company determines that it is unable to cause the authorization of
a sufficient number of additional Common Shares, then, in the event the Rights
become exercisable, the Company, with respect to each Right and to the extent
necessary and permitted by applicable law and any agreements or instruments in
effect on the date hereof to which it is a party, shall:  (A) determine the excess of (1) the value of
the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”),
over (2) the Purchase Price (such excess, the “Spread”) and (B) with respect to
each Right (other than Rights which have become void pursuant to Section
11.1.2), make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Preferred Shares or other equity securities of the Company
(including, without limitation, shares, or fractions of shares, of preferred
stock which, by virtue of having dividend and liquidation rights substantially
comparable to those of the Common Shares, the Board of Directors of the Company
has deemed in good faith to have substantially the same value as Common Shares)
(each such share of preferred stock or fractions of shares of preferred stock

 

13

 

constituting a “common stock equivalent”), (4) debt securities of the
Company, (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 Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected in good faith by the
Board of Directors of the Company; 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 occurrence of a Trigger Event, then
the Company shall be obligated to deliver, to the extent necessary and
permitted by applicable law and any agreements or instruments in effect on the
date hereof to which it is a party, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, Common Shares (to the
extent available) and then, if necessary, such number or fractions of Preferred
Shares (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread.  If the Board of Directors of the Company
shall determine in good faith that it is unlikely that sufficient additional
Common Shares could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended and
re-extended to the extent necessary, but not more than ninety (90) days
following the occurrence of a Trigger Event, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period as may be extended, the “Substitution Period”). 
To the extent that the Company determines that some action need be taken
pursuant to the second and/or third sentences of this Section 11.1.3, the
Company (x) shall provide 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 and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended as well as a public announcement at
such time as the suspension is no longer in effect.  For purposes of this Section 11.1.3, the value of a Common Share
shall be the current per share market price (as determined pursuant to Section
11.4) on the date of the occurrence of a Trigger Event and the value of any
“common stock equivalent” shall be deemed to have the same value as the Common
Shares on such date.  The Board of
Directors of the Company may, but shall not be required to, establish
procedures to allocate the right to receive Common Shares upon the exercise of
the Rights among holders of Rights pursuant to this Section 11.1.3.

 

11.2.   Dilutive Rights Offering.  In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Preferred Shares (or
securities having the same rights, privileges and preferences as the Preferred
Shares (“equivalent
preferred stock”)) or securities convertible into Preferred Shares
or equivalent preferred stock at a price per Preferred Share or per share of
equivalent preferred stock (or having a conversion or exercise price per share,
if a security convertible into or exercisable for Preferred Shares or
equivalent preferred stock) less than the current per share market price of the
Preferred Shares (as determined pursuant to Section 11.4) on such record date,
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of Preferred
Shares and shares of equivalent

 

14

 

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

 

11.3.   Distributions.  In case the Company shall fix a record date
for the making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash, securities or assets (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of the last
regular periodic cash dividend theretofore paid or, in case regular periodic
cash dividends have not theretofore been paid, at a rate not in excess of 50%
of the average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend payable in
Preferred Shares (which dividend, for purposes of this Agreement, shall be
subject to the provisions of Section 11.1.1(A))) or convertible securities, or
subscription rights or warrants (excluding those referred to in Section 11.2),
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current per share
market price of the Preferred Shares (as determined pursuant to Section 11.4)
on such record date, less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent) of the portion of the cash, assets,
securities or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares (as determined pursuant to Section 11.4); provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right.  Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.

 

15

 

11.4.   Current Per Share Market
Value.

 

11.4.1.     General.  For the purpose of any computation
hereunder, the “current
per share market price” of any security (a “Security” for
the purpose of this Section 11.4.1) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the thirty
(30) consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the current per share
market price of the Security is determined during any 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 thirty (30) Trading Days after
the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the “current 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 NYSE or, if the
Security is not listed or admitted to trading on the NYSE, 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 quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in
use, or, if on any such date the 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 such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the Board of
Directors of the Company shall be used. 
The term “Trading
Day” shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.  If the Security is not publicly held or not
so listed or traded, or if on any such date the Security is not so quoted and
no such market maker is making a market in the Security, “current per share
market price” shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company or, if at the time of such
determination there is an Acquiring Person, by a nationally recognized
investment banking firm selected by the Board of Directors, which shall have
the duty to make such determination in a reasonable and objective manner, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.

 

11.4.2.     Preferred
Shares.  Notwithstanding Section
11.4.1, for the purpose of any computation hereunder, the “current per share
market price” of the Preferred Shares shall be determined in the same manner as
set forth above in Section 11.4.1 (other than the last sentence thereof).  If the current per share market price of the
Preferred Shares cannot be determined in the manner described in Section
11.4.1, the “current per share market price” of the Preferred Shares shall be
conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and

 

16

 

recapitalizations with respect to the Common Shares occurring after the
date of this Agreement) multiplied by the current per share market price of the
Common Shares (as determined pursuant to Section 11.4.1). If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or traded, or if
on any such date neither the Common Shares nor the Preferred Shares are so quoted
and no such market maker is making a market in either the Common Shares or the
Preferred Shares, “current per share market price” of the Preferred Shares
shall mean the fair value per share as determined in good faith by the Board of
Directors of the Company, or, if at the time of such determination there is an
Acquiring Person, by a nationally recognized investment banking firm selected
by the Board of Directors of the Company, which shall have the duty to make
such determination in a reasonable and objective manner, which determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.  For
purposes of this Agreement, the “current per share market price” of one
one-thousandth of a Preferred Share shall be equal to the “current per share
market price” of one Preferred Share divided by 1,000.

 

11.5.   Insignificant Changes.  No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price.  Any
adjustments which by reason of this Section 11.5 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 11 shall
be made to the nearest cent or to the nearest one-hundred thousandth of a
Preferred Share or the nearest one-thousandth of a Common Share or other share
or security, as the case may be.

 

11.6.   Shares Other Than Preferred
Shares.  If as a result of an
adjustment made pursuant to Section 11.1, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such other shares
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Shares contained in Sections 11.1,
11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, 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.

 

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

 

11.8.   Effect of Adjustments.  Unless the Company shall have exercised its
election as provided in Section 11.9, upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11.2 and 11.3, each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-thousandths of a Preferred Share (calculated to the nearest
one-thousand thousandth of a Preferred Share) obtained by (i) multiplying (x)
the number of one one-thousandths of a Preferred Share covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the

 

17

 

Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.

 

11.9.   Adjustment in Number of
Rights.  The Company may elect on or
after the date of any adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of one one-thousandths
of a Preferred Share issuable upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. 
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price.  The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made.  This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement.  If
Right Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11.9, the Company may, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment.  Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.

 

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

 

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

 

11.12.   Deferred Issuance.  In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date of that number of Preferred Shares and shares of other

 

18

 

capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and shares of other capital stock
or other securities, assets or cash of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

 

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

 

11.14.   Company Not to Diminish
Benefits of Rights.  The Company
covenants and agrees that after the earlier of the Shares Acquisition Date or
Distribution Date it will not, except as permitted by Section 23, Section 26 or
Section 27, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.

 

11.15.   Adjustment of Rights
Associated with Common Shares. 
Notwithstanding anything contained in this Agreement to the contrary, in
the event that the Company shall at any time after the date hereof and prior to
the Distribution Date (i) declare or pay any dividend on the outstanding Common
Shares payable in Common Shares, (ii) effect a subdivision or consolidation of
the outstanding Common Shares (by reclassification or otherwise than by the
payment of dividends payable in Common Shares), or (iii) combine the outstanding
Common Shares into a greater or lesser number of Common Shares, then in any
such case, the number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date or in accordance with Section 22 shall be proportionately adjusted so that
the number of Rights thereafter associated with each Common Share following any
such event shall equal the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event by a
fraction, the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event.  The adjustments provided for in this Section 11.15 shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.

 

Section 12.                                      Certificate of
Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as provided in Sections 11 or 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common

 

19

 

Shares or the Preferred Shares a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25.  The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.

 

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

 

13.1.   Certain Transactions.  In the event that, from and after the first
occurrence of a Trigger Event, directly or indirectly, (A) the Company shall
consolidate with, or merge with and into, any other Person and the Company
shall not be the continuing or surviving corporation, (B) any Person shall
consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of the Company or any other
Person or cash or any other property, or (C) the Company shall sell, exchange,
mortgage or otherwise transfer (or one or more of its Subsidiaries shall sell,
exchange, mortgage or otherwise transfer), in one or more transactions, assets
or earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or one or more wholly-owned Subsidiaries of the Company
in one or more transactions each of which complies with Section 11.14), then,
and in each such case, proper provision shall be made so that (i) each holder
of a Right (other than Rights which have become void pursuant to Section
11.1.2) shall thereafter have the right to receive, upon the exercise thereof
at a price per Right equal to the then current Purchase Price multiplied by the
number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Trigger Event (as
subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and
11.12), in accordance with the terms of this Agreement and in lieu of Preferred
Shares or Common Shares, such number of validly authorized and issued, fully
paid, non-assessable and freely tradable Common Shares of the Principal Party
(as such term is hereinafter defined) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (x) multiplying the then current Purchase Price by the
number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Trigger Event (as
subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and
11.12) and (y) dividing that product by 50% of the then current per share
market price of the Common Shares of such Principal Party (determined pursuant
to Section 11.4) on the date of consummation of such consolidation, merger,
sale or transfer; provided that the price per Right so payable and the
number of Common Shares of such Principal Party so receivable upon exercise of
a Right shall thereafter be subject to further adjustment as appropriate in
accordance with Section 11.6 to reflect any events covered thereby occurring in
respect of the Common Shares of such Principal Party after the occurrence of
such consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed
to refer to such Principal Party; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Shares in accordance with Section 9) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
Common Shares

 

20

 

thereafter deliverable upon the exercise of the Rights; provided
that, 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 Purchase Price as provided in this
Section 13.1, 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 a Right pursuant to this Section 13.1, 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.  The Company shall not
consummate any such consolidation, merger, sale or transfer unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that the requirements
of this Section 13.1 and Section 13.2 shall promptly be performed in accordance
with their terms and that such consolidation, merger, sale or transfer of
assets shall not result in a default by the Principal Party under this
Agreement as the same shall have been assumed by the Principal Party pursuant
to this Section 13.1 and Section 13.2 and providing that, as soon as
practicable after executing such agreement pursuant to this Section 13, the
Principal Party, at its own expense, shall:

 

(1)                                  prepare
and file a registration statement under the Securities Act, if necessary, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date and similarly comply with applicable state securities laws;

 

(2)                                  use
its best efforts, if the Common Shares of the Principal Party shall be listed
or admitted to trading on the NYSE or on another national securities exchange,
to list or admit to trading (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on the NYSE or such
securities exchange, or, if the Common Shares of the Principal Party shall not
be listed or admitted to trading on the NYSE or a national securities exchange,
to cause the Rights and the securities receivable upon exercise of the Rights
to be authorized for quotation on Nasdaq or on such other system then in use;

 

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

 

(4)                                  obtain
waivers of any rights of first refusal or preemptive rights in respect of the
Common Shares of the Principal Party subject to purchase upon exercise of
outstanding Rights.

 

In case the Principal
Party 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 this Section 13),
in connection with, or as a consequence of, the

 

21

 

consummation of a transaction referred to in this Section 13, Common
Shares or common stock equivalents of such Principal Party at less than the
then current market price per share thereof (determined pursuant to Section
11.4) or securities exercisable for, or convertible into, Common Shares or
common stock equivalents of such Principal Party at less than such then current
market price (other than to holders of Rights pursuant to this Section 13), or
(ii) providing for any special payment, taxes or similar provision in
connection with the issuance of the Common Shares of such Principal Party
pursuant to the provision of Section 13, 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.

 

The Company covenants and
agrees that it shall not, at any time after the Trigger Event, enter into any
transaction of the type described in clauses (A) through (C) of this Section
13.1 if (i) at the time of or immediately after such consolidation, merger,
sale, transfer or other transaction 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
consolidation, merger, sale, transfer or other transaction, the stockholders of
the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13.2 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. 
The provisions of this Section 13 shall similarly apply to successive
transactions of the type described in clauses (A) through (C) of this Section
13.1.

 

13.2.   Principal Party.  “Principal
Party” shall mean:

 

(i)                                     in
the case of any transaction described in (A) or (B) of the first sentence of
Section 13.1:  (i) 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 (ii) 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 (C) of the first sentence in Section
13.1, 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 each Person that is a party to such transaction or transactions receives the
same 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, however,
that in any such case described

 

22

 

in the foregoing clause (i) or (ii) of this Section 13.2, 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 all 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 ratio as its interest in such Person bears to the total of such interests.

 

13.3.   Approved Acquisitions.  Notwithstanding anything contained herein to
the contrary, upon the consummation of any merger or other acquisition transaction
of the type described in clause (A), (B) or (C) of Section 13.1 involving the
Company pursuant to a merger or other acquisition agreement between the Company
and any Person (or one or more of such Person’s Affiliates or Associates) which
agreement has been approved by the Board of Directors of the Company prior to
any Person becoming an Acquiring Person, this Agreement and the rights of
holders of Rights hereunder shall be terminated in accordance with Section 7.1.

 

Section 14.                                      Fractional
Rights and Fractional Shares.

 

14.1.   Cash in Lieu of Fractional
Rights.  The Company shall not be
required to issue fractions of Rights or to distribute Right Certificates which
evidence fractional Rights (except prior to the Distribution Date in accordance
with Section 11.15).  In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right.  For the
purposes of this Section 14.1, the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.  The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NYSE or, if the
Rights are not listed or admitted to trading on the NYSE, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors
of the Company.  If on any such date no
such market maker is making a market in the Rights, the current market value of
the Rights on such date shall be the fair value of the Rights as determined in
good faith

 

23

 

by the Board of Directors of the Company, or, if at the time of such
determination there is an Acquiring Person, by a nationally recognized
investment banking firm selected by the Board of Directors of the Company,
which shall have the duty to make such determination in a reasonable and
objective manner, which determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.

 

14.2.   Cash in Lieu of Fractional
Preferred Shares.  The Company shall
not be required to issue fractions of Preferred Shares (other than fractions
which are integral multiples of one one-thousandth of a Preferred Share) upon
exercise or exchange of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one one-thousandth of a Preferred Share). 
Interests in fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts.  In lieu of fractional Preferred Shares that
are not integral multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised or exchanged as herein provided an amount in cash equal
to the same fraction of the current per share market price of one Preferred
Share (as determined in accordance with Section 14.1) for the Trading Day
immediately prior to the date of such exercise or exchange.

 

14.3.   Cash in Lieu of Fractional
Common Shares.  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
the Right Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share (as determined in accordance with
Section 14.1) for the Trading Day immediately prior to the date of such
exercise or exchange.

 

14.4.   Waiver of Right to Receive
Fractional Rights or Shares.  The
holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise or
exchange of a Right, except as permitted by this Section 14.

 

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

 

24

 

limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any
Person (including, without limitation, the Company) subject to this Agreement.

 

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

 

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

 

(b)                                 as
of and after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer with all required certifications completed; and

 

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

 

Section 17.                                      Right
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 24), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.

 

Section 18.                                      Concerning the
Rights Agent.  The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed upon and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with

 

25

 

the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.

 

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

 

Section 19.                                      Merger or
Consolidation or Change of Name of Rights Agent.  Any corporation or limited liability company into which the
Rights Agent or any successor Rights Agent may be merged or with which it may
be consolidated, or any corporation or limited liability company resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation or limited liability company
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
that such corporation or limited liability company would be eligible for
appointment as a successor Rights Agent under the provisions of Section
21.  In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.

 

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

 

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

 

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

 

26

 

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

 

20.3.   Standard of Care.  The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful misconduct.

 

20.4.   Reliance on Agreement and
Right Certificates.  The Rights
Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Right Certificates (except as to
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.

 

20.5.   No Responsibility as to
Certain Matters.  The Rights Agent
shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11.1.2) or any adjustment required under the provisions of
Sections 3, 11, 13, 23 or 27 or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any 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 or
other securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when so issued, be
validly authorized and issued, fully paid and nonassessable.

 

20.6.   Further Assurance by Company.  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.

 

20.7.   Authorized Company Officers.  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 of Directors, the
President, the Chief Financial Officer, any Vice President, the Treasurer, the
Secretary or any Assistant Treasurer or Assistant Secretary of the Company, and
to apply to such officers for advice or instructions in connection with its

 

27

 

duties under this Agreement, and it shall not be liable for any action
taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
these instructions.  Any application by
the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent with respect to its duties or obligations under
this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective.  The
Rights Agent shall not be liable to the Company for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any
such application on or after the date specified therein (which date shall not
be less than three (3) business days after the date any such officer actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking of any such action (or the
effective date in the case of omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to
be taken or omitted.

 

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

 

20.9.   Reliance on Attorneys and
Agents.  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, omission,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, omission, default, neglect or
misconduct, provided
that reasonable care was exercised in the selection and continued employment
thereof.

 

20.10.   Incomplete Certificate.  If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
contained in the form of assignment or the form of election to purchase set
forth on the reverse thereof, as the case may be, has not been completed to
certify the holder is not an Acquiring Person (or an Affiliate or Associate
thereof), the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.

 

20.11.   Rights Holders List.  At any time and from time to time after the
Distribution Date, upon the request of the Company, the Rights Agent shall
promptly deliver to the Company a list, as of the most recent practicable date
(or as of such earlier date as may be specified by the Company), of the holders
of record of Rights.

 

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 Common Shares and/or Preferred Shares, as
applicable, by registered or certified mail. 
Following the Distribution Date, the Company shall promptly notify the
holders of the Right Certificates by first-class mail of any

 

28

 

such resignation.  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 Common Shares and/or
Preferred Shares, as applicable, by registered or certified mail, and to the
holders of the Right Certificates by first-class mail.  If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the resigning, removed,
or incapacitated Rights Agent shall remit to the Company, or to any successor
Rights Agent designated by the Company, all books, records, funds, certificates
or other documents or instruments of any kind then in its possession which were
acquired by such resigning, removed or incapacitated Rights Agent in connection
with its services as Rights Agent hereunder, and shall thereafter be discharged
from all duties and obligations hereunder. 
Following notice of such removal, resignation or incapacity, the Company
shall appoint a successor to such 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 Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the State of New
York (or any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of New York) in
good standing, having an office in the State of New York, which is authorized
under such laws to exercise stock transfer or corporate trust powers and is
subject to supervision or examination by Federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $10 million.  After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and/or Preferred Shares, as
applicable, and, following the Distribution Date, mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.

 

Section 22.                                      Issuance of
New Right Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.  In addition, in connection with the issuance
or sale of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company shall, with respect to Common Shares so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded, or upon exercise, conversion or exchange of
securities hereinafter issued by the Company, in each case existing

 

29

 

prior to the Distribution Date, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

 

Section 23.                                      Redemption.

 

23.1.   Right to Redeem.  The Board of Directors of the Company may,
at its option, at any time prior to a Trigger Event, redeem all but not less
than all of the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend,
recapitalization or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the “Redemption Price”),
and the Company may, at its option, pay the Redemption Price in Common Shares
(based on the “current per share market price,” determined pursuant to Section
11.4, of the Common Shares at the time of redemption), cash or any other form
of consideration deemed appropriate by the Board of Directors.  The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and subject to such
conditions as the Board of Directors in its sole discretion may establish.

 

23.2.   Redemption Procedures.  Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights (or at such
later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price for each Right
so held.  The Company shall promptly
give public notice of such redemption; provided,  however, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption.  The Company shall promptly give, or cause
the Rights Agent to 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 shall 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 27, and other than in
connection with the purchase, acquisition or redemption of Common Shares prior
to the Distribution Date.

 

Section 24.                                      Notice of
Certain Events.  In case the Company
shall propose at any time after the earlier of the Shares Acquisition Date and
the Distribution Date (a) to pay any dividend payable in stock of any class to
the holders of Preferred Shares or to make any other distribution to the
holders of Preferred Shares (other than a regular periodic cash dividend at a
rate not in excess of 125% of the rate of the last regular periodic cash
dividend theretofore paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of

 

30

 

the average net income per share of the Company for the four quarters
ended immediately prior to the payment of such dividends, or a stock dividend
on, or a subdivision, combination or reclassification of the Common Shares), or
(b) to offer to the holders of Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, or (c) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), or (d) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person (other than pursuant to a merger or other acquisition agreement of the
type described in Section 1.3(ii)(A)(z)), or (e) to effect the liquidation,
dissolution or winding up of the Company, or (f) to declare or pay any dividend
on the Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then, in each such
case, the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Preferred Shares and/or Common Shares, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a)
or (b) above at least ten (10) days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and in the case of
any such other action, at least ten (10) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
the Preferred Shares and/or Common Shares, whichever shall be the earlier.

 

In case any event set forth in Section 11.1.2 or
Section 13 shall occur, then, in any such case, (i) the Company shall as soon
as practicable thereafter give to the Rights Agent and to each holder of a
Right Certificate, in accordance with Section 25, a notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11.1.2 and Section 13, and (ii) all
references in this Section 24 to Preferred Shares shall be deemed thereafter to
refer to Common Shares and/or, if appropriate, other securities.

 

Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a filing by the Company with the
Securities and Exchange Commission shall constitute sufficient notice to the
holders of securities of the Company, including the Rights, for purposes of
this Agreement and no other notice need be given.

 

Section 25.                                      Notices.  Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:

 

Compass Minerals
International, Inc.

8300 College Boulevard

 

31

 

Oakland Park, Kansas  66210

Attention:  Secretary

 

with a copy to (such copy
shall not constitute notice):

 

Raymond Y. Lin, Esq.

Latham & Watkins LLP

885 Third Avenue

New York, New York  10022

 

Subject to the provisions
of Section 21 and Section 24, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Right Certificate to
or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:

 

American Stock Transfer
& Trust Company

59 Maiden Lane

New York, New York 10038

Attention:  Corporate Trust Department

 

Notices or demands
authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate (or, prior to the Distribution
Date, to the holder of any certificate representing Common Shares) 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 26.                                      Supplements
and Amendments.  For so long as the
Rights are then redeemable, the Company may in its sole and absolute
discretion, and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement in any respect without the approval of
any holders of Rights or Common Shares. 
From and after the time that the Rights are no longer redeemable, the
Company may, and the Rights Agent shall, if the Company so directs, from time
to time supplement or amend this Agreement without the approval of any holders
of Rights (i) to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein or (ii) to make any other changes or provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable, including but not limited to extending the Final Expiration Date; provided, however,
that no such supplement or amendment shall adversely affect the interests of
the holders of Rights as such (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), and no such supplement or amendment may
cause the Rights again to become redeemable or cause this Agreement again to
become amendable other than in accordance with this sentence; provided  further,
that the right of the Board of Directors to extend the Distribution Date shall
not require any amendment or supplement hereunder.  Upon the delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment.

 

32

 

Without limiting the foregoing, at any time prior to such time as any
Person becomes an Acquiring Person, the Company and the Rights Agent may amend
this Agreement to lower the thresholds set forth in Sections 1.1 and 3.1 to not
less than the greater of (i) any percentage greater than the largest percentage
of the outstanding Common Shares then known by the Company to be beneficially
owned by any Person (other than an Exempt Person) and (ii) 10%.

 

Section 27.                                      Exchange.

 

27.1.   Exchange
of Common Shares for Rights.  The
Board of Directors of the Company may, at its option, at any time after the
occurrence of a Trigger Event, exchange Common Shares for all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11.1.2) by exchanging at
an exchange ratio of that number of Common Shares having an aggregate value
equal to the Spread (with such value being based on the current per share
market price (as determined pursuant to Section 11.4) on the date of the
occurrence of a Trigger Event) per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such amount per Right being hereinafter referred to as the “Exchange Consideration”).  Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Acquiring Person shall have become the Beneficial Owner of 50% or more of the
Common Shares then outstanding.  From
and after the occurrence of an event specified in Section 13.1, any Rights that
theretofore have not been exchanged pursuant to this Section 27.1 shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 27.1. 
The exchange of the Rights by the Board of Directors 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.

 

27.2.   Exchange
Procedures.  Immediately upon the
action of the Board of Directors of the Company ordering the exchange for any
Rights pursuant to Section 27.1 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 the Exchange
Consideration.  The Company shall
promptly give public notice of any such exchange; provided,  however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange.  The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent.  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
shall 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 the Rights that have become void pursuant to the provisions of
Section 11.1.2) held by each holder of Rights.

 

27.3.   Insufficient
Shares.  The Company may at its
option substitute, and, in the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit an
exchange of Rights for Common Shares as contemplated in accordance with this
Section 27, the Company shall substitute to the extent of such insufficiency,
for each Common Share that would otherwise be issuable upon exchange of a
Right, a number of Preferred Shares or fraction thereof (or equivalent
preferred stock, as such term is defined in

 

33

 

Section 11.2) such that the current per share market price (determined
pursuant to Section 11.4) of one Preferred Share (or equivalent preferred
share) multiplied by such number or fraction is equal to the current per share
market price of one Common Share (determined pursuant to Section 11.4) as of
the date of such exchange.

 

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

 

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

 

Section 30.                                      Determination
and Actions by the Board of Directors. 
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or amend
this Agreement).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) that are done or
made by the Board of Directors of the Company in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.

 

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

 

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

 

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

 

34

 

Section 34.                                      Descriptive
Heading.  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.

 

35

 

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

 

	
   

  	
  Compass Minerals International,
  Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  American Stock Transfer &
  Trust Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

36

 

EXHIBIT
A

 

FORM OF

 

CERTIFICATE OF
DESIGNATIONS

 

of

 

SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK

 

of

 

COMPASS MINERALS
INTERNATIONAL, INC.

 

(Pursuant to
Section 151 of the

Delaware General Corporation Law)

 

 

Compass Minerals International, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (hereinafter called the “Corporation”), hereby certifies that the following
resolution was adopted by the Board of Directors of the Corporation as required
by Section 151 of the General Corporation Law at a meeting duly called and held
on December 10, 2003.

 

RESOLVED, that pursuant to the authority granted to
and vested in the Board of Directors of this Corporation (hereinafter called
the “Board of
Directors” or the “Board”) in accordance with the provisions of the Certificate
of Incorporation of this Corporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the “Preferred Stock”),
of the Corporation and hereby states the designation and number of shares, and
fixes the relative rights, powers and preferences, and qualifications,
limitations and restrictions thereof as follows:

 

Section 1.                                            Designation
and Amount.  The shares of such
series shall be designated as “Series A Junior Participating Preferred Stock”
(the “Series A
Preferred Stock”) and the number of shares constituting the Series A
Preferred Stock shall be 200,000.  Such
number of shares may be increased or decreased by resolution of the Board of
Directors; provided
that no decrease shall reduce the number of shares of Series A Preferred Stock
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.

 

Section 2.                                            Dividends
and Distributions.

 

(A)                              Subject
to the prior and superior rights of the holders of any shares of any class or
series of stock of this Corporation ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value $.01
per share (the

 

A-1

 

“Common Stock”), of the Corporation, and of any other stock
ranking junior to the Series A 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 first day
of March, June, September and December in each year (each such date being
referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than
a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

 

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

 

(C)                                Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date.  Accrued but unpaid dividends
shall not bear interest.  Dividends paid
on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall
be

 

A-2

 

allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date shall be not more than sixty (60) days prior to the date fixed for the
payment thereof.

 

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

 

(A)                              Subject
to the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the stockholders of the Corporation.  In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

 

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

 

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

 

Section 4.                                            Certain Restrictions.

 

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

 

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

 

A-3

 

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

 

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

 

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

 

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

 

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

 

Section 6.                                            Liquidation,
Dissolution or Winding Up.  (A) Upon
any liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received an amount per share
(the “Series A Liquidation Preference”)
equal to $1,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series A Preferred Stock shall
be entitled to receive an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount
to be distributed per share to holders of shares 

 

A-4

 

of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. 
In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
the proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.

 

(B)                                In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other classes and series of stock of the Corporation, if any,
that rank on a parity with the Series A Preferred Stock in respect thereof,
then the assets available for such distribution shall be distributed ratably to
the holders of the Series A Preferred Stock and the holders of such parity
shares in proportion to their respective liquidation preferences.

 

(C)                                Neither
the merger or consolidation of the Corporation into or with another corporation
nor the merger or consolidation of any other corporation into or with the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this Section 6.

 

Section 7.                                            Consolidation,
Merger, etc.  In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged.  In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

A-5

 

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

 

Section 9.                                            Rank.  The Series A Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, junior to all series of any other class
of the Corporation’s Preferred Stock, except to the extent that any such other
series specifically provides that it shall rank on a parity with or junior to
the Series A Preferred Stock.

 

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

 

Section 11.                                      Fractional
Shares.  Series A Preferred Stock
may be issued in fractions of a share that 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 Preferred Stock.

 

A-6

 

IN WITNESS WHEREOF, this Certificate of Designations
is executed on behalf of the Corporation by its Chief Financial Officer this 11th
day of December 2003.

 

	
   

  	
   

  	
   

  
	
   

  	
  Chief Financial Officer

  

 

A-7

 

EXHIBIT
B

 

[Form of Right
Certificate]

 

	
  Certificate No. R-

  	
   

  	
  Rights

  

 

NOT EXERCISABLE AFTER DECEMBER 11, 2013 OR EARLIER IF
NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR
ACQUIRED PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION
1.3(ii)(A)(z) OF THE AGREEMENT.  THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT, AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE AGREEMENT.  UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS DEFINED IN THE
AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.

 

Right Certificate

 

COMPASS MINERALS
INTERNATIONAL, 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 December 11,
2003, as the same may be amended from time to time (the “Agreement”), between Compass Minerals
International, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, a
New York corporation, as Rights Agent (the “Rights
Agent”), to purchase from the Company at any time after the
Distribution Date and prior to 5:00 P.M. (New York City time) on December 11,
2013, at the offices of the Rights Agent, or its successors as Rights Agent,
designated for such purpose, one one-thousandth of a fully paid, nonassessable
share of Series A Junior Participating Preferred Stock, par value $.01 per
share (the “Preferred Shares”) of
the Company, at a purchase price of $70.00 per one one-thousandth of a
Preferred Share, subject to adjustment (the “Purchase
Price”), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and certification duly executed.  The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a Preferred Share which
may be purchased upon exercise thereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of December 11, 2003
based on the Preferred Shares as constituted at such date.  Capitalized terms used in this Right
Certificate without definition shall have the meanings ascribed to them in the
Agreement.  As provided in the
Agreement, the Purchase Price and the number of Preferred Shares which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain
events.

 

This Right Certificate is subject to all of the terms,
provisions and conditions of the Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference

 

B-1

 

and made a part hereof and to which Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. 
Copies of the Agreement are on file at the principal offices of the
Company and the Rights Agent.

 

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

 

Subject to the provisions of the Agreement, the Board
of Directors may, at its option, (i) redeem the Rights evidenced by this Right
Certificate at a redemption price of $.01 per Right or (ii) exchange Common
Shares for the Rights evidenced by this Certificate, in whole or in part.

 

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

 

No holder of this Right 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 Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Agreement.

 

If any term, provision, covenant or restriction of the
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 the Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

 

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

 

B-2

 

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

 

	
  Attest:

  	
  Compass
  Minerals International, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   Title:

  	
   

  	
   Title:

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
  AMERICAN STOCK TRANSFER & TRUST COMPANY, as
  Rights Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  	
   

  
	
  Authorized
  Signature

  	
   

  

 

B-3

 

[Form of Reverse
Side of Right Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by
the registered holder if such holder

desires to transfer the Right Certificate.)

 

FOR VALUE RECEIVED
                                                                                                                                                      
hereby sells, assigns and transfers unto                                             

 

 

 

(Please print name
and address

of transferee)

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

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

 

                                                                                                                                                                                                     

 

The undersigned hereby
certifies that:

 

(1)                                  the
Rights evidenced by this Right Certificate are not beneficially owned by and
are not being assigned to an Acquiring Person or an Affiliate or an Associate
thereof; and

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

 

B-4

 

FORM OF ELECTION
TO PURCHASE

 

(To be executed if
holder desires to

exercise the Right
Certificate.)

 

To: Compass Minerals
International, Inc.

 

The undersigned hereby irrevocably elects to exercise
                    
Rights represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights (or such other securities or property of the
Company or of any other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name
of:

 

	
   

  	
   

  
	
  (Please print name and
  address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

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

 

Please insert social
security

or other identifying
number

 

	
   

  	
   

  
	
  (Please print name and
  address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

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

 

B-5

 

The undersigned hereby
certifies that:

 

(1)                                  the
Rights evidenced by this Right Certificate are not beneficially owned by and
are not being assigned to an Acquiring Person or an Affiliate or an Associate
thereof; and

 

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

 

	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
				

 

NOTICE

 

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

 

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

 

B-6

 

EXHIBIT
C

 

As described in
the Rights Agreement, Rights which are

held by or have been held by an Acquiring Person or Associates

or Affiliates thereof (as defined in the Rights Agreement) and certain

transferees thereof shall become null and void and will no longer be
transferable.

 

SUMMARY OF RIGHTS
TO PURCHASE

PREFERRED SHARES

 

On December 10, 2003 the Board of Directors of Compass
Minerals International, Inc. (the “Company” or “Compass”) declared a dividend of one preferred share purchase
right (a “Right”)
for each share of common stock, $.01 par value (the “Common Shares”), of the Company
outstanding at the close of business on December 11, 2003 (the “Record Date”).  As long as the Rights are attached to the
Common Shares, the Company will issue one Right (subject to adjustment) with
each new Common Share so that all such shares will have attached Rights.  When exercisable, each Right will entitle
the registered holder to purchase from the Company one one-thousandth of a
share of Series A Junior Participating Preferred Stock (the “Preferred Shares”)
at a price of $70.00 per one one-thousandth of a Preferred Share, subject to
adjustment (the “Purchase
Price”).  The description and
terms of the Rights are set forth in a Rights Agreement, dated as of December
11, 2003, as the same may be amended from time to time (the “Agreement”),
between the Company and American Stock Transfer & Trust Company, as Rights
Agent (the “Rights
Agent”).

 

Until the earlier to occur of (i) ten (10) days
following a public announcement that a person or group of affiliated or
associated persons (other than an Exempt Person) has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the Common Shares (an
“Acquiring Person”)
or (ii) ten (10) business days (or such later date as may be determined by
action of the Board of Directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the Common Shares (the earlier of (i) and (ii) being
called the “Distribution
Date”), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate together with a copy of this Summary of Rights.

 

The Agreement provides that Apollo Management V, L.P.,
its affiliates and associates, any person with whom Apollo or any of its
affiliates or associates has an agreement, arrangement or understanding with
regard to any securities of Compass, and any group within the meaning of the
federal securities laws formed thereby are “Exempt Persons.”

 

The Agreement provides that until the Distribution
Date (or earlier redemption exchange, termination, or expiration of the
Rights), the Rights will be transferred with and only with the Common
Shares.  Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Share certificates
issued after the close of business on the Record Date upon transfer or new
issuance of the Common Shares will contain a notation incorporating the
Agreement by reference.  Until the
Distribution Date (or earlier redemption, exchange,

 

C-1

 

termination or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares, with or without such notation or a copy of
this Summary of Rights, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.  As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (“Right Certificates”)
will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and such separate Right Certificates alone
will evidence the Rights.

 

The Rights are not exercisable until the Distribution
Date.  The Rights will expire on
December 11, 2013, subject to the Company’s right to extend such date (the “Final Expiration  Date”), unless
earlier redeemed or exchanged by the Company or terminated.

 

Each Preferred Share purchasable upon exercise of the
Rights will be entitled, when, as and if declared, to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 1,000 times the dividend, if any, declared per Common
Share.  In the event of liquidation,
dissolution or winding up of the Company, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of $1,000 per
share (plus any accrued but unpaid dividends) but will be entitled to an
aggregate payment of 1,000 times the payment made per Common Share.  Each Preferred Share will have 1,000 votes
and will vote together with the Common Shares. 
Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 1,000 times the amount received per Common Share.  Preferred Shares will not be
redeemable.  These rights are protected
by customary antidilution provisions. 
Because of the nature of the Preferred Share’s dividend, liquidation and
voting rights, the value of one one-thousandth of a Preferred Share purchasable
upon exercise of each Right should approximate the value of one Common Share.

 

The Purchase Price payable, and the number of
Preferred Shares or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Shares, (ii) upon the grant to holders of the
Preferred Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares or convertible securities at less than the current market
price of the Preferred Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness, cash, securities or assets
(excluding regular periodic cash dividends at a rate not in excess of 125% of
the rate of the last regular periodic cash dividend theretofore paid or, in
case regular periodic cash dividends have not theretofore been paid, at a rate
not in excess of 50% of the average net income per share of the Company for the
four quarters ended immediately prior to the payment of such dividend, or
dividends payable in Preferred Shares (which dividends will be subject to the
adjustment described in clause (i) above)) or of subscription rights or
warrants (other than those referred to above).

 

In the event that a Person becomes an Acquiring Person
or if the Company were the surviving corporation in a merger with an Acquiring
Person or any affiliate or associate of an Acquiring Person and the Common
Shares were not changed or exchanged, each holder of a Right, other than Rights
that are or were acquired or beneficially owned by the Acquiring Person (which
Rights will thereafter be void), will thereafter have the right to receive upon
exercise that

 

C-2

 

number of Common Shares having a market value of two times the then
current Purchase Price of the Right.  In
the event that, after a person has become an Acquiring Person, the Company were
acquired in a merger or other business combination transaction or more than 50%
of its assets or earning power were sold, proper provision shall be made so
that each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price of the Right, that
number of shares of common stock of the acquiring Company which at the time of
such transaction would have a market value of two times the then current
Purchase Price of the Right.

 

At any time after a Person becomes an Acquiring Person
and prior to the earlier of one of the events described in the last sentence of
the previous paragraph or the acquisition by such Acquiring Person of 50% or
more of the outstanding Common Shares, the Board of Directors may cause the
Company to exchange the Rights (other than Rights owned by an Acquiring Person
which will have become void), in whole or in part, for Common Shares at an
exchange rate of one Common Share per Right (subject to adjustment).

 

No adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price.  No fractional Preferred
Shares or Common Shares will be issued (other than fractions of Preferred
Shares which are integral multiples of one one-thousandth of a Preferred Share,
which may, at the election of the Company, be evidenced by depository
receipts), and in lieu thereof, a payment in cash will be made based on the
market price of the Preferred Shares or Common Shares on the last trading date
prior to the date of exercise.

 

The Rights may be redeemed in whole, but not in part,
at a price of $.01 per Right (the “Redemption Price”) by the Board of Directors at any time
prior to the time that an Acquiring Person has become such.  The redemption of the Rights 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.  Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.

 

Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company beyond those as an
existing stockholder, including, without limitation, the right to vote or to
receive dividends.

 

Any of the provisions of the Agreement may be amended
by the Board of Directors of the Company for so long as the Rights are then
redeemable, and after the Rights are no longer redeemable, the Company may
amend or supplement the Agreement in any manner that does not adversely affect
the interests of the holders of the Rights (other than an Acquiring Person or
an affiliate or associate of an Acquiring Person).  The Company may at any time prior to such time as any person
becomes an Acquiring Person amend the Agreement to lower the thresholds
described above to no less than the greater of (i) any percentage greater than
the largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any person or group of affiliated or
associated persons (other than an Exempt Person) and (ii) 10%.

 

C-3

 

A copy of the Agreement has been filed with the
Securities and Exchange Commission as Exhibit 4.2 to the Company’s Registration
Statement on Form S-1 (Registration No. 333-110250).  A copy of the Agreement is available free of charge from the
Company.  This summary description of
the Rights does not purport to be complete and is qualified in its entirety by
reference to the Agreement, which is incorporated herein by reference.

 

C-4

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